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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 February, 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: February 23, 2005 By /s/ Carlos Ferreiro Rivas
------------------------------------
Name: Carlos Ferreiro Rivas
Title: Chief Financial Officer
[GRAPHIC OMITTED] [SKY LOGO]
FOR IMMEDIATE RELEASE
- ---------------------
INNOVA, S. DE R.L. DE C.V.
REPORTS FOURTH QUARTER AND FULL YEAR 2004 RESULTS
- SKY REACHES 1 MILLION SUBSCRIBERS -
- NET REVENUES INCREASED 18.7% -
- EBITDA INCREASED 38.8% TO PS. 1,739.4 MM -
- EBITDA MARGIN INCREASED TO 36.5% -
- SKY ACHIEVES NET INCOME FOR THE FIRST TIME -
o The number of gross active SUBSCRIBERS increased 17.0% to 1,002,500 as
of December 31, 2004 from 856,600 as of December 31, 2003.
o REVENUES for 2004 increased 18.7% to Ps. 4,769.0 million from Ps.
4,019.1 million for the prior year.
o EBITDA for 2004 increased 38.8% to Ps. 1,739.4 million from Ps.
1,253.4 million in 2003.
o EBITDA MARGIN increased to 36.5% for 2004 from 31.2% in 2003, a
historical record for Innova.
o NET INCOME of Ps. 576.3 million for 2004.
Mexico City, February 22, 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 fourth quarter and full year ended December 31, 2004. The attached
results have been prepared in accordance with Mexican GAAP in constant
Mexican pesos in purchasing power as of December 31, 2004.
SUBSCRIBER BASE The number of gross active subscribers increased
- --------------- to 1,002,500 (including 60,700 commercial
subscribers) as of December 31, 2004. This
represents a 17.0% net increase from 856,600
(including 48,500 commercial subscribers) as of
December 31, 2003, or an increase of approximately
145,900 gross active subscribers.
On December 30, 2004 Sky reached the 1 million
subscriber target. We believe this important
achievement reinforces Sky's leadership in the
Mexican pay-TV market.
We believe the increase in the subscriber base was
primarily due to 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.
The increase in our subscriber base was partially
offset by subscriber cancellations. Nevertheless,
we experienced a decline in the rate of subscriber
cancellations as compared to the prior year.
PROGRAMMING CONTENT During the fourth quarter of 2004, 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 2004 Opening Soccer
Tournament;
o Pay-TV exclusive broadcast of the US PGA and
Champions Tour Golf Tournaments;
o Confianza Ciega, an exclusive 30-day live
reality show broadcast on a pay-TV exclusive
basis, 24 hours a day;
o Pay-TV broadcast of the NFL Sunday Ticket;
o Launching of VH1 to all subscribers;
o Launching of Universal Channel for premium
subscribers;
o Pay-TV exclusive broadcast of certain boxing
matches, such as those of "El Travieso" Arce,
and Erick "Terrible" Morales.
o Pay-TV exclusive broadcast of special events,
such as "Pavarotti in Veracruz" concert.
During 2005, Innova plans to continue
offering the highest quality content in the
Mexican pay-TV market by offering the
following exclusive content:
o Big Brother VIP3-R, a successful live reality
show to be broadcasted 24 hours a day;
o Broadcast of certain matches of the Mexican
Soccer Tournament;
o Broadcast of certain soccer matches of the
"Copa Libertadores" Tournament;
o Broadcast of the NFL Sunday Ticket;
o Transmission of certain matches of the
Mexican Baseball league;
o The US PGA Golf Tournament, and
o Boxing fights and special events.
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.
As part of reaching and celebrating our first
million subscribers, we launched the special "9
promotion" for all subscribers, which allowed them
to win several prizes, and which contributed to
our loyalty plan.
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 On December 10, 2004 Innova entered into a Ps.
- ------------------- 1,012 million, 7-year bank loan with a fixed
interest rate of 10.55% per annum and a five-year
grace period for principal. This loan is to be
paid in eight equal quarterly payments during 2010
and 2011. Interest payments are due on a monthly
basis. Grupo Televisa, S.A. and News Corporation
are guaranteeing this loan 51% - 49%,
respectively. The net proceeds from the loan were
used on January 7, 2005 to pay the remaining US$88
million principal amount of the 12 7/8% notes due
2007 plus accrued and unpaid interest.
FINANCIAL REVIEW
- ----------------
FINANCIAL HIGHLIGHTS
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
STATEMENTS PREPARED UNDER MEXICAN GAAP (UNAUDITED)
MILLION OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2004
THREE MONTHS ENDED DECEMBER 31,
------------------------------------------------------
2004 % Margin 2003 % Margin VAR %
Net Revenues 1,239 100 1,051 100 188 18
Cost of Sales 370 30 325 31 45 14
------ ------ ------
Gross Profit 869 70 726 69 143 20
Selling 211 17 215 20 (4) (2)
Operations 156 13 134 13 22 16
Administrative 34 3 40 4 (6) (15)
------ ------ ------
Total Expenses 401 32 389 37 12 3
------ ------ ------
EBITDA (1) 468 38 337 32 131 39
EBIT (2) 282 23 128 12 154 120
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------------------------
2004 % Margin 2003 % Margin VAR %
Net Revenues 4,769 100 4,019 100 750 19
Cost of Sales 1,395 29 1,242 31 153 12
------ ------ ------
Gross Profit 3,374 71 2,777 69 597 21
Selling 977 20 892 22 85 10
Operations 525 11 500 12 25 5
Administrative 133 3 132 3 1 1
------ ------ ------
Total Expenses 1,635 34 1,524 38 111 7
------ ------ ------
EBITDA (1) 1,739 36 1,253 31 486 39
EBIT (2) 975 20 403 10 572 142
(1) EBITDA is defined as operating income before depreciation and amortization.
