6-K 1 f6k_innova.txt FORM 6-K 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 October, 2004 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: October 25, 2004 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 THIRD QUARTER 2004 RESULTS - SUBSCRIBER BASE GROWS TO 942,500 - - NET REVENUES INCREASED 18.7% - - EBITDA INCREASED 37.2% TO PS. 423.2 MM - - EBITDA MARGIN INCREASED TO 36.4% - ------------------------------------------------------------------------------ o The number of gross active SUBSCRIBERS increased 14.1% to 942,500 as of September 30, 2004 from 826,100 as of September 30, 2003. o REVENUES for the third quarter of 2004 increased 18.7% to Ps. 1,162.0 million from Ps. 979.0 million for the same period of the prior year. o EBITDA for the third quarter of 2004 increased 37.2% to Ps. 423.2 million from Ps. 308.4 million for the same period of the prior year. o EBITDA MARGIN increased to 36.4% for the third quarter of 2004 from 31.5% for the same period of the prior year. ------------------------------------------------------------------------------ Mexico City, October 22, 2004. INNOVA, S. DE R.L. DE C.V., 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 third quarter and nine months ended September 30, 2004. The attached results have been prepared in accordance with Mexican GAAP in constant Mexican pesos in purchasing power as of September 30, 2004. SUBSCRIBER BASE The number of gross active subscribers increased --------------- to 942,500 (including 54,800 commercial subscribers) as of September 30, 2004. This represents a 14.1% increase from 826,100 (including 46,900 commercial subscribers) as of September 30, 2003, or an increase of approximately 116,400 gross active subscribers. 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. However, as expected during the third quarter, we experienced slower subscriber base growth as compared to the prior quarter mainly due to the seasonality of our business. The increase in our subscriber base during the third quarter was partially offset by subscriber cancellations. Nevertheless, we experienced a decline in the rate of subscriber cancellations as compared to the same period in the prior year. PROGRAMMING CONTENT During the third 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 "G Channel" an adult oriented channel; o Pay-TV broadcast of the US PGA and Champions Golf Tournaments; o An interactive mosaic channel of the Olympic Games at Athens; o Pay-TV exclusive broadcast of certain matches of the Mexican Baseball league; and o Pay-TV exclusive broadcast of certain boxing matches, such as those of "El Travieso" Arce, De la Hoya and "Terrible" Morales. PRICE AND PROMOTIONS Innova's installation fee is Ps. 799. However, -------------------- under our current subscription promotion, installation is available at no charge or for Ps. 299 for those residential subscribers who agree to pay the monthly programming fee via automatic charge to a credit card or a debit card, respectively. Innova is also currently offering a special promotion where the installation fee is for free for those residential subscribers who are currently subscribed to cable pay-TV providers, if they agree to subscribe to Sky and pay with credit card, or for Ps. 199 or Ps. 599 If they agree to pay with debit card or cash, respectively. We continue our efforts to improve the subscriber base quality and 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 STATEMENTS PREPARED UNDER MEXICAN GAAP (UNAUDITED) MILLION OF CONSTANT MEXICAN PESOS AS OF SEPTEMBER 30, 2004 THREE MONTHS ENDED SEPTEMBER 30, ------------------------------------------------- 2004 % Margin 2003 % Margin VAR % Net Revenues 1,162 100 979 100 183 19 Cost of Sales 326 28 295 30 31 11 ------ ------ ------ Gross Profit 836 72 684 70 152 22 Selling 248 21 209 21 39 19 Operations 132 11 137 14 (5) (4) Administrative 33 3 30 3 3 10 ------ ------ ------ Total Expenses 413 36 376 38 37 10 ------ ------ ------ EBITDA (1) 423 36 308 31 115 37 EBIT (2) 241 21 97 10 144 148 NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------------------- 2004 % Margin 2003 % Margin VAR % Net Revenues 3,469 100 2,915 100 554 19 Cost of Sales 1,006 29 900 31 106 12 ------ ------ ------ Gross Profit 2,463 71 2,015 69 448 22 Selling 753 22 665 23 88 13 Operations 363 10 360 12 3 1 Administrative 97 3 89 3 8 9 ------ ------ ------ Total Expenses 1,213 35 1,114 38 99 9 ------ ------ ------ EBITDA (1) 1,250 36 901 31 349 39 EBIT (2) 681 20 270 9 411 152 (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. 