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 July, 2004
GRUPO IUSACELL, S.A. de C.V.
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(Translation of registrant's name into English)
Montes Urales 460
Col. Lomas de Chapultepec, Deleg. Miguel Hidalgo
11000, 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 |_| No |X|
Documents Furnished By the Registrant
1. Press Release of the Registrant dated July 23, 2004
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: July 26, 2004 /s/ Jose Luis Riera
------------------------------------
Name: Jose Luis Riera
Title: Attorney in fact
/s/ Fernando Cabrera
------------------------------------
Name: Fernando Cabrera
Title: Attorney in fact
[LOGO] IUSACELL Jose Luis Riera K.
Pensamos en it Chief Financial Officer
5255-5109-5927
J. Victor Ferrer
Finance Manager
5255-5109-5927
vferrer@iusacell.com.mx
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Second Quarter 2004 Results
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Mexico City, July 23, 2004 - Grupo Iusacell, S.A. de C.V. (Iusacell or the
Company) [BMV and NYSE: CEL] today announced unaudited financial results for the
second quarter ended June 30, 20041.
Financial Results
Revenue during the second quarter of 2004 decreased 4% from the previous quarter
to P$1,269 million due to lower handsets sales volume. Revenues for the quarter
increased 7% compared to the second quarter in 2003 mainly due to higher handset
sales volume, offset in part by a 3% decrease in service revenues due a
reduction in our rates to contend in the highly competitive Mexican market. As
of June 30, 2004, subscribers totaled approximately 1.3 million.
Cost of sales during the second quarter of 2004 decreased 18% from the previous
quarter to P$704 million due to lower handset sales volume. However, this item
increased 101% from the second quarter in 2003 mainly driven by the change in
our accounting policy adopted as of the third quarter of 2003 whereby we now
expense the postpaid handset-related costs rather than amortize them over the
average life of the postpaid contracts, and by higher costs related to higher
traffic.
Operating expenses increased 55% during the second quarter of 2004 as compared
to the first quarter of 2004, primarily due to other income of P$95 million
reflected in the first quarter of 2004 in connection to the sale of 46 towers to
American Tower Corporation. The increase was also due, to a lesser extent, i) to
an increase of 6% in sales and advertising expenses mainly driven by an increase
in temporary sales employees ii) an increase of 26% in general and
administrative expenses and iii) other loss related to sales of fixed assets of
P$5 million in the second quarter of 2004. Excluding the other income generated
by the sales of towers in the first quarter of 2004, the increase of the
operating expense would had been 11%.
Operating expenses decreased 5% in the second quarter of 2004 in comparison with
the second quarter of 2003 mainly due to higher sales and advertising expenses
of 3% and a reduction of 27% in administrative expenses as a result of the
implementation of cost reduction measures.
Operating income before depreciation and amortization decreased 18% to P$188
million from P$228 million in the previous quarter and also decreased 58% from
the second quarter in 2003, both decreases due to the reasons described above.
Excluding the other income generated by the sale of towers in the first quarter
of 2004 and the other loss from the sale of fixed assets during the second
quarter of 2004, our operating income before depreciation and amortization would
have increased 45% as compared to the previous quarter.
Depreciation and amortization decreased 25% in the second quarter of 2004 to
P$483 million compared with the second quarter of 2003 reflecting the Company's
decision, adopted during the third quarter of 2003, of expensing the postpaid
handset-related costs rather than amortizing them over the average life of the
postpaid contracts.
Operating loss in the second quarter of 2004 increased 10% to P$296 million
compared to the previous quarter and increased 48% from the second quarter in
2003, both as a result of the factors described above.
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1 Unless otherwise noted, all monetary figures are expressed in Mexican
pesos as of June 30, 2004 in accordance to Mexican GAAP. The symbols "P$"
and "US$" refer to Mexican pesos and U.S. dollars, respectively.
Integral financing cost during the second quarter of 2004 increased to P$605
million from P$22 million reflected during the previous quarter and an integral
financing gain of P$19 million during the same quarter of 2003. This result was
mainly driven by an exchange loss of P$357 million caused by the effect on the
Company's U.S. dollar-denominated indebtedness of the depreciation of the peso
compared with the dollar, and a monetary gain of P$1 million caused by the
effect on our net monetary position of a inflation experienced, both during the
second quarter of 2004.
