Pursuant to Rule 13a-16 or 15d-16 of the
04719-002 - São Paulo-SP
Federative Republic of Brazil
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____ If "Yes" is marked, indicate below the file number assigned to the Registrant
in connection with Rule 12g3-2(b):82-___
Interim Financial Statements
(unaudited)
Net Serviços de Comunicação S.A.
March 31, 2013
With Independent Auditor’s Review Report on individual and consolidated interim financial statements
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Interim financial statements
(unaudited)
March 31, 2013
Contents
Independent auditor’s review report on interim financial statements | 1 |
Income statements | 3 |
Statements of comprehensive income | 4 |
Balance sheets | 5 |
Statements of changes in equity | 7 |
Statements of cash flows | 8 |
Statements of value added | 9 |
Notes to the financial statements | 10 |
A free translation from Portuguese into English of Independent Auditor’s Review Report on individual and consolidated interim financial statement
INDEPENDENT AUDITOR’S REVIEW REPORT
To the Board of Directors and Stockholders of
Net Serviços de Comunicação S.A.
São Paulo - SP
Introduction
We have reviewed the interim individual and consolidated financial statements ofNet Serviços de Comunicação S.A. (“Entity”), contained in the Quarterly Information Form – ITR referring to the quarter ended March 31, 2012, which comprises the balance sheet as at March 31, 2013 and the respective statements of income, of comprehensive income, of changes in shareholders’ equity and of cash flows for the period then ended, including the notes.
The management is responsible for the preparation of the individual interim financial information in accordance with Technical Pronouncement CPC 21 – Interim Statements, and the consolidated interim financial information in accordance with CPC 21 and international standard IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board – IASB, as well as the presentation of the information in accordance with the standards issued by CVM (Comissão de Valores Mobiliários – Brazilian SEC), applicable to the preparation of Interim Information – ITR. Our responsibility is to express a conclusion on the interim accounting information based on our review.
Scope of review
We have conducted our review according to the Brazilian and International standards of review for interim information (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, respectively). A review of interim information consists of queries, especially to those responsible for financial and accounting matters and the application of analytical procedures and other review procedures.
The scope of a review is significantly smaller than the scope of an audit conducted in accordance with the audit standards and, consequently, it did not allow us to obtain assurance that we were aware of all significant matters which could be identified in an audit. Consequently, we did not express an audit opinion.
Conclusion on the individual interim financial information
Based on our review, we are not aware of any fact which could lead us to believe that the individual interim financial statements included in the quarterly information referred to above were not prepared, in all relevant aspects, in accordance with CPC 21, applicable to thepreparation of the Quarterly Information – ITR, and presented according to the standards issued by CVM.
3
Conclusion on the consolidated interim financial information
Based on our review, we are not aware of any fact which could lead us to believe that the consolidated interim financial statements included in the quarterly information referred to above were not prepared, in all relevant aspects, in accordance with CPC 21, and IAS 34, applicable to the preparation of the Quarterly Information – ITR, and presented according to the standards issued by CVM.
Other matters
Interim information of added value
We have also reviewed, the statement of value added (SVA), individual and consolidated, related to the quarter ended March 31, 2013,prepared under the Entity’s management responsibility, the presentation of which is required according to the standards issued by CVM applicable to the preparation of Quarterly Information – ITR, and considered as supplementary information by the IFRSs, which do not require the presentation of the SVA.These statements were submitted to the same review procedures previously described and, based on our review, we are not aware of any fact which could lead us to believe that they were not prepared, in all material aspects, in accordance with the individual and consolidated interim financial information as a whole.
Audit and review of comparative amounts of previous year
The Quarterly Information – ITR mentioned in the first paragraph include financial information corresponding to the income, changes in shareholders’ equity, cash flows and added value of the quarter ended March 31, 2012, obtained from the quarterly information – ITR from that period, and those from the balance sheet of December 31, 2012, obtained from the financial statements of December 31, 2012, presented for comparative purposes. The review of the Quarterly Information – ITR of the quarter ended December 31, 2012 and the exam on the financial statements of the period ended December 31, 2012 were conducted under the responsibility of other independent auditors, who issued quarterly review and audit reports dated April 25, 2012 and February 06, 2013, respectively, with no changes.
São Paulo, April 16, 2013.
CRC Nº SP-013002/O-3
Ernesto Rubens Gelbcke
CTCRC Nº 1SP-071189/O-6
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Statements of comprehensive income (unaudited)
For the three-month periods ended March 31, 2013 and 2012
(In thousands of reais, except for earnings per share)
|
|
| Controladora |
| Consolidado |
| ||||
| Notas |
| 2013 |
| 2012 |
| 2013 |
| 2012 | |
Net revenues | 4 |
| 1,198,224 |
| 978,494 |
| 2,240,954 |
| 1,838,506 | |
Cost of services rendered | 5/7 |
| (779,574) |
| (598,702) |
| (1,456,773) |
| (1,169,345) | |
Gross profit |
|
| 418,650 |
| 379,792 |
| 784,181 |
| 669,161 | |
|
|
|
|
|
|
|
|
|
| |
Operating expenses |
|
|
|
|
|
|
|
|
| |
Selling expenses | 7 |
| (159,517) |
| (124,269) |
| (240,384) |
| (199,048) | |
General and administrative expenses | 7 |
| (106,741) |
| (126,356) |
| (242,824) |
| (234,518) | |
Other | 7 |
| (14,439) |
| (13,645) |
| (27,818) |
| (28,168) | |
|
|
| (280,697) |
| (264,270) |
| (511,026) |
| (461,734) | |
Investments in subsidiaries |
|
|
|
|
|
|
|
|
| |
Equity pickup | 13 |
| 69,916 |
| 60,938 |
| - |
| - | |
|
|
| 69,916 |
| 60,938 |
| - |
| - | |
|
|
|
|
|
|
|
|
|
| |
Operating profit |
|
| 207,869 |
| 176,460 |
| 273,155 |
| 207,427 | |
|
|
|
|
|
|
|
|
|
| |
Finance results |
|
|
|
|
|
|
|
|
| |
Finance expenses | 6 |
| (69,386) |
| (57,076) |
| (105,383) |
| (72,228) | |
Finance income | 6 |
| 23,972 |
| 28,967 |
| 31,436 |
| 39,374 | |
|
|
| (45,414) |
| (28,109) |
| (73,947) |
| (32,854) | |
|
|
|
|
|
|
|
|
|
| |
Profit before income taxes and social contribution |
|
| 162,455 |
| 148,351 |
| 199,208 |
| 174,573 | |
Income tax |
|
|
|
|
|
|
|
|
| |
Current | 12 |
| 142 |
| 1,844 |
| (22,841) |
| (15,888) | |
Deferred | 12 |
| (47,705) |
| (35,597) |
| (61,475) |
| (44,087) | |
|
|
| (47,563) |
| (33,753) |
| (84,316) |
| (59,975) | |
Profit for the period |
|
| 114,892 |
| 114,598 |
| 114,892 |
| 114,598 | |
|
|
|
|
|
|
|
|
|
| |
Basic and diluted earnings per share – common | 23 |
| 0.31 |
| 0.31 |
|
|
|
| |
Basic and diluted earnings per share – preferred | 23 |
| 0.35 |
| 0.34 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the financial statements.
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Statement of comprehensive income (unaudited)
For the three-month periods ended March 31, 2013 and 2012
(In thousands of reais)
ControllingandConsolidated | 2013 | 2012 |
Profit for the period | 114,892 | 114,598 |
Comprehensive income | - | - |
Total comprehensive income | 114,892 | 114,598 |
See accompanying notes to the financial statements.
6
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Balance sheets
March 31, 2013 and December 31, 2012
(In thousands of reais)
|
|
| Controlling company |
| Consolidated | |||||
|
|
| 03/31/2013 |
|
|
| 03/31/2013 |
|
|
|
| Notes |
| (unaudited) |
| 12/31/2012 |
| (unaudited) |
| 12/31/2012 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents | 8 | 93,239 |
| 17,270 |
| 217,811 |
| 38,404 |
| |
Trade accounts receivable | 9 |
| 444,285 |
| 400,103 |
| 856,160 |
| 757,254 |
|
Inventories | 10 |
| 50,372 |
| 38,669 |
| 86,500 |
| 68,697 |
|
Related parties | 19 |
| 33,647 |
| 32,576 |
| - |
| - |
|
Programming receivable from subsidiaries | 19 |
| 35,634 |
| 48,529 |
| - |
| - |
|
Recoverable taxes | 12 |
| 64,725 |
| 63,117 |
| 81,600 |
| 77,115 |
|
Prepaid expenses |
|
| 31,385 |
| 19,929 |
| 39,793 |
| 27,818 |
|
Interest on equity | 19 |
| 75,388 |
| 75,388 |
| - |
| - |
|
Prepaid rights for use | 19 |
| 118,263 |
| 118,785 |
| 166,271 |
| 167,004 |
|
Other current assets |
|
| 10,619 |
| 9,901 |
| 23,824 |
| 21,034 |
|
Total current assets |
|
| 957,557 |
| 824,267 |
| 1,471,959 |
| 1,157,326 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
|
|
|
|
|
|
|
|
|
Judicial deposits | 11 |
| 71,411 |
| 66,490 |
| 132,056 |
| 123,396 |
|
Related parties | 19 |
| 31,021 |
| 157,711 |
| - |
| - |
|
Deferred taxes | 12 |
| - |
| - |
| 272,836 |
| 283,824 |
|
Recoverable taxes | 12 |
| 4,060 |
| 4,060 |
| 5,720 |
| 5,682 |
|
Prepaid rights for use | 19 |
| 77,649 |
| 107,017 |
| 109,169 |
| 150,459 |
|
Other non-current assets |
|
| 2,515 |
| 2,192 |
| 4,785 |
| 4,434 |
|
|
|
| 186,656 |
| 337,470 |
| 524,566 |
| 567,795 |
|
|
|
|
|
|
|
|
|
|
|
|
Investments | 13 |
| 1,326,051 |
| 1,114,872 |
| - |
| - |
|
Property, plant and equipment | 14 |
| 3,396,906 |
| 3,175,988 |
| 5,951,480 |
| 5,594,753 |
|
Intangible assets | 15 |
| 2,423,481 |
| 2,397,584 |
| 2,461,928 |
| 2,439,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
| 7,333,094 |
| 7,025,914 |
| 8,937,974 |
| 8,601,854 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| 8,290,651 |
| 7,850,181 |
| 10,409,933 |
| 9,759,180 |
|
7
|
|
| Controlling company |
| Consolidated | ||||
| Notes |
| 03/31/2013 (unaudited) |
| 12/31/2012 |
| 03/31/2013 (unaudited) |
| 12/31/2012 |
LIABILITIES |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
Trade accounts payable | 16 |
| 649,048 |
| 608,332 |
| 999,719 |
| 907,083 |
Accounts payable – programming suppliers | 17 |
| 146,282 |
| 129,071 |
| 209,076 |
| 189,460 |
Taxes payable | 12 |
| 34,252 |
| 36,528 |
| 100,183 |
| 93,994 |
Payroll and related charges |
|
| 116,597 |
| 167,134 |
| 173,197 |
| 243,089 |
Debt | 18 |
| 747,782 |
| 756,361 |
| 808,427 |
| 814,868 |
Related parties | 19 |
| 441,809 |
| 113,982 |
| 651,727 |
| 127,142 |
Deferred revenues | 19 |
| 114,709 |
| 114,939 |
| 200,959 |
| 201,283 |
Unrealized losses on derivatives | 24/25 |
| 3,747 |
| 4,102 |
| 3,747 |
| 4,102 |
Other current liabilities |
|
| 18,988 |
| 17,655 |
| 41,123 |
| 38,730 |
Total current liabilities |
|
| 2,273,214 |
| 1,948,104 |
| 3,188,158 |
| 2,619,751 |
|
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
|
|
|
Deferred taxes | 12 |
| 212,127 |
| 164,422 |
| 214,909 |
| 164,422 |
Debt | 18 |
| 774,153 |
| 792,197 |
| 1,084,840 |
| 1,117,969 |
Deferred revenues | 19 |
| 85,064 |
| 114,221 |
| 149,639 |
| 201,099 |
Related parties | 19 |
| 5,803 |
| 3,929 |
| 680,000 |
| 680,000 |
Provisions | 20 |
| 234,587 |
| 227,122 |
| 386,684 |
| 375,753 |
Other non-current liabilities |
|
| 9,270 |
| 18,645 |
| 9,270 |
| 18,645 |
Total non-current liabilities |
|
| 1,321,004 |
| 1,320,536 |
| 2,525,342 |
| 2,557,888 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
Share capital | 21 |
| 5,599,320 |
| 5,599,320 |
| 5,599,320 |
| 5,599,320 |
Capital reserves |
|
| 152,122 |
| 152,122 |
| 152,122 |
| 152,122 |
Accumulated deficit |
|
| (1,055,009) |
| (1,169,901) |
| (1,055,009) |
| (1,169,901) |
|
|
| 4,696,433 |
| 4,581,541 |
| 4,696,433 |
| 4,581,541 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
| 8,290,651 |
| 7,850,181 |
| 10,409,933 |
| 9,759,180 |
LANÇOS PATRIMONIAIS
See accompanying notes to the financial statements.NET SERVIÇOS DE COMUNICAÇÃO S.A.