1,162.0 million for the three months ended September 30, 2004, increased by Ps. 183.0 million or 18.7% as compared to the same period of the prior year, primarily due to the sustained growth of our subscriber base and the elimination of the 10% excise tax on telecommunications services. Net revenues of Ps. 3,468.8 million for the nine months ended September 30, 2004, increased by Ps. 553.4 million or 19.0% as compared to the prior year, primarily for the same reasons. COST OF SERVICES AND SALES Cost of services and sales increased by Ps. 30.8 million or 10.4% to Ps. 325.8 million for the three months ended September 30, 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 higher US dollars denominated costs, resulting from the devaluation of the peso against the US dollar. Cost of services and sales increased by Ps.105.8 million or 11.8% to Ps. 1,006.3 million for the nine months ended September 30, 2004, as compared to the prior year, primarily due to: a) higher programming costs associated with our larger subscriber base, b) increased costs related to our higher number of activations and c) higher US dollars denominated costs, resulting from the devaluation of the peso against the US dollar. OPERATING EXPENSES Total expenses of Ps. 413.0 million for the three months ended September 30, 2004, increased by Ps. 37.4 million or 9.9% as compared to the same period of the prior year, primarily due to higher commission and promotion expenses as a result of our marketing campaigns to activate new subscribers and higher US dollars denominated expenses, resulting from the devaluation of the peso against the US dollar. Total expenses of Ps. 1,213.0 million for the nine months ended September 30, 2004, increased by Ps. 98.6 million or 8.8%, as compared to the prior year, primarily for the same reasons. EBITDA EBITDA of Ps. 423.2 million for the three months ended September 30, 2004, improved by Ps. 114.8 million or 37.2%, 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 31.5% for the third quarter of 2003 to 36.4% for the third quarter of 2004. EBITDA of Ps. 1,249.5 million for the nine months ended September 30, 2004, improved by Ps. 349.0 million or 38.8%, as compared to the same period of the prior year, primarily for the same reasons. As a result, EBITDA margin increased to 36.0% for the nine months ended September 30, 2004 from 30.9% for the same period of the prior year. EBIT OPERATING INCOME EBIT improved by Ps. 144.0 million or 149.1% to Ps. 240.6 million for the three months ended September 30, 2004, as compared to Ps. 96.6 million during the same period of 2003. As a result, EBIT margin increased to 20.7% in the third quarter of 2004 as compared to 9.9% in the third quarter of 2003. EBIT improved by Ps. 411.6 million or 152.7% to Ps. 681.2 million for the nine months ended September 30, 2004, as compared to Ps. 269.6 million for the same period for the prior year. NET INCOME (LOSS) Innova reported net income of Ps. 131.4 million for the three months ended September 30, 2004, as compared to a net loss of Ps. (405.1) 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. (507.5) million in the third quarter of 2003 to a net loss of Ps. (55.1) million in the third quarter of 2004, and c) the decrease of our interest expenses from Ps. 243.1 million in the third quarter of 2003 to Ps. 151.8 million in the third quarter of 2004. Innova reported net income of Ps. 302.6 million for the nine months ended September 30, 2004, as compared to a net loss of Ps. (624.2) million for the same period of the prior year. This improvement was mainly due to higher operating income in the first nine months of 2004, combined with the 35.4% reduction in our interest expenses and 86.9% reduction in the foreign exchange loss. The peso devaluation of 5.2% versus the U.S. dollar during the first nine months of 2003 as compared to a 1.5% peso devaluation versus the U.S. dollar during the first nine months of 2004, affected 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"), The News Corporation Limited, an Australian 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 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 NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 STATEMENTS PREPARED UNDER MEXICAN GAAP (THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF SEPTEMBER 30, 2004)

