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, 2002
IUSACELL GROUP, INC.
Prol. Paseo de la Reforma 1236
Col. Santa Fe, Deleg. Cuajimalpa
05438, Mexico D.F.
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 o
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 Noo
Documents Furnished By the Registrant
1. Press Release of the Registrant dated October 23, 2002
2. Press Release of the Registrant dated October 24, 2002
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 29, 2002 | /s/ Russell A. Olson |
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Name: | Russell A. Olson |
|||
Title: | Executive Vice President and Chief Financial Officer |
Third Quarter 2002 Results(1)
IUSACELL REPORTS STABLE REVENUES AND
IMPROVED EBITDA MARGIN IN THE THIRD QUARTER
2002 COMPARED TO PREVIOUS QUARTER
Investor Contacts:
Russell A. Olson
Chief Financial Officer
011-5255-5109-5751
russell.olson@iusacell.com.mx
Carlos J. Moctezuma
Manager, Investor Relations
011-5255-5109-5780
carlos.moctezuma@iusacell.com.mx
Mexico City, October 23, 2002 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, 2002.
Highlights
| Revenues stabilized sequentially over the second quarter at $1,308 million | ||
| Postpaid ARPUs increased to $682 from $676 in the second quarter | ||
| Adjusted EBITDA margin(2) improved over second quarter from 23% to 26% | ||
| Benefits of Company restructuring and facilities rationalization taking hold with ongoing savings of over $200 million annually |
Iusacells renewed focus on quality subscribers and streamlined operations has resulted in an improved postpaid Average Revenue per User (ARPU), a more profitable customer base, and a tighter cost structure. When the economic outlook improves, Iusacell stands to benefit from the operational and strategic changes we have implemented, said Carlos Espinal G., Iusacells Chief Executive Officer.
Quarterly Results
Iusacell achieved 268,978 gross cellular additions during the third quarter 2002, 31% lower than the previous quarter, and 1% lower than the third quarter 2001. The decrease in gross additions during the quarter reflects the Companys renewed focus on high-value customers, and related changes in the commission structure designed to incent sales of higher traffic-generating product offerings. Consequently, the number of gross and net additions in low and ultra-low prepaid segments declined.
(1) | Unless otherwise noted, all monetary figures are in Mexican Pesos and restated as of September 30, 2002 in accordance with Mexican GAAP, except for ARPU (which is in nominal pesos). The symbols $ and US$ refer to Mexican pesos and U.S. dollars, respectively. | |
(2) | Adjusted EBITDA expenses rather than capitalizes handset subsidies and excludes non-operational transactions, such as severance costs and gains from fiber-optic and tower sales. |
1
Iusacells total subscriber base increased 28% on a year over year basis, with net additions of 23,499 in the quarter, however, after an adjustment of approximately 47,000 customers in the previously reported subscriber base, the Company registered negative net additions of 23,913 in the quarter. As of September 30, 2002, subscribers totaled 2,176,478. The postpaid customer base declined over the quarter to approximately 371,000 due to fewer hybrid package gross additions and increased disconnections of lower ARPU generating customers.
As part of the operational streamlining, the Company conducted a review of its subscriber base. This review identified approximately 47,000 existing prepaid customers who have not utilized Iusacells network services since the start of the year. These inactive accounts were turned over on an extraordinary basis and are not included in the blended churn rate. Prepaid customers increased 41% year over year, totaling approximately 1,805,000 as of September 30, 2002.
While blended churn improved from the 4.4% registered in the third quarter of 2001, turnover among low usage prepaid subscribers, combined with lower gross additions in both segments, increased the third quarter 2002 blended churn rate to 3.7% from the 3.0% reported in the second quarter of this year. Iusacell is focusing on its postpaid retention and renewal programs in an effort to further reduce churn in this high value, market segment. The Company anticipates the blended churn rate will remain relatively high while the turnover of low usage prepaid subscribers continues.
To improve high-value sales and emphasize the customer-care orientation of the Company, Iusacell is currently evaluating its Company-owned stores performance. Selected stores will be relocated and new stores will be opened to optimize coverage in Mexicos key plazas. As of September 30, 2002, the total number of Company-owned stores was 155, compared to 111 one year ago.
In the third quarter of 2002, Iusacell entered into direct distribution contracts with a number of national retail chains for more than 1,300 points of sale that had previously been serviced through third party distributors. The Company will continue to implement a more direct sales model in order to strengthen distribution relationships and improve cost structure. As of September 30, 2002 there were approximately 54,000 points of sale compared to approximately 43,000 one year ago.
