Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the month of March 2002
(Commission File No. 001-14489)
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
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(Exact name of registrant as specified in its charter)
Tele Centro Oeste Cellular Holding Company
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(Translation of registrant's name in English)
SCS-Quadra 2, Bloco C, Edificio Anexo-Telebrasilia Celular
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-7 andar, Brasilia, D.F.
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Federative Republic of Brazil
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
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 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes No X
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TCOC3: R$ 8,00/1.000 shares
TCOC4: R$ 4,58/1.000 shares
TRO: US$ 5,77/ADR (1 ADR = 3,000 shares)
INVESTOR RELATIONS: WEB SITE
Arthur Fonseca - arthur.fonseca@tco.net.br Http://www.tco.net.br
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STATEMENT OF RESULTS
FOURTH QUARTER AND ACCUMULATED 2001
2001 Highlights Brasilia, March 26, 2002 - Tele Centro Oeste Celular
Participacoes S.A. - TCO/NBT (NYSE: TRO; IBOVESPA:
TCOC3/TCOC4) herein discloses its results relative to the
fourth quarter of 2001 and accumulated 2001 results. The
company obtained a net consolidated profit of R$ 208.1 million
in 2001, which represents a 61% increase against the previous
year. The company's R$ 460.3 million EBITDA - Earnings Before
Interest, Taxes, Depreciation and Amortization were 45% higher
than last year's. The 41.8% increase in the Company's client
base along the period provided for Gross Operating Revenues of
R$ 1.6 billion and Net Operating Revenues of R$ 1.2 billion,
corresponding to a 38.2% growth compared to last year results.
NBT: Band B carrier TCO-NBT operating in Area 8 closed the year
a real hit in 2001 with 416.7 thousand service accesses, of which 27% were
2001 post-paid clients. NBT covers 83 locations, corresponding to
approximately 56% of the population in Area 8, and a market
share of 31.5%. At the end of 2001 and having operated for
only 27 months, NBT generated a R$ 2.9 million in net
accumulated profits. It was the first Band B company to
generate profit and a positive R$ 44 million EBITDA. NBT has
been operating with a positive EBITDA since March, 2000. The
62.4% increase in the Company's client-base along the period
provided for Gross Operating Revenues of R$ 272.3 million and
Net Operating Revenues of R$ 215 million, representing a 96.9%
growth compared to last year's results.
OPERATING RESULTS
The region TCO operates in 11 Brazilian states and in the Brazilian
covered Federal District, namely Acre, Amazonas, Amapa, Goias,
Maranhao, Mato Grosso, Mato Grosso do Sul, Para, Rondonia,
Roraima and Tocantins. This is the largest continuous area in
Brazil covered by a single cellular telephoning company (5.5
million km2) and holds a total population of 30.7 million.
According to recent statistics disclosed by the Brazilian
Institute of Geography & Statistics [Instituto Brasileiro
de Geografia e Estatistica - IBGE], the states comprised in
the mid-west region of the country are among those performing
the best Gross Domestic Product in 1999. In the last 10 years,
only the mid-west and north regions of the Brazilian territory
have managed to raise their participation in the national GDP.
Among all the Brazilian states, Mato Grosso was the one which
presented the highest growth rate, raising its Gross State
Product by 87% between 1990 and 1999. The per capita GSP in
the north region showed a 55% increase along the 1990's and
the mid-west region increased 39%. The Brazilian per capita
GDP rose by 27% between 1990 and 1999.
Competitive During 2001, not only did TCO strengthen its strategy to
Advantage invest in coverage and in the quality ofits services but it
Estrategia also intensified its marketing efforts to launch new services
Competitiva which meet the needs posed by its clients. At the end of 2001,
TCO had 2,428,206 clients, of which 2,011,446 in Area 7 and
416,760 in Area 8. The year 2001 was particularly marked by
client-loyalty strategies and actions to encourage the
purchase of alternative post-paid service plans.
Main services The month of January 2001 was marked by the campaign to launch
launched in 2001 the E-WAP, a service which allows clients owning handsets with
the compatible technology to use Internet services from their
cellular phones.
The first half of March saw the launch of Solte a Voz (Speak
up), a client relationship and loyalty program intended to
intensify traffic while improving the relationship with
post-paid clients [Programa de Fidelizacao e Relacionamento
Solte a Voz]. For each Brazilian Real paid in their bills,
clients are now credited one point. When 800 points are
accumulated they are entitled to exchange those points for
gifts such as free minutes and airline tickets.
In August 2001 we started to charge for the E-xpresso: the
service in which clients can send and receive text messages
from one cellular handset to another. In September the O2 was
launched, an Internet access provider which besides offering
the lowest cost for this service, guarantees quick access at
any time, as well as the possibility to include the price of
the subscription in the client's regular telephone bill.
In October 2001 we launched the E-ai? E-WAP! campaign,
developed to appeal to young users during the launch of Nokia
3320 and Gradiente Freedom handset models. The campaign used a
communication strategy focused on the advertisement of the
services provided by the new equipment - mainly the WAP
services. The promotion consisted of crediting a monthly bonus
of 100 minutes of WAP connection during 12 months - totaling
1,200 minutes - allowing clients to try out the benefits
offered by the service and to acquire the habit of using it.
Continuous During the year 2001, TCO consolidated the addition of 716,022
expansion of the new clients. In the fourth quarter of 2001 alone the net
Client Base number of TCO's additions totaled 232,834 clients, of which
14% were post-paid clients and resulted mainly from the
Christmas-time campaigns and from the introduction of new
services. During the year 2001, TCO's consolidated client base
increased by 42% compared to the year 2000.
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Clients 4Q01 3Q01 2Q01 1Q01 4Q00
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Consolidated 2,428,206 2,195,372 2,070,030 1,897,557 1,712,184
Post-paid 695,082 662,840 665,678 621,746 579,511
Pre-paid 1,716,398 1,515,804 1,387,631 1,259,101 1,115,962
Rural 16,726 16,728 16,721 16,710 16,711
Area 7 2,011,446 1,827,087 1,728,202 1,598,530 1,455,502
Post-paid 582,877 554,929 551,304 519,734 493,934
Pre-paid 1,411,843 1,255,430 1,160,177 1,062,086 944,857
Rural 16,726 16,728 16,721 16,710 16,711
Area 8 416,760 368,285 341,828 299,027 256,682
Post-paid 112,205 107,911 114,374 102,012 85,577
Pre-paid 304,555 260,374 227,454 197,015 171,105
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Market Share Again TCO has delivered proof of its solid knowledge of the
region in which it operates by fully adapting the solutions in
mobile communications to the characteristics of each market.
During the year 2001, TCO maintained its leadership in Area 7
and reached a market share of 77.2% at yearend, the highest
rate among Brazilian companies, whereas NBT reached the mark
of 31.5%. The Company's annual consolidated churn rate was
13.7% in 2001. At December 2001 TCO operated in 283
municipalities in Area 7 - which comprises the states of
Goias, Mato Grosso, Mato Grosso do Sul, Rondonia, Acre,
Tocantins and the Brazilian Federal District - as well as 83
municipalities in Area 8 - which comprises the states of
Amapa, Amazonas, Maranhao, Para and Roraima, attended by NBT.
In 2001, TCO reached a penetration rate of 13.4% in Area 7 and
Telebrasilia Celular had the highest penetration rate in the
region, approximately 21.4%.
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AREA 7 - Operating Data 4Q01 4Q00 Variation
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Market Share (%) 77.2 78.4 -1.5%
Estimated population (in millions of R$) 14.9 14.3 4.2%
Estimated penetration - TCO (%) 13.4 10.1 32.7%
Access digitization (%) 95.7 90.3 6.0%
Municipalities covered 283 253 11.9%
Workforce 2.368 1.834 29.1%
Permanent 1.202 1.082 11.1%
Interns and contracted third parties 1.166 752 55.1%
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AREA 8 - Operating Data 4Q01 4Q00 Variation
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Market Share (%) 31.5 25.3 24.5%
Estimated population (in millions of R$) 15.8 14.9 6.0%
Estimated penetration - NBT (%) 2.6 1.7 52.9
Access digitization (%) 100 100 0%
Municipalities covered 83 56 48.2%
Workforce 499 563 -11.4%
Permanent 259 245 5.7%
Interns and contracted third parties 240 318 -24.5%
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Trade At December 2001 TCO had 39 proprietary stores in Area 7, as
well as 1,346 accredited handset retailers and 14 thousand
direct and indirect retailers of cards. In Area 8, the trade
structure maintained by TCO and operated by NBT has 16
proprietary stores, as well as 305 accredited handset
retailers and 5 thousand direct and indirect retailers of
cards
Human Resources The carriers operating in Area 7 expanded their workforce by
29% between December 2000 (1,834) and December 2001 (2,368),
while the number of clients rose by 42% in the same period.
This resulted mainly from the implementation of the Call
Center, which is centralized in Goiania, the Capital of the
state of Goias, and provided for the generation of 836 direct
work posts. Of the total workforce, 89 are permanent employees
(51%) and 747 are interns or contracted third-parties (49%).
Exclusively among the Area 7 carriers, the permanent employees
indicator considered against each 1,000 service access was
0.74 in 2000 and decreased to 0.60 in 2001. Area 8 operator
NBT had a workforce of 563 at December 2000 and reduced it to
499 at December, 2001. Of this total, 52% are permanent
employees and the remaining ones are interns and contracted
third-parties. The permanent employees indicator considered
against each 1,000 service access was 0.95 in 2000 and fell to
0.62 in 2001.
Call Center The Call Center was conceived to provide clients with
information in the areas covered by TCO, which stands for a
concentration of its operations aimed at rationalizing
expenses, standardizing the information provided and
maximizing the quality of the client services delivered by
telephone. It also allows the call center to function as a
business unit, providing third-parties with services as well.
The Call Center also offers services to our partners, our
distributors and the providers of business services using
back-office and telemarketing services. Recently the Call
Center was given the ISO 9001:2000 certification and became
the only call center in Brasil to hold this certification,
which shows TCO's concern with the quality of services
rendered.
