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.
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
A free translation from Portuguese into English of Quarterly Financial Information | ||
prepared in Brazilian currency and in accordance with the accounting practices | ||
adopted in Brazil. | ||
FEDERAL GOVERNMENT SERVICE | ||
BRAZILIAN SECURITIES COMMISSION (CVM) | Corporate Legislation | |
QUARTERLY INFORMATION - ITR | March 31, 2007 | |
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES | ||
REGISTRATION WITH THE CVM DOES NOT IMPLY ANY ANALYSIS OF THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE ACCURACY OF THE INFORMATION PROVIDED. |
01.01 IDENTIFICATION
1 - CVM CODE 01763-9 |
2 COMPANY NAME TIM PARTICIPAÇÕES S.A. |
3 - National Corporate Taxpayers' Registration Number CNPJ 02.558.115/0001-21 |
4 State Registration Number NIRE 53 3 0000572 9 |
01.02 - HEAD OFFICE
1 - ADDRESS Av. das Américas, 3434, Bloco 1 7º andar parte |
2 - SUBURB OR DISTRICT Barra da Tijuca |
||||||||
3 - POSTAL CODE 22640-102 |
4 - MUNICIPALITY Rio de Janeiro |
5 - STATE Rio de Janeiro |
|||||||
6 - AREA CODE 21 |
7 - TELEPHONE 4009-3742 |
8 - TELEPHONE - |
9 - TELEPHONE - |
10 - TELEX - |
|||||
11 - AREA CODE 21 |
12 - FAX 4009-3314 |
13 - FAX - |
14 - FAX - |
- | |||||
15 - E-MAIL jserafim@timbrasil.com.br |
01.03 - INVESTOR RELATIONS OFFICER (Company Mail Address)
1- NAME Stefano De Angelis |
|||||||||
2 - ADDRESS Av. das Américas, 3434, Bloco 1 7º andar parte |
3 - SUBURB OR DISTRICT Barra da Tijuca |
||||||||
3 - ZIP CODE 22640-102 |
4 - MUNICIPALITY Rio de Janeiro |
5 - STATE Rio de Janeiro |
|||||||
6 - AREA CODE 21 |
7 - TELEPHONE 4009-3742 |
8 - TELEPHONE - |
9 - TELEPHONE - |
10 - TELEX - |
|||||
11 - AREA CODE 21 |
12 - FAX 4009-3314 |
13 - FAX - |
14 - FAX - |
- | |||||
15 - E-MAIL jserafim@timbrasil.com.br |
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
01.04 - GENERAL INFORMATION/INDEPENDENT ACCOUNTANT
CURRENT YEAR | CURRENT QUARTER | PRIOR QUARTER | |||||
1 - BEGINNING | 2. END | 3 - QUARTER | 4 - BEGINNING | 5 - END | 6 - QUARTER | 7 - BEGINNING | 8 - END |
01.01.2007 | 12.31.2007 | 1 | 01.01.2007 | 03.31.2007 | 4 | 10.01.2006 | 12.31.2006 |
09 - INDEPENDENT ACCOUNTANT Directa Auditores |
10 - CVM CODE 3670 |
||||||
11. PARTNER RESPONSIBLE Ernesto Rubens Gelbcke |
12 INDIVIDUAL TAXPAYERS REGISTRATION NUMBER OF THE PARTNER RESPONSIBLE 062.825.718-04 |
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
A free translation from Portuguese into English of Quarterly Financial Information | ||
prepared in Brazilian currency and in accordance with the accounting practices | Corporate Legislation | |
adopted in Brazil. | March 31, 2007 | |
FEDERAL GOVERNMENT SERVICE | ||
BRAZILIAN SECURITIES COMMISSION (CVM) | ||
QUARTERLY INFORMATION - ITR | ||
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES | ||
01.01 IDENTIFICATION
1 - CVM CODE 01763-9 |
2 - COMPANY NAME TIM PARTICIPAÇÕES S.A. |
3 - Federal Corporate Taxpayers' Registration Number CNPJ 02.558.115/0001-21 |
01.05 - CAPITAL COMPOSITION
Number of Shares (Thousands) |
Current quarter 03.31.2007 |
Prior quarter 12.31.2006 |
Same quarter in prior year 03.31.2006 |
Paid-up capital | |||
1 - Common | 793,544,277 | 793,544,277 | 791,117,235 |
2 - Preferred | 1,536,170,583 | 1,536,170,583 | 1,531,472,229 |
3 - Total | 2,329,714,860 | 2,329,714,860 | 2,322,589,464 |
Treasury Stock | |||
4 - Common | 0 | 0 | 0 |
5 - Preferred | 0 | 0 | 0 |
6 - Total | 0 | 0 | 0 |
01.06 CHARACTERISTICS OF THE COMPANY
1 - TYPE OF COMPANY Commercial, industrial and other |
2 - SITUATION Operational |
3 - NATURE OF OWNERSHIP Local Private |
4 - ACTIVITY CODE 113 Telecommunication |
5 - MAIN ACTIVITY Cellular Telecommunication Services |
6 - TYPE OF CONSOLIDATION Full |
7 - TYPE OF REPORT OF INDEPENDENT ACCOUNTANT Unqualified |
01.07 - COMPANIES EXCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS
1 - ITEM | 2 - CNPJ | 3 - NAME |
01.08 - DIVIDENDS AND OR INTEREST ON CAPITAL APPROVED AND/OR PAID DURING AND AFTER THE QUARTER
1 - ITEM | 2 - EVENT | 3 - DATE APPROVED | 4 - AMOUNT | 5 - DATE OF PAYMENT | 6 - TYPE OF SHARE | 7 - AMOUNT PER SHARE |
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
A free translation from Portuguese into English of Quarterly Financial Information | ||
prepared in Brazilian currency and in accordance with the accounting practices | ||
adopted in Brazil. | ||
FEDERAL GOVERNMENT SERVICE | ||
BRAZILIAN SECURITIES COMMISSION (CVM) | Corporate Legislation | |
QUARTERLY INFORMATION - ITR | March 31, 2007 | |
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES | ||
01.01 IDENTIFICATION
1 - CVM CODE 01763-9 |
2 - COMPANY NAME TIM PARTICIPAÇÕES S.A. |
3 - Federal Corporate Taxpayers' Registration Number CNPJ 02.558.115/0001-21 |
01.09 - SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR
1 - ITEM | 2 - DATE OF CHANGE | 3 - CAPITAL (IN THOUSANDS OF REAIS) |
4 - TOTAL CHANGE (IN THOUSANDS OF REAIS) |
5 - NATURE OF CHANGE | 7 - NUMBER OF SHARES ISSUED (IN THOUSANDS) |
8 -SHARE PRICE ON ISSUED DATE (IN REAIS) |
01.10 - INVESTOR RELATIONS OFFICER
1- DATE | 2 - SIGNATURE |
5
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | 03/31/2007 | 12/31/2006 |
1 | Total assets | 8,342,685 | 8,361,407 |
1.01 | Current assets | 14,436 | 16,721 |
1.01.01 | Cash and cash equivalents | 13,793 | 16,370 |
1.01.01.01 | Cash and Bank | 792 | 87 |
1.01.01.02 | Short-term investments in the money market | 13,001 | 16,283 |
1.01.02 | Credits | - | - |
1.01.02.01 | Accounts receivable | - | - |
1.01.02.02 | Others Credits | - | - |
1.01.03 | Inventories | - | - |
1.01.04 | Others | 643 | 351 |
1.01.04.01 | Recoverable taxes and contributions | 450 | 348 |
1.01.04.02 | Other current assets | 193 | 3 |
1.02 | Noncurrent assets | 8,328,249 | 8,344,686 |
1.02.01 | Noncurrent assets | 8,324 | 6,896 |
1.02.01.01 | Others Credits | 5,802 | 5,656 |
1.02.01.01.01 | Taxes and contributions recoverable | 5,802 | 5,656 |
1.02.01.02 | Related parties | 58 | 58 |
1.02.01.02.01 | Affiliates | - | - |
1.02.01.02.02 | Subsidiaries | 58 | 58 |
1.02.01.02.03 | Other related parties | - | - |
1.02.01.03 | others | 2,464 | 1,182 |
1.02.01.03.01 | Judicial deposits | 2,464 | 1,182 |
1.02.02 | Permanent assets | 8,319,925 | 8,337,790 |
1.02.02.01 | Investments | 8,319,925 | 8,337,790 |
1.02.02.01.01 | Affiliates | - | - |
1.02.02.01.02 | Affiliates - Goodwill | - | - |
1.02.02.01.03 | Subsidiaries | 8,313,612 | 8,331,082 |
1.02.02.01.04 | Subsidiaries - Goodwill | - | - |
1.02.02.01.05 | Other investments | 6,313 | 6,708 |
1.02.02.02 | Property, plant and equipment | - | - |
1.02.02.03 | Intangible | - | - |
1.02.02.04 | Deferred charges | - | - |
6
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | 03/31/2007 | 12/31/2006 |
2 | Total liabilities and shareholders' equity | 8,342,685 | 8,361,407 |
2.01 | Current liabilities | 468,533 | 467,306 |
2.01.01 | Loans and financing | - | - |
2.01.02 | Debentures | - | - |
2.01.03 | Suppliers | 1,714 | 1,960 |
2.01.04 | Taxes, charges and contributions | 7 | 65 |
2.01.05 | Dividends payable | 464,422 | 464,526 |
2.01.06 | Provisions | - | - |
2.01.07 | Related parties | 1,284 | - |
2.01.08 | Other | 1,106 | 755 |
2.01.08.01 | Labor liabilities | 1,106 | 755 |
2.02 | Noncurrent liabilities | 7,239 | 7,723 |
2.02.01 | Noncurrent liabilities | 7,239 | 7,723 |
2.02.01.01 | Loans and financing | - | - |
2.02.01.02 | Debentures | - | - |
2.02.01.03 | Provisions | 7,239 | 7,723 |
2.02.01.03.01 | Provision for contingencies | 2,684 | 3,168 |
2.02.01.03.02 | Supplementary pension plan | 4,555 | 4,555 |
2.02.01.04 | Related parties | - | - |
2.02.01.05 | Advances for future capital increase | - | - |
2.02.01.06 | Other | - | - |
2.02.02 | Deferred income | - | - |
2.04 | Shareholders' equity | 7,866,913 | 7,886,378 |
2.04.01 | Capital | 7,512,710 | 7,512,710 |
2.04.02 | Capital reserves | 135,230 | 135,230 |
2.04.03 | Revaluation reserves | - | - |
2.04.03.01 | Own assets | - | - |
2.04.03.02 | Subsidiaries/affiliates | - | - |
2.04.04 | Income reserves | 238,438 | 238,438 |
2.04.04.01 | Legal reserve | 98,741 | 98,741 |
2.04.04.02 | Statutory reserve | - | - |
2.04.04.03 | Reserves for contingencies | - | - |
2.04.04.04 | Unearned income reserve | - | - |
2.04.04.05 | Retained earnings | 139,697 | 139,697 |
2.04.04.06 | Special reserve for undistributed dividends | - | - |
2.04.04.07 | Other income reserves | - | - |
2.04.05 | Retained earnings | (19,465) | - |
2.04.06 | Advances for future capital increase | - | - |
7
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | From 01/01/2007 to 03/31/2007 |
Accumulated From 01/01/2007 to 03/31/2007 |
From 01/01/2006 a 03/31/2006 |
Accumulated From 01/01/2006 a 03/31/2006 |
3.01 | Gross revenues | - | - | - | - |
3.02 | Deductions from gross revenues | - | - | - | - |
3.03 | Net revenues | - | - | - | - |
3.04 | Cost of goods sold and services rendered | - | - | - | - |
3.05 | Gross profit | - | - | - | - |
3.06 | Operating income (expenses) | (19,465) | (19,465) | (91,210) | (91,210) |
3.06.01 | Selling | - | - | (8) | (8) |
3.06.02 | General and administrative | (2,643) | (2,643) | (7,914) | (7,914) |
3.06.03 | Financial income (expenses) | 558 | 558 | 166 | 166 |
3.06.03.01 | Financial income | 573 | 573 | 427 | 427 |
3.06.03.02 | Financial expenses | (15) | (15) | (261) | (261) |
3.06.04 | Other operating income | 725 | 725 | 979 | 979 |
3.06.05 | Other operating expenses | (635) | (635) | (1,170) | (1,170) |
3.06.06 | Equity pickup | (17,470) | (17,470) | (83,263) | (83,263) |
3.07 | Operating income | (19,465) | (19,465) | (91,210) | (91,210) |
3.08 | Nonoperating result | - | - | - | - |
3.08.01 | Income | - | - | - | - |
3.08.02 | Expenses | - | - | - | - |
3.09 | Income before taxation and participations | (19,465) | (19,465) | (91,210) | (91,210) |
3.10 | Provision for income and social contribution taxes | - | - | - | - |
3.11 | Deferred income tax | - | - | 2,560 | 2,560 |
3.12 | Participations/statutory contributions | - | - | - | - |
3.12.01 | Participations | - | - | - | - |
3.12.02 | Contributions | - | - | - | - |
3.13 | Reversal of interest on shareholders' equity | - | - | - | - |
3.15 | Net income for the period | (19,465) | (19,465) | (88,650) | (88,650) |
8
TIM PARTICIPAÇÕES S.A.