Third quarter 2002 revenues of $1,308 million held constant as compared to the second quarter of this year, after three consecutive quarters of decline. Compared to the previous year, third quarter revenues decreased 25% from the $1,747 million registered in the third quarter of 2001. Third quarter 2001 revenues included a $149 million from the sale of fiber optic and did not include revenues from Region 8 which was acquired in the fourth quarter of 2001.
After four consecutive quarters of deterioration, postpaid ARPUs increased in the third quarter of 2002 to $682, from the $676 earned in the second quarter, as a greater number of new subscribers entered into higher revenue generating contracts. Compared to the third quarter of 2001, however, postpaid ARPUs decreased 16%. Among prepaid subscribers, ARPU increased 4% compared to the previous quarter, again due to higher turnover among low-end prepaid subscribers. Compared to the same period in 2001, however, prepaid ARPUs decreased 23%.
In the third quarter of 2002, cost of sales decreased 5% from the second quarter of this year to $442 million. The reduction in costs was driven by lower acquisition cost associated with the decline in prepaid gross additions. On a year over year basis, cost of sales in the third quarter of 2002 decreased 11% compared to the same period in 2001, driven by the Companys cost-reduction efforts and the decline in sales. As a percentage of total revenues, cost of sales decreased from 36% in the second quarter, to 34% in the third quarter 2002.
2
Third quarter 2002 sales and advertising expenses declined 3% compared to the second quarter of this year and 11% compared to the third quarter of 2001 due to expense reduction efforts. General and administrative expenses rose 8% compared to the previous quarter as a result of severance charges incurred during the quarter. In spite of these non-recurring charges, general and administrative expenses decreased 9% compared to the third quarter of 2001.
EBITDA increased 13% in the third quarter compared to the second quarter of 2002, to $477 million. Compared to third quarter of 2001, EBITDA decreased 40%. Both 2002 and 2001s third quarter EBITDA results benefited from gains related to sales of non-strategic cellular towers of $65 million and $59 million, respectively (see Tower Sales). Restructuring-related severance costs totaled approximately $31 million in the third quarter of 2002. Adjusted EBITDA margin, which excludes tower gains and severance costs, was 26% in the third quarter, as compared to the 23% margin in the second quarter of 2002 and the 30% margin registered in the third quarter of last year.
Depreciation and amortization expenses of $572 million declined 15% from the third quarter of 2001, driven by lower handset amortization expenses resulting from more cost-effective handset purchases and a market-driven handset mix weighted toward lower-cost handsets.
Direct cash acquisition costs per postpaid subscriber improved from US$289 in the third quarter of 2001 to US$198 in the most recent quarter, due to restructured commission plans and lower handset costs derived from more efficient purchases and handset mix.
Third quarter operating loss totaled $95 million compared to an operating gain of $127 million in the same period of 2001. Excluding 2002 severance charges as well as tower-related gains and the fiber optic sales in both years quarters, Iusacell would have reported operating losses of $129 million and $76 million during the third quarter of 2002 and 2001, respectively.
The Company reported an integral financing cost of $425 million in the third quarter of 2002, compared to $522 million in the same quarter of last year. The reduction in the integral financing cost was mainly driven by a lower foreign exchange loss in the third quarter of 2002 derived from the 3.7% peso depreciation against the U.S. Dollar in the period, compared to the 4.7% peso depreciation in the third quarter of 2001, as well as a higher monetary correction gains and foreign exchange hedging benefits.
The higher operating loss in the third quarter of 2002 resulted in a net loss of $501 million, compared to a net loss of $412 million in the third quarter of 2001. Excluding the severance charges, tower related gains, and fiber-optic sales, Iusacell would have reported a $587 million loss in the third quarter of 2002 and a $615 million loss in the third quarter of 2001.
Financial Condition
Liquidity: During the third quarter of 2002, the Company funded its operations, capital expenditures, handset purchases, principal and interest payments mainly with internally generated cash flow and resources from the sale of certain non-strategic cellular towers. On September 30, 2002, the Companys operating cash balance was US$8 million. Iusacell also has US$25 million in escrow to cover interest payments through December 2002 on its 14.25% US$350 million Senior Notes due in 2006. The Company has no major principal payments due in the 2002 and 2003 time frame.
Capital expenditures: Iusacell invested US$14 million in its cellular and PCS regions during the third quarter of 2002, primarily to expand coverage. As of September 30, the Company has invested US$59 million year to date (see Other Developments PCS). The Company does not expect that 2002 capital expenditures will exceed the previously cited guidance of US$130 million.
3
Debt: As of September 30, 2002, debt, including trade notes payable and notes payable to related parties, totaled US$840 million. All of the Companys debt is U.S. dollar-denominated, with an average maturity of 3.1 years. As of quarter-end, Iusacells debt-to-capitalization ratio was 59.2%, versus 55.6% on September 30, 2001.
