SC 13G/A 1 arel_13ga1-123104.txt DECEMBER 31, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment No. 1)* AREL COMMUNICATIONS AND SOFTWARE LTD. ------------------------------------- (Name of Issuer) Ordinary Shares, NIS 0.001 Par Value ------------------------------------ (Title of Class of Securities) M14925107 --------- (CUSIP Number) December 31, 2004 ----------------- (Date of Event which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule is filed: [ ] Rule 13d-1(b) [X] Rule 13d-1(c) [ ] Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Continued on following page(s) Page 1 of 7 Pages SCHEDULE 13G CUSIP No. M14925107 Page 2 of 7 Pages 1 Names of Reporting Person I.R.S. Identification No. of above persons (entities only) SOROS FUND MANAGEMENT LLC 2 Check the Appropriate Box If a Member of a Group (See Instructions) a. [ ] b. [X] 3 SEC Use Only 4 Citizenship or Place of Organization DELAWARE 5 Sole Voting Power Number of 664,630 Shares Beneficially 6 Shared Voting Power Owned By 0 Each Reporting 7 Sole Dispositive Person 664,630 With 8 Shared Dispositive Power 0 9 Aggregate Amount Beneficially Owned by Each Reporting Person 664,630 10 Check Box If the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) [ ] 11 Percent of Class Represented By Amount in Row (9) 5.02% 12 Type of Reporting Person (See Instructions) OO; IA SCHEDULE 13G CUSIP No. M14925107 Page 3 of 7 Pages 1 Names of Reporting Person I.R.S. Identification No. of above persons (entities only) GEORGE SOROS (in the capacity described herein) 2 Check the Appropriate Box If a Member of a Group (See Instructions) a. [ ] b. [X] 3 SEC Use Only 4 Citizenship or Place of Organization UNITED STATES 5 Sole Voting Power Number of 664,630 Shares Beneficially 6 Shared Voting Power Owned By 0 Each Reporting 7 Sole Dispositive Person 664,630 With 8 Shared Dispositive Power 0 9 Aggregate Amount Beneficially Owned by Each Reporting Person 664,630 10 Check Box If the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) [ ] 11 Percent of Class Represented By Amount in Row (9) 5.02% 12 Type of Reporting Person (See Instructions) IA Page 4 of 7 Pages Item 1(a) Name of Issuer: Arel Communications and Software Ltd. (the "Issuer") Item 1(b) Address of the Issuer's Principal Executive Offices: 22 Einstein Street, Park Hamada, Building 22; Kiryat Weizmann, Nes Ziona, 74140; Israel Item 2(a) Name of Person Filing: The statement is being filed on behalf of each of the following persons (collectively, the "Reporting Persons"): i) Soros Fund Management LLC ("SFM LLC"); and ii) Mr. George Soros ("Mr. Soros"). This Statement relates to Shares (as defined herein) held for the account of, Quantum Partners LDC, a Cayman Islands exempted limited duration company ("Quantum Partners"). SFM LLC serves as principal investment manager to Quantum Partners. As such, SFM LLC has been granted investment discretion over portfolio investments, including the Shares, held for the account Quantum Partners. Mr. Soros is the Chairman of SFM LLC. Item 2(b) Address of Principal Business Office or, if None, Residence: The address of the principal business office of each SFM LLC and Mr. Soros is 888 Seventh Avenue, 33rd Floor, New York, NY 10106. Item 2(c) Citizenship: i) SFM LLC is a Delaware limited liability company; and ii) Mr. Soros is a United States citizen. Item 2(d) Title of Class of Securities: Ordinary Shares, NIS 0.001 par value (the "Shares") Item 2(e) CUSIP Number: M14925107 Item 3. If this statement is filed pursuant to Rule 13d-1(b), or 13d-2(b), check whether the person filing is a: This Item 3 is not applicable. Page 5 of 7 Pages Item 4. Ownership: Item 4(a) Amount Beneficially Owned: As of December 31, 2004, each of SFM LLC and Mr. Soros may be deemed to be the beneficial owner of the 664,630 Shares held for the account of Quantum Partners. Item 4(b) Percent of Class: The number of Shares of which each of SFM LLC and Mr. Soros may be deemed to be the beneficial owner constitutes approximately 5.02% of the total number of Shares outstanding (based upon information provided on Form 6-K, the Issuer had 13,241,916 Shares outstanding as of November 22, 2004). Item 4(c) Number of shares as to which such person has: SFM LLC ------- (i) Sole power to vote or to direct the vote: 664,630 (ii) Shared power to vote or to direct the vote: 0 (iii) Sole power to dispose or to direct the disposition of: 664,630 (iv) Shared power to dispose or to direct the disposition of: 0 Mr. Soros --------- (i) Sole power to vote or to direct the vote: 664,630 (ii) Shared power to vote or to direct the vote: 0 (iii) Sole power to dispose or to direct the disposition of: 664,630 (iv) Shared power to dispose or to direct the disposition of: 0 Item 5. Ownership of Five Percent or Less of a Class: This Item 5 is not applicable. Item 6. Ownership of More than Five Percent on Behalf of Another Person: The shareholders of Quantum Partners, including Quantum Endowment Fund N.V., have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the account of Quantum Partners in accordance with their ownership interests in Quantum Partners. Page 6 of 7 Pages Item 7. Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on by the Parent Holding Company: This Item 7 is not applicable. Item 8. Identification and Classification of Members of the Group: This Item 8 is not applicable. Item 9. Notice of Dissolution of Group: This Item 9 is not applicable. Item 10. Certification: By signing below each signatory certifies that, to the best of his/its knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the Issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. Page 7 of 7 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: February 14, 2005 SOROS FUND MANAGEMENT LLC By: /s/ Jodye M. Anzalotta ----------------------------------- Name: Jodye M. Anzalotta Title: Assistant General Counsel Date: February 14, 2005 GEORGE SOROS By: /s/ Jodye M. Anzalotta ----------------------------------- Name: Jodye M. Anzalotta Title: Assistant General Counsel