EX-99.3 5 y86185exv99w3.txt QUARTERLY FINANCIAL INFORMATION [TIM LOGO] [VIVER SEM FRONTEIRAS] [TELE CELULAR SUL PARTICIPACOES S.A. LETTERHEAD] QUARTERLY FINANCIAL INFORMATION Nine-months period Ended March 31 2003 With Special Review report of the Independent Auditors [TSU LETTERHEAD A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR 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 2-COMPANY NAME 3-NATIONAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------ 4 - State Registration Number - NIRE 53 3 0000572 9 ------------------------------------------------------------------------------------------------------------------------
01.02 - HEAD OFFICE ------------------------------------------------------------------------------------------------------------------------ 1-ADDRESS 2-SUBURB OR DISTRICT Rua Comendador Centro Araujo, 299 ------------------------------------------------------------------------------------------------------------------------ 3-POSTAL CODE 4-MUNICIPALITY 5-STATE 80420-000 Curitiba PR ------------------------------------------------------------------------------------------------------------------------ 6-AREA CODE 7-TELEPHONE 8-TELEPHONE 9-TELEPHONE 10-TELEX 41 312-6893 - - - ------------------------------------------------------------------------------------------------------------------------ 11-AREA CODE 12-FAX 13-FAX 14-FAX 41 312-6520 - - - ------------------------------------------------------------------------------------------------------------------------ 15 - E-MAIL rcoradin@timsul.com.br ------------------------------------------------------------------------------------------------------------------------
01.03 - INVESTOR RELATIONS OFFICER (COMPANY MAIL ADDRESS) ------------------------------------------------------------------------------------------------------------------------ 1-NAME Paulo Roberto Cruz Cozza ------------------------------------------------------------------------------------------------------------------------ 2-ADDRESS 3-SUBURB OR DISTRICT Rua Comendador Centro Araujo, 299 ------------------------------------------------------------------------------------------------------------------------ 4-POSTAL CODE 5-MUNICIPALITY 6-STATE 80420-000 Curitiba PR ------------------------------------------------------------------------------------------------------------------------ 7-AREA CODE 8-TELEPHONE 9-TELEPHONE 10-TELEPHONE 11-TELEX 41 312-6702 - - - ------------------------------------------------------------------------------------------------------------------------ 12 - AREA CODE 13-FAX 14-FAX 15-FAX 41 312-6520 - - - ------------------------------------------------------------------------------------------------------------------------ 16 - E-MAIL pcozza@timsul.com.br ------------------------------------------------------------------------------------------------------------------------
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 ------------------------------------------------------------------------------------------------------------------------ 01.01.2003 12.31.2003 1 01.01.2003 03.31.2003 4 10.01.2002 12.31.2002 ------------------------------------------------------------------------------------------------------------------------ 9-INDEPENDENT ACCOUNTANT 10-CVM CODE Ernst & Young Auditores Independentes S/C 00471-5 ------------------------------------------------------------------------------------------------------------------------ 11 - PARTNER RESPONSIBLE 12 - INDIVIDUAL TAXPAYERS' REGISTRATION NUMBER Marcos Antonio Quintanilha OF THE PARTNER RESPONSIBLE 006.840.298-80 ------------------------------------------------------------------------------------------------------------------------
1 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------------------- 1-CVM CODE 2-COMPANY NAME 3-FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER -CNPJ -------------------------------------------------------------------------------------------------------------------------- 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------------------
01.05 - CAPITAL COMPOSITION
------------------------------------------------------------------------------------------------------------------------------------ Number of shares Current quarter Prior quarter Same quarter in prior year (Thousand) 03.31.2003 12.31.2002 03.31.2002 ------------------------------------------------------------------------------------------------------------------------------------ PAID-UP CAPITAL ------------------------------------------------------------------------------------------------------------------------------------ 1 - Common 129,357,834 129,357,834 127,188,604 ------------------------------------------------------------------------------------------------------------------------------------ 2 - Preferred 213,612,106 213,612,106 210,029,997 ------------------------------------------------------------------------------------------------------------------------------------ 3 - Total 342,969,940 342,969,940 337,218,601 ------------------------------------------------------------------------------------------------------------------------------------ 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 1990100 - 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 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 ------------------------------------------------------------------------------------------------------------------------
2 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, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------------- 1-CVM CODE 2-COMPANY NAME 3-FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------------- 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 -------------------------------------------------------------------------------------------------------------------------------
01.09 - SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR ------------------------------------------------------------------------------ 1-ITEM 2-DATE OF CHANGE 3-CAPITAL 4-AMOUNT OF THE CHANGE (IN THOUSANDS OF REAIS) (IN THOUSANDS OF REAIS) ------------------------------------------------------------------------------ 01 03.18.2003 339,934 15,268 ------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 1-ITEM 5-NATURE OF CHANGE 7-NUMBER OF SHARES ISSUED 8-SHARE PRICE ON ISSUE DATE (IN THOUSAND) (IN REAIS) ---------------------------------------------------------------------------------------- 01 Capital reserve 0 0,00 ----------------------------------------------------------------------------------------
01.10 - INVESTOR RELATIONS OFFICER
-------------------------------------------------------------------------------- 1-DATE 2-SIGNATURE 03.31.2003 --------------------------------------------------------------------------------
3 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, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1-CVM CODE 2-COMPANY NAME 3-NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
02.01 - BALANCE SHEET - ASSETS (R$ THOUSAND)
------------------------------------------------------------------------------------------ 1-CODE 2-DESCRIPTION 3-03.31.2003 4-12.31.2002 ------------------------------------------------------------------------------------------ 1 Total assets 922,531 895,303 ----------------------------------------------------------------------------------------- 1.01 Current assets 21,614 18,859 ----------------------------------------------------------------------------------------- 1.01.01 Cash and cash equivalents 3,283 8,926 ----------------------------------------------------------------------------------------- 1.01.01.01 Banks 1,849 3,538 ----------------------------------------------------------------------------------------- 1.01.01.02 Marketable securities 1,434 5,388 ----------------------------------------------------------------------------------------- 1.01.02 Receivables 0 0 ----------------------------------------------------------------------------------------- 1.01.03 Inventories 0 0 ----------------------------------------------------------------------------------------- 1.01.04 Others 18,331 9,933 ----------------------------------------------------------------------------------------- 1.01.04.01 Recoverable taxes 1,364 1,414 ----------------------------------------------------------------------------------------- 1.01.04.02 Deferred taxes 7,332 7,874 ----------------------------------------------------------------------------------------- 1.01.04.03 Interest on shareholders' equity 7,898 0 ----------------------------------------------------------------------------------------- 1.01.04.04 Other current assets 1,737 645 ----------------------------------------------------------------------------------------- 1.02 Long-term assets 4,952 4,195 ----------------------------------------------------------------------------------------- 1.02.01 Other Receivables 0 0 ----------------------------------------------------------------------------------------- 1.02.02 Receivables from related companies 3,848 3,150 ----------------------------------------------------------------------------------------- 1.02.02.01 Associated companies 0 0 ----------------------------------------------------------------------------------------- 1.02.02.02 Subsidiaries 3,848 3,150 ----------------------------------------------------------------------------------------- 1.02.02.03 Other related companies 0 0 ----------------------------------------------------------------------------------------- 1.02.03 Other long-term assets 1,104 1,045 ----------------------------------------------------------------------------------------- 1.02.03.01 Deferred taxes 1,031 1,009 ----------------------------------------------------------------------------------------- 1.02.03.02 Other 73 36 ----------------------------------------------------------------------------------------- 1.03 Permanent assets 895,965 872,249 ----------------------------------------------------------------------------------------- 1.03.01 Investments 895,889 872,170 ----------------------------------------------------------------------------------------- 1.03.01.01 In associated companies 9,391 10,179 ----------------------------------------------------------------------------------------- 1.03.01.02 In Subsidiaries 873,862 848,960 ----------------------------------------------------------------------------------------- 1.03.01.03 Others 12,636 13,031 ----------------------------------------------------------------------------------------- 1.03.02 Property, plant and equipment 76 79 ----------------------------------------------------------------------------------------- 1.03.03 Deferred charges 0 0 -----------------------------------------------------------------------------------------
4 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, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------- 1-CVM CODE 2-COMPANY NAME 3-NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -------------------------------------------------------------------------------------------------------------
02.02-BALANCE SHEET-LIABILITIES AND STOCKHOLDERS' EQUITY (R$ THOUSAND)
---------------------------------------------------------------------------------------------------------- 1 - CODE 2-DESCRIPTION 3-03.31.2003 4-12.31.2002 ---------------------------------------------------------------------------------------------------------- 2 Total liabilities and shareholders' equity 922,531 895,303 --------------------------------------------------------------------------------------------------------- 2.01 Current liabilities 45,503 47,005 --------------------------------------------------------------------------------------------------------- 2.01.01 Debt - current portion 0 0 --------------------------------------------------------------------------------------------------------- 2.01.02 Debentures - current portion 0 0 --------------------------------------------------------------------------------------------------------- 2.01.03 Suppliers 3,246 2,777 --------------------------------------------------------------------------------------------------------- 2.01.04 Taxes, charges and contributions 1,028 20 --------------------------------------------------------------------------------------------------------- 2.01.05 Dividends payable 0 0 --------------------------------------------------------------------------------------------------------- 2.01.06 Provisions 0 0 --------------------------------------------------------------------------------------------------------- 2.01.07 Accounts payable to related companies 57 0 --------------------------------------------------------------------------------------------------------- 2.01.08 Others 41,172 44,208 --------------------------------------------------------------------------------------------------------- 2.01.08.01 Salaries, social charges and benefits 11,823 11,943 --------------------------------------------------------------------------------------------------------- 2.01.08.02 Dividends and interest on shareholders'equity 28,779 28,700 --------------------------------------------------------------------------------------------------------- 2.01.08.03 Others 570 3,565 --------------------------------------------------------------------------------------------------------- 