Oi announces material fact of step-up in basis of assets arising from Brasil Telecom S.A.'s acquisition of control of Telemar...

RIO DE JANEIRO, April 26, 2013 /PRNewswire/ -- Oi S.A. ("Oi") and Telemar Participacoes S.A. ("Telemar Participacoes"), in compliance with article 157, paragraph 4, of Law No. 6,404/76 and pursuant to CVM Instruction No. 358/02, inform their shareholders and the market in general that, in response to the formal consultation that Oi submitted to the Brazilian Securities and Exchange Commission (Comissao de Valores Mobiliarios – CVM) ("CVM") to confirm the most appropriate accounting treatment for the step-up in basis of assets arising from Brasil Telecom S.A.'s acquisition of control of Telemar Norte Leste S.A. as part of the corporate reorganization that was approved on February 27, 2012 ("Corporate Reorganization"), as reflected in Oi's individual and consolidated financial statements as of and for the year ended December 31, 2012 previously filed with the CVM, Oi was informed by CVM, in a letter received on this date, that on April 24, 2013, the Board of Directors of CVM unanimously decided to accept Oi's position that the reversal of the step-up in basis recorded by Oi (in the total amount of R$12,849 million as of December 31, 2012), and the recognition of such amount in Telemar Participacoes' financial statements, is the most appropriate accounting treatment for such event.

Subject to the conclusion of the necessary accounting and auditing work, Oi anticipates that the reversal of the step-up in basis will reduce Oi's the depreciation, amortization and write-off of property, plant and equipment expenses by R$1,436 million for the fiscal year ended December 31, 2012, causing an increase in adjusted net income for such year of R$948 million.

The table below shows the principal impacts on Oi's accounting records as a result of these adjustments.

	As of and for the year ended December 31, 2012
	Reported Balance	Reversal of Step-Up in Basis and Deferred Taxes and Social Contribution	Reclassification of Other Deferred Taxes and Social Contribution	Adjusted Balance
	(in millions of reais)
Assets
Current	21,145	—	—	21,145
Noncurrent	56,647	-12,849	4,135	47,933
Total	77,792	-12,849	4,135	69,078
Liabilities
Current	17,067	—	—	17,067
Noncurrent	40,898	-4,369	4,135	40,664
Shareholders' Equity	19,827	-8,48	—	11,347
Total	77,792	-12,849	4,135	69,078
Net Income	837	948	—	1,785

Oi will file with the CVM a restatement of its financial statements as of and for the year ended December 31, 2012, as well as its quarterly financial statements.

Rio de Janeiro, April 25, 2013.

Alex Waldemar Zornig
Investor Relations Officer
Oi S.A.

Pedro Jereissati
Investor Relations Officer
Telemar Participacoes S.A.

Oi S.A.
Corporate Taxpayers' Registry (CNPJ/MF) No. 76.535.764/0001-43
Board of Trade (NIRE) No. 3330029520-8
Publicly-Held Company

Telemar Participacoes S.A.
Corporate Taxpayers' Registry (CNPJ/MF) No. 02.107.946/0001-87
Board of Trade (NIRE) No. 3330016601-7
Publicly-Held Company

Tickers: OIBR3, OIBR4

 

SOURCE Oi S.A.

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