Network In 2001 TCO also activated its Network Management Center
Management [Centro de Gerencia de Rede], with the main objective of
Center supervising full time the entire network of telecommunications
used by TCO main objective of supervising full time the entire
network of telecommunications used by TCO and by NBT,
including the equipment installed in all the states in which
they operate. The Network Management Center, which is
installed in Brasilia, has made it possible to easily identify
failures in real time and therefore to remotely carry out the
required intervention on the hardware. In addition to this
increased agility in the process of identifying and removing
network failures and degradation of the network, the system
also collects daily performance indicators that allow the
preparation of network configuration actions to adjust the
flow of data and sound traffic, while continuously improving
the quality of cellular services.
Social concerns TCO has a significant role in social, cultural, sports and
community-related activities in Brazil. Since 1999, the
Company has acted as a strategic collaborator to educational
projects carried out by the Ayrton Senna Institute [Instituto
Ayrton Senna], benefiting over 100 thousand children and
teenagers and 2,640 educators in 256 different cities
throughout Brazil. This collaboration has granted the Company
the Top Social ADVB Prize in 2001, awarded by the Brazilian
Sales and Marketing Managers Association [Associacao dos
Dirigentes de Vendas e Marketing do Brasil], and the
Outstanding Marketing Performance Prize in 2001 [Premio
Destaque no Marketing], awarded by the Brazilian Marketing
& Business Association [Associacao Brasileira de Marketing
& Negocios].
Another major project maintained by TCO offers support to
cancer-research institutions. With the same objective, TCO has
partnered with Mc. Donald's to co-sponsor the Mc. Happy-Day
Campaign [Mc. Dia Feliz]. Concerned with the need to preserve
the local identity of the regions where it operates, TCO has
also been supporting projects that contribute to local
cultural activities and tourism. The funding provided by TCO
has made it possible to organize presentations given by
different groups of Brazilian artists, which have provided the
public with opportunities to be in closer contact with their
own values and cultural reality. Since the A Touch of Sympathy
Program [Toque de Solidariedade] was implemented in the year
2000, TCO has encouraged its collaborators to volunteer for
activities that are supportive of unprivileged communities and
social-assistance organizations, mainly those working with
children and youngsters. Besides benefiting poor communities,
this initiative has succeeded in improving volunteers'
awareness of social problems.
ECONOMIC AND FINANCIAL RESULTS
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Economic and Financial Results 2001 2000 Variation
(In millions of R$)
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Gross Operating Revenues (1) 1,573 1,130 39%
Gross Telecommunications Services Revenues (1) 1,338 941 42%
Gross Merchandise Sales Revenues (1) 235 188 25%
Net Operating Revenues 1,248 903 38%
Cost of services (2) (3) 229 189 17%
Cost of merchandise (3) 273 188 46%
Commercial and administrative expenses (3) 281 223 47%
Depreciation and amortization 138 112 24%
EBITDA (4) 460 318 45%
Net profit 208 129 61%
Investment in Property, Plant & equipment 191 234 -19%
Total assets 2,052 1,915 7%
Permanent assets 934 885 6%
Net equity 1,010 896 13%
Capital stock 505 303 67%
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Indicators 2001 2000 Variation
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EBITDA / Net Operating Revenues 36.88% 35.17% 2%
Overall liquidity (5) 1.14 1.09 5%
Solvability (6) 1.03 0.94 10%
Financial autonomy (7) 0.49 0.47 4%
Financial indebtedness (8) 0.51 0.57 -11%
Net Equity profitability (9) 20.60% 14.43% 6%
Asset profitability (10) 15.80% 10.80% 5%
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(1) Revenues with taxes (ICMS, Cofins and PIS)
(2) Not including the Cost of Merchandise
(3) Not including depreciation
(4) Operating Result + Amortization + Financial Result
(5) Current Assets + Long Term Assets / Current Liabilities + Long-Term
Liabilities
(6) Net Equity / Current Liabilities + Long-Term Liabilities
(7) Net Equity / Total Liabilities
(8) Short-Term and Long-Term Loans / Net Equity
(9) Net Profit / Net Equity
(10) Operating Profit + Interest on Owned Capital / Total Assets
Net Profit TCO's Net Profit rose by 61% against the previous year, while
its client base rose by 42%.
Operating TCO's Net Operating Revenues increased by 38.2% between 2000
Revenues and 2001. The consolidated ARPU was R$43 in 2001 - R$42 in
Area 8 and R$43 in Area 7. The sales of cellular handsets
generated R$ 235 million in gross revenues in 2001, of which
R$ 78 million (33.19 %) in the fourth quarter.
Operating The cost of merchandise reached R$ 273.3 million in 2001, of
Expenses which R$ 89.8 million (32,86%) in the last quarter. The cost
of acquisition per client (SAC) was R$ 151 in 2001, R$ 149 in
the fourth quarter.
EBITDA The EBITDA obtained in 2001 was R$ 460.3 million and R$ 114.9
million in the fourth quarter, which demonstrates the
Company's capability to generate cash from its operating
assets. The EBITDA generated last year was 36.8% and the
fourth-quarter EBITDA was 33.5%.
Depreciation Expenses accumulated with the depreciation and amortization
totaled R$ 137.9 million, of which R$ 38.8 million were in the
last quarter of 2001. Depreciation is calculated using the
linear method and considers the assets' useful life.
Provision for TCO registered a continuous decrease in the Provision for
Doubtful Debtors Doubtful Debtors / Write-Offs throughout the year 2001, which
resulted from the various actions taken by the Company to
optimize its billing process. From 5.52% of the Net Revenues
in the fourth quarter of 2000, the index fell to 2.6% in the
last quarter of 2001. Annually speaking, the index dropped
from 5% in 2000 to 3.9% in 2001. The amount represented by the
Provision for Doubtful Debtors / Write-Offs in 2001 was R$
48.3 million, of which R$ 9.0 million in the last quarter. The
methodology contemplates provisions for 100% of the credit
past due for more than 90 days. In addition, the percentage
ratio obtained from the write-offs' historical series is
applied to unbilled credits as well as to credits coming due
and to credits past due for up to 90 days, on the respective
gross revenues of the last 12 months.
Investments During the year 2001 TCO invested R$ 190.5 million in
Property, Plant & Equipment in areas 7 and 8, mainly in
projects to expand the network of cellular mobile
communication, to renovate telecommunication services, and to
develop proprietary transmission routes. The consolidated
estimate of investments for 2002 reaches approximately R$ 200
million, including both corporate resources and outside
funding to be used in network expansion, in the renovation of
services and to develop proprietary transmission routes.
Indebtedness Total indebtedness was R$ 517.0 million at December 31, 2001
against R$ 509.1 million in the previous year. Of this total,
60% is denominated in American Dollars. Eighty-seven percent
of the debt in American Dollars in hedged. TCO's indebtedness
is partially compensated by available funds, cash and
securities, providing for a negative net indebtedness of R$
172 million.
Share The stock value of technology companies fell sharply along the
performance year 2001. In Brazil, the BOVESPA index registered an 11% drop
resulting from the uncertainty experienced by the world's
economy after the September 11 attacks and the Argentinean
economic crisis, such as a global slow-down of the economy.
TCO stock followed this market fluctuation and lost 11% in the
value of common shares (TCOC3) and 19% in the value of
preferred shares (TCOC4). In the last stock exchange held in
2001 TCO's common shares were traded at R$ 7.93 each, and
preferred shares at R$ 5.33 each.
TCO obtained the 8th best performance in ADR price among all
Latin-American companies operating in the telecommunications
industry which trade their shares in the New York Stock
Exchange. This represented a reduction of only 27.74%. The
last price obtained for a TCO's ADR in 2001 was US$ 7.00.
2002 The year 2002 will be marked by the entry of new SMP carriers
Perspectives in the market. The perspective of an increase in competition
has made most of the companies start preparing as early as
2001 by launching new plans and services. TCO's plans to
diversify contemplate investments in the technical and
commercial areas, aiming at widening the scope of services
offered by the Company.
TCO also invests in the personal and professional development
of its collaborators, mainly by promoting training programs
which capacitate them to handle new challenges. In addition,
TCO has been developing more and more programs intended to
improve its collaborators' quality of life and social
participation, so as to allow TCO to maintain its
distinguishing levels of quality and efficiency in the future,
when a much stronger competition is expected to be present.
TCO's actions related to social improvements will be
maintained in the winning alliances such as the one the
Company has with the Ayrton Senna Institute [Instituto Ayrton
Senna], in the support given to the education of Brazilian
children and young adults and with the Mc.Donalds Institute
[Instituto Mc.Donald] through the support given to the Mc.
Happy Day Campaign [Campanha Dia Feliz]. Moreover, TCO will
continue to assist the social, cultural and sports initiatives
in the region where it operates.
In short, starting from an optimistic vision of the future and
working together with the cooperation of all directly or
indirectly involved with the Company, TCO is committed to
creating a new range of strategies and opportunities to assure
the success of a traditional, reliable and experienced Company
which at the same time has been renovated to cope with the
challenges of an ever-changing market.
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** FINANCIAL STATEMENTS TO FOLLOW **
FINANCIAL STATEMENTS
TELE CENTRO OESTE CELULAR
PARTICIPACOES S.A. E EMPRESAS
CONTROLADAS
December 31, 2001 and 2000
with Report of Independent
Auditors
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
FINANCIAL STATEMENTS
December 31, 2001 and 2000
CONTENTS
Report of Independent Auditors.................................................1
Balance Sheets.................................................................2
Statements of Income...........................................................4
Statements of Shareholders' Equity.............................................5
Statements of Changes in Financial Position....................................6
Notes to Financial Statements..................................................7
A free translation from Portuguese into English of Report of Independent
Auditors on financial statements prepared in Brazilian currency in accordance
with the accounting practices originating in Brazil's Corporation Law.
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REPORT OF INDEPENDENT AUDITORS
Directors and Shareholders
Tele Centro Oeste Celular Participacoes S.A.
We examined the accompanying balance sheets of Tele Centro Oeste Celular
Participacoes S.A. and consolidated balance sheets of Tele Centro Oeste Celular
Participacoes S.A. and subsidiaries as of December 31, 2001 and 2000, and the
related statements of income, shareholders' equity 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.
