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 2001
(Commission File No. 001-14489)
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
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(Exact name of registrant as specified in its charter)
TELE CENTRO OESTE CELLULAR HOLDING COMPANY
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(Translation of registrant's name in English)
SCS-QUADRA 2, BLOCO C, EDIFICIO ANEXO-TELEBRASILIA CELULAR
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-7 ANDAR, BRASILIA, D.F.
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FEDERATIVE REPUBLIC OF BRAZIL
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
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(Indicate by check mark whether the registrant by
furnishing the information contained in this form
is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes No X
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TCOC3: R$ 8,80/1,000 shares
TCOC4: R$ 5,20/1,000 shares
TRO: US$ 5,91/ADR (1 ADR = 3,000 shares)
INVESTOR RELATIONS:
ARTHUR FONSECA -
ARTHUR.FONSECA@TCO.NET.BR WEB SITE
FLAVIA MENEZES - HTTP://WWW.TCO.NET.BR
FLAVIA.MENEZES@TCO.NET.BR
ANNOUNCES RESULTS FOR THE
THIRD QUARTER OF 2001
RESULTS OF THE BRASILIA, November 13, 2001 - Tele Centro Oeste Celular
3RD QUARTER, (NYSE: TRO; BOVESPA: TCOC3/TCOC4) today discloses its
2001 results relative to the third quarter of 2001. In the
third quarter of 2001 the company obtained a net
consolidated profit of R$ 56.9 million, and its earnings
before interest, taxes, depreciation and amortization
(EBITDA), totaled R$ 136.6 million. The 57.6% increase
observed in the Company's client base against the third
quarter of last year resulted in a Gross Operating
Revenue of R$ 406.5 million and a Net Operating Revenue
of R$ 323.1 million, which corresponds to a growth of
41.2% over the same period of last year.
ELEVATION OF In the third quarter of 2001 TCO's consolidated EBITDA
MARGINS margin was 42.3%, against 35.4% registered in the
BASED ON THE previous quarter. An important factor in determining this
REDUCTION OF margin was the increase observed in the quarter's Net
SUBSIDIES Service Revenue generated by campaigns aiming at the
expansion of cellular service usage. The campaigns also
focused on improving client loyalty, mainly by
encouraging the celebration of new contracts based on
minutes deductibles. One other important factor
contributing to the elevation of the EBITDA margin was
the recently-implemented cost-reduction policy, effective
as of July, 2001. The emphasis placed on the reduction of
subsidies allowed the Cost of Sales to decrease by 13%
compared to the previous quarter.
MANAGEMENT Splice has been positioning TCO as one of the most
EFFICIENCY efficient companies among cellular telecommunications
companies in Brazil. Results have been extremely positive
quarter after quarter, mostly on account of strategic
decisions leading to the acquisition of a concession to
operate Band B in the North region of Brazil and in the
northeastern state of Maranhao. One consequence of this
acquisition was the creation of NBT, which has been
producing increasing and continual success. Having
operated for less than two years, NBT has exceeded all
expectations and has presented results significantly
above the average obtained by other Band B companies,
including those operating with a positive EBITDA. In the
last few years, TCO has cancelled the registrations of
four of its operating companies. As a consequence, TCO
bought back the shares of those companies. The
cancellation of the registration under which Telegoias
Celular S.A. operated was recently approved. The closing
of the capital of these companies will certainly benefit
TCO's shareholders in the long run. The process of buying
back shares issued by TCO was conceived as an attempt to
reduce the volatility of the Company's stock, thus
benefiting all minority shareholders. In addition, it is
important to mention that TCO has been maintaining a
comfortable cash position, which has allowed strategic
investments to be made.
A TCO has a significant role in social, cultural and sports
PARTICIPATING activities in Brazil. Since 1999, the Company has acted
'CITIZEN' as a strategic collaborator to educational projects
carried out by the AYRTON SENNA INSTITUTE [Instituto
Ayrton Senna], benefiting over 100 thousand children and
teenagers and 2,640 educators in 256 different cities
throughout Brazil. This collaboration has granted the
Company the TOP SOCIAL ADVB prize in 2001, awarded by the
BRAZILIAN SALES AND MARKETING MANAGERS ASSOCIATION
[Associacao dos Dirigentes de Vendas e Marketing do
Brasil], and the OUTSTANDING MARKETING PERFORMANCE IN
2001 PRIZE [Premio Destaque no Marketing], awarded by the
BRAZILIAN MARKETING & BUSINESS ASSOCIATION [Associacao
Brasileira de Marketing & Negocios]. Another major
project maintained by TCO offers support to
cancer-research institutions. With the same objective,
TCO has partnered with Mc. Donald's to co-sponsor the MC.
HAPPY-DAY CAMPAIGN [Mc. Dia Feliz]. Concerned about
preserving the local identity of the region where it
operates, TCO has been supporting projects that
contribute to cultural activities and local tourism. The
funding provided by TCO has allowed the organization of
presentations by different groups of Brazilian artists.