Hedging: The Company ended the third quarter of 2002 with approximately US$182 million in foreign exchange hedge coverage, for the principal and interest payments related to the Companys 10% US$150 million Senior Notes due 2004 and short-term interest payments. In order to improve liquidity by eliminating the collateral account requirements of the hedge and to take advantage of a temporary weakness in the Mexican peso, the Company opted to unwind the full foreign exchange hedge contracted for in August and October 2001. This action was completed on October 9, 2002 at an aggregate cost of US$1.7 million. The Company will continue to look for opportunities to enter into cost efficient, foreign exchange hedging positions when appropriate.
Other Developments
Cost control initiatives: As disclosed in the second quarter 2002 earnings release, the Company will continue to adapt its operations to the current environment by taking significant steps towards reducing costs. As part of these initiatives, Iusacell reduced its total labor force by 842 permanent and outsourced positions, ending the third quarter of 2002 with 1,871 total employees. The re-sizing of the Company generated a $31 million severance cost in the quarter. The Company expects approximately $50 million in net cost reduction savings by year-end 2002 and annual savings of approximately $200 million in 2003.
PCS: The Phase II PCS build-out, including the addition of network coverage to approximately 9 second-tier cities in Regions 1 and 4, was substantially completed in the third quarter. Once Phase II is fully placed in commercial service, Iusacells footprint will cover approximately 65% of these two regions population. Phase II has been financed by a portion of the funds raised in the 2001 rights offering and internally generated cash.
Tower sales: During the third quarter of 2002, the Company sold and leased back 51 additional non-strategic towers to the Mexican subsidiary of American Tower Corporation (MATC) for approximately $65 million in net gains. Through 2001 and the first nine months of 2002, the Company had sold and leased back a total of 320 non-strategic cellular towers to MATC.
Fiber optic inventory sales: In July 2002, the Company consummated a 1998 agreement with Marca-Tel, S.A. de C.V. to sell Iusacell dark fiber optic cable to Marca-Tel and purchase dark fiber optic cable from Marca-Tel through a series of fiber swaps. This transaction served to expand Iusacells long distance network. The transaction generated an extraordinary gain of approximately $52 million in the third quarter of 2002 in accordance with Generally Accepted Accounting Principals (GAAP) in Mexico. For U.S. GAAP purposes, this transaction represents no registered gain.
4
Corporate governance: Iusacell has taken the necessary actions to fully comply with Mexicos Securities Law. Specifically, the Company has:
| Ensured that independent Directors comprise at least 25% of the entire Board; | ||
| Established a separate Audit Committee, removing the audit responsibilities from the former Finance and Audit Committee; | ||
| Empowered the Audit Committee with the newly mandated functions; | ||
| Appointed independent directors to a majority of the Audit Committee seats as well as the Committees Chair; | ||
| Modified its corporate bylaws to incorporate required changes with respect to the non-delegable duties of Board members, statutory auditors, stock repurchases and Board and Shareholder meeting notifications. |
Listing standards on the NYSE: In September 2002, the Company received notice from the New York Stock Exchange (NYSE) that its not meeting one of the NYSEs continued listing standards because Iusacells ADRs 30 average trading day price is below US$1.00. The Company has notified the NYSE of its intention to cure the deficiency within the required six-month period and is currently evaluating appropriate alternatives.