8
Statements of changes in equity (unaudited)
For the three-month periods ended March 31, 2013 and 2012
(In thousands of reais)
| |||||||||||||
|
| Number of shares (thousands) |
|
Share capital |
| Capital reserves |
|
| |||||
|
|
Common |
Preferred |
| Subscribed | To be paid in | Paid in |
|
Shares Premium |
Special goodwill reserve |
Debentures premium |
Accumulated deficit |
Total Equity |
Balances at December 31, 2011 |
| 114,460 | 228,504 |
| 5,612,243 | (12,923) | 5,599,320 |
| 8,702 | 89,521 | 54,945 | (1,564,649) | 4,187,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
| - | - |
| - | - | - |
| - | - | - | 114,598 | 114,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2012 |
| 114,460 | 228,504 |
| 5,612,243 | (12,923) | 5,599,320 |
| 8,702 | 89,521 | 54,945 | (1,450,051) | 4,302,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2012 |
| 114,460 | 228,504 |
| 5,612,243 | (12,923) | 5,599,320 |
| 8,702 | 88,475 | 54,945 | (1,169,901) | 4,581,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
| - | - |
| - | - | - |
| - | - | - | 114,892 | 114,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2013 |
| 114,460 | 228,504 |
| 5,612,243 | (12,923) | 5,599,320 |
| 8,702 | 88,475 | 54,945 | (1,055,009) | 4,696,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the financial statements.
9
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Cash flow statements (unaudited)
For the three-month periods ended March 31, 2013 and 2012
(In thousands of reais)
| Controlling company |
| Consolidated | ||||
| 2013 |
| 2012 |
| 2013 |
| 2012 |
Net cash flows from operating activities |
|
|
|
|
|
|
|
Profit for the period | 114,892 |
| 114,598 |
| 114,892 |
| 114,598 |
Adjustments to reconcile profit for the period to cash flow from operating activities |
|
|
|
|
|
|
|
Equity pick-up | (69,916) |
| (60,938) |
| - |
| - |
Monetary and exchange rate variations, net | 1,004 |
| (31,026) |
| 3,340 |
| (34,555) |
Interest expense on borrowing | 27,779 |
| 36,734 |
| 47,643 |
| 47,836 |
Depreciation and amortization | 205,549 |
| 176,125 |
| 356,296 |
| 305,965 |
(Gain) losses on derivative financial instruments | 1,670 |
| 9,112 |
| 1,670 |
| 9,112 |
Deferred income taxes and social contribution | 47,705 |
| 35,597 |
| 61,475 |
| 44,087 |
Loss (gain) on disposal of property, plant and equipment and intangibles | 213 |
| (11) |
| 242 |
| (509) |
Provisions | 8,160 |
| 3,370 |
| 12,475 |
| 6,919 |
|
|
|
|
|
|
|
|
Increase/decrease in operating assets and liabilities |
|
|
|
|
|
|
|
(Increase) decrease in trade accounts receivable | (44,182) |
| (30,385) |
| (98,906) |
| (46,918) |
(Increase) decrease in inventories | (10,213) |
| 7,152 |
| (7,196) |
| 6,267 |
(Increase) decrease in recoverable taxes | 8,283 |
| 37,914 |
| 9,448 |
| 58,255 |
(Increase) decrease in prepaid expenses | (11,456) |
| (4,751) |
| (11,975) |
| (6,052) |
(Increase) decrease in other assets | 6,931 |
| (18,753) |
| (11,801) |
| (9,271) |
Increase (decrease) in suppliers and programming | 34,218 |
| 31,221 |
| 86,907 |
| 7,849 |
Increase (decrease) in fiscal obligations | (2,277) |
| (8,630) |
| 6,189 |
| (11,946) |
Increase (decrease) in payroll and related charges | (50,537) |
| (61,168) |
| (69,892) |
| (81,361) |
Increase (decrease) in deferred revenues | (29,388) |
| (29,998) |
| (51,785) |
| (53,078) |
Increase (decrease) in provisions and other accounts payable | (13,264) |
| (6,851) |
| (43,552) |
| (8,386) |
Dividend received | 65,000 |
| - |
| - |
| - |
Net cash provided by operating activities | 290,171 |
| 199,312 |
| 405,470 |
| 348,812 |
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
|
|
Capital increase | (69,977) |
| - |
| - |
| - |
Acquisition of property, plant and equipment and intangible assets | (424,562) |
| (339,899) |
| (705,061) |
| (531,653) |
Cash proceeds from sale of property, plant and equipment | 33 |
| 92 |
| 37 |
| 99 |
Net cash used in investing activities | (494,506) |
| (339,807) |
| (705,024) |
| (531,554) |
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|
Debt |
|
|
|
|
|
|
|
Proceeds | - |
| 3,383 |
| - |
| 5,196 |
Repayments of principal | (12,047) |
| (11,862) |
| (26,505) |
| (26,812) |
Repayments of interest | (32,290) |
| (29,620) |
| (34,534) |
| (33,320) |
|
|
|
|
|
|
|
|
Related parties |
|
|
|
|
|
|
|
Proceeds | 537.894 |
| 77,638 |
| 540,000 |
| - |
Payments | (213,253) |
| (127,827) |
| - |
| - |
Net cash (used in) provided by financing activities | 280,304 |
| (88,288) |
| 478,961 |
| (54,936) |
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents | 75,969 |
| (228,783) |
| 179,407 |
| (237,678) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period | 17,270 |
| 391,638 |
| 38,404 |
| 721,178 |
Cash and cash equivalents at the end of the period | 93,239 |
| 162,855 |
| 217,811 |
| 483,500 |
| 75,969 |
| (228,783) |
| 179,407 |
| (237,678) |
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flow information |
|
|
|
|
|
|
|
Income taxes and social contribution paid | 667 |
| 339 |
| 13,605 |
| 10,547 |
See accompanying notes to the financial statements.
10
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Value added statements (unaudited)
For the three-month periods ended March 31, 2013 and 2012
(In thousands of reais)
|
|
| ||||||
| Controlling company |
| Consolidated |
| ||||
| 03/31/2013 |
| 03/31/2012 |
| 03/31/2013 |
| 03/31/2012 |
|
1. Generation of value added |
|
|
|
|
|
|
|
|
Rendering of services | 1,456,497 |
| 1,181,450 |
| 2,720,576 |
| 2,222,759 |
|
Other revenues | 896 |
| 1,950 |
| 2,568 |
| 3,152 |
|
Revenue from the construction of own assets | 5,043 |
| 41,939 |
| 8,334 |
| 48,891 |
|
Allowance for doubtful accounts | (18,069) |
| (10,328) |
| (30,984) |
| (19,794) |
|
| 1,444,367 |
| 1,215,011 |
| 2,700,494 |
| 2,255,008 |
|
2. ( - ) Inputs |
|
|
|
|
|
|
|
|
Cost of services rendered | (322,741) |
| (247,271) |
| (652,618) |
| (519,626) |
|
Materials, energy and other outsourced services | (290,985) |
| (255,447) |
| (571,113) |
| (495,821) |
|
Other | (13,941) |
| (9,456) |
| (20,526) |
| (14,945) |
|
| (627,667) |
| (512,174) |
| (1,244,257) |
| (1,030,392) |
|
|
|
|
|
|
|
|
|
|
3. Gross value added (1-2) | 816,700 |
| 702,837 |
| 1,456,237 |
| 1,224,616 |
|
|
|
|
|
|
|
|
|
|
4. (-) Depreciation and amortization | (205,549) |
| (176,125) |
| (356,296) |
| (305,965) |
|
|
|
|
|
|
|
|
|
|
5. Net value added generated (3-4) | 611,151 |
| 526,712 |
| 1,099,941 |
| 918,651 |
|
|
|
|
|
|
|
|
|
|
6. Transferred value added received |
|
|
|
|
|
|
|
|
Equity pick-up | 69,916 |
| 60,938 |
| - |
| - |
|
Finance income | 34,265 |
| 54,384 |
| 44,847 |
| 72,958 |
|
| 104,181 |
| 115,322 |
| 44,847 |
| 72,958 |
|
|
|
|
|
|
|
|
|
|
7. Net value added for distribution(5+6) | 715,332 |
| 642,034 |
| 1,144,788 |
| 991,609 |
|
|
|
|
|
|
|
|
|
|
8. Distribution of value added |
|
|
|
|
|
|
|
|
Personnel: |
|
|
|
|
|
|
|
|
Direct Compensation | 103,996 |
| 106,816 |
| 156,821 |
| 154,911 |
|
Benefits | 22,495 |
| 22,509 |
| 38,541 |
| 36,741 |
|
FGTS | 7,861 |
| 7,662 |
| 11,837 |
| 11,311 |
|
Other | 1,235 |
| 3,955 |
| 2,045 |
| 6,126 |
|
| 135,587 |
| 140,942 |
| 209,244 |
| 209,089 |
|
Government: |
|
|
|
|
|
|
|
|
Federal | 151,743 |
| 121,860 |
| 297,208 |
| 234,167 |
|
State | 201,208 |
| 154,894 |
| 352,829 |
| 283,381 |
|
Municipal | 4,179 |
| 4,886 |
| 5,893 |
| 5,948 |
|
| 357,130 |
| 281,640 |
| 655,930 |
| 523,496 |
|
Third party capital: |
|
|
|
|
|
|
|
|
Finance income and expenses | 50,574 |
| 75,174 |
| 85,408 |
| 96,683 |
|
Rental | 31,986 |
| 26,654 |
| 52,310 |
| 44,010 |
|
Monetary and foreign exchange rate variations | 25,163 |
| 3,026 |
| 27,004 |
| 3,733 |
|
107,723 |
| 104,854 |
| 164,722 |
| 144,426 |
| |
Equity: |
|
|
|
|
|
|
|
|
Profit for the period | 114,892 |
| 114,598 |
| 114,892 |
| 114,598 |
|
Total | 715,332 |
| 642,034 |
| 1,144,788 |
| 991,609 |
|
See accompanying notes to the financial statements.
11
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
1. Corporate information
Net Serviços de Comunicação S.A. is a publicly held corporation incorporated under the Brazilian Law. The Company controls a group of cable subscription television companies, collectively referred to as “Net Serviços” or “the Company”.Net Serviços de Comunicação S.A.’s shares are traded on the São Paulo Stock Exchange – BM&FBOVESPA (“Bolsa de Valores, Mercadorias e Futuros”)under the code NETC.
In addition to having common and preferred shares on the BM&FBOVESPA, the Company holds preferred shares traded on NASDAQ as “American Depositary Shares” – ADS in the United States of America and is subject to the Securities and Exchange Commission – SEC regulations. Each ADS represents 1 preferred share traded under the code NETC.
The Company also has preferred shares that are traded on the LATIBEX, the Madrid stock exchange, and is therefore subject to the regulations of the Spanish Comisión Nacional del Mercado de Valores (CNMV).
The Company is located in Brazil and its headquarters are located at Verbo Divino Street, 1356 in São Paulo, São Paulo state.
The Company offers cable television services under “NET” brand name and high-speed Internet access under “NET VIRTUA” brand name through several cable networks located in the country’s largest cities. The Company and Empresa Brasileira de Telecomunicações S.A. – Embratel (“Embratel”), a subsidiary of Telmex Internacional S.A.B. de C.V. (Telmex), jointly provide voice services under “NET FONE VIA EMBRATEL (NetFone)” brand name.
12
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
1. Corporate information –continued
The Company signed an agreement with BM&FBOVESPA to adopt differentiated corporate governance practices, thus becoming eligible for a Level 2 listing, which was created to distinguish a select group of companies committed to differentiated corporate governance practices. The Company’s annual and quarterly financial statements meet the additional requirements of BM&FBOVESPA. Under the Company’s articles of incorporation, disputes and controversies arising from or related to their articles of incorporation, the Regulation of Level 2, the provisions of the Brazilian Corporate Law, the standards published by National Monetary Council, the Central Bank of Brazil and the Brazilian Securities Commission, the Regulations of the BM&FBOVESPA and other rules applicable to the operation of the capital market in general should be resolved by arbitration to be conducted as per the regulations of the Market Arbitration Committee set up by BM&FBOVESPA (Arbitration clause).
2. Basis of preparation and presentation of the interim financial statements
The Company’s individual and consolidated interim financial statements for the three-month period ended March 31, 2013 and 2012 were prepared and presented in accordance with accounting practices adopted in Brazil, which include the provisions of the Brazilian Corporate Law, the pronouncements issued by the Committee Accounting Pronouncements - CPC and regulations issued by the Securities and Exchange Commission - CVM, which are in accordance with international financial reporting standards (IFRS) issued by the International Accounting Standards Board - IASB, except for the measurement of investments in subsidiaries recorded by the equity method in the controlling company’s interim financial statements.
The interim financial statementsfor the three month periods ended March 31, 2012 and 2011were prepared in accordance with CPC 21 – Interim Financial Statements and IAS 34 - Interim Financial Reporting (consolidated).
The Company has adpoted all standards, revised standards and interpretations issued by CPC and IASB that were effective for the period ended March 31, 2013.
13
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
2. Basis of preparation and presentation of the interim financial statements – continued
In relation to the standards IAS 1 (R) - Presentation of Financial Statements, IAS 19 (R) - Employee Benefits, IAS 32 (R) - Compensation of Financial Assets and Financial Liabilities, IFRS 1 (R) - First Time Adoption of IFRS, IFRS 7 (R) - Financial Instruments: Disclosures, IFRS 9 - Financial Instruments: Classification and Measurement, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Involvement with Other Entities, IFRS 13 Fair Value Measurement, IAS 27 Separate Financial Statements (R) and IAS 28 Investments in Associates and Joint Ventures (R) were issued (new standards) and / or revised by the IASB prior to 2012 and whose applications became effective for fiscal years beginning
on or after January 1, 2013, the Company evaluate that the adoption of such standards did not have any impact on its interim financial statements.
