6-K 1 av6k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULES 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of April, 2005 Commission File Number: 333-7484 INNOVA, S. de R.L. de C.V. ----------------------------------------- (Translation of registrant's name into English) Insurgentes Sur 694 Piso 8, Col. Del Valle 03100 Mexico, D.F. Mexico -------------------------------------------------------------------------- (Address of principal executive offices) (Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.) Form 20-F X Form 40-F ----- ----- (Indicate by check mark whether the registrant by furnishing the information contained in this Form is also furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes No X ----- ----- (If "Yes" is marked indicate below the file number assigned to the registrant in connection with Rule 12g-3-2(b): 82 .) --- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INNOVA, S. de R.L. de C.V. (Registrant) Dated: April 27, 2005 By /s/ Carlos Ferreiro Rivas -------------------------------- Name: Carlos Ferreiro Rivas Title: Chief Financial Officer [LOGO - SKY] FOR IMMEDIATE RELEASE --------------------- INNOVA, S. DE R.L. DE C.V. REPORTS FIRST QUARTER 2005 RESULTS - SUBSCRIBER BASE GROWS 25% TO 1,107,500 - - NET REVENUES INCREASED 14.2% - - EBITDA INCREASED 26.2% TO PS. 509.8 MM - - EBITDA MARGIN INCREASED TO 39.1% - o The number of gross active SUBSCRIBERS increased 25.0% to 1,107,500 as of March 31, 2005 from 886,100 as of March 31, 2004. o NET REVENUES for the first quarter of 2005 increased 14.2% to Ps. 1,303.5 million from Ps. 1,141.0 million for the same period of the prior year. o EBITDA for the first quarter of 2005 increased 26.2% to Ps. 509.8 million from Ps. 404.0 million for the same period of the prior year. o EBITDA MARGIN increased to 39.1% for the first quarter of 2005 from 35.4% in the same period of the prior year, a new historical record for Innova. Mexico City, April 26, 2005. INNOVA, S. DE R.L. DE C.V. ("INNOVA" OR "SKY"), the provider of direct-to-home (DTH) satellite television services under the SKY brand name and the pay-TV market leader in Mexico as measured by the number of subscribers, announced its unaudited consolidated results for the first quarter ended March 31, 2005. The attached results have been prepared in accordance with Mexican GAAP in constant Mexican pesos in purchasing power as of March 31, 2005. SUBSCRIBER BASE The number of gross active subscribers increased --------------- to 1,107,500 (including 63,400 commercial subscribers) as of March 31, 2005. This represents a 25.0% net increase from 886,100 (including 50,200 commercial subscribers) as of March 31, 2004, or an increase of approximately 221,400 gross active subscribers. We believe the increase in the subscriber base was primarily due to: a) the sustained growth in customer activations in response to our marketing campaigns, the high quality and variety of our programming content, our unique exclusive events, and the high quality of our customer service, and b) new subscribers from DirecTV Mexico who have elected to change to our DTH service. The increase in our subscriber base was partially offset by subscriber cancellations. Nevertheless, we experienced a decline in the annual rate of subscriber cancellations as of March 31, 2005 as compared to the prior year. PROGRAMMING CONTENT During the first quarter of 2005, Sky continued to ------------------- enhance its programming content, by offering the following programs and exclusive events: o Pay-TV exclusive broadcast of certain soccer matches of the Mexican 2005 Closing Soccer Tournament; o Big Brother 3-R, a successful 24-hour live reality show; o Broadcast of certain soccer matches of the "Copa Libertadores" Tournament; o Pay-TV exclusive broadcast of the US PGA and Champions Tour Golf Tournaments; o Launching of Discovery Home & Health channel; o Pay-TV exclusive broadcast of certain boxing matches, such as those of Erick "Terrible" Morales and Jose Luis Castillo, and o Pay-TV exclusive broadcast of the NASCAR Nextel Cup Series. PRICE AND PROMOTIONS Innova's installation fee is Ps. 799. However, -------------------- under our current subscription promotion, the installation fee