NOTES TO THE FINANCIAL STATEMENTS
As of March 31, 2007
(In thousands of Reais, unless otherwise stated)
1 Operations
TIM Participações S.A. (Company) headquartered at Avenida das Américas, 3434, block 1, 7th floor, Rio de Janeiro, RJ, is a publicly-held company directly controlled by TIM Brasil Serviços e Participações S.A., a Telecom Italia Groups company, who holds interests of 81.219% of its voting capital and 69.67% of its total capital
TIM Participações S.A.´s operations comprise, among other things, the control of companies exploring telecommunications services, especially cellular phones, in its concession and/or authorization areas.
The Company has full control of TIM Celular S.A., which in turn controls TIM Nordeste S.A. TIM Celular S.A. and its subsidiary TIM Nordeste S.A.operate cellular telephony services in all Brazilian states.
The loss borne in the three-month period ended March 31, 2007 arises from the subsidiaries TIM Celular S.A. and TIM Nordeste S.A., in line with the Management´s expectations. However, the projections point to these subsidiaries attaining economic-financial balance, with generation of cash flow and positive results still in 2007.
The services provided by the subsidiaries and the respective tariffs are regulated by ANATEL Brazilian Telecommunications Agency in charge of regulating all Brazilian telecommunications. The subsidiaries´ authorizations mature as follows:
9
TIM Celular | Expiry Date | |
Região 1 | ||
Amapá, Roraima, Pará, Amazonas, Rio de Janeiro, and | March, 2016 | |
Espírito Santo | ||
Região 2 | ||
Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, | March, 2016 | |
Tocantins, Distrito Federal, Goiás and Rio Grande do Sul | ||
(except for Pelotas) | ||
Região 3 | ||
São Paulo | March, 2016 | |
Região 4 | ||
Paraná | September, 2007 | |
Santa Catarina | September, 2008 | |
Rio Grande do Sul (Pelotas) | April, 2009 | |
TIM Nordeste | ||
Região 1 | ||
Pernambuco | May, 2009 | |
Ceará | November, 2008 | |
Paraíba | December, 2008 | |
Rio Grande do Norte | December, 2008 | |
Alagoas | December, 2008 | |
Piauí | March, 2009 | |
Região 2 | ||
Minas Gerais | April, 2013 | |
Região 3 | ||
Bahia and Sergipe | August, 2012 |
2 Corporate Restructuring
a. Merger of TIM Nordeste Telecomunicações S.A. into Maxitel S.A. and TIM Sul S.A. into TIM Celular S.A.
On June 30, 2006, at the General Extraordinary Shareholders´ Meetings of Maxitel S.A., TIM Celular S.A., TIM Nordeste Telecomunicações S.A and TIM Sul S.A. approved the merger of TIM Nordeste Telecomunicações S.A.into Maxitel S.A., and of TIM Sul S.A. into TIM Celular S.A. On the same date, Maxitel S.A. changed its name to TIM Nordeste S.A. and moved its headquarters from Belo Horizonte (MG) to Jaboatão dos Guararapes, (PE).
This reorganization was intended to proceed with the optimization of the companies´ organizational structure, through further unification and rationalization of business and operations, concurrently with reduction of costs incurred in maintaining two separate entities. Additionally, all this enabled taking advantage of intercompany synergies, with the attendant fiscal and financial efficiency.
10
3 Presentation of Quarterly Information
a. Preparation and disclosure criteria
The quarterly information (Parent Company and consolidated) were prepared in accordance with the Corporate Law (Law 6.404/76 and subsequent amendments) and the standards applicable to public telecommunications service concessionaires/authorized companies; CVM Brazilian Securities Commission standards and procedures, and IBRACON Brazilian Institute of Independent Accountants´ accounting pronouncements.
As a publicly-held company, with American Depositary Receipts being traded on the New York Stock Exchange USA , TIM Participações S.A.is subject to the rules of the Securities and Exchange Commission (SEC). In order to meet its market needs, it is the Companys principle to disclose information simultaneously to both markets in Brazilian Reais, in Portuguese and in English.
b. Consolidated Quarterly Information
The consolidated quarterly information cover assets, liabilities and the Company´s and its subsidiaries´ consolidated results, as follows:
% Participation | ||||||||
03/2007 | 12/2006 | |||||||
Direct | Indirect | Direct | Indirect | |||||
TIM Participações | ||||||||
TIM Celular | 100,00 | - | 100,00 | - | ||||
TIM Nordeste | - | 100,00 | - | 100,00 |
The main consolidation procedures are as follows:
I. Elimination of intercompany consolidated assets and liabilities accounts;
II. Elimination of participation in capital, reserves and retained earnings of the subsidiaries;
III. Elimination of intercompany revenues and expenses;
IV. Separate disclosure of the minority participation in the consolidated quarterly information, where applicable.
Below, the reconciliation of the parent company´s income for the period to the consolidated figures:
03/2006 | ||
Adjusted | ||
Parent Company | (88,650) | |
ADENE benefit and fiscal incentive directly recorded as stockholders equity of the | ||
subsidiary TIM Nordeste S.A. | (12,911) | |
Consolidated | (101,561) | |
11
c. Comparability of Quarterly Information
The Company and its subsidiaries continuously strive to improve their corporate governance and quarterly information presentation and, especially, to comply with CVM Brazilian Securities Commission´s accounting practices and the international practices specifically applicable to their field of activity. In this sense, the Company and its subsidiaries analyzed the best accounting practices applicable to their field of activity, and made changes that affected the quarterly information, now substantially different from those previously published and made available to the shareholders, and had some additional effects:
The adjustments to the quarterly information published in the first quarter of 2006 are as follows:
(a) Adjustments relating to obligations deriving from discontinuance of assets;
(b) Reclassification of some discounts on sale of cell phones, which in the quarter ended March 31, 2006 were presented as costs of goods sold and selling expenses;
(c) Adjustments relating to deferral of subsidized sale of phone sets to the
post-paid system subscribers;
(d) Reclassification of amortization of premium on privatization.
(e) Equity accounting of the above mentioned adjustments.
Parent Company 03/2006 | ||||||
Original | (e) | Adjusted | ||||
Statement of income | ||||||
Operating revenues (expenses): | ||||||
Commercialization | (8) | - | (8) | |||
General and administrative | (7,914) | - | (7,914) | |||
Equity pickup | (133,459) | 50,196 | (83,263) | |||
Other operating expenses - net | (191) | - | (191) | |||
Operating income before financial income | (141,572) | 50,196 | (91,376) | |||
Financial revenues (expenses): | ||||||
Financial revenues | 427 | - | 427 | |||
Financial expenses | (261) | - | (261) | |||
166 | - | 166 | ||||
Pretax loss | (141,406) | 50,196 | (91,210) | |||
Provision for income tax and social contribution | 2,560 | - | 2,560 | |||
Loss for the Quarterly | (138,846) | 50,196 | (88,650) | |||
Loss per thousand-share lot (R$) | (0.06) | 0.02 | (0.04) | |||
12
Consolidated 03/2006 | ||||||||||||
Original | (a) | (b) | (c) | (d) | Adjusted | |||||||
Statement of income | ||||||||||||
Gross operating revenue | ||||||||||||
Telecommunications services | 2,465,646 | - | - | - | - | 2,465,646 | ||||||
Goods sold | 423,312 | - | - | - | - | 423,312 | ||||||
2,888,958 | - | - | - | - | 2,888,958 | |||||||
Deductions from gross revenue | (757,314) | - | (65,922) | - | - | (823,236) | ||||||
Net operating revenue | 2,131,644 | - | (65,922) | - | - | 2,065,722 | ||||||
Cost of services rendered | (810,651) | (3,621) | - | - | - | (814,272) | ||||||
Cost of goods sold | (304,186) | - | 15,724 | 55,622 | - | (232,840) | ||||||
Gross income | 1,016,807 | (3,621) | (50,198) | 55,622 | - | 1,018,610 | ||||||
Operating revenues (expenses): | ||||||||||||
Commercialization | (735,092) | - | 50,198 | - | - | (684,894) | ||||||
General and administrative | (243,468) | - | - | - | - | (243,468) | ||||||
Other operating expenses net | (66,985) | - | - | - | 12,613 | (54,372) | ||||||
(1,045,545) | - | 50,198 | - | 12,613 | (982,734) | |||||||
Operating income before financial income | ||||||||||||
(28,738) | (3,621) | - | 55,622 | 12,613 | 35,876 | |||||||
Financial revenues (expenses): | ||||||||||||
Financial revenues | 98,211 | - | - | - | - | 98,211 | ||||||
Financial expenses | (184,724) | (2,494) | - | - | - | (187,218) | ||||||
(86,513) | (2,494) | - | - | - | (89,007) | |||||||
Operating loss | (115,251) | (6,115) | - | 55,622 | 12,613 | (53,131) | ||||||
Non-operating income | 417 | - | - | - | - | 417 | ||||||
Pretax loss | ||||||||||||
(114,834) | (6,115) | - | 55,622 | 12,613 | (52,714) | |||||||
Provision for income tax and social | ||||||||||||
contribution | (36,923) | 689 | - | - | (12,613) | (48,847) | ||||||
Loss for the Quarterly | (151,757) | (5,426) | - | 55,622 | - | (101,561) | ||||||
4 Summary of the main accounting practices
a. Short-term investments in the money market
These refer short-term investments in the money market maturing in over 90 days, and stated at cost plus the related earnings up to the balance sheet, and where applicable, limited to the market value.
b. Accounts receivable
Accounts receivable from the telecommunications service costumers are recorded at the price ruling on the date of service-rendering, including credits for services rendered but not billed until the balance sheet date, receivables from network use and receivables from sales of cell phone sets and accessories.
13
c. Allowance for doubtful accounts
The allowance for doubtful accounts is recorded based on the customer base´s profile, the aging of past due accounts, the economic scenario and the risks involved in each case. The allowance amount is considered sufficient to cover possible losses on receivables.
d. Inventories
These comprise cell phone sets and accessories, which are stated at the average acquisition cost, not exceeding replacement cost. A provision was set up to adjust the slow-moving and obsolete items balance to the related realizable value.
e. Prepaid expenses
Prepaid expenses are shown at the amount actually disbursed and not yet incurred.
The subsidized sale of phone sets to post-paid system subscribers, which began to be deferred and amortized over the minimum period of service agreement duration (12 months). The contracted fine imposed on customers who cancel their subscriptions or migrate to the prepaid system at the end of contracts is invariably higher than the subsidy granted at the time of sale.
Advertising expenses are mostly composed of sponsorship of Formula 1 race transmissions on television.
f. Investments
The investments in subsidiaries are valued by the equity method, based on the subsidiaries´ shareholders equity, which is determined on the same date, by the same accounting principles used by the parent company.
The other investments are shown at cost, reduced to the realizable value, where applicable.
g. Property, plant and equipment
The property, plant and equipment items are shown at the acquisition and/or construction cost net of accumulated depreciation, calculated on the straight-line method, over the useful life of assets involved. Any repair and maintenance costs incurred representing improvement, higher capacity or longer useful life are capitalized, whereas the others are recorded as income for the year.
Interest and other financial charges on financing taken for funding construction work in progress (assets and facilities under construction) are capitalized up to the startup date.
14
The estimated costs to be incurred on disassembly of towers and equipment in property rented are capitalized and amortized over the useful life of the respective assets.
The long-term assets, especially property, plant and equipment, are periodically reviewed to determine the need for recording a provision for losses on any such items and recovery thereof.
