Edgar Filing: TELEFONICA BRASIL S.A.

vivodf4q14_6k.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2015

Commission File Number: 001-14475

TELEFÔNICA BRASIL S.A.
(Exact name of registrant as specified in its charter)

TELEFONICA BRAZIL S.A.
(Translation of registrant’s name into English)

Av. Eng° Luís Carlos Berrini, 1376 - 28º andar
São Paulo, S.P.
Federative Republic of Brazil
(Address of principal executive office)

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

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes

TELEFÔNICA BRASIL S.A.

QUARTERLY INFORMATION

DECEMBER 31, 2014

Shareholders and Management of

Telefônica Brasil S.A.

São Paulo – SP

Introduction

We have examined the individual and consolidated financial statements of Telefônica Brasil S.A., identified as Parent Company and Consolidated, respectively, which comprise the balance sheet as at December 31, 2014 and the respective statements of income, of comprehensive income, of changes in shareholders’ equity and of cash flows for the period then ended, as well as a summary of the main accounting practices and other notes.

Management’s responsibility on the financial statements

The Entity’s management is responsible for the preparation and adequate presentation of the individual financial statements in accordance with the accounting practices adopted in Brazil and the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board – IASB, and in accordance with the accounting practices adopted in Brazil, as well as for the internal controls it has determined as necessary to allow the preparation of financial statements free of material misstatements caused by fraud or error.

Responsibility of independent auditors

Our responsibility is to issue an opinion on these financial statements based on our audit, conducted in accordance with Brazilian and international audit standards. Those standards require the meeting of ethical demands by the auditors and that the audit be planned and executed in order to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit involves the execution of selected procedures to obtain evidence related to the amounts and disclosures presented in the financial statements. The selected procedures depend on the auditor’s professional judgment, including the assessment of risks of material misstatement in the financial statements, regardless if caused by fraud or error. In this risk assessment, the auditor considers the internal controls which are relevant to the preparation and adequate presentation of the financial statements of the Company in order to plan the audit procedures which are appropriate to the circumstances, but not to express an opinion on the effectiveness of the Company’s internal controls. An audit also includes the assessment of adequacy of the accounting practices used and the reasonableness of the accounting estimates made by the Management, as well as the evaluation of the presentation of the financial statements as a group.

We believe that the audit evidence obtained is sufficient and appropriate to serve as basis for our opinion.

Opinion on the individual financial statements

In our opinion, the individual financial statements referred to above adequately present, in all relevant aspects, the financial position of Telefônica do Brasil S.A. as at December 31, 2014, the performance of its operations and cash flows for the year then ended, in accordance with the accounting practices adopted in Brazil.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements referred to above adequately present, in all relevant aspects, the consolidated financial position of Telefônica do Brasil S.A. as at December 31, 2014, the consolidated performance of its operations and consolidated cash flows for the year then ended, in accordance with the international financial reporting standards (IFRS) issued by the International Accounting Standards Board – IASB and with accounting practices adopted in Brazil.

Other matters

Statement of Value Added

We have also examined the individual and consolidated statement of value added (SVA), referring to the period ended on December 31, 2014, prepared under the Company’s Management responsibility, the presentation of which is required according to the Brazilian corporate law for listed companies, and, as supplementary information by the IFRSs, which do not require the presentation of the SVA. These statements were submitted to the same audit procedures previously described and, in our opinion, they are adequately presented, in all material aspects, regarding the financial statements as a whole.

Audit of previous year’s comparative amounts

The examination on the financial statements of the period ended on December 31, 2013 was conducted under the responsibility of other independent auditors, who issued an audit report with no changes, dated February 25, 2014.

São Paulo, February 12, 2015.

Clóvis Ailton Madeira

Assurance Partner

Grant Thornton Auditores Independentes

TELEFÔNICA BRASIL S. A.
Balance sheets
December 31, 2014 and 2013
( In thousands of reais )

		Company		Consolidated				Company		Consolidado
ASSETS	Note	12.31.14	12.31.13	12.31.14	12.31.13	LIABILITIES AND EQUITY	Note	12.31.14	12.31.13	12.31.14	12.31.13