is Ps.199 or Ps. 699 for those residential subscribers who agree to pay the monthly programming fee via automatic charge to a credit card or a debit card, respectively. We continue our efforts to improve the quality of our subscriber base and the collection of subscriber fees by, among other things, encouraging new and current subscribers to pay monthly programming fees through an automatic charge to their credit or debit card. RECENT DEVELOPMENTS We have agreed to purchase certain rights of the ------------------- 2006 Soccer World Cup. Innova will be able to air the entire 64 games of the World Cup, out of which 34 will be exclusive for Sky subscribers. The cost of these rights is US$15 million. We believe this exclusive content represents an important competitive advantage and a driver in attracting and retaining subscribers. FINANCIAL REVIEW ---------------- FINANCIAL HIGHLIGHTS THREE MONTHS ENDED MARCH 31, 2005 AND 2004 STATEMENTS PREPARED UNDER MEXICAN GAAP (UNAUDITED) MILLIONS OF CONSTANT MEXICAN PESOS AS OF MARCH 31, 2005 THREE MONTHS ENDED MARCH 31, 2005 % Margin 2004 % Margin CHANGE % Net Revenues 1,304 100 1,141 100 163 14 Cost of Sales 387 30 336 29 51 15 ------ ------ ------ Gross Profit 917 70 805 71 112 14 Selling 291 22 246 22 45 18 Operations 82 6 121 11 (39) (32) Administrative 34 3 34 3 (0) (0) ------ ------ ------ Total Expenses 407 31 401 35 6 1 ------ ------ ------ EBITDA (1) 510 (39) 404 (35) 106 (26) EBIT (2) 320 (25) 205 18 115 (56) (1) EBITDA is defined as operating income before integral cost of financing, taxes, depreciation and amortization. (2) EBIT is defined as operating income before integral cost of financing and taxes. NET REVENUES Net revenues of Ps. 1,303.5 million for the three months ended March 31, 2005, increased by Ps. 162.5 million or 14.2% as compared to the same period of the prior year, primarily due to the sustained growth of our subscriber base. COST OF SERVICES AND SALES Cost of services and sales increased by Ps. 50.5 million or 15.0% to Ps. 386.6 million for the three months ended March 31, 2005, as compared to the same period of the prior year. This increase was primarily due to higher programming costs associated with our larger subscriber base and increased costs related to our higher number of activations. OPERATING EXPENSES Total expenses of Ps. 407.1 million for the three months ended March 31, 2005, slightly increased by Ps. 6.2 million or 1.6% as compared to the same period of the prior year, primarily due to more free special events offered to our subscribers and higher promotions and direct sales cost in order to attract and activate more subscribers. These expenses were offset by reductions in call center costs and lower repair costs of setup boxes. EBITDA EBITDA of Ps. 509.8 million for the three months ended March 31, 2005, improved by Ps. 105.8 million or 26.2%, as compared to the same period of 2004, primarily due to higher revenues, which were partially offset by higher cost of services and sales and operating expenses, as described above. As a result, EBITDA margin increased from 35.4% for the first quarter of 2004 to 39.1% for the first quarter of 2005. EBIT OPERATING INCOME EBIT improved by Ps. 114.7 million or 56.0% to Ps. 319.6 million for the three months ended March 31, 2005, as compared to Ps. 204.9 million during the same period of 2004. As a result, EBIT margin increased to 24.5% in the first quarter of 2005 as compared to 18.0% in the first quarter of 2004. NET INCOME Innova reported a net income of Ps. 204.3 million for the three months ended March 31, 2005, as compared to Ps. 153.4 million for the same period of 2004. This improvement was primarily due to higher operating income as explained above and the decrease of our interest expenses from Ps. 197.5 million in the first quarter of 2004 to Ps. 157.0 million in the first quarter of 2005, due to the savings generated by the refinancing of our debt. These savings were partially offset by the unfavorable foreign exchange result, from a net gain of Ps. 44.2 million in the first quarter of 2004 to a net loss of Ps. (11.1) million in the first quarter of 2005. Future devaluations of the peso will likely affect our liquidity and results of