This has provided the public with opportunities to be in
closer contact with their own values and cultural
reality. Since the SYMPATHY TOUCH PROGRAM [Toque de
Solidariedade] was implemented in the year 2000, TCO has
been encouraging collaborators to volunteer for
activities that are supportive of unprivileged
communities and social-assistance organizations, mainly
those working with children and youngsters. Besides
benefiting poor communities, this initiative has
succeeded in improving volunteers' awareness of social
problems.
OPERATING PERFORMANCE
INCREASE IN TOC consolidated the addition of 125,342 new subscribers
CLIENT BASE to its client base in the third quarter of 2001. This
represents an increase of 6.1% compared to the previous
quarter.
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CLIENTS 3Q01 2Q01 1Q01 4Q00 3Q00
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CONSOLIDATED 2,195,372 2,070,030 1,897,557 1,712,184 1,392,729
Post-paid 662,840 665,678 621,746 579,511 492,358
Pre-paid 1,515,804 1,387,631 1,259,101 1,115,962 883,664
Rural 16,728 16,721 16,710 16,711 16,707
AREA 7 1,827,087 1,728,202 1,598,530 1,455,502 1,212,137
Post-paid 554,929 551,304 519,734 493,934 446,093
Pre-paid 1,255,430 1,160,177 1,062,086 944,857 749,337
Rural 16,728 16,721 16,710 16,711 16,707
AREA 8 368,285 341,828 299,027 256,682 180,592
Post-paid 107,911 114,374 102,012 85,577 46,265
Pre-paid 260,374 227,454 197,015 171,105 134,327
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THE COMPETITION TCO has been successful in every single one of the
strategies it has used to sustain not only its fine
institutional reputation but also the quality of the
services it provides and the efficiency of its services
in both Area 7 and Area 8. Its market share in Area 7 is
estimated at 78% and it is increasing also in Area 8,
owing to some service-coverage advantages and to the
transparence characteristic of its relationship with all
clients. In the third quarter of 2001, the company
operating Area 8 reached a market share of nearly 30%.
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AREA 7 - OPERATING STATISTICS UNIT 3Q01 2Q01 1Q01 4Q00 3Q00
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Population covered x 1,000 12,625 12,082 12,036 11,994 11,661
TCO Penetration % 12.2 12.0 11.1 10.1 7.9
Cities attended UNIT 266 259 254 253 250
Workforce UNIT 2,415 2,376 2,213 1,834 1,701
Employees UNIT 1,215 1,208 1,148 1,082 1,056
Outsourced parties and trainees UNIT 1,200 1,168 1,065 752 645
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AREA 8 - OPERATING STATISTICS UNIT 3T01 2T01 1T01 4T00 3T00
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Population covered x 1000 8,347 7,511 7,366 7,366 6,330
NBT Penetration % 2.3 2.3 2.0 1.7 1.0
Cities attended UNIT 64 61 56 56 35
Workforce UNIT 593 667 636 563 519
Employees UNIT 265 260 252 245 229
Outsourced parties and trainees UNIT 328 407 384 318 290
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COMMERCIALIZATION At the end of the third quarter of 2001, TCO had 37
proprietary stores, 1,106 accredited dealers and 13
thousand direct and indirect retailers of cards in Area
7. In Area 8, TCO runs a trade structure through NBT
which has 15 proprietary stores, 273 accredited dealers
and 4 thousand direct and indirect retailers of cards.
NETWORK TCO operates based on TDMA technology. At the end of the
STRUCTURE third quarter of 2001, 95% of the handsets in Area 7
operated on a digital basis. Since its implementation,
NBT has operated with 100% digital technology.
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AREA 7 - NETWORK STRUCTURE UNIT 3Q01 3Q00
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Radio-Base Stations (ERB's) UNIT 629 582
Switches (CCC's) UNIT 13 12
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AREA 8 - NETWORK STRUCTURE UNIT 3Q01 3Q00
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Radio-Base Stations (ERB's) UNIT 133 98
Switches (CCC's) UNIT 10 8
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WAP SERVICES WAP services are currently offered in the main cities
where TCO has operations. For both the pre-paid and the
post-paid services, the Company commercializes two types
of handsets equipped with WAP technology: the Nokia 7160,
the Nokia 3320, the Gradiente G-WAP and the Gradiente
Freedom. No monthly subscription is charged; instead,
users pay the value equivalent to the VC1 rate, per
minute of usage. The services offered by the WAP portal
include an agenda for films, theater shows, parties and
musical events, as well as tourist tips, restaurant and
hotel referrals, useful and convenient telephone numbers,
news, banking services, message delivery, customized
message cards, games, professions and careers, among
others. TCO clients to the Basic Plan as well as clients
opting for the plan known as ESSENCIAL are eligible to a
given number of minutes offered every month as
deductibles, against their use of WAP services provided
by TCO. The number of minutes offered will vary from plan
to plan. As a way to encourage increased use of WAP
services, new clients receive 1,200 WAP minutes free of
charge, which are divided into 12 batches of 100 minutes
credited every 30 days.
SHORT- TCO offers two types of SHORT MESSAGE services: the
MESSAGE E-CELULAR and the E-EXPRESSO. The E-CELULAR delivers
SERVICE- messages using TCO's web site and includes the delivery
SMS of news packages, bankstatements etc. and served a total
of approximately 319 thousand registered subscribers at
the end of the third quarter. Along this last quarter,
258 thousand clients in Area 7 and 61 thousand clients in
Area 8 sent an average of 539 thousand messages daily.