5
Operating Highlights
Millions of constant pesos as of | |||||||||||||||||||||||||
September 30, 2002 | Third Quarter | Nine Months | |||||||||||||||||||||||
2001 | 2002 | % Change | 2001 | 2002 | % Change | ||||||||||||||||||||
Revenues |
$ | 1,747 | $ | 1,308 | -25 | $ | 4,957 | $ | 4,011 | -19 | |||||||||||||||
Gross Margin |
1,249 | 865 | -31 | 3,451 | 2,609 | -24 | |||||||||||||||||||
EBITDA |
801 | 477 | -40 | 2,160 | 1,347 | -38 | |||||||||||||||||||
EBITDA Margin |
46 | % | 36 | % | | 44 | % | 34 | % | | |||||||||||||||
Operating Income (Loss) |
127 | (95 | ) | | 91 | (392 | ) | | |||||||||||||||||
Net Loss |
($412 | ) | ($501 | ) | -22 | ($441 | ) | ($1,533 | ) | -248 | |||||||||||||||
Cellular Subscriber Base |
1,696,618 | 2,176,478 | 28 | 1,696,618 | 2,176,478 | 28 | |||||||||||||||||||
Gross Cellular Additions |
270,727 | 268,978 | -1 | 782,809 | 953,450 | 22 | |||||||||||||||||||
Net Cellular Additions before
adjustment |
54,197 | 23,499 | -57 | 15,399 | 368,724 | 2,294 | |||||||||||||||||||
Net Cellular Additions adjustment |
| -47,412 | | | -47,412 | | |||||||||||||||||||
Net Cellular Additions after
adjustment |
54,197 | -23,913 | | 15,399 | 321,312 | 1,987 | |||||||||||||||||||
Total Number of Employees |
2,632 | 1,871 | -29 | 2,632 | 1,871 | -29 | |||||||||||||||||||
Avg. Monthly Churn |
4.4 | % | 3.7 | % | | 3.8 | % | 3.2 | % |
All numbers are for the period indicated, except cellular subscriber base and employees data, which is period end data. All 2002 numbers include consolidation of Regions 1, 4 and 8. The EBITDA number for the periods indicated includes non-operational transactions, such as one time gains from tower and fiber sales. The total number of employees includes permanent, non-permanent and outsourced personnel. |
ARPUs in pesos as of | |||||||||||||||||||||||||||
September 30, 2002 | Third Quarter | Nine Months | |||||||||||||||||||||||||
2001 | 2002 | % Change | 2001 | 2002 | % Change | ||||||||||||||||||||||
Avg. Monthly MOU per
Subscriber* |
88 | 58 | -34 | 74 | 63 | -15 | |||||||||||||||||||||
Postpaid |
256 | 209 | -18 | 245 | 212 | -13 | |||||||||||||||||||||
Prepay |
31 | 28 | -10 | 23 | 29 | 26 | |||||||||||||||||||||
Monthly ARPU* |
281 | 182 | -36 | 264 | 195 | -26 | |||||||||||||||||||||
Postpaid |
811 | 682 | -16 | 833 | 699 | -16 | |||||||||||||||||||||
Prepay |
101 | 78 | -23 | 71 | 81 | 13 |
All 2002 numbers include consolidation of Regions 1, 4 and 8 *Total subscriber base, including Calling Party Pays Only subscribers within prepaid. |
Integral Financing (Cost) Gain
Thousands of constant pesos | ||||||||||||||||||||||||
as of September 30, 2002 | Third Quarter | Nine Months | ||||||||||||||||||||||
2001 | 2002 | % Change | 2001 | 2002 | % Change | |||||||||||||||||||
Net Interest Expense |
(217 | ) | (218 | ) | -1 | (621 | ) | (646 | ) | -4 | ||||||||||||||
Exchange (Loss)/Gain |
(359 | ) | (291 | ) | 19 | | (691 | ) | | |||||||||||||||
Monetary Correction Gain |
54 | 84 | 56 | 194 | 237 | 22 | ||||||||||||||||||
Total Integral Financing Loss |
(522 | ) | (425 | ) | 19 | (427 | ) | (1,100 | ) | -158 | ||||||||||||||
6
Revenue Breakdown
Revenues by type of service and the period-to-period comparisons expressed in millions of pesos as of September 30, 2002 are as follows:
Millions of constant pesos as of | ||||||||||||||||||||||||||||||||
September 30, 2002 | Third Quarter | Nine Months | ||||||||||||||||||||||||||||||
2001 | % of Total | 2002 | % of Total | 2001 | % of Total | 2002 | % of Total | |||||||||||||||||||||||||
Monthly Fee |
$ | 450 | 26 | $ | 363 | 28 | $ | 1,391 | 28 | $ | 1,146 | 29 | ||||||||||||||||||||
Airtime Consumption |
745 | 42 | 667 | 51 | 2,235 | 45 | 1,933 | 48 | ||||||||||||||||||||||||
