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, 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
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(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: March 2, 2006 By /s/ Carlos Ferreiro Rivas
--------------------------------
Name: Carlos Ferreiro Rivas
Title: Chief Financial Officer
[SKY LOGO] FOR IMMEDIATE RELEASE
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INNOVA, S. DE R.L. DE C.V.
REPORTS FOURTH QUARTER AND
FULL YEAR 2005 RESULTS
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SUBSCRIBER BASE GROWS TO 1,250,600
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The number of gross active SUBSCRIBERS increased 24.7%
to 1,250,600 as of December 31, 2005 from 1,002,500 as
of December 31, 2004.
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NET REVENUES INCREASED 21.5%
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NET REVENUES for 2005 increased 21.5% to Ps. 5,986.5
million from Ps. 4,928.0 million for the prior year.
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OIBDA INCREASED 40.0% TO PS. 2,516.8 MM
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OIBDA for 2005 increased 40.0% to Ps. 2,516.8 million
from Ps. 1,797.4 million for 2004. OIBDA margin reached
a record of 42.0% in 2005 versus 36.5% in the prior
year.
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OWNERSHIP STRUCTURE
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Televisa and DIRECTV have become the only owners of
INNOVA'S EQUITY.
Mexico City, February 23, 2006. INNOVA, S. DE R.L. DE [GRAPHIC OMITTED]
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 twelve months ended December 31,
2005. The attached results have been prepared in
accordance with Mexican GAAP in constant Mexican pesos
in purchasing power as of December 31, 2005.
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SUBSCRIBER BASE
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The number of gross active subscribers increased to 1,250,600 (including
70,100 commercial subscribers) as of December 31, 2005. This represents a
24.7% increase from 1,002,500 (including 60,700 commercial subscribers) as
of December 31, 2004, or an increase of 248,100 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. In addition to the above, we also experienced growth,
during the first three quarters of the year, due to new subscribers coming
from DirecTV Mexico, who chose our 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 December 31, 2005 as compared to the prior
year.
[GRAPHIC OMITTED]
Gross Active Subscribers
1,251k
1,003k
857k
738k
Dec 02 Dec 03 Dec 04 Dec 05
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PROGRAMMING CONTENT
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[GRAPHICS OMITTED]
During the fourth quarter of 2005, 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 2005 Opening Soccer Tournament;
o Pay-TV exclusive broadcast of the NFL Sunday Ticket
2005;
o Pay-TV exclusive broadcast of the US PGA and
Champions Tour Golf Tournaments;
o Pay-TV exclusive broadcast of the NASCAR Nextel Cup
Series, and
o Pay-TV exclusive broadcast of certain boxing
matches, such as those of D. Corrales, JL Castillo
and J. Arce.
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PRICE AND PROMOTIONS
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[GRAPHIC OMITTED]
Innova's installation fee is currently Ps. 1,099.
However, under our current subscription promotion, the
installation fee is Ps. 199 or Ps. 799 for those
residential subscribers who agree to pay the monthly
programming fee via automatic charge to a credit card
or a debit card, respectively.
Effective from January 1, 2006 we increased the prices
of our services for approximately 3% weighted average.
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.
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FINANCIAL REVIEW
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FINANCIAL HIGHLIGHTS
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2005 AND 2004
STATEMENTS PREPARED UNDER MEXICAN GAAP (UNAUDITED)
Millions of constant Mexican Pesos as of December 31, 2005
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2005 % Margin 2004 % Margin CHANGE %
Net Revenues 1,558 100 1,280 100 278 22
Cost of Sales 377 24 383 30 (6) (1)
---- ---- ---
Gross Profit 1,181 76 898 70 283 32
Selling 311 20 218 17 93 43
Operations 133 9 161 13 (28) (17)
Administrative 50 3 35 3 15 44
--- --- ---
Total Expenses 494 32 414 32 80 19
---- ---- ---
OIBDA(1) 687 (44) 484 (38) 202 (42)
Operating Income 394 25 291 23 103 35
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(1) OIBDA is defined as operating income before depreciation and
amortization.
