Edgar Filing: TELEFONICA BRASIL S.A.

vivitr3q17_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 November, 2017

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

(A free translation of the original in Portuguese)

Telefônica Brasil S.A.

Quarterly Information (ITR)

at September 30, 2017

and report on review of quarterly and nine months-period information

(A free translation of the original in Portuguese)

Report on review of quarterly information

To the Board of Directors and Stockholders

Telefônica Brasil S.A.

Introduction

We have reviewed the accompanying parent company and consolidated interim accounting information of Telefônica Brasil S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended September 30, 2017, comprising the balance sheet at that date and the statements of income and comprehensive income for the quarter and nine-month periods then ended, and changes in equity and cash flows for the nine-month period then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of the parent company interim accounting information in accordance with the accounting standard CPC 21 - "Interim Financial Reporting", of the Brazilian Accounting Pronouncements Committee (CPC), and of the consolidated interim accounting information in accordance with CPC 21 and International Accounting Standard (IAS) 34 - "Interim Financial Reporting" issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" and ISRE 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently did not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the parent company interim information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company interim accounting information included in the Quarterly Information referred to above has not been prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.

(A free translation of the original in Portuguese)

Conclusion on the consolidated interim information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim accounting information included in the Quarterly Information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.

Other matters

Statement of value added

We have also reviewed the parent company and consolidated statements of value added for the
nine-month period ended September 30, 2017. These statements are the responsibility of the Company's management and are required to be presented in accordance with standards issued by the CVM applicable to the preparation of Quarterly Information (ITR) and are considered supplementary information under IFRS, which do not require the presentation of the statement of value added. These statements have been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the parent company and consolidated interim accounting information taken as a whole.

Audit and review of prior-year information

The Quarterly Information Form (ITR) mentioned in the first paragraph includes accounting information, presented for comparison purposes, related to the statements of income and comprehensive income for the quarter and nine-month periods ended September 30,2016, and the statements of changes in equity, cash flows and value added for the nine-month period then ended, obtained from the Quarterly Information Form (ITR) for that quarter, and also to the balance sheet as at December 31, 2016, obtained from the financial statements at December 31, 2016. The review of the Quarterly Information (ITR) for the quarter ended September 30, 2016 and the audit of the financial statements for the year ended December 31, 2016 were conducted by other independent auditors, whose unqualified review and audit reports were dated October 25, 2016 and February 17, 2017, respectively.

São Paulo, October 24, 2017

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Estela Maris Vieira de Souza

Contadora CRC 1RS046957/O-3 "S" SP

(A free translation of the original in Portuguese)

TELEFÔNICA BRASIL S.A.
Balance Sheets
At September 30, 2017 and December 31, 2016
(In thousands of reais)								(A free translation of the original in Portuguese)

		Company		Consolidated					Company		Consolidated
ASSETS	Note	09.30.17	12.31.16	09.30.17	12.31.16	LIABILITIES AND EQUITY	Note		09.30.17	12.31.16	09.30.17	12.31.16