Long Distance |
171 | 10 | 85 | 6 | 504 | 10 | 340 | 8 | ||||||||||||||||||||||||
Value-added Services
plus roaming |
103 | 6 | 91 | 7 | 319 | 7 | 268 | 7 | ||||||||||||||||||||||||
Total Service Revenues |
$ | 1,469 | 84 | $ | 1,206 | 92 | $ | 4,449 | 90 | $ | 3,687 | 92 | ||||||||||||||||||||
Equipment Sales & Other |
278 | 16 | 102 | 8 | 508 | 10 | 324 | 8 | ||||||||||||||||||||||||
Total Revenues |
$ | 1,747 | 100 | $ | 1,308 | 100 | $ | 4,957 | 100 | $ | 4,011 | 100 | ||||||||||||||||||||
********************
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in seven of Mexicos nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, León and Mérida. The Companys service regions encompass a total of approximately 91 million POPs, representing approximately 90% of the countrys total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc. (NYSE: VZ). | |||
Note: This press release contains 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. Listed below are some important factors which could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in the business environment in Mexico, such as the change in value of the peso, the imposition of exchange controls, inflation levels above those in the U.S. and economic downturns; Iusacells ability to develop new technologies and hire and retain qualified personnel; the Companys ability to obtain debt or equity financing necessary to pursue business opportunities; and Iusacells ability to adapt to rapid technological change and significant competition. | |||
Macroeconomic information used in the preparation of this report considered a 4.6% inflation rate for the twelve months ended September 30, 2002 and peso-dollar exchange rates of $9.97 and $9.49 at the close of business of September 30, 2002 and 2001, respectively. | |||
For any additional corporate information please check the Companys web site at http://www.iusacell.com.mx | |||
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 periods ended September 30, 2002 and 2001, and the Consolidated Balance Sheet of Grupo Iusacell, S.A. de C.V. and Grupo Iusacell Celular, S.A. de C.V. at September 30, 2002 and 2001. The financial statements of Grupo Iusacell Celular, S.A. de C.V. exclude the impact on results and financial position of the US$350 million in 14.25% Senior Notes due 2006, certain microwave equipment and related purchase money indebtedness and the PCS business. |
7
GRUPO IUSACELL CONSOLIDATED BALANCE SHEET
COMPARISON OF THIRD QUARTER 2002 WITH THIRD QUARTER 2001
(Figures in thousands of constant September 30, 2002 Pesos)
Growth | ||||||||||||||||||||
3Q01 | 3Q02 | 3Q02 / 3Q01 | ||||||||||||||||||
ASSETS |
||||||||||||||||||||
Current Assets |
||||||||||||||||||||
Cash and marketable securities |
578,256 | 4 | % | 328,019 | 2 | % | -43.3 | % | ||||||||||||
Accounts receivable, net |
575,162 | 4 | % | 697,155 | 4 | % | 21.2 | % | ||||||||||||
Related parties |
2,664 | 0 | % | 0 | 0 | % | -100.0 | % | ||||||||||||
Recoverable taxes and other |
766,740 | 5 | % | 368,464 | 2 | % | -51.9 | % | ||||||||||||
Inventories |
191,900 | 1 | % | 125,904 | 1 | % | -34.4 | % | ||||||||||||
TOTAL CURRENT ASSETS |
2,114,722 | 13 | % | 1,519,542 | 10 | % | -28.1 | % | ||||||||||||
Property and equipment, net |
9,078,361 | 57 | % | 9,201,532 | 59 | % | 1.4 | % | ||||||||||||
Excess of cost of investments in
subsidiaries over book value, net |
2,059,217 | 13 | % | 2,092,830 | 13 | % | 1.6 | % | ||||||||||||
Other assets |
2,728,190 | 17 | % | 2,746,496 | 18 | % | 0.7 | % | ||||||||||||
TOTAL ASSETS |
15,980,490 | 100 | % | 15,560,400 | 100 | % | -2.6 | % | ||||||||||||
LIABILITIES
AND SHAREHOLDERS
EQUITY |
||||||||||||||||||||
Current Liabilities |
||||||||||||||||||||
Accrued liabilities |