Net loss during the quarter amounted to P$946 million. This compares to a net
loss of P$346 million in the previous quarter and P$130 million in the first
quarter of 2003.
Capital expenditures: Iusacell invested approximately US$11 million during this
quarter to expand coverage throughout its regions.
Recent Developments
Iusacell launched 3rd Generation (3G) services: On July 14, 2004, Iusacell
launched 3G Services; a 3G CDMA third-generation technology that offers a wide
range of multimedia applications that enables subscribers to use their mobile
phones as a communication tool that complements their lifestyles. Iusacell is
the first mobile telephone company in Mexico to offer full coverage using third
generation technology.
Iusacell also integrated QUALCOMM'S BREW solution to its system, thus allowing
subscribers to surf and download a variety of applications, such as e-mail, ring
tones, screen savers, games, and photo transmission, through its mobile
telephones. Iusacell plans to offer video transmission features under this
technology soon.
Debt Restructuring: As part of the Company's ongoing debt restructuring process,
the Company hired in March 2004 the services of Hill Street Capital LLC, as its
financial advisor. Hill Street Capital LLC is an investment banking firm
established in New York, with experience providing advice and assistance in the
execution of financial strategy, merger and acquisitions, restructurings and
raising of debt and equity.
The Company, represented by its financial advisor, has held discussions with a
group of its creditors aiming to reach a comprehensive restructuring agreement
in the shortest possible period. However, the Company can not predict if, when
or how such an agreement would be reached. Given its difficult financial
situation, the Company does not plan to service the great majority of its
financial indebtedness until a comprehensive restructuring agreement with its
creditors has been reached.
While the Company works with its advisors towards a comprehensive debt
restructuring plan, it continues with its normal daily operations, offering
quality products and services that satisfy the need of its customers, with a
constant commitment to renew and launch new products and state-of-the-art
technology services.
* * * * * * * * *
About Iusacell
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL) is a wireless
cellular and PCS service provider in Mexico encompassing a total of
approximately 92 million POPs, representing approximately 90% of the country's
total population. Independent of the negotiations towards the restructuring of
its debt, Iusacell reinforces its commitment with customers, employees and
suppliers and guarantees the highest quality standards in its daily operations
offering more and better voice communication and data services through
state-of-the-art technology, such as its new 3G network, throughout all of the
regions in which it operates.
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.
Attached are the Consolidated Income Statements of each of Grupo Iusacell, S.A.
de C.V. and Grupo Iusacell Celular, S.A. de C.V. for the three-month period
ended June 30, 2004, and the Consolidated Balance Sheet of Grupo Iusacell, S.A.
de C.V. and Grupo Iusacell Celular, S.A. de C.V. at June 30, 2004.
GRUPO IUSACELL CONSOLIDATED BALANCE SHEET
COMPARISON OF SECOND QUARTER 2004 WITH SECOND QUARTER 2003
(Figures in thousands of constant June 30, 2004 pesos)
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Change
2Q '04 2Q '03 2Q04 /2Q03
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ASSETS
Current Assets