Current assets		17,593,165	17,482,265	18,669,238	18,398,995	Current liabilities			19,565,054	20,280,286	19,473,630	20,438,575
Cash and cash equivalents	3	5,131,933	4,675,627	5,571,056	5,105,110	Personnel, social charges and benefits	13		780,589	746,798	825,290	760,643
Trade accounts receivable, net	4	8,072,174	8,282,685	8,791,035	8,701,688	Trade accounts payable	14		7,622,860	7,539,395	7,290,613	7,611,246
Inventories, net	5	350,250	368,151	380,610	410,413	Taxes, charges and contributions	15		1,677,801	1,698,334	1,866,994	1,770,731
Taxes recoverable	6.a	2,599,093	2,952,622	2,662,630	3,027,230	Dividends and interest on equity	16		3,525,455	2,195,031	3,525,455	2,195,031
Judicial deposits and garnishments	7	305,386	302,349	305,525	302,424	Provisions	17		1,288,657	1,183,623	1,288,657	1,183,623
Prepaid expenses	8	509,746	336,508	521,540	343,092	Deferred revenue	18		414,555	428,488	415,037	429,853
Derivative financial instruments	30	80,493	68,943	80,496	68,943	Loans and financing	19		1,993,408	2,542,975	1,993,408	2,542,975
Other assets	9	544,090	495,380	356,346	440,095	Debentures	19		1,414,838	2,120,504	1,414,838	2,120,504
						Derivative financial instruments	30		142,609	183,212	142,902	183,212
Non-current assets		84,609,594	84,475,240	83,617,799	83,667,264	Other liabilities	20		704,282	1,641,926	710,436	1,640,757
Short-term investments pledged as collateral		85,282	78,153	85,295	78,166
Trade accounts receivable, net	4	178,585	200,537	290,505	305,411	Non-current liabilities			13,125,623	12,432,800	13,301,325	12,383,265
Taxes recoverable	6.a	425,448	474,240	428,408	476,844	Personnel, social charges and benefits	13		20,451	11,016	21,045	11,016
Deferred taxes	6.b	-	-	364,351	27,497	Trade accounts payable	14		-	71,907	-	71,907
Judicial deposits and garnishments	7	6,155,015	5,974,733	6,334,882	6,049,142	Taxes, charges and contributions	15		19,046	20,996	47,697	49,131
Prepaid expenses	8	24,753	35,340	27,779	36,430	Deferred taxes	6.b		819,516	88,695	819,516	-
Derivative financial instruments	30	96,535	144,050	96,535	144,050	Provisions	17		6,594,976	6,591,493	6,745,464	6,625,638
Other assets	9	79,246	53,363	81,862	55,565	Deferred revenue	18		407,772	511,786	407,772	511,786
Investments	10	2,049,572	1,407,155	94,000	85,745	Loans and financing	19		2,541,124	3,126,792	2,541,124	3,126,792
Property, plant and equipment, net	11	32,332,125	31,837,549	32,417,039	31,924,918	Debentures	19		2,107,253	1,433,803	2,107,253	1,433,803
Intangible assets, net	12	43,183,033	44,270,120	43,397,143	44,483,496	Derivative financial instruments	30		15,292	1,404	15,292	1,404
						Other liabilities	20		600,193	574,908	596,162	551,788

						Equity			69,512,082	69,244,419	69,512,082	69,244,419
						Capital	21		63,571,416	63,571,416	63,571,416	63,571,416
						Capital reserves	21		1,213,522	1,272,581	1,213,522	1,272,581
						Revenue reserves	21		2,483,031	2,474,974	2,483,031	2,474,974
						Other comprehensive income	21		17,495	11,461	17,495	11,461
						Retained earnings	21		2,226,618	-	2,226,618	-
						Additional proposed dividends	21		-	1,913,987	-	1,913,987

TOTAL ASSETS		102,202,759	101,957,505	102,287,037	102,066,259	TOTAL LIABILITIES AND EQUITY			102,202,759	101,957,505	102,287,037	102,066,259

(A free translation of the original in Portuguese)

TELEFÔNICA BRASIL S.A.
Income Statemaents
Three and nine-month periods ended September 30, 2017 and 2016
(In thousands of reais, except earnings per share)						(A free translation of the original in Portuguese)


		Company					Consolidated
		Three-month periods ended		Nine-month periods ended			Three-month periods ended		Nine-month periods ended
	Note	09.30.17	09.30.16	09.30.17	09.30.16		09.30.17	09.30.16	09.30.17	09.30.16

Net operating revenue	22	9,631,494	10,111,110	29,765,720	28,381,864		10,885,949	10,693,365	32,173,292	31,634,810

Cost of sales and services	23	(4,751,844)	(4,965,161)	(14,327,557)	(14,129,562)		(5,095,718)	(5,272,970)	(15,172,547)	(15,929,873)

Gross profit		4,879,650	5,145,949	15,438,163	14,252,302		5,790,231	5,420,395	17,000,745	15,704,937

