-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IaEEQriu4J5lYNTDz14R+K8BLNWWDC4nkbR4YFOrddBwb/TJsuNS4OdFqU6b+zLW Wm67mryvEBo4Su6iaHHGWQ== 0000895345-06-000453.txt : 20060428 0000895345-06-000453.hdr.sgml : 20060428 20060428165611 ACCESSION NUMBER: 0000895345-06-000453 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060428 FILED AS OF DATE: 20060428 DATE AS OF CHANGE: 20060428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INNOVA S DE RL CENTRAL INDEX KEY: 0001044884 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-07484 FILM NUMBER: 06790906 BUSINESS ADDRESS: STREET 1: INSURGENTES SUR 694 STREET 2: PISO 8 COL DEL VALLE 03100 CITY: MEXICO STATE: O5 BUSINESS PHONE: 5254484000 6-K 1 av6k5.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, 2006 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 28, 2006 By /s/ Carlos Ferreiro Rivas ------------------------- Name: Carlos Ferreiro Rivas Title: Chief Financial Officer [GRAPHIC OMITTED][GRAPHIC OMITTED] FOR IMMEDIATE RELEASE INNOVA, S. de R.L. de C.V. REPORTS FIRST QUARTER 2006 RESULTS SUBSCRIBER BASE GROWS TO 1,315,100 The number of gross active subscribers increased 18.7% to 1,315,100 as of March 31, 2006 from 1,107,500 as of March 31, 2005. NET REVENUES INCREASED 27.3% NET REVENUES for the first quarter of 2006 increased 27.3% to Ps. 1,715.8 million from Ps. 1,348.0 million for the same period of the prior year. OIBDA INCREASED 48.3% TO PS. 782.0 MM OIBDA for the first quarter of 2006 increased 48.3% to Ps. 782.0 million from Ps. 527.2 million for the same period of the prior year. OIBDA margin reached a record of 45.6% versus 39.1% in the first quarter of last year. DEBT REFINANCING 96.25% of Innova's US$300 million Senior Notes due 2013 were tendered. Funding from two peso Bank loans and cash on hand will be used to pay for the tender. FIRST QUARTER 2006 [COMPANY LOGO OMITTED] Mexico City, April 27, 2006. 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, 2006. The attached results have been prepared in accordance with Mexican GAAP in constant Mexican pesos in purchasing power as of March 31, 2006. SUBSCRIBER BASE The number of gross active subscribers increased to 1,315,100 (including 73,600 commercial subscribers) as of March 31, 2006. This represents an 18.7% increase from 1,107,500 (including 63,400 commercial subscribers) as of March 31, 2005, or an increase of 207,600 gross active subscribers. We believe the increase in our subscriber base was primarily due to the sustained growth in customer activations in response to our marketing campaigns, our high quality content, our unique exclusive events and our customer 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, 2006 as compared to the prior year. Gross Active Subscribers [Bar Graph Omitted] 857k 1,003k 1,251k 1,315k Dec 03 Dec 04 Dec 05 Mar 06 PROGRAMMING CONTENT During the first quarter of 2006, Sky continued to enhance its programming content, by offering the following content and exclusive events: o Pay-TV exclusive broadcast of certain soccer matches of the Mexican 2006 Closing Soccer Tournament; o Pay-TV exclusive broadcast of the US PGA and Champions Tour Golf Tournaments; o Transmission of certain matches of the Mexican Baseball League; o Pay-TV exclusive broadcast of certain boxing matches, such as those of "Terrible" Morales, D. Corrales, JL Castillo, J. Arce and M. Pacquiao; o Transmission of certain of the semi-finals and final matches of the ATP 2006 International Tennis Tournament; o Launching of SKY ONE, an exclusive channel for special events such as the reality show "Cantando por un Sueno", and o Launching of TCM and MGM (movie channels), Hustler TV (adult oriented channel), MTV Hits and MTV Jams (music videos channels) and Nick GaS (kids channel). PRICE AND PROMOTIONS [GRAPHIC OMITTED] Innova's installation fee is Ps. 1,199. However, under our current subscription promotion, the installation fee is Ps. 199 or Ps. 899 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. FINANCIAL REVIEW FINANCIAL HIGHLIGHTS THREE MONTHS ENDED MARCH 31, 2006 AND 2005 STATEMENTS PREPARED UNDER MEXICAN GAAP (UNAUDITED) Millions of constant Mexican Pesos as of March 31, 2006
Three Months Ended March 31 ------------------------------------------------------------------ 2006 % Margin 2005 % Margin Change % NET REVENUES 1,716 100 1,348 100 368 27 Cost of Sales 424 25 400 30 24 6 ----- ----- --- Gross Profit 1,292 75 948 70 344 36 Selling 336 20 301 22 35 12 Operations 138 8 85 6 53 62 Administrative 36 2 35 3 1 3 ----- ----- --- Total Expenses 510 30 421 31 89 21 ----- ----- --- OIBDA (1) 782 46 527 39 255 48 Operating Income 525 31 331 25 194 59 (1) OIBDA is defined as operating income before depreciation and amortization.