The Company's Board of Directors has power to amend the financial statements after issued. On April 16, 2013, the Board of Directors approved the Company’s individual and consolidated financial statements and authorized disclosure thereof.
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note 2 of the financial statements for the year ended December 31, 2012.
3. Accounting practices
The interim financial statements have been prepared based on the same accounting practices disclosed in the note3 of the financial statements for the year ended December, 31, 2012.
4. Net revenues
|
Controlling Company |
|
Consolidated | ||||
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||||
| 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) |
Gross revenues | 1,499,271 |
| 1,229,004 |
| 2,801,056 |
| 2,306,494 |
Taxes on rendering of services | (258,273) |
| (202,956) |
| (479,622) |
| (384,253) |
Discounts and cancellations | (42,774) |
| (47,554) |
| (80,480) |
| (83,735) |
Net revenues | 1,198,224 |
| 978,494 |
| 2,240,954 |
| 1,838,506 |
For the three periods ended March 31, 2013, the taxes levied on sales have not significantly changed in relation to the disclosures made in the note 4 of the financial statements for the year ended December 31, 2012.
All the Company’s revenues are generated in Brazil.
14
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
5. Cost of services rendered
|
|
| ||||||
|
| Controlling Company |
| Consolidated | ||||
|
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||||
|
| 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) |
|
|
|
|
|
|
|
|
|
Programming costs |
| (243,476) |
| (196,814) |
| (514,684) |
| (432,100) |
Materials and maintenance |
| (10,383) |
| (9,672) |
| (20,489) |
| (21,855) |
Personnel |
| (83,059) |
| (70,755) |
| (140,086) |
| (117,343) |
Pole rental |
| (19,748) |
| (15,712) |
| (29,176) |
| (23,300) |
Depreciation |
| (154,501) |
| (115,623) |
| (286,632) |
| (225,283) |
Amortization |
| (29,732) |
| (29,828) |
| (41,672) |
| (41,767) |
Third party service |
| (115,591) |
| (70,676) |
| (209,469) |
| (151,715) |
Network electrical power |
| (10,166) |
| (8,387) |
| (15,961) |
| (12,802) |
Telecommunications |
| (67,658) |
| (42,374) |
| (123,264) |
| (74,879) |
Other |
| (45,260) |
| (38,861) |
| (75,340) |
| (68,301) |
|
| (779,574) |
| (598,702) |
| (1,456,773) |
| (1,169,345) |
6. Finance results
|
|
| ||||||
|
| Controlling Company |
| Consolidated | ||||
|
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
|
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
Finance Income: |
|
|
|
|
|
|
|
|
Interest on loans to subsidiaries and associated companies |
| 4,049 |
| 6,058 |
| - |
| - |
Interest on cash and cash equivalents |
| 1,212 |
| 6,572 |
| 2,180 |
| 14,289 |
Interest on prepaid rights for use |
| 9,543 |
| 9,048 |
| 13,417 |
| 12,721 |
Interest and fines on late monthly payments |
| 8,667 |
| 6,097 |
| 15,129 |
| 10,830 |
Other |
| 501 |
| 1,192 |
| 710 |
| 1,534 |
|
| 23,972 |
| 28,967 |
| 31,436 |
| 39,374 |
Finance Expenses: |
|
|
|
|
|
|
|
|
Finance charges on loans and debentures |
| (27,898) |
| (32,948) |
| (30,078) |
| (39,978) |
Monetary exchange rate variation on debt |
| 10,276 |
| 19,596 |
| 10,276 |
| 19,596 |
Finance charges and monetary exchange |
| (10,552) |
| (9,207) |
| (31,381) |
| (14,455) |
Finance charges and monetary variations on contingencies, suppliers, accounts payable and other |
| (27,035) |
|
(19,099) |
| (30,114) |
|
(18,265) |
Gains (losses) on derivatives |
| (1,670) |
| (9,112) |
| (1,670) |
| (9,112) |
IOF tax on intercompany transactions |
| (1,089) |
| (1,294) |
| (2,378) |
| (1,493) |
PIS and COFINS taxes on interest income |
| (525) |
| (353) |
| (912) |
| (643) |
Financial discounts extended |
| (8,172) |
| (538) |
| (15,127) |
| (2,705) |
Other |
| (2,721) |
| (4,121) |
| (3,999) |
| (5,173) |
|
| (69,386) |
| (57,076) |
| (105,383) |
| (72,228) |
Total |
| (45,414) |
| (28,109) |
| (73,947) |
| (32,854) |
15
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
7. Expenses by nature
The Company presents its income statements by function. The table below shows details by nature:
|
| ||||||
| Controlling Company |
| Consolidated | ||||
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||||
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
Programming costs | (243,476) |
| (196,814) |
| (514,684) |
| (432,100) |
Other costs | (68,460) |
| (58,807) |
| (107,916) |
| (99,038) |
Third party service | (234,993) |
| (166,394) |
| (379,288) |
| (290,911) |
Depreciation and amortization | (205,549) |
| (176,125) |
| (356,296) |
| (305,965) |
Employee benefits expenses | (159,294) |
| (151,239) |
| (243,123) |
| (225,122) |
Telecommunication expenses | (96,166) |
| (64,304) |
| (156,421) |
| (103,954) |
Business expenses | (39,200) |
| (28,704) |
| (73,744) |
| (57,324) |
Other | (13,133) |
| (20,585) |
| (136,327) |
| (116,665) |
| (1,060,271) |
| (862,972) |
| (1,967,799) |
| (1,631,079) |
Classified as: |
|
|
|
|
|
|
|
Cost of services rendered | (779,574) |
| (598,702) |
| (1,456,773) |
| (1,169,345) |
Selling expenses | (159,517) |
| (124,269) |
| (240,384) |
| (199,048) |
General and administrative expenses | (106,741) |
| (126,356) |
| (242,824) |
| (234,518) |
Other | (14,439) |
| (13,645) |
| (27,818) |
| (28,168) |
| (1,060,271) |
| (862,972) |
| (1,967,799) |
| (1,631,079) |
8. Cash and cash equivalents
| Controlling Company |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
| 12/31/2012 |
Cash and banks | 22,113 |
| 12,993 |
| 70,735 |
| 28,051 |
Banking deposit certificates | 53,398 |
| 4,258 |
| 53,478 |
| 4,337 |
Investment funds | 17,728 |
| 19 |
| 93,598 |
| 6,016 |
| 93,239 |
| 17,270 |
| 217,811 |
| 38,404 |
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note8 of the financial statements for the year ended December 31, 2012.
16
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
9. Trade receivables
| Controlling Company |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Trade receivables | 506,982 |
| 455,778 |
| 970,926 |
| 859,083 |
(-) Allowance for doubtful accounts | (62,697) |
| (55,675) |
| (114,766) |
| (101,829) |
| 444,285 |
| 400,103 |
| 856,160 |
| 757,254 |
Breakdown of trade receivables is as follows:
| Controlling Company |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
| 3 12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Due | 248,398 |
| 231,026 |
| 489,964 |
| 436,601 |
|
|
|
|
|
|
|
|
Overdue: |
|
|
|
|
|
|
|
Up to 30 days | 162,375 |
| 137,883 |
| 304,665 |
| 264,964 |
31 – 60 days | 23,009 |
| 22,092 |
| 41,923 |
| 39,079 |
61 – 90 days | 17,547 |
| 15,886 |
| 31,394 |
| 27,496 |
91- 180 days | 55,653 |
| 48,891 |
| 102,980 |
| 90,943 |
| 506,982 |
| 455,778 |
| 970,926 |
| 859,083 |
The continuity schedule of the allowance for doubtful accounts is shown below:
|
| Controlling |
| Consolidated |
Balances at December 31, 2012 |
| (55,675) |
| (101,829) |
Credits provisioned during the period (unaudited) |
| (18,071) |
| (30,984) |
Credits written off during the period (unaudited) |
| 11,049 |
| 18,047 |
Balances at March 31, 2013(unaudited) |
| (62,697) |
| (114,766) |
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note9 of the financial statements for the year ended December 31, 2012.
17
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
10. Inventories
| Controlling |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Material for network maintenance | 33,272 |
| 19,810 |
| 39,315 |
| 24,978 |
Material for technical assistance | 17,100 |
| 18,859 |
| 47,185 |
| 43,719 |
| 50,372 |
| 38,669 |
| 86,500 |
| 68,697 |
During the three-month period ended March 31, 2013, R$10,383 (R$9,672 during the three-month period ended March 31, 2012) consumed for materials related to maintenance of networks and technical assistance, which were recorded in cost of services rendered in the controlling company and R$20,489 (R$21,855 during the three-month period ended March 31, 2012) in the consolidated basis(unaudited).
11. Judicial deposits
The Company has judicial deposits related to labor, civil and tax claims, as follows:
| Controlling |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Labor | 14,494 |
| 11,685 |
| 23,650 |
| 20,165 |
Civil | 3,357 |
| 3,051 |
| 9,935 |
| 9,042 |
Lease of poles and ducts and copyright payable | 34,140 |
| 32,867 |
| 69,215 |
| 65,973 |
Tax | 19,420 |
| 18,887 |
| 29,256 |
| 28,216 |
| 71,411 |
| 66,490 |
| 132,056 |
| 123,396 |
18
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
12. Income tax
a. Income tax and social contribution
|
| ||||||
|
| ||||||
| Controlling |
| Consolidated | ||||
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||||
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
Current income tax and social contribution expenses | 142 |
| 1,844 |
| (22,841) |
| (15,888) |
|
|
|
|
|
|
|
|
Deferred income tax and social contribution on: |
|
|
|
|
|
|
|
Tax losses carryforward and negative tax basis of social contribution | - |
| - |
| (9,638) |
| (11,847) |
Temporary differences: |
|
|
|
|
|
|
|
-Fiscal credits on Goodwill | (34,512) |
| (34,263) |
| (34,512) |
| (34,263) |
- Amortization of intangible and property, plant and equipment | 541 |
| 4,090 |
| 541 |
| 4,090 |
- Estimated average tax rate | 2,424 |
| 21,795 |
| 2,379 |
| 31,587 |
-Provisions and other | (16,158) |
| (27,219) |
| (20,245) |
| (33,654) |
Total deferred income tax and social contribution | (47,705) |
| (35,597) |
| (61,475) |
| (44,087) |
Tax expenses | (47,563) |
| (33,753) |
| (84,316) |
| (59,975) |
The income taxes and social contribution expense was calculated based on the estimated annual tax average rate of 29.28% in the case of the controlling company’s interim financial statements and 42.33% in the case of the consolidated interim financial statements.
