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 November 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
------------------------------------------
(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
--- ---
HEAD OF INVESTOR RELATIONS:
ARTHUR FONSECO
PHONE: 55 61 313 7765
arthur.fonseca@tco.net.br
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WEB SITE
Http://ww.tco.net.br
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EBITDA grows 30.5% in the third quarter of 2002, against the
same period in the previous year
Introduction Brasilia, November 8, 2002 -- Tele Centro Oeste Celular
Participacoes S.A. - TCO Celular (NYSE: TRO; IBOVESPA: TCOC3 /
TCOC4) today discloses its results relative to the third
quarter of 2002. TCOC3: R$ 8.05 / 1,000 shares. TCOC4: R$ 3.74
/ 1,000 shares. TRO: US$ 3.05 / ADR (1 ADR = 3,000 shares).
HIGHLIGHTS In spite of the economic difficulties faced by the Brazilian
economy, TCO Celular has maintained its growth rate and closed
the third quarter of 2002 with 2,868,046 subscribers. Since it
started operations in 1999, NBT has evolved extraordinarily
throughout the region, which demonstrates the accuracy used by
controller in handling the challenge of operating wireless
telephoning services in a region marked by low population
levels but which also has a very high potential to grow. NBT
is the first and only Band B carrier to yield positive Net
Profits and accumulated results of R$ 2.2 million up to the
third quarter of 2002. NBT maintained a 36.6% Market Share in
the period, an index which has been continuously increasing
quarter after quarter in spite of the new presence of two new
competitors in the region - OI and TIM. This result was
obtained thanks to the intense growth of the number of
clients, which reached 549,549 at the end of the third quarter
of 2002, a growth of 49.2% compared to the same period of last
year.
OPERATING PERFORMANCE
The Region TCO Celular operates directly and through its controlled
companies in the Central-West and North regions of the country
and in the Brazilian state of Maranhao. The economic
development of the states in the Central-West region has
significantly exceeded the levels observed in other regions of
the country. As an example, business done by companies and
cooperatives based in the state of Mato Grosso with foreign
markets broke monthly records in September, rising by 65%
compared with the month of August: nearly R$ 1.1 billion. The
exports carried out by the same state between January and
September of 2002 beat by 15.94% the amount exported in the
same period of 2001. Still, according to estimates by the
Companhia Nacional de Abastecimento - CONAB, the production of
soy in Brazil has gradually been transferred from southern
Brazil to the new borders typically formed by the cerrado, as
a result of the large amounts of land which can become
operational at competitive prices. In this scenario, it has
been estimated that the Central-Western region will provide
46.21% of the national harvest of soy in the upcoming year.
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Client Base TCO Celular reached the mark of 2,868,046 clients in the third
quarter of 2002, of which 27.5% were post-paid clients. The
Company's client base has continuously grown in both areas
where the Company operates. In Area 7, the client-base
increased by 4.6% in the third quarter against the second
quarter, while in Area 8 the client base went up by 9.8%. The
growth rates in Area 7 and Area 8 rose by 26.9% and 49.2%
respectively compared with the same period last year.
Growth of the Client retention campaigns focusing mainly on heavy users have
Post-Paid base placed TCO Celular in advantage in this new, competitive
scenario. TCO Celular's Post-Paid service client base went up
by 5.6% in this third quarter of 2002 compared with the second
quarter of 2002. In Area 7, the number of Post-Paid service
clients went up 4.5% against the previous quarter. In Area 8,
the spectacular growth observed in the number of clients was
10.9% against the same period in the previous year.
HIGHLIGHT According to information provided by ANATEL (The Brazilian
Telecommunications Regulatory Agency), the number of
cell-phone users grew from 30.6 million at the end of the
second quarter of 2002 to 32.0 million in this third quarter
of 2002. TCO Celular increased its participation in this total
from 8.8% to 9.0% in the quarter. By comparing the net
Brazilian addition and TCO's consolidated addition we can see
that TCO Celular accounted for 14.3% of the national user base
net addition, which demonstrates that it has grown the most in
the penetration of cellular services in Brazil.
CONSOLIDATED TCO CELULAR
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3Q02 2Q02 Variation 3Q01 Variation
Clients 2,868,046 2,717,173 5.6% 2,195,372 30.6%
Post-paid 790,020 748,260 5.6% 662,840 19.2%
Pre-paid 2,061,276 1,952,201 5.6% 1,515,804 36.0%
Rural 16,750 16,712 0.2% 16,728 0.1%
ARPU 42.56 41.32 3.0% 44.32 -4.0%
Churn (%) 4.80 4.60 0.2% 5.17 -0.4%
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CHURN RATE The Churn Rate reached 4.80% in the third quarter of 2002,
which represents an increase of 0.20% over the value obtained
in the previous quarter and a decrease of 0.37% over the value
obtained in the third quarter of 2001.
Net Average TCO Celular's ARPU has grown continuously since the first
Revenue per quarter of 2002, consolidating the Company's policy to
User strengthen its best clients. The consolidated ARPU in the
period was R$ 42.56. The ARPU was R$ 42.95 in Area 7 and R$
40.96 in Area 8. The chart below shows the continuous growth
of TCO Celular's consolidated ARPU in the year of 2002.
Market Share TCO Celular remained as market leader for Area 7 in the third
quarter of 2002. Its estimated market share was 75.3%, way
above the national Band A average, which was 66.1%, In Area 8,
TCO Celular showed an intense growth during the quarter,
increasing its estimated market share to 36.6%, remaining
above the national Band B average, which was 32.3%.
Cellular TCO Celular has been granted a concession to provide cellular
Penetration telephoning services in 11 Brazilian states and in the Federal
District, which together have an estimated population of
nearly 31.4 million. The low penetration rate observed in the
areas where TCO Celular maintains operations, which is 15.2
per 100 residents in Area 7 and 3.4 per 100 residents in Area
8, shows that wireless cellular telephoning services still
have plenty of room to grow, particularly considering that
both regions where the Company operates have presented very
high economic growth rates, especially in the agricultural
business area.
Consolidated TCO Celular - Operating Data
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3Q02 2Q02 Variation 3Q01 Variation
Estimated population (in million) 31.4 30.7 2.3% 30.7 2.3%
Estimated Penetration - TCO (%) 9.1 8.9 0.2% 7.1 2.0%
Municipalities serviced 399 386 3.4% 330 20.9%
Workforce 2,785 2,799 -0.5% 3,008 -7.4%
Permanent employees 1,487 1,484 0.2% 1,480 0.5%
Interns and outsourced parties 1,298 1,315 -1.3% 1,528 -15.1%
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Municipalities In this third quarter TCO Celular expanded its coverage and
serviced now operates in a total of 399 municipalities. While in Area
7, TCO Celular had 299 municipalities serviced at the end of
the quarter, in Area 8 TCO Celular had 100 municipalities
serviced at the end of the quarter.
Network At the end of the second quarter of 2002, Area 7 presented a
structure handset digitization rate of 97.2%. NBT has operated with 100%
digital technology since it was first established. TCO Celular
currently uses TDMA technology in its wireless telephoning
services.
