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____(Free Translation of the original in Portuguese) | ||
FEDERAL GOVERNMENT | ||
BRAZILIAN SECURITIES COMMISSION (CVM) | ||
QUARTERLY INFORMATION ITR | Brazilian Corporation Law | |
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES | Date: June 30, 2008 |
REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS AN EVALUATION OF THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED. |
01.01 - IDENTIFICATION
1 - CVM CODE 01866-0 |
2 - COMPANY NAME CPFL ENERGIA S.A |
3 - CNPJ (Federal Tax ID) 02.429.144/0001-93 |
4 - NIRE (State Registration Number) 353.001.861.33 |
01.02 - HEAD OFFICE
1 - ADDRESS Rua Gomes de Carvalho, 1510 14º andar Conjunto 2 |
2 - DISTRICT Vila Olímpia |
||||
3 - ZIP CODE 04547-005 |
4 - CITY São Paulo |
5 - STATE SP |
|||
6 - AREA CODE 019 |
7 - TELEPHONE 3756-8018 |
8 - TELEPHONE - |
9 - TELEPHONE - |
10 - TELEX |
|
11 - AREA CODE 019 |
12 - FAX 3756-8392 |
13 - FAX - |
14 - FAX - |
||
15 - E-MAIL ri@cpfl.com.br |
01.03 - INVESTOR RELATIONS OFFICER (Company Mailing Address)
1- NAME José Antonio de Almeida Filippo |
||||
2 ADDRESS Rodovia Campinas Mogi-Mirim, 1755, Km 2,5 |
3 - DISTRICT Jardim Santana |
|||
4 - ZIP CODE 13088-900 |
5 - CITY Campinas |
6 - STATE SP |
||
7 - AREA CODE 019 |
8 - TELEPHONE 3756-8704 |
9 - TELEPHONE - |
10 - TELEPHONE - |
11 - TELEX |
12 - AREA CODE 019 |
13 - FAX 3756-8777 |
14 - FAX - |
15 - FAX - |
|
16 - E-MAIL jfilippo@cpfl.com.br |
01.04 ITR REFERENCE AND AUDITOR INFORMATION
CURRENT YEAR | CURRENT QUARTER | PREVIOUS QUARTER | |||||
1 - BEGINNING | 2. END | 3 - QUARTER | 4 - BEGINNING | 5 - END | 6 - QUARTER | 7 - BEGINNING | 8 - END |
01.01.2008 | 12.31.2008 | 2 | 04.01.2008 | 06.30.2008 | 1 | 01.01.2008 | 3.31.2008 |
09 - INDEPENDENT ACCOUNTANT KPMG Auditores Independentes |
10 - CVM CODE 00418-9 |
||||||
11. PARTNER IN CHARGE Jarib Brisola Duarte Fogaça |
12 - CPF (INDIVIDUAL TAX ID) 012.163.378-02 |
1
01.05 - CAPITAL STOCK
Number of Shares (in units) |
1 Current Quarter 06.30.2008 |
2 Previous Quarter 03.31.2008 |
3 Same Quarter of Last Year 06.30.2007 |
Paid-in Capital | |||
1 - Common | 479,910,938 | 479,910,938 | 479,756,730 |
2 - Preferred | 0 | 0 | 0 |
3 - Total | 479,910,938 | 479,910,938 | 479,756,730 |
Treasury Stock | |||
4 - Common | 0 | 0 | 0 |
5 - Preferred | 0 | 0 | 0 |
6 - Total | 0 | 0 | 0 |
01.06 - COMPANY PROFILE
1 - TYPE OF COMPANY Commercial, Industrial and Other |
2 - STATUS Operational |
3 - NATURE OF OWNERSHIP Private National |
4 - ACTIVITY CODE 3120 Administration and Participation Company - Electric Energy |
5 - MAIN ACTIVITY Holding |
6 - CONSOLIDATION TYPE Full |
7 TYPE OF REPORT OF INDEPENDENT AUDITORS Unqualified |
01.07 - COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS
1 - ITEM | 2 - CNPJ (Federal Tax ID) | 3 - COMPANY NAME |
01.08 - CASH DIVIDENDS
1 ITEM | 2 EVENT | 3 APPROVAL | 4 TYPE |
5 - DATE OF PAYMENT |
6 - TYPE OF SHARE | 7 - AMOUNT PER SHARE |
01 | AGO/E | 02.27.2008 | Dividend | 04.30.2008 | ON | 1.4979645300 |
02 | RCA | 08.11.2008 | Dividend | ON | 1.2535168090 |
2
01.09 - SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR
1 - ITEM | 2 - DATE OF CHANGE | 3 - CAPITAL STOCK (IN THOUSANDS OF REAIS) |
4 - AMOUNT OF CHANGE (IN THOUSANDS OF REAIS) |
5 - NATURE OF CHANGE | 7 - NUMBER OF SHARES ISSUED (IN UNITS) |
8 -SHARE PRICE WHEN ISSUED (IN REAIS) |
01.10 - INVESTOR RELATIONS OFFICER
1- DATE | 2 SIGNATURE |
3
02.01 - BALANCE SHEET - ASSETS (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 06/30/2008 | 4 03/31/2008 |
1 | Total assets | 6,113,361 | 6,644,184 |
1.01 | Current assets | 850,782 | 1,029,828 |
1.01.01 | Cash and banks | 7,626 | 4,890 |
1.01.02 | Credits | 838,570 | 1,016,074 |
1.01.02.01 | Accounts receivable | 0 | 0 |
1.01.02.02 | Other receivables | 838,570 | 1,016,074 |
1.01.02.02.01 | Dividends and interest on shareholders equity | 742,483 | 935,363 |
1.01.02.02.02 | Financial investments | 36,316 | 37,243 |
1.01.02.02.03 | Recoverable taxes | 49,799 | 33,468 |
1.01.02.02.04 | Deferred taxes | 9,645 | 9,673 |
1.01.02.02.05 | Prepaid expenses | 327 | 327 |
1.01.03 | Material and supplies | 0 | 0 |
1.01.04 | Other | 4,586 | 8,864 |
1.01.04.01 | Derivatives | 0 | 4,153 |
1.01.04.02 | Other credits | 4,586 | 4,711 |
1.02 | Noncurrent assets | 5,262,579 | 5,614,356 |
1.02.01 | Long-term assets | 582,728 | 585,625 |
1.02.01.01 | Other receivables | 173,411 | 176,308 |
1.02.01.01.01 | Financial investments | 94,796 | 93,659 |
1.02.01.01.02 | Recoverable taxes | 2,787 | 2,787 |
1.02.01.01.03 | Deferred taxes | 74,137 | 78,090 |
1.02.01.01.04 | Prepaid expenses | 1,691 | 1,772 |
1.02.01.02 | Related parties | 409,310 | 409,310 |
1.02.01.02.01 | Associated companies | 0 | 0 |
1.02.01.02.02 | Subsidiaries | 409,310 | 409,310 |
1.02.01.02.03 | Other related parties | 0 | 0 |
1.02.01.03 | Other | 7 | 7 |
1.02.01.03.01 | Escrow deposits | 7 | 7 |
1.02.02 | Permanent assets | 4,679,851 | 5,028,731 |
1.02.02.01 | Investments | 4,670,740 | 5,022,203 |
1.02.02.01.01 | Associated companies | 0 | 0 |
1.02.02.01.02 | Associated companies - goodwill | 0 | 0 |
1.02.02.01.03 | Permanent equity interests | 3,080,625 | 3,399,786 |
1.02.02.01.04 | Permanent equity interests - goodwill | 1,590,115 | 1,622,417 |
1.02.02.01.05 | Other investments | 0 | 0 |
1.02.02.02 | Property, plant and equipment | 424 | 443 |
1.02.02.03 | Intangible | 0 | 0 |
1.02.02.04 | Deferred charges | 8,687 | 6,085 |
4
02.02 - BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 06/30/2008 | 4 03/31/2008 |
2 | Total liabilities and shareholders equity | 6,113,361 | 6,644,184 |
2.01 | Current liabilities | 653,675 | 921,561 |
2.01.01 | Loans and financing | 0 | 180,990 |
2.01.01.01 | Loans and financing | 0 | 180,490 |
2.01.01.02 | Interest on loans and financing | 0 | 500 |
2.01.02 | Debentures | 16,678 | 3,737 |
2.01.02.01 | Interest on debentures | 16,678 | 3,737 |
2.01.03 | Suppliers | 4,242 | 4,868 |
2.01.04 | Taxes and social contributions payable | 14,992 | 113 |
2.01.05 | Dividends and interest on equity | 616,018 | 730,604 |
2.01.06 | Reserves | 0 | 0 |
2.01.07 | Related parties | 0 | 0 |
2.01.08 | Other | 1,745 | 1,249 |
2.01.08.01 | Accrued liabilities | 125 | 82 |
2.01.08.02 | Derivative contracts | 44 | 5 |
2.01.08.03 | Other | 1,576 | 1,162 |
2.02 | Non-current liabilities | 504,852 | 494,722 |
2.02.01 | Long-term liabilities | 504,852 | 494,722 |
2.02.01.01 | Loans and financing | 0 | 0 |
2.02.01.01.01 | Loans and financing | 0 | 0 |
2.02.01.01.02 | Interest on loans and financing | 0 | 0 |
2.02.01.02 | Debentures | 450,000 | 450,000 |
2.02.01.03 | Reserves | 54,852 | 44,722 |
2.02.01.03.01 | Reserve for contingencies | 54,852 | 44,722 |
2.02.01.04 | Related parties | 0 | 0 |
2.02.01.05 | Advances for future capital increase | 0 | 0 |
2.02.01.06 | Other | 0 | 0 |
2.02.01.06.01 | Derivative contracts | 0 | 0 |
2.02.02 | Deferred income | 0 | 0 |
2.04 | Shareholders equity | 4,954,834 | 5,227,901 |
2.04.01 | Capital | 4,741,175 | 4,741,175 |
2.04.02 | Capital reserves | 16 | 16 |
2.04.03 | Revaluation reserves | 0 | 0 |
2.04.03.01 | Own assets | 0 | 0 |
2.04.03.02 | Subsidiary/associated companies | 0 | 0 |
2.04.04 | Profit reserves | 213,643 | 213,643 |
2.04.04.01 | Legal reserves | 213,643 | 213,643 |
2.04.04.02 | Statutory reserves | 0 | 0 |
2.04.04.03 | For contingencies | 0 | 0 |
2.04.04.04 | Unrealized profits | 0 | 0 |
2.04.04.05 | Profit retention | 0 | 0 |
5
2.04.04.06 | Special reserve for undistributed dividends | 0 | 0 |
2.04.04.07 | Other revenue reserve | 0 | 0 |
2.04.05 | Retained earnings | 0 | 273,067 |
2.04.06 | Advance for future capital increase | 0 | 0 |
6
03.01 - INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 04/01/2008 to 06/30/2008 |
4 - 01/01/2008 to 06/30/2008 |
5 04/01/2007 to 06/30/2007 |
6 - 01/01/2007 to 06/30/2007 |
3.01 | Operating revenues | 0 | 0 | 0 | 0 |
3.02 | Deductions from operating revenues | 0 | 0 | 0 | 0 |
3.03 | Net operating revenues | 0 | 0 | 0 | 0 |
3.04 | Cost of sales and/or services | 0 | 0 | 0 | 0 |
3.05 | Gross operating income | 0 | 0 | 0 | 0 |
3.06 | Operating expenses/income | 445,762 | 721,197 | 450,179 | 921,998 |
3.06.01 | Sales and marketing | 0 | 0 | 0 | 0 |
3.06.02 | General and administrative | (5,618) | (9,966) | (4,075) | (10,007) |
3.06.03 | Financial | 51,305 | 8,816 | 14,355 | (3,838) |
3.06.03.01 | Financial income | 101,484 | 113,571 | 71,845 | 79,938 |
3.06.03.01.01 | Interest on shareholders' equity | 98,340 | 98,340 | 70,464 | 70,464 |
3.06.03.01.02 | Other financial income | 3,144 | 15,231 | 1,381 | 9,474 |
3.06.03.02 | Financial expenses | (50,179) | (104,755) | (57,490) | (83,776) |
3.06.03.02.01 | Goodwill amortization | (32,303) | (64,604) | (25,195) | (50,388) |
3.06.03.02.02 | Other financial expenses | (17,876) | (40,151) | (32,295) | (33,388) |
3.06.04 | Other operating income | 0 | 0 | 0 | 0 |
3.06.05 | Other operating expenses | 0 | 0 | 0 | 0 |
7
03.01 - INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 04/01/2008 to 06/30/2008 |
4 - 01/01/2008 to 06/30/2008 |
5 04/01/2007 to 06/30/2007 |
6 - 01/01/2007 to 06/30/2007 |
3.06.06 | Equity in subsidiaries | 400,075 | 722,347 | 439,899 | 935,843 |
3.06.06.01 | Companhia Paulista de Força e Luz | 127,909 | 299,971 | 193,431 | 406,848 |
3.06.06.02 | Companhia Piratininga de Força e Luz | 61,201 | 93,983 | 75,475 | 164,487 |
3.06.06.03 | CPFL Geração de Energia S.A. | 75,157 | 115,493 | 69,868 | 158,568 |
3.06.06.04 | CPFL Comercialização Brasil S.A. | 47,881 | 72,987 | 54,255 | 128,649 |
3.06.06.05 | Nova 4 Participações Ltda | 0 | 0 | 4,253 | (472) |
3.06.06.06 | CPFL Serra Ltda | 0 | 0 | 43,583 | 77,287 |
3.06.06.07 | CPFL Comercialização Cone Sul S.A. | 0 | 0 | 582 | 2,024 |
3.06.06.08 | Rio Grande Energia S.A. | 62,525 | 102,525 | 0 | 0 |
3.06.06.09 | Perácio Participações S.A. | 13,184 | 20,760 | (1,548) | (1,548) |
3.06.06.10 | Companhia Luz e Força Santa Cruz | 12,218 | 16,628 | 0 | 0 |
3.07 | Income (loss) from operations | 445,762 | 721,197 | 450,179 | 921,998 |
3.08 | Nonoperating income/expense | (113) | (1,099) | 1,337 | 3,200 |
3.08.01 | Income | 0 | 0 | 1,337 | 3,200 |
3.08.02 | Expenses | (113) | (1,099) | 0 | 0 |
3.09 | Income before taxes on income and minority interest | 445,649 | 720,098 | 451,516 | 925,198 |
3.10 | Income tax and social contribution | (14,819) | (14,819) | (9,330) | (9,898) |
3.10.01 | Social contribution | (2,813) | (2,813) | (1,651) | (1,651) |
3.10.02 | Income tax | (12,006) | (12,006) | (7,679) | (8,247) |
3.11 | Deferred tax | (3,981) | (5,363) | (2,275) | (2,461) |
3.11.01 | Deferred social contribution | (1,234) | (1,668) | (725) | (751) |
3.11.02 | Deferred income tax | (2,747) | (3,695) | (1,550) | (1,710) |
3.12 | Statutory profit sharing/contributions | 0 | 0 | 0 | 0 |
8
3.12.01 | Profit sharing | 0 | 0 | 0 | 0 |
3.12.02 | Contributions | 0 | 0 | 0 | 0 |
3.13 | Reversal of interest on shareholders equity | (98,340) | (98,340) | (70,464) | (70,464) |
3.15 | Net income for the period | 328,509 | 601,576 | 369,447 | 842,375 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 479,910,938 | 479,910,938 | 479,756,730 | 479,756,730 | |
INCOME PER SHARE | 0.68452 | 1.25352 | 0.77007 | 1.75584 | |
LOSS PER SHARE |
9
04.01 NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Amounts stated in thousands of Brazilian reais, except where otherwise indicated)
( 1 ) OPERATIONS | ||
CPFL Energia S.A. (CPFL Energia or Company) is a publicly quoted corporation incorporated for the principal purpose of acting as a holding company, participating in the capital of other companies primarily dedicated to electric energy distribution, generation and sales activities.
The Company has direct and indirect interests in the following operational subsidiaries, allocated by line of business:
June 30, 2008 | March 31, 2008 | |||||||||
Subsidiary | Consolidation | Equity Interest - % | Equity Interest - % | |||||||
Method | Direct | Indirect | Direct | Indirect | ||||||
Energy Distribution | ||||||||||
Companhia Paulista de Força e Luz (CPFL Paulista) | Full | 100.00 | - | 100.00 | - | |||||
Companhia Piratininga de Força e Luz (CPFL | ||||||||||
Piratininga) | Full | 100.00 | - | 100.00 | - | |||||
Companhia Luz e Força Santa Cruz (CPFL Santa | ||||||||||
Cruz) | Full | 99.99 | - | 99.99 | - | |||||
Rio Grande Energia S.A. (RGE) | Full | 100.00 | - | 100.00 | - | |||||
Companhia Paulista de Energia Elétrica (CPFL Leste | ||||||||||
Paulista) | Full | - | 96.56 | - | 96.56 | |||||
Companhia Jaguari de Energia (CPFL Jaguari) | Full | - | 90.15 | - | 90.15 | |||||
Companhia Sul Paulista de Energia (CPFL Sul | ||||||||||
Paulista) | Full | - | 87.80 | - | 87.80 | |||||
Companhia Luz e Força de Mococa (CPFL Mococa) | Full | - | 89.75 | - | 89.75 | |||||
Energy Generation | ||||||||||
CPFL Geração de Energia S.A. (CPFL Geração) | Full | 100.00 | - | 100.00 | - | |||||
CPFL Sul Centrais Elétricas Ltda. ("CPFL Sul Centrais | ||||||||||
Elétricas") | Full | - | 100.00 | - | 100.00 | |||||
Paulista Lajeado Energia S.A. ("Paulista Lajeado") | Full | - | 54.03 | - | 54.03 | |||||
CERAN - Companhia Energética Rio das Antas | ||||||||||
("CERAN") | Proportionate | - | 65.00 | - | 65.00 | |||||
BAESA - Energética Barra Grande S.A. ("BAESA") | Proportionate | - | 25.01 | - | 25.01 | |||||
Foz do Chapecó Energia S.A. ("Foz do Chapecó") | Proportionate | - | 51.00 | - | 51.00 | |||||
Campos Novos Energia S.A. ("ENERCAN") | Proportionate | - | 48.72 | - | 48.72 | |||||
Energy Commercialization | ||||||||||
CPFL Comercialização Brasil S.A. ("CPFL Brasil") | Full | 100.00 | - | 100.00 | - | |||||
CPFL Comercialização Cone Sul S.A. ("CPFL Cone | ||||||||||
Sul") | Full | - | 100.00 | - | 100.00 | |||||
Clion Assessoria e Comercialização de Energia Elétrica | ||||||||||
Ltda. ("CPFL Meridional") | Full | - | 100.00 | - | 100.00 | |||||
Sul Geradora Participações S.A. ("Sul Geradora") | Full | - | 99.95 | - | 99.95 | |||||
CPFL Planalto Ltda. ("CPFL Planalto") | Full | - | 100.00 | - | 100.00 |
10
Services | ||||||||||
CPFL Serviços, Equipamentos, Indústria e Comércio | Full | - | 89.81 | - | 89.81 | |||||
S.A. ("CPFL Serviços") | ||||||||||
Holding Company | ||||||||||
Perácio Participações S.A. ("Perácio") | Full | 100.00 | - | 100.00 | - | |||||
Chumpitaz Participações S.A. ("Chumpitaz") | Full | 100.00 | - | 100.00 | - | |||||
Makelele Participações S.A. ("Makelele") | Full | - | 100.00 | - | 100.00 | |||||
CPFL Jaguariúna S.A. ("CPFL Jaguariuna") | Full | - | 100.00 | - | 100.00 | |||||
Companhia Jaguari Geração de Energia ("Jaguari Geração") | Full | - | 90.15 | - | 90.15 |
( 2 ) PRESENTATION OF THE INTERIM FINANCIAL STATEMENTS | |
The parent companys and consolidated interim financial statements have been prepared in accordance with principles, practices and criteria consistent with those adopted for preparing the prior years financial statements and interim financial statements as of March 31, 2008 and should be analyzed together with those statements.
These interim financial statements were prepared in accordance with (i) generally accepted accounting principles in Brazil, (ii) the Accounting Manual of the Public Electric Energy Service and standards defined by ANEEL, and (iii) the complementary instructions of the Brazilian Securities Commission (CVM), including the CVM Instruction 469/08, which provides guidance for compliance with Law 11.638/07, as mentioned in Note 29.
The Cash Flow and Added Value Statements for the six months ended June 30, 2008 and 2007 are being presented as additional information for the market (appendices I and II, respectively).
The Cash Flow Statements are presented in accordance with the criteria established by FAS 95 Statement of Cash Flows, with respect to the presentation format, within the context of registering the Company's financial statements with the Securities and Exchange Commission (SEC).
Consolidation Principles
The consolidated financial statements include the balances and transactions of the Company and its subsidiaries CPFL Paulista, CPFL Piratininga, CPFL Geração, CPFL Brasil, CPFL Santa Cruz, RGE, Chumpitaz and Perácio. The asset, liability, income and expense balances have been fully consolidated. Prior to consolidation in the Company's financial statements, the financial statements of CPFL Geração, CPFL Brasil and Perácio are consolidated with those of their fully (majority) controlled or proportionally (jointly) controlled subsidiaries, according to the rules defined in CVM Instruction No. 247/96.
In compliance with the above conditions portion relating to the non-controlling shareholders is stated separately in liabilities and income statements for the presented period.
All significant intercompany balances and transactions have been eliminated.
The accounting policies of the parent companys subsidiaries are consistent with those of the parent company. The main difference in accounting policies relates to the revaluation of property, plant and equipment recorded by the indirect subsidiary RGE, which is eliminated in the shareholders equity base for calculation of equity interest and, consequently, in consolidation.
11
( 3 ) REGULATORY ASSETS AND LIABILITIES | |
Consolidated | ||||||||
Current | Noncurrent | |||||||
June 30, | March 31, | June 30, | March 31, | |||||
2008 | 2008 | 2008 | 2008 | |||||
Assets | ||||||||
Consumers, Concessionaires and Licensees (note 5) | ||||||||
Extraordinary tariff adjustment (a) | 2,175 | 3,048 | - | - | ||||
Free energy (a) | 1,045 | 1,326 | 134 | 81 | ||||
Tariff Review - Depreciation (b.1) | - | 948 | - | - | ||||
Discounts on TUSD and irrigation (b.3) | 68,530 | 77,640 | 5,198 | 6,182 | ||||
Other financial components | 3,160 | 4,573 | 95 | 95 | ||||
74,910 | 87,535 | 5,427 | 6,358 | |||||
Deferred Costs Variations | ||||||||
Parcel "A" (a) | 254,483 | 312,520 | 96,574 | 109,020 | ||||
CVA (c) | 246,825 | 306,957 | 180,529 | 64,782 | ||||
501,308 | 619,477 | 277,103 | 173,802 | |||||
Prepaid Expenses (note 9) | ||||||||
Other financial components | 9,750 | 7,007 | 42 | 42 | ||||
PIS and COFINS - Generators pass-through (b.3) | 374 | 515 | - | - | ||||
Increase in PIS and COFINS (b.3) | 258 | 2,396 | - | - | ||||
Energy surpluses and shortfalls (b.3) | 784 | 81 | 2,073 | 973 | ||||
Discounts on TUSD Generation (b.3) | 9,343 | - | - | - | ||||
Low income consumers' subsidy - Losses (d) | 52,712 | 39,489 | - | - | ||||
73,221 | 49,488 | 2,115 | 1,015 | |||||
Liabilities | ||||||||
Suppliers (note 17) | ||||||||
Free energy (a) | (29,651) | (29,867) | - | - | ||||
Deferred Gains Variations | ||||||||
Parcel "A" (a) | (17,740) | (9,439) | (2,878) | (3,240) | ||||
CVA (c) | (213,287) | (301,163) | (108,467) | (28,926) | ||||
(231,027) | (310,602) | (111,345) | (32,166) | |||||
Other Accounts Payable (note 22) | ||||||||
Tariff Review - Refund to consumer - recalculated (b.2) | - | (1,892) | - | - | ||||
Other financial components | (17,198) | (1,138) | (54) | (54) | ||||
Increase in PIS and COFINS (b.3) | (121,559) | (116,612) | - | - | ||||
Refund to consumer - Irrigation (b.3) | (1,950) | (2,070) | (727) | - | ||||
Refund to consumer - Overcontracting of electric energy (b.3) | (32,681) | (39,014) | (22,472) | (23,477) | ||||
Low income consumers' subsidy - Gains (d) | (10,360) | (9,208) | - | - | ||||
(183,748) | (169,934) | (23,253) | (23,531) | |||||
Total | 205,013 | 246,097 | 150,047 | 125,478 | ||||
12
a) Rationing
At the end of 2001, as a result of the Emergency Program for the Reduction of Electric Energy Consumption, in effect between June 2001 and February 2002, the generators, the power distributors and the Federal Government signed the "Overall Agreement for the Electric Energy Sector". The agreement introduced an Extraordinary Tariff Increase of 2.9% on electric power supply to residential consumers (except those regarded as "low income consumers") and for rural and public lighting, and 7.9% for all other consumers, as a mechanism to reimburse the electricity sector for the losses incurred as a result of this program.
The changes in RTE, Free Energy and Parcel A, net of the provision for losses,during the quarter ended in June 30, 2008 are shown below:
Consolidated | ||||||||
Free Energy | ||||||||
RTE | Asset | Liability | Parcel "A" | |||||
Description | Net | |||||||
As of March 31, 2008 | 3,048 | 1,407 | (29,867) | 408,861 | ||||
Monetary restatement | 156 | 235 | (119) | 10,403 | ||||
Provision for losses | (153) | (96) | 101 | - | ||||
Realization | (876) | (367) | 234 | (88,825) | ||||
As of June 30, 2008 | 2,175 | 1,179 | (29,651) | 330,439 | ||||
Extraordinary Tariff Adjustment (RTE) Corresponds to the loss of revenue determined by comparison of the sales revenues from energy effectively recorded in the rationing period, and projected revenue for this period, not taking into account the effects of the Energy Rationing Program.
As the deadline for recovery of the RTE has passed for the other distributors, the RTE balance refers to the indirect subsidiary CPFL Sul Paulista, which established a provision for losses of R$ 2,289, based on revenue projections, taking into consideration market growth and estimates of inflation, interest and regulatory aspects. ANEEL set a deadline of January 2009 for recovery of the RTE by CPFL Sul Paulista.
The distributors CPFL Paulista and CPFL Piratininga recorded losses of R$ 152,090 in prior years, due to the deadline for recovery of the full amount of the RTE having passed.
Electric energy from Independent Suppliers (Free Energy) Corresponds to the energy produced and made available to the consumer market during the rationing period by the independent producers and self-producers of energy.