2.02 Long-term liabilities 3,033 2,968 --------------------------------------------------------------------------------------------------------- 2.02.01 Debt - long-term portion 0 0 --------------------------------------------------------------------------------------------------------- 2.02.02 Debentures - long-term portion 0 0 --------------------------------------------------------------------------------------------------------- 2.02.03 Provisions 3,033 2,968 --------------------------------------------------------------------------------------------------------- 2.02.03.01 Provision for pension plan 2,877 2,833 --------------------------------------------------------------------------------------------------------- 2.02.03.02 Provision for contingencies 156 135 --------------------------------------------------------------------------------------------------------- 2.02.04 Accounts payable to related companies 0 0 --------------------------------------------------------------------------------------------------------- 2.02.05 Others 0 0 --------------------------------------------------------------------------------------------------------- 2.03 Deferred income 0 0 --------------------------------------------------------------------------------------------------------- 2.05 Shareholders' equity 873,995 845,330 --------------------------------------------------------------------------------------------------------- 2.05.01 Paid-up capital 339,934 324,666 --------------------------------------------------------------------------------------------------------- 2.05.02 Capital reserves 177,794 178,062 --------------------------------------------------------------------------------------------------------- 2.05.03 Revaluation reserves 0 0 --------------------------------------------------------------------------------------------------------- 2.05.03.01 Own assets 0 0 --------------------------------------------------------------------------------------------------------- 2.05.03.02 Associated/subsidiary companies' assets 0 0 --------------------------------------------------------------------------------------------------------- 2.05.04 Revenue reserves 327,602 342,602 --------------------------------------------------------------------------------------------------------- 2.05.04.01 Legal 23,795 23,795 --------------------------------------------------------------------------------------------------------- 2.05.04.02 Statutory 0 0 --------------------------------------------------------------------------------------------------------- 2.05.04.03 Contingencies 0 0 --------------------------------------------------------------------------------------------------------- 2.05.04.04 Unrealized profits 0 0 --------------------------------------------------------------------------------------------------------- 2.05.04.05 Retention of profits 0 0 --------------------------------------------------------------------------------------------------------- 2.05.04.06 Special reserve for undistributed dividends 8,655 8,655 --------------------------------------------------------------------------------------------------------- 2.05.04.07 Other revenue reserves 295,152 310,152 --------------------------------------------------------------------------------------------------------- 2.05.05 Retained earnings/accumulated deficit 28,665 0 ---------------------------------------------------------------------------------------------------------
5 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, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1-CVM CODE 2-COMPANY NAME 3-Federal Corporate Taxpayers' Registration Number - CNPJ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 -------------------------------------------------------------------------------------------------------------------------
03.01 - STATEMENT OF OPERATIONS (R$ THOUSAND)
----------------------------------------------------------------------------------------------------------- 3-01.01.2003 to 4-01.01.2003 to 1-CODE 2-DESCRIPTION 03.31.2003 03.31.2003 ----------------------------------------------------------------------------------------------------------- 3.01 Gross revenue from goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.02 Deductions to gross revenue 0 0 ----------------------------------------------------------------------------------------------------------- 3.03 Net revenue from goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.04 Cost of goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.05 Gross profit 0 0 ----------------------------------------------------------------------------------------------------------- 3.06 Operating expenses/income 31,195 31,195 ----------------------------------------------------------------------------------------------------------- 3.06.01 Selling 0 0 ----------------------------------------------------------------------------------------------------------- 3.06.02 General and administrative (2,229) (2,229) ----------------------------------------------------------------------------------------------------------- 3.06.03 Financial, net 735 735 ----------------------------------------------------------------------------------------------------------- 3.06.03.01 Financial income 929 929 ----------------------------------------------------------------------------------------------------------- 3.06.03.02 Financial expenses (194) (194) ----------------------------------------------------------------------------------------------------------- 3.06.04 Other operating income 207 207 ----------------------------------------------------------------------------------------------------------- 3.06.05 Other operating expenses (923) (923) ----------------------------------------------------------------------------------------------------------- 3.06.06 Equity interest in income of subsidiaries and 33,405 33,405 associated companies ----------------------------------------------------------------------------------------------------------- 3.07 Operating profit (loss) 31,195 31,195 ----------------------------------------------------------------------------------------------------------- 3.08 Non-operating results 0 0 ----------------------------------------------------------------------------------------------------------- 3.08.01 Income 0 0 ----------------------------------------------------------------------------------------------------------- 3.08.02 Expenses 0 0 ----------------------------------------------------------------------------------------------------------- 3.09 Income (loss) before taxes and participation 31,195 31,195 ----------------------------------------------------------------------------------------------------------- 3.10 Provision for income tax and social contribution (2,530) (2,530) ----------------------------------------------------------------------------------------------------------- 3.11 Deferred income tax 0 0 ----------------------------------------------------------------------------------------------------------- 3.12 Statutory profit sharing and contributions 0 0 ----------------------------------------------------------------------------------------------------------- 3.12.01 Profit sharing 0 0 ----------------------------------------------------------------------------------------------------------- 3.12.02 Contributions 0 0 ----------------------------------------------------------------------------------------------------------- 3.13 Reversal of interest over shareholders' capital 0 0 ----------------------------------------------------------------------------------------------------------- 3.15 Net income (loss) for the period 28,665 28,665 ----------------------------------------------------------------------------------------------------------- Number of shares (thousand), excluding treasury stock 342,969,940 342,969,940 ----------------------------------------------------------------------------------------------------------- Net income per share 0,00008 0,00008 ----------------------------------------------------------------------------------------------------------- Net loss per share -----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------- 5-01.01.2002 to 6-01.01.2002 to 1-CODE 2-DESCRIPTION 03.31.2002 03.31.2002 ----------------------------------------------------------------------------------------------------------- 3.01 Gross revenue from goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.02 Deductions to gross revenue 0 0 ----------------------------------------------------------------------------------------------------------- 3.03 Net revenue from goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.04 Cost of goods sold and services rendered 0 0 ----------------------------------------------------------------------------------------------------------- 3.05 Gross profit 0 0 ----------------------------------------------------------------------------------------------------------- 3.06 Operating expenses/income 17,103 17,103 ----------------------------------------------------------------------------------------------------------- 3.06.01 Selling 0 0 ----------------------------------------------------------------------------------------------------------- 3.06.02 General and administrative (1,528) (1,528) ----------------------------------------------------------------------------------------------------------- 3.06.03 Financial, net 1,170 1,170 ----------------------------------------------------------------------------------------------------------- 3.06.03.01 Financial income 1,496 1,496 ----------------------------------------------------------------------------------------------------------- 3.06.03.02 Financial expenses (326) (326) ----------------------------------------------------------------------------------------------------------- 3.06.04 Other operating income 188 188 ----------------------------------------------------------------------------------------------------------- 3.06.05 Other operating expenses (500) (500) ----------------------------------------------------------------------------------------------------------- 3.06.06 Equity interest in income of subsidiaries and 17,773 17,773 associated companies ----------------------------------------------------------------------------------------------------------- 3.07 Operating profit (loss) 17,103 17,103 ----------------------------------------------------------------------------------------------------------- 3.08 Non-operating results 0 0 ----------------------------------------------------------------------------------------------------------- 3.08.01 Income 0 0 ----------------------------------------------------------------------------------------------------------- 3.08.02 Expenses 0 0 ----------------------------------------------------------------------------------------------------------- 3.09 Income (loss) before taxes and participation 17,103 17,103 ----------------------------------------------------------------------------------------------------------- 3.10 Provision for income tax and social contribution 59 59 ----------------------------------------------------------------------------------------------------------- 3.11 Deferred income tax 0 0 ----------------------------------------------------------------------------------------------------------- 3.12 Statutory profit sharing and contributions 0 0 ----------------------------------------------------------------------------------------------------------- 3.12.01 Profit sharing 0 0 ----------------------------------------------------------------------------------------------------------- 3.12.02 Contributions 0 0 ----------------------------------------------------------------------------------------------------------- 3.13 Reversal of interest over shareholders' capital 0 0 ----------------------------------------------------------------------------------------------------------- 3.15 Net income (loss) for the period 17,162 17,162 ----------------------------------------------------------------------------------------------------------- Number of shares (thousand), excluding treasury stock 337,218,601 337,218,601 ----------------------------------------------------------------------------------------------------------- Net income per share 0,00005 0,00005 ----------------------------------------------------------------------------------------------------------- Net loss per share -----------------------------------------------------------------------------------------------------------