Amounts reported as income tax expense in the income statements are reconciled to the statutory rates as follows:
|
| ||||
| Controlling |
| Consolidated | ||
| Three-month period ended March 31, |
| Three-month period ended March 31, | ||
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
|
|
|
|
|
|
Profit before incometaxesand social contribution | 162,455 | 148,351 |
| 199,208 | 174,573 |
|
|
|
|
|
|
Income taxes and social contribution at the nominal rate of 34% | (55,235) | (50,439) |
| (67,731) | (59,355) |
|
|
|
|
|
|
(Additions) / exclusions: |
|
|
|
|
|
Income tax and social contribution on equity | 23,771 | 20,719 |
| - | - |
Income tax and social contribution on non-deductible expenses | (1,067) | (449) |
| (1,213) | (539) |
|
|
|
|
|
|
Other reconciling items: |
|
|
|
|
|
|
|
|
|
|
|
Unrecorded current period tax losses | (19,443) | (25,249) |
| (19,443) | (26,542) |
Estimated average tax rate | 2,424 | 21,795 |
| 2,379 | 31,587 |
Other | 1,987 | (130) |
| 1,692 | (5,126) |
Incometax and social contribution for the period | (47,563) | (33,753) |
| (84,316) | (59,975) |
Effective tax rate | (29,28%) | (22.75%) |
| (42,33%) | (34.36%) |
19
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
12. Income tax– continued
b. Deferred and recoverable tax
| Controlling |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
| 12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Recoverable tax: |
|
|
|
|
|
|
|
Withhold income tax | 2,744 |
| 18,306 |
| 4,016 |
| 19,639 |
Recoverable Federal tax | 30,031 |
| 12,466 |
| 44,111 |
| 18,939 |
Recoverable State tax | 34,605 |
| 34,576 |
| 36,312 |
| 36,245 |
Other | 1,405 |
| 1,829 |
| 2,881 |
| 7,974 |
| 68,785 |
| 67,177 |
| 87,320 |
| 82,797 |
Current | 64,725 |
| 63,117 |
| 81,600 |
| 77,115 |
Non-current | 4,060 |
| 4,060 |
| 5,720 |
| 5,682 |
|
|
|
|
|
|
|
|
Tax obligations |
|
|
|
|
|
|
|
Federal taxes payable | 26,875 |
| 31,296 |
| 64,558 |
| 63,366 |
State taxes payable | 4,918 |
| 2,460 |
| 31,468 |
| 26,555 |
Municipal taxes payable | 2,459 |
| 2,772 |
| 4,157 |
| 4,073 |
| 34,252 |
| 36,528 |
| 100,183 |
| 93,994 |
|
|
|
|
|
|
|
|
Deferred taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes and Social contribution assets: |
|
|
|
|
|
|
|
Net operating losses carryforward | - |
| - |
| 204,998 |
| 214,967 |
Temporary differences |
|
|
|
|
|
|
|
Provisions civil, tax and labor | 60,506 |
| 57,999 |
| 82,876 |
| 79,952 |
Allowance for doubtful accounts | 22,359 |
| 19,971 |
| 40,549 |
| 36,174 |
Provision for profit sharing | 14,563 |
| 37,157 |
| 19,050 |
| 50,296 |
Foreign exchange and derivative losses | 18,562 |
| 22,235 |
| 23,319 |
| 28,004 |
Property, equipment, inventories and trade accounts payables | 71,110 |
| 65,889 |
| 86,760 |
| 77,668 |
Estimated average tax rate and other | 13 |
| 25 |
| 2,396 |
| 39 |
| 187,113 |
| 203,276 |
| 254,950 |
| 272,133 |
|
|
|
|
|
|
|
|
| 187,113 |
| 203,276 |
| 459,948 |
| 487,100 |
|
|
|
|
|
|
|
|
Income taxes and Social contribution liabilities: |
|
|
|
|
|
|
|
Temporary differences |
|
|
|
|
|
|
|
Tax credit on goodwill | (268,089) |
| (233,578) |
| (268,089) |
| (233,578) |
Intangible | (133,293) |
| (133,880) |
| (133,293) |
| (133,880) |
Property, plant and equipment | 759 |
| 803 |
| 759 |
| 803 |
Other | 1,383 |
| (1,043) |
| (1,398) |
| (1,043) |
| (399,240) |
| (367,698) |
| (402,021) |
| (367,698) |
|
|
|
|
|
|
|
|
| (212,127) |
| (164,422) |
| 57,927 |
| 119,402 |
|
|
|
|
|
|
|
|
Non-current assets | - |
| - |
| 272,836 |
| 283,824 |
Non-current liabilities | (212,127) |
| (164,422) |
| (214,909) |
| (164,422) |
| (212,127) |
| (164,422) |
| 57,927 |
| 119,402 |
20
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
12. Income tax– continued
b. Deferred and recoverable tax– continued
| Controlling |
| Consolidated | ||
Changes in deferred income tax and social contribution deferred assets | Temporary differences |
| Net operating losses carry forward | Temporary differences | Total |
Balances at December 31, 2012 | - |
| 214,967 | 68,857 | 283,824 |
Addition (unaudited) | 21,134 |
| - | 33,570 | 33,570 |
Write-offs(unaudited) | (37,296) |
| (9,969) | (51,153) | (61,122) |
Reclassification of deferred tax liabilities (unaudited) | 16,162 |
| - | 16,564 | 16,564 |
Balances at March 31, 2013 (unaudited) | - |
| 204,998 | 67,838 | 272,836 |
Changes in deferred income tax and social contribution deferred liabilities | Controlling |
|
Consolidated |
Temporary differences | |||
Saldos em 31 de dezembro de 2012 | 164,422 |
| 164,422 |
Addition (unaudited) | 32,087 |
| 34,512 |
Write-offs(unaudited) | (544) |
| (589) |
Reclassification of deferred tax assets (unaudited) | 16,162 |
| 16,564 |
Balances at March 31, 2013 (unaudited) | 212,127 |
| 214,909 |
Estimated realization of deferred tax assets on March 31, 2013 is determined based on the projection of future taxable income, as follows (unaudited):
|
|
|
|
| Controlling |
| Consolidated |
2013 | 91,094 |
| 178,375 |
2014 | 53,789 |
| 119,820 |
2015 | 14,164 |
| 54,451 |
2016 | 8,819 |
| 31,436 |
2017 | 3,668 |
| 29,986 |
2018 to 2022 | 15,579 |
| 45,880 |
| 187,113 |
| 459,948 |
21
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
12. Income tax– continued
b. Deferred and recoverable tax – continued
The Company has net operating losses to offset 30% of the annual taxable income, without expiration, for the following amounts:
|
Controlling company |
|
Consolidated | ||||||||||||
| 03/31/2013 (unaudited) |
| 12/31/2012 |
| 03/31/2013 (unaudited) |
| 12/31/2012 | ||||||||
| Income taxes | Social contribution |
Total |
| Income taxes | Social contribution |
Total |
| Income taxes | Social contribution |
Total |
| Income taxes | Social contribution |
Total |
Gross amounts | 1,677,169 | 1,966,281 | - |
| 1,616,071 | 1,917,235 | - |
| 2,530,320 | 2,853,341 | - |
| 2,510,402 | 2,833,622 | - |
Tax credit (25%/9%) | 419,292 | 176,965 | 596,257 |
| 404,018 | 172,551 | 576,569 |
| 632,580 | 256,801 | 889,381 |
| 627,601 | 255,026 | 882,627 |
Recognized tax credit | - | - | - |
| - | - | - |
| (148,528) | (56,470) | (204,998) |
| (156,070) | (58,897) | (214,967) |
Non-recognized tax credit | 419,292 | 176,965 | 596,257 |
| 404,018 | 172,551 | 576,569 |
| 484,052 | 200,331 | 684,383 |
| 471,531 | 196,129 | 667,660 |
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note12 of the financial statements for the year ended December 31, 2012.
22
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
13. Investments
Detailed information about the composition, changes as well others relevant information of investments are as follows:
a)Continuity schedule of investments
Companies | % Interest | Balances on 12/31/2012 | Capital increase(unaudited) | Dividends(unaudited) | Equity (unaudited) | Balances on 03/31/2013 (unaudited) |
Investments in subsidiaries: |
|
|
|
|
|
|
Net São Paulo Ltda. | 100% | 575,014 | - | (65,000) | 56,480 | 566,494 |
Net Rio Ltda. | 100% | 237,827 | 63,649 | - | 8,924 | 310,400 |
Net Brasília Ltda. | 100% | 207,502 | 22,076 | - | 1,786 | 231,364 |
Reyc Comércio e Participações Ltda. | 100% | 80,351 | 120,538 | - | 1,352 | 202,241 |
Outros | 100% | 14,178 | - | - | 1,374 | 15,552 |
|
| 1,114,872 | 206,263 | (65,000) | 69,916 | 1,326,051 |
On March, 2013, the subsidiaries Net São Paulo Ltda., paid dividends to the parent company Net Services in the amount of R$ 65,000. The Company increased capital of its subsidiaries Net Rio, Net Brasilia Ltda. and Reyc Comércio e Participação Ltda using intercompanies loans in the amount of R$136,286 and with cash and cash equivalents in the amount of R$69,977.
b) Information related to subsidiaries (unaudited)
|
|
| |||||||
|
|
| Three-month period ended March 31, | ||||||
|
| 03/31/2013 | 2013 |
| 2012 | ||||
Subsidiaries: | Quotas (thousands) | Assets | Liabilities | Equity |
Net sales | Net income for the period | Effect on the Controlling Company’s income | ||
Net São Paulo Ltda. | 49,972 | 2,064,601 | 1,498,107 | 566,494 | 674,586 | 56,480 | 56,480 |
| 58,413 |
Net Rio Ltda. | 26,364,874 | 1,161,798 | 851,398 | 310,400 | 324,316 | 8,924 | 8,924 |
| 4,476 |
Net Brasília Ltda. | 20,870,294 | 342,982 | 111,618 | 231,364 | 83,121 | 1,786 | 1,786 |
| (3,801) |
Reyc Comércio e Participações Ltda. |
5,283 | 323,206 | 120,965 | 202,241 |
116,710 | 1,352 |
1,352 |
|
821 |
Other | - | 31,228 | 15,676 | 15,552 | 5,097 | 1,374 | 1,374 |
| 1,029 |
|
|
|
|
|
| 69,916 | 69,916 |
| 60,938 |
23
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
14. Property, plant and equipment | |||||||||
| Controlling company | ||||||||
Cost | Distribution plant | Software and computer equipment | Machinery and equipment | Furniture and fixtures | Installations, improvements and properties | Vehicles | Tools | Other | Total |
Balances at December 31, 2012 | 5,630,617 | 178,374 | 28,179 | 25,393 | 67,962 | 2,184 | 33,891 | 9,209 | 5,975,809 |
Additions(unaudited) | 383,181 | 511 | 50 | 208 | 184 | - | 1,140 | 322 | 385,596 |
Transfers(unaudited) | (4,208) | - | - | - | 833 | - | - | - | (3,375) |
Write-offs(unaudited) | (5,143) | (733) | - | (10) | - | (82) | - | - | (5,968) |
Balances at March 31, 2013(unaudited) | 6,004,447 | 178,152 | 28,229 | 25,591 | 68,979 | 2,102 | 35,031 | 9,531 | 6,352,062 |
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
Depreciation rate per annum | 8,33 a 20% | 20 a 33,33% | 10% | 10% | 4 a 25% | 20% | 20% | - | - |
Balances at December 31, 2012 | (2,588,380) | (111,450) | (23,707) | (17,673) | (34,890) | (1,966) | (21,876) | 121 | (2,799,821) |
Additions(unaudited) | (153,287) | (6,780) | (312) | (348) | (1,002) | (19) | (1,194) | - | (162,942) |
Transfers(unaudited) | 1,885 | - | - | - | - | - | - | - | 1,885 |
Write-offs(unaudited) | 4,900 | 730 | - | 10 | - | 82 | - | - | 5,722 |
Balances at March 31, 2013 (unaudited) | (2,734,882) | (117,500) | (24,019) | (18,011) | (35,892) | (1,903) | (23,070) | 121 | (2,955,156) |
|
|
|
|
|
|
|
|
| |
Net balances at December 31, 2012 | 3,042,237 | 66,924 | 4,472 | 7,720 | 33,072 | 218 | 12,015 | 9,330 | 3,175,988 |
Net balances at March 31, 2013 (unaudited) | 3,269,565 | 60,652 | 4,210 | 7,580 | 33,087 | 199 | 11,961 | 9,652 | 3,396,906 |
24
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
14. Property, plant and equipment– continued
| Consolidated | ||||||||
| Distribution plant | Software and computer equipment | Machinery and equipment | Furniture and fixtures | Installations, improvements and properties | Vehicles | Tools | Other | Total |
Cost |
|
|
|
|
|
|
|
|
|
Balances at December 31, 2012 | 10,533,242 | 207,075 | 45,640 | 35,099 | 114,036 | 2,929 | 64,571 | 9,558 | 11,012,150 |
Additions(unaudited) | 660,381 | 539 | 50 | 222 | 987 | - | 1,806 | 322 | 664,307 |
Transfers(unaudited) | (14,492) | - | - | - | 1,937 | - | - | - | (12,555) |
Write-offs(unaudited) | (5,867) | (783) | - | (10) | - | (82) | - | - | (6,742) |
Balances at March 31, 2013 (unaudited) | 11,173,264 | 206,831 | 45,690 | 35,311 | 116,960 | 2,847 | 66,377 | 9,880 | 11,657,160 |
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
Depreciation rate per annum | 8,33 a 20% | 20 a 33,33% | 10% | 10% | 4 a 25% | 20% | 20% | - | - |
Balances at December 31, 2012 | (5,113,264) | (137,482) | (38,771) | (23,468) | (59,544) | (2,362) | (43,008) | 502 | (5,417,397) |
Additions(unaudited) | (284,569) | (7,230) | (442) | (505) | (1,765) | (63) | (2,121) | - | (296,695) |
Transfers(unaudited) | 1,949 | - | - | - | - | - | - | - | 1,949 |
Write-offs(unaudited) | 5,590 | 781 | - | 10 | - | 82 | - | - | 6,463 |
Balances at March 31, 2013 (unaudited) | (5,390,294) | (143,931) | (39,213) | (23,963) | (61,309) | (2,343) | (45,129) | 502 | (5,705,680) |
|
|
|
|
|
|
|
|
| |
Net balances at December 31, 2012 | 5,419,978 | 69,593 | 6,869 | 11,631 | 54,492 | 567 | 21,563 | 10,060 | 5,594,753 |
Net balances at March 31, 2013 (unaudited) | 5,782,970 | 62,900 | 6,477 | 11,348 | 55,651 | 504 | 21,248 | 10,382 | 5,951,480 |
|
|
|
|
|
|
|
|
|
|
During the three-month period ended March 31, 2013, the Company did not identify an indication that the property, plant and equipment may be impaired, as required by IAS 36/CPC 01 (R1) Impairment of assets.
25
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
15. Intangible assets
| Controlling Company | ||||||||||
| Indefinite useful life |
| Finite useful life |
|
| ||||||
Cost | Goodwill |
| Licenses |
| Softwares |
| Customer portfolio |
| Other |
| Total |
Balance on December 31, 2012 | 1,961,405 |
| 496,586 |
| 518,514 |
| 304,367 |
| 11,779 |
| 3,292,651 |
Additions (unaudited) | - |
| - |
| 38,948 |
| - |
| 18 |
| 38,966 |
Balances at March 31, 2013 (unaudited) | 1,961,405 |
| 496,586 |
| 557,462 |
| 304,367 |
| 11,797 |
| 3,331,617 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
Amortization rate per annum | - |
| - |
| 20% |
| 16,67% |
| 20% |
| - |
Balance on December 31, 2012 | (212,062) |
| (59,666) |
| (328,704) |
| (291,244) |
| (3,391) |
| (895,067) |
Additions (unaudited) | - |
| - |
| (11,004) |
| (1,728) |
| (337) |
| (13,069) |
Balances at March 31, 2013 (unaudited) | (212,062) |
| (59,666) |
| (339,708) |
| (292,972) |
| (3,728) |
| (908,136) |
|
|
|
|
|
|
|
|
|
|
|
|
Net balance on December 31, 2012 | 1,749,343 |
| 436,920 |
| 189,810 |
| 13,123 |
| 8,388 |
| 2,397,584 |
Net balances at March 31, 2013 (unaudited) | 1,749,343 |
| 436,920 |
| 217,754 |
| 11,395 |
| 8,069 |
| 2,423,481 |
| Consolidated | ||||||||||
| Indefinite useful life |
| Finite useful life |
|
| ||||||
Cost | Goodwill |
| Licenses |
| Softwares |
| Customer portfolio |
| Other |
| Total |
Balance on December 31, 2012 | 1,928,616 |
| 438,726 |
| 650,256 |
| 304,367 |
| 17,678 |
| 3,339,643 |
Additions (unaudited) | - |
| - |
| 40,736 |
| - |
| 18 |
| 40,754 |
Balances at March 31, 2013 (unaudited) | 1,928,616 |
| 438,726 |
| 690,992 |
| 304,367 |
| 17,696 |
| 3,380,397 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
Amortization rate per annum | - |
| - |
| 20% |
| 16,67% |
| 20% |
| - |
Balance on December 31, 2012 | (178,742) |
| (1,806) |
| (419,273) |
| (291,245) |
| (9,271) |
| (900,337) |
Additions (unaudited) | - |
| - |
| (16,058) |
| (1,729) |
| (345) |
| (18,132) |
Balances at March 31, 2013 (unaudited) | (178,742) |
| (1,806) |
| (435,331) |
| (292,974) |
| (9,616) |
| (918,469) |
|
|
|
|
|
|
|
|
|
|
|
|
Net balance on December 31, 2012 | 1,749,874 |
| 436,920 |
| 230,983 |
| 13,122 |
| 8,407 |
| 2,439,306 |
Net balances at March 31, 2013 (unaudited) | 1,749,874 |
| 436,920 |
| 255,661 |
| 11,393 |
| 8,080 |
| 2,461,928 |
The Company assesses the recovery of the carrying value of goodwill and intangible assets with indefinite useful life at the close of each fiscal year. The last assessment performed on December 31, 2012, did not result in any recognizing losses on intangible assets, even applying conservative assumptions in an adverse scenario. On March 31, 2013, the Company did not identify the existence of indicators of impairment in their intangible assets.