The distribution utilities collected payment from consumers by means of the extraordinary tariff adjustment and passed it on to the generators, in accordance with the percentage established for each concessionaire, recording an asset and a liability. These amounts are monetarily restated in accordance with ANEEL instructions.
The subsidiary CPFL Sul Paulista recorded a reserve of R$ 1,917 for losses on realization of Free Energy.
13
In the case of the subsidiary RGE, the Free Energy regulatory asset derives from the fact that the distributor assigned its quota of Itaipu to the rationing program. As of June 30, 2008, the subsidiaries RGE and CPFL Geração have a reserve for losses on realization of Free Energy amounting to a total of R$ 4,514. The subsidiary CPFL Geração also recorded a loss of R$ 5,407 in relation to funds to be passed on by distributors, in cases where the deadlines for receipt have passed.
Parcel A Refers to the variation in the non-manageable costs corresponding Parcel "A" of the concession contracts, between January 1 and October 25, 2001. These amounts are restated in accordance with variation in the SELIC rate.
The subsidiaries CPFL Piratininga and CPFL Paulista started to offset Parcel A as from February 2007 and January 2008, respectively, using a mechanism similar to that used for the RTE. For the subsidiary CPFL Sul Paulista, amortization of parcel A will start from February 2009, over the period required to reach the amount recorded. In the case of the subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Mococa and CPFL Jaguari, Parcel A was amortized in November 2007, September 2005, March 2007 and August 2005, respectively.
Amortization of Parcel A in the quarter for CPFL Paulista and CPFL Piratininga:
Consolidated | ||||
June 30, | ||||
2008 | ||||
Energy purchased | 64,326 | |||
System service charge | 6,594 | |||
Fuel Consumption Account - CCC | 19,325 | |||
Global Reverse Fund - RGR | (1,487) | |||
Inspection fee | 67 | |||
Total | 88,825 | |||
b) Review and Adjustment Tariff
b.1) 1st Tariff review cycle (2003/2004)
a) CPFL Paulista Depreciation Difference
In 2007, by Ratification Resolution n° 443, ANEEL amended the final result of the first periodic tariff review of the subsidiary CPFL Paulista, approved in April 2005, adjusting the energy supply tariffs by 20.66%, due to a review of the calculation of the average depreciation percentage used in the 2003 tariff review. The difference in income resulting from the change in the tariff adjustment from 20.29% to 20.66%, and of the Xe component of the X Factor from 1.1352% to 1.2530%, corresponds to a financial adjustment of R$ 44,868, which was offset in the 2007 tariff adjustment.
b) CPFL Piratininga Remuneration Base
In 2006, by Ratification Resolution n° 385, and in answer to the application filed by Bandeirante Energia S.A. (Bandeirante) for reconsideration of the tariff review, ANEEL amended the amounts of the remuneration base for the subsidiary CPFL Piratininga.
In accordance with this amendment, ANEEL established that the electric energy supply tariffs should be reset at 10.14% . Accordingly, in line with the new provisional percentage established by
14
ANEEL, the subsidiary CPFL Piratininga recorded a regulatory asset of R$ 26,970 in 2006, in the Consumers, Concessionaires and Licensees account, including PIS and COFINS, which was amortized by October 2007.
ANEEL Resolution n° 336, of 2001, concerning approval of the request for spin-off of Bandeirante and the partial transfer of its concession area to the subsidiary CPFL Piratininga, established that, in the first periodic tariff review, the lower of the rates used for the two concessionaires would apply. As the rate for Bandeirante was 10.14%, against 11.52% for CPFL Piratininga, the rate of 10.14% prevails.
ANEEL Order n° 3209, of October 22, 2007, ratified the result of the subsidiary CPFL Piratiningas first tariff review, making it final.
c) CPFL Santa Cruz, CPFL Mococa and CPFL Leste Paulista Remuneration Base
In 2005, ANEEL finally approved the results of the first periodic tariff review of February 2004 for the subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari and CPFL Mococa. The differences between the provisional and the final percentages for subsidiaries CPFL Santa Cruz, CPFL Leste Paulista and CPFL Mococa were recovered by January 2008.
b.2) 2nd tariff review cycle (2007/2008)
ANEEL provisionally readjusted the tariffs and financial components relating to the tariff review on October 23, 2007, for the subsidiary CPFL Piratininga, on February 3, 2008, for the subsidiaries CPFL Santa Cruz, CPFL Jaguari, CPFL Mococa, CPFL Leste Paulista and CPFL Sul Paulista, on April 08, 2008, for the subsidiary CPFL Paulista and on April 19, 2008, for RGE, as shown below:
CPFL | ||||||||||||||||
CPFL Santa | CPFL | CPFL | Leste | CPFL Sul | CPFL | CPFL | ||||||||||
Cruz | Jaguari | Mococa | Paulista | Paulista | Piratininga | Paulista | RGE | |||||||||
Verified revenue | 213,312 | 87,989 | 54,148 | 77,145 | 92,390 | 2,136,914 | 5,175,546 | 1,950,452 | ||||||||
Parcel A - Total | 124,331 | 68,585 | 30,989 | 42,854 | 58,690 | 1,423,875 | 3,314,145 | 1,324,735 | ||||||||
Sector charges | 21,504 | 12,294 | 4,687 | 8,072 | 10,594 | 257,170 | 540,872 | 191,416 | ||||||||
Purchase of energy | 85,546 | 46,524 | 21,357 | 26,643 | 37,956 | 954,779 | 2,394,482 | 948,665 | ||||||||
Energy transmission | 17,281 | 9,767 | 4,945 | 8,139 | 10,140 | 211,926 | 378,791 | 184,654 | ||||||||
Parcel B - Total | 69,506 | 19,386 | 19,019 | 32,786 | 31,802 | 492,479 | 1,180,392 | 533,062 | ||||||||
Gross interest on capital | 14,894 | 4,880 | 3,658 | 11,696 | 7,745 | 154,530 | 351,310 | 179,713 | ||||||||
Depreciation rate | 10,594 | 2,492 | 1,816 | 4,322 | 4,230 | 81,098 | 252,111 | 97,139 | ||||||||
Reference company | 42,555 | 11,794 | 13,419 | 16,581 | 19,602 | 244,232 | 542,368 | 241,662 | ||||||||
Default | 1,463 | 220 | 126 | 187 | 225 | 12,619 | 34,603 | 14,548 | ||||||||
Income required (Parc. A + B) | 193,837 | 87,971 | 50,008 | 75,640 | 90,492 | 1,916,354 | 4,494,537 | 1,857,797 | ||||||||
(-) Other income | (1,291) | (291) | (411) | (569) | (860) | (13,152) | (27,276) | (12,170) | ||||||||
Net required revenue | 192,546 | 87,680 | 49,597 | 75,071 | 89,632 | 1,903,202 | 4,467,261 | 1,845,627 | ||||||||
Financial components | 5,013 | (1,079) | 1,366 | 777 | (524) | 15,767 | 3,336 | 187,320 | ||||||||
Financial repositioning | -9.73% | -0.35% | -8.40% | -2.69% | -2.98% | -10.94% | -13.69% | -5.37% | ||||||||
Financial components (*) | 2.60% | -1.23% | 2.75% | 1.04% | -0.58% | 0.83% | 0.08% | 10.15% | ||||||||
Total repositioning | -7.13% | -1.58% | -5.65% | -1.65% | -3.57% | -10.11% | -13.61% | 4.77% | ||||||||
Factor Xe | 0.22% | 2.10% | 0.24% | 1.07% | 1.31% | 0.73% | 0.83% | 0.66% | ||||||||
Consumer perception (**) | -8.14% | -3.56% | -8.15% | -1.45% | -7.11% | -15.29% | -17.21% | 2.52% |
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(*) In addition to the CVA (see item c), the main additional financial components are overcontracting of electric energy, discounts on collection of TUSD, adjustments of connection charges, basic network and CUSD. In the case of subsidiary RGE, 56% of the financial components refer to the subsidies to cooperatives located within the concession area.
(**) Represents the average effect perceived by consumers, as a result of the elimination from the tariff base of financial components added in the annual adjustment for the previous year.
In the tariff review process of the subsidiary CPFL Paulista, ANEEL provisionally recalculated the amount to be passed on to the tariffs relating to Overcontracting as of December 31, 2007. The regulatory agency included a refund of R$ 27,534 to consumers in the tariff review, while the balance at the same date was an asset of R$ 76,798.
On analyzing the process, management of the subsidiary CPFL Paulista, reviewed the procedures and applied to the CCEE for reassessment of part of the transactions involving the supply agreement of electric energy traded between the subsidiaries CPFL Paulista and CPFL Brasil.
In view of the above, pending the final result of the analysis by the regulatory agency, in March 2008 the subsidiary CPFL Paulista conservatively recorded a provision of R$ 39,853 for accounts receivable in relation to the CCEE reassessment for the period from January 2005 to February 2008, set against an increase of R$ 17,749 in CCEE revenue and a reduction of R$ 22,104 in CCEE cost. As a result of the reassessment, a provision of R$ 25,769 was recorded for the overcontracting asset and a provision of R$ 14,084 for a liability to refund to consumers in the next tariff adjustment, set against Electric energy costs. These records did not affect CPFL Paulistas income.
Conservatively, and in order to fully comply with the amounts approved by the regulatory agency, provisions of R$ 51,029 and R$ 27,534, respectively, were recorded in the first quarter of 2008 by the subsidiary CPFL Paulista for realization of an asset and a provision for a liability related to overcontracting, set against the electric energy costs overcontracting, relating to seasonal effects and losses, as defined provisionally by ANEEL. The provision on account of seasonal effects generated a CVA credit of R$ 9,487. These provisions will be maintained until ANEEL concludes its analyses and ratifies the final result of this review.
Since similar transactions were performed between the subsidiaries CPFL Piratininga and CPFL Brasil, the same provisions procedure was applied in CPFL Piratininga. A provision of R$ 14,452 was recorded related to reassessment of CCEE (increase of R$ 4,945 in CCEE income and reduction of R$ 9,507 in CCEE cost, respectively) and a further provision of R$ 45,398 in overcontracting for CCEE operations and losses.
Also in relation to the CCEE reassessment, a provision of R$ 71,879 was recorded in CPFL Brasil for accounts payable to CCEE (note 17), set against R$ 66,438 (reversal of income) of CCEE sales and R$ 5,441 in financial expenses. In the quarter, R$ 3,437 was recorded in relation to restatement of CCEE accounts payable.
In the consolidated financial statements, the effect of the provisions recorded, based on ANEEL's interpretation in relation to the process of overcontracting in the provisional tariff review, was R$ 189,789 (R$ 113,674 net of tax). The effect in the quarter was R$ 3,437 (R$ 1,779 net of tax).
b.3) Tariff adjustment
By establishing the Annual Tariff Adjustment Rate (IRT) of the subsidiary CPFL Paulista on April 3, 2007, in Ratification Resolution No. 445, and in order to review the PIS and COFINS amounts of the generators, ANEEL recalculated the electric energy cost of the first 2005 IRT initial contracts. As the cost of electric energy affects adjustment of the consumer tariff and calculation of CVA, the
16
recalculation, which resulted in a reduction in the average energy price, generated a liability to be reimbursed to the consumers and an additional CVA asset. Also, the CVA amounts approved by ANEEL in the 2007 IRT excluded the surpluses of the electric energy contracts, in accordance with item 61 of ANEEL Technical Note n° 069 of March 22, 2007. Accordingly, adjustments of R$ 98,635, recorded in Other Accounts Payable, and R$ 177,710, recorded in Deferral of Tariff Costs, were made in the first quarter of 2007 to counteract these effects, andset against Cost of Electric Energy (note 25).
In addition to the CVA (see item c), the main additional financial components of the assets and liabilities recorded are as follows:
Increase in PIS and COFINS
Refers to the difference between the costs relating to PIS and COFINS calculated by applying the current legislation, and those incorporated into tariff to April 2005 for the subsidiary CPFL Paulista and October 2005 for the subsidiary CPFL Piratininga.
The amounts approved in 2006 and 2007 were recorded in the Prepaid Expenses and will be amortized until April 2008.
In view of the discussions in respect of the nature of this credit, the Company conservatively opted to record a liability of the same assets amount, posted in the account Other Accounts Payable (note 22), which is monetarily restated based on the variation of the IGP-M rate.
Overcontracting
The electricity distribution concessionaires are obliged to guarantee 100% of their energy and power market through contracts approved, registered and ratified by ANEEL. The distribution concessionaires are also guaranteed that costs or income derived from overcontracting of electric energy will be passed on to the tariffs, limited to 3% of the energy load requirement. See item b.3 for further details on movement during this period.
Overcontracting is recorded and amortized as Prepaid Expenses (note 9) or Other Accounts Payable (note 22) and set against a credit recorded in Cost of Electric Energy (note 25).
Discounts on the TUSD and Irrigation
The subsidiaries record regulatory assets, relating to (i) the special discounts applied on the TUSD related to the supply of electricity from alternative sources, and on (ii) irrigation and aquaculture.
Discounts on and realization of TUSD and irrigation are recorded in Consumers, Concessionaires and Licensees and set against Revenue from Electricity Sales (note 24) account.
As from the 2008 Tariff Review, ANEEL established tariff advances related to the projected discounts for the following period, which has contributed towards reducing these assets.
Discounts TUSD Generation
The subsidiary RGE recorded a TUSD Generators asset in accordance with Resolution n° 497/2007, amended by Resolution n° 547/2007, which established new tariffs for shared Use of the Distribution System for the generation plants connected to the Other Transmission Facilities DITs. A liability of R$ 11,679 was recorded in 2007, which was passed on to the CEEE, and consequently, a balancing item was recorded as a regulatory asset in the 2008 Tariff Review.
17
The following table shows the changes in the items described above, relating to Tariff Review and Adjustments, occurred during the quarter ended June 30, 2008:
Consolidated | ||||||||||||||||||||||||
Description | Tariff review -Depreciation (b.1) | Tariff adjustment -Other asset and liability (1) | Assets - PIS and COFINS - Generators pass-through (2) |
Tariff review - Refund to consumer - IRT recalculated (b.2) |
Increase in PIS and COFINS (b.3) |
Overcontracting (b.3) | Discounts on the TUSD and irrigation (b.3) |
Refund to consumer - Irrigation (b.3) |
Discounts on the TUSD Generation | Total | ||||||||||||||
Asset | Liability | Asset | Liability | |||||||||||||||||||||
Balance as of March 31, 2008 | 948 | 10,525 | 515 | (1,892) | 2,396 | (116,612) | 1,054 | (62,491) | 83,822 | (2,070) | - | (83,805) | ||||||||||||
Constitution | - | (12,534) | 30 | - | - | - | 1,884 | - | 6,308 | (969) | 11,679 | 6,398 | ||||||||||||
Restatement | - | - | - | - | 5 | (4,947) | - | - | 762 | - | - | (4,180) | ||||||||||||
Amortization | (948) | (2,196) | (171) | 1,892 | (2,143) | - | (81) | 7,338 | (17,164) | 362 | (2,336) | (15,447) | ||||||||||||
Balance as of June 30, 2008 | - | (4,205) | 374 | - | 258 | (121,559) | 2,857 | (55,153) | 73,728 | (2,677) | 9,343 | (97,034) | ||||||||||||
(1) The effects of the provision were recorded in Supply Income (R$ 15,019), Energy Cost R$ 3,790, Operating Expense R$ 917 and Accounts Receivable (R$ 2,222).
The effects of amortization were recorded in Operating Income R$ 392, Energy Cost (R$ 483), System Use Charge (R$ 972), Operating Expense (R$ 1,127), and Financial Income (Expense R$ 6).
(2) The effects of the provision were recorded in Operating Expense R$ 30.
The effects of amortization were recorded in Operating Income R$ 14 and Accounts Receivable R$ (185).
c) Deferred Tariff Costs and Gains Variations (CVA)
Refer to the mechanism for compensation of the variations in unmanageable costs incurred by the electric energy distribution concessionaires. These variations are calculated in accordance with the difference between the expenses effectively incurred and the expenses estimated at the time of composing the tariffs for the annual tariff adjustments.
The amounts of CVA are monetarily restated based on the SELIC rate.
Consolidated | ||||||||||
Changes | ||||||||||
Balance as | Balance as | |||||||||
of March 31, | of June 30, | |||||||||
2008 | Deferral | Amortization | Restatement | 2008 | ||||||
ASSET | ||||||||||
Energy purchased | 339,730 | 26,882 | (56,352) | 7,989 | 318,249 | |||||
System service charge | 13,391 | 82,129 | (303) | 287 | 95,504 | |||||
Fuel consumption account CCC | 5,874 | 214 | (1,829) | 100 | 4,359 | |||||
Energy development account - | ||||||||||
CDE | 12,744 | 829 | (4,519) | 188 | 9,242 | |||||
Total | 371,739 | 110,054 | (63,003) | 8,564 | 427,354 | |||||
LIABILITY | ||||||||||
Energy purchased | (258,446) | (52,047) | 48,307 | (5,338) | (267,524) | |||||
System service charge | (34,487) | (3,253) | 6,283 | 418 | (31,039) | |||||
Fuel consumption account CCC | (37,156) | (10,448) | 25,204 | (791) | (23,191) | |||||
Total | (330,089) | (65,748) | 79,794 | (5,711) | (321,754) | |||||
d) Low Income Consumers Subsidy
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Law n° 10.438, of April 26, 2002 and Decree n° 4.336 of August 15, 2002 established new guidelines and criteria for classification of consumer units in the low-income residential sub-category. According to the legislation, this new criteria encompasses consumer units served by monophase circuits, with an average monthly consumption in the last 12 months of less than 80kWh, and consumer units with an average monthly consumption in the last 12 months of 80 to 220kWh, provided certain specific requirements are complied with, such as enrollment in Federal Government Social Programs.
As the subsidies granted to low income consumers are to be offset as from the 2008 Tariff Review, it was decided that this would be partially through tariffs in the ambit of the concessionaire itself (in accordance with DNAEE Administrative Ruling) and the remainder (in accordance with Law n° 10.438) through receipt of Energy development account - CDE funds. In respect of offsetting through tariffs, ANEEL also granted tariff advances so as to avoid compromising the Concessionaire's cash flow. The difference between the amount taken into account in the tariff review and the amount actually realized is calculated monthly to be taken into account in the next tariff adjustment.
The changes in balances in the quarter as of June 30, 2008, are as follows:
Consolidated | ||||
Asset | Liability | |||
Balances as of March 31, 2008 | 39,489 | (9,208) | ||
Revenue loss (gain) | 21,704 | (1,631) | ||
Amortization of tariff adjustment | (1,307) | 479 | ||
Receivables approved by ANEEL | (7,174) | - | ||
Balances as of June 30, 2008 | 52,712 | (10,360) | ||
( 4 ) CASH AND BANKS | ||
Parent Company | Consolidated | |||||||
June 30, | March | June 30, | March | |||||
2008 | 31,2008 | 2008 | 31,2008 | |||||
Bank deposits | 324 | 623 | 93,145 | 189,293 | ||||
Short-term financial investments | 7,302 | 4,267 | 776,466 | 957,955 | ||||
Total | 7,626 | 4,890 | 869,611 | 1,147,248 | ||||
The short-term financial investments refer to operations with financial institutions under normal market conditions and rates, mainly remunerated based on the variation of the CDI, and are available for use in the operations of the Company and its subsidiaries.
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( 5 ) CONSUMERS, CONCESSIONAIRES AND LICENSEES | |
The consolidated balance mainly refers to electricity sales activities as of June 30, 2008 and March 31, 2008, as follows:
Consolidated | ||||||||||
Balances Coming due |
Past due | Total | ||||||||
Up to 90 | More than | June 30, | March 31, | |||||||
days | 90 days | 2008 | 2008 | |||||||
Current | ||||||||||
Consumer Classes | ||||||||||
Residential | 231,370 | 158,819 | 28,590 | 418,779 | 441,319 | |||||
Industrial | 180,980 | 63,119 | 33,902 | 278,001 | 283,187 | |||||
Commercial | 88,391 | 42,755 | 27,231 | 158,377 | 181,194 | |||||
Rural | 22,447 | 5,644 | 1,768 | 29,859 | 33,358 | |||||
Public administration | 25,934 | 5,806 | 2,404 | 34,144 | 36,306 | |||||
Public lighting | 49,872 | 3,374 | 37,581 | 90,827 | 93,217 | |||||
Public service | 22,418 | 10,420 | 4,930 | 37,768 | 37,535 | |||||
Billed | 621,412 | 289,937 | 136,406 | 1,047,755 | 1,106,116 | |||||
Unbilled | 376,215 | - | - | 376,215 | 436,246 | |||||
Financing of consumers' debts | 20,761 | 2,859 | 9,732 | 33,352 | 35,804 | |||||
Regulatory asset (note 3) | 74,910 | - | - | 74,910 | 87,535 | |||||
CCEE transactions (a) | 72,479 | - | - | 72,479 | 77,970 | |||||
Concessionaires and licensees (b) | 86,704 | - | 4 | 86,708 | 90,960 | |||||
Other | 42,861 | - | - | 42,861 | 45,422 | |||||
Total | 1,295,342 | 292,796 | 146,142 | 1,734,280 | 1,880,053 | |||||
Noncurrent | ||||||||||
Financing of consumers' debts | 138,963 | - | - | 138,963 | 143,819 | |||||
CCEE transactions (a) | 41,800 | - | - | 41,800 | 41,798 | |||||
Regulatory asset (note 3) | 5,427 | - | - | 5,427 | 6,358 | |||||
Total | 186,190 | - | - | 186,190 | 191,975 | |||||
a) Electric Energy Trading Chamber (CCEE) transactions
The amounts refer to the accounting records of the Electric Energy Trading Chamber CCEE for the period September 2000 to June 2008. The non-current amount receivable for energy sales mainly comprises: (i) legal adjustments, made as a result of suits brought by agents in the sector; (ii) lawsuits challenging the CCEE accounting for the period September 2000 to December 2002; (iii) provisional accounting entries made by the CCEE; (iv) amounts negotiated bilaterally pending settlement. The subsidiaries consider that there is no significant risk on the realization of these assets and consequently no provision were posted in the accounts.
20
b) Concessionaires and Licensees
Refers basically to accounts receivable in respect of the supply of electricity to other Concessionaires and Licensees, mainly by the subsidiaries CPFL Geração and CPFL Brasil, and to certain transactions relating to the partial spin-off of Bandeirante by the subsidiary CPFL Piratininga. The amounts are set off against accounts payable, through a settlement of accounts.
( 6 ) FINANCIAL INVESTMENTS | ||
In April 2005, through a Private Credit Agreement, the Company acquired the credit arising from the Purchase and Sale of Electricity Agreement between Companhia Energética de São Paulo (CESP) (seller) and CPFL Brasil (purchaser), referring to the supply of energy for a period of 8 years. The amounts handed over by the Company to CESP will be settled using the funds derived from the acquisition of energy produced by that company for CPFL Brasil.
As of June 30, 2008 the parent companys short-term balance is R$ 36,316 (R$ 37,243 as of March 31, 2008), and the long-term balance is R$ 94,796 (R$ 93,659 as of March 31, 2008). The operation is subject to interest of 17.5% p.a., plus the annual variation of the IGP-M, and is being amortized in monthly installments of amounts corresponding to the purchase of energy.
( 7 ) RECOVERABLE TAXES | ||
Parent Company | Consolidated | |||||||
June 30, | March 31, | June 30, | March 31, | |||||
2008 | 2008 | 2008 | 2008 | |||||
Current | ||||||||
Social contribution prepayments - CSLL | - | - | 6,623 | 7,273 | ||||
Income tax prepayments - IRPJ | - | - | 7,086 | 6,186 | ||||
Social contribution and income tax | 33,184 | 32,235 | 52,135 | 46,701 | ||||
Withholding income tax - IRRF | 16,542 | 1,160 | 36,623 | 26,038 | ||||
ICMS (State VAT) | - | - | 58,699 | 65,753 | ||||
PIS (Tax on revenue) | - | - | 3,726 | 2,619 | ||||
COFINS (Tax on revenue) | - | - | 14,620 | 9,529 | ||||
INSS (Social security) | - | - | 2,755 | 2,257 | ||||
Other | 73 | 73 | 4,429 | 4,369 | ||||
Total | 49,799 | 33,468 | 186,696 | 170,725 | ||||
Noncurrent | ||||||||
Social contribution tax - CSLL | - | - | 25,664 | 25,314 | ||||
Income tax - IRPJ | - | - | 872 | 857 | ||||
PIS (Tax on Revenue) | 2,787 | 2,787 | 2,855 | 3,043 | ||||
COFINS (Tax on Revenue) | - | - | - | 859 | ||||
ICMS (State VAT) | - | - | 66,858 | 68,533 | ||||
INSS (Social security) | 97 | 97 | ||||||
Other | - | - | 557 | 578 | ||||
Total | 2,787 | 2,787 | 96,903 | 99,281 | ||||
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( 8 ) ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||
Consolidated | ||
Balance as of March 31, 2008 | (90,996) | |
Additional allowance recorded | (22,591) | |
Recovery of revenue | 7,498 | |
Write-off of accounts receivable | 16,784 | |
Balance as of June 30, 2008 | (89,305) | |
( 9 ) PREPAID EXPENSES | ||
Consolidated | ||||||||
Current | Noncurrent | |||||||
June 30, | March | June 30, | March | |||||
2008 | 31,2008 | 2008 | 31,2008 | |||||
Regulatory asset (note 3) | 73,221 | 49,488 | 2,115 | 1,015 | ||||
Other | 23,420 | 19,895 | 12,500 | 12,954 | ||||
Total | 96,641 | 69,383 | 14,615 | 13,969 | ||||
( 10 ) DEFERRED TAXES |
10.1 Composition of the tax credits:
Parent Company | Consolidated | |||||||
June | March | June | March | |||||
30,2008 | 31,2008 | 30,2008 | 31,2008 | |||||
Social Contribution Credit on: | ||||||||
Tax loss carryforwards | 13,918 | 15,123 | 31,575 | 34,189 | ||||
Tax benefit on merged goodwill | - | - | 224,366 | 230,406 | ||||
Temporarily nondeductible differences | 345 | 373 | 86,196 | 86,880 | ||||
Subtotal | 14,263 | 15,496 | 342,137 | 351,475 | ||||
Income Tax Credit on: | ||||||||
Tax loss carryforwards | 54,849 | 60,051 | 72,287 | 81,258 | ||||
Tax benefit on merged goodwill | - | - | 680,225 | 698,029 | ||||
Temporarily nondeductible differences | 14,670 | 12,216 | 252,192 | 251,775 | ||||
Subtotal | 69,519 | 72,267 | 1,004,704 | 1,031,062 | ||||
PIS and COFINS Credit on: | ||||||||
Temporarily nondeductible differences | - | - | 19,776 | 19,774 | ||||
Subtotal | - | - | 19,776 | 19,774 | ||||
Total | 83,782 | 87,763 | 1,366,617 | 1,402,311 | ||||
Current | 9,645 | 9,673 | 226,485 | 254,059 | ||||
Non current | 74,137 | 78,090 | 1,140,132 | 1,148,252 | ||||
83,782 | 87,763 | 1,366,617 | 1,402,311 | |||||
The projections of future results that guided and support the recording of deferred tax credits of the Company and its subsidiaries were approved by the Board of Directors and examined by the Audit Committee, and are reviewed annually. For the quarter ended June 30, 2008, management does not expect relevant changes in the projections disclosed in the financial statements as of December 31, 2007.