CONSOLIDATED TCO CELULAR - NETWORK STRUCTURE
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3Q02 3Q01
Radio Base Stations (RBS's) 836 762
Commuting Switches (CS's) 27 23
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Sales At the end of September 2002, TCO Celular had 37 proprietary
stores, 1.364 accredited salespersons for handsets and 14.9
thousand direct and indirect salespersons in Area 7; in Area
8, TCO Celular had 17 proprietary stores, 328 accredited
salespersons for handsets and 6.5 thousand direct and indirect
salespersons in Area 8. In the month of August the shops
maintained by TCO Celular in the Federal District were granted
the ISO 9001:2000 certification for Sales, Services and
Customized Client Service. The certification of the shops was
the second stage in the project to certify the proprietary
stores; the first stage was completed in January of this year
and consisted in the Certification of the Call Center. The
next steps will focus on extending the certification to all
TCO/NBT proprietary stores.
NAINET In the third quarter of 2002 TCO Celular launched the
Integrated Service Center - NAINET, aiming to make its
relationship with suppliers more practical and more effective.
NAINET consists in a web-tool developed specifically for
TCO/NBT retailers, and aims to materialize the new corporate
policy with its points of sale, improving the agility and the
effectiveness of all transactions carried out with TCO/NBT. By
using this system, the points-of-sale will act as
telecommunications services providers, offering services once
sold only by the proprietary stores. This nucleus should boost
the business-to-business transactions performed by TCO/NBT,
which today holds the 1st place in the Telecommunications
Sector and the 12th place among companies operating in all
sectors.
Human The workforce in Area 7 carriers decreased by 2.7%, from 2,415
Resources in September 2001 to 2,349 in September 2002. Of the total
workforce, 52.5% are permanent employees and the remainder
outsourced parties and interns. The Permanent Employees per
1000 Connections index was 0.53 in September 2002. The
workforce in the Area 8 carrier was reduced by 26.5%, from 593
in September 2001 to 436 in September 2002. Of this total,
58.3% are permanent employees and the remainder are outsourced
parties and interns. The Permanent Employees per 1000
Connections index was 0.46 for NBT in September 2002.
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AREA 7 - OPERATING DATA
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3Q02 2Q02 Variation 3Q01 Variation
Clients 2,318,497 2,216,507 4,6% 1,827,087 26.9%
Post-Paid 653,179 624,894 4,5% 554,929 17.7%
Pre-Paid 1,648,568 1,574,901 4,7% 1,255,430 31.3%
Rural 16,750 16,712 0,2% 16,728 0.1%
ARPU 42.95 42.32 1.5% 44.99 -4.5%
Churn, in the quarter (%) 4.68 4.45 0.23% 4.73 -0.05%
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Estimated Marked Share (%) 75.3 75.8 -0.5% 78 -2.7%
Estimated Population (in millions) 15.3 14.9 2.7% 14.9 2.7%
Estimated Penetration - TCO (%) 15.2 14.8 0.4% 12.2 3.0%
Access Digitization (%) 97.2 96.8 0.4% 94.6 2.6%
Municipalities Attended 299 295 1.4% 266 12.4%
Workforce 2,349 2,343 0.3% 2,415 -2.7%
Permanent Employees 1,233 1,218 1.2% 1,215 1.5%
Outsourced parties and interns 1,116 1,125 -0.8% 1,200 -7.0%
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Radio Base Stations (ERB's) 676 663 2.0% 629 7.5%
Connecting Switches (CCC's) 15 14 7.1% 13 15.4%
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AREA 8 - OPERATING DATA
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3Q02 2Q02 Variation 3Q01 Variation
Clients 549,549 500,666 9.8% 368,285 49.2%
Post-Paid 136,841 123,366 10.9% 107,911 26.8%
Pre-Paid 412,708 377,300 9.4% 260,374 58.5%
ARPU 40.96 37.03 10.6% 41.03 -0.2%
Churn, in the quarter (%) 5.29 5.27 0.02% 7.27 -1.98%
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Estimated Marked Share (%) 36.6 35.5 1.1% 30 6.6%
Estimated Population (in millions) 16.1 15.8 1.9% 15.8 1.9%
Estimated Penetration - TCO (%) 3.4 3.2 0.2% 2.3 1.1%
Access Digitization (%) 100 100 0% 100 0%
Municipalities Attended 100 91 9.9% 64 56.3%
Workforce 436 456 -4.4% 593 -26.5%
Permanent Employees 254 266 -4.5% 265 -4.2%
Outsourced parties and interns 182 190 -4.2% 328 -44.5%
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Radio Base Stations (ERB's) 160 149 7.4% 133 20.3%
Connecting Switches (CCC's) 12 12 0% 10 20.0%
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FINANCIAL PERFORMANCE
CONSOLIDATED TCO CELULAR
R$ Mil
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3Q02 2Q02 Variation 3Q01 Variation
Net Operating Service Revenue 354,961 323,182 9.8% 281,781 26.0%
Net Operating Merchandise Revenue 50,340 60,661 -17.0% 41,365 21.7%
Cost of Merchandise Sold 72,594 79,765 -9.0% 60,258 20.5%
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EBITDA with merchandise 178,355 154,587 15.4% 136.624 30.5%
% EBITDA 44.0% 40.3% 3.7% 42.3% 1.7%
EBITDA without merchandise 200,609 173,691 15.5% 155.516 29.0%
% EBITDA 56.5% 53.7% 2.8% 55.2% 1.3%
Depreciation and Amortization 37,791 37,972 -0.5% 35.301 7.1%
EBIT 140,564 116,615 20.5% 101.322 38.7%
% EBIT 34.7% 30.4% 4.3% 31.4% 3.3%
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Financial Revenue * 112,047 55,551 101.7% 46,883 139.0%
Financial Expenses * 139,307 99,429 40.1% 53,459 160.6%
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Investments 35,338 36,769 -3.9% 58,298 -39.4%
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Net Profit in the Quarter 68,948 89,334 -22.8% 56,873 21.2%
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* See details on note "Net Financial Expenses"
Operating The Net Operating Revenue of TCO Celular reached R$ 405.3
Revenue million in the third quarter of 2002, which represented a
13.7% increase compared with the second quarter of 2002 and a
25.4% increase compared with the third quarter of 2001. In the
third quarter of 2002, the net revenue from services was R$
355 million and the net revenue from the sale of merchandise
was R$ 50.3 million.
Purchasing The Cost of Merchandise Sold by TCO Celular reached R$ 72.6
Cost million in the third quarter of 2002, a reduction of 9.0%
against the second quarter of 2001. The purchasing cost per
client (SAC), in the quarter was R$ 150.00
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EBITDA EBITDA was R$ 178.4 million in the quarter, showing that the
company was more efficient in generating cash based on its
operating assets. The EBITDA suffered a positive R$ 8.1
million impact in this third quarter 2002 as a result of the
new accounting classification of PIS/COFINS expenses applied
to financial revenues, which used to be classified as
operating expenses in past quarters and from this quarter on
are to be written as reduction in financial expenses. TCO
Celular discloses its EBITDA margin in consonance with the
market, including its operations with the sales of
merchandise. The EBITDA margin was 44.0% in the quarter. For a
possible comparison, the EBITDA was R$ 200.6 million, not
including the operations with the sales of merchandise,
raising the margin to 56.5%. As a means of comparison, the
accumulated EBITDA up to the third quarter of 2002 was R$
481.4 million, 5% above the value obtained in the entire year
of 2001.
Depreciation The accumulated depreciation and amortization expenses totaled
R$ 113.3 million, of which R$ 37.8 million were in the third
quarter of 2002. Depreciation is calculated using the linear
method, taking into consideration the goods' useful life.
EBIT EBIT was R$ 140.6 million in the third quarter of 2002. The
EBIT margin, which includes the operations with the sales of
merchandise in the period, was 34.7%.