Operating income (expenses)		(3,922,622)	(3,950,088)	(11,946,475)	0,606,356)		(4,075,283)	(3,982,667)	(12,144,321)	(11,144,966)
Selling expenses	23	(3,199,016)	(3,124,939)	(9,643,209)	(8,800,115)		(3,324,498)	(3,156,618)	(9,812,347)	(9,247,283)
General and administrative expenses	23	(601,412)	(677,987)	(1,805,889)	(1,896,866)		(626,039)	(676,739)	(1,834,996)	(1,991,193)
Other operating income	24	87,729	109,163	267,286	806,809		88,450	109,979	270,572	837,999
Other operating expenses	24	(209,923)	(256,325)	(764,663)	(716,184)		(213,196)	(259,289)	(767,550)	(744,489)

Operating profit		957,028	1,195,861	3,491,688	3,645,946		1,714,948	1,437,728	4,856,424	4,559,971

Financial income	25	451,807	553,041	1,428,874	1,999,751		478,441	579,518	1,513,353	2,100,151
Financial expenses	25	(651,613)	(872,304)	(2,223,033)	(2,943,720)		(648,953)	(875,856)	(2,238,523)	(3,019,341)
Equity in results of investees	10	654,357	172,790	1,079,141	623,170		13	273	1,362	997

Income before taxes		1,411,579	1,049,388	3,776,670	3,325,147		1,544,449	1,141,663	4,132,616	3,641,778

Income tax and social contribution	26	(188,863)	(96,698)	(684,835)	(454,731)		(321,733)	(188,973)	(1,040,781)	(771,362)

Net income for the period		1,222,716	952,690	3,091,835	2,870,416		1,222,716	952,690	3,091,835	2,870,416


Basic and diluted earnings per common share (in R$)	21	0.68	0.53	1.72	1.59
Basic and diluted earnings per preferred share (in R$)	21	0.75	0.58	1.89	1.75

(A free translation of the original in Portuguese)

TELEFÔNICA BRASIL S.A.
Statements of Changes in Equity
Nine-month periods ended September 30, 2017 and 2016
(In thousands of reais)						(A free translation of the original in Portuguese)
			Capital reserves		Revenue reserves
	Capital	Premium on acquisition of interest	Other capital reserves	Treasury shares	Legal reserve		Tax incentive reserve	Expansion and modernization reserve	Retained earnings	Proposed additional dividends	Other comprehensive income	Total equity

Balances at December 31, 2015	63,571,416	(75,388)	1,435,757	(87,805)	1,703,643		6,928	700,000	-	1,287,223	25,468	68,567,242
Payment of additional dividend for 2015	-	-	-	-	-		-	-	-	(1,287,223)	-	(1,287,223)
Prescribed equity instruments	-	-	-	-	-		-	-	98,148	-	-	98,148
DIPJ adjustment - Tax incentives	-	-	-	-	-		7,504	-	(7,504)	-	-	-
Other comprehensive income	-	-	-	-	-		-	-	-	-	(16,872)	(16,872)
Net income for the period	-	-	-	-	-		-	-	2,870,416	-	-	2,870,416
Interim interest on equity	-	-	-	-	-		-	-	(1,568,000)	-	-	(1,568,000)

Balances at September 30, 2016	63,571,416	(75,388)	1,435,757	(87,805)	1,703,643		14,432	700,000	1,393,060	-	8,596	68,663,711
Prescribed equity instruments	-	-	-	-	-		-	-	123,411	-	-	123,411
Reclassification of premium on acquisition of equity interest by TData	-	75,388	(75,388)	-	-		-	-	-	-	-	-
Preferred shares given referring to the judicial process of expansion plan	-	-	2	15	-		-	-	-	-	-	17
DIPJ adjustment - Tax incentives	-	-	-	-	-		2,637	-	(2,637)	-	-	-
Other comprehensive income	-	-	-	-	-		-	-	(156,266)	-	2,865	(153,401)
Net income for the period	-	-	-	-	-		-	-	1,214,826	-	-	1,214,826
Allocation of income:
Legal reserve	-	-	-	-	204,262		-	-	(204,262)	-	-	-
Interim interest on equity	-	-	-	-	-		-	-	(604,145)	-	-	(604,145)
Reversal of Expansion and Modernization Reserve	-	-	-	-	-		-	(700,000)	700,000	-	-	-
Expansion and Modernization Reserve	-	-	-	-	-		-	550,000	(550,000)	-	-	-
Additional proposed dividends	-	-	-	-	-		-	-	(1,913,987)	1,913,987	-	-