Our audit was conducted in accordance with generally accepted auditing
standards in Brazil, which included: (a) the planning of our work, taking
into consideration the materiality of balances, the volume of transactions
and the accounting and internal control systems of the Company and
subsidiaries; (b) the examination, on a test basis, of documentary
evidence and accounting records supporting the amounts and disclosures in
the financial statements; and (c) an assessment of the accounting
practices used and significant estimates made by management, as well as an
evaluation of the overall financial statement presentation.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tele Centro Oeste Celular
Participacoes S.A., as well as the consolidated financial position of Tele
Centro Oeste Celular Participacoes S.A. and subsidiaries at December 31, 2001
and 2000, and the results of their operations, changes in their shareholders'
equity and changes in their financial position for the years then ended, in
accordance with the accounting practices originating in Brazil's Corporation
Law.
Brasilia, January 31, 2002
ERNST & YOUNG
Auditores Independentes S.C.
CRC 2SP015199/O-6-S-DF
Luiz Carlos Nannini
Accountant CRC 1SP171638/O-7-S-DF
A free translation from Portuguese into English of financial statements prepared
in Brazilian currency in accordance with the accounting practices originating in
Brazil's Corporation Law.
--------------------------------------------------------------------------------
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS
December 31, 2001 and 2000
(In thousands of reais - R$)
Company Consolidated
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ASSETS 2001 2000 2001 2000
--------------------------------------------------
Current assets:
Cash and banks 378 134 45,907 11,267
Short-term investments - 9,641 280,730 438,864
Marketable securities - 8,289 362,310 158,701
Trade accounts receivable - 5 186,762 161,010
Accounts receivable from related parties 8,057 - - -
Inventories - - 29,399 52,082
Deferred and recoverable taxes 47,476 30,350 120,222 107,380
Interest on shareholders' equity 141,788 44,370 - -
Other assets 10,087 7,228 33,124 28,275
--------------------------------------------------
Total current assets 207,786 100,017 1,058,454 957,579
Noncurrent assets:
Loans to related parties 1 1,262 - 2,673
Deferred and recoverable taxes 5 - 55,616 66,282
Other assets 10 11 3,922 4,018
--------------------------------------------------
Total noncurrent assets 16 1,273 59,538 72,973
Permanent assets
Investments 1,078,217 1,088,217 9,992 4,810
Property, plant and equipment 2,734 3,180 888,039 841,375
Deferred charges - - 36,113 38,713
--------------------------------------------------
Total permanent assets 1,080,951 1,091,397 934,144 884,898
--------------------------------------------------
Total assets 1,288,753 1,192,687 2,052,136 1,915,450
==================================================
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS--Continued
December 31, 2001 and 2000
(In thousands of reais - R$)
Company Consolidated
--------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
2001 2000 2001 2000
--------------------------------------------------
Current liabilities:
Payroll and related accruals 1,541 1,788 6,849 6,969
Suppliers 1,692 791 152,524 227,757
Indirect taxes 658 2,005 79,869 61,002
Participation in results of operation 82,643 40,844 109,092 51,780
Loans and financing 91,003 191,927 279,507 490,239
Concession area 8 - - - 19,423
Other payables 10,541 305 40,612 8,935
--------------------------------------------------
Total current liabilities 188,078 237,660 668,453 866,105
Noncurrent liabilities:
Provision for contingencies 71,862 58,503 76,476 62,996
Loans from related parties 2,907 - - -
Loans and financing 15,605 - 237,477 18,910
Other payables - - 1,790 1,047
--------------------------------------------------
Total noncurrent liabilities 90,374 58,503 315,743 82,953
Minority interests - - 57,639 69,868
Shareholders' equity and capitalizable funds
Capital 505,000 303,000 505,000 303,000
Capital reserves 87,825 109,928 87,825 109,928
Income reserves 40,567 127,837 40,567 127,837
Retained earnings 383,609 355,633 383,609 355,633
Treasury stock (6,826) - (6,826) -
--------------------------------------------------
Total shareholders' equity 1,010,175 896,398 1,010,175 896,398
Capitalizable funds 126 126 126 126
--------------------------------------------------
Total liabilities and shareholders' equity 1,288,753 1,192,687 2,052,136 1,915,450
==================================================
See accompanying notes.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
EBITDA STATEMENTS
(In thousands of Brazilian Reais)
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CONSOLIDATED 1st Q 00 1st Q 01 2nd Q 00 2nd Q 01 3rd Q 00
--------------------------------------------------------------------------------------------------------------------------
Gross Operating Revenue 243.418 346.539 274.814 384.821 283.840
Deductions from gross revenue (49.722) (68.932) (57.308) (80.427) (54.962)
Net Operating Revenue 193.696 277.607 217.506 304.394 228.878
Cost of services rendered and merchandise sold * (73.677) (104.265) (77.748) (122.115) (87.525)
Gross profit 120.019 173.342 139.758 182.279 141.353
Operating revenues / expenses
Services commercialized * (30.924) (47.677) (28.839) (48.626) (29.410)
General and administrative expenses * (17.546) (24.772) (17.562) (22.151) (17.282)
Other net revenues / expenses * (908) 194 (781) (3.783) (820)
Profit before depreciation and financial revenues / 70.641 101.087 92.576 107.719 93.841
expenses - EBITDA
Depreciation (26.617) (31.148) (27.734) (32.718) (28.845)
Profit after depreciation before financial revenue and 44.024 69.939 64.842 75.001 64.996
expenses - EBIT
Financial revenue / expenses (2.474) (11.197) (5.821) (16.165) 4.176
Operating Profit 41.550 58.742 59.021 58.836 69.172
Non-operating revenue / expense 1.211 (5.304) (5.454) (4.378) (3.374)
Profit before taxes, minor 42.761 53.438 53.567 54.458 65.798
Income tax and social contribution (11.620) (14.680) (14.505) (14.992) (19.785)
Employee participation (427) (527) (457) (589) (553)
Participation of minority shareholders (3.976) (3.329) (5.554) (4.675) (4.456)
Profit before reversal of interest on owned capital 26.738 34.902 33.051 34.202 41.004
Reversal of interest on owned capital - - 3.366 17.254 1.868
Net Profit in the Period 26.738 34.902 36.417 51.456 42.872
EBITDA margin 36,47% 36,41% 42,56% 35,39% 41,00%
EBIT margin 22,73% 25,19% 29,81% 24,64% 28,40%
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED 3rd Q 01 4th Q 00 4th Q 01 FY 2000 FY 2001
--------------------------------------------------------------------------------------------------------------------------
Gross Operating Revenue 406.470 327.674 435.584 1.129.746 1.573.414
Deductions from gross revenue (83.324) (64.657) (92.600) (226.649) (325.283)
Net Operating Revenue 323.146 263.017 342.984 903.097 1.248.131
Cost of services rendered and merchandise sold * (117.499) (137.843) (158.392) (376.793) (502.271)
Gross profit 205.647 125.174 184.592 526.304 745.860
Operating revenues / expenses
Services commercialized * (47.819) (38.447) (46.450) (127.620) (190.572)
General and administrative expenses * (19.460) (42.783) (24.052) (95.173) (90.435)
Other net revenues / expenses * (1.744) 16.626 820 14.117 (4.513)
Profit before depreciation and financial revenues / 136.624 60.570 114.910 317.628 460.340
expenses - EBITDA
Depreciation (35.301) (28.416) (38.751) (111.612) (137.918)
Profit after depreciation before financial revenue and 101.323 32.154 76.159 206.016 322.422
expenses - EBIT
Financial revenue / expenses (6.576) (20.080) (9.533) (24.199) (43.471)
Operating Profit 94.747 12.074 66.626 181.817 278.951
Non-operating revenue / expense (5.484) (11.049) (6.484) (18.666) (21.650)
Profit before taxes, minor 89.263 1.025 60.142 163.151 257.301
Income tax and social contribution (27.221) 4.264 (17.040) (41.646) (73.933)
Employee participation (621) (527) (609) (1.964) (2.346)
Participation of minority shareholders (4.659) (1.347) (5.552) (15.333) (18.215)
Profit before reversal of interest on owned capital 56.762 3.415 36.941 104.208 162.807
Reversal of interest on owned capital 111 19.877 27.932 25.111 45.297
Net Profit in the Period 56.873 23.292 64.873 129.319 208.104
EBITDA margin 42,28% 23,03% 33,50% 35,17% 36,88%
EBIT margin 31,36% 12,23% 22,20% 22,81% 25,83%
--------------------------------------------------------------------------------------------------------------------------
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
STATEMENTS OF INCOME
Years ended December 31, 2001 and 2000
(In thousands of reais - R$)
Company Consolidated
---------------------- ---------------------
2001 2000 2001 2000
---------- ----------- --------- -----------
Gross operating revenue - - 1,573,414 1,129,746
Gross revenue deductions - - (325,283) (226,649)
---------- ----------- ---------- -----------
Net operating revenue - - 1,248,131 903,097
Costs of services rendered and costs of products sold - - (620,306) (484,155)
---------- ----------- ---------- -----------
Gross profit - - 627,825 418,942
Operating income (expenses):
Selling expenses - - (193,794) (127,619)
General and administrative expenses (27,143) (20,467) (107,096) (77,020)
Financial result, net (69,855) (43,620) (43,471) (24,199)
Equity pickup 245,369 167,268 - -
Other operating income (expenses) 22,307 14,285 (4,513) (8,286)
---------- ----------- ---------- -----------
Operating income 170,678 117,466 278,951 181,818
Nonoperating income (9) (13,755) (21,650) (18,667)
---------- ----------- ---------- -----------
Income before income taxes and participation 170,669 103,711 257,301 163,151
Income and social contribution taxes (1,886) 6,888 (73,933) (41,647)
Employees' participation (679) (525) (2,346) (1,964)
Minority interests - - (18,215) (15,332)
---------- ----------- ----------- -----------
Net income before reversal of interest on shareholders' 168,104 110,074 162,807 104,208
equity
Reversal of interest on shareholders' equity 40,000 19,245 45,297 25,111
---------- ----------- ---------- -----------
Net income 208,104 129,319 208,104 129,319
=========== =========== =========== ===========
Outstanding shares at the balance sheet date (thousands) 366,463,335 364,399,028
Net income per lot of thousand shares (R$) 0.57 0.35
See accompanying notes.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31, 2001 and 2000
(In thousands of reais - R$)
Capital reserves Income reserves
---------------------------------------------------------
Special
Capital premium Premium Legal reserve Unearned income
reserve reserve reserve
---------------------------------------------------------------------
Balances at December 31, 1999 303,100 109,870 68 23,696 105,147
Capital reduction - partial spin-off of TCO (100) (93,262) - - -
Premium merged at subsidiaries - 93,252 - - -
Reversal of reserves - - - - (105,147)