6 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 1. OPERATIONS (a) HISTORY Tele Celular Sul Participacoes S.A. was formed in accordance with article 189 of Law 9472/97 - General Telecommunications Law and based on Decree 2546/98, as a result of the split-up of Telecomunicacoes Brasileiras S.A. that was approved at the Shareholders' Meeting held of Telecomunicacoes Brasileiras S.A. on May 22, 1998. The Company is a listed entity directly controlled by Bitel Participacoes S.A. which has a shareholding of 52.060% of the voting capital and 20,679% of the total capital. (b) CORPORATE REORGANIZATION On December 26, 2002, the Board of Directors approved the corporate reorganization, which was previously approved by the Extraordinary General Meeting held at November 19, 2002, in which all shares issued by Telesc Celular S.A. and CTMR Celular S.A., previously owned by Tele Celular Sul Participacoes S.A., were fully transferred to Telepar Celular S.A. The corporate restructuring was performed in order to achieve the following, among others: i) operational integration between the subsidiaries, which will allow the sharing of the knowledge of the businesses and consequent costs reduction; ii) concentration of the shares liquidity of the subsidiaries in one only public company generating a benefit to all shareholders. The restructuring process was performed through out the change of Telesc Celular S.A. and CTMR Celular S.A. shares by shares issued by Telepar Celular S.A., resulting in a capital increase on Telepar of R$578,959 as well as the ownership of Telesc and CTMR being assumed by Telepar. Telesc and CTMR were turned fully subsidiaries of Telepar. The new shares issued by Telepar as a result of the capital increase, were given to the shareholders of Telesc and CTMR. (c) COMPANY SUBSIDIARIES As a result of the corporate restructuring process, the Company has obtained the ownership control of Telepar Celular S.A., acting in an integrated way with its subsidiary, and their operational and administrative costs are allocated based on the proportion of the befits generated. The Company has also participation in the affiliated company Timnet.com S.A. 7 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE Up to November 30, 2002, the Company, besides Telepar Celular S.A., had the ownership of Telesc Celular S.A. and CTMR Celular S.A, being its control transferred to Telepar Celular S.A., as described in item "b" above. The subsidiary Telepar Celular S.A. is a provider of mobile telephony services in the states of Parana (except for Londrina and Tamarana). Timnet.com S.A. was created on July 13, 2000, in order to provide internet access and related services to end users, internet hosting and other services, webdesigning, information technology and data processing services, and information technology and telecommunications consulting and technical support. At March 31, 2003 the participation of the Company in Timnet.com S.A. was 20% and is recorded as investment in affiliated companies. The Timnet.com S.A. financial statements were not consolidated into Tele Celular Sul Participacoes S.A., since the Company has no direct influence over Timnet administration. (d) TECHNOLOGICAL PLATFORM The Company and its subsidiary are developing studies to offer mobile phones that operate in the GSM technology, in addition to the services currently offered in the TDMA technology, increasing its services portfolio to clients. (e) MIGRATION FROM SMC TO SMP On December 10, 2002, it was signed the Termo de Autorizacao do Servico Movel Pessoal - SMP or the Agreement of Authorization of the Personal Communication Service (PCS), between ANATEL - Agencia Nacional de Telecomunicacoes, the independent regulatory agency and its subsidiary. Such agreement became effective since its publication in the Diario Oficial da Uniao, the official publication of the Brazilian Government, as of December 18, 2002. The signature of such agreement finalized the migration of the utilization of Servico Movel Celular - SMC, or the Cellular Communication Service (CCS), effective through the concession to the Personal Communication Service, both authorized by the Brazilian Government. The authorized concession to the subsidiary is effective up to September 3, 2007, which is the remaining term of the concession previously approved. The concessions can be renewed in successive periods of 15 years, in a onerous basis. The main changes due the migration of the SMC to SMP are: 8 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE (i) the subscriber of the PCS will have the right to choose the long distance telecommunication service provider, through charging of CSP - Codigo de Selecao da Prestadora or Telecommunication Service Provider Selection Code, in the calls of the registered area; (ii) quality aims more exigent; (iii) the roaming charges follows item 5 of the 319/2002 Resolution from ANATEL. 2. BASIS OF PRESENTATION OF THE QUARTERLY FINANCIAL INFORMATION (a) DISCLOSURE AND ISSUANCE CRITERIA The parent company and consolidated quarterly financial information were prepared in accordance with the accounting principles adopted in Brazil and in conformity with accounting requirements and procedures established by the Brazilian Securities Commission (Comissao de Valores Mobiliarios - CVM), and the rules applicable to concessionaires of telecommunications public services. Tele Celular Sul Participacoes S.A. is a publicly trade Company and has American Depository Receipts trade in the New York stock market. Based on that, it is subjected to the rules of the Security Exchange Commission (SEC) and shall also based on accounting principals generally accepted in the United States of America (US GAAP). According to the SEC rules and aiming to provide information to the public, the Company simultaneously prepares information in Reais in Portuguese and in English. (b) CONSOLIDATED QUARTERLY FINANCIAL INFORMATION The consolidated quarterly financial information includes consolidated assets, liabilities and result of operations of the Company and its subsidiary. The description of main consolidation procedures is as follows: I. Elimination of assets and liabilities balances between the controlled consolidated subsidiary; II. Elimination of investments, reserves and retained earnings of the subsidiary; III. Elimination of revenues and expenses generated by transactions between the companies; IV. Disclosure of the minority interest participation in the consolidated quarterly information. 3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES 9 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE The significant accounting practices adopted in the preparation of the quarterly information of the Company and its subsidiary are consistent with those in preceding periods and are summarized below: (a) MARKETABLE SECURITIES Represent transitory investments and are recorded at cost, plus interest incurred up to the quarterly information date. (b) TRADE ACCOUNTS RECEIVABLE The amount represents services and products billed to customers, unbilled services rendered to customers, as well as amounts arisen from the use of the Company's telecommunications networking by subscribers of other telecommunication companies. The allowance for doubtful accounts is recorded based on an analysis prepared by management which considers the customer base profile, the aging of overdue accounts and the overall economic environment. Management believes the provision amount is considered sufficient to cover estimated losses of the receivables. (c) INVENTORIES Inventories primarily include cellular handset equipment which are stated at average acquisition cost net of the provisions for realization value adjustment, whenever applicable. (d) INVESTMENTS Represent the permanent investments in subsidiary and affiliated company. The ownership in the subsidiary and affiliated is recorded based on equity method. The accounting practices adopted by the subsidiary and affiliated company are consistent to the ones adopted by the Company. Other investments are stated at cost, net of provision for reduction to market value, when applicable. (e) PROPERTY, PLAT AND EQUIPMENT These are stated at purchase and/or construction cost, net of accumulated depreciation calculated on the straight-line method at the rates shown in Note 12, which take into consideration the useful lives of the assets. 10 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE Interest on loans to finance constructions in progress is added to their cost, in accordance with CVM Resolution 193/96. The Company's management reviews property, plant and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset or group of assets may not be recoverable, in order to record an impairment allowance for such assets. (f) DEFERRED CHARGES Represent expenses incurred in connection with the implementation of data processing systems, net of accumulated amortization calculated according to the straight-line method over five years. Such costs represent direct developments costs associated with internal-use software, including external direct costs of materials and services, and payroll costs for employees devoting time to the software projects. Maintenance and training costs are expenses as incurred. (g) INCOME TAX AND SOCIAL CONTRIBUTION These are calculated and recorded based on the effective tax rates prevailing on the date of the financial statements. Deferred taxes are recorded on timing differences and on tax losses and negative social contribution bases, when applicable. Based on the Brazilian Tax Legislation, the fiscal losses related to income taxes and negative social contribution bases have no prescription time, and may be used to compensate future taxable income up to a limit of 30% of such taxable income. Based on the business plan for the next years and on the restructuring process implemented during 2002, as described in Note 1.b, management expects the deferred tax credit recorded by the subsidiary Telepar Celular S.A. be realized in 4 years. (h) FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currency are recorded at the exchange rate at the date of the transaction. Foreign currency denominated assets and liabilities are translated into Brazilian Reais at the commercial selling exchange rate reported by the Central Bank of Brazil at each balance sheet date. Exchange gains and losses are recognized in the consolidated statement of income on a current basis. (i) PROVISION FOR CONTINGENCIES The provision for contingencies is recorded based on estimates made by management taking into consideration the opinion of its in-house and external legal council, and is considered sufficient to cover 11 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE losses and risks classified as probable. (j) REVENUE RECOGNITION Wireless services revenue primarily includes monthly recurring charges (subscriptions), airtime (usage of telephone), and roaming charges. Wireless services revenue is recognized based upon minutes of use processed and contracted fees, net of credits and adjustments for services discounts. Billings are monthly recorded and the revenues not billed between the billings date and the end of the month are estimated and recognized in the month the service was rendered Revenues from prepaid services are recognized when the services are rendered to customers. Revenue and related expenses associated with the sale of wireless handsets and accessories are recognized when the products are delivered and accepted by the customer or distributor. (k) FINANCIAL INCOME (EXPENSES) Financial income consists of interest earned, exchange gains and gains from financial investments. Financial expenses include interest expense, exchange losses, and gain/losses on swaps contracts, which are recognized on an accrual basis. (l) EMPLOYEES' BONUS PERFORMANCE PREMIUM As the operating targets are met, the Company records a provision for employees bonus performance premium, subjected to approval by the Annual General Meeting of Shareholders. Such expenses are recorded as "general and administrative expenses". (n) MINORITY INTEREST The minority interest corresponds to the interest of the minority shareholders in the Company. (o) USE OF ESTIMATES The preparation of the quarterly information in accordance with accounting principles adopted in Brazil requires management to use estimates and assumptions concerning the amounts of recorded assets and liabilities and the disclosures of contingent assets and liabilities at the balance sheet date, as well as the estimation of revenues and expenses for the period. The actual results may differ from those estimates. 4. MARKETABLE SECURITIES 12 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE These are financial investments through Banco do Brasil S.A., in Federal Government securities and banking deposits certificates (CDB), with average interest between 100% to 104% of the Interbank Deposit Certificate (CDI) rate. 5. ACCOUNTS RECEIVABLE
03/2003 12/2002 ------- ------- Services billed 40,416 35,040 Unbilled services 39,913 35,649 Network usage 42,061 35,872 Sales of equipments 41,785 65,773 ------- ------- 164,175 173,334 Allowance for doubtful account (9,192) (6,533) ------- ------- 154,983 165,801 ======= ======= Aging list Not due amounts 140,626 147,773 Past due amounts Up to 60 days 14,437 16,029 Over 60 days 9,112 8,532
Aiming to estimate the allowance for bad debt value, management analyses the accounts receivable from the Company and subsidiary, especially in relation to the due amounts, considering the recovering probability based on customers type and age of due amounts. The changes in the allowance for doubtful accounts were as following:
03/2003 12/2002 ------- ------- Beginning balance 6,533 6,852 Provision debited as selling expenses 2,659 - Writing-offs against the provision - (319) ------- ------- Ending balance 9,192 6,533 ======= =======
13 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 6. INVENTORIES
03/2003 12/2002 ------- ------- New handsets, accessories, cards and kits 5,900 15,726 Used handsets 1,154 1,140 Provision for realization value adjustment (1,019) (1,293) ------- ------- 6,035 15,573 ======= =======