TWELVE MONTHS ENDED DECEMBER 31,
--------------------------------
2005 % Margin 2004 % Margin Change %
Net Revenues 5,987 100 4,928 100 1,059 21
Cost of Sales 1,622 27 1,441 29 181 13
------ ------ ----
Gross Profit 4,364 73 3,487 71 878 25
Selling 1,218 20 1,010 20 208 21
Operations 470 8 543 11 (73) (13)
Administrative 160 3 137 2 23 17
---- ---- ---
Total Expenses 1,848 31 1,690 33 158 9
------ ------ ----
OIBDA(1) 2,517 42 1,797 36 720 40
Operating Income 1,572 26 1,007 20 564 56
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(1) OIBDA is defined as operating income before depreciation and
amortization.
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NET REVENUES
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Net revenues of Ps. 1,558.1 million for the three months ended December 31,
2005, increased by Ps. 277.7 million or 21.7% as compared to the same
period of the prior year due to the sustained growth of our subscriber
base.
Net revenues of Ps. 5,986.5 million for the year ended December 31, 2005,
increased by Ps. 1,058.5 million or 21.5% as compared to the prior year,
primarily due to the sustained growth of our subscriber base and revenues
from pay-per-view events, primarily non-recurring sports events broadcasted
on an exclusive basis.
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COST OF SERVICES AND SALES
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Cost of services and sales decreased by Ps. 5.7 million or 1.5% to Ps.
377.1 million for the three months ended December 31, 2005 as compared to
the same period of the prior year. This decrease was primarily due to lower
uplink and downlink costs and lower pay-per-view cost as well as the
positive impact of the peso appreciation against the US dollar. This
decrease was partially offset by higher programming costs associated with
our larger subscriber base.
Cost of services and sales increased by Ps. 181.0 million or 12.6% to Ps.
1,622.0 million for the twelve months ended December 31, 2005, as compared
to the prior year, primarily due to higher programming costs associated
with our larger subscriber base, partially offset by lower uplink and
downlink costs as well as the positive impact of the peso appreciation
against the US dollar.
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OPERATING EXPENSES
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Total expenses of Ps. 494.5 million for the three months ended December 31,
2005, increased by Ps. 80.4 million or 19.4% as compared to the same period
of the prior year, primarily due to more free special events offered to our
subscribers and higher direct sales cost and promotions in order to attract
and activate more subscribers, as well as higher repair of equipment cost
due to a larger subscriber base and the impact of the hurricanes season.
Total expenses of Ps. 1,847.7 million for the year ended December 31, 2005,
increased by Ps. 158.1 million or 9.4%, as compared to the prior year,
primarily for the same reasons.
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OIBDA
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OIBDA of Ps. 686.5 million for the three months ended December 31, 2005,
improved by Ps. 203.0 million or 42.0%, as compared to the same period of
2004, primarily due to higher revenues and lower cost of services and
sales, partially offset by higher operating expenses, as described above.
As a result, OIBDA as a percentage of net revenues, or OIBDA margin,
increased from 37.8% for the fourth quarter of 2004 to 44.1% for the fourth
quarter of 2005.
OIBDA of Ps. 2,516.8 million for the twelve months ended December 31, 2005,
improved by Ps. 719.4 million or 40.0%, as compared to the prior year,
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 36.5% for 2004, to 42.0% for 2005.
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OPERATING INCOME
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Operating income improved by Ps. 102.7 million or 35.3% to Ps. 393.9
million for the three months ended December 31, 2005, as compared to Ps.
291.2 million during the same period of 2004. As a result, operating income
as a percentage of net revenues, or operating income margin, increased to
25.3% in the fourth quarter of 2005 as compared to 22.7% in the fourth
quarter of 2004.