Cash and marketable securities 3,189 0.0% 128,560 0.9% -97.5%
Accounts receivable, net 482,782 4.3% 509,882 3.5% -5.3%
Related Parties 57,959 0.5% 0 0.0% -
Recoverable taxes and other 223,329 2.0% 667,017 4.5% -66.5%
Inventories 371,618 3.3% 53,911 0.4% 589.3%
TOTAL CURRENT ASSETS 1,138,877 10.1% 1,359,370 9.2% -16.2%
Property and equipment, net 7,197,393 63.9% 9,027,039 61.4% -20.3%
Excess of cost of investments
in subsidiaries over book
value, net 1,843,432 16.4% 2,075,284 14.1% -11.2%
Other assets 1,085,340 9.6% 2,242,027 15.2% -51.6%
TOTAL ASSETS 11,265,042 100.0% 14,703,720 100.0% -23.4%
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accrued liabilities 1,990,461 17.7% 950,563 6.5% 109.4%
Related parties 36,853 0.3% 0 0.0% -
Accounts payable 492,457 4.4% 204,636 1.4% 140.7%
Short-term debt 9,126,954 81.0% 8,479,298 57.7% 7.6%
TOTAL CURRENT LIABILITIES 11,646,725 103.4% 9,634,497 65.5% 20.9%
Non-current liabilities 95,583 0.8% 265,027 1.8% -63.9%
TOTAL LIABILITIES 11,742,308 104.2% 9,899,524 67.3% 18.6%
Minority interest -58,540 -0.5% 3,155 0.0% -1955.5%
Shareholders' Equity
Capital stock 7,538,780 66.9% 7,538,780 51.3% 0.0%
Legal reserve 21,187 0.2% 21,187 0.1% 0.0%
Capital contributions 1,483,522 13.2% 1,483,522 10.1% 0.0%
Net loss -1,291,372 -11.5% -853,332 -5.8% 51.3%
Accumulated earnings from
prior years -8,390,616 -74.5% -3,608,889 -24.5% 132.5%
Excess from restatement of
shareholders' equity 219,773 2.0% 219,773 1.5% 0.0%
TOTAL SHAREHOLDERS' EQUITY -418,726 -3.7% 4,801,041 32.7% -108.7%
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 11,265,042 100.0% 14,703,720 100.0% -23.4%
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GRUPO IUSACELL CONSOLIDATED INCOME STATEMENT
COMPARISON OF SECOND QUARTER 2004 WITH SECOND QUARTER 2003
(Figures in thousands of constant June 30, 2004 pesos)
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Change
2Q '04 2Q '03 2Q04/2Q03
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REVENUE
Service 1,094,439 86.2% 1,123,212 94.4% -2.6%
Equipment sales and other 174,480 13.8% 67,090 5.6% 160.1%
TOTAL REVENUE 1,268,919 100.0% 1,190,302 100.0% 6.6%
Cost of services 432,540 34.1% 324,799 27.3% 33.2%
Other costs 271,118 21.4% 24,618 2.1% 1001.3%
TOTAL COSTS 703,658 55.5% 349,417 29.4% 101.4%
GROSS MARGIN 565,261 44.5% 840,885 70.6% -32.8%
Sales & Advertising expenses 285,248 22.5% 277,745 23.3% 2.7%
General and administrative expenses 87,794 6.9% 119,689 10.1% -26.6%
Other income 4,592 0.4% 0 0.0% -
TOTAL OPERATING EXPENSES 377,634 29.8% 397,434 33.4% -5.0%
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION 187,627 14.8% 443,451 37.3% -57.7%
Depreciation and amortization 483,264 38.1% 642,660 54.0% -24.8%
OPERATING LOSS -295,637 -23.3% -199,209 -16.7% 48.4%
Other (income) expenses -7,834 -0.6% -72,218 -6.1% -89.2%
Interest expense, net 249,014 19.6% 247,118 20.8% 0.8%
Foreign exchange loss (gain) 356,883 28.1% -241,291 -20.3% 247.9%
Monetary correction -997 -0.1% -24,732 -2.1% -96.0%
INTEGRAL FINANCING COST 604,900 47.7% -18,905 -1.6% -3299.7%
INCOME (LOSS) BEFORE TAXES AND
STATUTORY PROFIT SHARING COST -892,703 -70.4% -108,086 -9.1% 725.9%
Part (Income) loss Subsidiaries 24 0.0% -193 0.0% -112.4%
Taxes 55,096 4.3% 25,048 2.1% 120.0%
NET LOSS BEFORE MINORITY INTEREST -947,823 -74.7% -132,941 -11.2% 613.0%
Minority interest -2,255 -0.2% -3,174 -0.3% -29.0%
NET LOSS -945,568 -74.5% -129,767 -10.9% 628.7%
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GRUPO IUSACELL CELULAR CONSOLIDATED BALANCE SHEET
COMPARISON OF SECOND QUARTER 2004 WITH SECOND QUARTER 2003
(Figures in thousands of constant June 30, 2004 pesos)