Net income - - - - -
Income appropriation proposal:
Transfer to reserves - - - 6,466 97,675
Interest on shareholders' equity - - - - -
Dividends - - - - -
---------------------------------------------------------------------
Balances at December 31, 2000 303,000 109,860 68 30,162 97,675
Capitalization of the offset tax credit 16,618 (16,618) - - -
Capital increase with retained earnings 185,382 - - - -
Reserve of premium merged at subsidiaries - (5,485) - - -
Treasury stock - - - - -
Adjustment of stock dividends at subsidiaries - - - - -
Reversal of reserves - - - - (97,675)
Net income - - - - -
Income appropriation proposal:
Transfer to reserves - - - 10,405 -
Interest on shareholders' equity - - - - -
Dividends - - - - -
---------------------------------------------------------------------
Balances at December 31, 2001 505,000 87,757 68 40,567 -
=====================================================================
Retained
earnings Treasury stock Total
------------------------------------------------
Balances at December 31, 1999 263,195 - 805,076
Capital reduction - partial spin-off of TCO - - (93,362)
Premium merged at subsidiaries - - 93,252
Reversal of reserves 105,147 - -
Net income 129,319 - 129,319
Income appropriation proposal:
Transfer to reserves (104,141) - -
Interest on shareholders' equity (19,245) - (19,245)
Dividends (18,642) - (18,642)
------------------------------------------------
Balances at December 31, 2000 355,633 - 896,398
Capitalization of the offset tax credit - - -
Capital increase with retained earnings (185,382) - -
Reserve of premium merged at subsidiaries - - (5,485)
Treasury stock - (6,826) (6,826)
Adjustment of stock dividends at subsidiaries (1,516) - (1,516)
Reversal of reserves 97,675 - -
Net income 208,104 - 208,104
Income appropriation proposal:
Transfer to reserves (10,405) - -
Interest on shareholders' equity (40,000) - (40,000)
Dividends (40,500) - (40,500)
------------------------------------------------
Balances at December 31, 2001 383,609 (6,826) 1,010,175
================================================
See accompanying notes.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
Years ended December 31, 2001 and 2000
(In thousands of reais - R$)
Company Consolidated
------------------------------- ------------------------------
2001 2000 2001 2000
---------------- -------------- -------------- ---------------
SOURCES OF WORKING CAPITAL
From operations
Net income 208,104 129,319 208,104 129,319
Minority interests - - 18,215 15,332
Expenses (income) not affecting working capital
Depreciation and amortization 1,134 379 138,585 113,269
Equity pickup (245,369) (167,268) - -
Monetary variation on noncurrent assets and liabilities 9,864 3,828 12,952 8,303
Book value of permanent asset write-offs 5 - 10,262 -
---------------- -------------- -------------------------------
Funds generated (consumed) by economic activity (26,262) (33,742) 388,118 266,223
From shareholders
Investment reduction 54,317 - - -
Interest on shareholders' equity, dividends and others 200,385 - - -
---------------- -------------- -------------------------------
---------------- -------------- -------------------------------
254,702 - - -
From third parties
Decrease in noncurrent assets 2,284 - 3,560 -
Transfer from noncurrent to current assets - 85,938 21,947 20,107
Increase in noncurrent liabilities 22,536 - 222,847 15,148
---------------- -------------- -------------------------------
24,820 85,938 248,354 35,255
---------------- -------------- -------------------------------
Total sources of working capital 253,260 52,196 636,472 301,478
---------------- -------------- -------------------------------
APPLICATIONS OF WORKING CAPITAL
Increase in noncurrent assets - 661 - 2,519
Additions to investment - 141,017 5,597 1,094
Additions to property, plant and equipment 25 431 190,521 234,010
Additions to deferred charges - 2 1,722 6,445
Transfer from noncurrent to current liabilities 1,557 - 15,082 24,981
Decrease in noncurrent liabilities - 79,338 - -
Interest on shareholders' equity 40,000 19,245 45,297 25,111
Dividends 40,500 18,642 53,671 18,642
Adjustment of stock dividends at subsidiaries 1,516 - 1,516 -
Capital reduction - partial spin-off - 100 - 100
Capitalization of offset tax credits 5,485 - 5,485 -
Treasury stock 6,826 - 6,826 -
Minority interests - - 12,228 21,745
---------------- -------------- -------------------------------
Total applications of working capital 95,909 259,436 337,945 334,647
---------------- -------------- -------------------------------
Increase (reduction) in net working capital 157,351 (207,240) 298,527 (33,169)
================ ============== ===============================
VARIATION IN NET WORKING CAPITAL
Current assets:
At beginning of year 100,017 112,539 957,579 416,763
At year-end 207,786 100,017 1,058,454 957,579
---------------- -------------- -------------------------------
107,769 12,522 100,875 540,816
Current liabilities:
At beginning of year 237,660 42,942 866,105 292,120
At year-end 188,078 237,660 668,453 866,105
---------------- -------------- -------------------------------
(49,582) 194,718 (197,652) 573,985
---------------- -------------- -------------------------------
Increase (reduction) in net working capital 157,351 (207,240) 298,527 (33,169)
================ ============== ===============================
See accompanying notes.
1. Operations
Tele Centro Oeste Celular Participacoes S.A. is a publicly traded company
directly controlled by BID S.A. (company controlled by Splice Group) who
acquired 53.80% of the voting capital and 18.53% of the total capital.
The Company controls the following companies: Telebrasilia Celular S.A.,
Telegoias Celular S.A., Telemat Celular S.A., Telems Celular S.A., Teleron
Celular S.A. and Teleacre Celular S.A. The subsidiaries are responsible
for providing cellular telephone services - Band A throughout the Middle
West region of the country including the States of Rondonia and Acre,
according to the concession terms signed by the Federal Government which
should expire on August 5, 2008 but could be extended for another 15
years.
On May 24, 1999 Norte Brasil Telecom S.A. - NBT was constituted, as a
private company, with the objective of exploring cellular telephone
services as well as all necessary and useful activities for delivering
these services within area 8 - Band B which comprises the States of
Amazonas, Roraima, Amapa, Para and Maranhao. Norte Brasil Telecom S.A.
started-up its activities in 1999, serving 11 of the 97 cities comprising
the respective operating area. The expenses incurred to December 31, 1999
were considered as pre-operating expenses and amortized as from January
2000 when the company became operational and the respective expenses
started being amortized.
The business of Tele Centro Oeste Celular Participacoes S.A., including
the services provided by its subsidiairies and respective charges are
controlled by ANATEL (National Agency of Telecommunications), the entity
responsible for regulating telecommunications in Brazil in accordance with
Law No. 9,472 of July 16, 1997 and respective regulations.
On November 21, 2000 TCO IP S.A. was constituted, a private company, with
the objective of rendering telecommunications and internet access
services, developing solutions and others.
2. Presentation of the financial statements
The financial statements of the parent company and consolidated financial
statements have been prepared in conformity with accounting practices
originating in Brazil's Corporation Law and accounting norms and
procedures established by the CVM (Brazilian Securities Commission).
3. Summary of the principal accounting practices
a. Short-term investments
Refers to temporary investments of high liquidity falling due within
less than three months, stated at cost plus income earned to the
balance sheet date.
b. Marketable securities
Refers to investments to be maintained up to the respective maturity,
which should not exceed 12 months, and are recorded at cost plus
interest earned to the balance sheet date.
c. Credits and obligations
Credits and obligations are stated at their historical value. The
amounts subject to monetary correction, foreign exchange variation and
interest are adjusted to the balance sheet date
d. Allowance for doubtful accounts
This provision was constituted to cover accounts receivable unlikely to
be collected. The methodology comprises the recording of a provision to
cover 100% of accounts overdue more than 90 days. Additionally, for the
accounts not yet billed, not yet due and overdue more than 90 days, the
percentages historically obtained from write-offs are applied on the
respective gross revenues computed within the last 12 months.
e. Inventories
Stated at the lower of average acquisition cost or market value.
Inventories mainly comprise cellular equipment to be sold to operators
or authorized agencies.
f. Investments
Refers to permanent participation in the capital of subsidiaries which
are recorded according to the equity pickup method. The accounting
practices adopted by subsidiaries are consistent to those adopted by
the Company. The investments are stated at cost not exceeding market
value.
g. Property, plant and equipment
Property, plant and equipment is stated at acquisition and/or
construction cost, monetarily corrected to December 31, 1995 less
accumulated depreciation.
The operation right (concession area 8) of cellular services - Band B
relating to the subsidiary Norte Brasil Telecom S.A. was stated at the
respective acquisition cost and is being amortized in accordance to
concession terms.
Materials related to the plant expansion are stated at average
acquisition cost.
The maintenance and repair expenses representing improvements (increase
of installed capacity or useful life) are capitalized while the
remaining expenses are charged to operating results following the
accrual method.
Depreciation is calculated by the straight-line method considering the
useful life of the assets at rates shown in Note 9.
h. Deferred charges
The income and expenses computed during the pre-operating phase of
subsidiaries Norte Brasil Telecom S.A. and TCO IP S.A. are charged to
deferred charges and amortized by the straight-line method over a
period of 10 years.
i. Income and social contribution taxes
Income and social contribution taxes are recorded on the accrual basis,
calculated in accordance with the current tax legislation. Deferred
taxes are recorded over temporary differences, calculated based on the
rates applicable at the respective realization or liquidation.
j. Provision for contingencies
The provision for contingencies was recorded based on an analysis of
the Company's lawyers regarding all existing legal actions.
k. Income and expenses
Income and expenses are charged to the year's operating result on the
accrual basis. The revenues derived from sales of prepaid recharging
cellular telephone cards are deferred and charged to the operating
result as the cards are used.