22
10.2 Tax Credit on Tax Benefit on Merged Goodwill:
The tax benefit on merged goodwill refers to the tax credit calculated on the merged goodwill on purchase and is recorded in accordance with CVM Instructions n° 319/1999 and n° 349/2001. The benefit is realized in proportion to amortization of the merged goodwill, in accordance with the net projected profit of the subsidiaries during the remaining term of the concession, as shown in note 13.2.
Consolidated | ||||||||
June 30,2008 | March 31,2008 | |||||||
Social | Social | Income Tax | ||||||
Contribution | Income Tax | Contribution | ||||||
CPFL Paulista | 118,379 | 328,831 | 120,783 | 335,508 | ||||
CPFL Piratininga | 26,331 | 90,311 | 26,855 | 92,087 | ||||
RGE | 65,773 | 182,701 | 68,344 | 189,848 | ||||
CPFL Santa Cruz | 7,795 | 24,511 | 8,130 | 25,563 | ||||
CPFL Leste Paulista | 1,839 | 5,109 | 1,901 | 5,282 | ||||
CPFL Sul Paulista | 1,801 | 5,003 | 1,862 | 5,174 | ||||
CPFL Jaguari | 1,720 | 4,776 | 1,778 | 4,939 | ||||
CPFL Mococa | 728 | 2,022 | 753 | 2,089 | ||||
CPFL Geração | - | 36,961 | - | 37,539 | ||||
Total | 224,366 | 680,225 | 230,406 | 698,029 | ||||
23
10.3 Accumulated balances on temporary nondeductible differences:
Consolidated | ||||||||||||
June 30, 2008 | March 31, 2008 | |||||||||||
Social | Income | Social | Income | |||||||||
Contribution | Tax | PIS and | Contribution | Tax | PIS and | |||||||
Tax (CSLL) | (IRPJ) | COFINS | Tax (CSLL) | (IRPJ) | COFINS | |||||||
Reserve for contingencies | 11,734 | 46,197 | - | 12,266 | 45,017 | - | ||||||
Pension plan expenses | 5,389 | 15,965 | - | 5,676 | 16,763 | - | ||||||
Allowance for doubtful accounts | 8,252 | 22,919 | - | 8,367 | 23,238 | - | ||||||
Provision for losses on the | - | |||||||||||
realization of RTE | 206 | 572 | - | 192 | 534 | |||||||
Research and Development and | - | |||||||||||
Energy Efficiency Programs | 14,271 | 39,640 | - | 13,695 | 38,039 | |||||||
Profit sharing | 1,193 | 3,862 | - | 2,224 | 6,724 | - | ||||||
Differences in revaluation rates | 10,610 | 29,473 | - | 10,414 | 29,135 | - | ||||||
Regulatory liability - Increase in PIS | ||||||||||||
and COFINS | 10,149 | 28,191 | - | 9,882 | 27,449 | - | ||||||
Provision for CCEE reassessment | ||||||||||||
and overcontracting (note 3.b.2) | 18,233 | 50,645 | 19,776 | 17,952 | 49,866 | 19,774 | ||||||
Other | 6,159 | 14,728 | - | 6,212 | 15,010 | - | ||||||
Total | 86,196 | 252,192 | 19,776 | 86,880 | 251,775 | 19,774 | ||||||
24
10.4 - Reconciliation of the amounts of income tax and social contribution reported in the income statements for the quarters and six months ended June 30, 2008 and 2007:
Parent Company | ||||||||
IRPJ | ||||||||
2008 | 2007 | |||||||
2nd Quarter | 1st Half | 2nd Quarter | 1st Half | |||||
Income before IRPJ | 445,649 | 720,098 | 451,516 | 925,198 | ||||
Adjustments to reflect effective rate: | ||||||||
- Equity in subsidiaries | (400,075) | (722,347) | (439,899) | (935,843) | ||||
- Goodwill amortization | 32,303 | 64,604 | 25,195 | 50,388 | ||||
- Other additions, net | 362 | 978 | 104 | 84 | ||||
Calculation base | 78,239 | 63,333 | 36,916 | 39,827 | ||||
Statutory tax rate | 25% | 25% | 25% | 25% | ||||
Tax (credit) debit result | (19,560) | (15,833) | (9,229) | (9,957) | ||||
- Tax credit allocated | 4,807 | 132 | - | - | ||||
Total | (14,753) | (15,701) | (9,229) | (9,957) | ||||
Parent Company | ||||||||
CSLL | ||||||||
2008 | 2007 | |||||||
2nd Quarter | 1st Half | 2nd Quarter | 1st Half | |||||
Income before CSLL | 445,649 | 720,098 | 451,516 | 925,198 | ||||
Adjustments to reflect effective rate: | ||||||||
- Equity in subsidiaries | (400,075) | (722,347) | (439,899) | (935,843) | ||||
- Goodwill amortization | 25,534 | 51,100 | 18,657 | 37,314 | ||||
- Other additions (deductions), net | 328 | 941 | (3,874) | 20 | ||||
Calculation base | 71,436 | 49,792 | 26,400 | 26,689 | ||||
Statutory tax rate | 9% | 9% | 9% | 9% | ||||
Tax (credit) debit result | (6,429) | (4,481) | (2,376) | (2,402) | ||||
- Tax credit allocated | 2,382 | - | - | - | ||||
Total | (4,047) | (4,481) | (2,376) | (2,402) | ||||
25
Consolidated | ||||||||
IRPJ | ||||||||
2008 | 2007 | |||||||
2nd Quarter | 1st Half | 2nd Quarter | 1st Half | |||||
Income before IRPJ | 499,298 | 943,699 | 567,534 | 1,244,611 | ||||
Adjustments to reflect effective rate: | ||||||||
- Goodwill amortization | 38,476 | 76,955 | 34,517 | 68,947 | ||||
- Effect of presumed profit system | (12,630) | (26,143) | (17,752) | (28,660) | ||||
- Other additions (deductions), net | (13,657) | 4,331 | (399) | 16,287 | ||||
Calculation base | 511,487 | 998,842 | 583,900 | 1,301,185 | ||||
Statutory tax rate | 25% | 25% | 25% | 25% | ||||
Tax (credit) debit result | (127,872) | (249,711) | (145,975) | (325,296) | ||||
- Tax credit allocated | 4,777 | 99 | - | 40,234 | ||||
Total | (123,095) | (249,612) | (145,975) | (285,062) | ||||
Consolidated | ||||||||
CSLL | ||||||||
2008 | 2007 | |||||||
2nd Quarter | 1st Half | 2nd Quarter | 1st Half | |||||
Income before CSLL | 499,298 | 943,699 | 567,534 | 1,244,611 | ||||
Adjustments to reflect effective rate: | ||||||||
- Goodwill amortization | 27,049 | 54,128 | 17,802 | 35,604 | ||||
- CMC realization | 4,613 | 8,462 | 4,576 | 9,042 | ||||
- Effect of presumed profit system | (5,134) | (11,721) | (12,014) | (20,605) | ||||
- Other additions (deductions), net | (9,817) | (29,389) | (171) | 30,941 | ||||
Calculation base | 516,009 | 965,179 | 577,727 | 1,299,593 | ||||
Statutory tax rate | 9% | 9% | 9% | 9% | ||||
Tax (credit) debit result | (46,441) | (86,866) | (51,995) | (116,963) | ||||
- Tax credit allocated (not allocated) | 1,992 | (772) | - | - | ||||
Total | (44,449) | (87,638) | (51,995) | (116,963) | ||||
26
( 11 ) OTHER CREDITS | ||
Consolidated | ||||||||
Current | Noncurrent | |||||||
June 30, | March | June 30, | March | |||||
2008 | 31,2008 | 2008 | 31,2008 | |||||
Receivable from CESP | 16,365 | 18,005 | 16,299 | 17,909 | ||||
Receivable from BAESA shareholders | - | - | 39,805 | 31,794 | ||||
Advances - Fundação CESP | 5,320 | 7,021 | - | - | ||||
Pledges, funds and tied deposits | 1,422 | 4,722 | 110,356 | 162,270 | ||||
Orders in progress | 9,525 | 12,026 | - | - | ||||
Services rendered to third parties | 24,729 | 20,158 | - | - | ||||
Reimbursement RGR | 4,325 | 4,285 | 707 | 707 | ||||
Advance energy purchase agreements | 1,430 | 9,557 | 28,624 | 29,074 | ||||
Other | 31,023 | 30,325 | 9,210 | 3,083 | ||||
Total | 94,139 | 106,099 | 205,001 | 244,837 | ||||
Credits receivable Shareholder BAESA
In the period November 1, 2005 to April 30, 2008, differences in the prices used in billing energy sold to the shareholders, different payment terms and other factors resulted in variations in contributions from the shareholders towards the subsidiary's results.
To settle this question, the shareholding companies agreed that the contributions made by the subsidiary CPFL Geração should be restated in accordance with the variation in the CDI rate, amortized over 36 months as from January, 2009, and offseted by an increase in the price of energy billed to the shareholders Alcoa Alumínio, Companhia Brasileira de Alumínio, Camargo Corrêa Cimentos and DME Energética, and a reduction in the price to the subsidiary CPFL Geração. As a result of the final agreement, the accounts receivable were increased by R$ 8,011, set against Other Operating Income. From May 1, 2008, the question of the differences in contribution towards BAESA's income was solved through approval by ANEEL of restructuring of the energy sales contracts, whereby BAESA sells the energy quota corresponding to its participation to the subsidiary CPFL Geração under the same conditions and prices as the other shareholders, and the subsidiary CPFL Geração trades this energy with CPFL Paulista and CPFL Piratininga.
( 12 ) ADVANCE FOR FUTURE CAPITAL INCREASE |
The advance refers to cash transferred to the subsidiary Perácio for acquisition of the indirect subsidiary CPFL Jaguariúna.
27
( 13 ) INVESTMENTS | ||
Parent Company | Consolidated | |||||||
June 30, | March | June 30, | March | |||||
2008 | 31,2008 | 2008 | 31,2008 | |||||
Permanent equity interests | 3,080,625 | 3,399,786 | - | - | ||||
Goodwill / Negative goodwill | 1,590,115 | 1,622,417 | 1,791,166 | 1,829,641 | ||||
Leased assets | - | - | 710,665 | 716,380 | ||||
Other | - | - | 115,705 | 115,476 | ||||
Total | 4,670,740 | 5,022,203 | 2,617,536 | 2,661,497 | ||||
13.1 - Permanent Equity Interests:
The principal information on the investments in direct permanent equity Interests is as follows:
June 30, 2008 | 2nd Quarter 2008 |
2nd Quarter 2007 |
||||||||||||||||
June 30, 2008 | March 31, 2008 | |||||||||||||||||
Investment | Number of | Share of Capital - % |
Capital | ShareholdersEquity | Net Income | Shareholders Equity Interest | Equity in Subsidiaries | |||||||||||
Shares held | ||||||||||||||||||
(thousand) | ||||||||||||||||||
CPFL Paulista | 1,000 | 100.00% | 36,324 | 497,388 | 127,909 | 497,388 | 669,450 | 127,909 | 193,431 | |||||||||
CPFL Piratininga | 53,031,259 | 100.00% | 54,832 | 230,538 | 61,201 | 230,538 | 263,320 | 61,201 | 75,475 | |||||||||
CPFL Serra | - | 100.00% | - | - | - | - | - | - | 43,583 | |||||||||
RGE | 807,168 | 100.00% | 830,924 | 1,100,386 | 62,525 | 1,100,386 | 1,137,275 | 62,525 | - | |||||||||
Nova 4 | - | 100.00% | - | - | - | - | - | - | 4,253 | |||||||||
CPFL Santa Cruz | 371,772 | 99.99% | 78,167 | 120,134 | 12,219 | 120,125 | 124,534 | 12,218 | - | |||||||||
CPFL Geração | 205,487,716 | 100.00% | 1,039,618 | 1,128,591 | 75,157 | 1,128,591 | 1,168,927 | 75,157 | 69,868 | |||||||||
CPFL Brasil | 2,999 | 100.00% | 2,999 | 3,597 | 47,881 | 3,597 | 28,703 | 47,881 | 54,255 | |||||||||
CPFL Cone Sul | 373 | 100.00% | - | - | - | - | - | - | 582 | |||||||||
Perácio | - | 100.00% | - | - | 13,184 | - | 7,577 | 13,184 | (1,548) | |||||||||
Total | 3,080,625 | 3,399,786 | 400,075 | 439,899 | ||||||||||||||
The changes in the balance of equity interests are as follows:
CPFL Paulista |
CPFL |
CPFL Santa Cruz |
CPFL Geração |
|||||||||||||
RGE | CPFL Brasil | Perácio | Total | |||||||||||||
Permanent equity interests - As of March 31, 2008 | 669,450 | 263,320 | 1,137,275 | 124,534 | 1,168,927 | 28,703 | 7,577 | 3,399,786 | ||||||||
Equity in subsidiaries | 127,909 | 61,201 | 62,525 | 12,218 | 75,157 | 47,881 | 13,184 | 400,075 | ||||||||
Interim dividend | (284,431) | (86,783) | (62,614) | (13,088) | (80,233) | (72,987) | (20,761) | (620,897) | ||||||||
Interim interest on shareholders equity | (15,540) | (7,200) | (36,800) | (3,539) | (35,260) | - | - | (98,339) | ||||||||
Permanent equity interests - As of June 30, 2008 | 497,388 | 230,538 | 1,100,386 | 120,125 | 1,128,591 | 3,597 | - | 3,080,625 | ||||||||
Completion of the CASTRO ALVES Hydropower Plant Project
As of June 6, 2008 ocurred the operational start-up of the last generator set of the Castro Alves Hydro-Power Plant, in the CERAN complex, thus completing the total installed power of 130 MW. ANEEL has already approved contracts for the purchase and sale of the portion of the plant's energy corresponding to the subsidiary CPFL Geração, signed with the distributors CPFL Paulista and CPFL Piratininga and the commercialization CPFL Brasil.
28
13.2 Goodwill and negative goodwill:
Consolidated | ||||||||||
June 30, 2008 | March 31, | Amortization Rate 2008 | ||||||||
2008 | ||||||||||
Historical | Accumulated | Net Value | Net Value | |||||||
Cost | Amortization | |||||||||
Goodwill on acquisition | ||||||||||
Parent company | ||||||||||
CPFL Paulista | 292,033 | (49,122) | 242,911 | 248,119 | 6.23% | |||||
CPFL Piratininga | 39,065 | (6,138) | 32,927 | 33,581 | 6.70% | |||||
CPFL Geração | 54,555 | (9,720) | 44,835 | 45,677 | 6.21% | |||||
RGE | 3,150 | (96) | 3,054 | 3,102 | 6.07% | |||||
Other | 27 | (2) | 25 | 26 | ||||||
388,830 | (65,078) | 323,752 | 330,505 | |||||||
Subsidiaries | ||||||||||
CPFL Jaguariúna | 142,793 | (13,547) | 129,246 | 133,461 | 11.81% | |||||
ENERCAN | 10,233 | (667) | 9,566 | 9,690 | 4.83% | |||||
Barra Grande | 3,081 | (546) | 2,535 | 2,586 | 6.65% | |||||
Foz do Chapecó | 7,319 | - | 7,319 | 7,319 | 0.00% | |||||
Other | 17,519 | (9,779) | 7,740 | 8,008 | 4.99% to 11.65% | |||||
180,945 | (24,539) | 156,406 | 161,064 | |||||||
Subtotal | 569,775 | (89,617) | 480,158 | 491,569 | ||||||
Goodwill reassessment | ||||||||||
Parent company | ||||||||||
CPFL Paulista | 1,074,026 | (249,863) | 824,163 | 840,899 | 6.23% | |||||
CPFL Piratininga | 115,762 | (18,190) | 97,572 | 99,510 | 6.70% | |||||
RGE | 310,127 | (19,805) | 290,322 | 294,865 | 5.88% | |||||
CPFL Santa Cruz | 61,685 | (7,379) | 54,306 | 56,638 | 15.12% | |||||
1,561,600 | (295,237) | 1,266,363 | 1,291,912 | |||||||
Subsidiaries | ||||||||||
CPFL Leste Paulista | 21,131 | (7,645) | 13,486 | 13,944 | 8.67% | |||||
CPFL Sul Paulista | 20,941 | (7,733) | 13,208 | 13,657 | 8.59% | |||||
CPFL Jaguari | 20,026 | (7,415) | 12,611 | 13,040 | 8.56% | |||||
CPFL Mococa | 8,444 | (3,104) | 5,340 | 5,519 | 8.49% | |||||
70,542 | (25,897) | 44,645 | 46,160 | |||||||
Subtotal | 1,632,142 | (321,134) | 1,311,008 | 1,338,072 | ||||||
Total Parent company | 1,950,430 | (360,315) | 1,590,115 | 1,622,417 | ||||||
Total Consolidated | 2,201,917 | (410,751) | 1,791,166 | 1,829,641 | ||||||
29
The goodwill arising from the acquisitions of the equity interests is amortized in proportion to the net income curves projected for the remaining term of the concession contract. The rates are subject to periodical review.
Goodwill on Purchase:
Parent Company: Refers mainly to acquisition of all the shares held by minority shareholders (share merger) of CPFL Geraçãos in June 2005, CPFL Paulista and CPFL Piratininga in November 2005, and RGE in December 2007.
Goodwill reassessment
In order to comply with ANEEL instructions and avoid the goodwill amortization resulting from the merger of the parent company causing a negative impact on dividends paid to the shareholders, the subsidiaries apply the concepts of CVM Instructions n° 319/1999 and n° 349/2001 in relation to this goodwill. Accordingly, a reserve was recorded, set against the subsidiaries equity reserve, so that the effect on the equity reflects the tax benefit of the merged goodwill. These changes affected the Company's investment in the subsidiaries, and goodwill was recorded in the parent company in order to restore it. The goodwill is amortized by the Company in proportion to the projected net income curves for the remaining term of the subsidiaries concession.
13.3 - Leased Assets
In the consolidated financial statements, the leased assets refer principally to the assets of the Serra da Mesa Plant, owned by the subsidiary CPFL Geração, leased to the FURNAS for a 30-year period ending in 2028. These assets are depreciated over their estimated useful life at annual rates defined by ANEEL, and in accordance with general conditions of the concession agreement held by FURNAS. The average depreciation rate is 2.4% p.a.
13.4 Other
Refers mainly to the indirect subsidiary Paulista Lajeado Energia S.A.s 5.84% participation in the total capital of Investco S/A, comprising 25,829 common shares and 16,412 preferred shares. This investment is recorded on a cost basis. Due to the participation of minority shareholders in the form of (i) preferred shares representing 40.07% of the total capital of Paulista Lajeado, and (ii) beneficiaries (founder-shares) who assign the right to 10% of net income before profit sharing, these effects, totaling R$ 74,799 (R$ 73,471 as of March 31, 2008), were registered in the consolidated financial statements in the Non-Controlling Shareholders Interest liabilities.
13.5 Interest on Shareholders Equity and Dividend:
Consolidated | ||||||||||||
Dividend | Interest on net equity | Total | ||||||||||
June | March 31, | June | March 31, | June | March 31, | |||||||
Subsidiaries | 30,2008 | 2008 | 30,2008 | 2008 | 30,2008 | 2008 | ||||||
CPFL Paulista | 284,431 | 405,108 | 13,208 | 13,447 | 297,639 | 418,555 | ||||||
CPFL Piratininga | 86,783 | 151,397 | 6,120 | 6,124 | 92,903 | 157,521 | ||||||
RGE | 62,614 | 44,322 | 31,280 | 49,350 | 93,894 | 93,672 | ||||||
CPFL Santa Cruz | 13,088 | 32,541 | 3,008 | 4,670 | 16,096 | 37,211 | ||||||
CPFL Geração | 118,232 | 72,623 | 29,971 | 29,605 | 148,203 | 102,228 | ||||||
CPFL Brasil | 72,987 | 108,678 | - | - | 72,987 | 108,678 | ||||||
Perácio | 20,761 | 17,498 | - | - | 20,761 | 17,498 | ||||||
Total | 658,896 | 832,167 | 83,587 | 103,196 | 742,483 | 935,363 | ||||||
30
In the quarter, R$ 897,363 was paid in relation to the 2007 results and R$ 719,236 was declared (R$ 704,483 net of withholding tax - IRRF) in relation to the interim results for 2008.
( 14 ) PROPERTY, PLANT AND EQUIPMENT |
Consolidated | ||||||||
June 30, 2008 | March 31, 2008 |
|||||||
Historical | Accumulated | |||||||
In Service | Cost | Depreciation | Net Value | Net Value | ||||
- Distribution | 7,764,609 | (3,960,414) | 3,804,195 | 3,770,251 | ||||
- Generation | 1,801,895 | (175,323) | 1,626,572 | 1,616,115 | ||||
- Commercialization | 206,968 | (82,544) | 124,424 | 128,424 | ||||
- Administration | 244,063 | (160,658) | 83,405 | 82,627 | ||||
10,017,535 | (4,378,939) | 5,638,596 | 5,597,417 | |||||
In Progress | ||||||||
- Distribution | 307,561 | - | 307,561 | 297,442 | ||||
- Generation | 701,885 | - | 701,885 | 612,822 | ||||
- Commercialization | 12,494 | - | 12,494 | 10,897 | ||||
- Administration | 31,494 | - | 31,494 | 29,158 | ||||
1,053,434 | - | 1,053,434 | 950,319 | |||||
Subtotal | 11,070,969 | (4,378,939) | 6,692,030 | 6,547,736 | ||||
Other assets not linked to the concession | 1,554,024 | (871,110) | 682,914 | 692,391 | ||||
Total of Property, Plant and Equipment | 12,624,993 | (5,250,049) | 7,374,944 | 7,240,127 | ||||
Special obligations linked to the concession | (962,354) | (943,140) | ||||||
Net Property, Plant and Equipment | 6,412,590 | 6,296,987 | ||||||
The average depreciation rate of the assets is 5.0% p.a. for the distributors and 2.6% p.a. for the generators.