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note 15 of the financial statements for the year ended December 31, 2012.
26
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
16. Trade accounts payables
| Controlling company |
| Consolidated | ||||
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
Domestic suppliers | 637,936 |
| 598,320 |
| 906,831 |
| 865,287 |
Foreign suppliers | 11,112 |
| 10,012 |
| 92,888 |
| 41,796 |
| 649,048 |
| 608,332 |
| 999,719 |
| 907,083 |
17. Accounts payables – programming suppliers
|
| Controlling company |
| Consolidated | ||||
Description |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
|
12/31/2012 |
|
|
|
|
|
|
|
|
|
Related parties |
|
|
|
|
|
|
|
|
G2C Globosat Comercialização de Conteúdos S.A |
| 47,622 |
| 46,471 |
| 106,728 |
| 101,448 |
DLA, Inc (Digital Latin America, LLC). |
| 2,583 |
| 650 |
| 6,475 |
| 2,915 |
|
|
|
|
|
|
|
|
|
Third parties |
| 96,077 |
| 81,950 |
| 95,873 |
| 85,097 |
|
|
|
|
|
|
|
|
|
|
| 146,282 |
| 129,071 |
| 209,076 |
| 189,460 |
The table below shows programming incurred costs with third and related parties:
| Operating results | ||||
| Controlling company |
| Consolidated | ||
| Three-month period ended
|
| Three-month period ended
| ||
Companies | 03/31/2013 (unaudited) | 03/31/2012 (unaudited) |
| 03/31/2013 (unaudited) | 03/31/2012 (unaudited) |
Related parties |
|
|
|
|
|
G2C Globosat Comercialização de Conteúdos S.A | (159,138) | (140,975) |
| (334,699) | (308,432) |
DLA, Inc (Digital Latin America, LLC). | (5,362) | - |
| (14,531) | - |
Third parties | (78,976) | (55,839) |
| (165,454) | (123,668) |
|
|
|
|
|
|
| (243,476) | (196,814) |
| (514,684) | (432,100) |
The additional information relating to this note has not been significantly changed in relation to the disclosures made in the note17 of the financial statements for the year ended December 31, 2012.
27
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
18. Debt
|
|
| Effective interest rate per annum |
|
Controlling company | ||||||||||||
|
Currency | Nominal interest rate per annum | 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
| 12/31/2012 | ||||||||
|
|
|
|
|
|
|
Current |
| Non-current |
|
Total |
|
Current |
| Non-current |
|
Total |
Local currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finame | R$ | TJLP + 3.15% | 8.15% |
| 8,65% |
| 16,379 |
| 1,731 |
| 18,110 |
| 20,735 |
| 3,699 |
| 24.434 |
Finame PSI | R$ | 4.50% to 8.70% | 5.10% |
| 5,10% |
| 23,499 |
| 71,031 |
| 94,530 |
| 23,438 |
| 76,866 |
| 100.304 |
|
|
|
|
|
|
| 39,878 |
| 72,762 |
| 112,640 |
| 44,173 |
| 80,565 |
| 124.738 |
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Notes 2020 | US$ | 7.50% | 8.57% |
| 8,57% |
| 9,621 |
| 701,391 |
| 711,012 |
| 25,439 |
| 711,632 |
| 737.071 |
|
|
|
|
|
|
| 9,621 |
| 701,391 |
| 711,012 |
| 25,439 |
| 711,632 |
| 737.071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and financings |
|
|
|
|
|
| 49,499 |
| 774,153 |
| 823,652 |
| 69,612 |
| 792,197 |
| 861.809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantities |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
| 03/31/2013 (unaudited) |
12/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Commercial paper | R$ | 103.50% of DI | 68 | 68 |
| 698,283 |
| - |
| 698,283 |
| 686.749 |
| - |
| 686,749 | |
Total debt |
|
|
|
|
| 747,782 |
| 774,153 |
| 1,521,935 |
| 756.361 |
| 792,197 |
| 1,548,558 |
|
|
|
Effective interest rate per annum |
|
Consolidated | |||||||||||||
|
Currency | Taxas nominais de juros a.a. | 03/31/2013 (unaudited) |
|
12/31/2012 |
| 03/31/2013 (unaudited) |
| 12/31/2012 | |||||||||
|
|
|
|
|
|
|
Current |
| Non-current |
|
Total |
|
Current |
| Non-current |
|
Total | |
Local currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Finame | R$ | TJLP + 3.15% | 8.15% |
| 8,65% |
| 33,530 |
| 6,084 |
| 39,614 |
| 40,321 |
| 11,386 |
| 51.707 | |
Finame PSI | R$ | 4.50 to 8.70% | 5.10% |
| 5,10% |
| 59,015 |
| 177,052 |
| 236,067 |
| 58,886 |
| 191,708 |
| 250.594 | |
|
|
|
|
|
|
| 92,545 |
| 183,136 |
| 275,681 |
| 99,207 |
| 203,094 |
| 302.301 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Global Notes 2020 | US$ | 7.50% | 8.57% |
| 8,57% |
| 9,621 |
| 701,391 |
| 711,012 |
| 25,439 |
| 711,632 |
| 737.071 | |
Banco Inbursa S.A. | US$ | 7.88% | 9.26% |
| 9,26% |
| 7,978 |
| 200,313 |
| 208,291 |
| 3,473 |
| 203,243 |
| 206.716 | |
|
|
|
|
|
|
| 17,599 |
| 901,704 |
| 919,303 |
| 28,912 |
| 914,875 |
| 943.787 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total loans and financings |
|
|
|
|
|
| 110,144 |
| 1,084,840 |
| 1,194,984 |
| 128,119 |
| 1,117,969 |
| 1.246.088 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Quantities |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| 03/31/2013 (unaudited) |
12/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Commercial paper | R$ | 103.50% of DI | 68 | 68 |
| 698,283 |
| - |
| 698,283 |
| 686.749 |
| - |
| 686,749 | ||
Total debt |
|
|
|
|
| 808,427 |
| 1,084,840 |
| 1,893,267 |
| 814.868 |
| 1,117,969 |
| 1,932,837 | ||
28
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
18. Debt– continued
Costs of debt
Following shown the amortization schedule of the costs of debt, which are accounted for reducing the related amortized cost of each debt:
Year |
|
Banco Inbursa S.A. |
|
Global Notes 2020 |
|
Commercial Papers |
|
Total |
2013 |
| 117 |
| 462 |
| 39 |
| 618 |
2014 |
| 168 |
| 616 |
| - |
| 784 |
2015 |
| 182 |
| 616 |
| - |
| 798 |
2016 |
| 197 |
| 616 |
| - |
| 813 |
2017 |
| 214 |
| 616 |
| - |
| 830 |
2018 – 2020 |
| 348 |
| 1,129 |
| - |
| 1,477 |
|
| 1,226 |
| 4,055 |
| 39 |
| 5,320 |
The additional information relating to this note has not been significantly changed in relation to the disclosures made in note 18 of the financial statements for the year ended December 31, 2012.
19. Related parties
a) Compensation
1- Compensation of key management personnel
The amount of the compensation of the Company’s executive officers and board of directors, is shown below:
|
|
|
| ||
|
Controlling Company and Consolidated |
| |||
|
| Three-month period ended March 31, |
| ||
|
| 2013 (unaudited) |
| 2012 (unaudited) |
|
Compensation |
| 895 |
| 907 |
|
Profit participation plan |
| 2,074 |
| 2,113 |
|
|
| 2,969 |
| 3,020 |
|
2- Compensation of the Fiscal Council
Additionally, the Company informs that the compensation o of the fiscal council for the three months ended March 31, 2013 (unaudited) was R$117 (R$78 for the three months ended March 31, 2012 - unaudited).
29
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
19. Related parties –continued
b) Subsidiaries, stockholders and entities under the common control
The main balances of assets, liabilities, revenues and expenses in March 31, 2013, arising from the transactions between related parties are as follows:
| Controlling company | |||||||||||||
| Assets | |||||||||||||
Related parties |
| Programming receivable |
| Interest on equity |
| Advance |
| Total | ||||||
Companies | 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) |
12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net São Paulo Ltda. | 18,063 | 72,796 |
| 21,627 | 29,894 |
| 27,145 | 27,145 |
| - | - |
| 66,835 | 129,835 |
Net Rio Ltda. | 11,855 | 82,076 |
| 11,064 | 14,632 |
| 33,984 | 33,984 |
| - | - |
| 56,903 | 130,692 |
Net Brasília Ltda. | 8,527 | 20,337 |
| 2,846 | 3,836 |
| 14,259 | 14,259 |
| - | - |
| 25,632 | 38,432 |
Reyc Comércio e Participações Ltda. | 24,749 | 14,449 |
| - | - |
| - | - |
| - | - |
| 24,749 | 14,449 |
Other | 195 | 163 |
| 97 | 167 |
| - | - |
| - | - |
| 292 | 330 |
| 63,389 | 189,821 |
| 35,634 | 48,529 |
| 75,388 | 75,388 |
| - | - |
| 174,411 | 313,738 |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Globosat Programadora Ltda. | 5 | 5 |
| - | - |
| - | - |
|
- | - |
| 5 | 5 |
Primesys Soluções Empresariais S.A. | 1,204 | 391 |
| - | - |
| - | - |
|
- | - |
| 1,204 | 391 |
Telmex do Brasil Ltda. | 70 | 70 |
| - | - |
| - | - |
| - | - |
| 70 | 70 |
Editora Globo S.A | - |
|
| - |
|
| - |
|
| 1,620 |
|
| 1,620 |
|
Cablena do Brasil Ltda. | - | - |
| - | - |
| - | - |
| - | 1,097 |
| - | 1,097 |
| 1,279 | 466 |
| - | - |
| - | - |
| 1,620 | 1,097 |
| 2,899 | 1,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets | 64,668 | 190,287 |
| 35,634 | 48,529 |
| 75,388 | 75,388 |
| 1,620 | 1,097 |
| 177,310 | 315,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets | 33,647 | 32,576 |
| 35,634 | 48,529 |
| 75,388 | 75,388 |
| 1,620 | - |
| 146,289 | 156,493 |
Non-current assets | 31,021 | 157,711 |
| - | - |
| - | - |
| - | 1,097 |
| 31,021 | 158,808 |
|
| Consolidated Assets | ||||||||
Companies |
|
Accounts receivable |
|
Advance |
|
Total | ||||
|
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) |
| 31/03/2012 |
| 03/31/2013 (unaudited) |
12/31/2012 |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
Globosat Programadora Ltda. |
| 22 | 106 |
| - |
| - |
| 22 | 106 |
Primesys Soluções Empresariais S.A. |
| 1,226 | 408 |
| - |
| - |
| 1,226 | 408 |
Telmexdo Brasil Ltda. |
| 70 | 70 |
| - |
| - |
| 70 | 70 |
Editora Globo S.A |
| - |
|
| 1,620 |
|
|
| 1,620 |
|
Cablena do Brasil Ltda. |
| - | - |
| - |
| 1,097 |
| - | 1,097 |
|
| 1,318 | 584 |
| 1,620 |
| 1,097 |
| 2,938 | 1,681 |
|
|
|
|
|
|
|
|
|
|
|
30
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
19. Related parties– continued
b) Subsidiaries, stockholders and entities under the common control – continued
| Controlling company Liabilities | ||||||||||||
| Suppliers |
| Programming suppliers |
|
| Related parties |
| Total | |||||
Companies |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
|
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Reyc Comércio e Part. Ltda. |
| - | - |
| - | - |
|
| 88,785 | 42,017 |
| 88,785 | 42,017 |
614 Serviços de Internet João Pessoa Ltda. |
| - | - |
| - | - |
|
| 804 | - |
| 804 | - |
Net São Paulo Ltda. |
| - | - |
| - | - |
|
| 1,914 | - |
| 1,914 | - |
Jacareí Cabo Ltda. |
| - | - |
| - | - |
|
| 3,086 | 3,128 |
| 3,086 | 3,128 |
Other |
| - | - |
| - | - |
|
| - | 800 |
| - | 800 |
| - | - |
| - | - |
|
| 94,589 | 45,945 |
| 94,589 | 45,945 | |
Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
Emp. Brasil. de Telecom. S.A. –Embratel |
| 100,142 | 103,506 |
| - | - |
|
| 62,861 | 71,966 |
| 163,003 | 175,472 |
| 100,142 | 103,506 |
| - | - |
|
| 62,861 | 71,966 |
| 163,003 | 175,472 | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
|
|
|
G2C Globosat Comercialização de Conteúdos S.A |
|
- |
- |
| 47,622 | 46,471 |
|
| - | - |
| 47,622 | 46,471 |
Procisa do Brasil Proj Con e Inst Ltda |
| 74 | 1,056 |
| - | - |
|
| - | - |
| 74 | 1,056 |
Cablena do Brasil Ltda. |
| 5,299 | 1,463 |
| - | - |
|
| - | - |
| 5,299 | 1,463 |
Claro S.A. |
| 790 | 556 |
| - | - |
|
| - | - |
| 790 | 556 |
Primesys Soluções Empresariais S.A. |
| 2,376 | 4,559 |
| - | - |
|
| - | - |
| 2,376 | 4,559 |
DLA, Inc (Digital Latin America, LLC). |
| - | - |
| 2,583 | 650 |
|
| - | - |
| 2,583 | 650 |
America Movil. S.A.B de C.V. |
| - | - |
| - | - |
|
| 290,162 | - |
| 290,162 | - |
Other |
| 144 | 346 |