Billings are computed monthly and the revenues not billed between the
billings date and the end of the respective period are estimated and
recognized in the month that the service was rendered.
l. Financial result, net
The financial result net is represented by interest and monetary
correction on short-term investments and loans obtained and granted. In
compliance with the current tax legislation, the interest on
shareholders' equity was recorded as financial expenses and considered
as destination of result for financial statement purposes, according to
Deliberation No. 207 of December 12, 1996 of the CVM (Brazilian
Securities Commission).
m. Pension plan
Tele Centro Oeste Celular Participacoes S.A. and subsidiaries sponsor a
private social security plan, which is managed by SISTEL. According to
the CVM Resolution No. 371 of December 13, 2000, the Company conducted
studies on future benefits to employees which are presented in Note 23.
However, the Company opted to record the adjustment to actuarial
liabilities directly in the year's operating result as of 2002 for a
period of five years, or if lower, for the period of the service or
remaining life of the employees.
n. Employees' income participation
Tele Centro Oeste Celular Participacoes S.A. and subsidiaries provide
for employees' income participation based on Article 5 of Provisional
Measure No. 980 of April 25, 1995 and subsequent publications.
The amount provided for is equivalent to a monthly salary subject to
approval of the Shareholders Meeting.
o. Profit per share
Profit per share was calculated based on the number of outstanding
shares at the balance sheet computation date.
4. Consolidation of the financial statements
The consolidated financial statements were prepared in accordance with
consolidation basic principles established by Brazil's Corporation Law and
norms of the CVM (Brazilian Securities Commission).
We present below the main consolidation procedures:
a) Elimination of assets and liability account balances between the
consolidated companies;
b) Elimination of capital participation, reserves and retained earnings of
the consolidated companies;
c) Elimination of revenues and expenses derived from business held between
the consolidated companies;
d) Highlighting the amounts of participation by minority interest on the
financial statements.
The consolidated companies comprise the following:
Capital participation total (%)
------------------------------------
2001 2000
------------------------------------
88.25 88.21
Telebrasilia Celular S.A.
Telegoias Celular S.A. 96.81 92.22
Telemat Celular S.A. 97.49 97.31
Telems Celular S.A. 98.39 98.19
Teleron Celular S.A. 97.12 96.97
Teleacre Celular S.A. 98.31 98.29
Norte Brasil Telecom S.A. - NBT 31.67 95.00
TCO IP S.A. 99.99 -
5. Marketable securities
Company Consolidated
--------------------------------
Interest Due date 2001 2000 2001 2000
------------------------------------------------------------------------
Notes from Central Foreign exchange variation 9/17/2001
Bank of Brazil - plus annual interest of 6% and
Especial Issuing - with Swap of 100% CDI 6/17/2004 - - - 39,007
government securities
Debentures - Unibanco Prefixed annual rate of 15%
Leasing Contracts with Swap of 100% CDI 5/1/2003 - - - 28,165
Bank Deposit Prefixed annual rate of 15% 3/19/2001
Certificate - Unibanco with Swap of 100% CDI and - - - 13,786
4/25/2001
Commercial Paper- Prefixed annual rate of 24% 7/5/2002
Splice do Brasil S.A. to 25% with Swap of 100% and - 8,289 362,310 77,743
CDI plus 1.5% p.a. 9/30/2002
--------------------------------
- 8,289 362,310 158,701
================================
6. Trade accounts receivable
Consolidated
-----------------------------------
Amounts invoiced 64,975 47,901
47,193 42,948
Amounts to be invoiced
Network use rate 52,849 46,284
Sales - prepaid 49,081 40,611
Allowance for doubtful accounts (40,781) (25,826)
Others 13,445 9,092
-----------------------------------
186,762 161,010
===================================
Not yet due 24,903 20,031
Overdue - from 1 to 30 days 16,291 10,779
Overdue - from 31 to 60 days 5,972 3,694
Overdue - from 61 to 90 days 4,779 3,443
Overdue - more than 90 days 13,030 9,954
-----------------------------------
Total services invoiced 64,975 47,901
===================================
Statement of the allowance for doubtful accounts movements:
Consolidated
------------------------------------
25,826 26,408
Initial balance
Complement to the year's allowance 60,479 54,873
Losses (45,524) (55,455)
------------------------------------
Final balance 40,781 25,826
====================================
Losses recovering 12,178 9,569
------------------------------------
7. Deferred and recoverable taxes
Company Consolidated
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
Withholding tax 10,628 - 26,583 -
Recoverable income tax 19,731 16,642 37,937 37,597
Recoverable social contribution tax 4,474 5,118 10,570 10,373
Recoverable income tax - premium - - 48,403 64,539
Recoverable social contribution tax - premium - - 17,427 23,234
Deferred income and social contribution taxes 12,460 8,533 19,865 18,853
Recoverable ICMS (State VAT) - - 13,355 17,764
Other recoverable taxes 188 57 1,698 1,302
--------------------------------------------
47,481 30,350 175,838 173,662
Current (47,476) (30,350) (120,222) (107,380)
--------------------------------------------
Noncurrent 5 - 55,616 66,282
============================================
The recoverable amounts relating to income and social contribution taxes on
premium refer to the tax benefit to be computed through the amortization of the
premium merged by the operators of Tele Centro Oeste Celular, with respective
realization to be concluded by 2004.
8. Investments
Company Consolidated
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
Participation stated by the equity
pickup method 1,068,410 1,083,592 - -
Premium - Norte Brasil Telecom S.A. 5,185 3,339 5,185 3,339
Premium - Telegoias Celular S.A. 4,616 - 4,616 -
Other investments 6 1,286 6 1,286
Tax Incentives - - 185 185
---------------------------------------------
1,078,217 1,088,217 9,992 4,810
=============================================
The significant information between subsidiaries is summarized as follows:
2001 2000
-----------------------------------------------------------------------------------------------------
Increase
Participation of capital,
--------------------- interest on
(loss) Equity shareholders'
Shareholders' for the Voting Total pickup equity and
Subsidiaries equity year capital capital result others Investments Investments
----------------------------------------------------------------------------------------------------------------------
Telebrasilia 345,070 100,949 91% 88% 89,108 (120,095) 307,525 338,512
Telegoias 309,764 62,224 91% 97% 58,061 (9,795) 300,446 252,180
Telemat 189,374 44,101 99% 97% 42,990 (36,870) 185,071 178,951
Telems 156,735 38,959 99% 98% 38,330 (29,374) 154,543 145,587
Teleron 44,273 10,540 98% 97% 10,233 (5,213) 43,121 38,101
Teleacre 24,439 5,598 100% 98% 5,506 (3,942) 24,067 22,503
NBT 165,433 2,854 95% 32% 1,402 (56,772) 52,388 107,758
TCO IP 1,249 (261) 99% 99% (261) 1,510 1,249 -
---------------------------------------------------
245,369 (260,551) 1,068,410 1,083,592
===================================================
On June 21, 2001 the Company sold 66.66% of its participation in the
capital of Norte Brasil Telecom S.A. to subsidiary Telebrasilia Celular
S.A. at book value.
The premiums of R$ 5,185 and R$ 4,616 at December 31, 2001 refer,
respectively, to the acquisition of 45% of the shares of Norte Brasil
Telecom S.A. from Inepar S.A. in May 1999 and the acquisition of the
shares of Telegoias Celular S.A. from the market in 2001. These premiums
are being amortized over 5 and 10 years.
9. Property, plant and equipment
Consolidated
------------------------------------------------------
2001 2000
------------------------------------------------------
Annual Cost
Depreciation monetarily Accumulated Net book Net book
rate (%) corrected depreciation value value
---------------------------------------------------------------------
Assets and service installations
Switching equipment 10 229,102 (52,334) 176,768 113,024
Transmission equipment 14.29 646,183 (318,834) 327,349 332,721
Infra-structure
Land - 4,817 - 4,817 3,588
Buildings 4 33,661 (10,899) 22,762 21,489
Supporters and protectors 5 45,468 (8,682) 36,786 32,828
Energy equipment 10 63,679 (35,197) 28,482 31,393
Others 10 3,919 (1,404) 2,515 2,808
Computer equipment 20 30,368 (8,401) 21,967 8,914
Vehicles 20 1,716 (1,182) 534 571
Other assets 5 to 20 62,164 (17,730) 44,434 41,665
Assets for future use
Assets and construction in progress - 152,749 - 152,749 182,932
Construction material - 14,523 - 14,523 10,908
Exploration right (concession) 6.90 60,550 (6,197) 54,353 58,534
------------------------------------------------------
1,348,899 (460,860) 888,039 841,375
======================================================
The exploration right balance started being amortized in 2001 at a 6.90%
annual rate in order to adapt the amortization to the concession period.
