UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October, 2003
GRUPO IUSACELL, S.A. de C.V.
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(Translation of registrant's name into English)
Prol. Paseo de la Reforma 1236
Col. Santa Fe, Deleg. Cuajimalpa
05438, Mexico D.F.
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(Address of principal executive office)
Indicate by check mark whether the registrant files or will fill annual reports
under cover of 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 thereby furnishing the information to the
Commission pursuant to Rule 12g-3-2(b) under the Securities and Exchange Act of
1934. Yes |X| No |_|
Documents Furnished By the Registrant
1. Press Release of the Registrant dated October 24, 2003
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRUPO IUSACELL, S.A. DE C.V.
Date: October 27, 2003 /s/ Jose Ignacio Morales Elcoro
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Name: Jose Ignacio Morales Elcoro
Title: Attorney in fact
/s/ Jorge Narvaez Mazzini
--------------------------------------
Name: Jorge Narvaez Mazzini
Title: Attorney in fact
2
[LOGO] IUSACELL Investor Contacts
Valora tu espacio Jose Luis Riera K.
Chief Financial Officer
011-5255-5109-5927
Carlos J. Moctezuma
Head of Investor Relations
011-5255-5109-5759
carlos.moctezuma@iusacell.com.mx
Third Quarter 2003 Results
Mexico City, October 24, 2003 - Grupo Iusacell, S.A. de C.V. (Iusacell or the
Company) [BMV: CEL, NYSE: CEL] today announced results for the third quarter
ended September 30, 20031.
Financial Results
Changes in accounting policies: In the third quarter of 2003 Iusacell conducted
a series of changes in its accounting policies. The changes are in accordance
with Mexican GAAP and in agreement with its independent auditors.
Iusacell decided to write-off some intangible assets in accordance with recently
released accounting pronouncements by the Mexican Accounting Institute, which
requires, among other things, intangible assets to produce measurable cash
flows. Consequently, the Company decided to amortize approximately $762 million
of other assets derived from preoperative and installation expenses related
mainly to PCS operations, and other differed charges.
The Company also decided to follow a more prudent approach in relation to
deferred income taxes. Since Iusacell cannot assure the recovery of some of its
tax loss carry forwards, $192 million of deferred income tax was cancelled, and
the effect is presented as an extraordinary item. Additionally, $164 million of
deferred expenses related to the original issuance of debt were also cancelled
as an extraordinary item in the quarter.
Iusacell is now expensing the postpaid handsets related costs rather than
amortizing it within the average life of the postpaid contracts. Consequently,
$157 million representing the balance of the 2003 amortization cost was expensed
in the quarter. Additionally, the charges applied retroactively to January 1,
2003, were reclassified from amortization to cost. This reclassification
impacted EBITDA for the quarter with an additional $223 million.
Resulting from the more conservative criteria regarding revenue recognition from
prepaid cards, the account of deferred liabilities (sale of services not yet
consumed) was updated by $80 million of deferred liabilities rather than
revenues.
After conducting a comprehensive review of the Company's assets during this
quarter, Iusacell decided to adjust the inventory of spare parts and some
network components, resulting in a $60 million increase in the provision for
obsolete equipment.
Operational change: As part of the operational streamlining and in order to
better focus on active customers, Iusacell reduced the period in which a prepaid
customer can receive incoming calls but cannot make outgoing calls from 305 and
275 days (depending on the amount of airtime previously charged) to 90 days.
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(1) Unless otherwise noted, all monetary figures are in Mexican pesos and
restated as of September 30, 2003 in accordance with Mexican GAAP. The
symbols "$" and "US$" refer to Mexican pesos and U.S. dollars,
respectively.
THIRD QUARTER 2003 RESULTS 3
This policy change identified approximately 437,000 existing prepaid customers
who have not utilized Iusacell's network services in an extended period of time.
These inactive accounts were turned over in an extraordinary subscribers
write-off. As of September 30, 2003 subscribers totaled 1.5 million.
Revenue in the quarter decreased 8% from the previous quarter and 21% from the
year ago period to $1,066 million, as a result of the update of deferred
liabilities, lower subscriber base and lower ARPUs.
Cost of sales in the third quarter of 2003 increased 99% from the year ago
period driven mainly by changes in accounting policies, from $457 million to
$912 million.
Operating expenses: sales and advertising expenses in the quarter declined
slightly year over year due primarily to fewer gross subscriber additions. As a
percentage of revenues, sales and advertising expenses increased from 24% to 31%
in the third quarter of 2003, resulting from lower revenues in the period.
EBITDA(2) was mainly affected by lower revenues as well as changes in accounting
policies during the quarter, ending with a negative $395 million for the period.