( 15 ) INTEREST, LOANS AND FINANCING |
Consolidated | ||||||||||||||||
June 30, 2008 | March 31, 2008 | |||||||||||||||
Interest Current and Non current |
Principal | Total | Interest Current and Non current |
Principal | Total | |||||||||||
Current | Non current | Current | Non current | |||||||||||||
LOCAL CURRENCY | ||||||||||||||||
BNDES - Power increases | 131 | 9,949 | 25,797 | 35,877 | 135 | 8,704 | 28,302 | 37,141 | ||||||||
BNDES - Investment | 16,222 | 231,145 | 1,721,565 | 1,968,932 | 11,113 | 233,343 | 1,595,294 | 1,839,750 | ||||||||
BNDES - Regulatory asset | 6 | 1,330 | - | 1,336 | 268 | 58,360 | - | 58,628 | ||||||||
BNDES - Purchase of assets | 16 | 48 | 822 | 886 | 16 | - | 869 | 885 | ||||||||
Furnas Centrais Elétricas S.A. | - | 91,119 | 83,526 | 174,645 | - | 69,499 | 100,221 | 169,720 | ||||||||
Financial institutions | 5,800 | 108,472 | 175,149 | 289,421 | 1,343 | 82,615 | 142,356 | 226,314 | ||||||||
Other | 495 | 30,127 | 41,201 | 71,823 | 487 | 30,080 | 36,495 | 67,062 | ||||||||
Subtotal | 22,670 | 472,190 | 2,048,060 | 2,542,920 | 13,362 | 482,601 | 1,903,537 | 2,399,500 | ||||||||
FOREIGN CURRENCY | ||||||||||||||||
IDB | 432 | 2,882 | 51,934 | 55,248 | 452 | 3,138 | 57,349 | 60,939 | ||||||||
Financial institutions | 16,770 | 44,387 | 898,040 | 959,197 | 11,173 | 153,262 | 1,049,807 | 1,214,242 | ||||||||
Subtotal | 17,202 | 47,269 | 949,974 | 1,014,445 | 11,625 | 156,400 | 1,107,156 | 1,275,181 | ||||||||
Total | 39,872 | 519,459 | 2,998,034 | 3,557,365 | 24,987 | 639,001 | 3,010,693 | 3,674,681 | ||||||||
31
Consolidated | ||||||||||
Local currency | June 30, 2008 | March 31, 2008 | Remuneration | Amortization | Collateral | |||||
BNDES - Power Increases | ||||||||||
CPFL Geração | 3,821 | 4,422 | TJLP + 3.5% p.a. | 84 monthly installments from February 2003 | Guarantee of CPFL Paulista | |||||
CPFL Geração | 31,624 | 32,185 | TJLP + 3.1% to 4.3% p.a. | Monthly installments from September 2004 | Guarantee of CPFL Energia | |||||
CPFL Geração | 172 | 217 | UMBND + 3.5% p.a. | 84 monthly installments from February 2003 | Guarantee of CPFL Paulista | |||||
CPFL Geração | 260 | 317 | UMBND + 4% p.a. | 72 monthly installments from September 2004 | Guarantee of CPFL Energia | |||||
BNDES - Investment | ||||||||||
CPFL Paulista - FINEM II | 158,657 | 174,419 | TJLP + 5.4% p.a. | 48 monthly installments from January 2007 | Guarantee of CPFL Energia and receivables | |||||
CPFL Paulista - FINEM III | 115,247 | 120,413 | TJLP + 3.3% p.a. | 72 monthly installments from January 2008 | Guarantee of CPFL Energia and receivables | |||||
CPFL Paulista - FINEM IV | 70,089 | - | TJLP + 3.28% to 3.4% p.a. | 60 monthly installments from January 2010 | Guarantee of CPFL Energia and receivables | |||||
RGE - FINEM I e II | 112,034 | 124,394 | TJLP +4.5% to 5.0% p.a. | monthly installments from October 2000 to December 2012 | Revenue collection/Promissory Notes/Reserve Account |
|||||
RGE - FINEM I | 1,992 | 3,104 | UMBNDES + 4.5% p.a. (1) | 36 monthly installments from February 2006 | Revenue collection/Promissory Notes/Reserve Account |
|||||
RGE - FINEM III | 76,097 | - | TJLP + 3.28% to 3.4% p.a. | 60 monthly installments from January 2010 | Revenue collection/credit of CPFL Energia |
|||||
CPFL Piratininga - FINEM I | 59,078 | 64,946 | TJLP + 5.4%p.a. | 48 monthly installments from January 2007 | Guarantee of CPFL Energia and receivables |
|||||
CPFL Piratininga - FINEM II | 80,705 | 84,323 | TJLP + 3.3% p.a. | 72 monthly installments from January 2008 | Guarantee of CPFL Energia and receivables |
|||||
CPFL Piratininga - FINEM III | 32,041 | - | TJLP + 3.28% to 3.4% p.a. | 60 monthly installments from January 2010 | Guarantee of CPFL Energia and receivables |
|||||
CPFL Santa Cruz | 1,502 | - | TJLP + 2.9% p.a. | 54 monthly installments from December 2010 | Guarantee of CPFL Energia | |||||
BAESA | 159,125 | 162,939 | TJLP + 3.125%p.a. | 144 monthly installments from September 2006 | Letters of Credit | |||||
BAESA | 29,795 | 33,305 | UMBND + 3.125% p.a. (1) | 144 monthly installments from November 2006 | Letters of Credit | |||||
ENERCAN | 355,971 | 364,030 | TJLP + 4% p.a. | 144 monthly installments from April 2007 | Letters of Credit | |||||
ENERCAN | 19,749 | 21,881 | UMBND + 4% p.a. | 144 monthly installments from April 2007 | Letters of Credit | |||||
CERAN | 284,996 | 281,380 | TJLP + 5% p.a. | 168 monthly installments from December 2005 | Guarantee of CPFL Energia | |||||
CERAN | 38,038 | 40,957 | UMBND + 5% p.a. (1) | 168 monthly installments from February 2006 | Guarantee of CPFL Energia | |||||
CERAN | 115,523 | 113,287 | TJLP + 3.69% p.a. | 168 monthly installments from November 2008 | Guarantee of CPFL Energia | |||||
Foz do Chapecó | 255,827 | 250,372 | TJLP + 2.49% to 2.95% p.a. | 192 monthly installments from October 2011 | Pledge of shares, credit rights and revenue | |||||
CPFL Jaguari | 2,466 | - | TJLP + 2.9% p.a. | 54 monthly installments from December 2010 | Guarantee of CPFL Energia | |||||
BNDES - Regulatory asset | ||||||||||
CPFL Paulista - Parcel "A" | - | 56,819 | Selic + 1.0 % p.a. | 13 monthly installments from May 2007 | Receivables | |||||
CPFL Sul Paulista - RTE | 1,336 | 1,809 | Selic + 1.0 % p.a. | 79 monthly installments from March 2002 | Receivables | |||||
BNDES - Purchase of assets | ||||||||||
CPFL Brasil | 886 | 885 | TJLP + 2.84% p.a. | 36 monthly installments from May 2009 | Linked to the asset acquired | |||||
Furnas Centrais Elétricas S.A. | ||||||||||
CPFL Geração | 174,645 | 169,720 | IGP-M + 10% p.a. | 24 monthly installments from June 2008 | Energy produced by plant | |||||
Financial Institutions | ||||||||||
Parent company | ||||||||||
Banco Unibanco | - | 76,425 | Pre fixed rate 12.55% p.a. (3) | 1 installment in June 2008 | No guarantee | |||||
CPFL Paulista | ||||||||||
Banco do Brasil - Law 8727 | 49,728 | 49,268 | IGPM variation + 7.42% p.a. | 240 monthly installments from May 1994 | Receivables | |||||
CPFL Piratininga | ||||||||||
Banco do Brasil | 101,945 | - | 106.45% of CDI | 1 installment in October 2008 | No guarantee | |||||
RGE | ||||||||||
Banco Itaú BBA | 103,545 | 100,621 | 106% of CDI | 1 installment in March 2011 | No guarantee | |||||
CPFL Santa Cruz | ||||||||||
Banco HSBC | 34,203 | - | CDI + 1.10% p.a. | 1 installment in June 2011 | Guarantee of CPFL Energia | |||||
Other | ||||||||||
Eletrobrás | ||||||||||
CPFL Paulista | 9,962 | 10,542 | RGR + rate variable of 6% to 9% p.a. | Monthly installments until July 2016 | Receivables/Promissory notes | |||||
CPFL Piratininga | 2,146 | 2,270 | RGR + 6% p.a. | Monthly installments until July 2016 | Receivables/Promissory notes | |||||
RGE | 11,548 | 5,084 | RGR + 6% p.a. | 120 monthly installments from August 2006 | Receivables/Promissory notes | |||||
CPFL Santa Cruz | 6,134 | 6,501 | RGR + 6% p.a. | 100 to 120 monthly installments from December 2002 | Receivables/Promissory notes | |||||
CPFL Leste Paulista | 1,198 | 1,229 | RGR + 6% p.a. | 120 monthly installments from February 2008 | Receivables/Promissory notes | |||||
CPFL Sul Paulista | 1,795 | 1,842 | RGR + 6% p.a. | 120 monthly installments from August 2007 | Receivables/Promissory notes | |||||
CPFL Jaguari | 37 | 38 | RGR + 6% p.a. | 120 monthly installments from June 2007 | Receivables/Promissory notes | |||||
CPFL Mococa | 338 | 347 | RGR + 6% p.a. | 120 monthly installments from January 2008 | Receivables/Promissory notes | |||||
Outros | 38,665 | 39,207 | ||||||||
Total Local Currency - Parent Company | - | 76,425 | ||||||||
Total Local Currency - Consolidated | 2,542,920 | 2,399,498 | ||||||||
32
Foreign currency |
||||||||||
IDB - Enercan | 55,248 | 60,939 | US$ + Libor + 3.5% p.a. | 49 quarterly installments from May 2007 | Guarantee of CPFL Energia | |||||
Financial Institutions | ||||||||||
Parent Company | ||||||||||
Banco Safra | - | 104,565 | Yen + 1.5% p.a. (4) | 1 installment in April 2008 | No guarantee | |||||
CPFL Paulista | ||||||||||
Debt Conversion Bond | 7,674 | 9,642 | US$ + 6-month Libor + 0.875% p.a. (8) | 17 semiannual installments from April 2004 | Revenue/Government SP guaranteed | |||||
New Money Bond | 506 | 848 | US$ + 6-month Libor + 0.875% p.a. | 17 semiannual installments from April 2001 | Revenue/Government SP guaranteed | |||||
FLIRB | 514 | 860 | US$ + 6-month Libor + 0.8125% p.a. | 13 semiannual installments from April 2003 | Revenue/Government SP guaranteed | |||||
C-Bond | 10,314 | 12,525 | US$ + 8% p.a. | 21 semiannual installments from April 2004 | Revenue/Government SP guaranteed | |||||
Discount Bond | 14,058 | 15,700 | US$ + 6-month Libor + 0.8125% p.a. | 1 installment in April 2024 | Escrow deposits and revenue/ Gov.SP guarantee | |||||
PAR-Bond | 20,142 | 22,470 | US$ + 6% p.a. | 1 installment in April 2024 | Escrow deposits and revenue/ Gov.SP guarantee | |||||
Banco do Brasil | 74,618 | 86,087 | Yen + 5.7778% p.a. (2) | 1 installment in January 2011 | No guarantee | |||||
ABN AMRO | 311,801 | 363,614 | Yen + 1.4824% p.a. (5) | 1 installment in August 2009 | No guarantee | |||||
CPFL Piratininga | ||||||||||
Banco BNP Paribás | 40,288 | 43,813 | US$ + 4.10% p.a. (6) | 1 installment in February 2009 | Promissory notes | |||||
RGE | ||||||||||
Banco do Brasil | 26,427 | 30,499 | Yen + 5.7778%p.a. (9) | 1 installment in September 2009 | No guarantee | |||||
CPFL Geração | ||||||||||
Banco do Brasil | 452,855 | 523,619 | Yen + 2.5% up to 5.8% p.a. (7) | 1 installment between April 2010 and january 2011 | Guarantee of CPFL Energia | |||||
Total Foreign Currency - Parent company | - | 104,565 | ||||||||
Total Foreign Currency - Consolidated | 1,014,445 | 1,275,181 | ||||||||
Total - Parenty Company | - | 180,990 | ||||||||
Total - Consolidated | 3,557,365 | 3,674,679 | ||||||||
The Company and its subsidiaries hold swap converting the local cost of currency variation to interest in reais, corresponding to: | ||||
(1) 148.93% to 159.00% of CDI | (4) 112.0% of CDI | (8) 96.5% to 99.4% of CDI | ||
(2) 104.5% of CDI | (5) 102.9% of CDI | (9) 103.5% of CDI | ||
(3) 115.5% of CDI | (6) 106.0% of CDI | |||
(7) 104.2% to 104.5% of CDI |
Main funding in the period:
Local Currency
BNDES FINEM IV Investment (CPFL Paulista) The subsidiary obtained approval for financing of R$ 345,990 from the BNDES in the quarter, part of a FINEM credit line, to be invested in the expansion and modernization of the Electricity System. The subsidiary received the amount of R$ 70,000 and the remaining balance of R$ 275,990 is scheduled for release by the end of 2009. The interest will be paid quarterly and the amortization will be on a monthly basis as from January 15, 2010.
BNDES FINEM III Investment (CPFL Piratininga) The subsidiary obtained approval for financing of R$ 155,178 from the BNDES in the quarter, part of a FINEM credit line, to be invested in the expansion and modernization of the Electricity System. The subsidiary received the amount of R$ 32,000 and the remaining balance of R$ 123,178 is scheduled for release by the end of 2009. The interest will be paid quarterly and the amortization will be on a monthly basis as from January 15, 2010.
BNDES FINEM IV Investment (RGE) In the quarter, the subsidiary obtained approval for financing of R$ 258,418 from the BNDES in 2008, part of a FINEM credit line, to be invested in the expansion and modernization of the Electricity System. The subsidiary received the amount of R$ 76,000 and the remaining balance of R$ 182,418 is scheduled for release by the end of 2009. The interest will be paid quarterly and the amortization will be on a monthly basis as from January 15, 2010.
Financial Institutions (CPFL Santa Cruz) The subsidiary contracted a loan of R$ 34,000 from the HSBC Bank in the quarter, to reinforce working capital.
Financial Institutions - (CPFL Piratininga) The subsidiary contracted a loan of R$ 100,000 from Banco do Brasil in the quarter, maturing on October 27, 2008, to reinforce working capital.
33
RESTRICTIVE COVENANTS
The financing by the BNDES approved in the quarter restricts the subsidiaries to paying dividends and interest on equity in an amount in excess of the minimum mandatory dividend laid down by law, only after proof is provided to the BNDES and the AGENTS in the operation of full compliance with the restrictive covenants established in the contract; and to maintaining certain financial ratios within predefined parameters, as follows:
CPFL Paulista
CPFL Piratininga
RGE
The indirect subsidiary ENERCAN's loans from the BNDES and IDB contain clauses that require the subsidiary to maintain certain financial ratios within preestablished parameters. As a result of the damage that occurred in the bypass tunnels of the Campos Novos hydropower plant, the start of commercial operations was postponed, compromising generation of the cash required to meet certain contractual obligations by the deadline originally foreseen. ENERCAN's management has already asked the respective financial institutions to review the contractual parameters, and has obtained confirmation that this review will not involve declaration of early maturity of the loan contract.
The loan and financing agreements are subject to certain restrictive covenants, including clauses that require the Company and its subsidiaries to maintain certain financial ratios within predefined parameters. Details of these restrictive covenants are presented in the financial statements as of December 31, 2007.
Company management monitors these indices systematically and constantly to ensure that the contractual conditions are complied with. In the opinion of the management, these restrictive covenants and clauses are being complied with, except in relation to ENERCAN, as mentioned above.
SWAP OPERATIONS
The net gains and losses on the swap operations made by the Company and its subsidiaries, including contracting on short-term operations, are recorded, net, under Derivatives, and corresponding amounts are recognized under financial income or expense. These operations resulted, in June 30, 2008, in a liability of R$ 156,433 (asset of R$ 67,392 and a liability of R$ 45,151 as of March 31, 2008).
34
( 16 ) DEBENTURES |
Consolidated | ||||||||||||||||||||||||
Balances as of | ||||||||||||||||||||||||
June 30, 2008 | March 31, 2008 | |||||||||||||||||||||||
Issued | Remuneration | Amortization Conditions | Collateral | Interest | Current | Non current | Total | Interest | Current | Non curre | Total | |||||||||||||
Parent Company | ||||||||||||||||||||||||
3rd issue | ||||||||||||||||||||||||
Unique series | 45,000 | CDI + 0.45% p.a. (1) | 3 annual installments from September 2012 | Unsecured | 16,678 | - | 450,000 | 466,678 | 3,737 | - | 450,000 | 453,737 | ||||||||||||
CPFL Paulista | ||||||||||||||||||||||||
2nd issue | ||||||||||||||||||||||||
1st serie | 11,968 | 109% of the CDI | July 1, 2009. | Unsecured | 6,985 | - | 119,680 | 126,665 | 3,310 | - | 119,680 | 122,990 | ||||||||||||
2nd serie | 13,032 | IGP-M + 9.8% p.a. | July 1, 2009. | Unsecured | 15,978 | - | 165,795 | 181,773 | 11,358 | - | 158,990 | 170,348 | ||||||||||||
3rd issue | ||||||||||||||||||||||||
1st serie | 64,000 | 104.4% of CDI | 3 annual installments from December 2011 | Credit of CPFL Energia | 6,032 | - | 640,000 | 646,032 | 22,701 | - | 640,000 | 662,701 | ||||||||||||
28,995 | - | 925,475 | 954,470 | 37,369 | - | 918,670 | 956,039 | |||||||||||||||||
CPFL Piratininga | ||||||||||||||||||||||||
1st issue | ||||||||||||||||||||||||
Unique serie | 40,000 | 104% of the CDI | 2 annual installments from January 2010 | Guarantee of CPFL | ||||||||||||||||||||
Energia | 22,247 | - | 400,000 | 422,247 | 10,548 | - | 400,000 | 410,548 | ||||||||||||||||
RGE | ||||||||||||||||||||||||
2nd issue | ||||||||||||||||||||||||
1st serie | 2,620 | IGP-M + 9.6% p.a. | 1 installment in April 1, 2011 | Unsecured | 613 | 1,112 | 26,200 | 27,925 | 5,072 | - | 26,200 | 31,272 | ||||||||||||
2nd serie | 20,380 | 106.0% of CDI | 1 installment in April 1, 2009 | Unsecured | 5,828 | 203,800 | - | 209,628 | 11,309 | - | 203,800 | 215,109 | ||||||||||||
3rd issue | ||||||||||||||||||||||||
1st serie | 1 | CDI + 0.60% p.a. (2) | 3 annual installments from December 2011 | Credit of CPFL Energia | 950 | - | 100,000 | 100,950 | 3,637 | - | 100,000 | 103,637 | ||||||||||||
2nd serie | 1 | CDI + 0.60% p.a. (3) | 3 annual installments from December 2013 | Credit of CPFL Energia | 7,972 | - | 140,000 | 147,972 | 3,816 | - | 140,000 | 143,816 | ||||||||||||
3rd serie | 1 | CDI + 0.60% p.a. (4) | 3 annual installments from December 2013 | Credit of CPFL Energia | 1,851 | - | 40,000 | 41,851 | 676 | - | 40,000 | 40,676 | ||||||||||||
4rd serie | 1 | CDI + 0.60% p.a. (5) | 3 annual installments from December 2013 | Credit of CPFL Energia | 1,422 | - | 50,000 | 51,422 | - | - | - | - | ||||||||||||
5rd serie | 1 | CDI + 0.60% p.a. (5) | 3 annual installments from December 2013 | Credit of CPFL Energia | 1,422 | - | 50,000 | 51,422 | - | - | - | - | ||||||||||||
20,058 | 204,912 | 406,200 | 631,170 | 24,510 | - | 510,000 | 534,510 | |||||||||||||||||
CPFL Geração | ||||||||||||||||||||||||
Guarantee of CPFL |
||||||||||||||||||||||||
Energia, Receivables | ||||||||||||||||||||||||
2nd Issue | 69,189 | TJLP + 4 to 5% p.a. | Semiannual with settlement in June 2009 | and CPFL Geração | 1,175 | 157,946 | - | 159,121 | 7,404 | 150,505 | 80,806 | 238,715 | ||||||||||||
common nominal |
||||||||||||||||||||||||
shares | ||||||||||||||||||||||||
Baesa | ||||||||||||||||||||||||
1st serie | 9,000 | 100% of the CDI+ 0.3% p.a. | Quarterly with settlement in August 2016. | Letters of Credit | 490 | 3,164 | 22,941 | 26,595 | 1,506 | 3,164 | 23,732 | 28,402 | ||||||||||||
2nd serie | 9,000 | 100% of the CDI+ 0.4% p.a. | Annually with settlement in August 2016. | Letters of Credit | 1,347 | - | 9,331 | 10,678 | - | - | 9,331 | 9,331 | ||||||||||||
1,837 | 3,164 | 32,272 | 37,273 | 1,506 | 3,164 | 33,063 | 37,733 | |||||||||||||||||
90,990 | 366,022 | 2,213,947 | 2,670,959 | 85,074 | 153,669 | 2,392,539 | 2,631,282 | |||||||||||||||||
The Company and its subsidiaries hold swap positions that convert the fixed rate component of the interest on the transaction into a variable interest rate in reais, corresponding to: | ||||
(1) 104.4% of CDI | (3) 104.85% of CDI | (5) 104.87% of CDI | ||
(2) 105.7% of CDI | (4) 104.9% of CDI |
RGE
On December 1, 2007, the subsidiary RGE made a third public issue of non-convertable debentures, in five series, with a total value of R$ 380,000. Each series comprises one debenture, guaranteed by a surety from CPFL Energia. All the debentures are unsecured, book-entry and registered, with no issued certificates and no scheduled renegotiation option. The 1st series, totaling R$ 100,000, was subscribed and paid up in December 2007. The 2nd and 3rd series, totaling R$ 140,000 and R$ 40,000, respectively, were subscribed and paid up in the first quarter of 2008. The 4th and 5th series, totaling R$ 100,000, were subscribed and paid-up in the quarter.
RESTRICTIVE COVENANTS
The debentures are subject to certain restrictive covenants, including clauses that require the subsidiaries to maintain certain financial ratios within pre-established parameters. Details of these restrictive covenants are presented in the financial statements as of December 31, 2007. In the opinion of the subsidiary's Management, these restrictive covenants and clauses are being adequately complied with.
35
( 17 ) SUPPLIERS |
Consolidated | ||||
June 30, | March 31, | |||
2008 | 2008 | |||
System service charges | 18,081 | 8,217 | ||
Energy purchased | 575,927 | 673,019 | ||
Electricity network usage charges | 97,318 | 94,470 | ||
Materials and services | 78,848 | 87,787 | ||
Co-Generators | 24,136 | 626 | ||
Regulatory liability (note 3) | 29,651 | 29,867 | ||
Other | 18,494 | 18,456 | ||
Total | 842,455 | 912,442 | ||
( 18 ) TAXES AND SOCIAL CONTRIBUTIONS PAYABLE |
Parent Company | Consolidated | |||||||||||
Current | Current | Non current | ||||||||||
June 30, | March | June 30, | March | June 30, | March | |||||||
2008 | 31, 2008 | 2008 | 31, 2008 | 2008 | 31, 2008 | |||||||
ICMS (State VAT) | - | - | 275,708 | 297,670 | - | - | ||||||
PIS (Tax on revenue) | - | - | 9,962 | 12,805 | 169 | - | ||||||
COFINS (Tax on revenue) | - | - | 47,253 | 54,625 | 3,291 | 2,034 | ||||||
IRPJ (Corporate income tax) | 12,129 | - | 104,019 | 107,830 | 17,392 | 9,250 | ||||||
CSLL (Social contribution tax) | 2,813 | - | 21,330 | 31,372 | 6,056 | 3,109 | ||||||
IRRF (Withholding tax on equity | ||||||||||||
interest) | - | - | 14,751 | - | - | - | ||||||
Other | 50 | 113 | 19,276 | 22,759 | - | - | ||||||
Total | 14,992 | 113 | 492,299 | 527,061 | 26,908 | 14,393 | ||||||
( 19 ) EMPLOYEE PENSION PLANS |
The subsidiaries CPFL Paulista, CPFL Piratininga and CPFL Geração, through Fundação CESP, the subsidiary RGE, through Fundação CEEE de Seguridade Social - ELETROCEEE, the indirect subsidiary CPFL Santa Cruz, through BB Previdência Fundo de Pensão Banco do Brasil, and the subsidiary CPFL Jaguariuna through IHPREV Fundo de Pensão, sponsor supplementary retirement and pension plans for their employees. The main characteristics of these plans are as follows:
I CPFL Paulista
A Proportional Supplementary Defined Benefit (BSPS) and a Mixed Benefit Plan are currently in effect for the employees of the subsidiary CPFL Paulista.
On modification of the Pension Plan in October 1997, the subsidiary recognized an obligation to pay in respect of the plan deficit determined at the time by the external actuaries of the Fundação CESP. This deficit will be liquidated in 260 installments, amortized monthly, plus interest of 6% p.a. and restatement based on the IGP-DI (FGV). Through the addendum to the agreement with Fundação CESP dated January 17, 2008, the payment terms were changed to 238 monthly payments and 19 annual installments, in relation to the base date of December 31, 2007, with final maturity on October 31, 2027. The balance of the liability as of June 30, 2008 is R$ 586,296 (R$ 568,143 as of March 31, 2008).
36
II CPFL Piratininga
As a result of the split-off of Bandeirante Energia S.A. (the subsidiarys predecessor), the subsidiary CPFL Piratininga assumed the responsibility for the actuarial liabilities for its retired and discharged employees up to the date of the split-off, as well as the responsibilities relating to the active employees transferred to CPFL Piratininga.
A Proportional Supplementary Defined Benefit (BSPS) and a Mixed Benefit Plan are currently in effect for the employees of CPFL Piratininga.
In September 1997, through a contractual instrument of adjustment of reserves to be amortized, Eletropaulo Metropolitana Eletricidade São Paulo S.A. (the predecessor of Bandeirante) recognized an obligation to pay in respect of the plan deficit determined at the time by the external actuaries of the Fundação CESP, to be liquidated in 260 installments, amortized on a monthly basis, plus interest of 6% p.a. and restatement based on the IGP-DI (FGV). Under the Contractual Amendment, signed with Fundação CESP on January 17, 2008, the payment terms were amended to 221 monthly payments and 18 annual installments, in relation to the base date of December 31, 2007, with final maturity on May 31, 2026. The balance of the liability as of June 30, 2008 is R$ 152,304 (R$ 147,710 as of March 31, 2008).
III RGE
A defined benefit type plan, with a benefit level equal to 100% of the adjusted average of the most recent salaries, including the presumed Social Security benefit, with a Segregated Net Asset administered by ELETROCEEE. Only those employed prior to the spin-off from CEEE to RGE are entitled to this benefit.
IV CPFL Santa Cruz
The subsidiary CPFL Santa Cruz has a defined contribution plan.
V CPFL Geração
The plans currently in force for the employees of subsidiary CPFL Geração are a Proportional Supplementary Defined Benefit (BSPS) and a Mixed Benefit Plan, along the same lines as the CPFL Paulista plan.
With the modification of the Retirement Plan, at that point maintained by CPFL Paulista, in October 1997, a liability was recognized as payable by the subsidiary CPFL Geração, relating to the plan deficit calculated by the external actuaries of Fundação CESP, which is being amortized on a monthly basis, in 260 installments, plus interest of 6% p.a. and restatement according to the IGP-DI (FGV). Under the Contractual Amendment, signed with Fundação CESP on January 17, 2008, the payment terms were amended to 238 monthly installments and 19 annual installments, in relation to the base date of December 31, 2007, with final maturity on October 31, 2027. As of June 30, 2008, the balance of the liability, which is restated annually in line with the evolution of the actuarial deficit calculated in accordance with the criteria of the Supplementary Pensions Department, was R$ 11,846 (R$ 11,480 as of March 31, 2008).
37
VI CPFL Jaguariúna
The subsidiary CPFL Jaguariúna has a defined contribution plan.
The changes in net actuarial liability as of June 30 and March 31, 2008, pursuant to CVM Resolution n° 371/2000, are as follows:
June 30, 2008 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Net actuarial liability at the beginning of the quarter | 500,684 | 136,440 | (4,441) | 8,855 | 641,538 | ||||
Income recognized in income statement | (16,580) | (3,091) | (921) | (447) | (21,039) | ||||
Sponsor's contributions during the period | (11,957) | (3,889) | - | (257) | (16,103) | ||||
Net actuarial liability at the end of the period | 472,147 | 129,460 | (5,362) | 8,151 | 604,396 | ||||
Other contributions | 12,398 | 497 | 13,282 | 164 | 26,341 | ||||
TOTAL | 484,545 | 129,957 | 7,920 | 8,315 | 630,737 | ||||
Current | 30,507 | 8,287 | 483 | 734 | 40,011 | ||||
Non current | 454,038 | 121,670 | 7,437 | 7,581 | 590,726 | ||||
484,545 | 129,957 | 7,920 | 8,315 | 630,737 | |||||
March 31, 2008 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Net actuarial liability at the beginning of the year | 533,948 | 144,136 | (3,520) | 9,655 | 684,219 | ||||
Income recognized in income statement | (16,580) | (3,091) | (921) | (447) | (21,039) | ||||
Sponsor's contributions during the period | (16,684) | (4,605) | - | (353) | (21,642) | ||||
Net actuarial liability at the end of the period | 500,684 | 136,440 | (4,441) | 8,855 | 641,538 | ||||
Other contributions | 12,010 | 236 | 13,298 | 160 | 25,704 | ||||
TOTAL | 512,694 | 136,676 | 8,857 | 9,015 | 667,242 | ||||
Current | 40,995 | 13,274 | 711 | 1,104 | 56,084 | ||||
Non current | 471,699 | 123,402 | 8,146 | 7,911 | 611,158 | ||||
512,694 | 136,676 | 8,857 | 9,015 | 667,242 | |||||
The revenues recognized are as follows:
2nd quarter 2008 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Cost of service | 271 | 1,143 | 308 | 27 | 1,749 | ||||
Interest on actuarial liabilities | 67,046 | 16,618 | 4,003 | 1,426 | 89,093 | ||||
Expected return on assets | (83,889) | (20,505) | (5,843) | (1,865) | (112,102) | ||||
Unrecognized cost of past service | - | 3 | - | - | 3 | ||||
Unrecognized actuarial gains amortization | - | - | (310) | - | (310) | ||||
Subtotal | (16,572) | (2,741) | (1,842) | (412) | (21,567) | ||||
Expected contributions from participants | (8) | (350) | - | (35) | (393) | ||||
Subtotal | (16,580) | (3,091) | (1,842) | (447) | (21,960) | ||||
Decrease of 50% on prepaid pension expense (*) | - | - | 921 | - | 921 | ||||
Total | (16,580) | (3,091) | (921) | (447) | (21,039) | ||||
2nd quarter 2007 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Cost of service | 262 | 1,022 | 225 | 22 | 1,531 | ||||
Interest on acturial liabilities | 64,878 | 16,272 | 2,831 | 1,363 | 85,344 | ||||
Expected return on assets | (74,137) | (18,424) | (3,834) | (1,614) | (98,009) | ||||
Unrecognized cost of past service | - | 3 | - | - | 3 | ||||
Unrecognized actuarial gains amortization | - | - | (965) | - | (965) | ||||
Subtotal | (8,997) | (1,127) | (1,743) | (229) | (12,096) | ||||
Expected contributions from participants | (8) | (477) | - | - | (485) | ||||
Total | (9,005) | (1,604) | (1,743) | (229) | (12,581) | ||||
(*) As the sponsor, RGE matches the participants contributions to this plan, only 50% was recorded.