10. Deferred charges
Consolidated
---------------------------------------------
2001 2000
---------------------------------------------
Preoperating expenses 44,692 42,994
Others 69 64
Accumulated amortization (8,648) (4,345)
---------------------------------------------
36,113 38,713
=============================================
11. Suppliers
Company Consolidated
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
1,645 746 132,399 219,002
Suppliers
Consignment on behalf of third parties 47 45 9,275 4,414
Accounts payable for interconnection services - - 10,850 4,341
---------------------------------------------
1,692 791 152,524 227,757
---------------------------------------------
12. Indirect taxes
Company Consolidated
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
ICMS tax - - 35,205 25,939
- - 37,770 28,355
Fistel tax
Taxes on revenues (COFINS, PIS and others) 658 2,005 6,894 6,708
---------------------------------------------
658 2,005 79,869 61,002
=============================================
13. Income participation
Company Consolidated
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
Interest on shareholders' equity for the year 40,000 19,245 57,288 25,111
Interest on shareholders' equity for the prior
year 7,365 5,313 15,664 9,841
IRRF tax on interest on shareholders' equity (6,000) (2,881) (18,828) (3,778)
Dividends 40,500 18,642 52,599 18,642
Employees' income participation 778 525 2,369 1,964
---------------------------------------------
82,643 40,844 109,092 51,780
=============================================
14. Loans and financing
Company Consolidated
-----------------------------------------
Interest and monetary correction Due date 2001 2000 2001 2000
------------------------------------------------------------------------------------------------------------------------------------
National currency
BNDES T.J.L.P. plus annual interest from 3.5% to 1/15/2002 and
4%. 1/15/2008 - - 192,030 84,026
BNDES UMBNDES variation plus a loan charge from 1/15/2002 and
BNDES and annual interest from 3.5% to 4% . 1/15/2008 - - 12,648 -
Commercial Paper Annual discount of 19% applied on the
subscription date with Swap of 103.5% of
CDI. 1/12/2001 - 186,913 - 186,913
Brasil Telecom S.A. - 5/21/2002 - - 2,917 -
Other loans Industrial Products Column 20 - FGV 2002 to 2008 - - 1,707 1,771
Foreign currency
Finimp Exchange variation based on the U.S.
dollar, plus Libor and 0.93% p.a. over 10/3/2002 e
Libor, and 2.47% p.a. 10/30/2002 2,374 - 11,125 6,542
Compror Exchange variation based on the U.S.
dollar plus annual interest of 9.30% 1/7/2002 359 - 4,447 -
Prepayment Exchange variation based on the U.S.
dollar, Libor plus interest from 1.75% to
1.90% p.a. and performance premium ranging 3/14/2002 and
from 1.20% to 1.30% p.a. 8/15/2002 41,537 - 98,174 -
Debt assumption - Finimp Exchange variation based on the U.S.
dollar plus Libor and interest from 0.5% from 2/25/2002
to 2.45% p.a. to 10/21/2002 41,398 - 128,937 -
Loan from supplier Exchange variation based on the U.S.
dollar plus annual interest of 6.05%. 11/29/2004 - - 3,291 -
Euro Commercial Paper Annual discount of 9.5 with exchange
variation based on the U.S. dollar. 5/18/2001 - 5,014 - 207,943
Export Development Exchange variation based on the U.S.
Corporation - EDC dollar plus semiannual Libor and annual
interest of 3.90%. 11/22/2005 20,940 - 61,708 21,954
-----------------------------------------
106,608 191,927 516,984 509,149
Current (91,003) (191,927) (279,507) (490,239)
-----------------------------------------
Noncurrent 15,605 - 237,477 18,910
=========================================
The amounts falling due on a long-term basis are as follows:
Consolidated
----------------------------------
Due date 2001 2000
-----------------------------------------------------
2002 - 4,563
2003 55,320 4,563
2004 66,735 4,563
2005 66,735 4,561
2006 25,402 220
2007 21,176 220
2008 2,109 220
----------------------------------
237,477 18,910
==================================
On May 17, and July 11, 2001, TCO IP S.A. (a subsidiary) obtained funds in
the international market in amounts corresponding to US$ 90 million and
US$ 20 million, respectively, through an operation known as exports
prepayment with purchase of performance. The charges on the operation were
1.75% and 1.90% p.a. over Libor, plus 1.20% and 1.30% p.a. as purchase of
performance rate.
The Finimp debt assumption refers to working capital financing operations
for acquiring cellular equipment, according to contracts held between the
respective financial institutions and suppliers.
Guarantees:
Banks Guarantees
--------------------------- ------------------------------------------------------
BNDES - TCO Operators 15% of receivables and CDB pledged in the amount of
the next installment due
BNDES - NBT 100% of receivables and CDB pledged in the amount of
the next installment due during the first year and
CDB pledged in the amount equivalent to two
installments due in the remaining period
EDC Guarantee from TCO and other subsidiaries
Other loans and financing Guarantee from TCO
The contracts with BNDES and EDC include several restrictive clauses
denominated covenants. At December 31, 2001, the Company does not present
problems relating to the compliance with contract conditions.
At December 31, 2001, the equivalent of 87% of loans and financing in
foreign currency are hedged against foreign exchange variation through
swap contracts.
15. Provision for contingencies
Based on the lawyers' opinion, the Company recorded a provision for
contingencies in amounts considered necessary to cover possible losses
derived from the outcome of ongoing processes, as follows:
Company Consolidated
-------------------------------------------------------------
2001 2000 2001 2000
-------------------------------------------------------------
Tax 9,735 5,375 14,148 8,721
Labor - - 201 654
Others (a) 62,127 53,128 62,127 53,621
-------------------------------------------------------------
71,862 58,503 76,476 62,996
=============================================================
(a) Basically corresponding to the original loans from Telecomunicacoes
Brasileiras S.A. - TELEBRAS, which according to Attachment II of the
Spin-Off Report of February 28, 1998, approved by the General Shareholders
Meeting of May 1998, should be charged to the respective holding
controlled by Telegoias Celular S.A. and Telebrasilia Celular S.A.
Local management, based on the understanding that the respective loans
were wrongly allocated at the time of the spin-off, suspended the payments
flow subsequent to the changes in Company's controls. These loans are
being indexed by the IGP-M (Market General Price Index) plus 6% annual
interest.
In June 1999, Tele Centro Oeste Celular Participacoes S.A. (parent
company) filed a legal action claiming that the assets related to these
obligations - loans and financing - belong to the Company as well as the
respective accessories, plus compensations for the installments paid.
In November 1999, the Company's management decided to transfer to the
actual holding - Tele Centro Oeste Celular Participacoes S.A., the
liability derived from the loan originally due to Telecomunicacoes
Brasileiras S/A - TELEBRAS and absorbed during the spin-off process.
16. Related party transactions
Company
The amounts receivable from related parties refer to the transfer of
administrative expenses from the Company to its subsidiaries.
Consolidated
2001 2000
---------------------------------------------------------------------------
SPL CSM
Splice do Banco Construtora e Cartoes
Brasil S.A. Credibel Pavimentadora S.A. Total Total
---------------------------------------------------------------------------
Assets
------
Cash and banks - - - - - 713
Short-term investments - 17,353 - - 17,353 6,527
Commercial Paper 362,310 - - - 362,310 77,743
Loan - - - - - 2,673
Liabilities
-----------
Suppliers 556 - 22 663 1,241 1,452
Interest on shareholders' equity 6,671 - - - 6,671 -
Dividends 7,505 - - - 7,505 -
Transactions
------------
Income from short-term investments 39,788 1,250 - - 41,038 11,078
Financial expense 7,850 - - - 7,850 -
General and administrative 1,968 - - - 1,968 3,508
expenses
Other materials - - - 10 10 -
Acquisition of telephone cards - - 920 920 2,121
Acquisition of property, plant
and equipment 9,338 - 2,457 11,795 5,112
The Company and subsidiaries makes loans in the financial market and
transfer these amounts to related parties through Debt Assumption
Operations with the aim of reducing loan costs. Through these operations,
the loans obtained are transferred to related parties at the same rates
originally charged plus a premium.
According to a contract entered into between Splice do Brasil S.A. and the
subsidiaries of Tele Centro Oeste Celular Participacoes S.A., Telems
Celular S.A., Telemat Celular S.A., Teleron Celular S.A. and Teleacre
Celular S.A., technical assistance services are payable to Splice do
Brasil S.A. corresponding at 1% of the net operating income. For the year
ended December 31, 2001 the amount of R$ 1,932 was charged to general and
administrative expenses.
All transactions with related parties were carried out in accordance with
the Company's Articles of Incorporation and under normal market
conditions.
17. Net operating result
Consolidated
-----------------------------------------
2001 2000
-----------------------------------------
121,486 188,556
Subscription
Use
National 491,894 304,494
Displacement/additional per calls and others 38,268 34,826
Use of network 526,846 324,402
Additional services 7,647 9,164
Resale of cellular equipment 235,010 188,290
151,655 78,227
Resale of cards
327 -
Internet services
281 1,787
Others
-----------------------------------------
Gross operating income 1,573,414 1,129,746
Taxes on gross income (325,283) (226,649)
-----------------------------------------
-----------------------------------------
Net operating income 1,248,131 903,097
=========================================
18. Operating costs and expenses
Consolidated - 2001
--------------------------------------------------------------------------
Costs of
services General and
rendered/ cost administrative
of products sold Selling expenses expenses Total
--------------------------------------------------------------------------
Personnel 11,629 19,592 30,966 62,187
Administration fees - - 2,500 2,500
Material 4,956 5,000 2,883 12,839
Third party services 121,016 113,251 47,653 281,920
Rental/leasing/insurance 37,669 4,074 4,533 46,276
Depreciation and amortization 118,035 3,222 16,661 137,918
Taxes and contributions 53,173 62 1,196 54,431
Allowance for doubtful accounts - 14,955 - 14,955
Net losses - 33,346 - 33,346
Cost of products sold 273,299 - - 273,299
Other materials 529 292 704 1,525
--------------------------------------------------------------------------
620,306 193,794 107,096 921,196
==========================================================================
Consolidate - 2000
---------------------------------------------------------------------------------
Costs of services General and Total
rendered/ cost of Selling expenses administrative
products sold expenses
---------------------------------------------------------------------------------
Personnel 10,910 13,986 25,361 50,257
Administration fees - - 1,788 1,788
Material 2,948 2,178 2,670 7,796
Third party services 89,770 62,558 39,916 192,244
Rental/leasing/insurance 35,408 3,364 2,345 41,117
Depreciation and amortization 107,362 - 4,251 111,613
Taxes and contributions 49,942 12 222 50,176
Allowance for doubtful accounts - (582) - (582)
Net losses - 45,886 - 45,886
Cost of products sold 187,754 - - 187,754
Other materials 61 217 467 745
---------------------------------------------------------------------------------
484,155 127,619 77,020 688,794
=================================================================================
19. Other operating income (expense)
Company Consolidated
-------------------------------------------------------------------
2001 2000 2001 2000
-------------------------------------------------------------------
Taxes (except income taxes) (6,719) (7,711) (13,822) (11,696)
Research and development - - (436) (736)
Technical and administrative services - - 436 743
Donations and sponsorships - (40) (7,330) (3,883)
Recovered expenses 185 1 348 772
Reversal of provisions - - 627 253
Premium amortization - (372) - (372)
Penalties - - 12,921 3,231
Recovery of expenses with subsidiaries 29,298 22,404 - -
Other operating income (expenses) (457) 3 2,743 3,402
-------------------------------------------------------------------
22,307 14,285 (4,513) (8,286)
===================================================================
20. Financial result, net
Company Consolidated
-----------------------------------------------------------------
2001 2000 2001 2000
-----------------------------------------------------------------
Financial revenue 29,846 21,743 134,703 84,244
Financial expenses (99,701) (65,363) (178,174) (108,443)
-----------------------------------------------------------------
(69,855) (43,620) (43,471) (24,199)
=================================================================
Financial expenses include interest on shareholders' equity at December
31, 2001 in the amounts of R$ 40,000 (R$ 19,245 in 2000) and R$ 45,297 (R$
25,111 in 2000), under parent company and consolidated respectively.