CURRENT ASSETS		14,754,381	15,595,493	15,517,368	15,899,396	CURRENT LIABILITIES		16,102,171	13,825,053	16,011,006	13,731,007
Cash and cash equivalents	4	3,835,304	6,311,299	4,692,689	6,543,936	Personnel, social charges and benefits	14	585,770	427,067	591,381	431,403
Trade accounts receivable, net	5	6,470,764	5,541,023	6,724,061	5,802,859	Trade accounts payable	15	7,675,632	6,948,957	7,641,191	6,914,009
Inventories, net	6	458,488	469,586	479,801	505,615	Taxes, charges and contributions	16	1,236,330	1,269,105	1,281,673	1,315,164
Taxes recoverable	7.1	2,163,404	2,168,797	2,202,662	2,191,962	Dividends and interest on equity	18	1,495,321	1,187,556	1,495,321	1,187,556
Judicial deposits and garnishments	8	202,169	166,928	202,169	166,928	Provisions	19	674,276	561,403	674,276	561,403
Prepaid expenses	9	300,567	254,743	303,551	257,286	Deferred revenue	20	704,589	812,843	717,019	817,551
Dividends and interest on equity	18	174,726	60,346	-	1,140	Loans, financing, and finance lease	17.1	1,509,471	1,236,784	1,509,471	1,236,784
Financial instruments	33	613,939	89,499	613,939	89,499	Debentures	17.2	755,047	286,929	755,047	286,929
Other assets	10	535,020	533,272	298,496	340,171	Financial instruments	33	23,011	44,463	23,011	44,463
						Authorization licenses		415,308	58,531	415,308	58,531
NONCURRENT ASSETS		58,382,747	53,982,379	57,547,920	53,604,442	Grouping of capital shares		388,975	389,220	388,975	389,220
Short-term investments pledged as collateral		125,343	106,239	125,353	106,455	Other liabilities	21	638,441	602,195	518,333	487,994
Trade accounts receivable, net	5	190,288	160,478	299,405	257,086
Taxes recoverable	7.1	340,205	368,388	340,205	368,388	NONCURRENT LIABILITIES		12,084,862	12,858,377	12,104,187	12,878,389
Deferred taxes	7.2	40,704	-	144,817	210,294	Personnel, social charges and benefits	14	118,829	18,698	118,829	18,698
Judicial deposits and garnishments	8	4,514,783	4,123,584	4,543,056	4,148,355	Taxes, charges and contributions	16	41,379	52,252	67,126	75,074
Prepaid expenses	9	24,346	24,879	26,223	25,364	Provisions	19	4,440,756	4,042,789	4,461,654	4,062,410
Financial instruments	33	152,843	329,652	152,843	329,652	Deferred revenue	20	480,957	252,351	482,782	253,661
Other assets	10	94,703	127,567	94,925	127,793	Deferred taxes	7.2	-	722,634	-	722,634
Investments	11	1,445,014	1,076,696	79,805	86,349	Loans, financing, and finance lease	17.1	2,123,126	3,215,156	2,123,126	3,215,156
Property and equipment, net	12	20,381,731	18,377,905	20,453,864	18,441,647	Debentures	17.2	3,411,616	4,014,686	3,411,616	4,014,686
Intangible assets, net	13	31,072,787	29,286,991	31,287,424	29,503,059	Financial instruments	33	24,133	24,807	24,133	24,807
						Post-Retirement Benefit Plans	32	456,129	370,351	456,129	370,351
						Authorization licenses		763,670	-	763,670	-
						Other liabilities	21	224,267	144,653	195,122	120,912

						EQUITY		44,950,095	42,894,442	44,950,095	42,894,442
						Capital	22	37,798,110	37,798,110	37,798,110	37,798,110
						Capital reserves	22	2,686,897	2,686,897	2,686,897	2,686,897
						Income reserves	22	1,534,479	1,287,496	1,534,479	1,287,496
						Premium on acquisition of interest from non-controlling shareholders	22	(70,448)	(70,448)	(70,448)	(70,448)
						Other comprehensive income	22	232,465	16,849	232,465	16,849
						Proposed additional dividend	22	2,768,592	1,175,538	2,768,592	1,175,538


TOTAL ASSETS		73,137,128	69,577,872	73,065,288	69,503,838	TOTAL LIABILITIES AND EQUITY		73,137,128	69,577,872	73,065,288	69,503,838

TELEFÔNICA BRASIL S. A.
Income statements
Years ended December 31, 2014 and 2013
( In thousands of reais)

		Company		Consolidated
	Note	12.31.14	12.31.13	12.31.14	12.31.13

OPERATING REVENUE, NET	23	32,993,687	23,189,261	34,999,969	34,721,897

Cost of sales and services	24	(16,286,314)	(12,452,247)	(17,222,675)	(17,542,167)

GROSS PROFIT		16,707,373	10,737,014	17,777,294	17,179,730

OPERATING INCOME (EXPENSES)		(12,603,848)	(8,335,501)	(12,668,265)	(12,247,456)
Selling expenses	24	(10,403,171)	(6,591,404)	(10,466,725)	(9,686,170)
General and administrative expenses	24	(1,773,582)	(1,313,365)	(1,803,803)	(2,177,891)
Other operating income	25	482,788	379,922	510,628	575,959
Other operating expenses	25	(909,883)	(810,654)	(908,365)	(959,354)