Balances at December 31, 2016	63,571,416	-	1,360,371	(87,790)	1,907,905		17,069	550,000	-	1,913,987	11,461	69,244,419
Payment of additional dividend for 2016	-	-	-	-	-		-	-	-	(1,913,987)	-	(1,913,987)
Prescribed equity instruments	-	-	-	-	-		-	-	72,840	-	-	72,840
Repurchase of preferred shares	-	-	-	(32)	-		-	-	-	-	-	(32)
Preferred shares delivered referring to the judicial process of expansion plan	-	-	-	2	-		-	-	-	-	-	2
Effects of the acquisition of Terra Networks Brasil by Tdata (Note 1 e)	-	-	(59,029)	-	-		-	-	-	-	-	(59,029)
DIPJ adjustment - Tax incentives	-	-	-	-	-		8,057	-	(8,057)	-	-	-
Other comprehensive income	-	-	-	-	-		-	-	-	-	6,034	6,034
Net income for the period	-	-	-	-	-		-	-	3,091,835	-	-	3,091,835
Interim interest on equity	-	-	-	-	-		-	-	(930,000)	-	-	(930,000)

Balances at September 30, 2017	63,571,416	-	1,301,342	(87,820)	1,907,905		25,126	550,000	2,226,618	-	17,495	69,512,082

(A free translation of the original in Portuguese)

TELEFÔNICA BRASIL S.A.
Statements of Comprehensive Income
Three and nine-month periods ended September 30, 2017 and 2016
(In thousands of reais)						(A free translation of the original in Portuguese)

		Company					Consolidated
		Three-month periods ended		Nine-month periods ended			Three-month periods ended		Nine-month periods ended
	Note	09.30.17	09.30.16	09.30.17	09.30.16		09.30.17	09.30.16	09.30.17	09.30.16
Net income for the period		1,222,716	952,690	3,091,835	2,870,416		1,222,716	952,690	3,091,835	2,870,416

Unrealized gains (losses) on investments available for sale	10	66	442	400	270		66	442	400	270
Taxes		(22)	(150)	(136)	(92)		(22)	(150)	(136)	(92)
		44	292	264	178		44	292	264	178

Gains (losses) on derivative financial instruments	30	(5,063)	11,519	(1,095)	(5,758)		(5,063)	11,519	(1,095)	(5,758)
Taxes		1,721	(3,916)	372	1,958		1,721	(3,916)	372	1,958
		(3,342)	7,603	(723)	(3,800)		(3,342)	7,603	(723)	(3,800)

Cumulative Translation Adjustments (CTA) on transactions in foreign currency	10	(637)	1,272	6,493	(13,250)		(637)	1,272	6,493	(13,250)

Other comprehensive income (losses) to be reclassified into income (losses) in subsequent periods		(3,935)	9,167	6,034	(16,872)		(3,935)	9,167	6,034	(16,872)


Comprehensive income for the period, net of taxes		1,218,781	961,857	3,097,869	2,853,544		1,218,781	961,857	3,097,869	2,853,544

(A free translation of the original in Portuguese)

TELEFÔNICA BRASIL S.A.