The number of daily messages averaged 448 thousand in
Area 7 and 91 thousand in Area 8. The E-EXPRESSO consists
in delivering messages using subscribers' handsets. TCO
started to charge for this service only in August, 2001,
at R$0.13 value per message, net of taxes. Since then,
approximately 5.9 million messages have been sent monthly
using the E-EXPRESSO, which generated an average monthly
net revenue of approximately R$ 760 thousand.
O2 O2 is TCO's provider of Internet access. It started
operations in early September 2001, aiming at offering
the best connection service, as well as content and
technology. Also, it intends to develop products and
solutions for cellular telephone users, as well as for
users of HANDHELDS and NOTEBOOKS. In addition, TCO is
working on innovative solutions to widen the scope of
services to include conveniences made possible by
integrating the Internet with WAP services and the SMS.
FINANCIAL PERFORMANCE
R$ X 1000
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3Q01 3Q00 CHANGE SEPT. 30/2001 SEPT. 30/2000 CHANGE
CONSOLIDATED (%) (%)
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Gross Operating Revenue 406,470 283,840 43.2 1,137,830 802,072 41.9
Net Operating Revenue 323,146 228,878 41.2 905,147 640,080 41.4
Operating Profit 56,873 42,872 32.7 143,231 106,027 35.1
Net Profit in the Period 136,624 93,841 45.6 345,430 257,058 34.4
Cost of sales 60,258 36,565 64.8 183,458 104,015 76.4
Depreciation 35,301 28,845 22.4 99,167 83,196 19.2
PDD / Write-offs 9,580 8,759 9.4 39,346 30,764 27.9
Financial revenues 46,883 21,320 119.9 142,679 54,642 161.1
Financial expenses (53,459) (17,144) 211.8 (176,617) (58,761) 200.6
Investments 56,257 66,100 -14.9 134,122 157,300 -14.7
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OPERATING TCO's Net Operating Revenue obtained in the third quarter
REVENUE of 2001 rose by 41.2% compared to the previous quarter.
The consolidated ARPU without handset sales in the third
quarter of 2001 was R$44. ARPU without handset sales in
Area 8 was R$41, while in Area 7 it was R$ 45. Handset
retail generated R$ 54 million in gross revenues in the
quarter.
OPERATING While the total cost of sales reached R$ 60 million in
EXPENSES the quarter, the cost of client-acquisition (SAC) was
R$147 in the third quarter of 2001, 12% below the value
registered in the second quarter. This reduction is due
to the reduction in marketing, advertising and subsidies
expenses.
EBITDA The EBITDA obtained in the quarter was R$ 136 million,
which clearly demonstrates the Company's capability to
generate cash by means of its own operating assets.
DEPRECIATION Expenses with depreciation and amortization mount up to
R$ 99 million, of which R$ 35 million were incurred in
the third quarter of 2001. Depreciation is calculated
based on the linear method and takes into consideration
the useful life of goods.
ALLOWANCE FOR Allowances for doubtful debtors / write-offs totaled 39
DOUBTFUL million, equivalent to 4.3% of the net operating revenue.
DEBTORS Allowances for doubtful debtors / write-offs reached R$
9.6 million in the third quarter. Such provisions aim at
covering credits regarded as unlikely to be recovered by
the Company. The methodology considers provisions for
100% of the credit over due for over 90 days. In
addition, the percentage ratio obtained from the
write-offs' historical series is applied to unbilled
credits, to credits coming due and to credits over due
for up to 90 days, on the respective gross revenues of
the last 12 months.
INVESTMENTS During the third quarter of 2001, TCO's investments in
Property, Plant & Equipment totaled R$ 56 million in
Areas 7 and 8, mainly in projects related with the
expansion of the wireless cellular telephoning network,
with the modernization of telecommunication services and
with the development of proprietary transmission routes.
On September 30, 2001, the accumulated investment in the
year was R$ 134 million. The amount of investments
estimated for the year 2001 amount to approximately R$
250 million, including TCO's own resources and resources
on loan, to be used in network expansion, to modernize
services and to develop proprietary transmission routes.
INDEBTEDNESS There was a 28.5% reduction in TCO's Gross
indebtedness in the third quarter of 2001. On September
30, 2001, TCO's total debt was R$ 398.6 million, against
R$ 512.4 million registered in the previous quarter.
Eighty-three percent of this debt is denominated in
American Dollars, of which 82% is hedged. Only the loans
obtained from the EXPORT DEVELOPMENT CORPORATION (EDC)
and the resources obtained based on RESOLUTION 2770 are
not hedged. Their due-dates are concentrated on the
long-run. This indebtedness is partially compensated by
the availabilities and securities, which provides for a
negative net debt of R$ 93 million.
SHARE TCO obtained the best performance in the last year among
PERFORMANCE all Latin-American companies in the telecommunications
sector which have ADRs negotiated in the New York Stock
Exchange. According to Morgan Stanley - Wireless
Connection October, TCO obtained the 7th best performance
in ADR price among telecommunications companies. The
increase in the price of TCO's ADRs was due mainly to the
excellent operating and economic/financial results the
company has been able to attain.