NET REVENUES Net revenues of Ps. 1,715.8 million for the three months ended March 31, 2006, increased by Ps. 367.8 million or 27.3% as compared to the same period of the prior year due to the sustained growth of our subscriber base. COST OF SERVICES AND SALES Cost of services and sales increased by Ps. 24.0 million or 6.0% to Ps. 423.8 million for the three months ended March 31, 2006 as compared to the same period of the prior year. This increase was primarily due to higher programming and other costs associated with our larger subscriber base as well as to the negative impact of the peso depreciation against the US dollar, partially offset by lower uplink and downlink costs. OPERATING EXPENSES Total expenses of Ps. 510.0 million for the three months ended March 31, 2006, increased by Ps. 89.0 million or 21.1% as compared to the same period of the prior year. This variance was primarily due to repair of equipment cost related to the hurricane season and the smart card changeover process closing expenses. In addition free special events, marketing, call center and collection expenses also experienced an increase mainly due to our larger subscriber base. OIBDA OIBDA of Ps. 782.0 million for the three months ended March 31, 2006, improved by Ps. 254.8 million or 48.3%, as compared to the same period of 2005, primarily due to higher revenues partially offset by higher cost of services and sales and operating expenses, as described above. As a result, OIBDA margin increased from 39.1% for the first quarter of 2005 to 45.6% for the first quarter of 2006. OPERATING INCOME Operating income improved by Ps. 194.5 million or 58.9% to Ps. 525.0 million for the three months ended March 31, 2006, as compared to Ps. 330.5 million during the same period of 2005. As a result, operating income margin increased to 30.6% in the first quarter of 2006 as compared to 24.5% in the first quarter of 2005. NET INCOME Innova reported a net income of Ps. 180.7 million for the three months ended March 31, 2006, as compared to Ps. 211.3 million for the same period of 2005. This decrease was primarily due to the negative impact for the application of Mexican GAAP Bulletin D-4, in connection with Innova's expected taxable income position for the coming years, which is similar to FASB-109 "Accounting for Income Taxes"; as well as higher foreign exchange losses due to the negative impact of the peso depreciation against the US dollar, partially offset by lower interest expenses. The 2.6% peso depreciation versus the U.S. dollar during the first quarter 2006 as compared to 0.1% peso depreciation versus the U.S. dollar during the first quarter 2005, had a negative impact in our results as explained above. Nevertheless, future devaluations of the peso will likely affect our liquidity and results of operations, due to the fact that our indebtedness, capital expenditures, satellite and a portion of our operating costs and expenses are 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. CAPITAL EXPENDITURES (CAPEX) The attached table shows our CAPEX for the first quarter ended March 31, 2006 and 2005. The decrease in 2006 as compared to 2005 was mainly due to the migration of DTV subscribers as well as for the smart card changeover process that took place primarily during 2005. Million of U.S. Dollars ----------------------- 1Q ---------------------------- 2006 20.6 ---------------------------- 2005 28.7 RECENT DEVELOPMENTS DEBT REFINANCING On March 13, 2006 we launched a Cash Tender Offer to purchase up to 65% of Innova's US$300 million 9.375% Senior Notes due 2013 ("The Notes"). On April 10, 2006 we extended the settlement of such Tender Offer and also offered to purchase up to 100% of the Notes. As of April 25, 2006, 96.25% of the Notes have been tendered at a price of 112.329, which represents a total amount of US$324.3 million to be paid by the Company in connection with the Tender Offer on April 28, 2006. In order to pay for the above transaction, we have entered into two bank loans, both of them in Mexican pesos and guaranteed by Grupo Televisa: - ----------------------------------------------------------------------- BANK PS.MM RATE TENOR - ----------------------------------------------------------------------- Santander 1,400 8.98% 3 yr TIEE + 24 bps 10 yr 4-10 yr - ----------------------------------------------------------------------- Banamex 2,100 8.74% 10 yr - ----------------------------------------------------------------------- We will use cash on hand to repay the remaining amount of the