The estimated useful lives of all property, plant and equipment items are regularly reviewed considering technological advances.
h. Intangibles
Intangibles are stated at the acquisition cost, net of accumulated amortization. Amortization expenses are calculated on the straight-line methodover the useful life of assets, i.e., five years for radio frequency bands and fifteen years for use authorization.
i. Deferred charges
The deferred charges comprise pre-operating expenses and financial costs of working capital required at the subsidiaries´ pre-operating stage, which are amortized in ten years from the date the subsidiaries become operative.
j. Income tax and social contribution
Income tax is calculated based on the income adjusted for legally stipulated additions and exclusions. The social contribution is calculated at the legally stipulated rates applied to pretax income.
Based on the Constitutive Reports nos. 0144/2003 and 0232/2003 issued by ADENE Northeast Development Agency on March 31, 2003, TIM Nordeste S.A. became eligible to fiscal incentives consisting of: (i) 75% reduction of income tax and non-reimbursable surtaxes for a ten-year period, from fiscal 2002 through 2011, calculated based on the exploration income arising from implementation of its installed capacity for rendering digital cellular telephone services; and (ii) reduction of 37.5%, 25% and 12.5% of income tax and non-reimbursable surtaxes for fiscal 2003, 2004-2008 and 2009-2013, respectively, calculated based on the exploration income arising from implementation of its installed capacity for rendering of analogical cellular telephone services. The amount of the previously mentioned income-tax-reduction benefit is accounted for as a reduction of the provision for income tax payable, against the Capital Reserve Fiscal Incentive, under the Shareholders´ Equity of TIM Nordeste S.A.
The deferred income tax and social contribution on temporary differences are valued based on expected taxable income generation, net of a provision for adjustment to the recovery value, which is set up in accordance with CVM Instruction 371/02. No deferred tax assets were recognized as of March 31, 2007 and December 31, 2006, because of the Company´s and its subsidiaries historical operating losses and unused credits.
15
k. Loans and financing
Loans and financing include accrued interest to the balance sheet date. The Companys subsidiaries are party to certain swap contracts whereby obligations denominated in foreign currency are converted into Reais, as a hedge against risks associated with unexpected devaluation of the Real in relation to foreign currencies. Additionally, the Companys subsidiaries have hedge contracts to cover changes in market Income tax is calculated based on the income adjusted for legally stipulated additions and exclusions interest rates. Gains and losses from swap operations are recognized in the income statement under the accrual method, based on the contracted rates.
l. Provision for contingencies
This is recorded based on internal and external lawyers´ and the Management´s opinion, in amounts deemed sufficient to cover probable losses and risks.
m. Obligations arising from discontinuance of assets
The provision for costs to be incurred on the disassembly of towers and equipment in rented property, which is recorded against the Company´s property, plant and equipment, is discounted to present value so it can reflect the best current estimate.
n. Revenue recognition
Service revenues are recognized as services are provided. Billings are monthly recorded. Unbilled revenues from the billing date to the month end are measured and recognized during the month in which services are provided. Revenues from sales of prepaid cell phone reloading credits are deferred and recognized as income over the actual utilization period. Revenues from sales of cell phone sets and accessories are recognized as these products are delivered to, and accepted by, end-consumers or distributors.
o. Financial revenues and expenses
These are represented by interest and exchange and monetary variations on short-term investments in the money market, swap contracts, loans and financing taken and granted.
p. Derivative instruments
The subsidiaries enter into swap derivative contract in order to manage risks involved in variation of exchange rates and interest rates, which are recorded on the accrual basis. Payments made and received are recognized as adjustments to exchange variation.
The subsidiaries´ derivate instrument contracts are signed with big, experienced financial institutions with great experience in this type of transactions. They do not operate with derivative instruments for commercial, speculative purposes.
16
q. Pension plans and other post-employment benefits
The Company and its subsidiaries record the adjustments connected with the employees pension plan obligations according to the rules established by IBRACON´s NPC 26, approved by CVM Deliberation 371, which defines the characteristics of the plan, obligations and events described in Note 35.
r. Use of estimates
The preparation of quarterly information in conformity with accounting practices adopted in Brazil requires management to make estimates and assumptions concerning the amounts of recorded assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date, as well as the estimation of revenues and expenses for the year. The actual results may differ from those estimates.
s. Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate prevailing on the transaction date. Foreign currency-denominated assets and liabilities are translated into Reais using the balance sheet date´s exchange rate, which is reported by the Brazilian Central Bank. Exchange gains and losses are recognized in the statement of income as incurred. Exchange gains and losses are recorded as incurred, in the statement of income.
t. Employees´ profit-sharing
The Company and its subsidiaries record a provision for employees´ profit-sharing, based on the targets disclosed to its employees and approved by the Administrative Council. These amounts are recorded as personnel expenses and allocated to profit and loss accounts considering each employees cost center.
u. Supplementary information
For additional information purposes, the following is presented: a) Statements of Cash Flow, prepared in accordance with the NPC no. 20 issued by the Institute of Independent Auditors of Brazil IBRACON; and b) Value-Added Statements prepared in accordance with the CFC Federal Accounting Council - Resolution no. 1010, which approved NBCT 37.
5 Short-term investments in the money market
Parent Company | ||||
03/2007 | 12/2006 | |||
CDB | 12,738 | - | ||
Federal public securities | 263 | 16,283 | ||
13,001 | 16,283 | |||
17
Consolidated | ||||
03/2007 | 12/2006 | |||
CDB | 134,853 | 462,949 | ||
Debentures | 30,328 | 141,338 | ||
Federal public securities | 263 | 145,355 | ||
Other | - | 2,969 | ||
165,444 | 752,611 | |||
The average yield on TIM Participações´s consolidated investments is 101,71% of the Interbank Deposit Certificate CDI variation.
These investments are redeemable at any time, with no significant impact on their recognized profitability.
6 Accounts receivable
Consolidated | ||||
03/2007 | 12/2006 | |||
Billed services | 790,817 | 757,817 | ||
Unbilled services | 465,464 | 423,097 | ||
Network use | 858,815 | 724,398 | ||
Goods sold | 769,102 | 879,131 | ||
Other receivables | 10,484 | 30,821 | ||
2,894,682 | 2,815,264 | |||
Allowance for doutful accounts | (382,847) | (309,431) | ||
2,511,835 | 2,505,833 | |||
The changes in the allowance for doubtful accounts can be summarized as follows:
Consolidated | ||
03/2007 | ||
Opening balance | 309,431 | |
Provision set up | 172,968 | |
Write offs | (99,552) | |
Closing balance | 382,847 | |
18
7 Inventories
Consolidated | ||||
03/2007 | 12/2006 | |||
Cell phone sets | 115,122 | 156,986 | ||
Accessories and prepaid card kits | 4,081 | 3,558 | ||
TIM chips | 13,327 | 22,806 | ||
132,530 | 183,350 | |||
Provision for adjustment to realizable value | (16,458) | (19,242) | ||
116,072 | 164,108 | |||
8 Taxes and contributions recoverable
Parent Company | ||||
03/2007 | 12/2006 | |||
Income tax | 6,162 | 5,656 | ||
IRRF recoverable | 88 | 346 | ||
Other | 2 | 2 | ||
6,252 | 6,004 | |||
Current portion | (450) | (348) | ||
Long-term portion | 5,802 | 5,656 | ||
Consolidated | ||||
03/2007 | 12/2006 | |||
Income tax | 42,140 | 34,739 | ||
Social Contribution | 8,564 | 4,654 | ||
ICMS | 426,592 | 422,216 | ||
PIS / COFINS | 80,020 | 96,858 | ||
IRRF recoverable | 11,124 | 9,809 | ||
Other | 15,166 | 9,947 | ||
583,606 | 578,223 | |||
Current portion | (320,467) | (292,542) | ||
Long-term portion | 263,139 | 285,681 | ||
The parent companys long-term portion basically refers to income tax and social contribution recoverable, whereas the consolidated figure also includes ICMS on the subsidiaries´ property, plant and equipment.
19
9 Income tax and social contribution
Below, the composition of deferred income tax and social contribution:
Consolidated | ||||
03/2007 | 12/2006 | |||
Goodwill on privatization | 197,844 | 234,939 | ||
Provision for maintenance of shareholders´ equity integrity | (130,577) | (155,060) | ||
Merger-generated tax credit | 67,267 | 79,879 | ||
Current portion | (50,450) | (50,450) | ||
Long-term portion | 16,817 | 29,429 | ||
Merger-generated tax credit
The deferred tax asset represented by the merger-generated tax credit refers to future tax benefit under the restructuring plan started in 2000. As a counterentry to said tax is a special reserve composed of goodwill on shareholders´ equity. The tax is realized ratably to estimated future income, over the duration of the authorization granted, which is due to end by 2008 The goodwill amortization reflecting the tax benefit is recorded under Provision for income tax and social contribution..
In the three-month period ended March 31, 2007, tax benefits in the amount of R$ 12,613 (same period in 2006 R$ 12,613) referring to this goodwill. Also under the restructuring process, each year´s actual tax benefit will be subsequently capitalized in favor of the majority shareholder (Note 24-b).
As projected by the Management, the deferred, long-term income tax and social contribution remaining from the merger-generated tax credit will be realized in 2008.
10 Prepaid expenses
Consolidated | ||||
03/2007 | 12/2006 | |||
Subsidized sales of phone sets | 146,023 | 160,172 | ||
Rentals | 10,201 | 11,004 | ||
Unpublished advertising | 47,348 | 51,860 | ||
Financial charges on loans | 7,908 | 8,814 | ||
Other | 3,236 | 2,415 | ||
214,716 | 234,265 | |||
Current portion | (203,129) | (221,008) | ||
Long-term portion | 11,587 | 13,257 | ||
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11 Related-party transactions
The related-party transactions (Telecom Italia Group), which are performed under regular market conditions, similarly to those with third parties, are thus composed:
Parent Company
Assets | Liabilities | |||||
03/2007 | 12/2006 | 03/2007 | ||||
TIM Celular S.A. | 58 | 58 | 1,284 | |||
Consolidated
Assets | ||||
03/2007 | 12/2006 | |||
Entel Bolívia (1) | 798 | 838 | ||
Telecom Personal Argentina (1) | 5,628 | 5,135 | ||
Telecom Sparkle (1) | 4,989 | 5,649 | ||
Telecom Italia S.p.A. (2) | 5,235 | 4,609 | ||
Other | 450 | 72 | ||
Total | 17,100 | 16,303 | ||
Liabilities | ||||
03/2007 | 12/2006 | |||
Telecom Italia S.p.A. (2) | 33,475 | 34,765 | ||
IT Telecom Italia (3) | 276 | 284 | ||
Entel Bolívia (1) | 91 | 89 | ||
Telecom Personal Argentina (1) | 1,478 | 2,951 | ||
Telecom Sparkle (1) | 6,192 | 6,739 | ||
Italtel (3) | 6,460 | 38,928 | ||
Other | 384 | 308 | ||
Total | 48,356 | 84,064 | ||
Revenue | ||||
03/2007 | 03/2006 | |||
Telecom Italia S.p.A. (2) | 6,603 | 2,167 | ||
Telecom Personal Argentina (1) | 1,487 | 1,342 | ||
Telecom Sparkle (1) | 2,744 | 791 | ||
Other | 287 | 505 | ||
Total | 11,121 | 4,805 | ||
Cost/Expense | ||||
03/2007 | 03/2006 | |||
Telecom Italia S.p.A. (2) | 5,832 | 1,892 | ||
Telecom Sparkle (1) | 6,102 | 3,845 | ||
Telecom Personal Argentina (1) | 1,500 | 2,550 | ||
Other | 257 | 231 | ||
Total | 13,691 | 8,518 | ||
(1) These refer to roaming, value-added services - VAS and media assignment.
21
(2) These amounts refer to international roaming, technical post-sales assistance, and VAS.
(3) This refers to the development and maintenance of software pieces used in the telecommunications service billing.