1,030,975 | 6 | % | 852,574 | 5 | % | -17.3 | % | ||||||||||||
Related parties |
154,662 | 1 | % | 204,472 | 1 | % | 32.2 | % | ||||||||||||
Accounts payable |
431,345 | 3 | % | 339,051 | 2 | % | -21.4 | % | ||||||||||||
Short-term debt |
119,171 | 1 | % | 316,668 | 2 | % | 165.7 | % | ||||||||||||
TOTAL CURRENT LIABILITIES |
1,736,153 | 11 | % | 1,712,765 | 11 | % | -1.3 | % | ||||||||||||
Non-current liabilities |
7,832,392 | 49 | % | 8,002,282 | 51 | % | 2.2 | % | ||||||||||||
TOTAL LIABILITIES |
9,568,545 | 60 | % | 9,715,047 | 62 | % | 1.5 | % | ||||||||||||
Minority interest |
9,699 | 0 | % | 87,475 | 1 | % | 801.9 | % | ||||||||||||
Shareholders Equity |
||||||||||||||||||||
Capital stock |
6,031,825 | 38 | % | 6,997,745 | 45 | % | 16.0 | % | ||||||||||||
Legal reserve |
19,666 | 0 | % | 19,666 | 0 | % | 0.0 | % | ||||||||||||
Capital contributions |
1,377,048 | 9 | % | 1,377,048 | 9 | % | 0.0 | % | ||||||||||||
Net income (loss) |
-441,006 | -3 | % | -1,533,307 | -10 | % | 247.7 | % | ||||||||||||
Accumulated earnings from prior years |
-789,287 | -5 | % | -1,307,274 | -8 | % | 65.6 | % | ||||||||||||
Excess from restatement of
shareholders equity |
204,000 | 1 | % | 204,000 | 1 | % | 0.0 | % | ||||||||||||
TOTAL
SHAREHOLDERS EQUITY |
6,402,246 | 40 | % | 5,757,878 | 37 | % | -10.1 | % | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
15,980,490 | 100 | % | 15,560,400 | 100 | % | -2.6 | % |
8
GRUPO IUSACELL CONSOLIDATED INCOME STATEMENT
COMPARISON OF THIRD QUARTER 2002 WITH THIRD QUARTER 2001
(Figures in thousands of constant September 30, 2002 Pesos)
Growth | |||||||||||||||||||||
3Q01 | 3Q02 | 3Q02 / 3Q01 | |||||||||||||||||||
REVENUE |
|||||||||||||||||||||
Service |
1,469,332 | 84.1 | % | 1,205,713 | 92.2 | % | -17.9 | % | |||||||||||||
Equipment sales and other |
277,715 | 15.9 | % | 101,854 | 7.8 | % | -63.3 | % | |||||||||||||
TOTAL REVENUE |
1,747,047 | 100.0 | % | 1,307,567 | 100.0 | % | -25.2 | % | |||||||||||||
Cost of services |
403,651 | 23.1 | % | 364,532 | 27.9 | % | -9.7 | % | |||||||||||||
Other costs |
94,577 | 5.4 | % | 77,878 | 6.0 | % | -17.7 | % | |||||||||||||
TOTAL COSTS |
498,228 | 28.5 | % | 442,410 | 33.8 | % | -11.2 | % | |||||||||||||
GROSS MARGIN |
1,248,819 | 71.5 | % | 865,157 | 66.2 | % | -30.7 | % | |||||||||||||
Sales & Advertising expenses |
358,409 | 20.5 | % | 318,608 | 24.4 | % | -11.1 | % | |||||||||||||
General and administrative expenses |
148,145 | 8.5 | % | 134,845 | 10.3 | % | -9.0 | % | |||||||||||||
Other income |
-59,124 | -3.4 | % | -65,395 | -5.0 | % | 10.6 | % | |||||||||||||
TOTAL OPERATING EXPENSES |
447,430 | 25.6 | % | 388,058 | 29.7 | % | -13.3 | % | |||||||||||||
EBITDA |
801,389 | 45.9 | % | 477,099 | 36.5 | % | -40.5 | % | |||||||||||||
Depreciation and amortization |
674,317 | 38.6 | % | 572,308 | 43.8 | % | -15.1 | % | |||||||||||||
OPERATING INCOME (LOSS) |
127,072 | 7.3 | % | -95,209 | -7.3 | % | | ||||||||||||||
Interest expense, net |
216,249 | 12.4 | % | 217,561 | 16.6 | % | 0.6 | % | |||||||||||||
Foreign exchange loss (gain) |
359,223 | 20.6 | % | 291,502 | 22.3 | % | -18.9 | % | |||||||||||||
Monetary correction |
-53,733 | -3.1 | % | -83,921 | -6.4 | % | -56.2 | % | |||||||||||||
INTEGRAL FINANCING COST |
521,739 | 29.9 | % | 425,142 | 32.5 | % | -18.5 | % | |||||||||||||
INCOME (LOSS) BEFORE TAXES AND
STATUTORY PROFIT SHARING COST |
-394,667 | -22.6 | % | -520,351 | -39.8 | % | -31.8 | % | |||||||||||||
Part (Income) loss Subsidiaries |
1,722 | 0.1 | % | -326 | 0.0 | % | | ||||||||||||||
Taxes |
40,693 | 2.3 | % | 25,572 | 2.0 | % | -37.2 | % | |||||||||||||
Extraordinary items |
-52,156 | -4.0 | % | -100.0 | % | ||||||||||||||||
NET INCOME (LOSS) BEFORE
MINORITY INTEREST |