7. Recoverable Taxes - current and long term
PARENT COMPANY CONSOLIDATED ----------------------- ----------------------- 03/2003 12/2002 03/2003 12/2002 ------- ------- ------- ------- Recoverable taxes Income tax Prepayments - - 13,021 16,392 Withholding tax on financial investments 672 661 9,149 6,694 Withholding tax on interest over shareholders' capital 692 753 6,044 856 Social Contribution Prepayments - - 6,891 7,553 VAT State (ICMS) - - 11,062 15,558 PIS - - 120 - ------ ------ ------ ------ 1,364 1,414 46,287 47,053 ====== ====== ====== ====== Current 1,364 1,414 42,180 42,386 Non-current receivables - - 4,107 4,667
8. DEFERRED TAXES - CURRENT AND LONG TERM
PARENT COMPANY CONSOLIDATED ----------------------- ----------------------- 03/2003 12/2002 03/2002 12/2002 ------- ------- ------- ------- Deferred taxes Loss carryfowards 5,813 6,696 63,832 64,771 Timing differences Exchange loss variation - - 7,413 Allowance for doubtful accounts - - 3,995 3,055 Amortization related to goodwill paid on privatization - - 6,563 7,031 Provision for contingencies 53 46 3,132 3,043 Employees bonus performance premium 1,519 1,178 1,851 1,442 Provision for pension plan 978 963 978 963 Provision for reduction to market value of inventories - - 346 439 Depreciation of lended handsets - - 3,306 - Tax benefit related to goodwill paid on privatization - - 134,770 141,106 ------ ------- ------- -------
14 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE
PARENT COMPANY CONSOLIDATED ----------------------- ----------------------- 03/2003 12/2002 03/2002 12/2002 ------- ------- ------- ------- Total 8,363 8,883 218,773 229,263 ======= ======= ======= ======= Current 7,332 7,874 53,727 44,590 Noncurrent 1,031 1,009 165,046 184,673
At March 31, 2003, the Company and its subsidiary Telepar Celular S.A. had consolidated operating loss carry-forwards totaling R$190,403 and R$190,508 for income tax and social contribution purposes, respectively. The loss carry-forwards have no expiration date and are available to offset up to 30% of the Companies' future taxable income in given year. The tax benefit related to goodwill paid on privatization is related to the future tax benefit arisen from de restructuring plan approved by the Extraordinary Shareholders General Meeting at June 30, 2000. In that date the goodwill paid by the shareholders in the privatization process was transferred to Tele Celular Sul Participacoes S.A. and its subsidiary. The counter-entry to the recognition of the tax benefit balance is recognized directly in shareholders equity as a capital reserve and is being amortized with rates and amounts calculated based on the estimated future profitability and in the length time of the concessions, which will terminated in 2008. The goodwill amortization was recorded as "Other operating expenses". As of March 31, 2003, R$6,336 (R$6,744 at March 31, 2002) related to such goodwill were realized. Also under the terms of the restructuring, the effective tax benefit realized in each fiscal year will subsequently be capitalized in the name of the controlling shareholder, and minority shareholders are ensure the right to preference in the acquisition of a proportional amount of new capital from the controlling shareholder. The capital reserve recorded by the Company represents its rights to the future capitalizations. (see note 18-b). Based on projections made by the Company, the deferred tax assets (long term) will be realized as follows:
PARENT COMPANY CONSOLIDATED -------------- ------------ 03/2003 03/2003 ------- ------- 2004 1,031 47,088 2005 - 39,897 2006 - 41,866 2007 - 36,195 ------- ------- 1,031 165,046 ======= =======
15 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 9. RELATED PARTIES TRANSACTIONS
PARENT COMPANY X SUBSIDIARIES --------------------------------------------------------- TELEPAR TELESC CTMR CELULAR S.A. CELULAR S.A. CELULAR S.A TOTAL --------------------------------------------------------- ASSETS Dividends and interest on shareholders' equity 03/2003 7,898 - - 7,898 Loans - long-term assets 03/2003 2,088 1,760 - 3,848 12/2002 2,075 964 111 3,150 LIABILITIES Loans - current 03/2003 - - 57 57 OTHER INFORMATION Financing revenues 03/2003 16 29 3 48 03/2002 796 177 12 985 Financing expenses 03/2003 (48) (25) (5) (78) 03/2002 (10) (29) - (39) Administrative services distributed 03/2003 8,799 8,457 301 17,557 03/2002 6,427 6,122 218 12,767
16 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 9. RELATED PARTIES TRANSACTIONS - CONTINUED
CONSOLIDATED X SUBSIDIARIES ---------------------------------------------------------------------------- TELE NORDESTE MAXITEL PARTIC. CELULAR TIM CELULAR TIM BRASIL S.A. S.A. S.A. S.A. TIMNET TOTAL ---------------------------------------------------------------------------- ASSETS Other credits 03/2003 344 38 232 760 - 1,374 12/2002 47 244 31 141 - 463 LIABILITIES Other liabilities 03/2003 54 60 96 527 - 737 12/2002 54 51 - 527 188 820 OTHER INFORMATION Other revenues 03/2003 447 129 2 12 - 590 03/2002 110 1,368 54 - - 1,532 Cost of services - selling expenses 03/2003 (172) (182) - - - (354) 03/2002 (111) (92) - - (504) (707)
The Company operates in an integrated way with its subsidiary and the normal costs of their operational and administrative structure are allocated to the subsidiary based on the proportion of the benefits generated, which amounts are demonstrated as administrative services distributed. In the Company's income statements, such amounts are allocated in different expenses and costs accounts. The related parties transactions were made using usual market conditions, and mainly summarize loans to affiliates and subsidiaries, with annual interest rates of 101.2% of the Brazilian Interbank rate, as well as corporate, operating and administrative costs allocation. 10. JUDICIAL DEPOSIT (CONSOLIDATED) At March 31, 2003, the judicial deposits of R$11,874 (R$11,148 - 12/2002), represent mainly the lawsuit questioning the ICMS (VAT State) Agreement 69/98. The Company, based on its legal advisor opinion, believes that will win this cause; therefore it did not constitute a contingency reserve for this amount. 17 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 11. INVESTMENTS
03/2003 12/2002 ------- ------- Investments Subsidiary 873,862 848,960 Affiliated 9,391 10,179 Other 12,636 13,031 ------- ------- 895,889 872,170 ======= =======
a) Information of investments in the subsidiaries
03/2003 12/2002 --------- --------- Number of shares (in thousands) Common 6,539,044 6,539,044 Preferred 8,024,973 8,024,973 Interest in the capital 80.79% 80.79% Shareholders' equity 1,039,370 1,008,548 Income (loss) of the period 42,323 (1,843)
b) CHANGES IN THE INVESTMENTS IN THE SUBSIDIARIES
03/2003 ------- Investment at 12/31/2002 848,960 Interest on shareholders' equity (9,291) Equity result 34,193 ------- Investment at 03/31/2003 873,862 =======
18 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 12. PROPERTY, PLANT AND EQUIPMENT - CONSOLIDATED
03/2003 12/2002 ------------------------------------------------- ANNUAL DEPRECIATION ACCUMULATED RATE % COST DEPRECIATION NET VALUE NET VALUE ------------------------------------------------------------------- Automatic commutation equipment (switches) 14.29 233,341 (110,449) 122,892 129,057 Automatic transmission equipment 14.29 813,587 (479,186) 334,401 365,500 Lended handsets 5.00 25,892 (17,302) 8,590 9,443 Network infrastructure 33.33 165,962 (67,551) 98,411 92,686 Software and hardware 20.00 41,952 (21,819) 20,133 22,188 Others 10.00 7,771 (4,195) 3,576 3,552 Intangible assets 20.00 30,768 (12,314) 18,454 18,151 ------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT 1,319,273 (712,816) 606,457 640,577 Construction in progress 7,345 - 7,345 15,372 ------------------------------------------------- TOTAL 1,326,618 (712,816) 613,802 655,949 =================================================
(a) INTEREST CAPITALIZATION For the three months-period ended March 31, 2003, it was capitalized in Property, Plant and Equipment an amount of R$40 (R$646 during 2002) related to financing of debt transactions contracted to finance certain assets in construction. (b) LEASES The Company leases equipment and facilities under many operating agreements with different terms, which can be terminated without cost. For the three months period ended on March 31, 2003 and 2002 the consolidated lease expenses under those agreements were R$1,827 and R$1,739, respectively. (c) RECOVERABILITY OF PROPERTY, PLANT AND EQUIPMENT As described in Note 1-d, the Company and its subsidiary plan the implementation of the GSM technology in their networking, in addition to the actual TDMA technology. The implementation studies of this new technology, including investments plans, are still in process. At March 31, 2003 and at December 31, 2002, none adjustment to the Company's assets was considered necessary, as a result of the introduction of the new GSM technology. 13. DEBT - CONSOLIDATED
03/2003 12/2002 -------------------- FOREIGN CURRENCY - UNITED STATES DOLLARS Supplier - Subject to exchange variation and interest from 6.61% to 7.3% p.a. These transactions were swapped to CDI. 2,988 2,482 Eximbank - refers to a direct financing with the Export and Import Bank of the United States (EXIMBANK), subject to exchange variation and interest of 7.03% p.a. This transaction was swapped to CDI. 29,882 39,134 -------------------- 32,870 41,616
19 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE LOCAL CURRENCY BNDES - Banco Nacional de Desenvolvimento Economico e Social. The financing is comprised by 71% subjected to the TJLP rate (11.00% p.a) plus spread of 4% p.a. The remaining 29% is updated based on a mix of indexes (8.457% p.a.), plus spread of 4% p.a. This financing 66,869 69,355 was swapped to CDI. ------ ------- 66,869 69,355 TOTAL DEBT 99,739 110,971 ====== ======= Current portion 38,450 38,052 Long-term liabilities 61,289 72,919
MATURITY DATES 03/2003 ----------- 2004 24,814 2005 18,345 2006 17,704 2007 and thereafter 426 ----------- 61,289 ===========
The BNDES loans are subject to certain covenants covering EBITDA margin, debt coverage, coverage of net financial expenses and indebtedness. The Company was in compliance with all such restrictive clauses at March 31, 2003. The parent Company endorsed the debt agreements guaranteeing these transactions. 14. DEBENTURES In October 2000 it was issued 20,000 debentures, non-convertible in stock, due in 2003, with interest equal to 102.7% of the Brazilian Interbank Rate, due in a semester basis, with final due date at October 2, 2003. This issuance also presents some covenants whose the company complies. It also has as a guarantee the parent Company endorsement. The debenture issuance expenses were recorded as Other Assets - Current Assets, and are being amortized over a period of 36 months, since the debentures issuance date. At March 31, 2003 and December 31, 2002 the balance registered in this account was R$318 and R$451, respectively. 20 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 15. TAXES AND CONTRIBUTIONS PAYABLE - CURRENT AND NON-CURRENT
PARENT COMPANY CONSOLIDATED --------------------------- ------------------------ 03/2003 12/2002 03/2003 12/2002 -------- --------- -------- -------- Income tax 538 - 538 747 Social contribution tax - - - 74 ICMS - - 112,392 106,035 PIS 158 8 1,347 1,928 COFINS 289 12 4,879 6,659 Fistel Fee - - 293 1,085 FUST - - 386 397 FUNTTEL - - 193 199 Other 43 - 95 27 -------- -------- -------- -------- 1,028 20 120,123 117,151 ======== ======== ======== ======== Current portion 1,028 20 49,567 42,958 Long-term liabilities - - 70,556 74,193
Maturity dates 03/2003 ----------- 2004 17,893 2005 30,482 2006 18,415 2007 3,766 ----------- 70,556 ===========
The subsidiary Telepar Celular S.A. has a tax benefit of postponing 48 months the ICMS (State VAT) to be paid, which is updated on UP/PR, and that was given by the Parana State government in a program called "Programa Parana Mais Emprego". 16. CONTINGENCIES PROVISION
PARENT COMPANY CONSOLIDATED ------------------------ ------------------------- 03/2003 12/2002 03/2003 12/2002 -------- ------- -------- -------- Labor 105 84 2,289 2,268 Fiscal - - 29 30 Civil 51 51 6,894 6,653 ------- ------ -------- -------- 156 135 9,212 8,951 ======= ====== ======== ========