12 Escrow deposits
Parent Company | ||||
03/2007 | 12/2006 | |||
Civil | 190 | - | ||
Labor | 1,995 | 903 | ||
Tax | 279 | 279 | ||
2,464 | 1,182 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
Civil | 15,262 | 13,172 | ||
Labor | 18,732 | 16,395 | ||
ICMS - 69/98 Agreement | 2,337 | 2,331 | ||
Others Tax | 30,999 | 25,522 | ||
67,330 | 57,420 | |||
13 Investments
Parent Company | ||||
03/2007 | 12/2006 | |||
Investments | ||||
Subsidiaries | 8,313,612 | 8,331,082 | ||
Goodwill | 6,313 | 6,708 | ||
8,319,925 | 8,337,790 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
Investments | ||||
Goodwill | 6,313 | 6,708 | ||
Other | 20 | 20 | ||
6,333 | 6,728 | |||
22
(a) Participation in subsidiaries:
03/2007 | ||
TIM Celular | ||
S.A. | ||
- Parent Company | ||
Number of shares held | 31.506.833.561 | |
Participation in total capital | 100% | |
Shareholders´ equity | 8,313,612 | |
Loss for the quarterly | (17,470) | |
Equity pickup | (17,470) | |
Investment amount | 8,247,192 | |
Special goodwill reserve (*) | 66,420 | |
Investment amount | 8,313,612 | |
12/2006 | ||||||
TIM Celular | TIM Nordeste | |||||
S.A. | Telecom. S.A. (i) | Total | ||||
- Subsidiaries | ||||||
Number of shares held | 31,506,833,561 | |||||
Participation in total capital | 100% | |||||
Shareholders´ equity | 8,331,082 | |||||
Loss for the period | (328,004) | |||||
Equity pickup | (328,004) | 62,859 | (265,145) | |||
Investment amount | 8,264,662 | 8,264,662 | ||||
Special goodwill reserve (*) | 66,420 | 66,420 | ||||
Investment amount | 8,331,082 | 8,331,082 | ||||
(i) The investment in TIM Nordeste Telecomunicações S.A., merged into Maxitel S.A. (Note 2-d), was valued on the equity method for the period from January 1 through May 31, 2006.
(*) The special goodwill reserve recorded at TIM Nordeste S.A. and TIM Celular S.A. represents the parent companys rights in future capitalizations. These tax benefits are connected with goodwill paid upon privatization of Tele Nordeste Celular Participações S.A..,(merged into TIM Participações S.A. in August 2004) and Tele Celular Sul Participações S.A. (TIM Participações S.As former name). This goodwill was recorded against the special goodwill reserve, under Shareholders equity. Based on projected income and the concession duration, in the first two years, amortization was at 4% p.a., the remainder being amortized on the straight-line basis over the eight years left, through 2008.
23
(b) Changes in investments in subsidiaries:
TIM Celular | ||
S.A. | ||
Investment balances of December 31, 2006 | 8,331,082 | |
Equity pickup | (17,470) | |
Investment balances of March 31, 2007 | 8,313,612 | |
(c) Goodwill:
Parent Company and Consolidated | ||||
03/2007 | 12/2006 | |||
Goodwill on acquisition of minority participation in TIM Celular S.A. | 16,918 | 16,918 | ||
(ii) | ||||
Accumulated amortization | (10,605) | (10,210) | ||
6,313 | 6,708 | |||
(ii) The goodwill on TIM Celular S.A., which will be amortized in tem years through 2010, represents an economic justification for the future profitability forecast.
14 Property, plant and equipment
Consolidated | ||||||||||
03/2007 | 12/2006 | |||||||||
Annual | ||||||||||
average | ||||||||||
depreciation | Accumulated | |||||||||
rate % | Cost | depreciation | Net | Net | ||||||
Switching/transmission equip. | 14,29 | 6,673,532 | (3,792,005) | 2,881,527 | 2,962,710 | |||||
Loan-for-use handsets | 50 | 749,997 | (469,843) | 280,154 | 327,327 | |||||
Infrastructure | 33,33 | 1,505,146 | (614,441) | 890,705 | 905,585 | |||||
Leasehold improvements | 33,33 | 100,712 | (56,301) | 44,411 | 44,500 | |||||
Software and hardware | 20 | 988,149 | (532,928) | 455,221 | 477,232 | |||||
Assets for general use | 10 | 289,623 | (88,219) | 201,404 | 202,606 | |||||
Software licensing | 20 | 3,358,477 | (1,521,334) | 1,837,143 | 1,818,618 | |||||
Assets and installations in | ||||||||||
service | 13,665,636 | (7,075,071) | 6,590,565 | 6,738,578 | ||||||
Plots of land | 24,328 | - | 24,328 | 24,326 | ||||||
Construction work in progress | 310,828 | - | 310,828 | 422,960 | ||||||
14,000,792 | (7,075,071) | 6,925,721 | 7,185,864 | |||||||
The construction work in progress basically refers to the construction of new transmission units (Base Radio Broadcast Station - ERB) for network expansion.
24
Pursuant to CVM Deliberation 193, in the three-month period ended March 31, 2007, the subsidiaries capitalized R$ 2,619 (December 31, 2006 R$ 16,564) under Property, plant and equipment relating to financial charges on loans taken to finance the construction. (CVM No. 193/96).
New technology implementation
The subsidiaries´ operate their service network using TDMA and GSM. With the introduction of the GSM technology, on March 31, 2007 no provision for loss on recovery of property, plant and equipment was deemed necessary, as both technologies are to remain in operation at the companies until 2008, at least. The TDMA-related assets have been subjected to accelerated depreciation and must be fully depreciated by 2008.
15 Intangibles
The authorization for SMP (Personal Mobile Service) exploitation and radiofrequency use rights can be thus shown:
Consolidated | ||||||
Annual | ||||||
average | ||||||
amortization | ||||||
rate % | 03/2007 | 12/2006 | ||||
SMP exploitation and radiofrequency use rights | 7-20 | 2,811,713 | 2,811,713 | |||
Capitalized charges | 7-20 | 411,356 | 411,356 | |||
3,223,069 | 3,223,069 | |||||
Accumulated amortization | (1,362,508) | (1,300,448) | ||||
1,860,561 | 1,922,621 | |||||
SMP authorization and radiofrequency
The subsidiaries SMP (Personal Mobile Service) authorizations are granted by the terms signed in the years from 2001 through 2004 with Anatel, for exploration of this service. Previously, the subsidiaries TIM Sul S.A. (merged into TIM Celular S.A.) and TIM Nordeste S.A. (formerly Maxitel S.A., into which TIM Nordeste Telecomunicações S.A. was merged) had been granted a fifteen-year concession for the SMC (Mobile Communication Service), which was changed into authorization for the SMP in 2002. The remaining SMC authorization period, initially associated with the 800 MHz radiofrequency license is the SMP authorization period.
25
From 2001 through 2004, the subsidiaries were authorized by Anatel to use radio frequency blocs connected with the provision of SMP at 900 MHz and 1800 MHz.
Our radio frequency authorizations for 800MHz, 900MHz and 1800MHz radiofrequency bands begin to expire in September 2007 , being renewable only once in 15 years. ANATEL may reject the Company´s requests to renew these authorizations, if it finds that we are using the allocated spectrum in an inappropriate or irrational way, and have severely or repeatedly violated the applicable legislation, or if it finds it necessary to redistribute the spectrum.
16 Deferred charges
Consolidated | ||||
03/2007 | 12/2006 | |||
Preoperating expenses: | ||||
Third parties´ services | 228,665 | 228,665/ | ||
Personnel expenses | 79,367 | 79,367 | ||
Rentals | 48,914 | 48,914 | ||
Materials | 3,439 | 3,439 | ||
Depreciation | 10,202 | 10,202 | ||
Financial charges, net | 46,774 | 46,774 | ||
Other expenses | 5,990 | 5,990 | ||
423,351 | 423,351 | |||
Accumulated amortization | (201,345) | (190,761) | ||
222,006 | 232,590 | |||
17 Suppliers Trade payables
Parent Company | ||||
03/2007 | 12/2006 | |||
Local currency | ||||
Suppliers of materials and services | 1,714 | 1,960 | ||
1,714 | 1,960 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
Local currency | ||||
Suppliers of materials and services | 1,117,884 | 2,108,470 | ||
Interconnection (a) | 286,396 | 293,700 | ||
Roaming (b) | 1,119 | 14,444 | ||
Co-billing (c) | 162,029 | 137,886 | ||
1,567,428 | 2,554,500 | |||
Foreign currency | ||||
Suppliers of materials and services | 41,852 | 56,010 | ||
Roaming (b) | 33,982 | 32,348 | ||
75,834 | 88,358 | |||
1,643,262 | 2,642,858 | |||
26
(a) This refers to use of the network of other fixed and mobile cell telephone operators, where calls are initiated at TIM network and end in the network of other operators.
(b) This refers to calls made when customers are outside their registration area, and are therefore considered visitors in the other network (roaming);
(c) This refers to calls made by customers when they choose another long-distance call operator.
18 Loans and Financing
Consolidado | ||||||
Guarantees | 03/2007 | 12/2006 | ||||
Local currency | ||||||
Banco BBA Creditanstalt S.A - debit balance restated | ||||||
based on CDI variation plus interest at 3.3% p.a. | N.A. | - | 1,694 | |||
Banco do Nordeste: financing subject to pre-fixed interest of | Bank surety | |||||
11.5% p.a. and a 15% and 25% bonus on payment on maturity, | ||||||
This loan is the subject matter of a swap operation for which | ||||||
the rate is 69.8% and 76.90% of the CDI monthly variation . | 191,594 | 196,933 | ||||
BNDES (Banco Nacional do Desenvolvimento | Direct portion: bank | |||||
Econômico e Social): this financing bears interest at 3.85% | surety. | |||||
p.a. plus variation of the TJLP (long-term interest rate) as | Indirect part: TIM Brasil | |||||
disclosed by the Brazilian Central Bank . or of the | Serviços e Participações | |||||
"UMBNDES" of the Basket of Currencies plus res. Rate 635/87 | S.A. surety and blocked | |||||
(average BNDES external funding rate). The Basket of | part of services collected | |||||
Currencies financing was the subject matter of a swap to some | up to the loan debit | |||||
128% of the daily CDI rate. The TJLP-based financing was the | balance. | 89,606 | ||||
object of swap to 85.85% of the daily CDI rate. | 119,664 | |||||
BNDES (Banco Nacional de Desenvolvimento | TIM Brasil Serviços e | |||||
Econômico e social): this financing bears interest at an | Participações S.A. | |||||
average rate of 4.20% p.a., plus variation of the TJLP (long- | surety and blocked part | |||||
term interest rate) as disclosed by the Brazilian Central | of services collected up | |||||
Bank 44.0% of the TJLP-based loan was the object of a swap | to the loan debit balance | 1,138,245 | 1,137,182 | |||
for 91.43% of the daily CDI rate. | ||||||
BNDES (Banco Nacional de Desenvolvimento | Bank surety | |||||
Econômico e social): this financing bears interest at an | ||||||
average rate of 3.0% p.a., plus variation of the TJLP (long-term | ||||||
interest rate) as disclosed by the Brazilian Central Bank . The | ||||||
TJLP-based loan was the object of a swap for 81.80% of the | 51,144 | 51,095 | ||||
daily CDI rate. |
27
Consolidated | ||||||
Guaarantee | 03/2007 | 12/2006 | ||||
Local Currency | ||||||
Empréstimo Sindicalizado (a) a) the debit balance is | TIM Brasil Serviços e | |||||
restated based on the CDI rate variation plus a 0.90% p.a. | Participações S.A. | |||||
margin until 12/31/06, and from then on a margin established in | surety | |||||
accordance with the Net Consolidated Debt/Consolidated | ||||||
EBITDA ratio as shown in the financial statements. | 607,664 | 628,199 | ||||
Compror: Bank financing for payment of suppliers of | N.A. | |||||
goods and services, linked to foreign currency variations. | ||||||
64% of the agreements denominated in US dollars | ||||||
(average coupon of 4.50% p.a.) and 36% of the | ||||||
agreements denominated in Yen (average coupon of | ||||||
0.10% pa.a.) These agreements are under swap | ||||||
operations which result in cost of some 109.0% of the | ||||||
CDI daily rate. | - | 63,320 | ||||
Swap agreements supporting the above mentioned loans. | 14,056 | 22,354 | ||||
2,092,309 | 2,220,441 | |||||
Current portion | (273,485) | (340,762) | ||||
Long-term portion | 1,818,824 | 1,879,679 | ||||
The syndicated loan taken by the subsidiary TIM Celular S.A. contains restrictive clauses relating to certain financial índices, which have been complied with. Among the lenders under this type of agreement are the following financial institutions: HSBC Bank Brasil S.A. Banco Múltiplo, Banco ABN AMRO Real S.A., Banco BNP Paribas Brasil S.A., Banco Bradesco S.A., Banco do Brasil S.A., Banco Itaú BBA S.A., Banco Santander Brasil S.A., Banco Société Générale Brasil S.A., Banco Votorantim S.A. e Unibanco União de Bancos Brasileiros S.A.