PDD / Losses The Accrued Provision for Doubtful Debtors / Losses was R$
24.8 million. In the second quarter, PDD / Losses reached R$
3.7 million, representing 0.9% of the Net Operating Income.
The PDD/Losses was positively impacted in the third quarter of
2002 by agreements celebrated with other carriers which
resulted in the reversal of approximately R$ 7 million. The
chart below shows how much TCO Celular has developed its PDD /
Losses index over its revenues.
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Net Net Financial Expenses accrued by TCO Celular up to the third
Financial quarter of 2002 total R$ 64 million, and R$ 27 million in the
Expenses quarter. The financial revenues of the third quarter of 2002
are R$ 8.1 million lower as a result of the new accounting
classification of PIS/COFINS expenses applied to financial
expenses, which used to be classified as operating expenses in
past quarters and from this quarter on are to be written as
reduction in financial expenses.
R$ Million
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3Q02 Accrued 2002
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Financial Revenue 111 211
Hedge gain 83 107
Exchange rate variation - 2
Other financial revenues 36 111
(-) PIS / COFINS over Financial Revenue (8) (8)
Financial Expenses (139) (275)
Exchange rate variation * (127) (176)
Interest on Owned Capital - (41)
Other Financial Expenses (12) (58)
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Net Financial Expenses (27) (64)
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* Reflects the exchange rate devaluation over debts in foreign currency, which
include operations with the BNDES attached to the basket of currencies -
UMBNDES.
Net At September 30, 2002, the total indebtedness reached R$ 695.7
Indebtedness million of which 70.06% was in foreign currency (66.51% in US
Dollars and Japanese Yens; and 3.55% was in basket of
currencies - an index used by the Brazilian Development Bank,
the BNDES). Of the portion of the debt in US Dollars and
Japanese Yens, 84.33% was protected by hedge operations at the
end of the quarter. Of the total in foreign currency, 80.05%
was protected by hedge operations. This indebtedness was
compensated by existing resources in cash (R$ 119.0 million),
by investments in securities (R$ 681.9 million) and by
accounts payable from the hedge operations (R$ 93.1 million),
which resulted in a negative net debt of R$ 198.3 million.
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Net profit The Net Profit obtained by TCO Celular went up by 21.2%
compared to the same period in the previous year, while its
client base increased by 30.6%. THE CONSOLIDATED NET PROFIT IN
THE THIRD QUARTER OF 2002 IS 10.6% ABOVE THE PROFIT ACCRUED
THROUGHOUT THE WHOLE YEAR OF 2001.
Investments In the first three quarters of 2002, R$ 113.2 million were
invested in Property, Plant & Equipment, mainly in projects to
expand the wireless cellular telephoning network, to improve
telecommunications services and to develop proprietary
transmission routes. The administration of TCO Celular expects
to close the year of 2002 with consolidated accrued
investments of approximately R$ 160 million in the year,
including its own resources and financing.
Social Like an active Brazilian citizen, TCO Celular plays a
Responsibility significant part in the social and cultural life of the
country, including sports and community shows. Committed with
the most widely debated issues in Brazil, particularly those
in the regions where it operates, TCO Celular invests in the
strongest Brazilian sports talents, believing in their
potential and understanding that their dedication is crucial
to make Brazil a stronger country. The resources provided by
the Company play a fundamental role in the education and
social development of these youngsters, and have contributed
to make several athletes accomplish state, country and
international awards. In October 2002, TCO won the prize
Entrepreneur of the Year 2002 in the Social Responsibility
category, awarded by Ernst & Young.
Perspectives for The third quarter of 2002 was marked by the start of
2002 operations of the second SMP carrier in Brazil: Telecom
Italia, also known as "TIM". This telecommunications company
purchased a license to explore GSM technology in Band D in
Region 2 (Central-West, South and part of the North region)
and Region 3 (the State of Sao Paulo) and in Band E and in
Region 1 (16 Brazilian states from Rio de Janeiro to
Amazonas). The first SMP carrier in Brazil to explore the GSM
technology was "OI", working in 16 Brazilian states where
Telemar operates, which has intersections with NBT in the
north of the country and in the state of Maranhao, located in
the Northeast. Since the year 2001, TCO Celular has prepared
to deal with new competitors by widening the scope of its
products and services and by improving its client-relationship
programs aiming at meeting users' needs pursuant to the
diversification and the quality of the services offered,
therefore remaining as market leaders. TCO Celular has been
conducting tests with two different lines of technology:
GSM/GPRS and CDMA 1xRTT. The company's decision whether to
which form of technology will be used shall be reached soon
and will depend on several factors, among which: (1) the cost
of migrating to the SMP technology; (2) the availability and
cost of the equipment; (3) the availability of the digital
national roaming; (4) the path toward 3G; (5) the results of
tests carried out in the market; (6) the cost and financing of
the overlay network.
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**SEGUEM AS DEMONSTRACOES FINANCEIRAS**
FINANCIAL STATEMENTS
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
At September 30 2002 and at June 30, 2002
Together with the Independent Auditors' Report
"A free translation from Portuguese into English of quarterly financial
information prepared in Brazilian currency in accordance with the accounting
practices originating in Brazil's Corporation Law and specific norms issued by
IBRACON, CFC and CVM"
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS
September 30, 2002
(In thousand of Reais-R$)
COMPANY
CONSOLIDATED
------------------------- ------------------------
09/30/2002 06/30/2002 09/30/2002 06/30/2002
------------------------- ------------------------
ASSETS
------------------------- ------------------------
CURRENT ASSETS 471,472 288,246 1,283,310 1,048,664
------------------------- ------------------------
Cash and cash equivalents 1,247 1,051 7,655 8,583
Short-term investments 214,751 86,019 681,918 411,995
Marketable securities 12,961 23,373 111,358 231,969
Accounts receivable from
services 53,191 57,190 193,783 191,472
Inventories 5,445 5,822 30,528 29,246
Deferred and recoverable
taxes 85,015 68,448 149,485 133,212
Interest on own
shareholders' equity 22,529 22,503 - -
Swap 59,014 6,242 65,306 7,281
Other assets 17,319 17,598 43,277 34,906
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NONCURRENT ASSETS 61,789 50,446 115,897 93,470
------------------------- ------------------------
Deferred and recoverable 14,481 13,415 49,908 49,380
taxes
Loans to related parties 50 - - -
Swap 11,687 1,460 27,806 5,908
Other assets 35,571 35,571 38,183 38,182
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PERMANENT ASSETS 1,269,243 1,220,063 919,027 925,190
------------------------- ------------------------
Investments 1,025,544 966,119 8,821 9,240
Property, plant and equipment 243,699 253,944 877,090 881,777
Deferred charges - - 33,116 34,173
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TOTAL ASSETS 1,802,504 1,558,755 2,318,234 2,067,324
========================= ========================
See accompanying notes.