Operating income improved by Ps. 564.4 million or 56.0% to Ps. 1,571.8
million for the twelve months ended December 31, 2005, as compared to Ps.
1,007.4 million for the same period in the prior year. As a result,
operating income margin increased to 26.3% for 2005 as compared to 20.4%
for 2004.
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NET INCOME
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Innova reported net income of Ps. 1,648.3 million for the three months
ended December 31, 2005, as compared to Ps. 277.3 million for the same
period of 2004. This improvement was due to a higher operating income as
explained above and the recognition of a benefit for Innova's cumulative
tax loss carryforwards as of December 31, 2005 (by reversing a related
valuation allowance recognized in prior years), in connection with Innova's
expected taxable income position for the coming years; in accordance with
Mexican GAAP Bulletin D-4, which is similar to FASB-109 "Accounting for
Income Taxes".
For the year ended December 31, 2005, Innova reported net income of Ps.
2,574.3 million, as compared to Ps. 595.5 million for the same period in
the prior year. This improvement was primarily due to: a) higher operating
income as explained above, b) the decrease of interest expenses from Ps.
695.4 million for 2004 to Ps. 668.6 million for 2005 mainly due to savings
generated by the refinancing of our debt, c) a favorable foreign exchange
result, from a net loss of Ps. (42.7) million for 2004 to a net gain of Ps.
75.6 million for 2005 and d) the positive impact for the application of
Bulletin D-4 as explained above.
The 4.7% peso appreciation versus the U.S. dollar during 2005 as compared
to a 0.7% peso appreciation versus the U.S. dollar during 2004, had a
positive 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.
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CAPITAL EXPENDITURES (CAPEX)
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The attached table shows our CAPEX for Million of U.S. Dollars
the fourth quarter and twelve months ------------------------
ended December 31, 2005 and 2004. The 4Q YTD
increase in 2005 as compared to 2004 was -----------------------------
mainly due to the migration of DIRECTV 2005 27.0 109.2
subscribers as well as for our smart -----------------------------
card changeover process. 2004 18.7 67.3
-----------------------------
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RECENT DEVELOPMENTS - OWNERSHIP STRUCTURE
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[GRAPHIC OMITTED] In February 2006, Innova and its partners
completed the previously disclosed
transactions by which affiliates of The
DIRECTV Group, Inc. (which is 34% owned by
News Corporation) acquired the direct and
indirect equity interests in Innova formerly
held by News Corporation and Liberty Media.
Accordingly, Televisa and DIRECTV currently
own 52.7% and 47.3%, respectively, of the
equity of Innova. In addition, Televisa has
the right to acquire two-thirds of the equity
interest that DIRECTV acquired from Liberty
Media.
If Televisa elects to acquire this interest,
then Televisa and DIRECTV would own 58.7% and
41.3%, respectively, of Innova's equity.
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 provider of digital multi-channel
television entertainment. DIRECTV is approximately 34% 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, the impact of changes in 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
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
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JUAN CARLOS MUNOZ
Head of Investor Relations
Innova, S. de R.L. de C.V.