The subsidiaries entered into swap operations as a safeguard against devaluation of the Brazilian currency (Real) in relation to foreign currencies and changes in the fair value of financing bearing prefixed interest rates and TJLP. The term of these swap operations are the same as those of the respective loans.
The long-term portions of loans and financing at December 31, 2007 mature as follows:
Consolidated | ||
2008 | 475,974 | |
2009 | 534,559 | |
2010 | 234,487 | |
2011 | 232,334 | |
2012 onwards | 341,470 | |
1,818,824 | ||
28
19 Labor obligations
Parent Company | ||||
03/2007 | 12/2006 | |||
Payroll taxes | 366 | 101 | ||
Labor provisions | 694 | 653 | ||
Employees´ withholding | 46 | 1 | ||
1,106 | 755 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
Salaries and fees | 12 | 2 | ||
Payroll taxes | 23,562 | 23,514 | ||
Labor provisions | 86,090 | 68,314 | ||
Employees´ withholding | 4,674 | 663 | ||
114,338 | 92,493 | |||
20 Taxes, rates and contributions
Parent Company | ||||
03/2007 | 12/2006 | |||
ICMS | - | 6 | ||
Other | 7 | 59 | ||
7 | 65 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
IRPJ and CSL | 24,330 | 5,830 | ||
ICMS | 265,286 | 268,203 | ||
COFINS | 36,173 | 36,838 | ||
PIS | 7,756 | 7,982 | ||
FISTEL | 89,120 | 14,652 | ||
FUST/FUNTTEL | 7,311 | 7,895 | ||
IRRF | 2,260 | 2,851 | ||
ISS | 19,339 | 20,366 | ||
Other | 8,172 | 5,647 | ||
459,747 | 370,264 | |||
Included in the liabilities recognized on March 31, 2007 is the appropriation of FISTEL fee expenses on subscriber base corresponding to the quarter then ended. On April 2, 2007 the Company paid the FISTEL fee (subscriber base) for the year 2007, in the amount of R$ 341,075.
29
21 Authorizations payable
Consolidated | ||||
03/2007 | 12/2006 | |||
SMP Exploitation rights | ||||
Authorizations obtained | 164,560 | 164,560 | ||
Payments | (157,219) | (157,219) | ||
Monetary restatement | 37,807 | 37,476 | ||
45,148 | 44,817 | |||
Current portion | (38,545) | (38,275) | ||
Long-term portion | 6,603 | 6,542 | ||
Payables are restated based on the variation of IGP-DI variation plus interest at 1% p.m.
Authorizations payable as of March 31, 2007 in the long-term mature as follows:
Consolidated | ||
2008 | 1,320 | |
2009 | 1,320 | |
2010 | 1,321 | |
2011 | 1,321 | |
2012 onwards | 1,321 | |
6,603 | ||
22 Provision for contingencies
The Company and its subsidiaries are parties to certain lawsuits (labor, tax, regulatory and civil) arising in the normal course of their business, and have recorded provisions when management understands that the risk of loss is deemed probable, based on the opinion of their legal advisors.
The provision for contingencies is thus composed:
Parent Company | ||||
03/2007 | 12/2006 | |||
Civil | 642 | 402 | ||
Labor | 2,042 | 2,766 | ||
2,684 | 3,168 | |||
Consolidated | ||||
03/2007 | 12/2006 | |||
Civil | 51,394 | 46,895 | ||
Labor | 38,749 | 37,930 | ||
Tax | 38,753 | 38,927 | ||
Regulatory | 9,181 | 4,381 | ||
138,077 | 128,133 | |||
30
The changes in the provision for contingencies can be summarized as follows:
Parent Company | ||||||||
Reversals | ||||||||
12/2006 | Additions | and | 03/2007 | |||||
Payments | ||||||||
Civil | 402 | 240 | - | 642 | ||||
Labor | 2,766 | - | (724) | 2,042 | ||||
3,168 | 240 | (724) | 2,684 | |||||
Consolidated | ||||||||
Reversals | ||||||||
12/2006 | Additions | and Payments | 03/2007 | |||||
Civil | 46,895 | 4,499 | - | 51,394 | ||||
Labor | 37,930 | 1,543 | (724) | 38,749 | ||||
Tax | 38,927 | - | (174) | 38,753 | ||||
Regulatory | 4,381 | 4,800 | - | 9,181 | ||||
128,133 | 10,842 | (898) | 138,077 | |||||
Civil contingencies
Several legal and administrative processes have been filed against the Company by consumers, suppliers, service providers and consumer protection agencies, dealing with various issues arising in the regular course of business. It is the Company´s policy to analyze each legal or administrative process to determine whether it involves probable, possible or remote risk of contingencies. In doing so, the Company always takes into account the opinion of lawyers engaged to conduct the processes. The evaluation is periodically reviewed, with the possibility of being modified over the processes due to facts of events such as case law changes.
Consumer lawsuits
Approximately 26,200 individual lawsuits (December 31, 2006 23.800) have been filed against the subsidiaries, mostly by consumers claiming for settlement of matters arising from their relationship with the Company. Among these, the allegedly undue collection, contract cancellation, defects of equipment and non-compliance with delivery deadlines stand out. Provisions have been set up for those processes involving probable losses.
31
Collective actions
There are four collective actions against subsidiaries involving the risk of probable loss, which can be summarized as follows: (i) a suit against TIM Celular S.;A. claiming for the installation of a service unit for personal assistance in Rio Branco, AC.; (ii) a suit against TIM Nordeste S.A. in the state of Pernambuco questioning the Company´s policy defective phone replacement , allegedly in disagreement with the manufacturer´s warranty terms; and (iii) a suit against TIM Nordeste S.A. in the state of Ceará, claiming for the Company´s obligation to replace cell phone sets which have been the subject of fraud in that state; (iv) a suit against TIM Nordeste S.A. in the state of Bahia, claiming for prohibition of charges on long-distance calls to and from the municipalities of Petrolina , PE and Juazeiro, BA., because these are bordering areas. No provisions have been recorded for these contingencies, given the obligations involved therein and the impossibility of accurately quantifying the possibility of losses at the current stage of the processes.
Other Actions and Proceedings
The indirect subsidiary TIM Nordeste S.A. has been sued by the Federal Audit Court at administrative level with the possibility of being submitted to a court of justice, for allegedly defaulting on payment of R$ 25,000 representing interest and monetary restatement on the second installment due on acquisition the Area 9 (Bahia and Sergipe) license. As the risk of an unfavorable outcome for the Company is deemed possible by both internal and external advisors, no provision has been set up.
The indirect subsidiary TIM Nordeste S.A. is also defendant in an action filed by the former legal services providers, the law firm Mattos & Callumby Lisboa Advogados, in Rio de Janeiro. They claim for success fees allegedly due under a service agreement for filing court injunctions against interest and monetary restatement on purchase prices of Maxitel S.A.´s Band B. As the risk of an unfavorable outcome for the Company is deemed possible by both internal and external advisors, no provision has been set up.
Labor contingencies
These refer to claims filed by both former employees in connection with salaries, salary differences and equalization, overtime, variable compensation/commissions and former employees of service providers who, based on pertinent legislation, claim for the Company´s and/or its subsidiaries´ accountability for labor obligations defaulted on by their outsourced employers.
Labor claims
Of the 1,778 labor suits filed against the Company and its subsidiaries (December 31, 2006 1,627) over 60% involve claims against service providers, concentrated on certain companies from São Paulo, Rio de Janeiro and Recife.
32
Still on third parties´ claims, they partly relate to specific projects of service agreement review, often ended in rescission in 2006 and winding up of the companies and termination of employees involved. A further significant portion of contingencies refers to organizational restructuring, among which the discontinuance of the Client Relationship Centers (call centers) in Fortaleza, Salvador and Belo Horizonte, and the termination of 800 own employees and outsourced personnel stand out. All processes involving the risk of loss have been provided for by the Company.
The assessment of possible success and the amount of the related contingency are subject to periodical review, taking into account the decisions issued during the processes, regulatory changes or modification of Jurisprudence and Law Abridgement orientation given by higher courts.
Occupational Accidents
With the enactment of the Constitutional Amendment no. 45/2004, the litigations involving occupational accidents that resulted in claims for damages, previously judged by the State Court began to be judged by the Labor Courts. Given the issues under litigation and the fact that indemnification is determined by arbitration, thus involving high subjectiveness, provisions for these suits were set up, based on estimated losses totaling R$ 1,800.
DRT (Regional Labor Offices)
The indirect subsidiary TIM Nordeste S.A. was assessed for R$ 778 by the Regional Labor Office from Minas Gerais, on charges of allegedly irregular engagement of third parties. The risk of loss was deemed probable by the Company´s advisors, and an adequate provision was recorded.
Tax Contingencies
IR (income tax) and CSSL (social contribution on net income)
In 2005, the indirect subsidiary TIM Nordeste S.A. was assessed by the Internal Revenue Secretariat of the State of Minas Gerais for R$ 126,933, for the following reasons: (i) taxation of monetary variations on swap operations and exchange variation on unsettled loans; (ii) a separate fine for default on payment of social contribution on an estimated monthly basis for the year 2002 and part of 2001; (iii) default on payment of corporate income tax on an estimated monthly basis for the year 2002; and (iv) remittance of interest (IRRF) a voluntary denunciation without payment of arrears charges. These assessments are now being discussed the taxing authorities. Based on its internal and external advisors´ opinion, the Management estimates probable losses on these processes at R$ 32,750, and accordingly, found it advisable to record it against the Income Tax and Social Contribution Expenses.
33
ICMS
In 2003 and 2004 the subsidiary TIM Celular S.A. was assessed by the Internal Revenue Secretariat of the State of Santa Catarina for R$ 85,114 (current value), mainly relating to dispute on the levying of ICMS on certain services provided. The Company is currently discussing these assessments with the tax authorities. According to its internal and external lawyers, the probable losses thereon, duly provided for, amount to R$ 2,650.
On October 12, 2006 the subsidiary TIM Celular S.A. adhered to the Revigorar II State of Santa Catarina Economic Recovery Program, whereby it was agreed to settle the tax debt arising from reversed ICMS rate differences on acquisition of phone sets from other Brazilian states. With the elimination of the process, the previously recorded R$ 11,779 provision was reversed.
Regulatory Contingencies
Due to default on some SMPs provisions and quality targets defined under the PGMQ-SMP General SMP Quality Goals Plan ANATEL started some procedures for determining Default on Obligations PADO, involving the subsidiaries.
The subsidiaries have endeavored to avoid being assessed, with arguments, mostly of technical and legal nature, that may contribute to reduce significantly the initial fine charged or event definitively file the PADO, with no sanctions. The related provision was set up based on the amount of fines charged, the risk of loss involved being classified probable (Note 36).
Contingencies involving possible losses
Civil, Labor, Regulatory and Tax-related actions have been filed against the Company and its subsidiaries involving risk of loss that is classified as possible or remote by the management and the Companys lawyers. No provision has been set up for these contingencies.
Consolidated | ||||
03/2007 | 12/2006 | |||
Civil | 67,053 | 67,785 | ||
Labor | 52,415 | 42,137 | ||
Tax | 668,372 | 625,265 | ||
Regulatory | 21,260 | 22,868 | ||
809,100 | 758,055 | |||
Below, a description of the main suits involving possible loss:
34
IR and CSSL
On October 30, 2006, the indirect subsidiary TIM Nordeste S.A. was assessed for R$ 331,171, for various reasons, the respective tax assessment notices being part of the same administrative process referring to IRPJ, CSL and a separate fine. Most of these tax assessment notices refer to amortization of goodwill on the Telebrás System privatization and the related tax deductions. Under art. 7 of Law 9,532/97, the proceeds of goodwill amortization are to be included in the income of the company resulting from merger, split or acquisition, where a company holds investment in the other, and pays for it using goodwill based on the investee´s prospective profitability. Also, this usually performed in the market, in compliance with CVM Instruction no. 319/99. After timely imputnaging the tax assessment notices, the subsidiary now awaits the taxing authorities´ decision thereon.
In September 2003 the subsidiary TIM Nordeste S.A. was assessed by the Internal Revenue Secretariat of the State of Ceará for R$ 12,721 referring to: (i) disallowance of R$ 8,402 expenses included in the IRPJ determination for the period from 1999 through 2001; (ii) R$ 3,208 of differences in CSLL payments for the years from 1998 through 2001; (iii) differences of R$ 334 and R$ 777, respectively, in the payment of PIS and COFINS for the years from 1998 through 2002. The Company filed an impugnation and a voluntary appeal against this assessment.