OPERATIONAL INCOME		4,103,525	2,401,513	5,109,029	4,932,274

Financial income	26	1,869,331	1,243,109	1,983,386	1,748,277
Financial expenses	26	(2,341,430)	(1,512,178)	(2,345,381)	(1,963,037)
Equity pickup	11	742,628	1,913,508	6,940	(55,150)

INCOME BEFORE TAXES		4,374,054	4,045,952	4,753,974	4,662,364

Income and social contributions taxes	27	562,605	(330,007)	182,685	(946,419)

NET INCOME FOR THE YEAR		4,936,659	3,715,945	4,936,659	3,715,945


Basic and diluted earnings per share – common	28	4.12	3.10
Basic and diluted earnings per share – preferred	28	4.53	3.41

TELEFÔNICA BRASIL S. A.
Statements of changes in equity
Years ended December 31, 2014 and 2013
( In thousands of reais )
			Capital reserve			Income reserve
	Capital	Premium on acquisition of interest from non-controlling shareholders	Special goodwill reserve	Other capital reserve	Treasury stock	Legal reserve	Tax grants	Accumulated income	Proposed additional dividend	Other comprehensive income	Equity

Balances at December 31, 2012	37,798,110	(70,448)	63,074	2,735,930	(112,107)	1,100,000	-	-	3,148,769	17,792	44,681,120

Additional dividend proposed for year 2012	-	-	-	-	-	-	-	-	(3,148,769)	-	(3,148,769)
Unclaimed dividends and interest on equity	-	-	-	-	-	-	-	116,825	-	-	116,825
Income tax return adjustment – government grants	-	-	-	-	-	-	1,699	(1,699)	-	-	-
Other comprehensive income	-	-	-	-	-	-	-	14,264	-	(943)	13,321
Net income for the year	-	-	-	-	-	-	-	3,715,945	-	-	3,715,945
Income allocation:
Legal reserve	-	-	-	-	-	185,797	-	(185,797)	-	-	-
Interim interest on equity	-	-	-	-	-	-	-	(1,738,000)	-	-	(1,738,000)
Interim dividends	-	-	-	-	-	-	-	(746,000)	-	-	(746,000)
Additional dividend proposed	-	-	-	-	-	-	-	(1,175,538)	1,175,538	-	-

Saldos em 31 de Dezembro de 2013	37,798,110	(70,448)	63,074	2,735,930	(112,107)	1,285,797	1,699	-	1,175,538	16,849	42,894,442

Additional dividend proposed for year 2013	-	-	-	-	-	-	-	-	(1,175,538)	-	(1,175,538)
Unclaimed dividends and interest on equity	-	-	-	-	-	-	-	207,442	-	-	207,442
Income tax return adjustment – government grants	-	-	-	-	-	-	150	(150)	-	-	-
Other comprehensive income	-	-	-	-	-	-	-	(36,526)	-	215,616	179,090
Net income for the year	-	-	-	-	-	-	-	4,936,659	-	-	4,936,659
Income allocation:
Legal reserve	-	-	-	-	-	246,833	-	(246,833)	-	-	-
Interim interest on equity	-	-	-	-	-	-	-	(2,092,000)	-	-	(2,092,000)
Additional dividend proposed	-	-	-	-	-	-	-	(2,768,592)	2,768,592	-	-

Balances at December 31, 2014	37,798,110	(70,448)	63,074	2,735,930	(112,107)	1,532,630	1,849	-	2,768,592	232,465	44,950,095

Outstanding shares (thousands)											1,123,269
Book value per shares (VPA) - Company											40.02

TELEFÔNICA BRASIL S. A.


Statements of cash flows
Years ended December 31, 2014 and 2013
( In thousands of reais )