38
The revenues were recorded in the following accounts in the statement of operations:
2nd Quarter 2008 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Operating cost | (16,580) | (3,091) | (921) | (447) | (21,039) | ||||
Total | (16,580) | (3,091) | (921) | (447) | (21,039) | ||||
2nd Quarter 2007 | |||||||||
CPFL | CPFL | CPFL | |||||||
Paulista | Piratininga | RGE | Geração | Consolidated | |||||
Operating cost | (9,005) | (1,604) | (1,743) | 13 | (12,339) | ||||
Operating expenses | - | - | - | (242) | (242) | ||||
Total | (9,005) | (1,604) | (1,743) | (229) | (12,581) | ||||
( 20 ) REGULATORY CHARGES |
Consolidated | ||||
June 30, | March 31, | |||
2008 | 2008 | |||
Fee for the use of water resources | 2,371 | 1,722 | ||
Global Reverse Fund - RGR | 6,947 | 7,642 | ||
ANEEL inspection fee | 1,830 | 1,776 | ||
Fuel Consumption Account - CCC | 28,558 | 29,612 | ||
Energy Development Account - CDE | 33,054 | 32,702 | ||
Total | 72,760 | 73,454 | ||
( 21 ) RESERVE FOR CONTINGENCIES |
Consolidated | |||||||||||||||
June 30, 2008 | March 31, 2008 | ||||||||||||||
Reserve for contingencies - Gross | Escrow Deposits related to Contingencies (1) | Reserve for Contingencies, net |
Other deposits, Judicial (2) | Reserve for contingencies - Gross | Escrow Deposits related to Contingencies (1) | Reserve for Contingencies, net |
Other deposits, Judicial (2) | ||||||||
Labor | |||||||||||||||
Various | 60,837 | 51,484 | 9,353 | 44,824 | 64,288 | 49,864 | 14,424 | 40,432 | |||||||
Civil | |||||||||||||||
General damages | 18,037 | 13,256 | 4,781 | 43,973 | 16,024 | 14,209 | 1,815 | 25,201 | |||||||
Tariff increase | 11,302 | 3,005 | 8,297 | 7,056 | 12,862 | 3,423 | 9,439 | 7,780 | |||||||
Energy purchased | 24,275 | 13,228 | 11,047 | - | 40,808 | 28,167 | 12,641 | - | |||||||
Other | 6,772 | 5,504 | 1,268 | 9,996 | 8,070 | 6,743 | 1,327 | 11,728 | |||||||
60,386 | 34,993 | 25,393 | 61,025 | 77,764 | 52,542 | 25,222 | 44,709 | ||||||||
Tax | |||||||||||||||
FINSOCIAL | 18,270 | 18,270 | - | 33,787 | 18,211 | 18,211 | - | 33,677 | |||||||
Increase on basis - PIS and COFINS | 1,396 | - | 1,396 | - | 2,651 | - | 2,651 | - | |||||||
Interest on shareholders equity - PIS | |||||||||||||||
and COFINS | 58,112 | - | 58,112 | 301 | 47,888 | - | 47,888 | 301 | |||||||
Income tax | 55,942 | 36,056 | 19,886 | 393,844 | 54,409 | 33,163 | 21,246 | 384,987 | |||||||
Other | 7,961 | 5,031 | 2,930 | 12,941 | 8,321 | 3,525 | 4,796 | 12,997 | |||||||
141,681 | 59,357 | 82,324 | 440,873 | 131,480 | 54,899 | 76,581 | 431,962 | ||||||||
Total | 262,904 | 145,834 | 117,070 | 546,722 | 273,532 | 157,305 | 116,227 | 517,103 | |||||||
39
The changes in the balances in the quarter ended June 30, 2008 are as follows:
Consolidated | |||||||||||
March 31, | Monetary | ||||||||||
2008 | Addition | Reversal | Payment | Restatement | June 30, 2008 | ||||||
Labor | 64,288 | 683 | (1,414) | (2,735) | 15 | 60,837 | |||||
Civil | 77,764 | 3,118 | (1,481) | (19,105) | 90 | 60,386 | |||||
Tax | 131,480 | 11,219 | (2,686) | (122) | 1,790 | 141,681 | |||||
Reserve for contingencies - Gross | 273,532 | 15,020 | (5,581) | (21,962) | 1,895 | 262,904 | |||||
Escrow Deposits (1) + (2) | 674,408 | 27,161 | (2,812) | (18,032) | 11,831 | 692,556 | |||||
The reserves for contingencies were based on appraisal of the risks of losing litigation to which the Company and its subsidiaries are parties, where a loss is probable in the opinion of the legal advisers and the management of the Company and its subsidiaries. Details of the reserves for contingencies are presented on the financial statements as of December 31, 2007.
Possible Losses: The Company and its subsidiaries are parties to other suits in which management, supported by its legal advisers, believes that the chances of a successful outcome are possible, due to a solid defensive base in these cases. These questions do not yet indicate a trend in the decisions of the courts or any other decision in similar proceedings considered probable or remote, and therefore no provision has been established for these. As of June 30, 2008, the claims relating to possible losses were as follows: (i) R$ 214,766 for labor suits (R$ 210,357 as of March 31, 2008); (ii) R$ 394,771 for civil suits, mainly for suits for personal injuries, environmental damages and tariff increases (R$ 396,882 as of March 31, 2008); and (iii) R$ 475,343 in respect of tax suits, relating basically to Income Tax, ICMS, FINSOCIAL and PIS and COFINS (R$ 475,372 as of March 31, 2008).
Escrow Deposit - Income Tax: refers to discussion of the deductibility for income tax purposes of expense recorded in 1997 in respect of the welfare deficit of the pension plan of employees of the subsidiary CPFL Paulista in relation to Fundação CESP, due to the renegotiation and renewal of debt in that year. After consulting the Brazilian Federal Income Office, CPFL Paulista obtained a favorable answer in Note MF/SRF/COSIT/GAB n° 157 of April 9, 1998, and used the tax deductibility of the expense, thereby generating tax loss carryforwards in that year. In March 2000, CPFL Paulista was assessed by the tax inspectors in relation to use of the tax loss carryforwards in 1997 and 1998. In 2007, as a result of the legal decision demanding the deposit to permit continuity of the discussions, CPFL Paulista made the escrow deposit, restated to June 30, 2008 at R$ 391,814 (R$ R$ 382,375 restated to March 31, 2008). This deductibility also affected other taxes and, in order to be able to continue the discussions, the subsidiary CPFL Paulista offered a total of R$ 219,837 (bank guarantees), restated as of June 30, 2008. Based on the updated position of the legal counsel in charge of this case, the risk of loss continues to be classified as remote.
Based on the opinion of their legal advisers, Management of the Company and of its subsidiaries consider that there are no significant contingent risks that are not covered by adequate provisions in the Interim Financial Statements, or that might result in the significant impact on future earnings.
40
( 22 ) OTHER ACCOUNTS PAYABLE | ||
Consolidated | ||||||||
Current | Long-term | |||||||
June 30, | March 31, | June 30, | March 31, | |||||
2008 | 2008 | 2008 | 2008 | |||||
Consumers and Concessionaires | 51,510 | 53,094 | - | - | ||||
Liability Regulatory (note 3 ) | 183,748 | 169,934 | 23,253 | 23,531 | ||||
Energy Efficiency Program - PEE | 37,465 | 39,393 | 73,646 | 68,209 | ||||
Research & Development - P&D | 32,729 | 31,880 | 49,461 | 46,547 | ||||
National Scientific and Technological | ||||||||
Development Fund - FNDCT | 23,819 | 25,492 | 2,277 | 1,902 | ||||
Energy Research Company - EPE | 12,074 | 12,676 | 632 | 637 | ||||
Fund for Reversal | - | - | 17,751 | 17,751 | ||||
Advances | 10,457 | 12,623 | 82,597 | 82,597 | ||||
Interest on Compulsory Loan | 4,120 | 3,678 | - | - | ||||
Emergency Charges (ECE/EAEE) | 4,929 | 5,033 | - | - | ||||
Provision for Environmental Expenses | 8,252 | 9,529 | 541 | 543 | ||||
Payroll | 5,990 | 6,842 | - | - | ||||
Profit sharing | 19,479 | 24,809 | - | - | ||||
Other | 51,935 | 43,573 | 6,434 | 6,454 | ||||
Total | 446,507 | 438,556 | 256,592 | 248,171 | ||||
( 23 ) SHAREHOLDERS EQUITY |
The participations of the shareholders in the Company's equity as of June 30, 2008 and March 31, 2008 are distributed as follows:
Total Shares | ||||||||
June 30, 2008 | March 31, 2008 | |||||||
Common | Interest | Common | Interest | |||||
Shareholders | Shares | % | Shares | % | ||||
VBC Energia S.A. | 136,329,808 | 28.41 | 136,329,808 | 28.41 | ||||
521 Participações S.A. | 149,233,727 | 31.10 | 149,233,727 | 31.10 | ||||
Bonaire Participações S.A. | 60,713,511 | 12.65 | 60,713,511 | 12.65 | ||||
BNDES Participações S.A. | 27,465,653 | 5.72 | 27,465,653 | 5.72 | ||||
Brumado Holdings S.A. | 28,420,052 | 5.92 | 28,420,052 | 5.92 | ||||
Board Members | 3,112 | 0.00 | 3,112 | 0.00 | ||||
Executive Officers | 31,102 | 0.01 | 16,564 | 0.00 | ||||
Other Shareholders | 77,713,973 | 16.19 | 77,728,511 | 16.20 | ||||
Total | 479,910,938 | 100.00 | 479,910,938 | 100.00 | ||||
41
Interest on Shareholders Equity and Dividend
Parent Company | ||||
June 30, | March | |||
2008 | 31,2008 | |||
Interest on Shareholders Equity Payable | 441 | 444 | ||
Dividend Payable | ||||
VBC Energia S.A. | 170,892 | 204,217 | ||
521 Participações S.A. | 187,067 | 223,547 | ||
Bonaire Participações S.A. | 76,105 | 90,947 | ||
BNDES Participações S.A. | 34,429 | 41,143 | ||
Other Shareholders | 147,084 | 170,306 | ||
Subtotal | 615,577 | 730,160 | ||
Total | 616,018 | 730,604 | ||
The Company paid dividend and interest on equity of R$ 716,162 in the quarter, as declared and provided as of December 31, 2007. Additionally, in accordance with the bylaws, Management approved the declaration of an interim dividend of R$ 601,576, equivalent to R$ 1.253516809 per share, in respect of the results for the first half of 2008.
42
( 24 ) OPERATING REVENUES |
Consolidated | ||||||||
2008 | 2007 | |||||||
Revenue from eletric energy operations | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Consumer class | ||||||||
Residential | 1,090,235 | 2,282,980 | 1,123,370 | 2,251,479 | ||||
Industrial | 1,018,310 | 2,029,419 | 1,026,854 | 1,947,404 | ||||
Commercial | 584,288 | 1,233,102 | 627,497 | 1,251,498 | ||||
Rural | 102,214 | 219,675 | 112,428 | 214,823 | ||||
Public Administration | 85,799 | 170,148 | 91,390 | 171,011 | ||||
Public Lighting | 65,881 | 136,136 | 68,162 | 134,507 | ||||
Public Services | 101,693 | 213,873 | 113,945 | 217,618 | ||||
Billed | 3,048,420 | 6,285,333 | 3,163,646 | 6,188,340 | ||||
Unbilled (Net) | (60,030) | (45,592) | (62,892) | (33,159) | ||||
Emergency charges - ECE/EAEE | 6 | 10 | 20 | 30 | ||||
Realization of extraordinary tariff adjustment (note 3 a) | (876) | (1,789) | (53,822) | (109,737) | ||||
Realization of free energy (note 3 a) | (258) | (500) | (17,916) | (37,640) | ||||
Tariff review - Remuneration base (note 3 b.1) | - | 728 | 2,054 | 4,064 | ||||
Realization of tariff review - Remuneration base (note 3 b.1) | - | (2,193) | (11,334) | (21,992) | ||||
Tariff review - Depreciation (note 3 b.1) | - | - | - | 6,310 | ||||
Realization of tariff review - Depreciation (note 3 b.1) | (948) | (13,147) | (11,385) | (11,385) | ||||
Realization of tariff review - Purchase of electric energy from Itaipu (nota 3.b.3) | - | - | (934) | (13,052) | ||||
Other financial components | (15,019) | (11,271) | 7,856 | 25,015 | ||||
Realization of other financial components | 392 | (12,862) | (11,545) | (12,009) | ||||
PIS and COFINS - Generators pass-through (note 3 b.3) | - | 258 | 2,520 | (7,972) | ||||
Realization PIS and COFINS - Generators pass-through (note 3 b.3) | 14 | (477) | 1,956 | 11,976 | ||||
Discount of tariff adjustment TUSD and irrigation (note 3.b.3) | 5,339 | 13,613 | 18,910 | 33,690 | ||||
Realization of discount of tariff adjustment TUSD and irrigation (note 3.b.3) | (16,802) | (29,043) | (10,273) | (13,673) | ||||
Discount TUSD Generation (note 3.b.3) | 11,679 | 11,679 | - | - | ||||
Realization of discount TUSD Generation (note 3.b.3) | (2,336) | (2,336) | - | - | ||||
ELECTRICITY SALES TO FINAL CONSUMERS | 2,969,581 | 6,192,411 | 3,016,861 | 6,008,806 | ||||
Furnas Centrais Elétricas S.A. | 80,278 | 160,593 | 74,499 | 148,214 | ||||
Other concessionaires and licensees | 113,631 | 253,011 | 75,878 | 119,502 | ||||
Current electric energy | 12,656 | 8,492 | 3,123 | 17,386 | ||||
ELECTRICITY SALES TO WHOLESALER | 206,565 | 422,096 | 153,500 | 285,102 | ||||
Revenue due to network usage charge - TUSD | 186,392 | 377,500 | 200,301 | 398,830 | ||||
Low income consumer's subsidy (note 3 d) | 19,245 | 26,301 | 6,623 | 503 | ||||
Other revenue and income | 57,339 | 102,829 | 32,302 | 58,074 | ||||
OTHER OPERATING REVENUES | 262,976 | 506,630 | 239,226 | 457,407 | ||||
Total | 3,439,122 | 7,121,137 | 3,409,587 | 6,751,315 | ||||
43
Consolidated | ||||||||
2008 | 2007 | |||||||
Revenue from Eletric Energy Operations - Consolidated - GWh (*) | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Consumer class | ||||||||
Residential | 2,848 | 5,735 | 2,635 | 5,322 | ||||
Industrial | 4,050 | 7,897 | 4,087 | 7,962 | ||||
Commercial | 1,671 | 3,443 | 1,624 | 3,286 | ||||
Rural | 579 | 1,207 | 587 | 1,132 | ||||
Public Administration | 257 | 498 | 251 | 474 | ||||
Public Lighting | 336 | 670 | 314 | 625 | ||||
Public Services | 399 | 809 | 401 | 784 | ||||
Billed | 10,140 | 20,259 | 9,899 | 19,585 | ||||
Own Consumption | 8 | 16 | 7 | 14 | ||||
Electric Energy distributed | 10,148 | 20,275 | 9,906 | 19,599 | ||||
Furnas Centrais Elétricas S.A. | 754 | 1,509 | 754 | 1,501 | ||||
Other Concessionaires and Licensees | 1,165 | 2,292 | 1,110 | 1,785 | ||||
Current Electric Energy | 199 | 344 | 537 | 1,193 | ||||
ELECTRICITY SALES TO WHOLESALER | 2,118 | 4,145 | 2,401 | 4,479 | ||||
(*) Information not reviewed by the independent auditors.
Consolidated | ||||
Number of consumers (*) | June 30, 2008 | June 30, 2007 | ||
Consumer class | ||||
Residential | 5,477,236 | 5,146,147 | ||
Industrial | 85,420 | 83,061 | ||
Commercial | 487,595 | 465,381 | ||
Rural | 235,327 | 248,651 | ||
Public Administration | 41,313 | 38,785 | ||
Public Lighting | 5,714 | 3,280 | ||
Public Services | 6,382 | 5,951 | ||
TOTAL | 6,338,987 | 5,991,256 | ||
(*) Information not reviewed by the independent auditors.
44
( 25 ) COST OF ELECTRIC ENERGY |
Consolidated | ||||||||
2008 | 2007 | |||||||
Electricity purchased for resale | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Energy Purchased in Restricted Framework - ACR | ||||||||
Itaipu Binacional | 218,351 | 447,916 | 254,533 | 508,595 | ||||
Furnas Centrais Elétricas S.A. | 24,676 | 48,124 | 21,876 | 42,658 | ||||
CESP - Cia Energética de São Paulo | 34,186 | 68,314 | 7,752 | 16,996 | ||||
Cia de Geração de Energia Elétrica do Tietê | 7,053 | 13,675 | 7,498 | 15,405 | ||||
Duke Energy Inter. Ger. Paranapanema S.A. | 3,677 | 7,344 | 25,879 | 56,715 | ||||
Tractebel Energia S.A. | 228,278 | 451,821 | 249,256 | 500,526 | ||||
Petróleo Brasileiro S.A. Petrobrás | 41,840 | 86,174 | 43,637 | 87,737 | ||||
CHESF - Cia Hidro Elétrica do São Francisco | 25,008 | 48,787 | 12,266 | 25,623 | ||||
CEMIG - Cia Energética de Minas Gerais | 17,909 | 38,435 | 4,993 | 10,892 | ||||
TermoRio S.A. | 53,026 | 119,138 | - | - | ||||
Enguia Gen | 15,852 | 36,193 | - | - | ||||
AES Uruguaiana Ltda. | 92 | 243 | 35,905 | 72,536 | ||||
Câmara de Comercialização de Energia Elétrica - CCEE | 12,442 | 192,463 | 3,915 | 4,626 | ||||
Other | 107,385 | 214,493 | 57,660 | 112,103 | ||||
789,775 | 1,773,120 | 725,170 | 1,454,412 | |||||
Energy Purchased in the Free Market - ACL | 344,029 | 684,536 | 335,667 | 627,884 | ||||
1,133,804 | 2,457,656 | 1,060,837 | 2,082,296 | |||||
Deferral/Amortization liquid effect - CVA | 84,900 | 79,878 | 58,346 | (84,125) | ||||
Overcontracting of energy (note 3 b.3) | (9,141) | 162,463 | (25,676) | (45,863) | ||||
Refund to consumer - Tariff adjustments (note 3 b.3) | (1,892) | (26,213) | (22,700) | 75,935 | ||||
Credit of PIS and COFINS | (112,920) | (228,941) | (96,417) | (182,670) | ||||
Others | 754 | 1,201 | - | - | ||||
Subtotal | 1,095,505 | 2,446,044 | 974,390 | 1,845,573 | ||||
Electricity Network Usage Charge | ||||||||
Basic network charges | 173,543 | 348,418 | 155,452 | 310,785 | ||||
Charges for transmission from Itaipu | 17,458 | 34,807 | 16,729 | 32,144 | ||||
Connection charges | 17,540 | 32,690 | 15,025 | 27,227 | ||||
System Service Charges - ESS | 84,063 | 91,819 | 737 | 9,423 | ||||
292,604 | 507,734 | 187,943 | 379,579 | |||||
Net effect of deferral and amortization - CVA | (78,396) | (71,971) | 3,234 | 8,216 | ||||
Credit of PIS and COFINS | (16,672) | (36,101) | (16,179) | (32,804) | ||||
Subtotal | 197,536 | 399,662 | 174,998 | 354,991 | ||||
Total | 1,293,041 | 2,845,706 | 1,149,388 | 2,200,564 | ||||
45
Consolidated | ||||||||
2008 | 2007 | |||||||
2nd Quarter | 1st Half | 2nd Quarter | 1st Half | |||||
Electricity Purchased for Resale - GWh (*) | ||||||||
Energy Purchased in Restricted Framework - ACR | ||||||||
Itaipu Binacional | 2,753 | 5,505 | 2,742 | 5,432 | ||||
Furnas Centrais Elétricas S.A. | 316 | 627 | 297 | 585 | ||||
CESP - Cia Energética de São Paulo | 405 | 847 | 106 | 234 | ||||
Cia de Geração de Energia Elétrica do Tietê | 75 | 150 | 86 | 179 | ||||
Duke Energy Inter. Ger. Paranapanema S.A. | 51 | 103 | 267 | 590 | ||||
Tractebel Energia S.A. | 1,723 | 3,503 | 2,000 | 4,076 | ||||
Petróleo Brasileiro S.A. Petrobrás | 373 | 763 | 381 | 770 | ||||
CHESF - Cia Hidro Elétrica do São Francisco | 314 | 624 | 182 | 359 | ||||
CEMIG - Cia Energética de Minas Gerais | 176 | 367 | 65 | 139 | ||||
TermoRio S.A. | 94 | 205 | - | - | ||||
Enguia Gen | 30 | 82 | - | - | ||||
AES Uruguaiana Ltda. | 266 | 589 | 270 | 590 | ||||
Câmara de Comercialização de Energia Elétrica - CCEE | 513 | 1,332 | 78 | 250 | ||||
Other | 716 | 1,482 | 478 | 933 | ||||
Subtotal | 7,805 | 16,179 | 6,952 | 14,137 | ||||
Energy Purchased in the Free Market - ACL | 3,854 | 7,550 | 4,797 | 9,669 | ||||
Total | 11,659 | 23,729 | 11,749 | 23,806 | ||||
(*) Information not reviewed by the independent auditors
46
( 26 ) OPERATING EXPENSES |
Parent company | ||||||||
2008 | 2007 | |||||||
General and Administrative Expenses | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Personnel | 790 | 1,344 | 492 | 747 | ||||
Materials | 14 | 23 | 14 | 32 | ||||
Outside Services | 3,373 | 6,307 | 2,178 | 6,869 | ||||
Leases and Rentals | 59 | 70 | 14 | 86 | ||||
Depreciation and Amortization | 25 | 50 | 25 | 50 | ||||
Publicity and Advertising | 643 | 816 | 849 | 1,259 | ||||
Legal, Judicial and Indemnities | 221 | 396 | 128 | 209 | ||||
Donations, Contributions and Subsidies | 30 | 138 | - | - | ||||
Other | 463 | 822 | 375 | 755 | ||||
Total | 5,618 | 9,966 | 4,075 | 10,007 | ||||
47
Consolidated | ||||||||
2008 | 2007 | |||||||
Sales and Marketing Expenses | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Personnel | 15,476 | 34,535 | 14,039 | 26,266 | ||||
Materials | 644 | 1,349 | 608 | 1,043 | ||||
Outside Services | 10,810 | 23,128 | 13,898 | 27,639 | ||||
Allowance for Doubtful Accounts | 15,093 | 22,185 | 4,963 | 16,769 | ||||
Depreciation and Amortization | 2,919 | 5,812 | 2,337 | 4,541 | ||||
Collection Tariffs and Services | 12,254 | 23,685 | 11,897 | 22,603 | ||||
Other | 1,232 | 4,053 | 3,514 | 7,111 | ||||
Total | 58,428 | 114,747 | 51,256 | 105,972 | ||||
General and Administrative Expenses | ||||||||
Personnel | 33,892 | 67,292 | 27,682 | 52,179 | ||||
Materials | 1,607 | 3,045 | 1,220 | 2,125 | ||||
Outside Services | 35,549 | 69,791 | 33,890 | 66,285 | ||||
Leases and Rentals | (3,131) | 1,953 | 1,031 | 2,003 | ||||
Depreciation and Amortization | 8,796 | 13,967 | 4,904 | 9,166 | ||||
Publicity and Advertising | 1,809 | 2,052 | 1,580 | 2,690 | ||||
Legal, Judicial and Indemnities | 3,615 | 11,727 | 14,466 | 14,586 | ||||
Donations, Contributions and Subsidies | 980 | 2,235 | 853 | 1,816 | ||||
Other | 3,587 | 11,387 | 3,387 | 9,098 | ||||
Total | 86,704 | 183,449 | 89,013 | 159,948 | ||||
Other Operating Expenses | ||||||||
Inspection Fee | 6,101 | 11,999 | 5,055 | 9,906 | ||||
RTE and Free Energy Losses | 148 | 510 | 9,136 | 9,390 | ||||
Other | 559 | 960 | 1 | 4 | ||||
Total | 6,808 | 13,469 | 14,192 | 19,300 | ||||
Goodwill Amortization | 9,531 | 19,061 | 8,166 | 16,330 | ||||
Total Operating Expenses | 161,471 | 330,726 | 162,627 | 301,550 | ||||
48
( 27 ) FINANCIAL INCOME (EXPENSE) |
Parent Company | ||||||||
2008 | 2007 | |||||||
Financial Income | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Income from Short-term Financial Investments | 10,552 | 18,137 | 6,026 | 12,479 | ||||
Interest on Prepaid Income and Social Contribution Taxes | 828 | 1,685 | 989 | 1,727 | ||||
Monetary and Exchange Variations | 2,597 | 2,597 | 111 | 111 | ||||
PIS and COFINS of Interest on Equity | (9,097) | (9,097) | (6,518) | (6,518) | ||||
Other | (1,736) | 1,909 | 773 | 1,675 | ||||
Subtotal | 3,144 | 15,231 | 1,381 | 9,474 | ||||
Interest on shareholder´s equity | 98,340 | 98,340 | 70,464 | 70,464 | ||||
TOTAL | 101,484 | 113,571 | 71,845 | 79,938 | ||||
Financial Expense | ||||||||
Debt Charges | (15,021) | (30,260) | (2,989) | (2,998) | ||||
Banking Expenses | - | (12) | (2,530) | (2,784) | ||||
Monetary and Exchange Variations | (1,112) | (6,702) | (26,119) | (26,306) | ||||
Other | (1,743) | (3,177) | (657) | (1,300) | ||||
Subtotal | (17,876) | (40,151) | (32,295) | (33,388) | ||||
Goodwill Amortization | (32,303) | (64,604) | (25,195) | (50,388) | ||||
Total | (50,179) | (104,755) | (57,490) | (83,776) | ||||
Net financial expenses | 51,305 | 8,816 | 14,355 | (3,838) | ||||
Consolidated | ||||||||
2008 | 2007 | |||||||
Financial Income | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half | ||||
Income from Short-term Financial Investments | 31,399 | 61,808 | 23,900 | 50,188 | ||||
Late Payments Charges | 28,694 | 58,376 | 25,793 | 51,462 | ||||
Interest on Prepaid Income and Social Contribution Taxes | 1,978 | 3,775 | 1,952 | 4,288 | ||||
Interest on Escrow deposits | 11,831 | 22,558 | 2,648 | 2,890 | ||||
Monetary and Exchange Variations | (1,201) | 9,262 | (3,349) | (1,944) | ||||
Remuneration Interest - CVA and Parcel "A" | 13,256 | 22,554 | 16,516 | 40,852 | ||||
Discount on purchase of ICMS credit | 2,155 | 5,967 | 3,038 | 6,327 | ||||
Interest of Realization of Extraordinary Tariff Adjustment (note 3 a) | 156 | 328 | 3,245 | 12,114 | ||||
PIS and COFINS of Interest on Equity | (9,097) | (9,097) | (6,518) | (6,518) | ||||
Other | 6,260 | 18,965 | 9,286 | 18,996 | ||||
Total | 85,431 | 194,496 | 76,511 | 178,655 | ||||
Financial Expense | ||||||||
Debt Charges | (127,878) | (260,118) | (133,730) | (255,732) | ||||
Banking Expenses | (838) | (2,233) | (23,395) | (43,454) | ||||
Monetary and Exchange Variations | (48,011) | (90,593) | (30,150) | (53,901) | ||||
Other | (11,206) | (23,382) | (10,864) | (19,812) | ||||
Subtotal | (187,933) | (376,326) | (198,139) | (372,899) | ||||
Goodwill Amortization | (38,476) | (76,955) | (34,517) | (68,947) | ||||
Total | (226,409) | (453,281) | (232,656) | (441,846) | ||||
Net financial expenses | (140,978) | (258,785) | (156,145) | (263,191) | ||||
49
( 28 ) FINANCIAL INSTRUMENTS AND OPERATING RISKS |
28.1 RISK CONSIDERATIONS
The business of the Company and its subsidiaries comprises, principally, generation, sale and distribution of electric energy. As public service concessionaires, the operations and tariffs of its principal subsidiaries are regulated by ANEEL.