"A free translation from Portuguese into English of quarterly financial
information prepared in Brazilian currency in accordance with the accounting
practices originating in Brazil's Corporation Law and specific norms issued by
IBRACON, CFC and CVM"
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS
September 30, 2002
(In thousand of Reais-R$)
COMPANY CONSOLIDATED
-----------------------------------------------------
09/30/2002 06/30/2002 09/30/2002 06/30/2002
----------------------- -----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------- -----------------------------
CURRENT LIABILITIES 397,594 266,499 684,096 549,393
----------------------- -----------------------------
Personnel, social charges and benefits 5,223 4,186 10,052 9,257
payable
Trade accounts payable 17,405 18,998 119,770 111,289
Indirect taxes 31,982 20,815 94,843 67,924
Income taxes 10,880 5,828 33,468 12,980
Income participation 53,917 125,084 62,478 133,023
Loans and financing 274,267 84,984 351,994 191,306
Other accounts payable 3,920 6,604 11,491 23,614
----------------------- -----------------------------
NONCURRENT LIABILITIES 226,479 151,896 432,726 356,009
----------------------- -----------------------------
Provision for contingencies 83,961 78,433 86,651 81,123
Income taxes - - - -
Loans from related parties 51,854 9,565 - -
Loans and financing 90,118 63,350 343,727 272,542
Others obligations 546 548 2,348 2,344
PARTICIPATION OF MINORITY SHAREHOLDERS - - 23,107 21,688
----------------------- -----------------------------
SHAREHOLDERS' EQUITY 1,178,305 1,140,234 1,178,305 1,140,234
----------------------- -----------------------------
Capital 534,046 534,046 534,046 534,046
Capital reserve 110,555 110,555 110,555 110,555
Revenue reserve 42,229 42,229 42,229 42,229
Treasury stock (4,757) (9,164) (4,757) (9,164)
Retained earnings 496,232 462,568 496,232 462,568
CAPITALIZABLE FUNDS 126 126 - -
----------------------- -----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,802,504 1,558,755 2,318,234 2,067,324
======================= =============================
See accompanying notes.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
Statements of Income
Nine months ended September 30, 2002 and 2001
(In Thousands of Reais-R$)
COMPANY CONSOLIDATED
------------- ------------ --------------- --------------
09/30/2002 09/30/2001 09/30/2002 09/30/2001
------------- ------------ --------------- --------------
GROSS OPERATING REVENUE 395,016 - 1,412,463 1,137,830
Gross revenue deductions (79,018) - (295,537) (232,683)
------------- ------------ --------------- --------------
NET OPERATING REVENUE 315,998 - 1,116,926 905,147
Cost of services rendered (137,381) - (500,003) (429,003)
------------- ------------ --------------- --------------
GROSS INCOME 178,617 - 616,923 476,144
OPERATING INCOME (EXPENSES) 109,391 165,251 (248,822) (229,881)
Commercialization of services (30,339) - (147,921) (146,504)
General and administrative expenses (53,129) (19,597) (98,724) (78,044)
Equity pickup 176,735 168,961 - -
Other operating income (expenses) net 16,124 15,887 (2,177) (5,333)
------------- ------------ --------------- --------------
OPERATING INCOME BEFORE FINANCIAL RESULT 288,008 165,251 368,101 246,263
Financial result, net (69,982) (40,425) (63,930) (33,938)
------------- ------------ --------------- --------------
OPERATING INCOME 218,026 124,826 304,171 212,325
Nonoperating income (expenses), net (4,852) 471 (16,435) (15,166)
------------- ------------ --------------- --------------
Income and social contribution taxes (20,859) 3,425 (90,170) (56,893)
Employees' profit participation (2,147) (491) (3,708) (1,737)
Participation of minority shareholders - - (4,501) (12,663)
------------- ------------ --------------- --------------
NET INCOME BEFORE REVERSAL OF INTEREST ON OWN 190,168 128,231 189,357 125,866
SHAREHOLDERS' EQUITY
Reversal of interest on own shareholders' equity 40,000 15,000 40,811 17,365
------------- ------------ --------------- --------------
NET INCOME 230,168 143,231 230,168 143,231
============= ============ =============== ==============
Shares in circulation on the balance sheet date
(thousands) 372,882.242 366,076,634
Net income per lot of thousand shares (R$) 0.00062 0.00039
See accompanying notes.
Tele Centro Oeste Celular Participacoes S.A.
Consolidated financial statement
(In thousands of Brazilian Reais)
--------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED 1* TRIM 1* TRIM 2* TRIM 2* TRIM 3* TRIM 3* TRIM Acumulado Acumulado
01 02 01 02 01 02 sep/01 sep/02
--------------------------------------------------------------------------------------------------------------------------------------
Gross Operating Revenue 346,539 441,674 384,821 455,178 406,470 515,610 1,137,830 1,412,463
Deductions from gross revenue (68,932) (86,716) (80,427) (98,638) (83,324) (110,309) (232,683) (295,663)
Net Operating Revenue 277,607 354,959 304,394 356,541 323,146 405,301 905,147 1,116,800
Cost of services rendered and
merchandise sold * (104,265) (132,406) (122,115) (125,411) (117,500) (150,156) (343,880) (407,972)
Gross profit 173,342 222,553 182,279 231,130 205,646 255,145 561,267 708,828
Operating revenues / expenses
Services commercialized * (47,677) (45,963) (48,626) (48,277) (47,819) (45,364) (144,122) (139,604)
General and administrative expenses * (24,772) (28,006) (22,151) (26,296) (19,460) (31,489) (66,383) (85,791)
Other net revenues / expenses * 194 (140) (3,783) (1,970) (1,744) 63 (5,333) (2,047)
Profit before depreciation and
financial revenues / expenses - EBITDA 101,087 148,444 107,719 154,587 136,623 178,355 345,429 481,385
Depreciation (31,148) (37,522) (32,718) (37,972) (35,301) (37,791) (99,167) (113,285)
Profit after depreciation before
financial revenue and expenses - EBIT 69,939 110,922 75,001 116,615 101,322 140,564 246,262 368,100
Financial revenue / expenses (11,197) 7,210 (16,165) (43,878) (6,576) (27,260) (33,938) (63,928)
- - -
Operating Profit 58,742 118,131 58,836 72,737 94,746 113,304 212,324 304,172
- - -
Non-operating revenue / expense (5,304) (5,871) (4,378) (5,168) (5,484) (5,399) (15,166) (16,438)
- - -
Profit before taxes, minor 53,438 112,260 54,458 67,569 89,262 107,905 197,158 287,734
- - -
Income tax and social contribution (14,680) (34,899) (14,992) (19,389) (27,221) (35,878) (56,893) (90,166)
Employee participation (527) (813) (589) (1,370) (621) (1,525) (1,737) (3,708)
Participation of minority shareholders (3,329) (4,799) (4,675) 1,822 (4,659) (1,524) (12,663) (4,501)
- - -
Profit before reversal of interest on
owned capital 34,902 71,750 34,202 48,631 56,761 68,978 125,865 189,359
- - -
Reversal of interest on owned capital - 138 17,254 40,703 111 (30) 17,365 40,811
- - - -
Net Profit in the Period 34,902 71,888 51,456 89,334 56,872 68,948 143,230 230,170
--------------------------------------------------------------------------------------------------------------------------------------
EBITDA margin 36.41% 45.30% 35.39% 40.27% 42.28% 44.01% 38.16% 43.10%
EBIT margin 25.19% 33.85% 24.64% 30.38% 31.35% 34.68% 27.21% 32.96%
--------------------------------------------------------------------------------------------------------------------------------------
* without depreciation.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
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),
which acquired 53.23% of voting capital and 17.75% of total capital.
The Company controls the following companies: 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 Midwestern Brazil,
including the States of Rondonia and Acre, according to the concession
terms signed by the Federal Government, which expire on August 5, 2008 but
can be extended for another 15 years.
On May 24, 1999 Norte Brasil Telecom S.A. - NBT was formed 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 comprising 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 up 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 subsidiaries and respective charges, are
controlled by ANATEL (National Telecommunications Agency), the entity
responsible for regulating telecommunications in Brazil in accordance with
Law No. 9472 of July 16, 1997 and respective regulations.