	Company		Consolidated
	12.31.14	12.31.13	12.31.14	12.31.13

Net cash from operating activities	8,485,411	6,596,380	9,384,219	9,576,280

Cash from operations	10,900,855	8,409,235	12,058,587	13,103,190
Income before taxes	4,374,054	4,045,952	4,753,974	4,662,364
Depreciation and amortization	5,273,256	4,135,668	5,295,589	5,643,310
Exchange variations on loans	96,036	70,612	96,036	98,105
Monetary gains	(2,437)	135,624	(4,990)	142,289
Equity pickup	(742,628)	(1,913,508)	(6,940)	55,150
Loses (gains) on write-off/disposal of goods	39,662	(46,235)	37,934	(122,598)
Estimated for impairment of trade accounts receivable	832,184	480,373	896,336	741,274
Provision (reversal) of accounts payable	(198,477)	498,835	(234,967)	579,225
Estimated loses (write-offs and reversals) for impairment of inventory items	(25,458)	(14,728)	(29,062)	(5,901)
Pension plan and other post-employment benefits	33,690	27,106	33,691	26,986
Provisions for tax, labor, civil and regulatory demands	546,191	493,965	546,204	660,771
Interest expenses	662,944	489,145	662,944	596,292
Provision for desmobiligation	10,931	3,268	10,931	19,437
Provision for custumer loyalty program	907	2,154	907	8,915
Others	-	1,004	-	(2,429)

Changes in operating assets and liabilities:	(2,415,444)	(1,812,855)	(2,674,368)	(3,526,910)
Trade accounts receivable	(1,791,735)	(870,569)	(1,859,857)	(1,160,903)
Inventories	36,556	15,997	54,876	(111,905)
Taxes recoverable	(219,466)	(75,609)	(235,559)	(399,105)
Prepaid expenses	61,296	494,149	59,463	(2,917)
Other current assets	(12,862)	(164,638)	30,561	46,652
Other noncurrent assets	33,062	(109,687)	29,612	(45,624)
Personnel, social charges and benefits	258,834	16,629	260,109	20,625
Trade accounts payable	496,976	(522,289)	539,136	(490,538)
Taxes, charges and contributions	618,024	229,493	617,886	487,854
Interest paid	(800,302)	(501,335)	(800,302)	(625,624)
Income and social contribution taxes paid	(520,740)	-	(782,860)	(868,395)
Other current liabilities	(531,236)	(343,670)	(538,693)	(341,427)
Other noncurrent liabilities	(43,851)	18,674	(48,740)	(35,603)

Net cash from investing activities	(7,333,582)	1,041,711	(7,607,642)	(5,543,799)
Future capital contribution in subsidiaries	-	(85,250)	-	-
Acquisition of fixed and intangible assets (net of donations)	(7,504,464)	(3,814,802)	(7,535,011)	(5,837,172)
Proceeds from disposal of property and equipment items	19,856	47,437	21,128	436,386
Redemption of (short-term) investments in guarantee	4,567	267,220	4,567	22,485
Redemption (realization) of judicial deposits	(105,228)	(67,098)	(104,707)	(168,075)
Dividends and interest on equity received	251,687	1,323,026	6,381	2,577
Effect cash and cash equivalent effect by merger/spin-off	-	3,371,178	-	-


Net cash from financing activities	(3,627,824)	(4,406,074)	(3,627,824)	(4,622,030)
Payment of loans, financing, and debentures	(1,563,272)	(2,111,360)	(1,563,272)	(2,336,023)
Loans and debentures raised	318,573	2,211,138	318,573	2,229,134
Net payment of derivative agreements	63,741	29,956	63,741	20,667
Payment referring to group of shares	(245)	(289)	(245)	(289)
Dividends and interest on equity paid	(2,446,621)	(4,535,519)	(2,446,621)	(4,535,519)


Increase (decrease) in cash and cash equivalents	(2,475,995)	3,232,017	(1,851,247)	(589,549)

Cash and cash equivalents at beginning of year	6,311,299	3,079,282	6,543,936	7,133,485
Cash and cash equivalents at end of year	3,835,304	6,311,299	4,692,689	6,543,936

Changes in cash and cash equivalents for the year	(2,475,995)	3,232,017	(1,851,247)	(589,549)

TELEFÔNICA BRASIL S. A.
Statements of comprehensive income
Years ended December 31, 2014 and 2013
( In thousands of reais)

	Company		Consolidated
	12.31.14	12.31.13	12.31.14	12.31.13
Net income for the year	4,936,659	3,715,945	4,936,659	3,715,945

Gains (losses) on derivative transactions	335,169	(5,424)	335,169	(5,424)
Taxes on gains (losses) on derivative transactions	(113,958)	1,844	(113,958)	1,844
	221,211	(3,580)	221,211	(3,580)

Unrealized losses in investments available for sale	(7,643)	(13,466)	(7,643)	(13,466)
Taxes on unrealized losses in investments available for sale	2,599	4,578	2,599	4,578
	(5,044)	(8,888)	(5,044)	(8,888)

Accumulated adjustments of conversion of foreign currency transactions	(551)	11,525	(551)	11,525

Other net comprehensive income to be reclassified to P&L in subsequent years	215,616	(943)	215,616	(943)