The main market risk factors that affect business are related, basically, to fluctuations in exchange rates and interest, credit, energy shortages and prepayments of debts. The Company and its subsidiaries manage these risks in such a way as to minimize them through the compensation mechanism (CVA), contracting swap operations, adopting collection policies, obtaining guarantees and cutting off supplies to defaulting customers and monitoring contractual obligations.
28.2 VALUATION OF FINANCIAL INSTRUMENTS
The Company and its subsidiaries maintain certain operating and financial policies and strategies with a view to ensuring the liquidity, security and profitability of their assets. As a result, control and follow-up procedures are in place on the transactions and balances of financial instruments, for the purpose of monitoring the risks and current rates in relation to those used in the market.
As of June 30, 2008, the principal financial asset and liability instruments of the Company and its subsidiaries are as follows:
50
The book values of the main financial instruments for the Company and its subsidiaries, compared with the market funding amounts as of June 30, 2008 and March 31, 2008, are as follows:
Parent Company | ||||||||
June 30, 2008 | March 31, 2008 | |||||||
Book Value | Fair Value | Book Value | Fair Value | |||||
Loans and financing (note 15) | - | - | 180,990 | 181,298 | ||||
Debentures (note 16) | 466,678 | 474,341 | 453,737 | 461,927 | ||||
Derivatives (note 15) | 44 | 105 | (4,148) | (4,014) | ||||
Total | 466,722 | 474,446 | 630,579 | 639,211 | ||||
Consolidated | ||||||||
June 30, 2008 | March 31, 2008 | |||||||
Book Value | Fair Value | Book Value | Fair Value | |||||
Loans and financing (note 15) | 3,557,365 | 3,321,746 | 3,674,681 | 3,523,427 | ||||
Debentures (note 16) | 2,670,959 | 2,710,826 | 2,631,282 | 2,663,545 | ||||
Derivatives (note 15) | 156,433 | 169,913 | (22,241) | (6,174) | ||||
Total | 6,384,757 | 6,202,485 | 6,283,722 | 6,180,798 | ||||
The estimates of the market value of these financial instruments for the Company and its subsidiaries were based on models that discount future cash flows to present value, comparison with similar transactions contracted on dates close to the end of the quarter and comparisons with average market parameters. In cases where there are no similar transactions in the market, principally relating to the loan linked to the regulatory assets and credits receivable from CESP, the subsidiaries assumed that the market value corresponds to the respective book value.
( 29 ) CHANGE IN THE LEGISLATION AMENDMENT OF LAW 6.404/76 LAW 11.638/07 |
Law 11.638/07 was enacted on December 28, 2007, amending, revoking and adding to the provisions of Brazilian Company Law (Law 6.404/76) relating to preparation and disclosure of Financial Statements. These changes came into effect as from January 1, 2008.
Exclusively for compliance with the provisions contained in CVM Instruction 469, dated May 2, 2008, analyzed the impacts caused by Law 11.638/2007 on its financial statements for the first semester of 2008, comparatively with the same period of 2007, and no significant effects were identified. In the opinion of Company management, the financial statements already reflect, in all material respects, the changes proposed by Law 11.638, based on the guidelines issued by the Brazilian Securities Commission - CVM.
The main changes included in this law, which came into effect as from 2008, are summarized below:
51
Additionally, the Company (i) was not affected by the change in the rule for evaluation of investments in associated companies, (ii) did not effect any transactions involving premiums received on the issuing of debentures, donations or investment subsidies, (iii) does not have an accounting policy of revaluation of assets, (iv) has no remuneration based on shares, and (v) was not involved in any merger, amalgamation or spin off between unrelated parties, linked to the transfer of control.
As announced to the market, CVM intends to conclude, in 2008, the regulatory process for the provisions of corporate law that have been altered and that require regulation, and to review all its regulatory rulings on accounting matters, in order to check and eliminate any divergences in relation to the specific changes made by the new law.
The effects of application of the new Law on the Company's quarterly information have been evaluated based on the legislation and regulations in force as of this date, and may still change as a result of regulations to be issued by the appropriate agencies.
( 30 ) RELEVANT FACT |
On September 29, 2006 the indirect subsidiary BAESA published a relevant fact concerning the shareholders' intention to conduct a corporate restructuring through a partial spin-off of the company's assets and liabilities. In the light of the enactment of Law n ° 11.488, of June 15, 2007, which extended to BAESA shareholders the reduction in transmission charges that previously applied only to independent energy producers, a relevant fact was communicated to the market on June 2, 2008, advising that the company's shareholders had decided not to proceed with the corporate restructuring through a partial spin-off of the assets and liabilities.
( 31 ) SUBSEQUENT EVENTS |
CPFL Santa Cruz
The company received R$ 40,000 on July 15, 2008 in relation to reduction of the capital of CPFL Santa Cruz, without canceling shares, resulting in amendment of Article 5 of the bylaws. The objective of the reduction was to adjust the capital structure to bring it into line with the other distributors in the group. The operation was approved at an Extraordinary General Meeting (EGM) held on June 26, 2008.
CERAN
The CERAN Complex plants were approved in the ambit of the Kyoto Protocol Clean Development Mechanism - CDM by the ICGCC Interministerial Commission on Global Climate Change, and on April 8, 2007, the Monte Claro hydropower plant obtained registration with the CDM Executive Committee at the United Nations.
In July 2008, the Japanese government approved the participation of the Tokyo Electric Power Company - TEPCO in the Monte Claro hydropower plant CDM project. This entitles CERAN to transfer carbon credits (Certified Emission Reductions, or CERs) to TEPCO annually until 2012.
52
CERs have already been issued for the subsidiary, and will be transferred to TEPCO in the 3rd quarter of 2008, for the amount of R$ 9,276 (R$ 6,029 in proportion to the participation of CPFL Geração).
FOZ DO CHAPECÓ
In July 2008, the second installment of the total loan of R$ 1,655,838 approved by the BNDES on July 3, 2007, amounting to R$ 308,117 (R$ 157,140 in proportion to the participation of CPFL Geração) was released by the BNDES to the indirect subsidiary Foz do Chapecó, while maintaining the current conditions of interest, amortization and guarantee conditions.
53
APENDIX I
CASH FLOWS
For the period of six months ended June 30, 2008 and 2007
( Stated in thousands of Reais )
Parent Company | Consolidated | |||||||
June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | |||||
OPERATING CASH FLOW | ||||||||
Income for the period | 601,576 | 842,375 | 601,576 | 842,375 | ||||
Adjustments to reconcile net income to cash derived from | ||||||||
operations | ||||||||
Non-controlling shareholders' interest | - | - | 4,873 | 211 | ||||
Monetary restatement of rationing regulatory assets | - | - | (23,238) | (44,226) | ||||
Provisions for losses on rationing regulatory assets | - | - | 682 | 9,390 | ||||
Tariff review and adjustment | - | - | 25,499 | 24,665 | ||||
Other regulatory assets | - | - | 172,999 | 59,961 | ||||
Low income consumers subsidy | - | - | (26,301) | (503) | ||||
Depreciation and amortization | 64,654 | 50,438 | 284,952 | 269,509 | ||||
Reserve for contingencies | 9,097 | 7,807 | (3,480) | 265 | ||||
Interest, monetary and exchange restatement | (10,291) | (28,310) | (77,697) | (16,356) | ||||
Derivative contracts | (47,891) | (22,295) | (19,365) | 57,995 | ||||
Pension plan costs | - | - | (42,077) | (24,706) | ||||
Equity in subsidiaries | (722,347) | (935,843) | - | - | ||||
Loss (gain) on the write-off of permanent assets and investment | - | (3,199) | 11,416 | 4,817 | ||||
Deferred taxes - assets and liabilities | 5,363 | 2,460 | (41,026) | 14,021 | ||||
Research and development and energy efficiency programs | - | - | 397 | (7,844) | ||||
Other | - | - | (1,569) | 17,393 | ||||
REDUCTION (INCREASE) IN OPERATING ASSETS | ||||||||
Consumers, concessionaires and licensees | - | - | 84,451 | 121,409 | ||||
Dividend and interest on equity received | 970,363 | 735,783 | - | - | ||||
Recoverable taxes | (3,148) | (967) | 12,854 | 49,840 | ||||
Financial Investments | 9,766 | (1,392) | 59,567 | (38,318) | ||||
Deferred tariff costs variations | - | - | (12,693) | 2,011 | ||||
Escrow deposits | - | - | (21,957) | (20,667) |
Other operating assets | - | (2,382) | (15,150) | (44,344) | ||||
INCREASE (DECREASE) IN OPERATING LIABILITIES | ||||||||
Suppliers | (9,787) | (4,848) | (25,722) | (53,006) | ||||
Taxes and social contributions payable | 14,719 | 8,410 | (92,921) | 16,419 | ||||
Deferred tariff gains variations | - | - | 57,309 | 72,536 | ||||
Other liabilities with employee pension plans | - | - | (49,517) | (43,454) | ||||
Interest on debts - accrued and paid | (11,810) | 2,848 | 4,065 | (47,677) | ||||
Interest on debts - incorporated interest | - | - | 6,786 | 21,774 | ||||
Regulatory charges | - | - | 4,064 | (36,235) | ||||
Related parties | 378 | - | - | (459) | ||||
Other operating liabilities | 322 | 118 | 19,471 | 24,942 | ||||
CASH FLOWS PROVIDED BY OPERATIONS | 870,964 | 651,003 | 898,248 | 1,231,738 | ||||
INVESTMENT ACTIVITIES | ||||||||
Acquisition of investments (net of cash & cash equivalents) | - | (12) | - | (377,437) | ||||
Decrease in investments on subsidiaries | - | 12,400 | - | - | ||||
Increase in property,property, plant and equipment | (7) | (10) | (483,257) | (549,338) | ||||
Financial investments | - | - | (33,878) | (4,098) | ||||
Redemption of financial investments | 18,298 | 14,986 | 83,081 | 15,799 | ||||
Advance energy purchase agreements | - | - | 2,650 | 1,321 | ||||
Increase in special obligations | - | - | 34,677 | 30,963 | ||||
Additions (reduction) to deferred charges | (2,275) | (354) | (6,142) | (8,648) | ||||
Sale of permanent assets | - | 2,631 | 18,120 | 31,392 | ||||
Advance for Future Capital Increase | - | (409,368) | - | - | ||||
Other | 5,031 | - | 4,795 | - | ||||
UTILIZATION OF CASH IN INVESTMENTS | 21,047 | (379,727) | (379,954) | (860,046) | ||||
FINANCING ACTIVITIES | ||||||||
Loans, financing and debentures obtained | 446,804 | 466,250 | 1,525,705 | 1,062,240 | ||||
Payments of loan and debentures | (623,034) | (34,500) | (1,499,549) | (554,788) | ||||
Dividend and interest on equity paid | (716,192) | (718,840) | (721,580) | (719,123) | ||||
GENERATION (UTILIZATION) OF CASH IN FINANCING | (892,422) | (287,090) | (695,424) | (211,671) | ||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (411) | (15,814) | (177,130) | 160,021 | ||||
OPENING BALANCE OF CASH AND CASH EQUIVALENTS | 5,744 | 25,429 | 927,897 | 540,364 | ||||
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS | 5,333 | 9,615 | 750,767 | 700,385 | ||||
SUPPLEMENTARY INFORMATION | ||||||||
Social contribution and income tax paid | - | - | 410,233 | 324,907 | ||||
Interest paid | 41,845 | 137 | 283,700 | 222,151 | ||||
Transactions with no cash effects | ||||||||
Advances for future capital increase through assumption of debts | ||||||||
of subsidiary | - | 202,729 | - | - | ||||
41,845 | 202,866 | 693,933 | 547,058 |
CASH AND CASH EQUIVALENTS | June 30, 2008 | December 31, 2007 | June 30,2007 | December 31, 2006 | ||||
PARENT COMPANY | ||||||||
Balance according to Corporation Law | 7,626 | 17,803 | 11,971 | 26,393 | ||||
Reclassification - FAS 95 (1) | (2,293) | (12,059) | (2,356) | (964) | ||||
Adjusted balance | 5,333 | 5,744 | 9,615 | 25,429 | ||||
Consolidated | ||||||||
Balance according to Corporation Law | 869,611 | 1,106,308 | 828,589 | 630,250 | ||||
Reclassification - FAS 95 (1) | (118,844) | (178,411) | (128,204) | (89,886) | ||||
Adjusted balance | 750,767 | 927,897 | 700,385 | 540,364 | ||||
(1) Adjustment made to cash and cash equivalents to adjust the Cash Flow Statement to the criteria established by FAS 95 Statements of Cash Flow. In accordance with this criterion, short term cash investments which, while having immediate liquidity, have maturity dates of more than 90 days, with early redemption subject to their market value, are subject to reclassification to Financial Investments.
54
APENDIX II
Added Value Statements
For the period of six months ended June 30, 2008 and 2007
( in thousands of Brazilian Reais )
Parent Company | Consolidated | |||||||
June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | |||||
1 - Revenues | (1,099) | 3,200 | 7,092,293 | 6,719,992 | ||||
1.1 Operating revenues | - | - | 7,121,137 | 6,751,315 | ||||
1.2 Provision for losses on the realization of regulatory assets | - | - | (510) | (9,390) | ||||
1.3 Allowance for doubtful accounts | - | - | (22,185) | (16,769) | ||||
1.4 Nonoperating income (expense) | (1,099) | 3,200 | (6,149) | (5,164) | ||||
2- ( - ) Inputs | (8,503) | (9,128) | (3,426,645) | (2,704,128) | ||||
2.1 - Electricity purchased for resale | - | - | (3,110,748) | (2,416,038) | ||||
2.2 - Outsourced services | (6,308) | (6,869) | (174,105) | (154,836) | ||||
2.3 - Material | (23) | (32) | (29,388) | (23,108) | ||||
2.4 - Other | (2,172) | (2,227) | (108,504) | (106,908) | ||||
2.5 - Cost of service rendered | - | - | (3,900) | (3,238) | ||||
3- Gross added value (1 + 2) | (9,602) | (5,928) | 3,665,648 | 4,015,864 | ||||
4- Retentions | (64,654) | (50,437) | (294,972) | (276,339) | ||||
4.1 - Depreciation and amortization | (50) | (50) | (198,928) | (191,062) | ||||
4.2 - Goodwill amortization | (64,604) | (50,387) | (96,044) | (85,277) | ||||
5- Net Added Value Generated (3 + 4) | (74,256) | (56,365) | 3,370,676 | 3,739,525 | ||||
6- Added value received in transfer | 746,674 | 951,834 | 198,746 | 184,962 | ||||
6.1 - Financial income | 24,327 | 15,992 | 203,619 | 185,173 | ||||
6.2 - Equity in subsidiaries | 722,347 | 935,842 | - | - | ||||
6.3 - Non-controlling shareholder's equity | - | - | (4,873) | (211) | ||||
7- Added value to be distributed (5 + 6) | 672,418 | 895,469 | 3,569,422 | 3,924,487 | ||||
8- Distribution of added value | ||||||||
8.1 - Personnel and charges | 1,108 | 651 | 169,534 | 141,413 | ||||
8.2 - Taxes, fees and contributions | 29,625 | 21,757 | 2,418,564 | 2,605,155 | ||||
8.3 - Interest and rentals | 40,109 | 30,686 | 379,748 | 335,544 | ||||
8.4 - Dividend | 601,576 | 842,375 | 601,576 | 842,375 | ||||
672,418 | 895,469 | 3,569,422 | 3,924,487 | |||||
55
05.01 COMMENTS ON PERFORMANCE OF THE QUARTER
Analysis of Results CPFL Energia (parent company)
Net income was R$ 328,509 in the quarter, a decrease of 11.1% (R$ 40,938) compared to the same quarter of the previous year, due mainly to the results of equity in subsidiaries, in relation to the performance of the subsidiaries, as shown below:
2nd quarter 2008 | 2nd quarter 2007 | |||
CPFL Paulista | 127,909 | 193,431 | ||
CPFL Piratininga | 61,201 | 75,475 | ||
RGE | 62,525 | - | ||
CPFL Santa Cruz | 12,218 | - | ||
CPFL Geração | 75,157 | 69,868 | ||
CPFL Brasil | 47,881 | 54,255 | ||
Perácio Participações | 13,184 | (1,548) | ||
CPFL Serra | - | 43,583 | ||
CPFL Cone Sul | - | 582 | ||
Nova 4 | - | 4,253 | ||
Total | 400,075 | 439,899 | ||
56
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 06/30/2008 | 4 - 03/31/2008 |
1 | Total assets | 15,341,906 | 15,792,124 |
1.01 | Current assets | 3,671,522 | 4,213,720 |
1.01.01 | Cash and banks | 869,611 | 1,147,248 |
1.01.02 | Credits | 2,692,421 | 2,945,556 |
1.01.02.01 | Accounts receivable | 1,644,975 | 1,789,057 |
1.01.02.01.01 | Consumers, concessionaires and licensees | 1,734,280 | 1,880,053 |
1.01.02.01.02 | (-) Allowance for doubtful accounts | (89,305) | (90,996) |
1.01.02.02 | Other credits | 1,047,446 | 1,156,499 |
1.01.02.02.01 | Financial Investments | 36,316 | 37,246 |
1.01.02.01.02 | Recoverable taxes | 186,696 | 170,725 |
1.01.02.01.03 | Deferred taxes | 226,485 | 254,059 |
1.01.02.02.04 | Deferred tariff cost variations | 501,308 | 619,477 |
1.01.02.02.05 | Prepaid expenses | 96,641 | 69,383 |
1.01.02.02.06 | Derivatives contracts | 0 | 5,609 |
1.01.03 | Materials and suppliers | 15,351 | 14,817 |
1.01.04.04 | Other | 94,139 | 106,099 |
1.01.04.01 | Other credits | 94,139 | 106,099 |
1.02 | Noncurrent assets | 11,670,384 | 11,578,404 |
1.02.01 | Long-term assets | 2,570,536 | 2,553,495 |
1.02.01.01 | Other credits | 1,527,095 | 1,542,001 |
1.02.01.01.01 | Consumers, concessionaires and licensees | 186,190 | 191,975 |
1.02.01.01.02 | Financial investments | 103,870 | 102,493 |
1.02.01.01.03 | Recoverable taxes | 96,903 | 99,281 |
1.02.01.01.04 | Deferred taxes | 1,140,132 | 1,148,252 |
1.02.01.02 | Related parties | 0 | 0 |
1.02.01.02.01 | Associated companies | 0 | 0 |
1.02.01.02.02 | Subsidiaries | 0 | 0 |
1.02.01.02.03 | Other related parties | 0 | 0 |
1.02.01.03 | Other | 1,043,441 | 1,011,494 |
1.02.01.03.01 | Escrow deposits | 546,722 | 517,103 |
1.02.01.03.02 | Deferred tariff costs variations | 277,103 | 173,802 |
1.02.01.03.03 | Prepaid expenses | 14,615 | 13,969 |
1.02.01.03.04 | Derivatives contracts | 0 | 61,783 |
1.02.01.03.05 | Other | 205,001 | 244,837 |
1.02.02 | Permanent assets | 9,099,848 | 9,024,909 |
1.02.02.01 | Investments | 2,617,536 | 2,661,497 |
1.02.02.01.01 | Associated companies | 0 | 0 |
1.02.02.01.02 | Associated companies - goodwill | 0 | 0 |
1.02.02.01.03 | Permanent equity interests | 0 | 0 |
1.02.02.01.04 | Permanent equity interests - goodwill | 1,791,166 | 1,829,641 |
1.02.02.01.05 | Other investments | 826,370 | 831,856 |
1.02.02.02 | Property, plant and equipment | 6,412,590 | 6,296,987 |
1.02.02.02.01 | Property, plant and equipment | 7,374,944 | 7,240,127 |
1.02.02.02.02 | (-) Special obligation linked to the concession | (962,354) | (943,140) |
1.02.02.03 | Intangible | 0 | 0 |
1.03.02.04 | Deferred charges | 69,722 | 66,425 |
57
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 06/30/2008 | 4 - 03/31/2008 |
2 | Total liabilities and shareholders equity | 15,341,906 | 15,792,124 |
2.01 | Current liabilities | 3,801,553 | 3,990,325 |
2.01.01 | Loans and financing | 533,053 | 649,418 |
2.01.01.01 | Accrued interest on debts | 13,594 | 10,417 |
2.01.01.02 | Loans and financing | 519,459 | 639,001 |
2.01.02 | Debentures | 457,012 | 238,743 |
2.01.02.01 | Accrued interest on debentures | 90,990 | 85,074 |
2.01.02.02 | Debentures | 366,022 | 153,669 |
2.01.03 | Suppliers | 842,455 | 912,442 |
2.01.04 | Taxes and social contributions payable | 492,299 | 527,061 |
2.01.05 | Dividends and interest on equity | 624,735 | 743,572 |
2.01.06 | Reserves | 15 | 780 |
2.01.06.01 | Reserve for contingencies | 15 | 780 |
2.01.07 | Due to related parties | 0 | 0 |
2.01.08 | Other | 851,984 | 918,309 |
2.01.08.01 | Employee pension plans | 40,011 | 56,084 |
2.01.08.02 | Regulatory charges | 72,760 | 73,454 |
2.01.08.03 | Accrued liabilities | 57,397 | 39,608 |
2.01.08.04 | Deferred tariff gains variations | 231,027 | 310,602 |
2.01.08.05 | Derivative contracts | 4,282 | 5 |
2.01.08.06 | Other | 446,507 | 438,556 |
2.02 | Noncurrent liabilities | 6,493,036 | 6,484,283 |
2.02.01 | Long-term liabilities | 6,493,036 | 6,484,283 |
2.02.01.01 | Loans and financing | 3,024,312 | 3,025,263 |
2.02.01.01.01 | Accrued interest on debts | 26,278 | 14,570 |
2.02.01.01.02 | Loans and financing | 2,998,034 | 3,010,693 |
2.02.01.02 | Debentures | 2,213,947 | 2,392,539 |
2.02.01.03 | Reserves | 117,055 | 115,447 |
2.02.01.03.01 | Reserve for contingencies | 117,055 | 115,447 |
2.02.01.04 | Related parties | 0 | 0 |
2.02.01.05 | Advance for future capital increase | 0 | 0 |
2.02.01.06 | Other | 1,137,722 | 951,034 |
2.02.01.06.01 | Employee pension plans | 590,726 | 611,158 |
2.02.01.06.02 | Taxes and social contributions payable | 26,908 | 14,393 |
2.02.01.06.03 | Deferred tariff gains variations | 111,345 | 32,166 |
2.02.01.06.04 | Derivative contracts | 152,151 | 45,146 |
2.02.01.06.05 | Other | 256,592 | 248,171 |
2.02.02 | Deferred income | 0 | 0 |
2.03 | Non-controlling shareholders interest | 92,483 | 89,615 |
2.04 | Shareholders equity | 4,954,834 | 5,227,901 |
58
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
2.04.01 | Capital | 4,741,175 | 4,741,175 |
2.04.02 | Capital reserves | 16 | 16 |
2.04.03 | Revaluation reserves | 0 | 0 |
2.04.03.01 | Own assets | 0 | 0 |
2.04.03.02 | Subsidiary/associated companies | 0 | 0 |
2.04.04 | Profit reserves | 213,643 | 213,643 |
2.04.04.01 | Legal reserves | 213,643 | 213,643 |
2.04.04.02 | Statutory reserves | 0 | 0 |
2.04.04.03 | For contingencies | 0 | 0 |
2.04.04.04 | Unrealized profits | 0 | 0 |
2.04.04.05 | Profit retention | 0 | 0 |
2.04.04.06 | Special reserve for undistributed dividends | 0 | 0 |
2.04.04.07 | Other revenue reserves | 0 | 0 |
2.04.05 | Accumulated profit | 0 | 273,067 |
2.04.06 | Advance for future capital increase | 0 | 0 |
59
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 04/01/2008 to 06/30/2008 | 4 - 01/01/2008 to 06/30/2008 | 5 - 04/01/2007 to 06/30//2007 | 6 - 01/01/2007 to 06/30/2007 |
3.01 | Operating revenues | 3,439,122 | 7,121,137 | 3,409,587 | 6,751,315 |
3.02 | Deductions from operating revenues | (1,128,749) | (2,326,280) | (1,185,386) | (2,373,920) |
3.02.01 | ICMS | (590,662) | (1,224,852) | (616,096) | (1,210,483) |
3.02.02 | PIS | (54,916) | (115,301) | (60,030) | (114,936) |
3.02.03 | COFINS | (253,179) | (530,658) | (271,163) | (524,417) |
3.02.04 | ISS | (669) | (1,395) | (298) | (574) |
3.02.05 | Global Reversal Reserve - RGR | (12,094) | (23,441) | (12,678) | (24,999) |
3.02.06 | Fuel Consumption Account - CCC | (93,039) | (183,727) | (104,801) | (255,048) |
3.02.07 | Energy Development Account - CDE | (102,521) | (201,197) | (98,918) | (194,279) |
3.02.08 | Research and Development and Energy Efficiency Programs | (21,663) | (45,699) | (21,381) | (49,153) |
3.02.09 | Emergency Charges (ECE/EAEE) | (6) | (10) | (21) | (31) |
3.03 | Net operating revenues | 2,310,373 | 4,794,857 | 2,224,201 | 4,377,395 |
3.04 | Cost of electric energy services | (1,508,912) | (3,255,498) | (1,335,570) | (2,562,879) |
3.04.01 | Electricity purchased for resale | (1,095,505) | (2,446,044) | (974,390) | (1,845,573) |
3.04.02 | Electricity network usage charges | (197,536) | (399,662) | (174,998) | (354,991) |
3.04.03 | Personnel | (85,027) | (151,850) | (64,687) | (125,025) |
3.04.04 | Employee pension plans | 21,039 | 42,078 | 12,339 | 24,680 |
3.04.05 | Material | (12,210) | (23,938) | (9,804) | (19,137) |
3.04.06 | Outsourced services | (39,164) | (76,647) | (29,122) | (56,621) |
3.04.07 | Depreciation and amortization | (80,457) | (168,786) | (87,551) | (170,217) |
3.04.08 | Other | (17,757) | (26,387) | (5,359) | (12,326) |
3.04.09 | Services Rendered to Third Parties | (2,295) | (4,262) | (1,998) | (3,669) |
3.05 | Gross operating income | 801,461 | 1,539,359 | 888,631 | 1,814,516 |
3.06 | Operating expenses/income | (302,449) | (589,511) | (318,772) | (564,741) |
60
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 04/01/2008 to 06/30/2008 | 4 - 01/01/2008 to 06/30/2008 | 5 - 04/01/2007 to 06/30//2007 | 6 - 01/01/2007 to 06/30/2007 |
3.06.01 | Sales and marketing | (58,428) | (114,747) | (51,256) | (105,972) |
3.06.02 | General and administrative | (86,704) | (183,449) | (89,013) | (159,948) |
3.06.03 | Financial | (140,978) | (258,785) | (156,145) | (263,191) |
3.06.03.01 | Financial income | 85,431 | 194,496 | 76,511 | 178,655 |
3.06.03.02 | Financial expenses | (226,409) | (453,281) | (232,656) | (441,846) |
3.06.03.02.01 | Goodwill amortization | (38,476) | (76,955) | (34,517) | (68,947) |
3.06.03.02.02 | Other financial expenses | (187,933) | (376,326) | (198,139) | (372,899) |
3.06.04 | Other operating income | 0 | 0 | 0 | 0 |
3.06.05 | Other operating expense | (16,339) | (32,530) | (22,358) | (35,630) |
3.06.05.01 | Merged goodwill | (9,531) | (19,061) | (8,166) | (16,330) |
3.06.05.02 | Other operating expenses | (6,808) | (13,469) | (14,192) | (19,300) |
3.06.06 | Equity in subsidiaries | 0 | 0 | 0 | 0 |
3.07 | Income (loss) from operations | 499,012 | 949,848 | 569,859 | 1,249,775 |
3.08 | Nonoperating income (expense) | 286 | (6,149) | (2,325) | (5,164) |
3.08.01 | Income | 6,627 | 8,344 | 2,700 | 6,005 |
3.08.02 | Expenses | (6,341) | (14,493) | (5,025) | (11,169) |
3.09 | Income before taxes on income and minority interest | 499,298 | 943,699 | 567,534 | 1,244,611 |
3.10 | Income tax and social contribution | (139,824) | (366,242) | (186,888) | (380,744) |
3.10.01 | Social contribution | (37,212) | (97,954) | (49,403) | (99,987) |
3.10.02 | Income tax | (102,612) | (268,288) | (137,485) | (280,757) |
3.11 | Deferred income tax and social contribution | (27,720) | 28,992 | (11,082) | (21,281) |
3.11.01 | Deferred Social contribution | (7,237) | 10,316 | (2,592) | (16,976) |
3.11.02 | Deferred Income tax | (20,483) | 18,676 | (8,490) | (4,305) |
3.12 | Statutory profit sharing/contributions | 0 | 0 | 0 | 0 |
3.12.01 | Profit sharing | 0 | 0 | 0 | 0 |
3.12.02 | Contributions | 0 | 0 | 0 | 0 |
3.13 | Reversal of interest on shareholders equity | 0 | 0 | 0 | 0 |
61
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 04/01/2008 to 06/30/2008 | 4 - 01/01/2008 to 06/30/2008 | 5 - 04/01/2007 to 06/30//2007 | 6 - 01/01/2007 to 06/30/2007 |
3.14 | Non-controlling shareholder's interest | (3,245) | (4,873) | (117) | (211) |
3.15 | Net income (loss) for the period | 328,509 | 601,576 | 369,447 | 842,375 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 479,910,938 | 479,910,938 | 479,756,730 | 479,756,730 | |
EARNINGS PER SHARE (R$) | 0.68452 | 1.25352 | 0.77007 | 1.75584 | |
LOSSES PER SHARE (R$) |
62
08.01 COMMENTS ON CONSOLIDATED PERFORMANCE OF THE QUARTER
Analysis of Results CPFL Energia Consolidated
The comments on performance are expressed in thousands of Brazilian reais, unless otherwise indicated.