There is no provision accrued for all those cases in which the Company's legal advisors believe that the Company is going to succeed, including the lawsuit questioning the ICMS (VAT State) as mentioned in Note 10. 21 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE CIVIL CLAIMS The provision for civil claims represents claims filed by former customers in connection with billing disputes. LABOR CLAIMS The provision for labor claims represents management's estimate of probable losses in relation to the various suits filed by former employees. FISCAL CLAIMS The provision for civil claims represents different interpretation by the Fiscal Law, in which management estimates the tax authorities can obtain success. 17. PENSION PLAN The Company is sponsoring a defined benefits pension plan to a group of employees from the former Telebras system, under the administration of the Fundacao Sistel de Seguridade Social - Sistel, as the result of the legal provisions established at the time of privatization of that company in July 1998. 22 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 17. PENSION PLAN -- continued Considering that in 1999/2000, the sponsors of the plans administered by SISTEL had already negotiated conditions for the creation of individualized retirement plans for each sponsor, maintaining the joint and several aspect only for the participants already assisted under such condition at January 31, 2000, the Company, during the year 2002, as occurred with other companies originating from the former Telebras System, started the actions for the formatting of a Defined Contribution Plan, which would meet the most modern standards of social security practices in the private sector and that would permit a migration possibility to the employees linked to SISTEL. On November 13, 2002, through Notification 1,917 CGAJ/SPC, the Secretary of Complementary Pension approved the new pension plan, from now on called Regulations of the Benefit Plan TIMPREV, in the Defined Contribution modality, providing new conditions for the granting and maintenance of benefits, as well as the rights and obligations of the Plan Administration Entity, the Sponsors, the Participants and their respective beneficiaries. The majority or 94% of the participants of the prior plans migrated to the new plan up to January 29, 2003, which was dead line for the migration to the new plan. In the new modality, the normal contribution of the sponsor corresponds to 100% of the basic contribution of the participant, while the administration entity of the TIMPREV will assure, as per the terms and conditions of the approved regulations, the benefits listed below, not assuming the responsibility for granting any other benefit even if the official social security grants it to its beneficiaries: - Regular retirement pension - Anticipated retirement pension - Invalid (disability) pension - Deferred proportional benefit - Death pension SUPPLEMENTARY PENSION As successor in the partial spin-off of Telecomunicacoes do Parana S.A. - TELEPAR, the Company sponsors the supplementary pension plan established in 1970 under a Collective Agreement ratified by the Atypical Contractual Relationship Agreement entered into by the Company and labor unions representing the then existing professional categories. 23 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 0176-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 18. NET EQUITY - COMPANY (a) CAPITAL The Company is authorized to increase its capital, through approval by a shareholders' meeting, up to the limit 700 billion of common or preferred shares, without the need to maintain the proportion between the shares, but keeping the legal limit of 2/3 (two thirds) for issuing preferred shares without voting rights. The limit to increase the Company's capital will be increased based on approval of an Extraordinary General Meeting, when the capital was fully utilized or when the difference between such limit and the subscribed capital was not sufficient to guarantee the capitalization plan for the year. At March 18 2003, the Shareholders' Annual Meeting approved the capital increase of the Company, without issuance of new shares, based on the exceeding resources remaining from the retained income account and income reserves in amount of R$15,000 and also R$268, related to a goodwill reserve not used, totaling R$15,268. At March 31, 2003, capital was represented by the following shares with out nominal value:
COMMON PREFERRED TOTAL -------- --------- -------- Quantity (in million of shares) 129,358 213,612 342.970 Amount (R$) 128,213 211,721 339,934
The preferred shares have the following advantages: I - Preferred shares class A are assured of priority in reimbursement of capital, without premium, and right to receive dividends greater than 10% (ten percent) than the dividends paid to common shares issued by the Company; II - Preferred shares class B are assured of priority in reimbursement of capital, without premium, and receiving of minimum noncumulative dividends of 6% a year, on the amount resulting from the division of capital stock subscribed by the total number of Company shares; III - Alternatively, preferred shares can receive dividends representing 3% (three percent) of the equity value of the share, which is greater. 24 A free translation from Portuguese into English of Quarterly Financial Information prepared in Brazilian currency and in accordance with the CORPORATE LEGISLATION accounting practices adopted in Brazil. MARCH 31, 2003 FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
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05.01 - COMMENTS ON COMPANY PERFORMANCE (b) CAPITAL RESERVE - SPECIAL GOODWILL RESERVE This reserve was generated by the corporate restructuring approved by the Extraordinary General Meeting at June 30, 2000 (see note 8). A portion of this reserve which corresponds to the benefit for the year can be, at the end of each fiscal year, capitalized in favor of the majority shareholder with the issuing of new shares. The respective capital increase should respect the preference of the minority shareholders, in the proportion of its participation, by species and class of shares at the time of issuance. The amounts paid for exercising this right will be paid to the majority shareholder, in accordance with the Instruction CVM 319/99. 18. NET EQUITY - COMPANY -- CONTINUED (c) LEGAL RESERVE Brazilian companies are required to appropriate 5% of their annual net income to a legal reserve until that reserve equals 20% of paid-up share capital, or 30% of nominal paid-up share capital plus capital reserves; thereafter, appropriations to this reserve are not compulsory. This reserve can only be used to increase capital or offset accumulated losses. (d) DIVIDENDS The dividends are being calculated in accordance with the Company's by Laws and with Brazilian Corporate Law. According to the Company's by Laws, the Company should distribute as minimum dividends at each fiscal year ending December 31, considering there are available funds for distribution, a total amount equivalent to 25% of the adjusted net income. (e) SPECIAL RESERVE FOR DIVIDENDS During 2001, the Shareholders Meeting approved the proposal made by management for the formation of a reserve for dividends payable in the amount of R$19,257, referring to the portion of dividends declared based on the balance sheet at December 31, 2001, with the objective of preserving the economic and financial equilibrium of the Company and concurrently satisfying the needs of relevant investments to meet demand. At March 18, 2003 the Shareholders Meeting, based on the Company's management proposal to the distribution of the net income for the year ended December 31, 2002, approved the realization of part of 25 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE the special reserve for dividends in the amount of R$10,602, leaving a remaining portion of R$8,655 to be realized in the future. (f) INCOME RESERVE FOR EXPANSION This reserve is constitute as determined by Instruction CVM 59/86 to be used in the expansion of the Company's networking. Such retention is supported by the Company's investment budge to be approved in the Shareholders Meeting as proposed by management. 18. NET EQUITY - COMPANY -- CONTINUED (g) STOCK OPTION PLAN Considering the paragraph 3 of article 168 of Law 6,404/76, the Company can deliberate option to acquire shares to its executives, employees and services providers to the Company or subsidiaries, based on a plan approved by the Shareholders Meeting. At May 2 2001, the Company shareholders approved an employee stock option plan, with the following objectives: i) to retain the services and advice of key employees, upon whose judgment, initiative and efforts the Company depends; ii) to make available to key employees certain compensatory arrangements based on market value increase; and iii) to align generally the interests of key employees and the interests of shareholders. The Board of Executive Officers may authorize future capital increases, within the limit of the authorized capital, with the issuance of preferred shares for the benefit of the directors and key officers. The amount of shares that may be issued under the stock option plan is limited to 1.5% of the Company's capital stock on May 2, 2001. The option exercise price per 1,000 Preferred Shares was set at R$4.27, the closing price of 1,000 Preferred Shares at the Sao Paulo Stock Exchange ("Bovespa"), on May 2, 2001. The stock option plan has a four-year term and will expire in 2005. No option may be exercised after four years from the date it was granted. The options may not be exercised before one year from the date they are granted. The exercise of the option may occur in the end of the fourth year after the granted date, but can be accelerated depending upon the achievement of certain results, which are based on certain EBIT (earnings before interest and 26 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE taxes). Up to March 31, 2003, no option granted to the Company's key employees was exercised. At March 31, 2003, the closing price per 1,000 preferred shares was set as R$2.36 (R$2.74 at December 31, 2002) at the Sao Paulo Stock Exchange, which price was lower than the option exercise price per 1,000 preferred shares at the granted date. 19. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD --------------------------------------------------------------------------------- Balance at December 31, 2002 845,330 Net income for the period 28,665 --------------------------------------------------------------------------------- Balance at March 31, 2003 873,995 --------------------------------------------------------------------------------- Net equity book value per thousand of shares (in Reais) 2.45 ---------------------------------------------------------------------------------
20. NET OPERATING REVENUE
CONSOLIDATED -------------------- 03/2003 03/2002 ------- ------- Revenues from telecommunication services Subscriptions 54,574 47,370 Usage 129,162 117,731 Use of network 94,940 82,927 Other services 10,143 3,525 ------- ------- 288,819 251,553 Sale of products 28,638 21,028 ------- ------- Gross revenues 317,457 272,581 Deduction from Gross revenues Taxes (63,899) (53,834) Discounts (6.898) (10,844) Other (37) (129) ------- ------- (70,834) (64,807) ------- ------- 246,623 207,774 ======= =======
27 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 21. COST OF SERVICES RENDERED AND GOODS SOLD
CONSOLIDATED -------------------- 03/2003 03/2002 ------- ------- Salaries and social contribution charges (2,317) (2,169) Third-party services (6,010) (4,024) Interconnection (38,875) (31,937) Depreciation and amortization (42,081) (40,210) Cost of goods sold (29,481) (17,503) Other (1,062) (255) ------- ------- (119,826) (96,098) ======= =======
22. SELLING EXPENSES
CONSOLIDATED -------------------- 03/2003 03/2002 ------- ------- Salaries and social contribution charges (5,576) (4,967) Third-party services (27,462) (26,414) Allowance for doubtful accounts and provision for losses (5,492) (9,915) Fistel (6,555) (5,603) Depreciation and amortization (3,484) (3,356) Other (669) (136) ------- ------- (49,238) (50,391) ======= =======
23. GENERAL AND ADMINISTRATIVE EXPENSES
PARENT COMPANY CONSOLIDATED -------------------- -------------------- 03/2003 03/2002 03/2003 03/2002 ------- ------- ------- ------- Salaries and social contribution charges (1,559) (1,083) (6,699) (4,433) Third-party services (382) (386) (12,401) (7,128) Depreciation and amortization (4) (4) (6,197) (5,128) Other (284) (55) (1,602) (1,494) ------ ------ ------- ------- (2,229) (1,528) (26,899) (18,183) ====== ====== ======= =======
During the three-month period ended March 31, 2003, the Company and subsidiaries paid R$598 (R$565 at March 31, 2002) to management members. 28 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
----------------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ ----------------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 -----------------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 24. OTHER OPERATING INCOME
PARENT COMPANY CONSOLIDATED ------------------- ------------------- 03/2003 03/2002 03/2003 03/2002 ------- ------- ------- ------- Fines charges to customers on overdue payments - - 850 939 Reversal of provision for reduction to market value - - - 763 Anti-fraud services - - 59 31 Others 207 188 1,077 1,722 --- --- ----- ----- 207 188 1,986 3,455 === === ===== =====
25. OTHER OPERATING EXPENSES
PARENT COMPANY CONSOLIDATED ------------------- ------------------- 03/2003 03/2002 03/2003 03/2002 ------- ------- ------- ------- Expenses PIS and COFINS over interest on shareholders' equity (475) - (2,103) - Taxes and contributions (14) (5) (2,405) (232) Amortization of goodwill - - (6,336) (6,744) Provision for contingencies - (47) - (1,224) Other (434) (448) (1,124) (959) ---- ---- ------ ------ (923) (500) (11,968) (9,159) ==== ==== ======= ======
26. INCOME TAX AND SOCIAL CONTRIBUTION The provision for income tax is calculated at the rate of 15%, plus an additional 10% on taxable income. The provision for social contribution is calculated at the rate of 9% on income before income tax, adjusted in accordance with current tax legislation. 29 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 26. INCOME TAX AND SOCIAL CONTRIBUTION -- CONTINUED Reconciliation of the taxes recorded in the income statement is as follows:
PARENT COMPANY CONSOLIDATED ------------------ ------------------ 03/2003 03/2002 03/2003 03/2002 ------- ------- ------- ------- INCOME TAX Income before taxes 31,195 17,103 45,861 27,757 Interest on shareholders' equity 9,291 - (2,209) - Equity result (33,405) (17,773) 788 1,554 ------- ------- ------- ------- Basis of calculation 7,081 (670) 44,440 29,311 Standard rate - 25% (1,771) 167 (11,110) (7,328) Permanent differences Goodwill amortization (99) (106) 2,962 2,959 Others 13 (6) 1,485 (349) ------- ------- ------- ------- (86) (112) 4,447 2,610 (1,857) 55 (6,663) (4,718) ------- ------- ------- ------- SOCIAL CONTRIBUTION Income before taxes 31,195 17,103 45,861 27,757 Interest on shareholders' equity 9,291 - (2,209) - Equity results (33,405) (17,773) 788 1,554 ------- ------- ------- ------- Basis of calculation 7,081 (670) 44,440 29,311 Standard rate - 9% (637) 60 (4,000) (2,638) Permanent differences Goodwill amortization (36) (38) 1,066 1,066 Others - (18) 532 (828) ------- ------- ------- ------- (36) (56) 1,598 238 (673) 4 (2,402) (2,400) ------- ------- ------- ------- Total income tax and social contribution (2,530) 59 (9,065) (7,118) ======= ======= ======= =======
30 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 27. FINANCIAL INSTRUMENTS The Company and its subsidiary carry out operations involving financial instruments with the aim of reducing risks relating to market, foreign exchange and interest rates. Such risks are controlled through specific policies, the establishment of operating strategies and limits, and other techniques for monitoring the positions. The estimated market value of the financial instruments, primarily cash and cash equivalents, trade accounts receivable, and short-term financing instruments, approximates its book value because of the short maturity of those instruments. On March 31, 2003, the Company and its subsidiary invested their financial resources mainly in investments backed by Certificados de Deposito Interbancario (CDIs - Interbank Deposit Certificates), recorded as Marketable Securities. There are no financial assets indexed to a foreign currency. The estimated fair value of long-term loans and financings are based on interest rates as of March 31, 2003 for transactions with similar characteristics, as below.
BOOK MARKET VALUE VALUE ------- -------- Long-term loans and financing and debentures 322,097 310,420
(a) LOANS AND FINANCING Fair values of loans and financing demonstrated above are determined based on future cash flow and interest rates applicable to similar transactions, in same conditions and risks or based on the market quotations for such operations. The total liabilities denominated in United States dollars totaled R$32,870 (R$41,616 at December 31, 2002). In addition to those financial instruments, the subsidiary Telepar Celular S.A. has Swap Contracts between US Dollars and mix of currencies (BNDES) to CDI, in the amount of R$16,845 (R$28,224 in 2002), with due dates between 2003 and 2007. (b) LIMITATIONS The market values were estimated at a certain period, based on significant market information. Changes in assumptions may affect significantly the estimates presented. 31 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 27. FINANCIAL INSTRUMENTS -- CONTINUED (c) RISK FACTORS The risk factors affecting the Company's instruments are the following: (I) EXCHANGE AND INTEREST RATES RISK The exchange and interest rates risk relate to the possibility of the Company computing losses resulting from fluctuations in exchange and interest 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. At March 31, 2003, a portion of Company loans was denominated in U.S. dollars and 100% of the loans were covered by hedge contracts. The income or loss resulting from these hedge contracts is charged to operating results. The Company is also a part in agreements that allow it to effectively pay interest at fixed rates on some of its debts contracted in variable interest rates. (II) CREDIT OPERATING RISK The risk is related to the possibility of the Company computing losses originating from the difficulty of collecting the amounts billed to customers, which are represented by traders of prepaid telephone cards and distributors of cellular equipment. In order to have this risk reduced, the Company performs credit analyses to assist the risk management in respect to collection problems and monitors the accounts receivable from subscribers, blocking the telephony ability in case customers do not pay their bills. With respect to distributors, the Company maintains individual credit limits, based on potential sales analysis, risk history and risk with collection problems. (III) CREDIT RISK RELATED TO THE SALE OF TELEPHONE SETS The Company's policy for the sale of telephone sets and distribution of prepaid telephone cards is directly related to the risk of credit levels accepted during the normal course of business. The selection of partners, the diversification of the accounts payable portfolio, the monitoring of loan conditions, the positions and limits of requests established for traders, the constitution of real guarantees are procedures adopted by the Company to minimize possible collection problems with its commercial partners. 32 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
05.01 - COMMENTS ON COMPANY PERFORMANCE 27. FINANCIAL INSTRUMENTS -- CONTINUED (IV) FINANCIAL CREDIT RISK The risks related to the possibility of the Company computing losses originating from the difficulty in realizing its short-term investments and hedge 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 of work, service, concessions or rights that have not been mentioned above that could, if eliminated suddenly, severely impact the operations of the Company. 28. INSURANCE COVERAGE As of March 31, 2003, the Company presents insurance cover against fire and various risks for the inventories and fixed assets, based on amounts considered sufficient to cover eventual losses, considering management assessment of the risks and amounts involved. See "08.01- Comments on the consolidated company performance in the quarter." 33 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (R$ THOUSAND) 06.01 - CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF REAIS)
---------------------------------------------------------------------------------------------- 1 - CODE 2 - DESCRIPTION 3 - 03.31.2003 4 - 12.31.2002 ---------------------------------------------------------------------------------------------- 1 Total assets 1,633,457 1,647,885 ---------------------------------------------------------------------------------------------- 1.01 Current assets 766,589 705,791 ---------------------------------------------------------------------------------------------- 1.01.01 Cash and cash equivalents 488,244 432,834 --------------------------------------------------------------------------------------------- 1.01.01.01 Banks 3,874 11,147 ---------------------------------------------------------------------------------------------- 1.01.01.02 Marketable securities 484,370 421,687 ---------------------------------------------------------------------------------------------- 1.01.02 Receivables 154,983 165,801 ---------------------------------------------------------------------------------------------- 1.01.02.01 Receivables from customers 154,983 165,801 ---------------------------------------------------------------------------------------------- 1.01.03 Inventories 6,035 15,573 ---------------------------------------------------------------------------------------------- 1.01.04 Other current assets 117,327 91,583 ---------------------------------------------------------------------------------------------- 1.01.04.01 Recoverable taxes 42,180 42,386 ---------------------------------------------------------------------------------------------- 1.01.04.02 Deferred taxes 53,727 44,590 ---------------------------------------------------------------------------------------------- 1.01.04.03 Prepaid expenses 18,813 1,013 ---------------------------------------------------------------------------------------------- 1.01.04.04 Other 2,607 3,594 ---------------------------------------------------------------------------------------------- 1.02 Long-term assets 181,649 208,967 ---------------------------------------------------------------------------------------------- 1.02.01 Other receivables 169,153 189,340 ---------------------------------------------------------------------------------------------- 1.02.01.01 Recoverable taxes 4,107 4,667 ---------------------------------------------------------------------------------------------- 1.02.01.02 Deferred taxes 165,046 184,673 ---------------------------------------------------------------------------------------------- 1.02.02 Receivables from related companies 0 0 ---------------------------------------------------------------------------------------------- 1.02.02.01 Associated companies 0 0 ---------------------------------------------------------------------------------------------- 1.02.02.02 Subsidiaries 0 0 ---------------------------------------------------------------------------------------------- 1.02.02.03 Other related companies 0 0 ---------------------------------------------------------------------------------------------- 1.02.03 Other 12,496 19,627 ---------------------------------------------------------------------------------------------- 1.02.03.01 Judicial deposits 11,874 11,148 ---------------------------------------------------------------------------------------------- 1.02.03.02 Other 622 8,479 ---------------------------------------------------------------------------------------------- 1.03 Permanent assets 685,219 733,127 ---------------------------------------------------------------------------------------------- 1.03.01 Investments 23,083 24,320 ---------------------------------------------------------------------------------------------- 1.03.01.01 In associated companies 9,391 0 ---------------------------------------------------------------------------------------------- 1.03.01.02 In Subsidiaries 0 0 ---------------------------------------------------------------------------------------------- 1.03.01.03 Other 13,692 24,320 ---------------------------------------------------------------------------------------------- 1.03.02 Property, plant and equipment 613,802 655,949 ---------------------------------------------------------------------------------------------- 1.03.03 Deferred charges 48,334 52,858 ----------------------------------------------------------------------------------------------
34 A free translation from Portuguese into English CORPORATE LEGISLATION of Quarterly Financial Information prepared in MARCH 31, 2003 Brazilian currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPJ -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND STOCKHOLDERS' EQUITY (R$ THOUSAND) 06.02 - CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF REAIS)
--------------------------------------------------------------------------------------------------- 1 - CODE 2 - DESCRIPTION 3 - 03.31.2003 4 - 12.31.2002 --------------------------------------------------------------------------------------------------- 2 Total liabilities and shareholders' equity 1,633,457 1,647,885 --------------------------------------------------------------------------------------------------- 2.01 Current liabilities 450,020 484,070 --------------------------------------------------------------------------------------------------- 2.01.01 Debt - current portion 38,450 38,052 --------------------------------------------------------------------------------------------------- 2.01.02 Debentures - current portion 222,358 210,114 --------------------------------------------------------------------------------------------------- 2.01.03 Suppliers 80,630 123,677 --------------------------------------------------------------------------------------------------- 2.01.04 Taxes, charges and contributions 49,567 42,958 --------------------------------------------------------------------------------------------------- 2.01.05 Dividends payable 32,126 30,186 --------------------------------------------------------------------------------------------------- 2.01.05.01 Interest attributed to shareholders' capital 19,640 17,697 --------------------------------------------------------------------------------------------------- 2.01.05.02 Dividends payable 12,486 12,489 --------------------------------------------------------------------------------------------------- 2.01.06 Provisions 0 0 --------------------------------------------------------------------------------------------------- 2.01.07 Payable to related companies 0 0 --------------------------------------------------------------------------------------------------- 2.01.08 Other 26,889 39,083 --------------------------------------------------------------------------------------------------- 2.01.08.01 Salaries, charges and social benefits 13,953 14,115 --------------------------------------------------------------------------------------------------- 2.01.08.02 