Actuarial gains (losses) and limitation effect of the surplus plan assets	(55,343)	18,993	(55,343)	21,612
Taxes on actuarial gains (losses) and limitation effect of the surplus plan assets	18,817	(6,458)	18,817	(7,348)
	(36,526)	12,535	(36,526)	14,264

Interest held in comprehensive income of subsidiaries		1,729	-	-

Other net comprehensive income that will not be reclassified to P&L in subsequent years	(36,526)	14,264	(36,526)	14,264

Comprehensive income for the year, net of taxes	5,115,749	3,729,266	5,115,749	3,729,266

TELEFÔNICA BRASIL S. A.
Statements of value added
Years ended December 31, 2014 and 2013
( In thousands of reais )

	Company		Consolidated
	12.31.14	12.31.13	12.31.14	12.31.13

Revenues	44,918,310	30,949,078	47,303,636	46,916,669
Goods and services sold	45,083,020	30,999,167	47,504,654	47,041,525
Other revenues	667,474	430,284	695,318	616,418
Provision for impairment of trade accounts receivable	(832,184)	(480,373)	(896,336)	(741,274)

Input products acquired from third parties	(17,787,621)	(12,927,165)	(18,818,226)	(18,277,910)
Cost of goods and products sold and services rendered	(9,674,776)	(7,815,416)	(10,685,880)	(10,714,027)
Materials, energy, third-party services and other expenses	(8,101,062)	(5,166,303)	(8,125,895)	(7,683,887)
Loss/recovery of assets	(11,783)	54,554	(6,451)	120,004

Gross value added	27,130,689	18,021,913	28,485,410	28,638,759

Retentions	(5,273,256)	(4,135,668)	(5,295,589)	(5,643,310)
Depreciation and amortization	(5,273,256)	(4,135,668)	(5,295,589)	(5,643,310)

Net value added produced	21,857,433	13,886,245	23,189,821	22,995,449

Value added received in transfer	2,611,263	3,156,617	1,989,630	1,693,127
Equity pickup	742,628	1,913,508	6,940	(55,150)
Financial income	1,868,635	1,243,109	1,982,690	1,748,277

Total value added to be distributed	24,468,696	17,042,862	25,179,451	24,688,576

Distribution of value added	(24,468,696)	(17,042,862)	(25,179,451)	(24,688,576)

Personnel, social charges and benefits	(2,832,181)	(2,002,970)	(2,855,235)	(2,788,341)
Direct compensation	(2,039,202)	(1,458,843)	(2,055,234)	(1,951,750)
Benefits	(658,993)	(439,614)	(664,727)	(698,907)
FGTS	(133,986)	(104,513)	(135,274)	(137,684)
Taxes, charges and contributions	(12,563,110)	(8,718,867)	(13,241,637)	(14,569,191)
Federal	(3,016,423)	(2,698,203)	(3,579,958)	(4,887,840)
State	(9,483,392)	(5,955,657)	(9,496,466)	(9,550,947)
Municipal	(63,295)	(65,007)	(165,213)	(130,404)
Remuneration of third-party capital	(4,136,746)	(2,605,080)	(4,145,920)	(3,615,099)
Interest	(2,336,538)	(1,486,003)	(2,340,098)	(1,934,369)
Rent	(1,800,208)	(1,119,077)	(1,805,822)	(1,680,730)
Equity remuneration	(4,936,659)	(3,715,945)	(4,936,659)	(3,715,945)
Interest on Equity (IOE)	(2,092,000)	(1,738,000)	(2,092,000)	(1,738,000)
Dividends	-	(746,000)	-	(746,000)
Retained earnings	(2,844,659)	(1,231,945)	(2,844,659)	(1,231,945)

Telefônica Brasil S. A.

NOTES TO FINANCIAL STATEMENTS

Years ended December 31, 2014 and 2013

(In thousands of reais, unless otherwise stated)

1) OPERATIONS

a) Background information

Telefônica Brasil S.A. (Company or Telefônica Brasil) is a publicly-traded corporation operating in telecommunication services and in the performance of activities that are necessary or useful in the rendering of such services, in conformity with the concessions, authorizations and permissions it has been or granted. The Company, headquartered at Avenida Engenheiro Luiz Carlos Berrini, nº 1376, in the city and State of São Paulo, Brazil, is a member of Telefónica Group (Group), the telecommunications industry leader in Spain, also being present in various European and Latin American countries.

At December 31, 2014 and 2013, Telefónica S.A., holding company of the Group located in Spain, held a total of 73.81% direct and indirect interest in the Company, being 91.76% of common shares and 64.60% of preferred shares (See Note 22).