PIS and COFINS
In 2004, the indirect subsidiary TIM Nordeste S.A. was assessed in connection with PIS and COFINS due on exchange variation arising from revenue generated in 1999. Both assessment notices amounted to R$ 30,913. Because this is a controversial matter involving interpretation of applicable legislation, a provision was set up, in 2004, for the same amount. On March 13, 2006 the decision was issued on the action filed by the company against Law 9718 of November 27, 1998, with no right to further appeal. The company alleged that this law was unconstitutional concerning the expansion of the tax basis of calculation, preventing the collection of PIS and COFINS on non-operating revenue. In view of the final decision, the Management requested extinction of the tax assessment against the subsidiary, concerning PIS and COFINS on exchange variation and reversed, in 2006, the provision set up in 2004 (Note 28).
FUST Telecommunications Service Universalization Fund
On December 15, 2005, Anatel issued its Summary no. 07 aimed at collecting contributions to the FUST out of interconnection revenues earned by providers of telecommunications services, as from the date of enactment of Law 9998 of August 17, 2000. The Company still believes that based on applicable legislation (including the sole paragraph of article 6 of Law 9998/00), the above revenues are not subject to the FUST charges, and accordingly, the Management has taken the necessary measures to protect their interests. In October and November 2006, ANATEL assessed the Company´s subsidiaries for R$ 82,096 referring to FUST on interconnection revenues and arrears fine, all because of Summary 07/05. Currently Anatels intended collection of FUST on interconnection revenues earned by the Company is suspended, because of a favorable sentence to the Company
35
ICMS
In 2006 the indirect subsidiary TIM Nordeste S.A. was assessed by the taxing authorities from the State of Piauí for R$ 7,308, in connection with the payment of a difference between intrastate and interstate ICMS rate on fixed assets items for use and consumption and the determination of ICMS basis of calculation for acquisition of goods intended for sale. The Company is impugnating these assessments at administrative level.
23 Obligations arising from discontinuance of assets
In compliance with CVM/SNC/SEO Circular Letter 01/2007, the obligations arising from discontinuance of assets were recorded at their present value. As a consequence, financial expenses of R$ 8,221 were recorded in the statement of income for the quarter ended March 31, 2007 (same period in 2006 R$ 2,494).
The changes occurred during the quarter ended March 31, 2007 can be thus shown:
Consolidated | ||
Opening balance | 158,168 | |
Aditions | 299 | |
Monetary variation | 8,221 | |
Closing balance | 166,688 | |
24 Shareholders´ equity
a. Capital
As authorized by the Administrative Council, regardless of the statutory reform, the Company´s capital is authorized to increase its capital by up to 2,500,000,000,000 (two trillion and five hundred billion) common or preferred shares.
Capital subscribed and paid-in comprises shares without par value, thus distributed:
03/2007 | 12/2006 | |||
Number of common shares | 793,544,276,988 | 793,544,276,988 | ||
Number of preferred shares | 1,536,170,582,578 | 1,536,170,582,578 | ||
2,329,714,859,566 | 2,329,714,859,566 | |||
36
b. Capital reserves
Special Goodwill Reserve
This reserve was set up during the corporate reorganization process in 2000. The portion of the special reserve corresponding to the tax benefit obtained may be capitalized at the end of each fiscal year for the benefit of the controlling shareholder, with no need for issuance of new shares. The respective capital increase will be subject to preemptive rights of the minority shareholders, in proportion to their shareholdings, by type and class, at the time of new issuance, and the amounts payable during the year in connection with this right must be delivered directly to the controlling shareholder, in accordance with Instruction No. 319/99 of the Brazilian Securities Commission (CVM nº 319/99).
c. Revenue Reserves
Legal Reserve
This refers to the 5% (five percent) of net income for every year ended December 31 to be appropriated to the legal reserve, which should not exceed 20% (twenty percent) of capital.. Also, the Company is not authorized to set up a legal reserve when it exceeds 30% (thirty percent) of capital plus capital reserves. This reserve can be used only for capital increase or compensation of accumulated losses.
Reserve for Expansion
This reserve , which is set up based on paragraph 2, article 40 of the by-laws and article 194 of Law 6.404/76, is intended to fund investment and plant expansion projects.
d. Dividends
Dividends are calculated in accordance with the Bylaws and Brazilian Corporate Law (Lei das Sociedades por Ações).
As stipulated in its by-laws, the Company shall distribute an amount equivalent to 25% of adjusted net income as minimum dividend every year ended December 31, provided there are funds available for distribution.
Preferred shares are nonvoting and take priority on (i) the payment of capital at no premium, and (ii) payment of a minimum noncumulative dividend of 6% p.a. on the total obtained from dividing the capital stock representing this type of shares by the total number of the same class of shares issued by the Company.
In order to comply with Law 10,303/01, the Companys bylaws were amended, including the First Paragraph of Section 10, which ensures the holders of preferred shares, every year, the right to receive stock dividends corresponding to 3% (three percent) of net earnings per share, based on the balance sheet most recently approved, whenever the dividend established according to this criterion exceeds the dividend calculated according to the criteria previously established, described in the preceding paragraph.
37
25 Net operating revenue
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Telecommunications service | ||||
Subscription | 112,682 | 139,641 | ||
Utilization | 1,583,808 | 1,183,965 | ||
Network use | 1,111,740 | 650,225 | ||
Long distance | 462,899 | 288,887 | ||
VAS Additional services | 253,469 | 180,964 | ||
Other | 21,348 | 21,964 | ||
3,545,946 | 2,465,646 | |||
Goods sold | 349,388 | 423,312 | ||
Gross operating revenue | 3,895,334 | 2,888,958 | ||
Deductions from gross revenue | ||||
Taxes levied | (822,451) | (621,699) | ||
Discounts given | (189,943) | (156,679) | ||
Other | (39,767) | (44,858) | ||
(1,052,161) | (823,236) | |||
2,843,173 | 2,065,722 | |||
26 Cost of services rendered and goods sold
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Personnel | (24,755) | (33,105) | ||
Third parties´ services | (80,495) | (69,474) | ||
Interconnection charges | (788,568) | (347,506) | ||
Depreciation and amortization | (330,993) | (323,701) | ||
Telecommunications surveillance fund (FISTEL) | (2,845) | (2,301) | ||
Other | (36,828) | (38,185) | ||
Cost of services rendered | (1,264,484) | (814,272) | ||
Cost of goods sold | (263,619) | (232,840) | ||
Total cost of services rendered and goods sold | (1,528,103) | (1,047,112) | ||
38
27 Selling expenses
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Personnel | (79,486) | (64,661) | ||
Third parties´ services | (351,751) | (248,336) | ||
advertising | (85,639) | (94,983) | ||
Allowance for doubtful accounts | (172,968) | (89,381) | ||
Telecommunications surveillance fund | (111,291) | (91,669) | ||
Depreciation and amortization | (90,131) | (72,704) | ||
Other | (23,061) | (23,160) | ||
(914,327) | (684,894) | |||
28 General and administrative expenses
Parent Company | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Personnel | (956) | (1,861) | ||
Third parties´ services | (1,470) | (5,910) | ||
Other | (217) | (143) | ||
(2,643) | (7,914) | |||
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Personnel | (47,932) | (45,238) | ||
Third parties´ services | (92,443) | (96,010) | ||
Depreciation and amortization | (98,655) | (78,033) | ||
Other | (20,119) | (24,187) | ||
(259,149) | (243,468) | |||
29 Other operating revenues (expenses) - net
Parent Company | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Revenues | ||||
Reversal of provision for contingencies | 724 | 979 | ||
Other operating revenues | 1 | - | ||
725 | 979 | |||
Expenses | ||||
Goodwill amortization | (395) | (395) | ||
Provision for contingencies | (240) | (775) | ||
(635) | (1,170) | |||
Other operating revenues (expenses) net | 90 | (191) | ||
39
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Revenues | ||||
Fines on telecommunications services | 10,658 | 5,658 | ||
Reversal of provision for contingencies | 898 | 33,808 | ||
Other operating revenues | 11,546 | 4,509 | ||
23,102 | 43,975 | |||
Expenses | ||||
Amortization of deferred charges | (32) | (1,103) | ||
Amortization of concessions | (62,059) | (62,059) | ||
Taxes, rates and contributions | (3,480) | (16,506) | ||
Goodwill amortization | (395) | (395) | ||
Provision for contingencies | (10,842) | (11,627) | ||
Losses on lawsuits | (6,102) | (6,657) | ||
(82,910) | (98,347) | |||
Other operating revenues (expenses) net | (59,808) | (54,372) | ||
(a) In 2006, it mainly refers to reversal of the provision for PIS and COFINS set up by the indirect subsidiary TIM Nordeste S.A. (Note 22).
30 Financial revenues
Parent Company | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Interest on short-term investments in the money market | 417 | 62 | ||
Monetary restatement | 156 | 315 | ||
Other revenues | - | 50 | ||
573 | 427 | |||
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Interest on short-term investments in the money market | 10,700 | 39,435 | ||
Monetary restatement | 6,899 | 710 | ||
Interest on trade receivables | 3,684 | 3,433 | ||
Exchange variation | 11,051 | 49,960 | ||
Other revenues | 2,288 | 4,673 | ||
34,622 | 98,211 | |||
40
31 Financial expenses
Parent Company | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
CPMF | (13) | (259) | ||
Other expenses | (2) | (2) | ||
(15) | (261) | |||
32 Non-operating income
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Revenues | ||||
Disposal of property, plant and equipment | 4,731 | 1,169 | ||
4,731 | 1,169 | |||
Expenses | ||||
Cost of property, plant and equipment disposed of | (5,887) | (751) | ||
Provision for contingencies (a) | - | (1) | ||
Other operating expenses | (5,887) | (752) | ||
Non-operating income | (1,156) | 417 | ||
33 Income tax and social contribution expenses and tax losses
Parent | ||||||
Company | Consolidated | |||||
03/2006 | 03/2006 | |||||
Adjusted | 03/2007 | Adjusted | ||||
Income tax for the quarterly | - | (17,751) | (30,296) | |||
Social contribution for the quarterly | - | (6,476) | (10,908) | |||
- | (24,227) | (41,204) | ||||
Deferred income tax | 1,882 | - | 3,670 | |||
Deferred social contribution | 678 | - | 1,300 | |||
2,560 | - | 4,970 | ||||
Amortization of goodwill on privatization | - | (12,613) | (12,613) | |||
2,560 | (36,840) | (48,847) | ||||
Below, the reconciliation of income tax and social contribution expenses calculated at the applicable tax rates plus the amounts reflected in the income for the year:
41
Parent | ||
Company | ||
03/2006 | ||
Adjusted | ||
Pretax income (loss) | (91,210) | |
Combined tax rate | 34% | |
Income tax and social contribution at the combined tax rate | 31,011 | |
(Additions)/Exclusions: | ||
Equity pickup (net of JSCP) | (28,309) | |
Amortization of goodwill reserve | (134) | |
Other | (8) | |
(28,451) | ||
Income tax and social contribution credited to the income for the Quarterly | 2,560 | |
Tax rate in effect | -2.81% | |
Consolidated | ||||
03/2006 | ||||
03/2007 | Adjusted | |||
Pretax income (loss) | 17,375 | (52,714) | ||
Combined tax rate | 34% | 34% | ||
Income tax and social contribution at the combined tax rate | (5,908) | 17,923 | ||
(Additions)/Exclusions: | ||||
Unrecognized tax losses and temporary differences | (18,319) | (54,157) | ||
Amortization of goodwill on privatization | (12,613) | (12,613) | ||
(30,932) | (66,770) | |||
Income tax and social contribution credited to the income for the | ||||
Quarterly | (36,840) | (48,847) | ||
Accumulated tax losses
The Company´s tax losses and negative social contribution basis, the credits on which are only recognized if there are consistent prospects of realization, can be summarized as follows:
03/2007 | 12/2006 | |||
TIM Celular S.A. | 3,653,308 | 3,684,140 | ||
TIM Nordeste S.A. | 2,397,870 | 2,397,426 | ||
TIM Participações S.A. | 16,533 | 14,523 | ||
6,067,711 | 6,096,089 | |||
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34 Financial instruments and risk management
The following are the main risks to which the Company and its subsidiaries are exposed:
(i) Exchange rate risks
The exchange rate risk relates to the possibility of the subsidiaries to compute losses resulting from fluctuations in exchange rates, thus increasing debt balances of loans obtained in the market and the corresponding financial charges. In order to mitigate this kind of risk, the Company carries out hedge contracts with financial institutions.