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** FINANCIAL STATEMENTS TO FOLLOW **
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS
September 30, 2001 and June 30, 2001
(In thousands of Brazilian Reais)
CONSOLIDATED
09/30/2001 06/30/2001
ASSETS
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CURRENT ASSETS 878.310 941.558
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Cash and cash equivalents 41.100 20.927
Short-term investments 169.583 439.805
Marketable securities 281.268 134.365
Accounts receivable from services 161.203 153.073
Inventories 34.985 35.612
Deferred and recoverable taxes 127.749 119.026
Interest on own shareholders' equity - -
Other assets 62.422 38.750
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NONCURRENT ASSETS 53.297 58.779
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Deferred and recoverable taxes 49.375 54.858
Loans to related parties - -
Other assets 3.922 3.921
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PERMANENT ASSETS 914.476 892.186
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Investments 5.528 5.699
Property, plant and equipment 871.749 848.559
Deferred charges 37.199 37.928
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TOTAL ASSETS 1.846.083 1.892.523
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TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
BALANCE SHEETS
September 30, 2001 and June 30, 2001
(In thousands of Brazilian Reais)
CONSOLIDATED
09/30/2001 06/30/2001
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------
CURRENT LIABILITIES 559.049 704.902
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Personnel, social charges and benefits payable 9.659 9.748
Trade accounts payable 109.325 124.684
Indirect taxes 65.972 55.482
Income taxes 23.908 10.132
Income participation 34.475 33.331
Loans and financing 280.484 432.462
Concession Area 8 21.890 21.045
Other obligations 13.336 18.018
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NONCURRENT LIABILITIES 190.862 148.479
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Provision for contingencies 72.229 68.004
Trade accounts payable 548 548
Income taxes - -
Loans from related parties - -
Loans and financing 118.085 79.927
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PARTICIPATION OF MINORITY SHAREHOLDERS 80.954 76.670
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SHAREHOLDERS' EQUITY 1.015.087 962.346
Capital 505.000 319.618
Capital reserve 87.900 87.900
Income reserve 127.837 127.837
Retained earnings 294.350 426.991
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CAPITALIZABLE FUNDS 131 126
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TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY 1.846.083 1.892.523
============================
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
CONSOLIDATED FINANCIAL STATEMENT
(In thousands of Brazilian Reais)
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CONSOLIDATED 1 TRIM 00 1 TRIM 01 2 TRIM 00 2 TRIM 01 3 TRIM 00 3 TRIM 01 ACUMUL/00 ACUMUL/01
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GROSS OPERATING REVENUE 243.418 346.539 274.814 384.821 283.840 406.470 802.072 1.137.830
Deductions from gross revenue (49.722) (68.932) (57.308) (80.427) (54.962) (83.324) (161.992) (232.683)
NET OPERATING REVENUE 193.696 277.607 217.506 304.394 228.878 323.146 640.080 905.147
Cost of services rendered and (73.677) (104.265) (77.748) (122.115) (87.525) (117.499) (238.950) (343.879)
merchandise sold *
GROSS PROFIT 120.019 173.342 139.758 182.279 141.353 205.647 401.130 561.268
OPERATING REVENUES / EXPENSES
Services commercialized * (30.924) (47.677) (28.839) (48.626) (29.410) (47.819) (89.173) (144.122)
General and administrative expenses * (17.546) (24.772) (17.562) (22.151) (17.282) (19.460) (52.390) (66.383)
Other net revenues / expenses * (908) 194 (781) (3.783) (820) (1.744) (2.509) (5.333)
PROFIT BEFORE DEPRECIATION AND 70.641 101.087 92.576 107.719 93.841 136.624 257.058 345.430
FINANCIAL REVENUES / EXPENSES - EBITDA
Depreciation (26.617) (31.148) (27.734) (32.718) (28.845) (35.301) (83.196) (99.167)
PROFIT AFTER DEPRECIATION BEFORE 44.024 69.939 64.842 75.001 64.996 101.323 173.862 246.263
FINANCIAL REVENUE AND EXPENSES - EBIT
Financial revenue / expenses (2.474) (11.197) (5.821) (16.165) 4.176 (6.576) (4.119) (33.938)
OPERATING PROFIT 41.550 58.742 59.021 58.836 69.172 94.747 169.743 212.325
Non-operating revenue / expense 1.211 (5.304) (5.454) (4.378) (3.374) (5.484) (7.617) (15.166)
PROFIT BEFORE TAXES, MINOR 42.761 53.438 53.567 54.458 65.798 89.263 162.126 197.159
Income tax and social contribution (11.620) (14.680) (14.505) (14.992) (19.785) (27.221) (45.910) (56.893)
Employee participation (427) (527) (457) (589) (553) (621) (1.437) (1.737)
Participation of minority shareholders (3.976) (3.329) (5.554) (4.675) (4.456) (4.659) (13.986) (12.663)
PROFIT BEFORE REVERSAL OF INTEREST ON 26.738 34.902 33.051 34.202 41.004 56.762 100.793 125.866
OWNED CAPITAL
REVERSAL OF INTEREST ON OWNED CAPITAL - - 3.366 17.254 1.868 111 5.234 17.365
NET PROFIT IN THE PERIOD 26.738 34.902 36.417 51.456 42.872 56.873 106.027 143.231
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EBITDA MARGIN 36,47% 36,41% 42,56% 35,39% 41,00% 42,28% 40,16% 38,16%
EBIT MARGIN 22,73% 25,19% 29,81% 24,64% 28,40% 31,36% 27,16% 27,21%
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* without depreciation.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.