Depreciation and amortization expenses of $285 million in the third quarter of
2003 also were affected by the accounting adjustments particularly derived from
the reclassification of handset amortization as part of the cost.
Operating loss in the quarter increased from the $98 million recorded last year
to $680 million in the current quarter driven by the changes in accounting
policies and lower revenues.
Integral financing cost in the quarter ended with $658 million, compared to $440
million in the same quarter of last year. The result was mainly driven by a $500
million foreign exchange loss resulting from the 5% depreciation of the peso
against the U.S. dollar in the quarter. Interest expense increased $15 million
in the third quarter of 2003, compared to the same period of 2002 as a result of
the 11% peso depreciation in the twelve-month period ended September 30, 2003.
Net loss in the quarter of $2,510 million was the result of changes in
accounting policies and higher integral financing costs. This compares to a net
loss of $517 million in the year ago period.
Capital expenditures: Iusacell invested approximately US$6.5 million in its
regions during the third quarter of 2003 to expand coverage.
Debt: As of September 30, 2003, including trade notes payable and notes payable
to related parties, debt totaled US$811 million. All of the Company's debt is
U.S. dollar-denominated.
As previously communicated, most of the Company's financial debt is classified
as current in the Balance Sheet presented herein, in accordance with Mexican
GAAP.
* * * * * * * * * *
Legal Disclaimer
Grupo Iusacell, S.A. de C.V. quarterly reports and all other written materials
may from time to time contain statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties. For those statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Discussion of factors that may affect future
results is contained in our filings with the Securities and Exchange Commission.
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(2) This press release contains a reference to EBITDA and provides the
components of EBITDA on the face of the Consolidated Income Statement.
EBITDA is used by management for comparisons to other companies within our
industry as an alternative to GAAP measures and is used by investors and
analysts in evaluating performance. EBITDA, which is earnings before
interest, taxes, depreciation and amortization, is computed by adding back
net interest expense, income and asset tax expense, depreciation expense
and amortization expense to net income (loss) before minority interest and
loss of subsidiaries as reported. The Company presented a reconciliation
of EBITDA from net loss (see exhibit 1 herein). EBITDA should be
considered in addition to, but not as a substitute for other measures of
financial performance reported in accordance with Mexican GAAP. EBITDA, as
defined above, may not be comparable to similarly titled measures reported
by other companies.
THIRD QUARTER 2003 RESULTS 4
GRUPO IUSACELL CONSOLIDATED BALANCE SHEET
COMPARISON OF THIRD QUARTER 2003 WITH THIRD QUARTER 2002
(Figures in thousands of constant September 30, 2003 pesos)
------------------------------------------------------------------------------------------------------------------------------------
3Q03 3Q02 Change 3Q03
/3Q02
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ASSETS
Current Assets
Cash and marketable securities 71,133 0.6% 341,205 2.1% -79.2%
Accounts receivable, net 536,815 4.3% 725,181 4.5% -26.0%
Recoverable taxes and other 430,544 3.5% 383,276 2.4% 12.3%
Inventories 78,553 0.6% 130,965 0.8% -40.0%
TOTAL CURRENT ASSETS 1,117,045 9.0% 1,580,627 9.8% -29.3%
Property and equipment, net 8,299,887 66.5% 9,571,434 59.1% -13.3%
Goodwill, net 1,956,267 15.7% 2,176,961 13.4% -10.1%
Other assets 1,103,903 8.8% 2,856,905 17.7% -61.4%