| - | - |
|
| - | - |
| 144 | 346 |
| 8,683 | 7,980 |
| 50,205 | 47,121 |
|
| 290,162 | - |
| 349,050 | 55,101 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
| 108,825 | 111,486 |
| 50,205 | 47,121 |
|
| 447,612 | 117,911 |
| 606,642 | 276,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
| 108,825 | 111,486 |
| 50,205 | 47,121 |
|
| 441,809 | 113,982 |
| 600,839 | 272,589 |
Non-current liabilities |
| - | - |
| - | - |
|
| 5,803 | 3,929 |
| 5,803 | 3,929 |
|
| Consolidated | |||||||||||||
|
| liabilities | |||||||||||||
|
| Suppliers |
| Programming suppliers |
| Debt |
| Related parties |
| Total | |||||
Companies |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
| 03/31/2013 (unaudited) | 12/31/2012 |
Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emp. Brasil. de Telecom. S.A. – Embratel |
| 167,218 | 169,312 |
| - | - |
| - | - |
| 91,972 | 120,557 |
| 259,190 | 289,869 |
|
| 167,218 | 169,312 |
| - | - |
| - | - |
| 91,972 | 120,557 |
| 259,190 | 289,869 |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G2C Globosat Comercialização de Conteúdos S.A |
|
- |
- |
|
106,728 |
101,448 |
| - | - |
|
- |
- |
|
106,728 |
101,448 |
Banco Inbursa S.A. (not incluiding debt costs) |
|
- |
- |
|
- |
- |
|
209,517 |
207,979 |
|
- |
- |
|
209,517 |
207,979 |
Cablena do Brasil Ltda. |
| 5,487 | 1,579 |
| - | - |
| - | - |
| - | - |
| 5,487 | 1,579 |
America Movil. S.A.B de C.V. |
| - | - |
| - | - |
| - | - |
| 1,239,755 | 686,585 |
| 1,239,755 | 686,585 |
Procisa do Brasil Proj. Cost. e Inst. Ltda. |
| 74 | 3,195 |
| - | - |
| - | - |
| - | - |
| 74 | 3,195 |
DLA, Inc (Digital Latin America, LLC) |
| - | - |
| 6,475 | 2,915 |
| - | - |
| - | - |
| 6,475 | 2,915 |
Primesys Soluções Empresariais S.A. |
| 2,697 | 4,787 |
| - | - |
| - | - |
| - | - |
| 2,697 | 4,787 |
Other |
| 1,212 | 1,009 |
| - | - |
| - | - |
| - | - |
| 1,212 | 1,009 |
|
| 9,470 | 10,570 |
| 113,203 | 104,363 |
| 209,517 | 207,979 |
| 1,239,755 | 686,585 |
| 1,571,945 | 1,009,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
| 176,688 | 179,882 |
| 113,203 | 104,363 |
| 209,517 | 207,979 |
| 1,331,727 | 807,142 |
| 1,831,135 | 1,299,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
| 176,688 | 179,882 |
| 113,203 | 104,363 |
| 8,137 | 3,629 |
| 651,727 | 127,142 |
| 949,755 | 415,016 |
Non-current liabilities |
| - | - |
| - | - |
| 201,380 | 204,350 |
| 680,000 | 680,000 |
| 881,380 | 884,350 |
On March 26, 2013, the Company entered with its indirect parent company, America Movil, SAB CV, into two intercompanies loans through its controlling company and its subsidiary Net Rio Ltda., totaling R$540,000, maturing in March 25,2014, may be extended for consecutive periods of one year. The interest rate is equivalent to 104% of the CDI payable toghedar with the principal. The Company used proceeds from those loansto settle other loans agreements and increase equity of some subsidiaries as described in note 13.
31
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
19. Related parties– continued
b) Subsidiaries, stockholders and entities under the common control – continued
The continuity schedule of prepaid used rights for use and deferred revenues in transactions with Embratel is as follows:
|
|
|
| Controlling company | ||||||||||||
|
| Assets |
| Liabilities | ||||||||||||
|
|
Prepaid used rights |
| Deferred revenues |
|
Total | ||||||||||
Net Fone |
| Shared services | ||||||||||||||
|
| Current assets |
| Non-current assets |
| Currentliabilities |
| Non-currentliabilities |
| Currentliabilities |
| Non-currentliabilities |
| Currentliabilities |
| Non-currentliabilities |
Balance at 12/31/2012 |
| 118,785 |
| 107,017 |
| 97,460 |
| 87,803 |
| 18,412 |
| 27,554 |
| 115,872 |
| 115,357 |
Write-offs (unaudited) |
| (29,890) |
| - |
| (24,524) |
| - |
| (5,071) |
| - |
| (29,595) |
| - |
Transfers (unaudited) |
| 29,368 |
| (29,368) |
| 24,095 |
| (24,095) |
| 5,285 |
| (5,285) |
| 29,380 |
| (29,380) |
Balance at 03/31/2013(unaudited) |
| 118,263 |
| 77,649 |
| 97,031 |
| 63,708 |
| 18,626 |
| 22,269 |
| 115,657 |
| 85,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | ||||||||||||
|
| Assets |
| Liabilities | ||||||||||||
|
|
Prepaid used rights |
| Deferred revenues |
|
Total | ||||||||||
Net Fone |
| Shared services | ||||||||||||||
|
| Current assets |
| Non-current assets |
| Currentliabilities |
| Non-currentliabilities |
| Currentliabilities |
| Non-currentliabilities |
| Currentliabilities |
| Non-currentliabilities |
Balance at 12/31/2012 |
| 167,004 |
| 150,459 |
| 171,703 |
| 154,692 |
| 31,169 |
| 48,223 |
| 202,872 |
| 202,915 |
Write-offs (unaudited) |
| (42,023) |
| - |
| (43,205) |
| - |
| (8,921) |
| - |
| (52,126) |
| - |
Transfers (unaudited) |
| 41,290 |
| (41,290) |
| 42,451 |
| (42,451) |
| 9,365 |
| (9,365) |
| 51,816 |
| (51,816) |
Balance at 03/31/2013(unaudited) |
| 166,271 |
| 109,169 |
| 170,949 |
| 112,241 |
| 31,613 |
| 38,858 |
| 202,562 |
| 151,099 |
32
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
19. Related parties– continued
b) Subsidiaries, stockholders and entities under the common control – continued
| Controlling company | ||||||||||||||||||||
| Operating results / financial Three-month period ended March 31 | ||||||||||||||||||||
| Services revenue and transfer of administrative expenses |
|
Finance |
|
Telecommunications – expenses and amortization |
| Rental revenues Telecommunications expenses |
| Programming |
| Commissions / programming guide |
| Total | ||||||||
Companies |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net São Paulo Ltda. |
| 73,031 | 58,801 |
| 516 | (607) |
| - | - |
| - | - |
| - | - |
| - | - |
| 73,547 | 58,194 |
Net Rio Ltda. |
| 34,568 | 27,951 |
| 1,259 | 861 |
| - | - |
| - | - |
| - | - |
| - | - |
| 35,827 | 28,812 |
Net Brasília Ltda. |
| 9,008 | 7,616 |
| 375 | 2,654 |
| - | - |
| - | - |
| - | - |
| - | - |
| 9,383 | 10,270 |
Reyc Comércio e Participações Ltda. |
|
- |
- |
|
1,120 |
2,321 |
|
- |
- |
|
- |
- |
|
- |
- |
|
- |
- |
|
1,120 |
2,321 |
Net Brasil Serv.de TV por Assinatura S.A |
|
- |
- |
|
(47) | - |
|
- |
- |
|
- |
- |
|
- |
- |
|
- |
- |
|
(47) |
- |
Other |
| 478 | 396 |
| (155) | (120) |
| - | - |
| - | - |
| - | - |
| - | - |
| 323 | 276 |
| 117,085 | 94,764 |
| 3,068 | 5,109 |
| - | - |
| - | - |
| - | - |
| - | - |
| 120,153 | 99,873 | |
Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emp. Brasil. de Telecom. S.A. – Embratel |
| - |
- |
| 134 | (516) |
| (145,059) | (104,048) |
| 101,360 | 88,557 |
| - | - |
| - | - |
| (43,565) | (16,007) |
|
| - | - |
| 134 | (516) |
| (145,059) | (104,048) |
| 101,360 | 88,557 |
| - | - |
| - | - |
| (43,565) | (16,007) |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Inbursa S.A. (not including debt costs) |
|
- | - |
|
- |
1,306 |
|
- |
- |
|
- |
- |
|
- |
- |
|
- |
- |
|
- |
1,306 |
Globosat Programadora Ltda. |
| - | - |
| - | - |
| - | - |
| 19 | - |
| - | - |
| - | - |
| 19 | - |
G2C Globosat Comercialização de Conteúdos S.A. |
|
- | - |
|
- |
- |
|
- |
- |
|
- |
- |
|
(159,138) |
(140,975) |
|
(274) |
(264) |
|
(159,412) |
(141,239) |
Primesys Soluções Empresariais S.A. |
|
- |
- |
|
- |
- |
|
(5,346) |
(4,368) |
|
2,256 |
4 |
|
- |
- |
|
- |
- |
|
(3,090) |
(4,364) |
Telmex do Brasil Ltda. |
| - | - |
| - | - |
| - | - |
| 21 | - |
| - | - |
| - | - |
| 21 | - |
Claro S.A. |
| - | - |
| - | - |
| (1,901) | (1,891) |
| - | - |
| - | - |
| - | - |
| (1,901) | (1,891) |
Editora Globo |
| - | - |
| - | - |
| - | - |
| - | - |
| - | - |
| (552) | (765) |
| (552) | (765) |
DLA, Inc (Digital Latin America, LLC). |
|
- | - |
|
- |
- |
|
- | - |
|
- |
- |
|
(5,362) |
- |
|
- |
- |
|
(5,362) | - |
America Movil. S.A.B de C.V. |
| - | - |
| (162) | - |
| - | - |
| - | - |
| - | - |
| - | - |
| (162) | - |
Other |
| - | - |
| - | - |
| (1,252) | (173) |
| - | 31 |
| - | - |
| - | - |
| (1,252) | (142) |
| - | - |
| (162) | 1,306 |
| (8,499) | (6,432) |
| 2,296 | 35 |
| (164,500) | (140,975) |
| (826) | (1,029) |
| (171,691) | (147,095) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 117,085 | 94,764 |
| 3,040 | 5,899 |
| (153,558) | (110,480) |
| 103,656 | 88,592 |
| (164,500) | (140,975) |
| (826) | (1,029) |
| (95,103) | (63,229) |
33
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
19. Related parties– continued
b) Subsidiaries, stockholders and entities under the common control – continued
| Consolidated | |||||||||||||||||||||||
| Operating results / financial Three-month period ended March 31 | |||||||||||||||||||||||
Rental revenues / telecommunications |
| Finance | Telecommunication expenses | Programming | Commissions / programming guide | Total | ||||||||||||||||||
Companies | 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) | 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) |
| 2013 (unaudited) |
| 2012 (unaudited) | ||
Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emp. Brasil. de Telecom. S.A. – Embratel | 195,911 |
| 161,499 |
| (3,256) |
| (4,154) |
| (233,050) |
| (157,773) |
| - |
| - |
| - |
| - |
| (40,395) |
| (428) | |
|
| 195,911 |
| 161,499 |
| (3,256) |
| (4,154) |
| (233,050) |
| (157,773) |
| - |
| - |
| - |
| - |
| (40,395) |
| (428) |
Entities under the common control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
G2C Globosat Comercialização de Conteúdos S.A. |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(334,699) |
|
(308,432) |
|
(484) |
|
(463) |
|
(335,183) |
|
(308,895) |
Editora Globo S.A. |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (752) |
| (1,586) |
| (752) |
| (1,586) |
Banco Inbursa S.A. (. (not including debt costs)) |
|
- |
|
- |
|
(1,538) |
|
2,421 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,538) |
|
2,421 |
America Movil. S.A.B de C.V. |
|
- |
| - |
|
(13,170) |
| - |
|
- |
| - |
|
- |
| - |
|
- |
|
- |
|
(13,170) |
|
- |
Telmex do Brasil Ltda. |
| 21 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 21 |
| - |
Claro S.A. |
| - |
| - |
| - |
| - |
| (2,819) |
| (3,291) |
| - |
| - |
| - |
| - |
| (2,819) |
| (3,291) |
Primesys Soluções Empresariais S.A. |
|
2,320 |
|
258 |
|
- |
|
- |
|
(5,789) |
|
(4,871) |
|
- |
|
- |
|
- |
|
- |
|
(3,469) |
|
(4,613) |
Procisa do Brasil Proj. Cost. e Inst. Ltda |
|
- |
|
- |
|
- |
|
- |
|
(4,314) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(4,314) |
|
- |
DLA, Inc (Digital Latin America, LLC). |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(14,531) |
|
- |
|
- |
|
- |
|
(14,531) |
|
- |
Other |
| 219 |
| 366 |
| - |
| - |
| (18) |
| (4,187) |
| - |
| - |
| - |
| - |
| 201 |
| (3,821) |
|
| 2,560 |
| 624 |
| (14,708) |
| 2,421 |
| (12,940) |
| (12,349) |
| (349,230) |
| (308,432) |
| (1,236) |
| (2,049) |
| (375,554) |
| (319,785) |
|
| 198,471 |
| 162,123 |
| (17,964) |
| (1,733) |
| (245,990) |
| (170,122) |
|
(349,230) |
|
(308,432) |
| (1,236) |
| (2,049) |
| (415,949) |
| (320,213) |
Except for the intercompanies loanswith América Móvil, the nature of transactions involving related parties has not changed in relation to disclosuresmade in the note 19 of the financial statements for the year ended December 31, 2012.