On November 21, 2000 TCO IP S.A. was formed as a private company, with the
objectives of rendering telecommunications and internet access services,
and developing solutions among others.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
1. Operations - continued
On April 26, 2002, in order to rationalize the corporate structure of the
parent company and its subsidiaries, a corporate restructuring was carried
out by means of the absorption of Telebrasilia Celular S.A. by Tele Centro
Oeste Celular Participacoes S.A., taking advantages of existing
administrative and commercial synergies and concentrating the liquidity of
listed companies' shares on a single company, thereby reducing capital
cost. The terms and conditions of this restructuring were negotiated by
both company managements in a Special General Meeting also held on April
26, 2002, which approved that the substitution proportion were determined
based on net assets appraised at market value and that only preferred
shares were delivered, even for ordinary shareholders. We point out that
such absorption was subject to the authorization of the National
Telecommunications Agency - ANATEL, and the restructuring was approved by
Act No. 24991 of April 23, 2002. The financial statements used at the time
Tele Centro Oeste Participacoes S.A. absorbed Telebrasilia Celular S.A.
were those as of December 31, 2001 pursuant to the Absorption Protocol
item III - "C" of January 15, 2002.
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 (company and consolidated)
a. Short-term investments
Comprised temporary high liquidity investments falling due in less than
three months, stated at cost plus income earned through the balance
sheet date.
b. Marketable securities
Comprised investments to be held to their respective maturity, which
should not exceed 12 months and are recorded at cost plus interest
earned through the balance sheet date.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
3. Summary of the principal accounting practices (company and
consolidated)--Continued
c. Credits and obligations
Credits and obligations are stated at their historical value. The
amounts subject to monetary updating, foreign exchange variation and
interest are adjusted through the balance sheet date.
d. Allowance for doubtful accounts
This provision was set up to cover accounts of a doubtful collection.
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 accredited agencies.
f. Investments
Comprise permanent shareholding of subsidiaries recorded according to
the equity pickup method. The accounting practices adopted by
subsidiaries are consistent with those adopted by the Company. The
investments are stated at cost not exceeding market value.
g. Property, plant and equipment
Property, plant and equipment are stated at acquisition and/or
construction cost, monetarily updated 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 with
concession terms.
Materials related to the plant expansion are stated at average
acquisition cost.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
3. Summary of the principal accounting practices (company and
consolidated)--Continued
g. Property, plant and equipment--Continued
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 8.
h. Deferred charges
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 by
the Company's lawyers regarding all legal actions in progress.
k. Income and expenses
Income and expenses are charged to the operating result for the year on
the accrual basis. 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 revenues not billed between the
billings date and the end of the respective period are estimated and
recognized in the month in which the service was rendered.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
3. Summary of the principal accounting practices (company and
consolidated)--Continued
l. Financial result, net
The financial result net is represented by interest and monetary
updating on short-term investments and loans obtained and granted. In
compliance with the current tax legislation, the interest on
shareholders' equity was recorded as a financial expense and considered
as an appropriation of result for financial statement purposes,
according to Brazilian Securities Commission (CVM) Resolution No. 207
of December 12, 1996.
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 carried
out studies of future benefits to employees. However, the Company opted
to record the adjustment to actuarial liabilities directly in the
operating result for the year as from 2002 and for a period of five
years or, if lower, for the period of the service or remaining life of
the employees.
n. Employees' profit participation
Tele Centro Oeste Celular Participacoes S.A. and its subsidiaries
provide for employees' profit 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 in the Shareholders Meeting.
o. Earnings per share
Earnings per share were calculated based on the number of outstanding
shares at the balance sheet computation date.
Tele Centro Oeste Celular Participacoes S.A.
NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
4. Consolidation of the financial statements
The consolidated financial statements were prepared in accordance with
basic consolidation 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 shareholding, reserves and retained earnings of the
consolidated companies;
c) Elimination of revenues and expenses derived from business between the
consolidated companies;
d) Highlighting the minority interest amounts on the financial statements.
The consolidated companies comprise the following:
Total shareholding (%)
------------------------------------------------
9/30/2002 6/30/2002
------------------------------------------------
Telegoias Celular S.A. 97.06 97.02
Telemat Celular S.A. 97.56 97.56
Telems Celular S.A. 98.45 98.45
Teleron Celular S.A. 97.21 97.21
Teleacre Celular S.A. 98.35 98.35
Norte Brasil Telecom S.A. - NBT 98.33 98.33
TCO IP S.A. 99.99 99.99
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
5. Marketable securities
Consolidated
--------------------------
Maturity date
Interest 9/30/2002 6/30/2002
--------------------------------------------------------------------------------
Commercial Paper - Prefixed annual rate of 24% to
Splice do Brasil S.A. 25% with Swap of 100% of 07/05/2002 and
Interbank Deposit Certificate - 09/30/2002
CDI plus 1.5% p.a. - 411,995
Debentures - Fixcel CDI plus 2.0% p.a. 06/27/2002 and
S.A. 08/08/2003 681,918 -
--------------------------
681,918 411,995
==========================
Tele Centro Oeste Celular Participacoes S.A., directly and through its
subsidiaries, acquired a total of R$ 660 million in debentures issued by
Fixcel S.A., from which R$ 470 million was due on July 2, 2002 and R$ 190
million on August 13, 2002. The debentures have variable guarantee on the
assets of Fixcel S.A. and are secured by Splice do Brasil Telecomunicacoes
e Eletronica S.A..