operations, due to the fact that our indebtedness, operating costs and expenses are primarily U.S. dollar-denominated, while our revenues are primarily peso-denominated. Any decrease in the value of the peso against the U.S. dollar could cause us to incur foreign exchange losses, which would reduce our net income. INNOVA, S. DE R.L. DE C.V., is a joint venture indirectly owned by Grupo Televisa, S.A., a Mexican corporation ("Televisa"), News Corporation, a Delaware corporation ("News Corporation"), and Liberty Media International Inc., a Delaware corporation. For more information, please visit www.sky.com.mx. GRUPO TELEVISA S.A., is the largest media company in the Spanish-speaking world, and a major participant in the international entertainment business. It has interests in television production and broadcasting, production of pay television networks, international distribution of television programming, direct-to-home satellite services, publishing and publishing distribution, cable television, radio production and broadcasting, professional sports and live entertainment, feature film production and distribution, and the operation of a horizontal Internet portal. Grupo Televisa also owns an unconsolidated equity stake in Univision, the leading Spanish-language media company in the United States. For more information, please visit www.televisa.com. NEWS CORPORATION, is a diversified international media and entertainment company with operations in seven industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, the United Kingdom, Australia, Asia and the Pacific Basin. For more information, please visit www.newscorp.com. LIBERTY MEDIA INTERNATIONAL, INC. owns interests in broadband distribution and content companies operating outside the U.S., principally in Europe, Asia and Latin America. For more information, please visit www.libertymediainternational.com. This press release contains forward-looking statements regarding Innova's results and prospects. Actual results could differ materially from these statements. The forward-looking statements in this press release, including, but not limited to, statements regarding our subscriber base, our programming and pricing plans, and the impact of changes to foreign currency exchange rates should be read in conjunction with the factors described in "Item 3. Risk Factors" in the Company's Annual Report on Form 20-F, which among others, could cause actual results to differ materially from those contained in any oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Contacts: CARLOS FERREIRO Chief Financial Officer Innova, S. de R.L. de C.V. Insurgentes Sur No.694 Col. del Valle Mexico City, 03100 (5255) 5448-4131 cferreiro@sky.com.mx -------------------- JUAN CARLOS MUNOZ Investor Relations Innova, S. de R.L. de C.V. (5255) 5448-4000 ext.6658 jmunoz@sky.com.mx ----------------- INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 STATEMENTS PREPARED UNDER MEXICAN GAAP (THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF MARCH 31, 2005) THREE MONTHS ENDED MARCH 31, 2005 2004 ---------------- -------------- NET REVENUES PS. 1,303,490 PS. 1,141,014 COST OF SERVICES AND SALES 386,621 336,144 ---------------- -------------- GROSS PROFIT 916,869 804,870 ---------------- -------------- OPERATING EXPENSES: Selling 291,322 245,931 Operations 81,562 120,584 Administrative 34,195 34,326 ---------------- -------------- 407,079 400,841 ---------------- -------------- EBITDA 509,790 404,029 DEPRECIATION AND AMORTIZATION 190,152 199,168 ---------------- -------------- OPERATING INCOME - EBIT 319,638 204,861 ---------------- -------------- INTEGRAL COST OF FINANCING: Interest expense 157,024 197,507 Interest income (8,440) (3,687) Foreign exchange loss (gain) - net 11,113 (44,245) Gain from monetary position (39,286) (99,613) ---------------- -------------- 120,411 49,962 ---------------- -------------- Special items & other expense - net (5,110) 1,269 ---------------- -------------- INCOME BEFORE TAXES AND MINORITY INTEREST 204,337 153,630 Provision for income and assets tax 51 51 Minority interest (57) 181 ---------------- -------------- NET INCOME PS. 204,343 PS. 153,398 ================ ============== INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2005 AND DECEMBER 31, 2004 (UNAUDITED) Statements prepared under Mexican GAAP (Thousands of Mexican Pesos in purchasing power as of March 31, 2005)