TOTAL ASSETS 12,477,102 100.0% 16,185,927 100.0% -22.9%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued liabilities 1,097,467 8.8% 1,074,189 6.6% 2.2%
Accounts payable 506,517 4.1% 352,681 2.2% 43.6%
Short-term debt 8,567,907 68.7% 329,398 2.0% 2501.1%
TOTAL CURRENT LIABILITIES 10,171,891 81.5% 1,756,268 10.9% 479.2%
Non-current liabilities 264,054 2.1% 8,323,974 51.4% -96.8%
TOTAL LIABILITIES 10,435,945 83.6% 10,080,242 62.3% 3.5%
Minority interest -100,089 -0.8% 90,991 0.6% --
Shareholders' Equity
Capital stock 7,303,268 58.5% 7,303,268 45.1% --
Legal reserve 20,525 0.2% 20,525 0.1% --
Paid-in capital 1,437,144 11.5% 1,437,144 8.9% --
Net loss -3,336,632 -26.7% -1,594,947 -9.9% 109.2%
Accumulated earnings from prior years -3,495,962 -28.0% -1,364,199 -8.4% -156.3%
Excess from restatement of 212,903 1.7% 212,903 1.3% --
shareholders' equity
TOTAL SHAREHOLDERS' EQUITY 2,141,246 17.2% 6,014,694 37.2% -64.4%
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 12,477,102 100.0% 16,185,927 100.0% -22.9%
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THIRD QUARTER 2003 RESULTS 5
GRUPO IUSACELL CONSOLIDATED INCOME STATEMENT
COMPARISON OF THIRD QUARTER 2003 WITH THIRD QUARTER 2002
(Figures in thousands of constant September 30, 2003 pesos)
------------------------------------------------------------------------------------------------------------------------------------
3Q03 3Q02 Change 3Q03
/3Q02
------------------------------------------------------------------------------------------------------------------------------------
REVENUE
Service 954,522 89.5% 1,245,770 92.2% -23.4%
Equipment sales and other 111,955 10.5% 105,196 7.8% 6.4%
TOTAL REVENUE 1,066,477 100.0% 1,350,966 100.0% -21.1%
Cost of services 391,040 36.7% 376,601 27.9% 3.8%
Other costs 521,425 48.9% 80,341 5.9% 549.0%
TOTAL COSTS 912,465 85.6% 456,942 33.8% 99.7%
GROSS MARGIN 154,013 14.4% 894,024 66.2% -82.8%
Sales & Advertising expenses 328,642 30.8% 329,188 24.4% -0.2%
General and administrative expenses 220,150 20.6% 139,535 10.3% 57.8%
Other income 0.0% -68,028 -5.0% --
TOTAL OPERATING EXPENSES 548,792 51.5% 400,695 29.7% 37.0%
EBITDA -394,780 -37.0% 493,329 36.5% --
Depreciation and amortization 285,012 26.7% 591,358 43.8% -51.8%
OPERATING LOSS -679,792 -63.7% -98,029 -7.3% 593.5%
Other (income) expense 1,473 0.1% -54,253 -4.0% --
Interest expense, net 239,881 22.5% 224,855 16.6% 6.7%
Foreign exchange loss (gain) 500,441 46.9% 301,867 22.3% 65.8%
Monetary gain -82,369 -7.7% -86,776 -6.4% -5.1%
INTEGRAL FINANCING COST 657,953 61.7% 439,946 32.6% 49.6%
LOSS BEFORE TAXES AND
STATUTORY PROFIT SHARING COST -1,339,218 -125.6% -483,722 -35.8% 176.9%
Equity in income (losses) of subsidiaries 297 0.0% -372 0.0% --
Taxes 23,641 2.2% 26,372 2.0% -10.4%
Extraordinary items 355,824 33.4% -- 0.0% --
Intangible assets valuation 815,999 76.5% -- -- --
NET LOSS BEFORE
MINORITY INTEREST -2,534,979 -237.7% -509,722 -37.7% 397.3%
Minority interest -25,005 -2.3% 7,584 0.6% -429.7%
NET LOSS -2,509,974 -235.4% -517,306 -38.3% 385.2%
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THIRD QUARTER 2003 RESULTS 6
GRUPO IUSACELL CELULAR CONSOLIDATED BALANCE SHEET
COMPARISON OF THIRD QUARTER 2003 WITH THIRD QUARTER 2002
(Figures in thousands of constant September 30, 2003 pesos)
------------------------------------------------------------------------------------------------------------------------------------
3Q03 3Q02 Change 3Q03
/3Q02
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ASSETS
Current Assets
Cash and marketable securities 19,798 0.9% 49,644 0.5% -60.1%
Accounts receivable, net 499,407 4.0% 708,135 4.9% -29.5%
Related parties 100,624 0.7% 115,047 0.5% -12.5%
Recoverable taxes and other 431,503 4.5% 297,044 1.8% 45.3%
Inventories 78,553 0.4% 130,965 1.3% -40.0%
TOTAL CURRENT ASSETS 1,129,885 10.5% 1,300,835 9.0% -13.1%
Property and equipment, net 7,509,843 63.5% 8,795,828 63.2% -14.6%
Goodwill, net 1,770,640 14.6% 1,980,829 14.2% -10.6%