As of March 31, 2007 the subsidiaries loans and financing indexed to the UMBNDES exchange variance of a basket of currencies are covered by hedge contracts. Income or loss resulting from these swap contracts is charged to the income.
There are no significant financial assets indexed to foreign currencies.
(ii) Interest rate risks
The interest rate risks relate to:
- The possibility of changes in the fair value of financing indexed to prefixed interest rates, in the event the latter do not reflect the actual market conditions. In order to reduce this type of risk the subsidiaries sign swap contracts with financial institutions, the income or loss on these contracts is recorded as income;
- The possibility of changes in the fair value of TJLP-indexed loans, if these rates do not ratably follow CDI rates. Income or loss on these contracts is recorded as income;
- The possibility of an unfavorable change in interest rates, with a resulting increase in financial expenses incurred by the subsidiaries, due to the fact that the interest rate of part of their swap debt and obligations is floating. As of March 31, 2007, the subsidiaries financial resources are mostly invested in CDI, which partially reduces this risk.
(iii) Credit risk inherent in services rendered
This risk is related to the possibility of the subsidiaries computing losses originating from the difficulty in collecting the amounts billed to customers. In order to mitigate this risk, the Company and its subsidiaries perform credit analysis that assist the management of risks related to collection problems, and monitor accounts receivable from subscribers, blocking the telephone, in case customers default on payment of their bills.
43
(iv) Credit risk related to the sale of telephone sets and prepaid telephone cards
The policy adopted by the Companys subsidiaries for the sale of telephone sets and distribution of prepaid telephone cards is directly related to credit risk levels accepted during the normal course of business. The choice of partners, the diversification of the accounts receivable portfolio, the monitoring of loan conditions, the positions and limits defined for orders placed by traders, the adoption of guarantees are procedures adopted by the subsidiaries to minimize possible collection problems with its commercial partners. There is no single client who accounts for more than 10% of net receivables from sales of goods as of March 31, 2007 and 2006, or sales revenues during the years ended 2007 and 2006.
(v) Financial credit risk
This risk relates to the possibility of the Company and its subsidiaries computing losses originating from the difficulty in realizing its short-term investments and swap contracts. The Company and its subsidiaries minimize the risk associated to these financial instruments by investing in well-reputed financial institutions.
There is no concentration of available resources in connection with work, service, concessions or rights that have not been mentioned above that, if suddenly eliminated, could severely impact the operations of the subsidiaries.
Market value of financial instruments
The estimated market value of financial instruments, especially cash and cash equivalents, accounts receivable and short-term financial instruments approximates their book value, given their short duration. Below, the financial instruments with market value different from their book value:
Consolidated | ||||||||
03/2007 | 12/2006 | |||||||
Book | Market | Book | Market | |||||
value | value | value | value | |||||
Loans and financing | 2,078,253 | 2,070,419 | 2,198,087 | 2,198,466 | ||||
Swap contracts | 14,056 | 1,174 | 22,354 | 13,103 | ||||
2,092,309 | 2,071,593 | 2,220,441 | 2,211,569 | |||||
The market value of loans and financing and swap contracts was determined based on future discounted cash flow and at interest rates applicable to similar instruments which involve the same risks and conditions or are based on their market quotations.
The market values were estimated at a specific time, using available information and the Companys own evaluation methods. Any change in the underlying assumptions may significantly affect the estimates.
44
35 Pension plans and other post-employment benefits
Supplementary Social Security Plan
On August 07, 2006, TIM Participações S.A.´s Administrative Council approved the implementation of a Supplementary Social Security Plan of the types PGBL and VGBL for the Company and its subsidiaries TIM Celular S.A. e TIM Nordeste S.A. , by Itaú Vida e Previdência S.A. All employees still not entitled to social security benefits sponsored by the Company and its subsidiaries became eligible for this Supplementary Social Security Plan.
Term of atypical contractual relationship
The Companyis the succeeding company arison from the spin off of Telecomunicações do Paraná S.A. TELEPAR, and as such sponsors the supplementary retirement plans instituted in 1970 under a Term of Collective Agreement and ratified by the Term of Atypical Contractual Relationship signed by the Company and trade uions representative of the professional categories then existing.
The agreement covers 86 employees contracted before December 31, 1982, and grants them a supplementary pension. This right is granted only if these employees retire after a minimum work period (30 years for men and 25 years for women).
With the split of Telebrás i June 1998, the Company opted for discontinuing this supplementary retirement plan, and accordingly, the participants were entitled to payment in cash for the accumulated benefits or transfer of their accumulated rights to the PBS Sistel plan.. Most for the participants opted for payment in cash. The remainder of the provision will be used for covering benefits due to employees have not made their option (4 employees as of March 31, 2007 and December 31, 2006).
TIMPREV and SISTEL
TIM Participações S.A. and its subsidiaries TIM Nordeste S.A. and TIM Celular S.A., have sponsored a private defined-benefit pension plan for a group of TELEBRÁS system´s former employees, which is managed by Fundação Sistel de Seguridade Social SISTEL, as a consequence of the legal provisions applicable to the privatization process of these companies in July 1998.
If one considers that, in 1999 and 2000 the sponsors of the pension plans managed by SISTEL had already negotiated conditions for the creation of individual pension plans per sponsoring company and maintenance of joint liability only in relation to the participants already assisted on January 31, 2000, the Companies and their subsidiaries in 2002, like other companies resulting from the former TELEBRÁS system, started the creation of a pension plan for defined contributions meeting the most modern social security standards adopted by private companies and allowing the possibility of migration to this plan of the employee groups linked to SISTEL.
45
On November 13, 2002, the Brazilian Secretariat for Supplemental Pension Plans, through official ruling No. 1917 CGAJ/SPC, approved the statutes of the new pension plan, denominated Statutes of the TIMPREV Benefits Plan, defined contributions, which provide for new conditions for benefits granting and maintenance, as well as the rights and obligations of the Plan Managing Entity, the sponsoring companies, participants and the beneficiaries thereof.
Under the new plan, the contribution on the part of the sponsoring company shall be of 100% of the basic participants´ contribution, and the managing entity of TIMPREV shall ensure, on the approved statutory terms and conditions, the benefits listed below, not being held liable for granting any other, even if the government-sponsored social security agency starts granting them to beneficiaries:
However, as not all of the Company´s and its subsidiaries´ employees have migrated to TIMPREV plan, the pension and health care plans deriving from the TELEBRÁS system briefly listed below remain:
PBS: benefits plan of SISTEL for defined benefits, which includes the employees paying contributions to the plan (active) who participated in the plans sponsored by the companies of the former TELEBRÁS system;
PBS Assistidos: private pension plan for employees receiving benefits (inactive), for multi-sponsored benefits;
Convênio de Administração: for managing pension payment to retirees and pensioners of the predecessors of the subsidiaries;
PAMEC: health care plan granted to pensioners of the predecessors of the subsidiary companies;
PBT: plan for defined benefits for pensioners of the predecessors of the company and its subsidiaries;
PAMA: health care plan for retired employees and their dependents, on a shared cost basis.
In accordance with the rules established by NPC-26 issued by the Institute of Independent Auditors of Brazil IBRACON, and approved by CVM Deliberation No. 371, the actuarial position of these plans represents a surplus not recorded by the Company in view of the impossibility to recover such amounts and also considering that the amount of contributions will not be reduced for the future sponsor.
46
On January 31, 2006, TIM Participações S.A.´s Administrative Council approved the proposed migration of pension plans sponsored by TIM Celular S.A. and TIM Nordeste S.A. at Fundação Sistel de Seguridade Social to a multisponsored plan linked to the HSBC Fundo de Pensão. Throught 2006, the entities in question conducted migration studies, having registered the respective Terms of Transfer with the Ministry of Social Security´s Secretariat of Supplementary Social Security in December 2006.
In the three-month period ended March 31, 2007, the contributions to pension plans and other post-employment benefits totaled R$ 62 (R$ 65 in the same period of 2006).
36 Insurance (unaudited)
It is the Company´s and its subsidiaries´ policy to monitor risks inherent in their operations, which is why as of March 31, 2007, they have insurance coverage against operating risks, third party liability, health, among others. The Management of the Company and its subsidiaries find the insurance coverage sufficient to cover any losses. The table below shows the main assets, liabilities or interests insured and the respective amounts:
Types | Amounts insured | |
Operating Risks | R$ 7,542,481 | |
General Third Party Liability RCG | R$ 4,600 | |
100% Fipe Table, | ||
Cars (Executive and Operational Fleets) | R$ 1.000 for RC (DM and DC) |
37 Commitments
ANATEL
Under the terms of the Authorization for Mobile Personal Service (SMP) Exploitation, the subsidiaries have committed to implement mobile personal telecommunications cover for the assigned area, on a phased basis, within the quality standards established by such authorization. Should said terms fail to be met, the subsidiaries are subject to penalties.
ANATEL has brought administrative proceedings against the subsidiaries for (i) noncompliance with certain quality service indicators in 2003, 2004 and 2005 as established by the licenses for Personal Mobile Service (SMP); and (ii) noncompliance with other obligations assumed under the Terms of Authorization.
47
The subsidiaries contested that (i) noncompliance with quality indicators were mainly due to the migration from the Cellular Mobile Service (SMC) to the Personal Mobile Service (SMP), the change in the long-distance system, and the implementation of the GSM network; and (ii) in certain cases the obligations assumed under the Terms of Authorization were not met, whereas in others, this was due to several factors, many of which involuntary and unrelated to the companies´ activities and actions. The subsidiaries are unable to foresee the outcome of Anatel processes at the moment. The provision for regulatory contingencies reflected in the balance sheet corresponds to losses expected by the Management (Note 22).