~~THREE~~March ~~MONTHS ENDED DECEMBER~~ 31, ~~TWELVE~~2005 ~~MONTHS~~December ~~ENDED DECEMBER~~ 31, 2004 ~~2003 2004 2003~~ ---------------- -------------- --------------- ------------~~----~~ ~~NET~~ASSETS ~~REVENUES~~Cash and cash equivalents PS. 1,~~239~~017,~~140~~988 PS. 1,~~050~~710,~~970~~179 ~~PS.~~Trade ~~4,769,027~~accounts ~~PS.~~receivable 4225,~~019~~951 163,~~065~~744 ~~COST~~Spare OFparts ~~SERVICES~~15,624 ~~AND~~16,881 ~~SALES~~Prepaid ~~370,473~~expenses ~~324,672~~and 1other 119,~~394,507~~858 1141,~~241,478~~683 ---------------- --~~------------~~ --------------- ---~~-------------~~ ~~GROSS~~TOTAL ~~PROFIT~~CURRENT ~~868,667~~ASSETS ~~726~~1,~~298 3~~379,~~374,520~~421 2,~~777~~032,~~587~~487 ~~----------------~~PROPERTY ~~--------------~~AND ~~---------------~~EQUIPMENT -~~---------------~~ ~~OPERATING~~NET ~~EXPENSES: Selling 211~~1,~~156 215~~657,~~339~~080 ~~977~~1,~~350 892~~499,~~395~~570 ~~Operations~~PAS ~~156,131~~- ~~134,103~~9 ~~525~~SATELLITE-NET 1,~~168~~169,658 ~~500~~1,~~356~~189,288 ~~Administrative~~OTHER ~~33,435~~NON-CURRENT ~~40,269~~ASSETS ~~132~~- NET 41,~~554~~540 ~~131~~41,~~485~~826 ---------------- --~~------------~~ --------------- ---~~-------------~~ ~~400,722~~TOTAL ~~389,711~~ASSETS 1PS. 4,~~635~~247,~~072~~699 1PS. 4,~~524~~763,~~236~~171 ~~----------------~~================== ~~--------------~~================== ~~---------------~~LIABILITIES Senior Notes due 2007 PS. -~~---------------~~ ~~EBITDA~~PS. ~~467~~988,~~945~~852 ~~336~~Trade accounts payable and accruals 597,~~587~~084 1414,~~739~~153 PanAmSat Pas-9 72,~~448~~862 171,~~253,351~~301 ~~DEPRECIATION~~Due ~~AND~~to ~~AMORTIZATION~~affiliated companies and other related parties 339,957 186,~~158~~197 ~~208~~Accrued interest 18,~~357~~091 ~~764~~126,~~499~~772 ~~850~~Accrued taxes 157,~~602~~720 118,440 Deferred income - Pre-billed and pre-collected services 193,240 153,615 ------------- -----~~---------~~ --------------- ---~~-------------~~ ~~OPERATING~~TOTAL ~~INCOME~~CURRENT -LIABILITIES ~~EBIT 281~~1,~~787 128~~378,~~230~~954 ~~974~~2,~~949 402~~059,~~749~~330 ---------------- --~~------------~~ --------------- ---~~-------------~~ ~~INTEGRAL~~Senior ~~COST~~Notes OFdue ~~FINANCING:~~2013 ~~Interest expense 148~~3,~~632 175~~347,~~729~~700 ~~672~~3,~~973 987~~371,~~637~~086 ~~Interest~~Bank ~~income~~Loans (71,~~240) (2~~012,~~340)~~000 ~~(18~~1,~~678) (15~~019,~~958)~~984 ~~Foreign~~Seniority ~~exchange~~premiums ~~(gain) loss - net (24~~7,~~612)~~045 ~~115~~2,~~748~~198 ~~41,329~~PanAmSat ~~618,267~~Pas-9 ~~Gain from monetary position (113~~1,~~698) (105~~306,~~781)~~799 ~~(308~~1,~~289) (331~~335,~~661)~~065 ---------------- -- ------------ ------~~---------~~ TOTAL NON-~~---------------~~CURRENT ~~3,082~~LIABILITIES ~~183~~5,~~356 387~~673,~~335~~544 15,~~258~~728,~~285~~333 ---------------- --~~------------~~ --------------- ---~~-------------~~ ~~Special~~TOTAL ~~items~~LIABILITIES ~~& other expense - net 9~~7,~~974 147~~052,~~725~~498 107,~~958 108~~787,~~786~~663 ---------------- --~~------------~~ --------------- ---~~-------------~~ ~~INCOME~~EQUITY ~~(LOSS)~~OWNERS' ~~BEFORE~~DEFICIT ~~TAXES~~Social ~~AND~~Parts ~~MINORITY INTEREST 268~~6,~~731~~701,510 ~~(202~~6,~~851)~~701,510 ~~576~~Additional paid-in capital 181,~~656~~202 ~~(964~~181,~~322)~~202 ~~Provision~~Accumulated ~~for~~loss (~~benefit~~9,953,231) ~~from~~(10,534,064) Net income ~~and~~for ~~assets~~the ~~tax~~period 49204,343 2580,~~085~~833 ~~198~~Excess ~~(123,126)~~from ~~Minority~~restatement-Inflationary ~~interest~~effects ~~322~~on ~~(252)~~Balance ~~171~~Sheet (161,~~087)~~377 46,027 ------------------ ------------------ TOTAL EQUITY OWNERS' DEFICIT (2,804,799) (3,024,492) ------------------ ------------------ ~~NET~~TOTAL ~~INCOME~~LIABILITIES ~~(LOSS)~~AND ~~PS.~~EQUITY ~~268,360~~OWNERS' ~~PS.~~DEFICIT ~~(204,684) PS~~Ps. ~~576~~4,~~287~~247,699 PSPs. ~~(840~~4,~~109)~~763,171 ================ ==~~============~~ =============== ===~~=============~~

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