Explicative Notes
For the period ended September 30, 2001
1. COMPANY OPERATIONS
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A. was constituted in accordance with
Article 189 of Law No. 9472/97 (General Telecommunications Law) and Decree No.
2,546 of April 14, 1998, as a result of the spin-off of TELEBRAS. The general
shareholders' meeting that approved the register/justification was held on May
22, 1998 and the respective appraisal report was issued on February 28, 1998.
The Company is a corporation directly controlled by BID S.A. (company controlled
by Splice do Brasil S.A.) who acquired 53.80% of the voting capital and 18.36%
of the total capital.
The Company controls the following companies: Telebrasilia Celular S.A.,
Telegoias Celular S.A., Telemat Celular S.A., Telems Celular S.A., Teleron
Celular S.A. and Teleacre Celular S.A. The subsidiaries are responsible for
providing cellular telephone services - Band A throughout the Middle West region
of the country including the States of Rondonia and Acre, according to the
concession terms signed by the Federal Government, which should expire on August
5, 2008 but could be extended for another 15 years.
On May 24, 1999 the company Norte Brasil Telecom S.A. - NBT was constituted, as
a private corporation, with 95% participation in the parent company. NBT's
operating objective is to explore cellular services as well as all necessary and
useful activities for delivering these services within Area 8 - Band B which
comprises the States of Amazonas, Roraima, Amapa, Para and Maranhao.
Norte Brasil Telecom S.A. started its operating activities at the end of October
1999, serving 11 of the 97 cities comprising the respective service area. As the
operating activities related to the services at December 31, 1999 were not
significant, all expenses incurred as a result were considered as pre-operating
expenses, which were amortized in proportion to the area served as of January
2000.
The services provided by the subsidiaries and respective charges are controlled
by ANATEL (National Agency of Telecommunications), authority responsible for
regulating telecommunications in Brazil in accordance with Law No. 9472 of July
16, 1997.
On November 21, 2000 TCO IP S.A. was constituted, a corporation holding 99.99%
participation in the parent company (Tele Centro Oeste Celular). The latter has
the objective of rendering telecommunication services according to
classification established by ANATEL - National Agency of Telecommunications, as
well as services of internet access, information systems in general, resale of
computer and software equipment, computer and telecommunications training,
internet marketing, home pages development and others.
Tele Centro Oeste Celular Participacoes S.A. has a 98.33% shareholding in Norte
Brasil Telecom S.A., comprised of a direct shareholding of 31.67%, and an
indirect shareholding of 66.66% through its subsidiary company Telebrasilia
Celular, which on June 21, 2001 acquired from Tele Centro Oeste Celular
Participacoes S.A. 47,999,692 preferred shares of Norte Brasil Telecom S.A.
2. PRESENTATION OF FINANCIAL STATEMENTS
The consolidated financial statements of the parent company and subsidiaries
have been prepared in conformity with accounting practices established by the
Brazilian Corporation Law and norms published by the C.V.M. (Brazilian
equivalent of the Securities and Exchange Commission of the U.S.).
3. SUMMARY OF THE MAIN ACCOUNTING PRACTICES
a. SHORT-TERM INVESTMENTS
Refer to temporary investments of high liquidity falling due within less than
three months, stated at cost plus income earned to the balance sheet date.
b. CREDITS AND OBLIGATIONS
Credits and obligations are stated at their historical amounts. The amounts
subject to monetary correction, foreign exchange rates and interest have been
adjusted to the balance sheet date.
c. ALLOWANCE FOR DOUBTFUL ACCOUNTS
This allowance was constituted to cover accounts receivable unlikely to be
collected. The methodology comprises the recording of a provision to cover 100%
of accounts overdue more than 90 days. Additionally, for the accounts not yet
billed, not yet due and overdue less than 90 days, the percentages historically
obtained from write-offs are applied on the respective gross revenues computed
within the last 12 months.
d. INVENTORIES
Stated at average acquisition cost not exceeding the respective replacement
cost.
e. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at acquisition and/or construction
cost, monetarily corrected to December 31, 1995 less accumulated depreciation.
The exploration 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 according to the concession period.
The inventories of materials related to the plant expansion are stated at
average acquisition cost.
Expenditures with repair and maintenance are capitalized when improvements are
made (increase in the installation capacity or useful life). The remaining
expenses are charged to the operating result on the accrual basis.
Depreciation is calculated by the straight-line method taking into consideration
the useful life of the assets. The respective rates are described in Note 7.
f. DEFERRED CHARGES
The income and expenses incurred during the pre-operating period of the
subsidiary Norte Brasil Telecom S.A. are charged to deferred charges.