6. Accounts receivable
Consolidated
------------------------------------
9/30/2002 6/30/2002
------------------------------------
Amounts invoiced 74,815 68,771
43,449 53,944
Amounts to be0
invoiced
Network use rate 49,015 54,830
Sales - prepaid 29,581 28,917
10,644 11,547
Credit Cards
Allowance for doubtful accounts (25,415) (40,382)
Others 11,694 13,845
------------------------------------
193,783 191,472
====================================
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
7. Investments
Company Consolidated
--------------------------------------------------------
9/30/2002 6/30/2002 9/30/2002 6/30/2002
--------------------------------------------------------
Participation stated by the equity
pickup method 1,016,892 957,048 - -
Premium - Norte Brasil Telecom S.A. 4,730 4,882
4,730 4,882
Premium - Telegoias Celular S.A. 3,900 4,138 3,900 4,138
Other investments 6 35 6 35
16 16 185 185
TAX
INCENTIVES
--------------------------------------------------------
1,025,544 966,119 8,821 9,240
========================================================
The premiums of R$ 4,730 and R$ 3,900 at September 30, 2002 refer, respectively,
to the acquisition of 45% of 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.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
7. Investments--Continued
The significant information on subsidiaries is as follows:
Telegoias Telemat Telems Teleron Teleacre NBT TCO IP Parent company
--------- ------- -------- ------- ---------- --------- -------- ----------------
Investment balance at June 30, 2002 331,678 206,729 173,089 49,939 27,873 167,122 618 957,048
Equity pick-up 3nd quarter 24,674 17,040 12,883 5,047 2,637 (2,273) (271) 59,737
Purchase of shares in the 3nd quarter 129 2 1 - - - - 132
Gain (loss) from the purchase of shares (27) 1 1 - - - - (25)
--------- ------- -------- ------- ---------- --------- -------- ----------------
Investment balance at September 30, 2002 356,454 223,772 185,974 54,986 30,510 164,849 347 1,016,892
========= ======= ======== ======= ========== ========= ======== ================
Balance for shareholders' equity at
September 30, 2002, with no premium reserve 353,607 215,775 173,461 53,293 29,121 167,643 (163) 992,737
Percentage of participation of the
parent company 97,0555 97,5651 98,4544 97,2110 98,3508 98,3333 99,9900 -
--------- ------- --------- ------- ---------- --------- -------- ---------------
Investment in subsidiaries 343,196 210,521 170,781 51,806 28,640 164,849 (163) 969,630
Merged premium/ advance for future
capital increase (TCO-IP) 13,258 13,251 15,193 3,180 1,870 - 510 47,262
--------- ------- -------- ------- ---------- --------- -------- ----------------
Investment balance at September 30, 2002 356,454 223,772 185,974 54,986 30,510 164,849 347 1,016,892
========= ======= ======== ======= ========== ========= ======== ================
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
8. Property, plant and equipment
Consolidated
------------------------------------------------------
9/30/2002 6/30/2002
------------------------------------------------------
Annual Cost
depreciation monetarily Accumulated Net book Net book
rate (%) updated depreciation value value
---------------------------------------------------------------------
Assets and service installations
Switching equipment 10 228,641 (67,357) 161,284 168,107
Transmission equipment 14.29 652,611 (386,652) 265,959 286,619
Infrastructure
- 4,825 - 4,825 4,825
Land
Buildings 4 34.720 (12.480) 22.240 22,709
Supporters and protectors 5 46,384 (10,147) 36,237 36,520
Energy equipment 10 64,312 (39,300) 25,012 26,339
Others 10 4,331 (1.714) 2,617 2.505
Computer equipment 20 32,388 (12,862) 19,526 20,433
Vehicles 20 1,777 (1,322) 455 495
5 to 20 87,084 (27,748) 59,336 48,235
Other assets
Assets for future use
Assets and construction in progress - 214,417 - 214,417 199,304
Construction material - 13,963 - 13,963 13,422
6.90 60,550 (9,331) 51,219 52,264
Exploration right (concession)
------------------------------------------------------
1,446,003 (568,913) 877,090 881,777
======================================================
9. Loans and financing
Company Consolidated
-------------------------------------------
Interest and monetary updating Due date 9/30/2002 6/30/2002 9/30/2002 6/30/2002
--------------------------------------------------------------------------------------------------
Local currency
--------------
BNDES T.J.L.P. plus annual interest from 1/15/2008 17,448 18,513 206,635 208,396
3.5% to 4%.
Industrial Products Column 20 - FGV 2002 to 2008 - - 1,654 1,723
Other loans
Foreign currency
----------------
Finimp Exchange variation based on the U.S. 5/19/2003 to
dollar, plus Libor and 1.5% p.a. over 12/12/2003 178,052 20,219 188,292 35,004
Libor, and 3,45% p.a.
Resolution No. Exchange variation based on the U.S.
2,770 dollar plus annual interest ranging
from 6.05% to 8.15% and exchange 27/12/2002 a
variation based on the Yen plus annual 29/11/2004 71,180 486 90,262 4,154
interest of 1.05%.
Prepayment Exchange variation based on the U.S.
dollar, Libor plus interest from 1.75%
to 1.90% p.a. and performance premium 8/15/2002 - 38,916 - 63,941
ranging from 1.20% to 1.30% p.a.
Export Exchange variation based on the U.S.
Development dollar plus semiannual Libor and
Corporation - EDC annual interest of 3.90%. p.a. to 5% 12/14/2006 97,705 70,200 184,146 132,262
p.a.
BNDES - Currency UMBNDES variation plus the loan rate
basket* from BNDES plus annual interest of 3.5. 01/15/2008 - - 24.732 18,368
-------------------------------------------
364,385 148,334 695,721 463,848
Current (274,267) (84,984) (351,994) (191,306)
-------------------------------------------
Noncurrent 90,118 63,350 343,727 275,542
===========================================
*The amounts for the 1st and 2nd quarter of 2002 relating to the UMBNDES
(Monetary Unit of the National Bank for the Economic and Social Development)
variation on the debt denominated currency basket were reclassified as exchange
variation.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
9. Loans and financing--Continued
The amounts falling due on a long-term basis are as follows:
Consolidated
-----------------------------------
9/30/2002 6/30/2002 Due date
-----------------------------------------------------
54,740 47,521
2003
119,050 90,548
2004
119,050 90,548
2005
26,493 22,883
2006
19,388 16,706
2007
5,006 4,336
2008
-----------------------------------
343,727 272,542
===================================
Guarantees:
-----------
Banks Guarantees
--------------------------------------------- --------------------------------------------------------
BNDES - 15% of receivables and CDB pledged in the amount of
TCO Operators the next installment due
BNDES - 100% of receivables and CDB pledged in the amount of
NBT 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 Guarantee from TCO
loans and
financing
The contracts with BNDES and EDC include several restrictive clauses denominated
covenants. At September 30, 2002, the Company does not have problems relating to
the compliance with contractual conditions.
At September 30, 2002 the total debt amounted to R$ 695,721 million of which
70.06% is expressed in foreign currency (66.51% in U.S. dollars and Japanese
Yen) and 3.55% relates to the currency basket - BNDES index). From the portion
expressed in U.S. dollars and Japanese Yen, 84.33% was protected by hedge
operations at the end of the quarter. From the total denominated currency
basket, 80.05% was protected by hedge operations.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
10. 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
-------------------------------------------------------------
9/30/2002 6/30/2002 9/30/2002 6/30/2002
-------------------------------------------------------------
Tax 12,199 12,199 13,571 14,707
Labor 54 54 1,372 236
Others (a) 71,708 66,180 71,708 66,180
-------------------------------------------------------------
83,961 78,433 86,651 81,123
=============================================================
(a) Basically correspond 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 payments
subsequently to the changes in Company's controls. These loans are being
indexed by the IGP-M (General Market 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.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
11. Shareholder' equity
a) Capital
The authorized capital at September 30, 2002 and June 30, 2002 corresponds
to 700,000,000,000 shares. The subscribed and paid-in capital at September
30, 2002 and June 30, 2002 corresponds to R$ 534,046, represented by
379,200,036,000 shares with no par value, held as follows (in thousands of
shares):
9/30/2002 6/30/2002
--------------------------------------
Common shares 126,433,338 126,433,338
252,766,698 252,766,698
Preferred shares
--------------------------------------
379,200,036 379,200,036
======================================
Book value per lot of thousand share (in R$) 3,10767 3,006946
The preferred shares of Tele Centro Oeste Celular Participacoes S.A. are
nonvoting and have priority of reimbursement and payment of noncumulative
minimum dividends.
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) Treasury stock
On July 1st, 2002, the Administration Council of Tele Centro Oeste Celular
Participacoes S.A., supporting the resolutions of June 22, 2001, September
25, 2001 and December 26, 2001, respectively, approved the acquisition of
shares at market value up to a number of 28,620,000,000 shares issued by
the Company, from which 3,350,000,000 correspond to common shares and
25,270,000,000 correspond to preferred shares, representing up to 10% of
the outstanding common shares and up to 10% of the outstanding preferred
shares, for cancellation or permanence in treasury and subsequent
disposal, without reduction of capital.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
11. Shareholder' equity--Continued
c) Treasury stock
The balance of common shares corresponds to 4,162,094,000 shares at
September 30, 2002 (1,251,892 at June 30, 2002). With the merger of
Telebrasilia Celular S.A. by Tele Centro Oeste Celular Participacoes S.A.
on April 26, 2002, all preferred shares in threasury were cancelled.
However, on August 15, 2002 Tele Centro Oeste Celular Participacoes S.A.
acquired new preferred shares. The balance of preferred shares at
September 30, 2002 corresponds to 2,155,700,000 shares.