Information (Consolidated - R$ thousands) | Consolidated | |||||||||||
2nd Quarter 2008 |
2nd Quarter 2007 |
Variation | 1st Half 2008 | 1st Half 2007 | Variation | |||||||
GROSS REVENUE | 3,439,122 | 3,409,587 | 0.9% | 7,121,137 | 6,751,315 | 5.5% | ||||||
Electricity sales to final consumers | 2,969,581 | 3,016,861 | -1.6% | 6,192,411 | 6,008,806 | 3.1% | ||||||
Electricity sales to wholesaler | 206,565 | 153,500 | 34.6% | 422,096 | 285,102 | 48.1% | ||||||
Other operating revenues | 262,976 | 239,226 | 9.9% | 506,630 | 457,407 | 10.8% | ||||||
DEDUCTION FROM OPERATING REVENUE | (1,128,749) | (1,185,386) | -4.8% | (2,326,280) | (2,373,920) | -2.0% | ||||||
NET OPERATING REVENUE | 2,310,373 | 2,224,201 | 3.9% | 4,794,857 | 4,377,395 | 9.5% | ||||||
ENERGY COST | (1,293,041) | (1,149,388) | 12.5% | (2,845,706) | (2,200,564) | 29.3% | ||||||
Electricity purchased for resale | (1,095,505) | (974,390) | 12.4% | (2,446,044) | (1,845,573) | 32.5% | ||||||
Electricity network usage charges | (197,536) | (174,998) | 12.9% | (399,662) | (354,991) | 12.6% | ||||||
OPERATING COST/EXPENSE | (377,342) | (348,809) | 8.2% | (740,518) | (663,865) | 11.5% | ||||||
Personnel | (134,604) | (106,615) | 26.3% | (254,074) | (203,952) | 24.6% | ||||||
Employee pension plan | 21,016 | 12,581 | 67.0% | 42,055 | 25,164 | 67.1% | ||||||
Material | (15,224) | (12,156) | 25.2% | (29,675) | (23,356) | 27.1% | ||||||
Outsourced Services | (86,729) | (78,015) | 11.2% | (172,272) | (152,358) | 13.1% | ||||||
Depreciation and Amortization | (92,373) | (94,953) | -2.7% | (188,908) | (184,232) | 2.5% | ||||||
Merged Goodwill Amortization | (9,545) | (8,166) | 16.9% | (19,089) | (16,330) | 16.9% | ||||||
Other | (59,883) | (61,485) | -2.6% | (118,555) | (108,801) | 9.0% | ||||||
INCOME FROM ELECTRIC UTILITY SERVICES | 639,990 | 726,004 | -11.8% | 1,208,633 | 1,512,966 | -20.1% | ||||||
FINANCIAL INCOME (EXPENSE) | (140,978) | (156,145) | -9.7% | (258,785) | (263,191) | -1.7% | ||||||
Income | 85,431 | 76,511 | 11.7% | 194,496 | 178,655 | 8.9% | ||||||
Expenses | (226,409) | (232,656) | -2.7% | (453,281) | (441,846) | 2.6% | ||||||
OPERATING INCOME | 499,012 | 569,859 | -12.4% | 949,848 | 1,249,775 | -24.0% | ||||||
NON-OPERATING INCOME (EXPENSE) | 286 | (2,325) | -112.3% | (6,149) | (5,164) | 19.1% | ||||||
Income | 6,627 | 2,700 | 145.4% | 8,344 | 6,005 | 39.0% | ||||||
Expenses | (6,341) | (5,025) | 26.2% | (14,493) | (11,169) | 29.8% | ||||||
INCOME BEFORE TAX | 499,298 | 567,534 | -12.0% | 943,699 | 1,244,611 | -24.2% | ||||||
Social Contribution | (44,449) | (51,995) | -14.5% | (87,638) | (116,963) | -25.1% | ||||||
Income Tax | (123,095) | (145,975) | -15.7% | (249,612) | (285,062) | -12.4% | ||||||
INCOME BEFORE | ||||||||||||
MINORITY INTEREST AND REVERSALS | 331,754 | 369,564 | -10.2% | 606,449 | 842,586 | -28.0% | ||||||
Minority interest | (3,245) | (117) | 0.0% | (4,873) | (211) | 0.0% | ||||||
NET INCOME FOR THE PERIOD | 328,509 | 369,447 | -11.1% | 601,576 | 842,375 | -28.6% | ||||||
EBITDA | 717,933 | 814,100 | -11.8% | 1,363,553 | 1,682,989 | -19.0% | ||||||
Net Income for the Period and EBITDA Reconciliation (*) | ||||||||
NET INCOME FOR THE PERIOD | 328,509 | 369,447 | 601,576 | 842,375 | ||||
Employee Pension Plan | (21,016) | (12,581) | (42,055) | (25,164) | ||||
Depreciation and Amortization | 101,918 | 103,119 | 207,997 | 200,562 | ||||
Financial Income (Expense) | 140,978 | 156,145 | 258,785 | 263,191 | ||||
Social Contribution | 44,449 | 51,995 | 87,638 | 116,963 | ||||
Income Tax | 123,095 | 145,975 | 249,612 | 285,062 | ||||
EBITDA | 717,933 | 814,100 | 1,363,553 | 1,682,989 | ||||
(*)information not reviewed by the Independent Auditors |
63
For a comparative analysis of the results for the periods, the following factors that generated income in the quarter and which are not comparable with the previous quarter should be taken into consideration:
Gross Operating Revenue
The Gross Operating Revenue in the second quarter of 2008 was R$ 3,439,122, up 0.9% (R$ 29,535) on the same period the previous year.
The main factors that contributed to this change were:
a) A decrease of 3.6% (R$ 115,226) in the billed energy supplied, justified by the reduction of 5.9% in the average tariffs, partially offset by the 2.4% increase in the amount of energy sold.
b) Amortization of RTE by the subsidiary CPFL Paulista (R$ 71,694 in the 2nd quarter of 2007). As from January 2008, as this relates to Parcel A, it is recorded in Deductions from Operating Income, Cost of Electric Energy and Operating Costs/Expense.
c) Increase of R$ 37,753 in the energy supply, to other concessionaires and licensees, although the amount of energy sold remained stable, mainly due to price adjustments and R$ 10,775 in respect of CPFL Jaguariúna.
d) Increase of R$ 23,750 in other income, due mainly to recording of R$ 8,011 in relation to the agreement between the BAESA shareholders on the differences of contributions to the results and R$ 7.098 in respect of CPFL Jaguariúna.
Quantity of Energy Sold
The amount of energy sold to end users increased by 2.4% in the 2nd quarter of 2008, mainly as a result of the energy added by the acquisition of CPFL Jaguariúna and subsidiaries, which were responsible for an increase of 3.3% in the period.
The residential and commercial classes, corresponding to 44.5% of the energy sold to end users in the quarter, at the best average tariffs, recorded growth of 8.1% and 2.9% respectively, compared to the same quarter of the previous year.
The quantity sold to the industrial class decreased by 0.9%, mainly influenced by consumer migration to the free market and the drop in sales to CPFL Brasil's free customers.
The total energy sales, taking into account the supply to end users and to concessionaires and license holders (bilateral agreements), increased by 2.7% in relation to the same quarter of the previous year (3.7% corresponds to the contribution of CPFL Jaguariúna).
The CPFL Energia concession areas increased by 5.1% compared to the same period of the previous year, impacting both the supply billed and the TUSD collected. Eliminating the effects of the purchase of CPFL Jaguariúna, the growth would be 2.0% ..
64
Tariffs
In the 2nd quarter of 2008, the energy supply tariffs decreased by an average of 5.9%, due mainly to the impacts of the tariff adjustments of the subsidiaries (-17.21% for CPFL Paulista and 2.52% for RGE, as from April 2008, -8.14% for CPFL Santa Cruz from February 2008 and -15.29% for CPFL Piratininga from October 2007).
On the other hand, we stress an improvement in the sales breakdown, mainly as a result of the increase of 8.1% in residential consumption (at lower tariffs) and drop of 0.9% in the consumption of the industrial class.
Deductions from Operating Revenue
Deductions from Operating Revenue in the second quarter of 2008 amounted to R$ 1,128,749, down 4.8% (R$ 56,637) on the same quarter of 2007, mainly due to:
a) Reduction of R$ 11,762 in the CCC sector charges.
b) Reduction in PIS and COFINS, largely due to recording of R$ 29,623 in the 2nd quarter of 2007 in connection with amortization of the Regulatory Asset in relation to the increase in the PIS and COFINS rate.
c) A decrease of R$ 25,434 in ICMS, due to reduction of billed supplied
Cost of Electric energy
The Cost of Electric Energy totaled R$ 1,293,041 in the quarter, up 12.5% (R$ 143,653) on the same period of the previous year, due mainly to:
a) Amortization by the subsidiary CPFL Paulista of R$ 52,370 in relation to Parcel A, starting in January 2008.
b) Impacts of the tariff adjustments of energy purchased.
Operating Costs and Expense
Operating Costs and Expense in the quarter amounted to R$ 377,342, up 8.2% (R$ 28,533) on the same period of the previous year. This increase is due mainly to:
Manageable Operating Expenses
These expenses, related to Personnel, Materials, Outsourced Services and Other, totaled R$ 296,440 in the quarter, an increase of 14.8% (R$ 38,169), mainly as a result of the operational start-up of Castro Alves (CERAN complex) and the acquisition of CPFL Jaguariúna, as well as the adjustments for inflation in the period.
Private Pension Plan
The Private Pension plan recorded income of R$ 21,016 in the quarter (up R$ 8,435 on the same period of 2007), mainly due to impacts on the expected rate of return on the plan assets, as defined in the December 2007 Actuarial Report.
65
Financial Income (Expense)
Net financial expense of R$ 140,978 was recorded in the quarter, compared with R$ 156,145 in the same period of 2007, principally due to:
a) Higher indebtedness in the quarter, compared with the same quarter of the previous year, largely due to the acquisition of CPFL Jaguariúna and investments in the CERAN and Foz de Chapecó generation projects.
b) Financial expense in relation to hedge transactions in connection with the acquisition of CPFL Jaguariúna amounted to R$ 22,799 in the 2nd quarter of 2007.
c) A reduction of R$ 22,557 in bank expense, mainly due to discontinuance of the CPMF charge;
Social Contribution and Income Tax
Taxes on income in the 2nd quarter of 2008 amounted to R$ 167,544, down 15.4% (R$ 30,426) on the same quarter of 2007, basically reflecting the reduction in pre-tax income.
Net income and EBITDA
Due to the above factors, net income of R$ 328,509 was recorded in the quarter, down 11.1% (R$ 40,938) on the same period of 2007.
The adjusted EBITDA (net income for the quarter, eliminating the effects of the private pension plan, depreciation, amortization, financial income (expense), equity accounting, social contribution, income tax and extraordinary item) for the 2nd quarter of 2008 was R$ 717,933, 11.8% (R$ 96,167) lower than the EBITDA for the same period of 2007.
66
09.01 INVESTMENTS IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES
1 - ITEM | 2 - NAME OF SUBSIDIARY/ASSOCIATED COMPANY | 3 - CNPJ (Federal Tax ID) | 4 - CLASSIFICATION | 5 - EQUITY IN CAPITAL OF INVESTEE - % | 6 - SHAREHOLDERS' EQUITY - % | |
7 - TYPE OF COMPANY | 8 - NUMBER OF SHARES HELD IN CURRENT QUARTER (in units) |
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER (in units) |
||||
01 | COMPANHIA PAULISTA DE FORÇA E LUZ - CPFL | 33.050.196/0001-88 | PUBLIC SUBSIDIARY | 100.00 | 37.58 | |
COMMERCIAL, INDUSTRIAL AND OTHER | 36,324,227 | 999,996 | ||||
02 | CPFL GERAÇÃO DE ENERGIA S/A | 03.953.509/0001-47 | PUBLIC SUBSIDIARY | 100.00 | 26.67 | |
COMMERCIAL, INDUSTRIAL AND OTHER | 205,487,715,790 | 205,487,715,790 | ||||
03 | CPFL COMERCIALIZAÇÃO BRASIL S/A | 04.973.790/0001-42 | CLOSED SUBSIDIARY | 100.00 | 1.55 | |
COMMERCIAL, INDUSTRIAL AND OTHER | 2,998,565 | 2,998,565 | ||||
04 | COMPANHIA PIRATININGA DE FORÇA E LUZ | 04.172.213/0001-51 | PUBLIC SUBSIDIARY | 100.00 | 9.16 | |
COMMERCIAL, INDUSTRIAL AND OTHER | 53,031,258,896 | 53.031.258.896 | ||||
05 | RIO GRANDE ENERGIA S/A | 02.016.439/0001-38 | PUBLIC SUBSIDIARY | 100.00 | 30.02 | |
COMMERCIAL, INDUSTRIAL AND OTHER | 807,168,578 | 807,168,578 |
67
10.01 CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES
1 - ITEM | 01 |
2 - ISSUE ORDER NUMBER | 3 |
3 - REGISTRATION NUMBER WITH CVM | CVM/SRE/DEB/2007/042 |
4 - DATE OF REGISTRATION WITH CVM | 10/25/2007 |
5 - ISSUED SERIES | UN |
6 - TYPE | SIMPLE |
7 - NATURE | PUBLIC |
8 - ISSUE DATE | 09/03/2007 |
9 - DUE DATE | 09/03/2014 |
10 - TYPE OF DEBENTURE | NO PREFERENCE |
11 - REMUNERATION CONDITIONS PREVAILING | CDI + 0.45% |
12 - PREMIUM/DISCOUNT | |
13 - NOMINAL VALUE (Reais) | 10,000.00 |
14 - ISSUED AMOUNT (Thousands of Reais) | 450,000 |
15 - NUMBER OF DEBENTURES ISSUED (UNIT) | 45,000 |
16 - OUTSTANDING DEBENTURES (UNIT) | 45,000 |
17 - TREASURY DEBENTURES (UNIT) | 0 |
18 - REDEEMED DEBENTURES (UNIT) | 0 |
19 - CONVERTED DEBENTURES (UNIT) | 0 |
20 - DEBENTURES TO BE PLACED (UNIT) | 0 |
21 - DATE OF THE LAST RENEGOTIATION | |
22 - DATE OF NEXT EVENT | 09/03/2012 |
68
15.01 INVESTMENTS
(Not reviewed by independent auditors)
Our principal capital expenditure in recent years has been on maintaining and upgrading our distribution network and generation projects. The following table sets forth our capital expenditure for the 6 month-period ended June 30, 2008, as well as the three years ended December 31, 2007, 2006 and 2005.
In million of R$ | ||||||||
Year Ended December 31, | ||||||||
Six Months | 2007 | 2006 | 2005 | |||||
Distribution | ||||||||
CPFL Paulista | 121 | 291 | 245 | 189 | ||||
CPFL Piratininga | 87 | 144 | 131 | 86 | ||||
RGE | 56 | 221 | 151 | 93 | ||||
CPFL Santa Cruz | 5 | 11 | - | - | ||||
CPFL Jaguariúna | 6 | 9 | - | - | ||||
Total distribution | 275 | 676 | 527 | 368 | ||||
Generation | 202 | 445 | 266 | 255 | ||||
Commercialization | 5 | 9 | 4 | 4 | ||||
Other | 1 | 2 | - | - | ||||
Total | 483 | 1,132 | 797 | 627 | ||||
We plan to effect capital expenditure totaling approximately R$ 1,233 million in 2008 and approximately R$ 1,126 million in 2009. Of total budgeted capital expenditure over this period, R$ 1,505 million is for distribution, R$ 815 million is for generation, R$ 0.4 million is for holding and R$ 39 million is for commercialization.
69
16.01 OTHER IMPORTANT INFORMATION ON THE COMPANY
Additional information New Market
Shareholders of CPFL Energia S/A holding more than 5% of the shares with voting rights, as of June 30, 2008:
Common | Interest - % | |||
Shareholders | Shares | |||
VBC Energia S.A. | 136,329,808 | 28.41 | ||
521 Participações S.A. | 149,233,727 | 31.10 | ||
Bonaire Participações S.A. | 60,713,511 | 12.65 | ||
BNDES Participações S.A. | 27,465,653 | 5.72 | ||
Brumado Holdings S.A. | 28,420,052 | 5.92 | ||
Board of directors | 3,112 | - | ||
Executive officers | 31,102 | 0.01 | ||
Other shareholders | 77,713,973 | 16.19 | ||
Total | 479,910,938 | 100.00 | ||
Quantity and characteristic of securities held by the Controlling Shareholders, Executive Officers, Board of Directors, Fiscal Council and Free Float, as of June 30, 2008 and 2007:
June 30, 2008 | June 30, 2007 | |||||||
Common | Common | |||||||
Shareholders | Shares | % | Shares | % | ||||
Controlling shareholders | 347,114,888 | 72.33 | 349,784,397 | 72.91 | ||||
Administrator | ||||||||
Executive officers | 31,102 | 0.01 | 30,795 | 0.00 | ||||
Board of directors | 3,112 | 0.00 | 3,112 | 0.00 | ||||
Other shareholders Free float | 132,761,836 | 27.66 | 129,938,426 | 27.08 | ||||
Total | 479,910,938 | 100.00 | 479,756,730 | 100.00 | ||||
70
Shareholders of VBC Energia S/A holding more than 5% of common shares (with voting rights), up to the individuals level, as of June 30, 2008.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(a) | Votorantim Energia Ltda | 1,100,652 | 30.31 | 47,018 | 33.33 | 1,147,670 | 30.42 |
(b) | Camargo Corrêa Energia S.A. | 1,100,652 | 30.31 | 47,018 | 33.33 | 1,147,670 | 30.42 |
(c) | Atila Holdings S.A. | 550,326 | 15.15 | 23,510 | 16.67 | 573,836 | 15.21 |
(d) | Camargo Corrêa S.A. | 550,326 | 15.15 | 23,512 | 16.67 | 573,838 | 15.21 |
Other Shareholders | 329,899 | 9.08 | 3 | 0.00 | 329,902 | 8.74 | |
Total | 3,631,855 | 100.00% | 141,061 | 100.00 | 3,772,916 | 100.00 |
(a) Votorantim Energia Ltda
Shareholders | Quotas | % | |
(e) | Votorantim Investimentos Industriais S.A. | 228,617,352 | 70.28 |
(f) | Companhia Brasileira de Alumínio | 70,827,862 | 21.77 |
(g) | Santa Cruz Geração de Energia S.A. | 25,855,977 | 7.95 |
Total | 325,301,191 | 100.00 |
(b) Camargo Corrêa Energia S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(h) | Camargo Corrêa Investimento em Infra- Estrutura S.A. | 518,860 | 100.00 | 518,851 | 100.00 | 1,037,711 | 100.00 |
Other Shareholders | 0 | 0.00 | 9 | 0.00 | 9 | 0.00 | |
Total | 518,860 | 100.00 | 518,860 | 100.00 | 1,037,720 | 100.00 |
(c) Atila Holdings S/A
Shareholders | Common Shares |
% | |
(e) | Votorantim Investimentos Industriais S.A. | 43,888,284 | 100.00 |
Total | 43,888,284 | 100.00 |
71
(d) Camargo Corrêa S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(i) | Participações Morro Vermelho S.A. | 48,940 | 99.99 | 93,099 | 100.00 | 142,039 | 100.00 |
Other Shareholders | 6 | 0.01 | 1 | 0.00 | 7 | 0.00 | |
Total | 48,946 | 100.00 | 93,100 | 100.00 | 142,046 | 100.00 |
(e) Votorantim Investimentos Industriais S.A.
Shareholders | Common Shares |
% | |
(j) | Votorantim Participações S.A. | 11,165,582,998 | 100.00 |
Other Shareholders | 2 | 0.00 | |
Total | 11,165,583,000 | 100.00 |
(f) Companhia Brasileira de Alumínio
Shareholders | Common Shares |
% | |
(e) | Votorantim Investimentos Industriais S.A. | 765,534,496 | 99.76 |
Other Shareholders | 1,874,557 | 0.24 | |
Total | 767,409,053 | 100.00 |
(g) Santa Cruz Geração de Energia S.A.
Shareholders | Common Shares |
% | |
(f) | Companhia Brasileira de Alumínio | 42,105,504 | 100.00 |
Other Shareholders | 6 | 0.00 | |
Total | 42,105,510 | 100.00 |
(h) Camargo Corrêa Investimentos em Infra-Estrutura S.A.