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2004 2003 2004 2003 ---------------- -------------- ~~ASSETS~~--------------- ~~Cash~~---------------- ~~and~~NET ~~cash~~REVENUES ~~equivalents~~ PS. ~~441~~1,~~626~~161,969 PS. ~~535~~979,~~954~~002 ~~Trade~~PS. ~~accounts receivable 157~~3,~~435 146~~468,~~338~~795 ~~Value~~PS. ~~added tax credit~~ 2,~~035 1~~915,~~603~~422 ~~Spare~~COST ~~parts~~OF ~~10,242~~SERVICES ~~13,435~~AND ~~Prepaid~~SALES ~~expenses~~325,828 ~~and~~294,955 ~~other 164~~1,~~139~~006,311 ~~153~~900,~~111~~536 ---------------- -------------- ~~TOTAL~~--------------- ~~CURRENT~~---------------- ~~ASSETS~~GROSS ~~775~~PROFIT 836,~~477~~141 ~~850~~684,~~441~~047 ~~PROPERTY AND EQUIPMENT - NET 1~~2,~~359~~462,~~584~~484 12,~~545~~014,~~749~~886 ~~PAS~~ - ~~9 SATELLITE~~-~~NET 1,232,148 1,326,209 OTHER NON~~-~~CURRENT~~------------- ~~ASSETS~~ -------------- ~~NET 65,700 94,468~~ --------------- ---------------- ~~TOTAL~~OPERATING ~~ASSETS~~EXPENSES: ~~PS.~~Selling 3247,~~432~~573 209,~~909~~227 ~~PS.~~752,933 3665,~~816,867~~040 ~~============~~Operations ~~=============~~132,266 ~~LIABILITIES~~136,693 ~~Trade~~362,650 ~~accounts~~359,753 ~~payable~~Administrative ~~and~~33,096 ~~accruals~~29,694 ~~PS.~~97,403 ~~414~~89,~~035~~597 ~~PS.~~---------------- ~~468,839~~-------------- ~~PanAmSat~~--------------- ~~Pas~~-9--------------- 65412,~~066~~935 51375,~~114~~614 ~~Due~~1,212,986 to1,114,390 ~~affiliated~~---------------- ~~companies~~-------------- ~~and~~--------------- ~~other~~---------------- ~~related~~EBITDA ~~parties 384~~423,~~385~~206 ~~356~~308,~~851~~433 ~~Accrued interest 28~~1,~~019~~249,498 ~~271~~900,~~603~~496 ~~Accrued~~DEPRECIATION ~~taxes~~AND ~~143~~AMORTIZATION 182,~~216~~617 ~~178~~211,~~999~~809 ~~Deferred~~568,332 ~~income~~630,848 - ~~Pre~~-~~billed~~-------------- ~~and pre~~-~~collected~~------------- ~~services 140,462 128,965~~ --------------- ---------------- ~~TOTAL~~OPERATING ~~CURRENT~~INCOME ~~LIABILITIES~~- 1EBIT 240,~~175~~589 96,~~183~~624 1681,~~456~~166 269,~~371~~648 ---------------- -------------- ~~Senior~~--------------- ~~Exchange~~---------------- ~~Notes~~INTEGRAL ~~due~~COST ~~2013~~OF ~~3,352,200~~FINANCING: -Interest ~~Senior~~expense ~~Exchange~~151,806 ~~Notes~~243,103 ~~due 2007 983~~515,~~312~~266 4797,~~218,218~~501 ~~Long-term~~Interest ~~loans~~income ~~from~~(4,681) ~~Stockholders~~(2,708) -(11,240) 3(13,~~485,934~~377) ~~Long-term~~Foreign ~~interest~~exchange onloss ~~Stockholders~~- ~~loans~~net -55,092 ~~817~~507,~~590~~546 ~~Seniority premiums 1~~64,~~791~~800 1493,~~398~~602 ~~PanAmSat~~Gain ~~Pas-9~~from 1monetary position (92,~~381~~529) (109,~~519~~237) 1(191,~~463~~224) (221,~~547~~872) ---------------- -------------- ~~TOTAL~~--------------- ~~NON~~-~~CURRENT~~--------------- ~~LIABILITIES~~109,688 5638,~~718~~704 377,~~822~~602 91,~~986~~055,~~687~~854 ---------------- -------------- ~~TOTAL LIABILITIES 6,894,005 11,443,058~~ --------------- ---------------- ~~STOCKHOLDERS'~~Special ~~DEFICIT~~Items ~~Capital~~& ~~stock~~other ~~6,423,975~~expense ~~2,018,382~~- ~~Accumulated~~net ~~loss~~(810) (1042,~~087,778~~468) 967 (938,~~271,035~~248) ~~Income~~---------------- -------------- --------------- ---------------- INCOME (~~loss~~LOSS) ~~for~~BEFORE ~~the~~TAXES ~~three-month~~131,711 ~~period~~(499,612) ~~146~~302,~~954~~597 (~~388~~747,~~458~~958) ~~Excess~~Provision for (benefit from) ~~restatement-Inflationary~~income ~~effects~~and onassets ~~Balance~~tax ~~Sheet~~47 55(93,~~753~~700) 14146 (122,~~920~~989) Minority interest 306 (819) (148) (819) ---------------- -------------- ~~TOTAL STOCKHOLDERS' DEFICIT (3,461,096) (7,626,191)~~ --------------- ---------------- ~~TOTAL~~NET ~~LIABILITIES~~INCOME ~~AND~~(LOSS) ~~STOCKHOLDERS'~~PS. ~~DEFICIT~~131,358 PsPS. 3(405,~~432~~093) PS. 302,~~909~~599 PsPS. 3(624,~~816,867~~150) ================ ============== =============== ================

INNOVA, S. DE R.L. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2004 AND 2003 (UNAUDITED) STATEMENTS PREPARED UNDER MEXICAN GAAP (THOUSANDS OF MEXICAN PESOS IN PURCHASING POWER AS OF SEPTEMBER 30, 2004)

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