Deferred charges were not subject to amortization in 1999 as the subsidiary
Norte Brasil Telecom S.A. was in a pre-operating phase. These charges have been
subjected to amortization since January 2000.
g. PROVISION FOR VACATION
The amounts related to employee vacations due were provided for in proportion to
the respective acquisition period.
h. INCOME AND SOCIAL CONTRIBUTION TAXES
Income and social contribution taxes are recorded on the accrual basis,
calculated according to current legislation. Deferred taxes are recorded over
temporary differences, calculated based on rates applicable at the respective
realization or liquidation.
i. PROVISION FOR CONTINGENCIES
The provision for contingencies was recorded based on an analysis of the
Company's lawyers regarding all existing legal actions.
j. RECORDING OF REVENUES AND EXPENSES
Revenues and expenses are charged to the period's operating results on the
accrual basis. The revenues derived from sales of prepaid recharging cellular
telephone cards are deferred and charged to the operating results as the cards
are used.
k. FINANCIAL RESULT, NET
The net financial result is represented by interest and monetary correction on
short-term investments and loans obtained as well as granted.
l. PENSION PLAN
Tele Centro Oeste Celular Participacoes S.A. and subsidiary companies sponsor
the private pension plan TCO PREV, which is characterized as a "mixed" or
"defined contribution plan" to grant schedulable benefits and as a "defined
benefit" for the so-called "risk benefits", namely: disability compensation,
disability and pension for death of active participant. The contributions to the
plan are determined based on actuarial studies prepared and periodically
reviewed by independent actuaries in accordance with regulations effective in
Brazil.
m. EMPLOYEES' INCOME PARTICIPATION
Tele Centro Oeste Celular Participacoes S.A. and subsidiaries provide for
employees' income participation based on Article 5 of Provisional Measure No.
980 of April 25, 1995 and subsequent publications.
The amount provided is equivalent to a monthly salary subject to approval at the
Shareholders Meeting.
n. NET INCOME PER SHARE
Net income per share was calculated based on the number of shares in circulation
at the balance sheet date.
4. CONSOLIDATION OF THE FINANCIAL STATEMENTS
The consolidated financial statements were prepared in accordance with basic
consolidation principles established by the Brazilian Corporation Law and norms
of the C.V.M. (Brazilian equivalent of the Securities and Exchange Commission of
the US).
We present below the main consolidation procedures:
Elimination of asset and liability account balances between the consolidated
companies;
Elimination of capital participation, reserves and retained earnings of the
consolidated companies;
Elimination of revenues and expenses derived from business transactions between
the consolidated companies;
Highlighting the amounts of participation by minority shareholders in the
financial statements.
The consolidated companies are as follows:
CAPITAL PARTICIPATION (%)
----------------------------------
9/30/2001 6/30/2001
----------------------------------
Telebrasilia Celular S.A. 88.26 88.26
Telegoias Celular S.A. 92.24 92.24
Telemat Celular S.A. 97.47 97.42
Telems Celular S.A. 98.39 98.29
Teleron Celular S.A. 97.04 97.02
Teleacre Celular S.A. 98.31 98.31
Norte Brasil Telecom S.A. - NBT 31.66 98.33
TCO IP S.A. 99.99 99.99
5. ACCOUNTS RECEIVABLE FROM SERVICES
CONSOLIDATED
-------------------------------
9/30/2001 6/30/2001
-------------------------------
Amounts invoiced 69,150 64,411
Amounts to be invoiced 46,447 44,918
Network use rate 48,539 48,419
Sales - prepaid 26,817 29,110
Allowance for doubtful accounts (41,962) (41,629)
Others 12,212 7,844
-------------------------------
Total 161,203 153,073
===============================
6. MARKETABLE SECURITIES
CONSOLIDATED
-----------------------
INTEREST MATURITY DATE 9/30/2001 6/30/2001
------------------------------------------------------------------------------
Commercial Paper - Prefixed rate ranging from 24%
Splice do Brasil S.A. to 25% p.a. with swap of 100%
of Interbank Deposit
Certificate - CDI plus 1.5% p.a. 07/05/2002 281,268 134,365
-----------------------
281,268 134,365
=======================
7. INVESTMENTS
COMPANY CONSOLIDATED
-------------------------------------------------------------
9/30/2001 6/30/2001 9/30/2001 6/30/2001
-------------------------------------------------------------
Participation stated by the equity method 1,114,720 1,055,943 - -
Premium - Norte Brasil Telecom S.A. 5,337 5,508 5,337 5,508
Other investments 6 6 191 191
-------------------------------------------------------------
Total 1,120,063 1,061,457 5,528 5,699
=============================================================
9/30/2001 6/30/2001
--------------------------------------------------------------------------------------- ---------------
CAPITAL
NET (LOSS) INCREASE AND
SHAREHOLDERS' INCOME FOR VOTING TOTAL EQUITY INTEREST ON
COMPANIES EQUITY THE PERIOD CAPITAL CAPITAL PICK-UP OWN CAPITAL INVESTMENT INVESTMENT
---------------------------------------------------------------------------------------------------- ---------------
Telebrasilia 430,709 22,134 91% 88% 19,535 2 383,090 363,553
Telegoias 312,420 18,580 91% 92% 17,138 (238) 289,535 272,635
Telemat 182,716 11,940 99% 97% 11,637 (3,180) 178,528 170,071
Telems 148,829 12,019 99% 98% 11,822 (1,790) 146,740 136,708
Teleron 42,315 3,258 98% 97% 3,162 (696) 41,187 38,721
Teleacre 23,555 2,104 100% 98% 2,068 (326) 23,195 21,453
NBT 161,043 (912) 95% 32% (289) - 50,998 51,287
TCO IP 1,452 (63) 100% 100% (63) (5) 1,447 1,515
--------------------------- --------------------------------------- ---------------
Total 1,303,039 69,060 65,010 (6,233) 1,114,720 1,055,943
=========================== ======================================= ===============
On June 21, 2001 Tele Centro Oeste Celular Participacoes S.A. sold to
Telebrasilia S.A. 47,999,692 preferred shares of Norte Brasil Telecom S.A.,
representing 66.66% of Norte Brasil Telecom S.A.'s total capital, for R$ 2.26895
per share, corresponding to the book value of the shares of Norte Brasil Telecom
S.A. at April 30, 2001.