The market value of common and preferred shares at the end of the quarter
was R$ 8,10 per share (R$ 8.90 at June 30, 2002) for common shares and R$
2.90 per share for preferred shares at September 30, 2002.
Common shares were acquired for a price ranging from R$ 4.20 to R$ 9.01
per share.
Preferred shares were acquired for a price ranging from R$ 2.26 to R$ 3.66
per share.
12. Net operating result
Consolidated
-----------------------------------------
9/30/2002 9/30/2001
-----------------------------------------
82,737 95,807
Subscription
Use
National 457,894 357,913
Displacement/additional per calls and others 32,295 30,043
Use of network 476,666 386,175
Additional services 9,695 5,416
Resale of cellular equipment 181,854 157,002
170,250 105,327
Resale of cards
875 8
Internet services
197 139
Others
-----------------------------------------
Gross operating income 1,412,463 1,137,830
Taxes on gross income (295,537) (232,683)
-----------------------------------------
Net operating income 1,116,926 905,147
=========================================
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
13. Related party transactions
9/30/2002
----------------------------------
Company Consolidated
----------------------------------
Assets
Cash and cash equivalents 9 9
Short-term investments 6,340 14,265
Marketable securities 214,751 681,918
Accounts receivable 176 -
Loans to related parties 22,529 -
50 -
Liabilities
Suppliers 771 3,934
Interest on shareholders' equity 6,035 6,035
Intercompany 51,855 -
Transactions
Cost of telecom services - mobile network use tariff (TUM) 106 -
Merchandise and card costs 3,782 -
Financial expenses 8.571 14,493
General and administrative expenses 2,033 8,599
Acquisition of telephone cards 656 3,710
Acquisition of property, plant and equipment 1,421 2,071
Telecom services - TUM 130 -
Sale of merchandise and cards 2,118 -
Financial income 49,006 73,067
According to the contract entered into by and among 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., Telegoias
Celular S.A and Teleacre Celular S.A., a technical assistance shall be
provided to Splice do Brasil S.A., corresponding to 1% of net operating
revenues. For the period ended September 30, 2002, R$ 4,433 (R$ 2,279 at
June 30, 2002) was appropriated to general and administrative expenses.
All the related party transactions were carried out in accordance with the
Company's articles of incorporation and at normal market conditions.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
14. Financial instruments
Pursuant to Normative Instruction of CVM No. 235/95, Tele Centro Oeste
Celular Participacoes S.A. and subsidiaries performed an evaluation of
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, requires considerable judgment and
reasonable estimates in order to reach 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 are comprised of 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.
In September 2002, the total debt amounted to R$ 695,721 from which 70.06%
is expressed in foreign currency (66.51% updated by the U.S. dollar and
Yen and 3.55% denominated currency basket - BNDES index). The portion
expressed in U.S. dollars and Yen, 84.33% was protected by hedge
operations at the end of the quarter. From the total denominated in
foreign currency 80.05% was protected by hedge operations. The hedge
operations were carried out for purposes of partially covering future
maturity of debts in U.S. dollar and Yen, indexed at fixed or variable
interest rates. The gains or losses derived from these operations have
been recorded in the statement of operations.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
14. Financial instruments --Continued
a) Exchange rate risk--Continued
The Company's net exposure to the foreign exchange rate risk, at book and
market value, at September 30, 2002 corresponds to the following:
September 30, 2002 June 30, 2002
----------------------------- -------------------------------
Book Fair Book Fair
value value value value
----------------------------- -------------------------------
Loans in U.S. dollars 462,700 462,700 235,361 237,161
Currency basket 24,732 24,732 18,368 18,508
Hedge 385,628 312,487 189,897 181,719
----------------------------- -------------------------------
Net exposure 101,804 174,945 63,832 73,950
============================= ===============================
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. The
Company intends to maintain the existing hedge operations up to their
maturity.
b) Interest rate risk
The risk relates to the possibility of the Company incurring 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 to hedge against the risk of interest
rates volatility.
At September 30, 2002, the Company has R$ 208,289 (R$ 210,119 at June 30,
2002) in loans and financing in local currency obtained at various
fluctuating rates (as explained in Note 9), as well as short-term
investments in the amount of R$ 111,358 (R$ 231,969 at June 30, 2002) and
investments in marketable securities of R$ 681,918 (R$ 411,995 at June 30,
2002) based on the CDI variation.
At September 30, 2002, the Company has R$ 184,146 (R$ 132,262 at June 30,
2002) 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$ 112,310 (R$ 87,285 at June 30, 2002) at
fixed interest rates plus the exchange variation.
Tele Centro Oeste Celular Participacoes S.A.
EXPLICATIVE NOTES
For the period ended September30, 2002
(In thousands of Brazilian Reais)
14. Financial instruments --Continued
b) Interest rates risk--Continued
Another risk to which Tele Centro Oeste Celular Participacoes S.A. and its
subsidiaries are exposed is the non-connection between the monetary
updating indexes on their debts and those 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 incurring 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 risk management of collection problems
and monitors the accounts receivable from subscribers, locking 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.
d) Credit risk linked to rendering of services
The credit risk in relation to accounts receivable from cellular telephone
services is diversified.
e) 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,
diversification of receivables portfolio, 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.
CONSOLIDATED FORM
Management and Related Persons' Negotiation of Securities Issued by the Company
Article 11 - CVM Instruction # 358/2002
In October 2002, the only operations with securities and derivatives were those
presented below, in compliance with Article 11 - CVM Instruction # 358/2002:
-------------------------------------------------------------------------------------------------------------------------
Company Name: Tele Centro Oeste Celular Participacoes S.A.
-------------------------------------------------------------------------------------------------------------------------
Group and ( X ) ( ) ( ) ( )
Related Board of Directors Management Audit Committee Technical and Consulting
Persons Committees
-------------------------------------------------------------------------------------------------------------------------
Initial Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/ Quantity %
Derivatives Securities Characteristics (1)
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 5,842 0.00000462 0.00000154
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 14,433 0.00000571 0.00000380
-------------------------------------------------------------------------------------------------------------------------
Final Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/
Derivatives Securities Characteristics (1) Quantity %
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 5,842 0.00000462 0.00000154
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 14,433 0.00000571 0.00000380
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Company Name: Tele Centro Oeste Celular Participacoes S.A.
-------------------------------------------------------------------------------------------------------------------------
Group and ( ) ( X ) ( ) ( )
Related Board of Directors Management Audit Committee Technical and Consulting
Persons Committees
-------------------------------------------------------------------------------------------------------------------------
Initial Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/ Quantity %
Derivatives Securities Characteristics (1)
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 100,306 0.00007933 0.000026452
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 141,228 0.00005587 0.000037243
-------------------------------------------------------------------------------------------------------------------------
Final Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/
Derivatives Securities Characteristics (1) Quantity %
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 100,306 0.00007933 0.000026452
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 141,228 0.00005587 0.000037243
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Company Name: Tele Centro Oeste Celular Participacoes S.A.