-437,082 | -25.0 | % | -493,441 | -37.7 | % | -12.9 | % | |||||||||||||
Minority interest |
-24,733 | -1.4 | % | 7,238 | 0.6 | % | | ||||||||||||||
NET INCOME (LOSS) |
-412,349 | -23.6 | % | -500,679 | -38.3 | % | -21.4 | % | |||||||||||||
9
GRUPO IUSACELL CELULAR CONSOLIDATED BALANCE SHEET
COMPARISON OF THIRD QUARTER 2002 WITH THIRD 2001
(Figures in thousands of constant September 30, 2002 Pesos)
Growth | ||||||||||||||||||||
3Q01 | 3Q02 | 3Q02 / 3Q01 | ||||||||||||||||||
ASSETS |
||||||||||||||||||||
Current Assets |
||||||||||||||||||||
Cash and marketable securities |
161,763 | 1 | % | 47,725 | 0 | % | -70.5 | % | ||||||||||||
Accounts receivable, net |
575,162 | 4 | % | 680,768 | 5 | % | 18.4 | % | ||||||||||||
Related parties |
2,664 | 0 | % | 110,601 | 1 | % | 4051.7 | % | ||||||||||||
Recoverable taxes and other |
529,312 | 4 | % | 285,564 | 2 | % | -46.0 | % | ||||||||||||
Inventories |
191,900 | 1 | % | 125,904 | 1 | % | -34.4 | % | ||||||||||||
TOTAL CURRENT ASSETS |
1,460,801 | 11 | % | 1,250,562 | 9 | % | -14.4 | % | ||||||||||||
Property and equipment, net |
8,713,734 | 65 | % | 8,455,901 | 63 | % | -3.0 | % | ||||||||||||
Excess of cost of investments in
subsidiaries over book value, net |
1,860,284 | 14 | % | 1,904,277 | 14 | % | 2.4 | % | ||||||||||||
Other assets |
1,387,147 | 10 | % | 1,912,231 | 14 | % | 37.9 | % | ||||||||||||
TOTAL ASSETS |
13,421,966 | 100 | % | 13,522,971 | 100 | % | 0.8 | % | ||||||||||||
LIABILITIES
AND SHAREHOLDERS
EQUITY |
||||||||||||||||||||
Current
Liabilities Accrued liabilities |
784,150 | 6 | % | 624,485 | 5 | % | -20.4 | % | ||||||||||||
Related parties |
77,200 | 1 | % | 352,360 | 3 | % | 356.4 | % | ||||||||||||
Accounts payable |
370,340 | 3 | % | 242,237 | 2 | % | -34.6 | % | ||||||||||||
Short-term debt |
119,171 | 1 | % | 169,419 | 1 | % | 42.2 | % | ||||||||||||
TOTAL CURRENT LIABILITIES |
1,350,861 | 10 | % | 1,388,501 | 10 | % | 2.8 | % | ||||||||||||
Non-current liabilities |
4,130,982 | 31 | % | 4,191,119 | 31 | % | 1.5 | % | ||||||||||||
TOTAL LIABILITIES |
5,481,843 | 41 | % | 5,579,620 | 41 | % | 1.8 | % | ||||||||||||
Minority interest |
9,699 | 0 | % | 41,593 | 0 | % | 328.8 | % | ||||||||||||
Shareholders
Equity Capital stock |
14,682,791 | 109 | % | 15,608,535 | 115 | % | 6.3 | % | ||||||||||||
Legal reserve |
27,794 | 0 | % | 27,794 | 0 | % | 0.0 | % | ||||||||||||
Capital contributions |
96,173 | 1 | % | 96,173 | 1 | % | 0.0 | % | ||||||||||||
Net income (loss) |
-141,766 | -1 | % | -787,785 | -6 | % | 455.7 | % | ||||||||||||
Accumulated earnings from prior
years |
-6,045,890 | -45 | % | -6,354,281 | -47 | % | 5.1 | % | ||||||||||||
Excess from restatement of
shareholders equity |
-688,678 | -5 | % | -688,678 | -5 | % | 0.0 | % | ||||||||||||
TOTAL
SHAREHOLDERS EQUITY |
7,930,424 | 59 | % | 7,901,758 | 58 | % | -0.4 | % | ||||||||||||
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |
13,421,966 | 100 | % | 13,522,971 | 100 | % | 0.8 | % |
10
GRUPO IUSACELL CELULAR CONSOLIDATED INCOME STATEMENT
COMPARISON OF THIRD QUARTER 2002 WITH THIRD QUARTER 2001
(Figures in thousands of constant September 30, 2002 Pesos)
Growth | |||||||||||||||||||||
3Q01 | 3Q02 | 3Q02 / 3Q01 | |||||||||||||||||||
REVENUE |
|||||||||||||||||||||
Service |
1,469,332 | 84.1 | % | 1,221,568 | 92.3 | % | -16.9 | % | |||||||||||||
Equipment sales and other |
277,715 | 15.9 | % | 102,193 | 7.7 | % | -63.2 | % | |||||||||||||
TOTAL REVENUE |
1,747,047 | 100.0 | % | 1,323,761 | 100.0 | % | -24.2 | % | |||||||||||||
Cost of services |
390,750 | 22.4 | % | 335,286 | 25.3 | % | -14.2 | % | |||||||||||||
Other costs |
94,577 | 5.4 | % | 77,738 | 5.9 | % | -17.8 | % | |||||||||||||
TOTAL COSTS |
485,327 | 27.8 | % | 413,024 | 31.2 | % | -14.9 | % | |||||||||||||