Statements of Cash Flow
Nine-month periods ended September 30, 2017 and 2016
(In thousands of *Reais*)			(A free translation of the original in Portuguese)

	Company			Consolidated
	09.30.17	09.30.16		09.30.17	09.30.16
Operating activities

Expenses (revenues) not representing changes in cash:
Income before taxes	3,776,670	3,325,147		4,132,616	3,641,778
Depreciation and amortization	5,842,396	5,355,847		5,862,808	5,839,148
Foreign exchange gains on loans and derivative financial instruments	46,670	33,785		43,719	33,785
Monetary losses	476,343	444,315		478,973	436,825
Equity in results of investees	(1,079,141)	(623,170)		(1,362)	(997)
Losses (gains) on write-off/sale of goods	17,512	(444,501)		12,654	(448,560)
Provision for impairment - accounts receivable	1,037,677	900,456		1,108,925	1,003,976
Provision of trade accounts payable	176,907	488,222		121,490	525,454
Write-off and reversals for impairment - inventories	(45,899)	(25,237)		(43,184)	(28,280)
Pension plans and other post-retirement benefits	23,117	(3,646)		23,700	(4,417)
Provisions for tax, civil, labor and regulatory contingencies	640,383	713,451		650,654	744,489
Interest expense	770,991	791,998		770,991	832,491
Other	10,383	(40,976)		10,383	(58,998)

Changes in assets and liabilities
Trade accounts receivable	(805,214)	(995,452)		(1,122,090)	(1,281,268)
Inventories	63,800	130,177		72,987	131,815
Taxes recoverable	(269,874)	(191,101)		(240,862)	(291,667)
Prepaid expenses	(62,142)	(35,009)		(68,456)	(43,807)
Other current assets	(52,717)	114,698		114,177	11,515
Other noncurrent assets	(27,032)	38,179		(24,939)	11,188
Personnel, social charges and benefits	43,226	70,105		56,841	92,906
Trade accounts payable	298,318	(1,190,760)		(12,126)	(894,353)
Taxes, charges and contributions	494,612	(43,163)		509,268	125,722
Other current liabilities	(1,292,664)	(385,542)		(1,289,931)	(393,965)
Other non-current liabilities	(1,060,039)	(619,652)		(1,054,640)	(633,862)
	9,024,283	7,808,171		10,112,596	9,350,918

Interest paid	(695,802)	(703,415)		(695,802)	(743,482)
Income tax and social contribution paid	-	(190,670)		(394,075)	(484,591)

Total cash generated by operating activities	8,328,481	6,914,086		9,022,719	8,122,845

Investing activities
Additions to PP&E, intangible assets	(5,450,121)	(4,930,661)		(5,552,615)	(5,526,491)
Acquisition of company	-	-		(250,000)	-
Cash received from sale of PP&E items	18,267	771,757		23,825	772,332
Redemption of (increase in) judicial deposits	49,816	(148,895)		49,762	(167,964)
Dividends and interest on equity received	384,588	767,551		-	-
Cash and cash equivalents merged	-	358,579		-	-
Cash and cash equivalents by company acquisition	-	-		43,351	-

Total cash used in investing activities	(4,997,450)	(3,181,669)		(5,685,677)	(4,922,123)

Financing activities
Payment of loans, financing and debentures	(3,551,465)	(1,726,423)		(3,551,465)	(1,895,660)
Funding from the issuance of loans, financing and debentures	2,039,878	289,786		2,039,878	289,786
Received from derivative financial instruments	81,525	107,116		85,159	107,116
Payment of derivative financial instruments	(140,470)	(173,485)		(140,475)	(173,485)
Payment for reverse split of shares	-	(164)		-	(164)
Dividends and interest on equity paid	(1,304,161)	(1,070,594)		(1,304,161)	(1,070,594)
Repurchase of preferred shares	(32)	-		(32)	-

Total cash generated by (used in) financing activities	(2,874,725)	(2,573,764)		(2,871,096)	(2,743,001)

Increase in cash and cash equivalents	456,306	1,158,653		465,946	457,721

Cash and cash equivalents at beginning of the period	4,675,627	4,206,595		5,105,110	5,336,845
Cash and cash equivalents at end of the period	5,131,933	5,365,248