(5255) 5448-4000 ext.6642
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, 2005 AND 2004
STATEMENTS PREPARED UNDER MEXICAN GAAP
(THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF DECEMBER 31, 2005)
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
2005 2004 2005 2004
----------------- ---------------- ------------------ ------------------
NET REVENUES PS. 1,558,140 PS. 1,280,432 PS. 5,986,529 PS. 4,927,964
COST OF SERVICES AND SALES 377,106 382,818 1,622,030 1,440,981
----------------- ---------------- ------------------ ------------------
GROSS PROFIT 1,181,034 897,614 4,364,499 3,486,983
----------------- ---------------- ------------------ ------------------
OPERATING EXPENSES:
Selling 311,265 218,193 1,217,560 1,009,922
Operations 133,568 161,335 470,273 542,671
Administrative 49,664 34,550 159,839 136,972
----------------- ---------------- ------------------ ------------------
494,497 414,078 1,847,672 1,689,565
----------------- ---------------- ------------------ ------------------
OIBDA 686,537 483,536 2,516,827 1,797,418
DEPRECIATION AND AMORTIZATION 292,684 192,362 945,012 789,978
----------------- ---------------- ------------------ ------------------
OPERATING INCOME 393,853 291,174 1,571,815 1,007,440
----------------- ---------------- ------------------ ------------------
INTEGRAL COST OF FINANCING:
Interest expense 199,502 153,584 668,615 695,400
Interest income (16,494) (7,481) (47,661) (19,300)
Foreign exchange loss (gain) - net (16,723) (25,431) (75,598) 42,708
Gain from monetary position (85,813) (117,486) (190,974) (318,563)
----------------- ---------------- ------------------ ------------------
80,472 3,186 354,382 400,245
----------------- ---------------- ------------------ ------------------
Special items & other expense - net (20,185) 10,306 (42,664) 11,323
----------------- ---------------- ------------------ ------------------
INCOME BEFORE TAXES AND
MINORITY INTEREST 333,566 277,682 1,260,097 595,872
Provision for income tax 899 51 918 205
Deffered income tax (income) (1,315,935) - (1,315,935) -
Minority interest 322 329 779 174
----------------- ---------------- ------------------ ------------------
NET INCOME PS. 1,648,280 PS. 277,302 PS. 2,574,335 PS. 595,493
================= ================ ================== ==================
INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2005 and DECEMBER 31, 2004
Statements prepared under Mexican GAAP
(Thousands of Mexican Pesos in purchasing power as of December 31, 2005)
December 31, 2005 December 31, 2004
(Audited) (Audited)
-------------------------- --------------------------
ASSETS
Cash and cash equivalents Ps. 834,101 Ps. 1,753,342
Trade accounts receivable 125,403 167,876
Spare parts 60,150 17,307
Prepaid expenses and other 215,293 145,259
----------------------- ----------------------
Total current assets 1,234,947 2,083,784
Property and equipment - net 1,959,320 1,537,419
Pas - 9 Satellite-net 1,054,409 1,219,304
Deferred income tax 1,315,935 -
Other non-current assets - net 470,531 42,882
----------------------- ----------------------
TOTAL ASSETS Ps. 6,035,142 Ps. 4,883,389
======================= ======================
LIABILITIES
Senior Notes due 2007 Ps. - Ps. 1,013,810
Trade accounts payable and accruals 445,078 424,605
PanAmSat Pas-9 75,604 73,101
Due to affiliated companies and other
related parties 900,098 190,897
Accrued interest 87,074 129,972
Accrued taxes 25,741 121,429
Deferred income - Pre-billed and
pre-collected services 235,517 157,492
----------------------- ----------------------
Total current liabilities 1,769,112 2,111,306
----------------------- ----------------------
Senior Notes due 2013 3,187,950 3,456,169
Bank Loans - 1,045,727
Televisa Loan 500,000 -
Seniority premiums 8,206 2,254
PanAmSat Pas-9 1,186,933 1,368,760
----------------------- ----------------------
Total non-current liabilities 4,883,089 5,872,910
----------------------- ----------------------
TOTAL LIABILITIES 6,652,201 7,984,216
----------------------- ----------------------
EQUITY OWNERS' DEFICIT
Social Parts 6,877,493 6,877,493
Additional paid-in capital 185,776 185,776
Accumulated loss (10,204,439) (10,799,932)
Net income for the period 2,574,335 595,493
Excess from restatement-Inflationary
effects on Balance Sheet (50,224) 40,343
----------------------- ----------------------
Total Equity Owners' deficit (617,059) (3,100,827)
----------------------- ----------------------
TOTAL LIABILITIES AND EQUITY OWNERS' DEFICIT Ps. 6,035,142 Ps. 4,883,389
======================= ======================