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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 April, 2006
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]
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Documents Furnished By the Registrant
1. Press Release of the Registrant dated April 28, 2006
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INVESTOR CONTACTS
Jose Luis Riera K.
[LOGO OF IUSACELL] Chief Financial Officer
5255-5109-5927
J.Victor Ferrer
Finance Manager
5255-5109-5273
vferrer@iusacell.com.mx
TRANSCRIPTION OF THE REPORT OF INDEPENDENT ACCOUNTANTS
Mexico City, April 18, 2006
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Grupo Iusacell, S.A. de C.V.
(Subsidiary of Movil Access, S.A. de C.V.)
Mexico City, Mexico
We have audited the consolidated balance sheets of Grupo Iusacell, S.A. de C.V.
and subsidiaries (the Company), as of December 31, 2005 and 2004, and the
related consolidated statements of income (loss), changes in stockholders'
equity (deficit) and changes in financial position for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
The consolidated financial statements for the year ended December 31, 2003,
presented for comparison purposes only, were audited by other independent
accountants, whose report dated March 26, 2004, and for certain information
April 19, 2004, expressed an unqualified opinion on those statements, and
included explanatory paragraphs describing the following matters: 1) the Company
adopted, in 2003, Statement C-8, "Intangible Assets", issued by the Mexican
Institute of Public Accountants, with the effects described in Note 4n. to the
consolidated financial statements; 2) the Company and Grupo Iusacell Celular,
S.A. de C.V., its main subsidiary, incurred in certain events of default related
to its debt originally issued at long-term, which entitled creditors with the
right to claim, request or demand the immediate payment of the principal and
interest; also, a group of holders of certain long-term debt of the main
subsidiary filed a lawsuit in a New York Court against such subsidiary for the
immediate payment of indebtedness under such debt. Under these circumstances,
the Company reclassified its debt, originally issued at long-term, as short-term
liabilities, and as a result, current liabilities exceeded current assets by
Ps.10,643.9 million (constant Mexican pesos of December 31, 2005); 3) the
Company reported accumulated losses representing more than two thirds of its
capital stock, which, in accordance with Mexican law is a cause of dissolution,
and may be among the assumptions provided by the Concurso Mercantil Law in
Mexico and; 4) the circumstances described in numerals 2) and 3) above, raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements did not include any adjustments related to
the recoverability and classification of the amounts recorded as assets, and the
amounts and classification of liabilities, deemed necessary in the event the
Company could not continue operating as a going concern.
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We conducted our audits in accordance with auditing standards generally accepted
in Mexico. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement, and have been prepared in conformity with accounting principles
generally accepted in Mexico. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements presentation. We believe that our audits provide a reasonable basis
for our opinion.
a) As more fully discussed in Notes 2 and 11 to the accompanying
consolidated financial statements, the Company has incurred in events
of default under the agreements and/or instruments governing the
obligations which conform the Company's debt. Such events relate,
mainly, to the failure in the payment of the principal and the
corresponding interest, to technical defaults and noncompliance of
financial ratios, and to the change of control of the Company that
occurred when the former shareholders, Verizon Communications, Inc.
(Verizon) and Vodafone Group Plc. (Vodafone), sold their majority
equity position to Movil Access, S.A. de C.V., as well as other
defaults detailed in such notes. These defaults entitled the creditors
of most of the Company's debt to demand the acceleration of principal
payments and the corresponding accessories, in accordance with the
executed agreements. As a result of the above, and in conformity with
accounting principles generally accepted in Mexico, long-term debt, as
described in Note 11 to the consolidated financial statements, has
been classified as short-term and, consequently, as of December 31,
2005 and 2004, current liabilities exceeded current assets by
Ps.11,282.1 million and Ps.11,437.2 million, respectively. On January
14, 2004, a group of holders of the Secured Senior Notes Due 2004,
issued by the Company's main subsidiary, filed a lawsuit in a New York
Court against that subsidiary, for the immediate payment of principal
and interest; the lawsuit includes other aspects also described in
Notes 2 and 11 to the consolidated financial statements. Also, as
indicated in the above mentioned notes, on April 29, 2005, Grupo
Iusacell, S.A. de C.V. received a notification from The Bank of New
York, acting as trustee under the act governing the Senior Notes due
2006, notifying that the noteholders chose to accelerate the payment
of the notes.
b) The Company has incurred in losses during recent years, which
accumulated as of December 31, 2005 and 2004, have originated the
total loss of the Company's capital stock, and a deficit in its
stockholders' equity at those dates. The loss of capital stock, in
accordance with Mexican General Corporate Law, is cause of a possible
dissolution of the Company; furthermore, the Company is under the
assumptions which would allow any creditor or the Company itself, to
request a reorganization proceeding under the Concurso Mercantil Law
in Mexico.
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These circumstances, in addition to the description in paragraph a)
above, raise substantial doubt about the Company's ability to continue
as a going concern, which will depend, among other factors, on the
restructuring of its debt and/or, as the case may be, on obtaining or
generating the additional resources necessary to meet/serve its
obligations and to cover its operating needs. The accompanying
consolidated financial statements, due to the reasons described in
Note 4a. to such financial statements, have been prepared considering
that the Company will continue as a going concern and, in consequence,
do not include any adjustments related to the recoverability and
classification of the amounts recorded as assets, and the amounts and
classification of liabilities, which might be deemed necessary in the
event the Company were to enter into a liquidation process.
Note 21b. to the consolidated financial statements discloses the
agreements reached by Grupo Iusacell, S.A. de C.V. and its
subsidiaries, with their creditors, which reflect the advances through
this date in the process to accomplish their debt restructuring.
c) As described in Note 4j. to the accompanying consolidated financial
statements, beginning January 1, 2005, the Company changed its
accounting policy for the recognition of the cost of cellular phones
and other expenses related to revenue from contracts of cellular
telephony services; a change in which we concur. For the reasons
mentioned in such Note, it was impractical for the Company to
determine the effects of this change related to prior years'
transactions.
Also, as described in Note 4m., the Company adopted in 2005, with the
effects indicated in such Note, Statement B-7, "Business
Acquisitions", issued by the Mexican Institute of Public Accountants,
in connection with goodwill.
d) In accordance with Note 4o. to the consolidated financial statements,
beginning in 2004, the Company adopted Statement C-15, "Impairment of
the Value of Long-Lived Assets and Disposal", issued by the Mexican
Institute of Public Accountants, in order to value such assets.
In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the consolidated financial
position of Grupo Iusacell, S.A. de C.V. and subsidiaries, as of December
31, 2005 and 2004, and the consolidated results of its operations, changes
in its consolidated stockholders' equity (deficit), and changes in its
consolidated financial position for the years then ended, in conformity
with accounting principles generally accepted in Mexico.
Despacho Freyssinier Morin, S.C.
CPC Jorge E. Santibanez Fajardo
Partner
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ABOUT IUSACELL
Grupo Iusacell, S.A. de C.V. (Iusacell, BMV: CEL) is a wireless cellular and PCS
service provider in Mexico with a national footprint. 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 operate.
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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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: April 28, 2006
/s/ Fernando Cabrera
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Name: Fernando Cabrera
Title: Attorney in fact
/s/ Jose Luis Riera
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Name: Jose Luis Riera
Title: Attorney in fact
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