The premium of R$ 5,508 refers to the acquisition of 45% of the shares of Norte
Brasil Telecom S.A. from Inepar S.A. on May 24, 1999 plus the capital
contribution of May 25, 2001, which is being amortized over a period of 10
years.
8. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
----------------------------------------------------------
9/30/2001 6/30/2001
---------------------------------------------
ANNUAL DEPRECIATION ACCUMULATED NET BOOK NET BOOK
RATES (%) COST DEPRECIATION VALUE VALUE
-----------------------------------------------------------------------------
Assets and service installations
Switching equipment 10 214,319 (48,799) 165,520 156,549
Transmission equipment 14.29 635,694 (297,474) 338,220 327,160
Infrastructure
Land - 4,713 - 4,713 3,809
Buildings 4 32,868 (10,347) 22,521 21,752
Supporters and protectors 5 45,089 (8,197) 36,892 33,885
Energy equipment 10 62,810 (33,692) 29,118 29,190
Leasehold improvements 10 3,911 (1,243) 2,668 2,710
Computer equipment 20 28,572 (6,964) 21,608 13,487
Vehicles 20 1,679 (1,266) 413 448
Exploration right (concession) 3.33 60,550 (4,033) 56,517 57,021
Other assets 5 to 20 59,349 (14,424) 44,925 35,681
Assets and installations in progress - 135,685 - 135,685 157,040
Construction material - 12,949 - 12,949 9,827
----------------------------------------------------------
Total 1,298,188 (426,439) 871,749 848,559
==========================================================
9. LOANS AND FINANCING
PARENT COMPANY CONSOLIDATED
------------------------------------------------
MATURITY
OPERATIONS INTEREST AND RESTATEMENT DATE 9/30/2001 6/30/2001 9/30/2001 6/30/2001
--------------------------------------------------------------------------------------------------------------------------
LOCAL CURRENCY
National Bank for Long-term Interest Rate - TJLP plus 1/16/2006
Economic and Social interest ranging from 3.5 to 4% p.a. and
Development - BNDES 2/15/2006 - - 67,932 69,760
Commercial Paper Depreciation of 19% p.a. on the
subscription date with swap of 7/11/2001 - 97,927 - 97,927
103.5% of CDI
Others Industrial Products - Column 20 -
Getulio Vargas Foundation - FGV 2000 to - - 1,769 1,832
2008
FOREIGN CURRENCY
Export Development Exchange variation based on the U.S.
Corporation - EDC dollar, increased by six-month Libor
rate plus 3.90%, p.a. 11/22/2005 27,087 - 80,698 38,474
Prepayment Exchange variation based on the U.S.
dollar, increased by Libor interest 7/12/2002
rate ranging from 1.75% p.a to 1,90% and
p.a., plus performance bonus ranging 8/13/2002 42,290 34,130 111,029 209,236
from 1.20% to 1.30% p.a.;
Import Financing Rate Exchange variation based on the U.S.
- FINIMP dollar, increased by Libor interest 12/16/2001
rate plus 0.93% p.a. to Libor to 47,618 - 132,132 90,935
interest rate plus 2.47% p.a. 7/25/2002
Capital Raising Based Exchange variation based on the U.S.
on Resolution No. 2770 dollar rate, pus interest rate of 1/07/2002 405 - 5,009 4,225
9.30% p.a.
------------------------------------------------
Total 117,400 132,057 398,569 512,389
Current (95,024) (132,057) (280,484) (432,462)
------------------------------------------------
Non-current 22,376 - 118,085 79,927
================================================
The amounts falling due on a long-term basis are as follows:
CONSOLIDATED
----------------------------
DUE DATE 9/30/2001 6/30/2001
-------------------------------------------------
2003 39,115 26,387
2004 39,115 26,387
2005 39,116 26,387
2006 261 271
2007 261 271
2008 217 224
----------------------------
Total 118,085 79,927
============================
The Company obtains loans in the financial market and transfers these amounts to
related parties through debt assumption operations in order to reduce the loan
total costs.
