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 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)

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 ================= =================

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