-------------------------------------------------------------------------------------------------------------------------
Group and ( ) ( ) (x) ( )
Related Board of Directors Management Audit Committee Technical and Consulting
Persons Committees
-------------------------------------------------------------------------------------------------------------------------
Initial Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/ Quantity %
Derivatives Securities Characteristics (1)
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 4,146 0.00000327 0.000001093
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 9,601 0.0000379 0.000002531
-------------------------------------------------------------------------------------------------------------------------
Final Balance
-------------------------------------------------------------------------------------------------------------------------
Securities/
Derivatives Securities Characteristics (1) Quantity %
-------------------------------------------------------------------------------------------------------------------------
Same Class Total
and Type
-------------------------------------------------------------------------------------------------------------------------
Shares Common 4,146 0.00000327 0.000001093
-------------------------------------------------------------------------------------------------------------------------
Shares Preferred 9,601 0.00000379 0.000002531
-------------------------------------------------------------------------------------------------------------------------
(1) Issue/Series, convertibility, simple, term, guaranties, type/class, among
others.
Note: These consolidated data must have information by group: Directors,
Management (which have not been included in the Board of Directors), among
others.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
(A Publicly-Held Company)
CNPJ/MF n° 02.558.132/0001-69 / NIRE 53.30000.580-0
MINUTES OF THE 176th (ONE HUNDRED AND SEVENTY-SIXTH) EXTRAORDINARY
BOARD MEETING
1. DATE, TIME, AND LOCATION OF THE MEETING: The meeting was held at 18:00
(eighteen hundred hours) on November 08, 2002, at the Company's headquarters,
located at Setor Comercial Sul, Quadra 02, Bloco C, n° 226, Edificio
Telebrasilia Celular, 7° andar, CEP 70302-916, in the city of Brasilia, in the
Federal District of Brazil. 2. CALL FOR ATTENDANCE: The meeting was called by
Mr. ALEXANDRE BELDI NETTO, Chairman of the Company's Board of Directors. 3.
OPENING The meeting opened with the presence of all members of the Board of
Directors except for the justified absence of board member Mario Cesar Pereira
de Araujo. 4. THE TABLE: Mr. Alexandre Beldi Netto, chairman of the Company's
Board of Directors conducted the proceedings, and invited Mr. Marco Antonio
Beldi to act as secretary. 5. DELIBERATIONS: The members of the Board of
Directors unanimously and with no restrictions decided for the following: I. To
approve in compliance with the terms under item VII of Article 17 of the
Company's bylaws and with CVM instructions 10/1980, 268/97, and 358/02, the
acquisition by the Company at market value of up to 23,334,500,000 (twenty-three
billion, three hundred and thirty-four million and five hundred thousand) shares
issued by the Company, of which 1,670,000,000 (one billion and six hundred and
seventy million) are common shares and 21,664,500,000 (twenty-one billion, six
hundred and sixty-four million and five hundred thousand) are preferred shares,
with the option of further cancellation or maintenance in treasury and
subsequent divestment, implying in no reduction of the Company's Capital Stock
and leaving full responsibility to the Board itself as to deciding on the best
opportunity and on the amount of stock to be effectively acquired. The
above-mentioned acquisitions have the purpose of investing resources available
in cash whenever rates do not appropriately reflect the Company's financial and
economic performance. Operations will be carried out in the Sao Paulo Stock
Exchange - BOVESPA - and mediated by brokerage agencies Sudameris - Corretora de
Cambio e Valores Mobiliarios S.A., established at Av. Engenheiro Luiz Carlos
Berrini 1.297 - 2° andar - CEP 04571-010 - Sao Paulo-SP; Unibanco - Corretora de
Valores Mobiliarios S.A., established at Rua Quitanda, 157 - 3° andar Centro -
CEP 01012-010 - Sao Paulo-SP; Brascan S.A. - Corretora de Titulos e Valores,
established at Av. das Nacoes 1.995 - 19° andar - CEP 04578-000 - Sao Paulo-SP;
Fair - Corretora de Cambio e Valores Ltda, established at Alameda Santos n°
1.800 - 8° e 9° andares - Cerqueira Cesar - CEP 01418-200 - Sao Paulo-SP and UBS
Warburg - Corretora de Cambio e Valores Mobiliarios S/A., established at Praia
do Botafogo n° 228 - 16° andar - Ala B - Bairro Botafogo - CEP 22359-900 - Rio
de Janeiro-RJ, supported by the values of existing reserves available at the
company's Equity Balance, as provided by Article 7 of CVM Instruction number
10/80. The present authorization shall remain effective for a maximum period of
3 (three) months, starting at November 12, 2002 and closing at February 11,
2003. II. At this date the Company has a total of 306,206,332,300 (three hundred
and six billion, two hundred and six million, three hundred and thirty-two
thousand and three hundred) outstanding shares in the market, of which
54,903,433,827 (fifty-four billion, nine hundred and three million, four hundred
and thirty-three thousand, eight hundred and twenty-seven) are common shares and
251,302,898,473 (two hundred and fifty-one billion, three hundred and two
million, eight hundred and ninety-eight thousand, four hundred and
seventy-three) are preferred shares. 5. Closing: With no further issues to
address, the assembly was closed and the present minutes were drawn, read and
considered appropriate and signed by all the present members. Brasilia-DF,
November 08, 2.002.
ALEXANDRE BELDI NETTO
Chairman of the Board of Directors
MARCO ANTONIO BELDI ANTONIO FABIO BELDI
Board Member Board Member
NELSON GUARNIERI DE LARA ARALDO ALEXANDRE M. DE SOUZA
Board Member Board Member
RICARDO DE SOUZA ADENES
Board Member
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
CNPJ/MF 02.558.132/0001-69
A Publicly-Held Company
TO ALL SHAREHOLDERS
Meeting on November 8, 2002, the Board of Tele Centro Oeste Celular
Participacoes S.A. decided in accordance with the provisions under item VII of
Article 17 of the Company's bylaws and observing CVM instructions 10/80, 268/97
and 299/99, to acquire at market price up to 23,334,500,000 shares issued by
this company, of which 1,670,000,000 are common shares and 21,664,500,000 are
preferred shares, for further cancellation or maintenance in treasury and
subsequent divestment, with no reduction of the Capital Stock, and the Board
itself is in charge of deciding on the opportunity and on the amount of stock to
be effectively acquired. The acquisitions aim at investing resources available
in cash whenever rates do not appropriately reflect the Company's financial and
economic performance. The present authorization will remain effective for the
maximum period of three months starting at November 12, 2002. Operations will be
carried out in the Sao Paulo Stock Exchange - BOVESPA - and mediated by
brokerage agencies Sudameris - Corretora de Cambio e Valores Mobiliarios S.A.,
established at Av. Engenheiro Luiz Carlos Berrini 1.297 - 2° andar - CEP
04571-010 - Sao Paulo-SP; Unibanco - Corretora de Valores Mobiliarios S.A.,
established at Rua Quitanda, 157 - 3° andar Centro - CEP 01012-010 - Sao
Paulo-SP; Brascan S.A. - Corretora de Titulos e Valores, established at Av. das
Nacoes 1.995 - 19° andar - CEP 04578-000 - Sao Paulo-SP; Fair - Corretora de
Cambio e Valores Ltda, established at Alameda Santos n° 1.800 - 8° e 9° andares
- Cerqueira Cesar - CEP 01418-200 - Sao Paulo-SP and UBS Warburg - Corretora de
Cambio e Valores Mobiliarios S/A., established at Praia do Botafogo n° 228 - 16°
andar - Ala B - Bairro Botafogo - CEP 22359-900 - Rio de Janeiro-RJ.
Brasilia, November 08, 2002.
MARIO CESAR PEREIRA DE ARAUJO
President and Head of Investor Relations
--------------------------------------------------------------------------------
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: November 12, 2002 By: /s/ Mario Cesar Pereira de Araujo
--------------------------------------------------------
Name: Mario Cesar Pereira de Araujo
Title: President