(2) EBIT is defined as operating income before integral cost of financing and
taxes.
NET REVENUES Net revenues of Ps. 1,239.1 million for the three
months ended December 31, 2004, increased by Ps.
188.1 million or 17.9% as compared to the same
period of the prior year, primarily due to the
sustained growth of our subscriber base and the
fact that from January 1st, 2004 and going forward
we did not have to pay the 10% excise tax on
telecommunications services; therefore, we have
been able to retain a higher proportion of our
revenues, without any modification in prices to
our subscribers.
Net revenues of Ps. 4,769.0 million for the twelve
months ended December 31, 2004, increased by Ps.
749.9 million or 18.7% as compared to the prior
year, primarily due to the same reasons explained
above, together with additional pay-per-view
revenues during the 2004 year.
COST OF SERVICES
AND SALES Cost of services and sales increased by Ps. 45.8
million or 14.1% to Ps. 370.5 million for the
three months ended December 31, 2004, 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, partially offset by lower
translated peso amount for US dollars denominated
costs, resulting from the revaluation of the peso
against the US dollar.
Cost of services and sales increased by Ps.153.0
million or 12.3% to Ps. 1,394.5 million for the
twelve months ended December 31, 2004, as compared
to the prior year, primarily for the same reasons.
OPERATING EXPENSES Total expenses of Ps. 400.7 million for the three
months ended December 31, 2004, increased by Ps.
11.0 million or 2.8% as compared to the same
period of the prior year, primarily due to more
free special events offered to our subscribers.
Total expenses of Ps. 1,635.1 million for the
twelve months ended December 31, 2004, increased
by Ps. 110.9 million or 7.3%, as compared to the
prior year, primarily due to: a) more free special
events offered to our subscribers, b) higher
commission and promotion expenses as a result of
our marketing campaigns to activate new
subscribers, and c) higher call center cost due to
our subscriber base growth.
EBITDA EBITDA of Ps. 467.9 million for the three months
ended December 31, 2004, improved by Ps. 131.3
million or 39.0%, as compared to the same period
of 2003, 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
32.0% for the fourth quarter of 2003 to 37.8% for
the fourth quarter of 2004.
EBITDA of Ps. 1,739.4 million for the twelve
months ended December 31, 2004, improved by Ps.
486.0 million or 38.8%, as compared to the prior
year, primarily for the same reasons. As a result,
EBITDA margin increased to 36.5% for the twelve
months ended December 31, 2004, from 31.2% for the
same period of the prior year.
EBIT
OPERATING INCOME EBIT improved by Ps. 153.6 million or 119.8% to
Ps. 281.8 million for the three months ended
December 31, 2004, as compared to Ps. 128.2
million during the same period of 2003. As a
result, EBIT margin increased to 22.7% in the
fourth quarter of 2004 as compared to 12.2% in the
fourth quarter of 2003.
EBIT improved by Ps. 572.2 million or 142.1% to
Ps. 974.9 million for the twelve months ended
December 31, 2004, as compared to Ps. 402.7
million for the same period of the prior year. As
a result, EBIT margin increased to 20.4% for the
twelve months ended December 31, 2004 from 10.0%
for the same period of the prior year.
NET INCOME (LOSS) Innova reported a net income of Ps. 268.4 million
for the three months ended December 31, 2004, as
compared to a net loss of Ps. (204.7) million for
the same period of 2003. This improvement was
primarily due to: a) higher operating income as
explained above, b) the favorable foreign exchange
result, from a net loss of Ps. (115.7) million in
the fourth quarter of 2003 to a net gain of Ps.
24.6 million in the fourth quarter of 2004, c) the
decrease of our interest expenses from Ps. 175.7
million in the fourth quarter of 2003 to Ps. 148.6
million in the fourth quarter of 2004, and d)
lower special items due to various extraordinary
items affecting the fourth quarter of 2003, mainly
due to our debt restructuring as reported last
year.
Innova reported a net income of Ps. 576.3 million
for the twelve months ended December 31, 2004, as
compared to a net loss of Ps. (840.1) million for
the prior year. This improvement was mainly due to
higher operating income in the twelve months of
2004, combined with the 31.9% reduction in our
interest expenses and 93.3% reduction in the
foreign exchange loss.
The peso devaluation of 7.3% versus the U.S.
dollar during the year of 2003 as compared to a
0.7% peso revaluation versus the U.S. dollar
during the year of 2004, improved our results as
explained above.