20. Commitments and provisions
I) Commitments
The Company has several firm agreements with suppliers as follows:
|
| Rental of poles |
| Rental of ducts |
| Rental of offices |
|
Equipment |
|
Total |
2013 (9 months) |
| 111,887 |
| 8,254 |
| 27,033 |
| 57,696 |
| 204,870 |
2014 |
| 152,914 |
| 11,287 |
| 37,517 |
| - |
| 201,718 |
2015 |
| 160,110 |
| 11,818 |
| 39,283 |
| - |
| 211,211 |
2016 |
| 167,446 |
| 12,359 |
| 41,083 |
| - |
| 220,888 |
2017 |
| 175,117 |
| 12,926 |
| 42,965 |
| - |
| 231,008 |
2018 to 2022 |
| 1,002,496 |
| 73,995 |
| 245,960 |
| - |
| 1,322,451 |
Total |
| 1,769,970 |
| 130,639 |
| 433,841 |
| 57,696 |
| 2,392,146 |
34
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
20. Commitments and provisions– continued
II) Provisions
The Company and its subsidiaries are involved in legal and administrative proceedings before several courts and governmental agencies arising during the normal course of operations, involving tax, labor, civil and other legal matters. These cases involve tax delinquency notices, compensation claims, requirements for contract review and other actions for which the amounts claimed can be substantially different from the final expected settlement value. In addition, it is not possible to predict when these cases will be settled, as they are dependent on factors outside the Company management’s control. The Company does not expect any reimbursement in connection with the outcome of these legal and administrative proceedings and, based in its legal advisors, pending judicial analysis an prior experience in the claim amounts, constituted provision considered enough to cover probable losses in the proceedings in course, as follows:
|
| Controlling company | |||
|
|
Labor / Social security |
Civil |
Tax |
Total |
Balances at December 31, 2012 |
| 38,814 | 41,312 | 146,996 | 227,122 |
Additions (unaudited) |
| 6,814 | 1,968 | 450 | 9,232 |
Inflation adjustments (unaudited) |
| 81 | 1,062 | 1,369 | 2,512 |
Amounts used (unaudited) |
| (2,319) | (831) | (57) | (3,207) |
Unused amounts reversed (unaudited) |
| (210) | (855) | (7) | (1,072) |
Balances at March 31, 2013 (unaudited) |
| 43,180 | 42,656 | 148,751 | 234,587 |
|
|
| |||
|
| Consolidated | |||
|
|
Labor / Social security |
Civil |
Tax |
Total |
Balances at December 31, 2012 |
| 64,609 | 73,658 | 237,486 | 375,753 |
Additions (unaudited) |
| 9,741 | 3,017 | 1,002 | 13,760 |
Inflation adjustments (unaudited) |
| 82 | 2,090 | 2,242 | 4,414 |
Amounts used (unaudited) |
| (4,114) | (1,787) | (57) | (5,958) |
Unused amounts reversed (unaudited) |
| (296) | (982) | (7) | (1,285) |
Balances at March 31, 2013 (unaudited) |
| 70,022 | 75,996 | 240,666 | 386,684 |
On March 5, 2013, the subsidiary Net São Paulo Ltda. was assessed by the State Tax Authority of the State of São Paulo for the loss of tax benefit allowing the reduction of ICMS tax basis, where the tax authority argued the non-inclusion of certain revenues on the basis of calculation of ICMS, in 2010 and 2011, in the amount of R$83,097. Management, based in the opinion of its legal advisors, consider that the probability of loss of this process is considered possible.
The nature of the estimated liability for tax, labor and civil claims has not changed significantly in relation to disclosures madein the note 20 of the financial statements for the year ended December 31, 2012.
35
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
21. Equity
Share capital
On March 31, 2013, the Company’s share capital is represented by 114,459,685 ordinary shares and 228,503,916 preferred shares with no par value.
Share capital may be raised to a maximum of R$6,500,000 without need for a statutory amendment as per article 168 of the Brazilian Corporate Law, as agreed by the Board of Directors, who will determine conditions for the issue as per article 170, paragraph 1 of the Brazilian Corporate Law.
The additional information relating to this note has not been significantly changed in relation to the disclosures made in note 21of the financial statements for the year ended December 31, 2012.
22. Guarantees
The Company and some of its subsidiaries have signed surety letters with financial institutions and insurance contracts mainly for the purpose of guaranteeing payment of tax suits lodged against the Company by the Brazilian Federal Tax Authority, the Finance Departments of São Paulo and Rio de Janeiro States, and the Belo Horizonte Federal Tax Office, as follows:
|
| Controlling company | Consolidated | |||
|
| 03/31/2013 (unaudited) |
12/31/2012 |
| 03/31/2013 (unaudited) |
12/31/2012 |
Net Rio Ltda. |
| - | - |
| 268,618 | 267,311 |
Net Serviços de Comunicação S.A. |
| 78,612 | 73,008 |
| 78,612 | 73,008 |
Reyc Comércio e Participações Ltda. |
| - | - |
| 13,165 | 12,948 |
Net Brasília Ltda. |
| - | - |
| 7,262 | 7,557 |
Net São Paulo Ltda. |
| - | - |
| 4,896 | 4,833 |
|
| 78,612 | 73,008 |
| 372,553 | 365,657 |
36
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
23. Earnings per share
(in thousands, except for earnings per share)
| Controlling Company and Consolidated | ||
| Three-month period ended March 31, | ||
| 2013 |
| 2012 |
| (unaudited) |
| (unaudited) |
Numerator |
|
|
|
Profit for the period | R$ 114,892 |
| R$ 114,598 |
|
|
|
|
Denominator |
|
|
|
Weighted average number of common shares | 114,459,685 |
| 114,459,685 |
Weighted average number of preferred shares | 228,503,916 |
| 228,503,916 |
10% - Preferred shares | 1,10 |
| 1,10 |
Weighted average number of adjusted preferred shares | 251,354,308 |
| 251,354,308 |
|
|
|
|
Denominator for basic and diluted earnings per share | 365,813,993 |
| 365,813,993 |
|
|
|
|
Basic and diluted earnings per common share | R$ 0.31 |
| R$ 0.31 |
10% - Preferred shares | 1.10 |
| 1.10 |
Basic and diluted earnings per preferred share | R$ 0.35 |
| R$ 0.34 |
24. Financial instruments
a) General considerations
The Company is exposed to market risks arising from its operations, and uses derivatives to minimize its exposure to such risks. The Company's revenues are generated in Brazilian reais, while the Company debts, interest charges and accounts payable to equipment suppliers are denominated in foreign currency. Therefore, the Company’s earnings are sensitive to exchange rate variations, in particular the US dollar. Market values of the Company's key financial assets and liabilities were determined using available market information and appropriate valuation methodologies. The use of different market methodologies may affect estimated realization values. Capital is managed using operational strategies aiming for protection, security and liquidity. The control policy involves constantly monitoring rates contracted against current market rates. The Company and its subsidiaries do not make speculative investments in derivatives or other risk assets.
37
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
24. Financial instruments – continued
b) Fair value
Fair values of the main financial liabilities were calculated considering the estimated costs to settle the liabilities on March 31, 2013, which includes penalties for early settlement.
Fair values and carrying amounts of the main financial liabilities, net of borrowings costs, are shown below:
|
| Controlling company | ||||||
|
| 03/31/2013 |
|
| ||||
|
| (unaudited) |
| 12/31/2012 | ||||
|
| Carrying amount |
| Fair value |
| Carrying amount |
| Fair value |
Global Notes 2020 |
| 711,012 |
| 801,360 |
| 737,071 |
| 843,959 |
Finame |
| 112,640 |
| 112,640 |
| 124,738 |
| 124,738 |
America Movil S,A,B de C.V. |
| 290,162 |
| 290,162 |
| - |
| - |
Commercial Paper |
| 698,283 |
| 698,283 |
| 686,749 |
| 686,749 |
|
| 1,812,097 |
| 1,902,445 |
| 1,548,558 |
| 1,655,446 |
|
| Consolidated | ||||||
|
| 03/31/2013 |
| |||||
|
| (unaudited) |
| 12/31/2012 | ||||
|
| Carrying amount |
| Fair value |
| Carrying amount |
| Fair value |
Global Notes 2020 |
| 711,012 |
| 801,360 |
| 737,071 |
| 843,959 |
Banco Inbursa S.A. |
| 208,291 |
| 210,002 |
| 206,716 |
| 208,518 |
America Movil S.A.B de C.V. |
| 1,239,755 |
| 1,239,755 |
| 686,585 |
| 686,585 |
Finame |
| 275,681 |
| 275,681 |
| 302,301 |
| 302,301 |
Commercial Paper |
| 698,283 |
| 698,283 |
| 686,749 |
| 686,749 |
|
| 3,133,022 |
| 3,225,081 |
| 2,619,422 |
| 2,728,112 |
Other financial assets and liabilities have fair values approximated to their carrying amounts.
c)Risks impacting on the Company’s business
Foreign exchange rate risk
The Company's results are subject to foreign exchange fluctuations, depending on the effects of exchange rate volatility on liabilities pegged to foreign currencies, particularly the US dollar. The Company's revenues are generated in Brazilian reais, whereas it pays certain equipment and programming content suppliers in foreign currencies.
38
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
24. Instrumentos financeiros– continued
c)Risks impacting on the Company’s business – continued
Foreign exchange rate risk – continued
The Company’s foreign currency exposure on March 31, 2013 (unaudited), is shown below:
| Controlling company |
| Consolidated |
Debt in US dollars: |
|
|
|
Current: |
|
|
|
Interest on loans and financing | 9,621 |
| 17,599 |
Suppliers of equipment and others | 11,112 |
| 92,888 |
Programming suppliers | 6,051 |
| 6,051 |
| 26,784 |
| 116,538 |
Non-current: |
|
|
|
Loans payable, net of costs of debts | 701,391 |
| 901,704 |
|
|
|
|
Exposure liability | 728,175 |
| 1,018,242 |
The Company acquired non-speculative derivative financial instruments to hedge against its foreign currency exposure. The purpose of these transactions is to minimize the effects of changes in US dollar exchange rate when settling short term transactions. Counterparties to the contracts are the following banks: HSBC, Santander and JP Morgan.
The Company only enters into foreign exchange derivatives in order to hedge a portion of its accounts payable to imported equipment suppliers and future obligations for purchases not yet made, which are or will be linked to the US dollar, and payments of interest charges on debt. For the three-month period ended March 31, 2013, the Company held a derivative instrument (foreign exchange) position of R$52,257 (unaudited), (R$83,898 December 31, 2012), relating to interest charges on loans in foreign currency and commitments to foreign suppliers. Part of total debt in dollars refers to a loan from Banco Inbursa S.A. due between 2017 and 2019 and Global Notes 2020 due to 2020.
39
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
24. Instrumentos financeiros– continued
c)Risks impacting on the Company’s business – continued
Foreign exchange rate risk – continued
Derivatives financial instruments are as follows:
| Notional amount | Fair value |
| Accumulated effect (current period) | |||
| 03/31/2013 |
|
| 03/31/2013 |
|
|
|
Description | (unaudited) | 12/31/2012 |
| (unaudited) | 12/31/2012 |
| Amount payable |
|
|
|
|
|
|
|
|
“Swaps” contracts |
|
|
|
|
|
|
|
Asset position |
|
|
|
|
|
|
|
Foreign currency | 52,257 | 83,898 |
| 44,764 | 75,701 |
| - |
Liability position |
|
|
|
|
|
|
|
Ratios (Dollar vs, CDI) | 52,257 | 83,898 |
| 48,511 | 79,803 |
| 3,747 |
| - | - |
| (3,747) | (4,102) |
| 3,747 |
The net liability payable of R$3,747 is recognized in the unrealized losses on derivatives account in the balance sheet. During the three-month period ended March 31, 2013 (unaudited), the Company recognized a loss on derivatives of R$1,670 (R$9,112 during the three-month period ended March 31, 2012 - unaudited), which was recorded as finance income.