Other assets 709,278 11.4% 1,989,103 13.6% -64.3%
TOTAL ASSETS 11,119,646 100.0% 14,066,595 100.0% -20.9%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued liabilities 451,302 4.0% 986,274 4.9% -54.2%
Accounts payable 392,385 0.9% 251,975 1.8% 55.7%
Short-term debt 4,584,304 2.8% 176,230 1.2% 2501.3%
TOTAL CURRENT LIABILITIES 5,427,991 11.0% 1,414,479 9.0% 283.7%
Non-current liabilities 2,253 32.4% 4,359,602 30.0% -99.9%
TOTAL LIABILITIES 5,430,244 57.0% 5,774,081 67.0% -6.0%
Minority interest -131,651 0.0% 43,265 0.2% --
Shareholders' Equity
Capital stock 16,289,598 130.6% 16,289,598 114.0% --
Legal reserve 29,005 0.2% 29,005 0.2% --
Paid-in capital 100,369 0.8% 100,369 0.7% --
Net loss -2,162,413 -3.6% -819,457 -4.4% 163.9%
Accumulated earnings from prior years -7,716,779 -61.9% -6,631,539 -46.4% 16.4%
Excess from restatement of -718,727 -5.8% -718,727 -5.0% --
shareholders' equity
TOTAL SHAREHOLDERS'EQUITY 5,821,053 43.0% 8,249,249 32.0% -29.4%
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 11,119,646 100.0% 14,066,595 100.0% -20.9%
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THIRD QUARTER 2003 RESULTS 7
GRUPO IUSACELL CELULAR CONSOLIDATED INCOME STATEMENT
COMPARISON OF THIRD QUARTER 2003 WITH THIRD QUARTER 2002
(Figures in thousands of constant September 30, 2003 pesos)
-------------------------------------------------------------------------------------------------------------------------------
3Q03 3Q02 Change 3Q03
/3Q02
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REVENUE
Service 960,899 89.6% 1,262,174 92.3% -23.9%
Equipment sales and other 111,975 10.4% 105,550 7.7% 6.1%
TOTAL REVENUE 1,072,874 100.0% 1,367,724 100.0% -21.6%
Cost of services 398,180 37.1% 346,186 25.3% 15.0%
Other costs 521,425 48.6% 80,196 5.9% 550.2%
TOTAL COSTS 919,605 85.7% 426,382 31.2% 115.7%
GROSS MARGIN 153,269 14.3% 941,342 68.8% -83.7%
Sales & Advertising expenses 328,627 30.6% 328,780 24.0% 0.0%
General and administrative expenses 207,697 19.4% 135,484 9.9% 53.3%
Other income 0.0% -58,443 -4.3% --
TOTAL OPERATING EXPENSES 536,324 50.0% 405,821 29.7% 32.2%
EBITDA -383,055 -35.7% 535,521 39.2% --
Depreciation and amortization 305,211 28.4% 555,248 40.6% -45.0%
OPERATING LOSS -688,266 -64.2% -19,727 -1.4% 3389.0%
Other (income) expense 1,473 0.1% -54,253 -4.0% --
Interest expense, net 88,683 8.3% 87,306 6.4% 1.6%
Foreign exchange loss (gain) 247,776 23.1% 153,414 11.2% 61.5%
Monetary gain -36,387 -3.4% -43,861 -3.2% -17.0%
INTEGRAL FINANCING COST 300,072 28.0% 196,859 14.4% 52.4%
INCOME (LOSS) BEFORE TAXES AND
STATUTORY PROFIT SHARING COST -989,811 -92.3% -162,333 -11.9% 509.7%
Equity in income (losses) of subsidiaries -278 0.0% -192 0.0% 44.8%
Taxes 21,330 2.0% 26,372 1.9% -19.1%
Extraordinary items 114,792 10.7% -- 0.0% --
Intangible assets valuation 597,232 55.7% -- 0.0% --
NET LOSS BEFORE
MINORITY INTEREST -1,722,887 -160.6% -188,513 -13.8% 813.9%
Minority interest -15,283 -1.4% 9,208 0.7% --
NET LOSS -1,707,604 -159.2% -197,721 -14.5% 763.6%
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THIRD QUARTER 2003 RESULTS 8
Exhibit 1:
Reconciliation of EBITDA from net loss
(Figures in thousands of constant September 30, 2003 pesos)
3Q03 3Q02 9M03 9M02
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Net loss (2,509,975) (517,305) (3,336,632) (1,594,947)
plus (minus):
Other income 1,473 (68,488) (54,253)
Minority interest (25,005) 7,584 (31,389) (9,539)
Intangible assets valuation 815,999 815,999
Extraordinary items 355,824 (54,391) 355,824
Taxes 23,641 26,372 73,517 96,638
Equity in income (losses) of subsidiaries 297 (372) 17,342 9,686
Integral financing cost 657,954 439,945 1,072,614 1,144,379
Depreciation and amortization 285,012 591,358 1,538,469 1,809,294
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EBITDA as reported (394,780) 493,191 437,256 1,401,258
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THIRD QUARTER 2003 RESULTS 9