transaction plus fees and expenses incurred in connection with the Tender Offer. With these transactions we have: a) Significantly reduced our foreign exchange exposure; b) Taken advantage of historical low peso interest rates, and c) Decreased our interest expense. EQUITY OWNERSHIP In April 2006 Grupo Televisa exercised its option to acquire two-thirds of the equity interest that DIRECTV acquired from Liberty Media. As a result, Innova's current equity is indirectly held by Televisa 58.7% and DIRECTV 41.3%. INNOVA, S. DE R.L. DE C.V., is a joint venture indirectly owned by Grupo Televisa, S.A., a Mexican corporation ("Televisa"), and The DIRECTV Group, Inc, a Delaware corporation ("DIRECTV"). 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. THE DIRECTV GROUP, INC. is a world-leading digital television service. DIRECTV is approximately 37 percent owned by News Corporation. For more information, please visit www.directv.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 Company's debt refinancing and equity ownership, 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 JUAN CARLOS MUNOZ Chief Financial Officer Head of Investor Relations Innova, S. de R.L. de C.V. Innova, S. de R.L. de C.V. Insurgentes Sur No.694 (5255) 5448-4000 ext.6642 Col. del Valle jmunoz@sky.com.mx Mexico City, 03100 (5255) 5448-4131 cferreiro@sky.com.mx
INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005 STATEMENTS PREPARED UNDER MEXICAN GAAP (THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF MARCH 31, 2006) Three months ended March 31, 2006 2005 ------------------------------------- NET REVENUES Ps. 1,715,786 Ps. 1,347,971 COST OF SERVICES AND SALES 423,815 399,814 ---------- --------- GROSS PROFIT 1,291,971 948,157 ---------- --------- OPERATING EXPENSES: Selling 335,642 301,264 Operations 138,815 84,345 Administrative 35,547 35,362 ---------- --------- 510,004 420,971 ---------- --------- OIBDA 781,967 527,186 DEPRECIATION AND AMORTIZATION 256,941 196,641 ---------- --------- OPERATING INCOME 525,026 330,545 ---------- --------- INTEGRAL COST OF FINANCING: Interest expense 141,726 162,383 Interest income (11,781) (8,728) Foreign exchange loss (gain) - net 79,514 11,492 Gain from monetary position (31,280) (40,627) ---------- --------- 178,179 124,520 ---------- --------- Special items & other expense - net - (5,284) ---------- --------- INCOME BEFORE TAXES AND MINORIRTY INTEREST 346,847 211,309 Provision for income tax 4 53 Income tax 166,084 - Minority interest 50 (60) ---------- --------- NET INCOME Ps. 180,709 Ps. 211,316 ---------- ---------
INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2005 AND MARCH 31, 2006 STATEMENTS PREPARED UNDER MEXICAN GAAP (THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF MARCH 31, 2006) March 31, 2006 December 31, 2005 (UNAUDITED) (AUDITED) --------------- ----------------- ASSETS Cash and cash equivalents Ps. 1,191,459 Ps. 841,330 Trade accounts receivable 270,885 126,490 Value added tax credit 67,955 - Spare parts 68,509 60,671 Prepaid expenses and other 163,763 217,159 ---------- --------- TOTAL CURRENT ASSETS 1,762,571 1,245,650 PROPERTY AND EQUIPMENT - NET 1,992,879 1,976,301 PAS - 9 SATELLITE-NET 1,056,642 1,063,548 OTHER NON-CURRENT ASSETS - NET 437,095 474,609 DEFERRED INCOME TAX 1,149,853 1,327,340 TOTAL ASSETS Ps. 6,399,040 Ps. 6,087,448 ---------- --------- LIABILITIES Trade accounts payable and accruals Ps. 668,683 Ps. 448,935 PanAmSat Pas-9 79,830 76,259 Due to affiliated companies and other related parties 166,643 907,899 Accrued interest 13,454 87,829 Accrued taxes 28,092 25,964 Deferred income - Pre-billed and pre-collected services 250,565 237,558 ---------- --------- TOTAL CURRENT LIABILITIES 1,207,267 1,784,444 ---------- --------- Senior notes due 2013 3,271,200 3,215,580 Televisa Loan 500,000 504,334 Seniority premiums 8,642 8,277 PanAmSat Pas-9 1,197,106 1,197,220 ---------- --------- TOTAL NON-CURRENT LIABILITIES 4,976,948 4,925,411 ---------- --------- TOTAL LIABILITIES 6,184,215 6,709,855 ---------- --------- EQUITY OWNERS' DEFICIT Social Parts 6,551,777 6,937,100 Additional paid-in capital 187,299 187,386 Accumulated loss (6,688,955) (10,292,881) Net income for the period 180,709 2,596,647 Excess from restatement-inflationary (16,005) (50,659) effects on Balance Sheet ---------- --------- TOTAL OWNERS' EQUITY (DEFICIT) 214,825 (622,407) ---------- --------- TOTAL LIABILITIES AND OWNERS' EQUITY (DEFICIT) Ps. 6,399,040 Ps. 6,087,448 ---------- ---------
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