On May 17, 2001 TCO IP, controlled by Tele Centro Oeste Celular Participacoes
S.A., obtained funds in the international market through an operation known as
Exports Prepayment, with performance purchase. The operation amount was US$
90,000. The charges on this operation corresponded to 1.75% over Libor, plus
annual interest of 1.20% for performance purchase charge.
On July 11, 2001, TCO IP, controlled by Tele Centro Oeste Celular Participacoes
S.A., obtained funds in the international market in an operation called Export
Prepayment with performance purchase. The amount of the transaction was US$ 20
million. The financial charges of the transaction are 1.9% over Libor plus 1.3%
per year as performance charge.
10. NET OPERATING REVENUE FROM TELECOMMUNICATION SERVICES
CONSOLIDATED
-----------------------------
9/30/2001 9/30/2000
-----------------------------
Subscription 95,807 145,304
Use 387,956 248,898
Use of network 386,175 225,804
Additional services 5,416 7,007
Resale of cellular equipment 157,002 118,954
Resale of cards 105,327 54,375
Others 147 1,730
-----------------------------
Gross operating revenue 1,137,830 802,072
Gross revenue deductions (232,683) (161,992)
-----------------------------
Net operating revenue 905,147 640,080
=============================
11. PROVISION FOR CONTINGENCIES
COMPANY CONSOLIDATED
----------------------------------------------------
9/30/2001 6/30/2001 9/30/2001 6/30/2001
----------------------------------------------------
Tax 8,295 6,750 12,133 10,405
Labor - - 364 364
Others (a) 59,732 57,052 59,732 57,235
----------------------------------------------------
Total 68,027 63,802 72,229 63,804
====================================================
Basically refers to original loans from Telecomunicacoes Brasileira S.A. -
TELEBRAS, which according to Attachment II of the Spin-Off Report of February
28,1998, approved by the Shareholders Meeting of May 1998, should be charged to
the respective holding company controlled by Telegoias Celular S.A. and
Telebrasilia Celular S.A.
Local management, based on the understanding that the respective loans were
wrongly allocated at the time of the spin-off, suspended the payment flow
subsequent to the changes in the Company's controls. These loans are being
indexed by the IGP-M (Market General Price Index) plus 6% annual interest.
In June 1999, Tele Centro Oeste Celular Participacoes S.A. (parent company)
filed a legal action claiming that the assets related to these obligations -
loans and financing - belong to the Company as well as the respective
accessories, plus compensation for the installments paid.
In November 1999, the Company's management decided to transfer to the actual
holding company - Tele Centro Oeste Celular Participacoes S.A. the liability
derived from the loan originally made by Telecomunicacoes Brasileiras S.A. -
TELEBRAS and absorbed during the spin-off process.
The Company's lawyers believe that the chances of obtaining a favorable outcome
are good.
12. CAPITAL
The authorized capital at September 30 and June 30, 2001 is represented by
700,000,000,000 shares.
The subscribed and paid-in capital at June 30, 2001 is R$ 505,000 (R$ 319,618 at
June 30,2001), represented by 366,463,334,000 shares distributed as follows (in
thousands of shares):
9/30/2001 6/30/2001
--------------------------------------
Common shares 126,433,337 126,433,337
Preferred shares 240,029,997 240,029,997
--------------------------------------
Total 366,463,334 366,463,334
======================================
Equity value per lot of thousand shares (in R$) 2.769955 2.640202
The preferred shares of Tele Centro Oeste Celular Participacoes S.A do not have
voting rights, priority of capital reimbursement and payment of noncummulative
minimum dividends.
The Tele Centro Oeste Celular Participacoes S.A. Board of Directors, decided in
a meeting held on June 22, 2001, for the acquisition at market value of up to
28,150,000,000 shares issued by this Company, distributed in 4,750,000,000
common shares and 23,400,000,000 preferred shares, representing up to 10% of
common shares in circulation, for cancellation or holding in Treasury for
subsequent alienation, without capital stock reduction
On August 2001, the General Shareholders' Meeting approved the Company's capital
increase from R$ 319,618 to R$ 505,000 through capitalization of retained
earnings of R$ 185,382, without the issue of new shares.
13. MARKET VALUE OF FINANCIAL ASSETS AND LIABILITIES (FINANCIAL INSTRUMENTS)
At June 30, 2001, the Company and subsidiaries maintained operations that could
be regarded as "Financial Instruments" according to instruction of CVM No.
235/95. However, none of these operations should result in significant effects
regarding future gain or loss, considering market values and rates.
The main operations were:
Short-term investments - adjusted according to rates agreed with financial
institutions, without expectation of losses to the Company.
Loans and financing - are linked to several indices and present varied interest
rates, as mentioned in Note 8. Local management does not believe that future
gains or losses will be generated by negotiations involving loans and financing.
These operations are carried out through definition of strategies, establishment
of control systems, determination of position limits and assessment of risks
involved.
--------------------------------------------------------------------------------
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 13, 2001 By: /S/ MARIO CESAR PEREIRA DE ARAUJO
--------------------------------------
Name: Mario Cesar Pereira de Araujo
Title: President