Other liabilities 12,936 24,968 --------------------------------------------------------------------------------------------------- 2.02 Long-term liabilities 143,934 158,896 --------------------------------------------------------------------------------------------------- 2.02.01 Debt 61,289 72,919 --------------------------------------------------------------------------------------------------- 2.02.02 Debentures 0 0 --------------------------------------------------------------------------------------------------- 2.02.03 Provisions 12,089 11,784 --------------------------------------------------------------------------------------------------- 2.02.03.01 Provision for pension plan 2,877 2,833 --------------------------------------------------------------------------------------------------- 2.02.03.02 Provision for contingencies 9,212 8,951 --------------------------------------------------------------------------------------------------- 2.02.04 Payable to related companies 0 0 --------------------------------------------------------------------------------------------------- 2.02.05 Other 70,556 74,193 --------------------------------------------------------------------------------------------------- 2.02.05.01 Taxes and contributions payable 70,556 74,193 --------------------------------------------------------------------------------------------------- 2.03 Deferred income 0 0 --------------------------------------------------------------------------------------------------- 2.04 Minority interest 165,508 159,589 --------------------------------------------------------------------------------------------------- 2.05 Shareholders' equity 873,995 845,330 --------------------------------------------------------------------------------------------------- 2.05.01 Paid-up capital 339,934 324,666 --------------------------------------------------------------------------------------------------- 2.05.02 Capital reserves 177,794 178,062 --------------------------------------------------------------------------------------------------- 2.05.03 Revaluation reserves 0 0 --------------------------------------------------------------------------------------------------- 2.05.03.01 Own assets 0 0 --------------------------------------------------------------------------------------------------- 2.05.03.02 Associated/subsidiary companies' assets 0 0 --------------------------------------------------------------------------------------------------- 2.05.04 Revenue reserves 327,602 342,602 --------------------------------------------------------------------------------------------------- 2.05.04.01 Legal 23,795 23,795 --------------------------------------------------------------------------------------------------- 2.05.04.02 Statutory 0 0 --------------------------------------------------------------------------------------------------- 2.05.04.03 Contingencies 0 0 --------------------------------------------------------------------------------------------------- 2.05.04.04 Unrealized profits 0 0 --------------------------------------------------------------------------------------------------- 2.05.04.05 Retention of profits 0 0 --------------------------------------------------------------------------------------------------- 2.05.04.06 Special reserve for undistributed dividends 8,655 8,655 --------------------------------------------------------------------------------------------------- 2.05.04.07 Other revenue reserves 295,152 310,152 --------------------------------------------------------------------------------------------------- 2.05.05 Retained earnings/accumulated deficit 28,665 0 ---------------------------------------------------------------------------------------------------
35 A free translation from Portuguese into English of CORPORATE LEGISLATION Quarterly Financial Information prepared in Brazilian MARCH 31, 2003 currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1 - CVM CODE 2 - COMPANY NAME 3 - FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------------------------------------------------------------------------------------------------------ 1 - CODE 2 - DESCRIPTION 3 - 01.01.2003 TO 4 - 01.01.2003 TO 5 - 01.01.2002 TO 6 - 01.01.2002 TO 03.31.2003 03.31.2003 03.31.2002 03.31.2002 ------------------------------------------------------------------------------------------------------------------------------------ 3.01 Gross revenue from goods sold and services rendered 317,457 317,457 272,581 272,581 ----------------------------------------------------------------------------------------------------------------------------------- 3.02 Deductions to gross revenue (70,834) (70,834) (64,807) (64,807) ----------------------------------------------------------------------------------------------------------------------------------- 3.03 Net revenue from goods sold and services rendered 246,623 246,623 207,774 207,774 ----------------------------------------------------------------------------------------------------------------------------------- 3.04 Cost of goods sold and services rendered (119,826) (119,826) (96,098) (96,098) ----------------------------------------------------------------------------------------------------------------------------------- 3.05 Gross profit 126,797 126,797 111,676 111,676 ----------------------------------------------------------------------------------------------------------------------------------- 3.06 Operating expenses/income (81,067) (81,067) (83,919) (83,919) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.01 Selling (49,238) (49,238) (50,391) (50,391) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.02 General and administrative (26,899) (26,899) (18,183) (18,183) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.03 Financial, net 5,840 5,840 (8,087) (8,087) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.03.01 Financial income 33,033 33,033 13,696 13,696 ----------------------------------------------------------------------------------------------------------------------------------- 3.06.03.02 Financial expenses (27,193) (27,193) (21,783) (21,783) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.04 Other operating income 1,986 1,986 3,455 3,455 ----------------------------------------------------------------------------------------------------------------------------------- 3.06.05 Other operating expenses (11,968) (11,968) (9,159) (9,159) ----------------------------------------------------------------------------------------------------------------------------------- 3.06.06 Equity interest in income of subsidiary and associated companies (788) (788) (1,554) (1,554) ----------------------------------------------------------------------------------------------------------------------------------- 3.07 Operating profit (loss) 45,730 45,730 27,757 27,757 ----------------------------------------------------------------------------------------------------------------------------------- 3.08 Non-operating results 131 131 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.08.01 Income 131 131 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.08.02 Expenses 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.09 Income (loss) before taxes and participation 45,861 45,861 27,757 27,757 ----------------------------------------------------------------------------------------------------------------------------------- 3.10 Provision for income tax and social contribution (9,065) (9,065) (7,118) (7,118) ----------------------------------------------------------------------------------------------------------------------------------- 3.11 Deferred income tax 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.12 Statutory profit sharing and contributions 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.12.01 Participation 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.12.01.01 Profit sharing 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.12.02 Contributions 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.13 Reversal of interest attributed to shareholders' capital 0 0 0 0 ----------------------------------------------------------------------------------------------------------------------------------- 3.14 Minority interest (8,131) (8,131) (3,477) (3,477) ----------------------------------------------------------------------------------------------------------------------------------- 3.15 Net income (loss) for the period 28,665 28,665 17,162 17,162 ----------------------------------------------------------------------------------------------------------------------------------- Number of shares (thousand), excluding treasury stock 342,969,940 342,969,940 337,218,601 337,218,601 ----------------------------------------------------------------------------------------------------------------------------------- Net income per share 0,00008 0,00008 0,00005 0,00005 ----------------------------------------------------------------------------------------------------------------------------------- Net loss per share -----------------------------------------------------------------------------------------------------------------------------------
36 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) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1 - CVM CODE 2 - COMPANY NAME 3 - FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS COMMENTS ON CONSOLIDATED PERFORMANCE - FIRST QUARTER/2003 OPERATING REVENUE
R$ thousands ------------------------------------------------------------------------------ 1ST QUARTER/2003 1ST QUARTER/2002 ------------------------------------------------------------------------------ Handset sales 28,638 21,028 ------------------------------------------------------------------------- Usage 129,162 117,731 ------------------------------------------------------------------------- Subscription 54,574 47,370 ------------------------------------------------------------------------- Interconnection 94,940 82,927 ------------------------------------------------------------------------- Other 10,143 3,525 ------------------------------------------------------------------------- GROSS REVENUE 317,457 272,581 ------------------------------------------------------------------------- Taxes and other deductions (70,834) (64,807) ------------------------------------------------------------------------- NET REVENUE 246,623 207,774 -------------------------------------------------------------------------
During the first quarter of 2003, the Company's gross revenue amounted to R$317.5 million, an increase of 16.5% related to the first quarter of 2002. The main reason was the increase in the number of subscribers during the period and due to the increase in handsets sales. COSTS AND OPERATING EXPENSES
R$ thousands -------------------------------------------------------------------------------------- 1ST QUARTER/2003 1ST QUARTER/2002 -------------------------------------------------------------------------------------- COST OF GOODS SOLD AND SERVICES RENDERED 77,745 55,888 --------------------------------------------------------------------------------- Costs of services (1) 48,264 38,385 --------------------------------------------------------------------------------- Cost of handset sales 29,481 17,503 --------------------------------------------------------------------------------- SELLING EXPENSES (1) e (2) 40,262 34,873 --------------------------------------------------------------------------------- GENERAL AND ADMINISTRATIVE EXPENSES (1) e (3) 21,150 13,055 --------------------------------------------------------------------------------- TOTAL COST AND OPERATING EXPENSES 139,157 103,816 ---------------------------------------------------------------------------------
Note: (1) Depreciation and amortization not included; (2) Allowance for doubtful account expenses not included ; and (3) Employee's profit sharing included in the first quarter of 2002 Costs of services and operating expenses summed R$139.2 million in the quarter, an increase of 34% comparing to the first quarter of 2002, due to the increase in the number of subscribers in the period as well as the increase in handsets sales. The effects of exchange rate over the cost of handsets and the agreements related to the Information Technology were another reason for the increase. 37 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) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1 - CVM CODE 2 - COMPANY NAME 3 - FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS The expenses of provision for doubtful accounts in the first quarter summed R$5.5 million or 1.7% of the gross revenue, which represents a higher collection of due accounts, compared to the 3.6% in the first quarter of 2002. The depreciation and amortization expenses amounted to R$58.1 million (including goodwill amortization), representing an increase of 4.9% comparing with the first quarter of 2002, mainly due to the recent investments done by the Company. EBITDA During the first quarter, EBITDA, by the international concept (operating result before net financing expenses, excluding depreciation and amortization) was R$98.8 million, representing an increase of 6.4% in relation to the first quarter of 2002. The EBITDA margin in the first quarter of 2003 was 40.1% over the total net revenues or 44.2% over net services revenues.