GROSS MARGIN |
1,261,720 | 72.2 | % | 910,737 | 68.8 | % | -27.8 | % | |||||||||||||
Sales & Advertising expenses |
361,780 | 20.7 | % | 318,346 | 24.0 | % | -12.0 | % | |||||||||||||
General and administrative expenses |
144,902 | 8.3 | % | 130,806 | 9.9 | % | -9.7 | % | |||||||||||||
Other income |
-59,127 | -3.4 | % | -56,180 | -4.2 | % | -5.0 | % | |||||||||||||
TOTAL OPERATING EXPENSES |
447,555 | 25.6 | % | 392,972 | 29.7 | % | -12.2 | % | |||||||||||||
EBITDA |
814,165 | 46.6 | % | 517,765 | 39.1 | % | -36.4 | % | |||||||||||||
Depreciation and amortization |
667,385 | 38.2 | % | 537,400 | 40.6 | % | -19.5 | % | |||||||||||||
OPERATING LOSS (LOSS) |
146,780 | 8.4 | % | -19,635 | -1.5 | % | | ||||||||||||||
Interest expense, net |
95,281 | 5.5 | % | 84,553 | 6.4 | % | -11.3 | % | |||||||||||||
Foreign exchange loss (gain) |
220,820 | 12.6 | % | 148,212 | 11.2 | % | -32.9 | % | |||||||||||||
Monetary correction |
-33,160 | -1.9 | % | -42,452 | -3.2 | % | 28.0 | % | |||||||||||||
INTEGRAL FINANCING COST |
282,941 | 16.2 | % | 190,313 | 14.4 | % | -32.7 | % | |||||||||||||
INCOME (LOSS) BEFORE TAXES AND STATUTORY PROFIT SHARING COST |
-136,161 | -7.8 | % | -209,948 | -15.9 | % | -54.2 | % | |||||||||||||
Part (Income) loss Subsidiaries |
1,722 | 0.1 | % | -153 | 0.0 | % | | ||||||||||||||
Taxes |
40,693 | 2.3 | % | 25,572 | 1.9 | % | -37.2 | % | |||||||||||||
Extraordinary items |
-52,156 | -3.9 | % | -100.0 | % | ||||||||||||||||
NET INCOME (LOSS) BEFORE MINORITY INTEREST |
-178,576 | -10.2 | % | -183,211 | -13.8 | % | -2.6 | % | |||||||||||||
Minority interest |
-24,733 | -1.4 | % | 8,808 | 0.7 | % | | ||||||||||||||
NET INCOME (LOSS) |
-153,843 | -8.8 | % | -192,019 | -14.5 | % | -24.8 | % |
11
Iusacell Announcement
IUSACELL ANNOUNCES FAVORABLE RULING IN
INJUNCTIVE ACTION (AMPARO) AGAINST
SPECIAL TELECOM TAX
Investor Contacts:
Russell A. Olson
Chief Financial Officer
011-5255-5109-5751
russell.olson@iusacell.com.mx
Carlos J. Moctezuma
Manager, Investor Relations
011-5255-5109-5780
carlos.moctezuma@iusacell.com.mx
Mexico City, October 24, 2002 - Grupo Iusacell, S.A. de C.V. [BMV: CEL, NYSE: CEL] today announced that, on October 21, 2002, the Company was officially notified that the federal district court of Mexico City ruled in favor of Iusacells cellular service concessionaires in their injunction (amparo) filed against the special telecommunications tax enacted by the Mexican Congress on January 1, 2002. This ruling is subject to appeal by the Mexican government. Iusacell has no knowledge as to whether or not the Mexican government intends to file such an appeal.
In March 2002, the Company filed several injunctive actions challenging the Mexican governments implementation of an additional 10% excise tax approved by the Mexican Congress on certain telecommunications services. The Company decided to pass the full impact of this new tax to its postpaid customers, although monthly service packages were modified to increase airtime minutes in an effort to compensate these high value customers for that impact. The excise tax has also been applied to prepaid cards with a face value equal to or in excess of Ps.$200.
Even though the case is still subject to appeal, the Company believes that the district court decision is an important step towards obtaining a favorable final ruling.
**********************
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in seven of Mexicos nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, León and Mérida. The Companys service regions encompass a total of approximately 91 million POPs, representing approximately 90% of the countrys total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc. (NYSE: VZ).
1