38 Supplementary information
Parent Company | Consolidated | |||||||
03/2006 | 03/2006 | |||||||
03/2007 | Adjusted | 03/2007 | Adjusted | |||||
Operating Activities | ||||||||
Loss for the Quarterly | (19,465) | (88,650) | (19,465) | (101,561) | ||||
Adjustments for reconciliation of income to cash and cash | ||||||||
equivalents: | ||||||||
Depreciation and amortization | 395 | 395 | 582,265 | 537,995 | ||||
Equity pickup | 17,470 | 83,263 | - | - | ||||
Residual value of permanent assets written off | - | - | 5,887 | 751 | ||||
Deferred income tax and social contribution | - | (2,560) | 12,613 | 7,643 | ||||
Interest and monetary and exchange variation on loans | - | - | 55,922 | 72,475 | ||||
Monetary restatement of obligations arising from | ||||||||
discontinuance of assets | - | - | 8,222 | 2,494 | ||||
Interest on short-term investments in the money market | (417) | (62) | (10,700) | (39,436) | ||||
Allowance for doubtful accounts | - | - | 172,968 | 89,381 | ||||
Decrease (increase) in operating assets | ||||||||
Trade receivables | - | - | (178,970) | 116,780 | ||||
Taxes and contributions recoverable | (248) | 16,992 | (5,383) | 44,039 | ||||
Inventories | - | - | 48,036 | 66,734 | ||||
Related-party transactions | - | - | (798) | 604 | ||||
Prepaid expenses | - | - | (241,205) | (268,210) | ||||
Interest received on own capital | - | 64,750 | - | - | ||||
Other current assets | (190) | (105) | (5,886) | (5,780) | ||||
Other long-term assets | (1,284) | (551) | (9,983) | (6,890) | ||||
Increase (decrease) in operating liabilities | ||||||||
Labor obligations | 352 | 228 | 21,845 | 13,012 | ||||
Suppliers Trade payables | (246) | (748) | (421,791) | (540,120) | ||||
Taxes, rates and contributions | (57) | (20,683) | 350,237 | (82,781) | ||||
Provision for contingencies | (484) | 290 | 9,944 | (25,501) | ||||
Related-party transactions | 1,284 | - | (35,708) | (34,210) | ||||
Other current liabilities | - | (194) | (15,885) | 199 | ||||
Net cash and cash equivalents generated by operating activities | (2,890) | 52,365 | 322,165 | (152,382) | ||||
Investment activities | ||||||||
Short-term investments in the money market | 3,699 | 4,901 | 597,866 | 493,906 | ||||
Additions to property, plant and equipment | - | - | (829,858) | (1,193,430) | ||||
Net cash and cash equivalents used by investment | ||||||||
activities | 3,699 | 4,901 | (231,992) | (699,524) | ||||
Financing activities | ||||||||
New loans | - | - | 27,520 | 616,474 | ||||
Loan amortization | - | - | (213,862) | (129,678) | ||||
Dividends and interest paid on own capital | (104) | (56,195) | (170) | (56,290) | ||||
Net cash and cash equivalents generated (used) by | ||||||||
financing activities | (104) | (56,195) | (186,512) | 430,506 | ||||
Increase (decrease) in cash and cash equivalents | 705 | 1,071 | (96,339) | (421,400) | ||||
Cash and cash equivalents at the beginning of the Quarterly | 87 | 55 | 440,866 | 519,300 | ||||
Cash and cash equivalents at the end of the Quarterly | 792 | 1,126 | 344,527 | 97,900 | ||||
48
Parent Company | Consolidated | |||||||
03/2006 | 03/2006 | |||||||
03/2007 | Adjusted | 03/2007 | Adjusted | |||||
Supplementary cash flow information : | ||||||||
Income tax and social contribution paid | - | - | 5,233 | 12,572 | ||||
Interest paid | - | - | 78,609 | 86,600 | ||||
Capitalized interest | - | - | 2,619 | 3,385 | ||||
Accounts payable referring to property plant and equipment | ||||||||
addition expenses | - | - | 422,137 | 579,249 |
a. Value-Added Statements
Parent Company | Consolidated | |||||||
03/2006 | 03/2006 | |||||||
03/2007 | Adjusted | 03/2007 | Adjusted | |||||
Revenues | ||||||||
Gross operating revenue | - | - | 3,895,334 | 2,888,958 | ||||
Allowance for doubtful accounts | - | - | (172,968) | (89,381) | ||||
Discounts given, returns and other | - | - | (229,710) | (201,537) | ||||
Non-operating revenues (expenses) net | - | - | (1,156) | 417 | ||||
- | - | 3,491,500 | 2,598,457 | |||||
Input acquired from third parties | ||||||||
Cost of services rendered and goods sold | - | - | (1,134,958) | (651,992) | ||||
Materials, energy, third parties´ services and other | (994) | (5,737) | (547,463) | (456,633) | ||||
(994) | (5,737) | (1,682,421) | (1,108,625) | |||||
Withholding | ||||||||
Depreciation and amortization | (395) | (395) | (582,265) | (537,995) | ||||
Value-added produced net | (1,389) | (6,132) | 1,226,814 | 951,837 | ||||
Value added received through reclassification | ||||||||
Equity pickup | (17,470) | (83,263) | - | - | ||||
Financial revenues | 573 | 427 | 34,622 | 98,211 | ||||
(16,897) | (82,836) | 34,622 | 98,211 | |||||
Total undistributed value-added | (18,286) | (88,968) | 1,261,436 | 1,050,048 | ||||
Value-added distributed | ||||||||
Personnel and related charges | 868 | 1,593 | 130,590 | 123,257 | ||||
Taxes, rates and contributions | 284 | (1,945) | 1,021,492 | 803,873 | ||||
Interest and rentals | 27 | 34 | 128,819 | 224,479 | ||||
Accumulated losses | (19,465) | (86,650) | (19,465) | (101,561) | ||||
49
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | 03/31/2007 | 03/31/2006 |
1 | Total assets | 13,131,272 | 14,200,105 |
1.01 | Current assets | 3,733,413 | 4,443,021 |
1.01.01 | Cash and cash equivalents | 509,971 | 1,193,477 |
1.01.01.01 | Cash and Banks | 344,527 | 440,866 |
1.01.01.02 | Short-term investments in the money market | 165,444 | 752,611 |
1.01.02 | Accounts receivable | 2,511,835 | 2,505,833 |
1.01.02.01 | Accounts receivable | 0 | 0 |
1.01.02.02 | Accounts receivable | 2,511,835 | 2,505,833 |
1.01.02.02.01 | Accounts receivable | 2,511,835 | 2,505,833 |
1.01.03 | Inventories | 116,072 | 164,108 |
1.01.04 | Others | 595,535 | 579,603 |
1.01.04.01 | Recoverable taxes and contributions | 320,467 | 292,542 |
1.01.04.02 | Deferred income and social contribution taxes | 50,450 | 50,450 |
1.01.04.03 | Prepaid expenses | 203,129 | 221,008 |
1.01.04.04 | Other | 21,489 | 15,603 |
1.02 | Noncurrent assets | 9,397,859 | 9,757,084 |
1.02.01 | Noncurrent assets | 383,238 | 409,281 |
1.02.01.01 | Sundry receivables | 279,956 | 315,110 |
1.02.01.01.01 | Taxes and contributions recoverable | 263,139 | 285,681 |
1.02.01.01.02 | Deferred income and social contribution taxes | 16,817 | 29,429 |
1.02.01.02 | Related parties | 17,100 | 16,303 |
1.02.01.02.01 | Affiliates | 0 | 0 |
1.02.01.02.02 | Subsidiaries | 0 | 0 |
1.02.01.02.03 | Other related parties | 17,100 | 16,303 |
1.02.01.03 | Other | 86,182 | 77,868 |
1.02.01.03.01 | Judicial deposits | 67,330 | 57,420 |
1.02.01.03.02 | Prepaid expenses | 11,587 | 13,257 |
1.02.01.03.03 | Other assets | 7,265 | 7,191 |
1.02.02 | Permanent assets | 9,014,621 | 9,347,803 |
1.02.02.01 | Investments | 6,333 | 6,728 |
1.02.02.01.01 | Affiliates | 0 | 0 |
1.02.02.01.02 | Affiliates - Agio | 0 | 0 |
1.02.02.01.03 | Subsidiaries | 0 | 0 |
1.02.02.01.04 | Subsidiaries - Agio | 0 | 0 |
1.02.02.01.05 | Others Investments | 6,333 | 6,728 |
1.02.02.02 | Other investments | 6,925,721 | 7,185,864 |
1.02.02.03 | Property, plant and equipment | 1,860,561 | 1,922,621 |
1.02.02.04 | Deferred charges | 222,006 | 232,590 |
50
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | 03/31/2007 | 12/31/2006 |
2 | Total liabilities and shareholders' equity | 13,131,272 | 14,200,105 |
2.01 | Current liabilities | 3,128,084 | 4,135,122 |
2.01.01 | Loans and financing | 273,485 | 340,762 |
2.01.02 | Debentures | 0 | 0 |
2.01.03 | Suppliers | 1,643,262 | 2,642,858 |
2.01.04 | Taxes, charges and contributions | 459,747 | 370,264 |
2.01.05 | Dividends payable | 472,788 | 472,958 |
2.01.06 | Provisions | 0 | 0 |
2.01.07 | Related parties | 48,356 | 84,064 |
2.01.08 | Other | 230,446 | 224,216 |
2.01.08.01 | Labor liabilities | 114,338 | 92,493 |
2.01.08.02 | Authorizations payable | 38,545 | 38,275 |
2.01.08.03 | Other liabilities | 77,563 | 93,448 |
2.02 | Noncurrent liabilities | 2,136,275 | 2,178,605 |
2.02.01 | Noncurrent liabilities | 2,136,275 | 2,178,605 |
2.02.01.01 | Loans and financing | 1,818,824 | 1,879,679 |
2.02.01.02 | Debentures | 0 | 0 |
2.02.01.03 | Provisions | 144,160 | 134,216 |
2.02.01.03.01 | Supplementary pension plan | 138,077 | 128,133 |
2.02.01.03.02 | Provision for contingency | 6,083 | 6,083 |
2.02.01.04 | Related parties | 0 | 0 |
2.02.01.05 | Advances for future capital increase | 0 | 0 |
2.02.01.06 | Others | 173,291 | 164,710 |
2.02.01.06.01 | Authorizations payable | 6,603 | 6,542 |
2.02.01.06.02 | Obligations arising from discontinuance of assets | 166,688 | 158,168 |
2.02.02 | Deferred income | 0 | 0 |
2.03 | Minority interests | 0 | 0 |
2.04 | Shareholders' equity | 7,866,913 | 7,886,378 |
2.04.01 | Capital | 7,512,710 | 7,512,710 |
2.04.02 | Capital reserves | 135,230 | 135,230 |
2.04.03 | Revaluation reserves | 0 | 0 |
2.04.03.01 | Own assets | 0 | 0 |
2.04.03.02 | Subsidiaries/affiliates | 0 | 0 |
2.04.04 | Income reserves | 238,438 | 238,438 |
2.04.04.01 | Legal reserve | 98,741 | 98,741 |
2.04.04.02 | Statutory reserve | 0 | 0 |
2.04.04.03 | Reserve for contingencies | 0 | 0 |
2.04.04.04 | Unearned income reserve | 0 | 0 |
2.04.04.05 | Retained earnings | 139,697 | 139,697 |
2.04.04.06 | Special reserve for undistributed dividends | 0 | 0 |
2.04.04.07 | Other income reserves | 0 | 0 |
2.04.05 | Retained earnings | -19,465 | 0 |
2.04.06 | Advances for future capital increase | 0 | 0 |
51
FEDERAL PUBLIC SERVICE | ||
CVM BRAZILIAN SECURITIES COMMISSION | ||
ITR Quarterly Information | Corporate Law | |
COMMERCIAL, INDUSTRIAL & OTHER TYPES OF COMPANY | Data-Base - 03/31/2007 |
01763-9 TIM PARTICIPAÇÕES S.A. | 02.558.115/0001-21 | |
Free Translation into English of Quarterly Information (ITR) | ||
Originally Issued in Portuguese | ||
04.01 NOTES TO QUARTERLY INFORMATION | ||
(In thousands of Reais, except where otherwise stated) |
Code | Heading | From 01/01/2007 to 03/31/2007 |
Accumulated From 01/01/2007 to 03/31/2007 |
From 01/01/2006 a 03/31/2006 |
Accumulated From 01/01/2006 a 03/31/2006 |
3.01 | Gross revenues | 3,895,334 | 3,895,334 | 2,888,958 | 2,888,958 |
3.02 | Deductions from gross revenues | (1,052,161) | (1,052,161) | (823,236) | (823,236) |
3.03 | Net revenues | 2,843,173 | 2,843,173 | 2,065,722 | 2,065,722 |
3.04 | Cost of goods sold and services rendered | (1,528,103) | (1,528,103) | (1,047,112) | (1,047,112) |
3.05 | Gross profit | 1,315,070 | 1,315,070 | 1,018,610 | 1,018,610 |
3.06 | Operating income (expenses) | (1,296,539) | (1,296,539) | (1,071,741) | (1,071,741) |
3.06.01 | Selling | (914,327) | (914,327) | (684,894) | (684,894) |
3.06.02 | General and administrative | (259,149) | (259,149) | (243,468) | (243,468) |
3.06.03 | Financial income (expenses) | (63,255) | (63,255) | (89,007) | (89,007) |
3.06.03.01 | Financial income | 34,622 | 34,622 | 98,211 | 98,211 |
3.06.03.02 | Financial expenses | (97,877) | (97,877) | (187,218) | (187,218) |
3.06.04 | Other operating income | 23,102 | 23,102 | 43,975 | 43,975 |
3.06.05 | Other operating expenses | (82,910) | (82,910) | (98,347) | (98,347) |
3.06.06 | Equity pickup | - | - | - | - |
3.07 | Operating income | 18,531 | 18,531 | (53,131) | (53,131) |
3.08 | Nonoperating income | (1,156) | (1,156) | 417 | 417 |
3.08.01 | Income | 4,731 | 4,731 | 1,169 | 1,169 |
3.08.02 | Expenses | (5,887) | (5,887) | (752) | (752) |
3.09 | Income before taxation and participations | 17,375 | 17,375 | (52,714) | (52,714) |
3.10 | Provision for income and social contribution taxes | (36,840) | (36,840) | (41,204) | (41,204) |
3.11 | Deferred income tax | - | - | (7,643) | (7,643) |
3.12 | Participations/statutory contributions | - | - | - | - |
3.12.01 | Participations | - | - | - | - |
3.12.02 | Contributions | - | - | - | - |
3.13 | Reversal of interest on shareholders' equity | - | - | - | - |
3.14 | Minority interests | - | - | - | - |
3.15 | Net income for the period | (19,465) | (19,465) | (101,561) | (101,561) |
52
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.
TIM PARTICIPAÇÕES S.A. | |||
Date: May 07, 2007 | By: | /s/ Stefano De Angelis | |
Name: Stefano De Angelis | |||
Title: Chief Financial Officer |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.