These amounts were reversed against shareholders' equity in accordance
with Resolution No. 207/96 of the CVM (Brazilian Securities Commission).
21. Nonoperating result
Basically refers to amortization of deferred assets and the provision for
maintenance of shareholders' equity completeness (premium computed at the
merger of Coverage Participacoes S.A.).
22. Income and social contribution taxes
Company Consolidated
-------------------------------------------------------
2001 2000 2001 2000
-------------------------------------------------------
Social contribution tax income (expenses) (495) 1,832 (19,711) (11,847)
Income tax income (expenses) (1,391) 5,056 (54,222) (29,800)
-------------------------------------------------------
(1,886) 6,888 (73,933) (41,647)
=======================================================
Income before deductions 170,669 103,711 257,301 163,151
Employees' income participation (679) (525) (2,346) (1,964)
-------------------------------------------------------
Calculation base 169,990 103,186 254,955 161,187
-------------------------------------------------------
Social contribution tax (15,299) (9,287) (22,946) (14,808)
Social contribution tax on permanent additions (7,286) (6,515) (666) (6,717)
Social contribution tax on permanent exclusions 22,083 17,577 3,859 9,504
Others 7 57 42 174
-------------------------------------------------------
Social contribution tax (495) 1,832 (19,711) (11,847)
=======================================================
Income tax (42,498) (25,797) (63,739) (40,297)
Income tax on permanent additions (20,380) (18,098) (2,035) (18,661)
Income tax on permanent exclusions 61,342 48,823 10,685 27,700
Tax incentives/others 145 128 867 1,458
-------------------------------------------------------
Income tax (1,391) 5,056 (54,222) (29,800)
=======================================================
Effective rate (income and social contribution 1% 7% 29% 26%
taxes)
In 2001 and 2000, tax expenses were calculated based on the current rate
of 34% (25% for income tax and 9% for social contribution tax), except in
the month of January 2000 when the applicable rate for social contribution
tax was 12%.
23. Pension plan
Tele Centro Oeste Celular Participacoes S.A., together with other
companies of the former Telebras System, make payments towards private
pension plans and of medical assistance for retired employees, controlled
by Sistel Social Security Foundation - SISTEL. Up until December 1999, all
sponsors of the plans controlled by SISTEL showed solidarity towards the
Benefits Plan existing at that time. On December 28, 1999, the sponsors of
the plans controlled by SISTEL negotiated conditions for the creation of
individual pension plans per sponsor (PBS-TCO), maintaining the solidarity
only for the participants already assisted by the plan and under such
conditions at January 31, 2000 (PBS-A), resulting in a restructuring
proposal on the Sistel Statute and Regulation which was approved by the
Complementary Pension Department on January 13, 2000.
Due to the discontinuation of the solidarity concept occurred in 1999,
Tele Centro Oeste Celular Participacoes S.A. individually sponsors a
Defined Benefits Retirement Plan PBS-TCO, which covers approximately 1% of
the employees working for this Company. Apart from the supplementation
benefit, the Company is participant of a multi-sponsored plan of medical
assistance for retired employees and dependents at a shared cost (PAMA).
The contributions towards plan PBS-TCO are determined based on actuarial
studies prepared by independent actuaries in accordance with current norms
established in Brazil. The cost determination regime is based on
capitalization and the contribution due by the sponsor is 13.5% on payroll
covering the employees who are participating in the plan, from which 12%
is allocated to the costing for plan PBS-TCO and 1.5% for plan PAMA.
For the other 99% of employees from Tele Centro Oeste Celular
Participacoes S.A., there is an individual defined contribution plan -
Benefits Plan TCOPREV, instituted by Sistel in August 2000. The Plan
TCOPREV is supported by contributions made by participants (employees) and
by the sponsor which are credited to individual accounts on behalf of the
participants. Tele Centro Oeste Celular Participacoes S.A. is responsible
for the costs relating to all administrative and maintenance expenses of
the plan, including death and invalidity risks. The employees taking part
of the Defined Benefits Plan (PBS-TCO) were given the option to joint plan
TCOPREV, which was also offered to the employees not taking part of plan
PBS-TCO, as well as to all newly hired employees. The Company's
contributions towards plan TCOPREV are equal to those made by the
participants, up to 8% of the participation salary, according to the
percentage chosen by the participant.
We present below the consolidated position of the provision for the
defined benefits pension plan and medical assistance for retired employees
at December 31, 2001, as well as other information required by the CVM
Instruction No. 371, of December 13, 2000 on such plans.
PBS - TCO
Reconciliation of assets and liabilities at December 31, 2001
Company Consolidated
--------------- ---------------
1. Present value of actuarial obligations with cover 501 3,184
2. Present value of actuarial obligations without cover - -
--------------- ---------------
3. Present value of actuarial obligations 501 3,184
4. Fair market value of the plan assets 762 4,685
--------------- ---------------
5. Present value of obligations exceeding the fair market (261) (1,501)
value of assets (3 - 4)
6. Net actuarial liabilities / (assets)
--------------- ---------------
a) Net actuarial liabilities / (assets) (261) (1,501)
b) Actuarial liabilities / (assets) already provided for - -
--------------- ---------------
c) Additional actuarial liabilities / (assets) (a - b) (261) (1,501)
=============== ===============
TCO PREV
Reconciliation of assets and liabilities at December 31, 2001
Company Consolidated
-------------- -------------
1. Present value of actuarial obligations with cover 5,993 33,373
2. Present value of actuarial obligations without cover - -
-------------- -------------
3. Present value of actuarial obligations 5,993 33,373
4. Fair market value of the plan assets 5,311 29,564
-------------- -------------
5. Present value of obligations exceeding the fair market 682 3,809
value of assets (3 - 4)
6. Net actuarial liabilities / (assets)
-------------- -------------
a) Net actuarial liabilities / (assets) 682 3,809
b) Actuarial liabilities / (assets) already provided for - -
-------------- -------------
c) Additional actuarial liabilities / (assets) (a - b) 682 3,809
============== =============
Expenses to be recorded in 2002
Company Consolidated
------------ --------------
1. Cost of current services (with interest) 1,034 4,173
2. Expected contributions from participants for 2002 - -
3. Interest on actuarial obligations 528 2,996
4. Expected income from assets 591 3,345
5. Amortization costs
a) Actuarial (gains) or losses not recorded - -
b) Cost of past services not recorded - -
c) Increase in unrecorded liabilities - -
d) Total (a+b+c) - -
------------ --------------
6. Total expenses recorded (1-2+3-4+5d) 971 3,824
============ ==============
Actuarial assumptions adopted in the calculations:
Discount rate for the actuarial obligation: 11.30% p.a. ( 6.0% real e 5.0% inflation)
Expected interest rates on the plan assets: 14.45% p.a. ( 9.0% real e 5.0% inflation)
Estimated salary increase index: 8.15% p.a. ( 3.0% real e 5.0% inflation)
Estimated benefit increase index: 5.00% p.a. ( 0.0% real e 5.0% inflation)
Biometrics table for general death rate: UP84 with 1 year aggravation
Biometrics table for disability: Disability table
Expected rotation rate: 0.15 / (Service Period + 1)
Possibility of retirement: 100% at the first eligibility to a benefit
from the Plan
The Company and subsidiaries have not recognize the adjustments resulting
from the application of the CVM Resolution No. 371 in the financial
statements as of December 31, 2001.
During 2001, the Company made contributions to the plans PBS-TCO and TCO
Prev in the amount of R$ 552 (R$ 243 in 2000) and R$ 2,561 for the
consolidated (R$ 2,087 in 2000).
24. Shareholder' equity
a) Capital
The authorized capital at December 31, 2001 and 2000 corresponds to
700,000,000,000 shares. The subscribed and paid-in capital at December 31,
2001 corresponds to R$ 505,000 (R$ 303,000 in 2000), represented by
366,463,335,000 shares (364,399,028,000 shares in 2000) with no par value,
distributed as follows (in thousands of shares):
2001 2000
-----------------------------
Common shares 126,433,338 124,369,031
Preferred shares 240,029,997 240,029,997
-----------------------------
366,463,335 364,399,028
=============================
Book value per lot of thousand share (em R$) 2,756551 2,459935
The preferred shares of Tele Centro Oeste Celular Participacoes S. are
nonvoting and have priority of reimbursement and payment of noncumulative
minimum dividends.
The partial spin-off of the Company was approved by the Extraordinary
Shareholders' Meeting held at Tele Centro Oeste Celular Participacoes S.A.
on October 30, 2000, and confirmed by the Board of Directors, reducing its
subscribed capital from R$ 303,100 to R$ 303,000 and increasing the
capital in its subsidiaries (except Norte Brasil Telecom S.A.) by the
amount of R$ 5 (five reais) each and the remaining amount was used for
capital reserve purposes.
a) Capital--Continued
At a meeting held on June 22, 2001, the Board of Directors of Tele Centro
Oeste Celular Participacoes S.A. decided on the acquisition, at market
value, of up to 28,150,000,000 shares issued by the Company as follows:
4,750,000,000 common shares and 23,400,000,000 preferred shares
representing up to 10% of outstanding common shares and up to 10% of
outstanding preferred shares, for cancellation or maintenance in treasury
and subsequent disposal, without reducing the capital.