R$ thousands -------------------------------------------------------------------------------------- 1ST QUARTER/2003 1ST QUARTER/2002 -------------------------------------------------------------------------------------- NET OPERATING REVENUE 246,623 207,774 --------------------------------------------------------------------------------- Operating income 45,730 27,757 --------------------------------------------------------------------------------- Depreciation 51,762 48,694 --------------------------------------------------------------------------------- Goodwill amortization 6,337 6,744 --------------------------------------------------------------------------------- Financing revenues (33,033) (13,696) --------------------------------------------------------------------------------- Financing expenses 27,193 21,783 --------------------------------------------------------------------------------- Equity (Timnet.com) 788 1,554 --------------------------------------------------------------------------------- EBITDA 98,777 92,836 --------------------------------------------------------------------------------- EBITDA MARGIN 40.1% 44.7% --------------------------------------------------------------------------------- EBITDA MARGIN - OVER SERVICES REVENUES 44.2% 48.6% ---------------------------------------------------------------------------------
NET INCOME During the quarter, net income was R$28.7 million, 67% and 20% higher than the first and fourth quarter of 2002, mainly due to the increase on revenues. Net income per thousand share was R$0.08 and R$0.80 per ADR. INDEBTEDNESS At March 31, 2003 the debt of the Company was R$322.1 millions comparing with cash and cash equivalent of R$488.2, resulting in a positive net balance of R$166.1 millions. 38 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) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1 - CVM CODE 2 - COMPANY NAME 3 - FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS The amount of R$32.9 millions, of the total mentioned above, represents foreign loans (US$), which are fully covered by hedge operations. During the first quarter of 2003, a financing income of R$33.0 millions was recorded, which source is basically related to the remuneration of the cash and cash equivalents. The financing expense was R$27.2 millions in the same period. OTHER INFORMATION As determined by a specific regulation of CVM - Comissao de Valores Mobiliarios (381/03) or the Brazilian Securities and Exchange Commission, the Company's management inform that up to March 31, 2003, the services provided by the independent auditor, Ernst & Young Auditores Independentes S/C, to Tele Celular Sul Participacoes S.A., Telepar Celular S.A., Telesc Celular S.A. and CTMR Celular S.A., were limited to external auditing. CAPITAL MARKET The Company closed the first quarter of 2003 with its common and preferred shares valuing at Bovespa at R$2.60 and R$2.36 per 1,000 shares, respectively. At the New York stock market (NYSE), the Company's ADRs (American Depository Receipt) were valued at US$7.10 at the last day of the quarter. SUBSCRIBERS The Company finished the first quarter with 1,752,938 subscribers, being 506,375 pos-paid subscribers and 1,246,563 pre-paid subscribers, representing 29% and 71%, respectively. In terms of gross increases, the Company obtained 123,835 new subscribers, 37% higher than the first quarter of 2002. The market share over new acquisitions was 53%, which means that more than half of the new subscribers who acquire handsets in our area, purchased handsets from the Company. At March 31, 2003, the market share was estimated in 60% and the total estimated penetration rate was 20%. The Company has coverage in 250 municipalities and the services are available to 81% of the total population of the region where the Company acts. 39 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) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
------------------------------------------------------------------------------------------------------------------------ 1 - CVM CODE 2 - COMPANY NAME 3 - FEDERAL CORPORATE TAXPAYERS' REGISTRATION NUMBER - CNPJ ------------------------------------------------------------------------------------------------------------------------ 01763-9 TELE CELULAR SUL PARTICIPACOES S.A. 02.558.115/0001-21 ------------------------------------------------------------------------------------------------------------------------
07.01 - CONSOLIDATED STATEMENT OF OPERATIONS SELECTED DATA
-------------------------------------------------------------------------------------- 1ST QUARTER/2003 1ST QUARTER/2002 -------------------------------------------------------------------------------------- Total subscribers 1,752,938 1,614,256 Pos-paid 506,375 580,196 Pre-paid 1,246,563 1,034,060 Estimated population in the region (million) 15.0 15.0 Municipalities covered 250 232 Estimated penetration rate 20% 16% Investments (million) R$ 5 R$ 6 Total employees 993 1,150 ----------------------------------------------------------------------------------
40 A free translation from Portuguese into English of CORPORATE LEGISLATION Quarterly Financial Information prepared in Brazilian MARCH 31, 2003 currency and in accordance with the accounting practices adopted in Brazil. FEDERAL GOVERNMENT SERVICE BRAZILIAN SECURITIES COMMISSION (CVM) QUARTERLY INFORMATION - ITR COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 01.01 - IDENTIFICATION
-------------------------------------------------------------------------------------------------------------- 1 - CVM CODE 2 - COMPANY NAME 3 - NATIONAL CORPORATE TAXPAYERS' REGISTRY - CNPG -------------------------------------------------------------------------------------------------------------- 01763-9 Tele Celular Sul Participacoes S.A. 02.558.115/0001-21 --------------------------------------------------------------------------------------------------------------
17.01 - REPORT ON THE SPECIAL REVIEW - UNQUALIFIED A free translation from Portuguese into English of the Special Review Report of Independent Auditors on the Quarterly Financial Information prepared in Brazilian currency and in accordance with the accounting practices adopted in Brasil. REPORT OF INDEPENDENT ACCOUNTANTS ON THE SPECIAL REVIEW OF QUARTERLY INFORMATION Curitiba, April 11, 2003 To the Board of Directors and Shareholders Tele Celular Sul Participacoes S.A. We have carried out a special review of the quarterly information (ITR) of Tele Celular Sul Participacoes S.A., related to the three-month period ended March 31, 2003, including the balance sheet, the income statement, the comments over the performance in the quarter and the relevant information, prepared in accordance with the accounting practices adopted in Brazil. Our review was conducted in accordance with standards established by the Brazilian Institute of Independent Auditors - IBRACON in conjunction with the Federal Accounting Council - (CFC) and mainly was comprised by: (a) inquiries of, and discussions with, management responsible for the accounting, financial and operating areas of the Company with regard to the main criteria adopted for the preparation of the Quarterly Information and (b) a review of the significant information and subsequent events which have, or could have, significant effects on the Company's financial position and operations. Based on our special review, we are not aware of any significant adjustments which should be made to the Quarterly Information referred to above in order that such information be stated in conformity with accounting practices adopted in Brazil applicable to the preparation of quarterly information, consistent with the regulations of the Brazilian Securities Commission - CVM. [ERNST & YOUNG LOGO] Auditores Independentes S.C. CRC-2-SP 015199/O-6- S-PR Marcos Antonio Quintanilha CRC-1-SP 132776/O-3 T-SC - S-PR 41
------------------------------------------------------------------------------------------------------- GROUP ITR DESCRIPTION PAGE ------------------------------------------------------------------------------------------------------- 01 01 Identification 1 ------------------------------------------------------------------------------------------------------ 01 02 Head-office 1 ------------------------------------------------------------------------------------------------------ 01 03 Investor Relations Officer 1 ------------------------------------------------------------------------------------------------------ 01 04 Quarterly Information Reference 1 ------------------------------------------------------------------------------------------------------ 01 05 Capital composition 2 ------------------------------------------------------------------------------------------------------ 01 06 Characteristics of the company 2 ------------------------------------------------------------------------------------------------------ 01 07 Companies excluded from the consolidated financial statements 2 ------------------------------------------------------------------------------------------------------ 01 08 Dividends approved and/or paid during and after the quarter 2 ------------------------------------------------------------------------------------------------------ 01 09 Subscribed capital and changes in current year 3 ------------------------------------------------------------------------------------------------------ 01 10 Investor Relations Officer 3 ------------------------------------------------------------------------------------------------------ 02 01 Balance sheet - assets 4 ------------------------------------------------------------------------------------------------------ 02 02 Balance sheet - liabilities and stockholders' equity 5 ------------------------------------------------------------------------------------------------------ 03 01 Statements of operations 6 ------------------------------------------------------------------------------------------------------ 04 01 Notes to the quarterly information 7 ------------------------------------------------------------------------------------------------------ 05 01 Comments on company performance 35 ------------------------------------------------------------------------------------------------------ 06 01 Consolidated balance sheet - assets 36 ------------------------------------------------------------------------------------------------------ 06 02 Consolidated balance sheet - liabilities and stockholders' equity 37 ------------------------------------------------------------------------------------------------------ 07 01 Consolidated statement of operations 38 ------------------------------------------------------------------------------------------------------ 08 01 Comments on consolidated performance in the quarter 39 ------------------------------------------------------------------------------------------------------ 17 01 Report on the special review - unqualified 44 ------------------------------------------------------------------------------------------------------
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