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 player in the international entertainment business. It
has interests in television production and broadcasting, programming for
pay television, international distribution of television programming,
direct-to-home satellite services, publishing and publishing distribution,
cable television, radio production and broadcasting, professional sports
and show business promotions, feature film production and distribution, and
the operation of a horizontal Internet portal. Grupo Televisa also has an
unconsolidated equity stake in Univision, the leading Spanish-language
television 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 AND TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
STATEMENTS PREPARED UNDER MEXICAN GAAP
(THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF DECEMBER 31, 2004)
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
2004 2003 2004 2003
---------------- -------------- --------------- ----------------
NET REVENUES PS. 1,239,140 PS. 1,050,970 PS. 4,769,027 PS. 4,019,065
COST OF SERVICES AND SALES 370,473 324,672 1,394,507 1,241,478
---------------- -------------- --------------- ----------------
GROSS PROFIT 868,667 726,298 3,374,520 2,777,587
---------------- -------------- --------------- ----------------
OPERATING EXPENSES:
Selling 211,156 215,339 977,350 892,395
Operations 156,131 134,103 525,168 500,356
Administrative 33,435 40,269 132,554 131,485
---------------- -------------- --------------- ----------------
400,722 389,711 1,635,072 1,524,236
---------------- -------------- --------------- ----------------
EBITDA 467,945 336,587 1,739,448 1,253,351
DEPRECIATION AND AMORTIZATION 186,158 208,357 764,499 850,602
---------------- -------------- --------------- ----------------
OPERATING INCOME - EBIT 281,787 128,230 974,949 402,749
---------------- -------------- --------------- ----------------
INTEGRAL COST OF FINANCING:
Interest expense 148,632 175,729 672,973 987,637
Interest income (7,240) (2,340) (18,678) (15,958)
Foreign exchange (gain) loss - net (24,612) 115,748 41,329 618,267
Gain from monetary position (113,698) (105,781) (308,289) (331,661)
---------------- -------------- --------------- ----------------
3,082 183,356 387,335 1,258,285
---------------- -------------- --------------- ----------------
Special items & other expense - net 9,974 147,725 10,958 108,786
---------------- -------------- --------------- ----------------
INCOME (LOSS) BEFORE TAXES AND
MINORITY INTEREST 268,731 (202,851) 576,656 (964,322)
Provision for (benefit from)
income and assets tax 49 2,085 198 (123,126)
Minority interest 322 (252) 171 (1,087)
---------------- -------------- --------------- ----------------
NET INCOME (LOSS) PS. 268,360 PS. (204,684) PS. 576,287 PS. (840,109)
================ ============== =============== ================
INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003 (UNAUDITED)
Statements prepared under Mexican GAAP
(Thousands of Mexican Pesos in purchasing power as of December 31, 2004)
2004 2003
---- ----
ASSETS
Cash and cash equivalents PS. 1,696,793 PS. 519,189
Trade accounts receivable 162,462 124,308
Spare parts 16,749 10,602
Prepaid expenses and other 140,574 149,887
----------------- -----------------
TOTAL CURRENT ASSETS 2,016,578 803,986
PROPERTY AND EQUIPMENT - NET 1,487,833 1,453,016
PAS - 9 SATELLITE-NET 1,179,979 1,318,503
OTHER NON-CURRENT ASSETS - NET 41,499 71,446
----------------- -----------------
TOTAL ASSETS PS. 4,725,889 PS. 3,646,951
================= =================
LIABILITIES
Senior Exchange Notes due 2007 PS. 981,112 PS. -
Trade accounts payable and accruals 410,911 423,150
PanAmSat Pas-9 70,743 66,820
Due to affiliated companies and other related parties 184,740 438,332
Accrued interest 125,780 126,615
Accrued taxes 117,513 102,734
Deferred income - Pre-billed and pre-collected services 152,413 145,119
----------------- -----------------
TOTAL CURRENT LIABILITIES 2,043,212 1,302,770
----------------- -----------------
Senior Exchange Notes due 2013 3,344,700 3,542,300
Senior Exchange Notes due 2007 - 1,039,075
Bank Loans 1,012,000 -
Seniority premiums 2,181 1,726
PanAmSat Pas-9 1,324,615 1,477,795
----------------- -----------------
TOTAL NON-CURRENT LIABILITIES 5,683,496 6,060,896
----------------- -----------------
TOTAL LIABILITIES 7,726,708 7,363,666
----------------- -----------------
EQUITY OWNERS' DEFICIT
Social Parts 6,655,679 6,655,668
Additional paid-in capital 179,784 -
Accumulated loss (10,451,611) (9,611,502)
Income (loss) for the year 576,287 (840,109)
Excess from restatement-Inflationary effects on Balance Sheet 39,042 79,228
----------------- -----------------
TOTAL EQUITY OWNERS' DEFICIT (3,000,819) (3,716,715)
----------------- -----------------
TOTAL LIABILITIES AND EQUITY OWNERS' DEFICIT Ps. 4,725,889 Ps. 3,646,951
================= =================