On August 27, 2001, the Extraordinary Shareholders Meeting approved the
Company's capital increase from R$ 319,618 to R$ 505,000 through
capitalization of retained earnings in the amount of R$ 185,382, without
the issuance of new shares.
b) Special premium reserve
This reserve was constituted as a result of the Company's partial spin-off
and refers to the premium paid for the acquisition of BID S.A.
(subsequently recorded at Coverage Participacoes S.A., a company merged by
Tele Centro Oeste Celular Participacoes S.A.). This operation was recorded
in a specific permanent assets account against the capital reserve account
recorded in shareholders' equity. This reserve is reduced by the provision
for maintaining shareholders' equity completeness.
c) Income reserves
Legal reserve
Constituted in accordance with the corporate legislation based on the
appropriation of 5% of the net income, observing the limit of 20% of the
paid-in capital or 30% of the capital plus capital reserves. After these
figures are met, the appropriations to this legal reserve are no longer
required. The legal reserve may only be used for capital increase purposes
or absorption of losses.
Unearned income reserve
At December 31, 2001, the Company did not constituted unearned income
reserves as the compulsory dividends portion did not exceed the realized
income, considering that the constitution of this reserve has the
objective of delaying the payment of minimum compulsory dividends to the
year in which the unearned income, deriving from the investment
adjustments valued by the equity pickup method, are financially realized.
d) Dividends/interest on shareholders' equity
2001 2000
-------------------------
Net income for the year 208,104 129,319
(+) Reversal of unearned income reserve 97,675 105,147
(-) Unearned income reserve - (97,675)
(-) Legal reserve (10,405) (6,466)
-------------------------
(=) Net income for the year, adjusted 295,374 130,325
Minimum compulsory dividends (25%) 73,844 32,581
Common shares 25,477 11,120
Preferred shares 48,367 21,461
Dividends value per lot of thousand shares - R$ 0.202 0.089
As determined by management, in 2001 interest on shareholder' equity was
credited to shareholders in the amount of R$ 40,000 (R$ 0.109353 per lot
of thousand shares) with retention of 15% withholding tax, resulting in R$
34,000 (R$ 0.092950 per lot of thousand shares). It was proposed at the
Shareholders Meeting that the referred interest, net of income tax, be
compensated in the same amount as that of minimum compulsory dividends, as
follows:
2001 2000
-------------------------------
Common shares 13,775 6,569
Preferred shares 26,225 12,676
Withholding tax (6,000) (2,887)
-------------------------------
34,000 16,358
===============================
d) Dividends/interest on shareholders' equity -Continued
Additionally, dividends were proposed in the amount of R$ 40,500 at
December 31, 2001 (R$ 18,642 in 2000), distributed as follows:
2001 2000
-------------------------------
Common shares 13,932 6,363
Preferred shares 26,568 12,279
-------------------------------
40,500 18,642
===============================
The treasury stocks are not included in the calculations of dividends and
interest on shareholders' equity.
e) Treasury stock
At December 31, 2001, the treasury stocks amount to 336,900,000 preferred
shares and 747,178,000 common shares.
The market value of these shares at year-end was R$ 7.93 per lot of
thousand shares for common shares and R$ 5.33 per lot of thousand shares
for preferred shares, according to the quotation on December 28, 2001.
Preferred shares were acquired at the minimum cost per lot of thousand
shares of R$ 4.38 and maximum of R$ 5.86.
Common shares were acquired at a cost ranging from R$ 4.24 to R$ 8.50.
f) Retained earnings
The remaining balance of retained earnings, adjusted in accordance with
Article 202 of Law No. 6,404/76, in the amount of R$ 383,609 at December
31, 2001 (R$ 355,633 in 2000), will be used for future investments
according to the capital budget to be presented at the General
Shareholders Meeting.
25. Financial instruments
Considering the terms of Normative Instruction of CVM No. 235/95, Tele
Centro Oeste Celular Participacoes S.A. and subsidiaries performed an
evaluation of the book value of their assets and liabilities in relation
to market value based on available information and appropriate evaluation
methodologies. However, the interpretation of market information as well
as of the selection of evaluation methods require considerable judgment
and reasonable estimates in order to conclude on the most adequate
realization value. Consequently, the estimates presented do not
necessarily indicate the amounts that could be realized in the current
market. The application of different market hypothesis and /or estimate
could have a material effect on the estimated realization values.
The Company's investments are recorded by the equity pickup method. These
investments comprise subsidiaries of strategic interest to the Company.
Therefore, market value considerations are not applicable. The accounts
receivable and accounts payable recorded in current assets and liabilities
approximate market value due to their short-term maturity.
The main market risk factors affecting the Company's business comprise the
following:
a) Exchange rate risk
This risk relates to the possibility of the Company computing losses
derived from foreign exchange rate fluctuations, increasing the debt
balance of foreign currency loans obtained in the market and the financial
expenses balance. In order to reduce this type of risk, the Company enters
into hedge contracts (swaps of CDI) with financial institutions.
At December 31, 2001, part of the Company's financial debts was in U.S.
dollar and 87% of the foreign currency debts were covered by hedge
operations which were carried out for purposes of partially covering the
future maturity of debts in U.S. dollars, indexed by fixed or variable
interest rates. The gains or losses from these operations are recorded in
the statement of operations.
The Company's net exposure to the foreign exchange rate risk, at book and
market value, at December 31, 2001 corresponds to the following:
Value
---------------------------------
Loans in U.S. dollars 307,682 311,857
Hedge 261,596 266,603
-------------- -------------
Net exposure 46,086 45,254
============== =============
The valuation method used for calculating the market value of loans,
financing and swap contracts was based on discounted cash flow,
considering the expectations of liquidation or realization of liabilities
and assets at market rates in effect at the balance sheet date.
b) Interest rates risk
The risk relates to the possibility of the Company computing losses
resulting from interest rate fluctuations, increasing the debt balances of
loans obtained in the market and the financial expenses. The Company has
not entered into hedge contracts against this risk. However, the Company
constantly monitors the market interest rates in order to assess the need
for contracting derivatives and obtain protection against the risk of
interest rates volatility.
At December 31, 2001, the Company presents the amount of R$ 209,302 in
loans and financing in national currency obtained at various fluctuating
rates (as explained in Note 14) as well as short-term investments in the
amount of R$ 280,730 and investments in marketable securities of R$
362,310 based on the CDI variation.
At December 31, 2001, the Company presents R$ 61,706 in loans and
financing in foreign currency at variable interest rates (Libor
renegotiated on a semiannual basis) and hedge contracts for these
operations amounting to R$ 27,374 at fixed interest rates plus the
exchange variation.
Another risk to which Tele Centro Oeste Celular Participacoes S.A. and
subsidiaries are exposed is the noncorrelation between the monetary
correction indices on their debts and on accounts receivable. The
telephone charge readjustments do not necessarily correspond to the local
interest rates rise affecting the Company's debts.
c) Operating credit risk
The risk relates to the possibility of the Company computing losses
derived from difficulties in collecting the amounts billed to customers,
represented by cellular equipment dealers and distributors of prepaid
telephone cards. In order to reduce this type of risk, the Company
performs credit analyses supporting the risk management over collection
problems and monitors the accounts receivable from subscribers, blocking
the calling capacity in case customers fail to pay their debts. With
respect to shops and distributors, the Company maintains individual credit
limits based on the analysis of sales potential, risk history and
collection problem risks.
Credit risk linked to rendering of services
The credit risk in relation to accounts receivable from cellular telephone
services is diversified.
Credit risk linked to the sale of equipment
The Company's policy for selling equipment and distributing prepaid
telephone cards is closely related to the credit risk levels accepted
during the normal course of business. The selection of partners, the
diversification of receivables portfolio, the monitoring of loan terms,
position and request limits established for dealers, obtaining guarantees
are procedures adopted by the Company in order to minimize possible
collection problems with its trading partners.
d) Financial credit risk
The risk relates to the possibility of the Company computing losses
derived from difficulties in the realization of short-term investments and
hedge contracts. The Company and subsidiaries minimize the risks
associated with these financial instruments by investing with good rating
financial institutions.
26. Insurance (unaudited)
Tele Centro Oeste Celular Participacoes S.A. and subsidiaries have a
policy for assessing possible risks to their operations. Accordingly, at
December 31, 2001 the Companies present insurance contracts to cover
operating risks, civil responsibility, theft of assets, health, life, etc.
Management understands that the existing insurance premiums are sufficient
to cover possible casualties.
27. Corporate restructuring
The Board of Directors of Tele Centro Oeste Celular Participacoes S.A., at
a meeting held on December 18, 2001, authorized the management of Tele
Centro Oeste Celular Participacoes S.A. to initiate discussions with the
subsidiary Telebrasilia Celular S.A. regarding the corporate restructuring
for the Company and subsidiaries, considering a corporate restructuring
through the merger of Telebrasilia Celular S.A. into Tele Centro Oeste
Celular Participacoes S.A., so that the existing administrative and
trading synergy would be used, concentrating the liquidation of the shares
from the publicly traded companies in one company only, thus reducing the
capital cost. The terms and conditions of this restructuring should be
negotiated by the management of both companies with the Company's
intention to determine the respective replacement based on shareholders'
equity at market value, offering preferred shares only, even to common
shareholders. Please note that the referred merger is subject to approval
by ANATEL - National Agency of Telecommunications, and that the
shareholders of Telebrasilia that not agreeing with the merger will have
right to withdrawal.
--------------------------------------------------------------------------------
This release contains forward-looking statements. Statements that are not
statements of historical fact, including statements about the beliefs and
expectations of the Company's management, are forward-looking statements. The
words "anticipates," "believes," "estimates," "expects," "forecasts," "intends,"
"plans," "predicts," "projects" and "targets" and similar words are intended to
identify these statements, which necessarily involve known and unknown risks and
uncertainties. Accordingly, the actual results of operations of the Company may
be different from the Company's current expectations, and the reader should not
place undue reliance on these forward-looking statements. Forward-looking
statements speak only as of the date they are made, and the Company does not
undertake any obligation to update them in light of new information or future
developments.
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.
Tele Centro Oeste Cellular Holding Company
Date: March 27, 2002 By: /s/ Mario Cesar Pereira de Araujo
-------------------------------------------
Name: Mario Cesar Pereira de Araujo
Title: President