40
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notes to interim financial statements
March31, 2013
(In thousands of reais)
24. Financial instruments – continued
c)Risks impacting the Company’s business – continued
Foreign exchange rate risk – continued
The following table shows the sensitivity analysis of the Company’s management and the effect of cash operations with derivative financial instruments outstanding as of March 31, 2013 (unaudited):
Scenario - currency appreciation (R$/US$) and increase of interbank rate (CDI)
Operations |
| Contracts |
| Probable scenario |
| Possible adverse scenario (a) |
| Remote adverse scenario (b) | ||||||||||||||
|
|
Quantity |
| Amount US$ (thousands) |
|
Maturity |
| Dollar rate R$ |
| CDI |
| Dollar rate R$ |
| CDI |
| Loss |
| Dollar rate R$ |
| CDI |
| Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar x CDI |
| 5 |
| 24,200 |
| from 04/12/2013 to 07/29/2013 |
| 2.0138 |
| 7.01 |
| 1.5104 |
| 8.76 |
| 15,957 |
| 1.0069 |
| 10.52 |
| 28,077 |
(a) The possible adverse scenario is represented by a 25% appreciation of the real against the dollar and an increase of 25% in CDI rate over the rates of the probable scenario.
(b) The remote adverse scenario is represented by a 50% appreciation of the real against the dollar and an increase of 50% in CDI rate % over the rates of the probable scenario.
Scenario - depreciation of Brazilian currency (R$/US$) and decrease of CDI
Operations |
| Contracts |
| Probable scenario |
| Possible adverse scenario (c) |
| Remote adverse scenario (d) | ||||||||||||||
|
| Quantity |
| Amount US$ (thousands) |
| Maturity |
| Dollar rate R$ |
| CDI |
| Dollar rate R$ |
| CDI |
| Gain |
| Dollar rate R$ |
| CDI |
| Gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar x CDI |
| 5 |
| 24,200 |
| from 04/12/2013 to 07/29/2013 |
| 2.0138 |
| 7.01 |
| 2.5173 |
| 5.26 |
| 8,556 |
| 3.0207 |
| 3.51 |
| 20,955 |
(c) The possible adverse scenario is represented by a 25% depreciation of the real in relation to the dollar and reduction in CDI by 25% over the rates of the probable scenario.
(d) The remote adverse scenario is represented by a 50% depreciation of the real in relation to the dollar and reduction of CDI by 50% over the rates of the probable scenario.
41
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
24. Financial instruments – continued
c) Risks impacting the Company’s business – continued
Foreign exchange rate risk – continued
On March 31, 2013 and 2012, the Company holds no leveraged derivatives and no limits for determining the results of the US dollar appreciating or depreciating against the Brazilian real.
Interest rate risk
The Company and its subsidiaries’ results are subject to fluctuations due to the variation in interest rates on liabilities and assets pegged to floating interest rates, especially CDI and TJLP.
The Company's exposure to floating interest rates as of March 31, 2013 is as follows:
| Controlling company |
| Consolidated |
Finame | 112,640 |
| 275,681 |
Commercial paper | 698,283 |
| 698,283 |
America Movil S.A.B de C.V. | 290,162 |
| 1,239,755 |
Liability exposure | 1,101,085 |
| 2,213,719 |
|
|
|
|
(-) Financial investments denominated in reais | 71,126 |
| 147,076 |
Net exposure | 1,029,959 |
| 2,066,643 |
Credit risk
Financial instruments, which subject the Company to credit risks, are mainly represented by cash and cash equivalents and trade accounts receivable. The Company maintains cash and cash equivalents with a number of financial institutions and does not limit its exposure to one institution in particular, according to a formal policy. The Company also holds units in conservative-profile fixed-income investment funds. The funds' assets comprise government bonds and first-tier private securities with low risk ratings as per the guidelines set by the Company, Centralized fund's portfolio is managed by Itaú Unibanco Asset Management - Banco de Investimento S.A.
The custody and control of the funds are under the responsibility of Banco Itaú and Risk Office Consultoria Financeira Ltda, performs risk management. Management believes the risk of not receiving amounts due from its counterparties is insignificant.
The credit risk is concentrated in the subscriber’s accounts receivable and it is reduced by the large number of subscribers that comprise the Company’s subscribers’ base.
42
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
24. Financial instruments – continued
c) Risks impacting the Company’s business – continued
Liquidity risk
Liquidity risk is the risk of a shortfall of funds used for payment of debts. The table below shows payments required for financial liabilities as of March 31, 2013 (unaudited).
|
| Controlling company | ||||||||
Maturity |
|
Finame |
|
Global Notes 2020 |
|
Commercial Paper |
| America Movil, S.A.B de C.V. |
|
Total |
2013 |
| 35,817 |
| 30,647 |
| 704,562 |
| - |
| 771,026 |
2014 |
| 29,699 |
| 61,295 |
| - |
| 313,621 |
| 404,615 |
2015 |
| 25,019 |
| 61,295 |
| - |
| - |
| 86,314 |
2016-2020 |
| 32,895 |
| 991,052 |
| - |
| - |
| 1,023,947 |
Total |
| 123,430 |
| 1,144,289 |
| 704,562 |
| 313,621 |
| 2,285,902 |
Consolidado | ||||||||||||
Maturity |
| Finame |
| Global Notes 2020 |
| Banco Inbursa S.A. |
| Commercial Paper |
| America Movil. S.A.B de C.V. |
| Total |
2013 |
| 81,768 |
| 30,647 |
| 18,922 |
| 704,562 |
| 56,899 |
| 892,798 |
2014 |
| 75,292 |
| 61,295 |
| 18,922 |
| - |
| 646,167 |
| 801,676 |
2015 |
| 62,150 |
| 61,295 |
| 18,922 |
| - |
| 65,694 |
| 208,061 |
2016-2020 |
| 83,159 |
| 991,052 |
| 465,468 |
| - |
| 782,032 |
| 2,321,711 |
Total |
| 302,369 |
| 1,144,289 |
| 522,234 |
| 704,562 |
| 1,550,792 |
| 4,224,246 |
The amounts presented include principal and interest payments calculated using the dollar exchange rate at March 31, 2013 (R$2.0138/US$ 1) for the debt denominated in US dollars (Global Notes 2020 and Banco Inbursa). The Finame loan was estimated based on the long-term interest rate (TJLP) of 5.0% + 3.15% per year for the entire year and fixed rate between 4.5% and 5.5% and 8.7% per year.
Interest payments for US Dollar denominated debt (Global Notes 2020 and Banco Inbursa S.A.) include withholding taxes, is in accordance with the prevailing tax legislation.
43
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
25. Measurement and fair value hierarchy
Fair value is an existing price representing the value that would be received from the sale of an asset, or that would be paid to transfer a liability in a normal transaction between market participants.
Therefore fair value is a market-based measurement and should be determined using the assumptions market participants would make when pricing an asset or liability. As a basis for consideration thereof, a three-level fair value hierarchy is determined by prioritizing the inputs used in measuring fair value as follows:
• Level 1. Observable inputs such as those with prices quoted in active markets;
• Level 2. Inputs other than those with prices quoted in active markets, which are observable either directly or indirectly; and
• Level 3. Unobservable inputs, for which there are few or no market data, which requires the reporting entity to develop its own assumptions.
|
| Measurement of fair value | ||
| Derivative instruments – currency swap contracts | Quoted prices in active markets for identical assets (Level 1) | Other significant observable sources (Level 2) | Significant unobservable inputs (Level 3) |
Balances at March 31, 2013 (unaudited) | (3,747) | - | (3,747) | - |
Balances at December 31, 2012 | (4,102) | - | (4,102) | - |
Currency swap derivative instruments are tools for managing risks arising from the effects of a major devaluation of the Brazilian real against the US dollar, which are inputs, other prices quoted in active markets, which are directly or indirectly observable.
During the three-month periodended March 31, 2013, there were no transfers between levels 1 and 2 in relation to the measurement of the fair value or transfers to level 3.
26. Insurance
For the three months period ended March 31, 2013, the insurance contracts has not changed significantly in relation to disclosures made in the note 26 of the financial statements for the year ended December 31, 2012.
44
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
27. Subsequent event
a) On April 09, 2013 the Company’s Management approved the second issuance of 68 commercial promissory notes, in a single series, with unit face value of R$10,000, totaling up to R$ 680,000, on the issue date, with no guarantees or suretyship and maturing in 360 days.
The promissory notes will be subject to public offering for distribution with restricted placement efforts and the proceeds from the aforementioned issue will be used to the repayment of obligations regarding the total rescue of the first issuance of the Company’s commercial promissory notes.
b) On April 11, 2013, Net Serviços,Embratel Participações S.A. (“Embrapar”). entities indirectly controlled by América Móvil S.A.B. de C.V. (“América Móvil”), in accordance with the terms of Instruction nº 358/02 of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, or “CVM”) reported that they are evaluating the possibility of implementing, along with Claro S.A., an entity also indirectly controlled by América Móvil, a corporate reorganization aiming to consolidating the corporate structure and activities of the entities and some of their subsidiaries in Brazil into a single company (the “transaction”).
.
Therefore, they informed that the above mentioned entities will start internal analysis and procedures along with the National Telecommunications Agency - ANATEL, in order to assess the feasibility of the operation and any conditions for its implementation. The decision regarding the transaction will depend, among other things, on the satisfactory completion of studies and analysis and position to be adopted by ANATEL in face of the same. The Company and Embrapar will disclose new information related to the transaction when new developments occur.
45
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
FINANCIAL PERFORMANCE AND LIQUIDITY – CONSOLIDATED 1Q13
Results
Net Revenueincrease21.9%, totalingR$2,240,954 thousand in the1Q13 compared to R$1,838,506 thousand in the 1Q12, mainly driven by the expansion of the subscriber base.
EBITDA (earnings before interest, income taxes including Social Contribution on net income, depreciation and amortization) totaledR$629,452 thousandin the1Q13compared toR$513,391 thousand in the 1Q12, therefore an increase of22.6%.
The Company recorded in the1Q13 Net Income ofR$114,892 thousand.
The Company’s annual and quarterly financial statements include additional BM&FBOVESPA requirements on the adoption of differentiated practices of corporate governance "Level 2".
On April 11, 2013, Net Serviços, Embratel Participações S.A. (“Embrapar”). companies indirectly controlled by América Móvil S.A.B. de C.V. (“América Móvil”), in accordance with the terms of Instruction nº 358/02 of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, or “CVM”) reported that they are evaluating the possibility of implementing, along with Claro S.A., a company also indirectly controlled by América Móvil, a corporate reorganization aiming to consolidating the corporate structure and activities of the companies and some of their subsidiaries in Brazil into a single company.
Therefore, they informed that the above mentioned companies will start internal analysis and procedures along with the Agência Nacional de Telecomunicações - ANATEL, in order to assess the feasibility of the operation and any conditions for its implementation. The decision regarding the transaction will depend, among other things, on the satisfactory completion of studies and analysis and position to be adopted by ANATEL in face of the same. NET Serviços and Embrapar will disclose new information related to the transaction when new developments occur.
46
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
Net Serviços de Comunicação S.A. CNPJ/MF nº 00.108.786/0001-65 NIN NIRE nº 35.300.177.240 Public Held Corporation Verbo Divino Street nº 1.356 - 1º floor -SãoPaulo-SP | |
Fiscal Council Report
Considering the material submitted, previous analyzes and additional information provided by the auditors, the members recommended the Company's financial statements for the period ended March 31, 2013, prepared by management in accordance with International Financial Reporting Standards (IFRS) and accounting practices adopted in Brazil, to the Board for approval, which will be formalized in a specific document.
São Paulo, April 16, 2013.
Martin Roberto Glogowsky
Eraldo Soares Peçanha
47
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
Declaration
Hereby, the Chief Executive Officer and other Statutory Officers of Net Serviços de Comunicação S.A. a public held corporation incorporated under the Brazilian Law, located at Verbo Divino Street, 1356 in São Paulo, São Paulo state, inscribed in the CNPJ under nº 00108786/0001-65, declare, under paragraph 29 of the CVM instruction nº 480, issued in December 7,2009, that:
Reviewed, discussed and agreed with the opinion expressed in the independent auditors' report relating to the individual and consolidated financial statements for the period ended March 31, 2013, contained in that report.
_____________________________________
José Antônio G. Félix.
Chief Executive Officer and Investors Relations
____________________________________
Roberto Catalão Cardoso
Chief Financial Officer
__________________________________
Rodrigo Marques de Oliveira
Director
____________________________________
Daniel Feldmann Barros
Director of Operations
48
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
Declaration
Hereby, the Chief Executive Officer and other Statutory Officers of Net Serviços de Comunicação S.A. a public held corporation incorporated under the Brazilian Law, located at Verbo Divino Street, 1356 in São Paulo, São Paulo state, inscribed in the CNPJ under nº 00108786/0001-65, declare, under paragraph 29 of the CVM instruction nº 480, issued in December 7,2009, that:
Reviewed, discussed and agreed with the individual and consolidated financial statements for the period ended March 31, 2013.
_____________________________________
José Antônio G. Félix.
Chief Executive Officer and Investors Relations
____________________________________
Roberto Catalão Cardoso
Chief Financial Officer
____________________________________
Rodrigo Marques de Oliveira
Director
____________________________________
Daniel Feldmann Barros
Director of Operations
49
NET SERVIÇOS DE COMUNICAÇÃO S.A.
Notas explicativas às demonstrações financeiras - continuação
31 de março de 2013
(Em milhares de reais)
Capital budget proposal
Not applicable to Company.
NET SERVIÇOS DE COMUNICAÇÃO S.A. | ||
By: | /S/ José Antonio Guaraldi Félix | |
José Antonio Guaraldi Félix CEO |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.