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Change
2Q' 04 2Q `03 2Q04/2Q03
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ASSETS
Current Assets
Cash and marketable securities 3,072 0.0% 114,039 0.9% -97.3%
Accounts receivable, net 478,557 4.8% 509,263 4.0% -6.0%
Related parties 211,329 2.1% 96,469 0.7% 119.1%
Recoverable taxes and other 177,473 1.8% 579,313 4.5% -69.4%
Inventories 371,618 3.7% 53,911 0.4% 589.3%
TOTAL CURRENT ASSETS 1,242,049 12.4% 1,352,995 10.5% -8.2%
Property and equipment, net 6,448,593 64.5% 8,187,335 63.5% -21.2%
Excess of cost of investments in
subsidiaries over book value, net 1,660,544 16.6% 1,880,694 14.6% -11.7%
Other assets 650,156 6.5% 1,471,332 11.4% -55.8%
TOTAL ASSETS 10,001,342 100.0% 12,892,356 100.0% -22.4%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued liabilities 788,776 7.9% 470,146 3.6% 67.8%
Related parties 36,810 0.4% 0 0.0% -
Accounts payable 419,041 4.2% 109,730 0.9% 281.9%
Short-term debt 4,787,959 47.9% 4,536,894 35.2% 5.5%
TOTAL CURRENT LIABILITIES 6,032,586 60.3% 5,116,770 39.7% 17.9%
Non-current liabilities 576 0.0% 3,921 0.0% -85.3%
TOTAL LIABILITIES 6,033,162 60.3% 5,120,691 39.7% 17.8%
Minority interest -58,540 -0.6% 0 0.0% -
Shareholders' Equity
Capital stock 16,815,389 168.1% 16,815,389 130.4% 0.0%
Legal reserve 29,942 0.3% 29,942 0.2% 0.0%
Capital contributions 103,608 1.0% 103,608 0.8% 0.0%
Net loss -835,560 -8.4% -469,488 -3.6% 78.0%
Accumulated earnings from prior years -11,344,733 -113.4% -7,965,860 -61.8% 42.4%
Excess from restatement of
shareholders' equity -741,926 -7.4% -741,926 -5.8% 0.0%
TOTAL SHAREHOLDERS' EQUITY 4,026,720 40.3% 7,771,665 60.3% -48.2%
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 10,001,342 100.0% 12,892,356 100.0% -22.4%
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GRUPO IUSACELL CELULAR CONSOLIDATED INCOME STATEMENT
COMPARISON OF SECOND QUARTER 2004 WITH SECOND QUARTER 2003
(Figures in thousands of constant June 30, 2004 pesos)
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Change
2Q '04 2Q '03 2Q04/2Q03
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REVENUE
Service 1,112,098 86.5% 1,139,792 94.6% -2.4%
Equipment sales and other 174,229 13.5% 64,614 5.4% 169.6%
TOTAL REVENUE 1,286,327 100.0% 1,204,406 100.0% 6.8%
Cost of services 467,744 36.4% 324,521 26.9% 44.1%
Other costs 271,118 21.1% 24,618 2.0% 1001.3%
TOTAL COSTS 738,862 57.4% 349,139 29.0% 111.6%
GROSS MARGIN 547,465 42.6% 855,267 71.0% -36.0%
Sales & Advertising expenses 282,825 22.0% 277,745 23.1% 1.8%
General and administrative expenses 83,008 6.5% 118,183 9.8% -29.8%
Other income 4,573 0.4% 0 0.0% -100.0%
TOTAL OPERATING EXPENSES 370,406 28.8% 395,928 32.9% -6.4%
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION 177,059 13.8% 459,339 38.1% -61.5%
Depreciation and amortization 444,498 34.6% 598,133 49.7% -25.7%
OPERATING LOSS -267,439 -20.8% -138,794 -11.5% 92.7%
Other (income) expenses -7,834 -0.6% -90,064 -7.5% -91.3%
Interest expense, net 90,922 7.1% 97,381 8.1% -6.6%
Foreign exchange loss (gain) 178,837 13.9% -113,107 -9.4% -258.1%
Monetary gain -881 -0.1% -12,348 -1.0% -92.9%
INTEGRAL FINANCING COST 268,878 20.9% -28,074 -2.3% -1057.7%
INCOME (LOSS) BEFORE TAXES AND
STATUTORY PROFIT SHARING COST -528,483 -41.1% -20,656 -1.7% 2458.5%
Equity in losses of subsidiaries 24 0.0% -271 0.0% -108.9%
Taxes 49,693 3.9% 20,897 1.7% 137.8%
NET LOSS BEFORE
MINORITY INTEREST -578,200 -44.9% -41,282 -3.4% 1300.6%
Minority interest -2,255 -0.2% -830 -0.1% 171.7%
NET LOSS -575,945 -44.8% -40,452 -3.4% 1323.8%
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