Shareholders | Common Shares |
% | |
(d) | Camargo Corrêa S.A. | 526,206,813 | 100.00 |
Other Shareholders | 7 | 0.00 | |
Total | 526,206,820 | 100.00 |
72
(i) Participações Morro Vermelho S.A.
Shareholders | Common Shares |
% | |
Rosana Camargo Arruda Botelho | 4,882,646 | 33.34 | |
Renata Camargo Nascimento | 4,882,646 | 33.33 | |
Regina Camargo Pires Oliveira Dias | 4,882,644 | 33.33 | |
Other Shareholders | 191 | 0.00 | |
Total | 14,648,127 | 100.00% |
(j) Votorantim Participações S.A.
Shareholders | Common Shares |
% | |
(k) | Hejoassu Administração S.A. | 5,304,772,480 | 98.59 |
Other Shareholders | 76,106,493 | 1.41 | |
Total | 5,380,878,973 | 100.00 |
(k) Hejoassu Administração S.A.
Shareholders | Common Shares |
% | |
(l) | JEMF Participações S.A. | 400,000 | 25.00 |
(m) | AEM Participações S.A. | 400,000 | 25.00 |
(n) | ERMAN Participações S.A. | 400,000 | 25.00 |
(o) | MRC Participações S.A. | 400,000 | 25.00 |
Total | 1,600,000 | 100.00 |
(l) JEMF Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
José Ermírio de Moraes Neto | 228,243,033 | 33.33 | 0 | 0.00 | 228,243,033 | 33.33 | |
José Roberto Ermírio Moraes | 228,243,033 | 33.33 | 0 | 0.00 | 228,243,033 | 33.33 | |
Neide Helena de Moraes | 228,243,034 | 33.34 | 0 | 0.00 | 228,243,034 | 33.34 | |
(m) | AEM Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(n) | ERMAN Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(o) | MRC Participações S.A. | 0 | 0.00 | 300 | 33.34 | 300 | 0.00 |
Total | 684,729,100 | 100.00 | 900 | 100.00 | 684,730,000 | 100.00 |
73
(m) AEM Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Antonio Ermírio de Moraes holds the voting rights in relation to all his common shares | 684,729,100 | 100.00 | 0 | 0.00 | 684,729,100 | 100.00 | |
(l) | JEMF Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(n) | ERMAN Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(o) | MRC Participações S.A. | 0 | 0.00 | 300 | 33.34 | 300 | 0.00 |
Total | 684,729,100 | 100.00 | 900 | 100.00 | 684,730,000 | 100.00 |
(n) ERMAN Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Ermírio Pereira de Moraes holds the voting rights in relation to all his common shares | 684,729,100 | 100.00 | 0 | 0.00 | 684,729,100 | 100.00 | |
(l) | JEMF Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(m) | AEM Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(o) | MRC Participações S.A. | 0 | 0.00 | 300 | 33.34 | 300 | 0.00 |
Total | 684,729,100 | 100.00 | 900 | 100.00 | 684,730,000 | 100.00 |
(o) MRC Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Maria Helena Moraes Scripilliti holds the voting rights in relation to all her common shares | 684,729,100 | 100.00 | 0 | 0.00 | 684,729,100 | 100.00 | |
(l) | JEMF Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
(m) | ERMAN Participações S.A. | 0 | 0.00 | 300 | 33.34 | 300 | 0.00 |
(n) | AEM Participações S.A. | 0 | 0.00 | 300 | 33.33 | 300 | 0.00 |
Total | 684,729,100 | 100.00 | 900 | 100.00 | 684,730,000 | 100.00 |
74
Shareholders composition of 521 Participações S.A. holding more than 5% of common shares (voting right), up to the individuals level, as of June 30, 2008.
Shareholders | Common Shares |
% | |
Fundo de Investimento Financeiro BB Renda Fixa IV | 377,592 | 15.70 | |
Fundo Mutuo de Investimento em Ações BB - Free Portfolio I | 2,027,402 | 84.30 | |
Other Shareholders | 6 | 0.00 | |
Total | 2,405,000 | 100.00 |
Shareholders of Bonaire Participações S.A. holding more than 5% of common shares (with voting rights), up to the individuals level, as of June 30, 2008.
Shareholders | Common Shares |
% | |
Energia São Paulo Fundo de | |||
Investimento em Participações | 66,728,872 | 100.00 | |
Other Shareholders | 6 | 0.00 | |
Total | 66,728,878 | 100.00 |
Shareholders of BRUMADO HOLDINGS S.A. holding more than 5% of common shares (with voting rights), up to the individuals level, as of June 30, 2008.
Shareholders | Common Shares |
% | |
(a) | Antares Holding Ltda | 980,527,791 | 100.00 |
Other Shareholders | 1 | 0.00 | |
Total | 980,527,792 | 100.00 |
(a) Antares Holding Ltda
Shareholders | Quotas | % | |
(b) | Bradespar S.A. | 274,546,567 | 100.00 |
Other Shareholders | 1 | 0.00 | |
Total | 274,546,568 | 100.00 |
75
(b) Bradespar S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(c) | Cidade de Deus Cia Cial de Participações | 44,883,224 | 36.59 | 300,960 | 0.13 | 45,184,184 | 12.92 |
Fundação Bradesco | 18,179,304 | 14.82 | 2,210,984 | 0.97 | 20,390,288 | 5.83 | |
Hedging Griffo (Fundos) | 6,323,980 | 5.16 | 17,632,268 | 7.77 | 23,956,248 | 6.85 | |
(d) | NCF Participações S.A. | 23,767,944 | 19.38 | - | 0.00 | 23,767,944 | 6.80 |
Fundo de Pensões do Banco Espirito Santo | 6,620,432 | 5.40 | - | 0.00 | 6,620,432 | 1.89 | |
BlackRock, Inc. | - | - | 12,541,200 | 5.52 | 12,541,200 | 3.59 | |
Other Shareholders | 22,889,620 | 18.65 | 194,339,484 | 85.61 | 217,229,104 | 62.12 | |
Total | 122,664,504 | 100.00 | 227,024,896 | 100.00 | 349,689,400 | 100.00 |
(c) Cidade de Deus Cia Cial de Participações
Shareholders | Common Shares |
% | |
(e) | Nova Cidade de Deus Participações S.A. | 2,666,400,460 | 44.84 |
Fundação Bradesco | 1,971,462,964 | 33.15 | |
Lia Maria Aguiar | 424,869,425 | 7.14 | |
Lina Maria Aguiar | 505,373,186 | 8.50 | |
Other Shareholders | 378,780,409 | 6.37 | |
Total | 5,946,886,444 | 100.00 |
(d) NCF Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Fundação Bradesco | 132,346,199 | 25.13 | 469,390,527 | 100.00 | 601,736,726 | 60.41 | |
(c) | Cidade de Deus Cia Cial de Participações | 393,537,013 | 74.72 | - | - | 393,537,013 | 39.51 |
(e) | Nova Cidade de Deus Participações S.A. | 787,932 | 0.15 | - | - | 787,932 | 0.08 |
Total | 526,671,144 | 100.00 | 469,390,527 | 100.00 | 996,061,671 | 100.00 |
76
(e) Nova Cidade de Deus Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Fundação Bradesco | 104,444,477 | 46.30 | 239,026,439 | 98.35 | 343,470,916 | 73.29 | |
(f) | Elo Participações e Investimentos S.A. | 121,129,551 | 53.70 | 0 | 0.00 | 121,129,551 | 25.85 |
Caixa Beneficiente Fund. do Bradesco | 0 | 0 | 4,014,708 | 1.65 | 4,014,708 | 0.86 | |
Total | 225,574,028 | 100.00 | 243,041,147 | 100.00 | 468,615,175 | 100.00 |
(f) Elo Participações S.A.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Lázaro de Mello Brandão | 10,194,242 | 6.33 | - | 0.00 | 10,194,242 | 4.43 | |
Other Shareholders | 150,956,300 | 93.67 | 69,006,686 | 100.00 | 219,962,986 | 95.57 | |
Total | 161,150,542 | 100.00 | 69,006,686 | 100.00 | 230,157,228 | 100.00 |
Shareholders of BNDES Participações S.A. holding more than 5% of common shares (with voting rights), up to the individuals level, as of June 30, 2008.
Shareholders | Common Shares |
% | |
Banco Nacional de | |||
Desenv.Econômico e Social ( 1 ) | 1 | 100.00 | |
Total | 1 | 100.00 |
( 1 ) State agency Brazilian Federal.
The quantity of shares are expressed in units
Commitment to arbitrage
The Company is committed to arbitration in the Market Arbitratoin Chamber, in accordance with the Arbitration Clause in Article 44 of the Companys By-Laws.
77
Social Report / Six-month period ended in June 2008 and 2007 (*) Company: CPFL ENERGIA S.A. |
![]() |
1 - Calculation Basis | 6 month-period ended June 2008 Value (R$ thousand) | 6 month-period ended June 2007 Value (R$ thousand) | ||||
Net Revenues (NR) | 4,794,857 | 4,377,395 | ||||
Operating Result (OR) | 949,848 | 1,249,775 | ||||
Gross Payroll (GP) | 221,901 | 211,640 | ||||
2 - Internal Social Indicators | Value (000) | % of GP | % of NR | Valor (000) | % of GP | % of NR |
Food | 16,353 | 7.37% | 0.34% | 14,096 | 6.66% | 0.32% |
Mandatory payroll taxes | 58,198 | 26.23% | 1.21% | 49,595 | 23.43% | 1.13% |
Private pension plan | 13,009 | 5.86% | 0.27% | 9,384 | 4.43% | 0.21% |
Health | 15,628 | 7.04% | 0.33% | 11,135 | 5.26% | 0.25% |
Occupational safety and health | 980 | 0.44% | 0.02% | 1,041 | 0.49% | 0.02% |
Education | 1,033 | 0.47% | 0.02% | 867 | 0.41% | 0.02% |
Culture | 0 | 0.00% | 0.00% | 0 | 0.00% | 0.00% |
Trainning and professional development | 3,025 | 1.36% | 0.06% | 2,813 | 1.33% | 0.06% |
Day-care / allowance | 428 | 0.19% | 0.01% | 370 | 0.17% | 0.01% |
Profit / income sharing | 19,337 | 8.71% | 0.40% | 14,401 | 6.80% | 0.33% |
Others | 2,212 | 1.00% | 0.05% | 1,997 | 0.94% | 0.05% |
Total - internal social indicators | 130,204 | 58.68% | 2.72% | 105,699 | 49.94% | 2.41% |
3 - External Social Indicators | Valor (000) | % of OR | % of NR | Valor (000) | % of OR | % of NR |
Education | 0 | 0.00% | 0.00% | 0 | 0.00% | 0.00% |
Culture | 2,259 | 0.24% | 0.05% | 3,306 | 0.26% | 0.08% |
Health and sanitation | 50 | 0.01% | 0.00% | 180 | 0.01% | 0.00% |
Sport | 0 | 0.00% | 0.00% | 0 | 0.00% | 0.00% |
Hunger and malnutrition | 0 | 0.00% | 0.00% | 0 | 0.00% | 0.00% |
Others | 826 | 0.09% | 0.02% | 538 | 0.04% | 0.01% |
Total contributions to society | 3,135 | 0.33% | 0.07% | 4,024 | 0.32% | 0.09% |
Taxes (excluding payroll taxes) | 2,338,432 | 246.19% | 48.77% | 2,452,135 | 196.21% | 56.02% |
Total - external social indicators | 2,341,567 | 246.52% | 48.83% | 2,456,159 | 196.53% | 56.11% |
4 - Environmental Indicators | Valor (000) | % of OR | % of NR | Valor (000) | % of OR | % of NR |
Investments relalated to company production / operation | 57,577 | 6.06% | 1.20% | 12,508 | 1.00% | 0.29% |
Investments in external programs and/or projects | 9,672 | 1.02% | 0.20% | 7,056 | 0.56% | 0.16% |
Total environmental investments | 67,249 | 7.08% | 1.40% | 19,564 | 1.57% | 0.45% |
Regarding the establishment of "annual targets" to minimize residues, the consumption in production / operation and increase efficiency in the use of natural resources, the company | ( ) do not have targets ( ) fulfill from 0 to 50% |
( ) fulfill from 51 to 75% (X) fulfill from 76 to 100% |
( ) do not have targets ( ) fulfill from 0 to 50% |
( ) fulfill from 51 to 75% (x) fulfill from 76 to 100% |
||
5 - Staff Indicators | 6 month-period 2008 | 6 month-period 2007 | ||||
Nº of employees at the end of period | 7,156 | 6,221 | ||||
Nº of employees hired during the period | 507 | 214 | ||||
Nº of outsourced employees | 6,337 | 6,793 | ||||
Nº of interns | 230 | 168 | ||||
Nº of employees above 45 years age | 2,057 | 1,545 | ||||
Nº of women working at the company | 1,218 | 1,043 | ||||
% of management position occupied by women | 10.31% | 9.22% | ||||
Nº of Afro-Brazilian employees working at the company | 652 | 495 | ||||
% of management position occupied by Afro-Brazilian employees | 1.03% | 0.97% | ||||
Nº of employees with disabilities | 294 | 203 | ||||
6 - Relevant information regarding the exercise of corporate citizenship | 1. Half 2008 | 1. Half 2007 | ||||
Ratio of the highest to the lowest compensation at company | 55.88 | 73.54 | ||||
Total number of work-related accidents | 11 | 17 | ||||
Social and environmental projects developed by the company were decided upon by: | ( ) directors | (X) directors and managers |
( ) all employees |
( ) directors | (X) directors and managers |
( ) all employees |
Health and safety standards at the workplace were decided upon by: | ( ) directors and managers |
( ) all employees |
(X) all + Cipa | ( ) directors and managers |
( ) all employees |
(X) all + Cipa |
Regarding the liberty to join a union, the right to a collective negotiation and the internal representation of the employees, the company: | ( ) does not get involved |
( ) follows the OIT rules |
(X) motivates and follows OIT |
( ) will not get involved |
( ) will follow the OIT rules |
(X) will motivate and follow OIT |
The private pension plan contemplates: | ( ) directors | ( ) directors and managers |
(X) all employees |
( ) directors | ( ) directors and managers |
(X) all employees |
The profit / income sharing contemplates: | ( ) directors | ( ) directors and managers |
(X) all employees |
( ) directors | ( ) directors and managers |
(X) all employees |
In the selection of suppliers, the same ethical standards and social / environmental responsibilities adopted by the company: | ( ) are not considered |
( ) are suggested |
(X) are required |
( ) will not be considered |
( ) will be suggested |
(X) will be required |
Regarding the participation of employees in voluntary work programs, the company: | ( ) does not get involved |
( ) supports | (X) organizes and motivates |
( ) will not get involved |
( ) will support | (X) will organize and motivate |
Total number of customer complaints and criticisms: | in the company 374.650 |
in Procon 371 |
in the Courts 725 |
in the company 449.807 |
in Procon 746 |
in the Courts 1,054 |
% of complaints and criticisms attended to or resolved: | in the company 100% |
in Procon 100% |
in the Courts 48.54% |
in the company 100% |
in Procon 100% |
in the Courts 55.13% |
Total value-added to distribute (R$ 000): | Six-month-period 2008: | 3,569,422 | Six-month-period 2007: | 3,924,487 | ||
67.76% government | 4.75% employees | 66.39% government | 3.60% employees | |||
16.85% shareholders | 10.64% third parties | 21.46% shareholders | 8.55% third parties | |||
Value-Added Distribution (VAD): | 0% retained | 0% retained | ||||
7 - Other Information | ||||||
Consolidated information | ||||||
In the financial items were utilized the percentage of share paticipation. For the other information, as number of employees and legal lawsuits, the informations were available in full numbers. | ||||||
Responsible: Antônio Carlos Bassalo, phone: 55-19-3756-8018, bassalo@cpfl.com.br |
(*) Information not reviewed by the independent auditors.
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17.01 REPORT ON SPECIAL REVIEW-UNQUALIFIED
(Convenience Translation into English from the Original Previously Issued in Portuguese)
To
The Shareholders and Directors
CPFL Energia S.A.
São Paulo - SP
1 We have reviewed the accompanying quarterly financial information individual and consolidated of CPFL Energia S.A. as of and for the quarter ended June 30, 2008, comprising the balance sheet, and the statements of income, cash flows and added value, the performance reports and relevant information, prepared under the responsibility of the Companys Management.
2 The quarterly financial information of the jointly-owned indirect subsidiary BAESA - Energética Barra Grande S.A. as of June 30, 2008 was reviewed by other independent auditors, who issued a qualified special review report on July 22, 2008, with respect to registering in April 2008, the liability resulted from acquisition of energy in February 2008. If BAESA had recorded the effects of the aforementioned liability on accrual basis, its statement of income as of June 30, 2008 should be increased in R$ 1,123 thousand, and the effect in the statement of income of the indirect controlling company CPFL Energia S.A. would be an increase of R$ 280 thousand. CPFL Energia S.A. values its indirect interest in BAESA - Energética Barra Grande S.A. by the equity method of accounting and consolidates this investment by the proportional consolidation method. As of June 30, 2008, the balance of this investment is R$ 140,483 thousand, and the equity in income of subsidiaries and associated companies of this investment in the net income for this three-month period is a profit of R$ 5,166 thousand. The quarterly financial information of this indirect investee included in the consolidated quarterly financial information presents proportional assets of R$ 376,048 thousand as of June 30, 2008. Our report, in relation to the amounts generated by this company during the aforementioned three-month period is based exclusively on the report of the review conducted by the independent auditors of BAESA - Energética Barra Grande S.A.
3 Our review was conducted in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON) and the Federal Accounting Council (CFC), which consisted mainly of (a) inquiries of and discussions with persons responsible for the accounting, financial and operating areas of the Company and its subsidiaries about the main criteria adopted in preparing the quarterly financial information, and (b) review of the information and subsequent events that have or may have material effects on the financial position and operations of the Company and its subsidiaries.
79
4 Based on our special review and the review report issued by other independent auditors, we are not aware of any material modifications that should be made to the quarterly financial information mentioned in paragraph 1 for it to be in conformity with the regulations issued by the Brazilian Securities Commission (CVM), specifically applicable to the preparation of mandatory quarterly financial information, including the CVM instruction 469/08.
5 As described in Note 29, Law 11638 was published on December 28, 2007, applicable as from January 1, 2008. This Law amended, revoked and introduced new provisions to Law 6404/76 (Corporation Law) and has introduced changes in accounting practices adopted in Brazil. Although the aforementioned Law has already come into force, some of its changes introduced depend on regulation by regulatory agencies, in order to be applied by the companies. Even so, as mentioned in Note 29, the Company, exclusively for compliance with the provisions contained in CVM Instruction 469 dated May 2, 2008, analyzed the impacts caused by Law 11638/2007 in its financial statements of the first semester of 2008, comparatively with the same period of 2007, and no significant effects were identified. Therefore, the aforementioned accounting information was prepared in accordance with specific instructions of CVM exclusively for compliance with the provisions contained in CVM Instruction 469 dated May 2, 2008, and do not consider the amendments in the accounting practices introduced by Law 11638/2007 which have not been regulated yet.
6 As mentioned in Note 3, item (b.2) to the quarterly financial information, as result of the second periodical tariff review established on the concession agreement, the Brazilian Electricity Agency (ANEEL) ratified, on a temporary basis, the percentage to be applied to the tariffs of its directs subsidiaries, Companhia Piratininga de Força e Luz, Companhia Paulista de Força e Luz, Rio Grande Energia S.A. and Companhia Luz e Força Santa Cruz and its indirect subsidiaries of CPFL Jaguariuna group, Companhia Paulista de Energia Elétrica, Companhia Sul Paulista de Energia Elétrica, Companhia Jaguari de Energia and Companhia Luz e Força Mococa. The possible effects resulting from this final review, if any, will be recorded in the Companys equity and financial position in subsequent periods.
July 23, 2008
KPMG Auditores Independentes
CRC 2SP014428/O-6
Jarib Brisola Duarte Fogaça Accountant
CRC 1SP125991/O-0
80
18.02 COMMENTS ON PERFORMANCE OF SUBSIDIARIES
Subsidiary: COMPANHIA PAULISTA DE FORÇA E LUZ - CPFL |
The subsidiary Companhia Paulista de Força e Luz - CPFL is a public company and its Comments on the performance in this quarter are attached in the Interim Financial Statements as of June 30, 2008, filed at CVM (Brazilian Securities Commission).
81
18.02 COMMENTS ON PERFORMANCE OF SUBSIDIARIES
Subsidiary: CPFL GERAÇÃO DE ENERGIA S.A. |
The subsidiary CPFL Geração de Energia S.A. is a public company and its Comments on the performance in this quarter (the Company and Consolidated) are attached in the Interim Financial Statements as of June 30, 2008, filed at CVM (Brazilian Securities Commission).
82
Subsidiary
CPFL COMERCIALIZAÇÃO BRASIL S/A
18.01 INCOME STATEMENT OF SUBSIDIARY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 04/01/2008 to 06/30/2008 |
4 - 01/01/2008 to 06/30/2008 |
5 - 04/01/2007 to 06/30//2007 |
6 - 01/01/2007 to 06/30/2007 |
3.01 | Operating revenues | 467,932 | 903,044 | 460,627 | 909,061 |
3.02 | Deductions from operating revenues | (70,596) | (139,504) | (64,439) | (126,551) |
3.02.01 | ICMS | (28,494) | (58,385) | (22,691) | (43,475) |
3.02.02 | PIS | (7,448) | (14,332) | (7,418) | (14,768) |
3.02.03 | COFINS | (34,306) | (66,008) | (34,171) | (68,023) |
3.02.04 | ISS | (348) | (779) | (159) | (285) |
3.03 | Net operating revenues | 397,336 | 763,540 | 396,188 | 782,510 |
3.04 | Cost of sales and/or services | (321,993) | (643,070) | (312,509) | (583,183) |
3.04.01 | Electricity purchased for resale | (314,280) | (625,733) | (306,068) | (573,119) |
3.04.02 | Electricity network usage charges | (398) | (430) | 0 | 0 |
3.04.03 | Material | (648) | (1,387) | (729) | (849) |
3.04.04 | Outsourced services | (6,667) | (15,520) | (5,712) | (9,215) |
3.05 | Gross operating income | 75,343 | 120,470 | 83,679 | 199,327 |
3.06 | Operating expenses/income | (5,514) | (16,010) | (3,342) | (6,505) |
3.06.01 | Sales and Marketing | (5,337) | (10,510) | (4,313) | (8,580) |
3.06.02 | General and administrative | (175) | (3,759) | (72) | (112) |
3.06.03 | Financial | (2) | (1,741) | 1,043 | 2,187 |
3.06.03.01 | Financial income | 3,440 | 7,574 | 3,562 | 7,315 |
3.06.03.02 | Financial expenses | (3,442) | (9,315) | (2,519) | (5,128) |
3.06.03.02.01 | Goodwill amortization | (3) | (6) | (3) | (6) |
3.06.03.02.02 | Other financial expenses | (3,439) | (9,309) | (2,516) | (5,122) |
83
CPFL COMERCIALIZAÇÃO BRASIL S/A
18.01 INCOME STATEMENT OF SUBSIDIARY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 04/01/2008 to 06/30/2008 |
4 - 01/01/2008 to 06/30/2008 |
5 - 04/01/2007 to 06/30//2007 |
6 - 01/01/2007 to 06/30/2007 |
3.06.05 | Other operating expense | 0 | 0 | 0 | 0 |
3.06.06 | Equity in subsidiaries | 0 | 0 | 0 | 0 |
3.07 | Income from operations | 69,829 | 104,460 | 80,337 | 192,822 |
3.08 | Nonoperating income (expense) | 0 | 0 | 0 | 0 |
3.08.01 | Income | 0 | 0 | 0 | 0 |
3.08.02 | Expenses | 0 | 0 | 0 | 0 |
3.09 | Income before taxes on income and minority interest | 69,829 | 104,460 | 80,337 | 192,822 |
3.10 | Income tax and social contribution | (22,918) | (54,854) | (26,082) | (64,173) |
3.10.01 | Social contribution | (6,126) | (14,643) | (6,938) | (17,028) |
3.10.02 | Income tax | (16,792) | (40,211) | (19,144) | (47,145) |
3.11 | Deferred income tax and social contribution | 971 | 23,381 | 0 | 0 |
3.11.01 | Social contribution | 257 | 6,172 | 0 | 0 |
3.11.02 | Income tax | 714 | 17,209 | 0 | 0 |
3.12 | Statutory profit sharing/contributions | 0 | 0 | 0 | 0 |
3.12.01 | Profit sharing | 0 | 0 | 0 | 0 |
3.12.02 | Contributions | 0 | 0 | 0 | 0 |
3.13 | Reversal of interest on shareholders equity | 0 | 0 | 0 | 0 |
3.15 | Net income (loss) for the period | 47,882 | 72,987 | 54,255 | 128,649 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 2,998,565 | 2,998,565 | 2,998,565 | 2,998,565 | |
EARNINGS PER SHARE | 15.96830 | 24.34064 | 18.09365 | 42.90352 | |
LOSS PER SHARE |
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18.02 COMMENTS ON PERFORMANCE OF SUBSIDIARIES
Subsidiary: CPFL COMERCIALIZAÇÃO BRASIL S.A. |
Gross Revenue
The Gross revenue for the 2nd quarter of 2008, which includes the operations of the subsidiaries CLION, Sul Geradora and Cone Sul, was R$ 467,932, an increase of R$ 7,305 (1.6%) in relation to the same quarter of 2007. The reason for this increase is the fact that Cone Suls operations were consolidated in CPFL Brasil as from May 2007.
Net Income and EBITDA
Net income of R$ 47,882 was recorded in the 2nd quarter of 2008, down R$ 6,373 (11.6%) on the same quarter of 2007. The main reasons for this decrease are: i) the increase of R$ 8,610 in the cost of energy purchased, due to the increase of 26.5% in the average purchase price; and ii) the increase of some R$ 1,573 in the cost of outsourced services.
EBITDA (net income before financial income, income tax and social contribution, depreciation and amortization) for the 2nd quarter of 2008 was R$ 70,356, a decrease of 11.6% in relation to the same quarter of 2007, which amounted to R$ 79,620 (information not reviewed by the Independent Auditors).
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Subsidiary: CPFL PIRATININGA DE FORÇA E LUZ |
The subsidiary CPFL Piratininga de Força e Luz is a public company and its Comments on the performance in this quarter are attached in the Interim Financial Statements as of June 30, 2008, filed at CVM (Brazilian Securities Commission).
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Subsidiary: RIO GRANDE ENERGIA S.A. |
The subsidiary Rio Grande Energia S.A. is a public company and its Comments on the performance in this quarter are attached in the Interim Financial Statements as of June 30, 2008, filed at CVM (Brazilian Securities Commission).
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SUMMARY
Group | Table | Description | Page |
01 | 01 | IDENTIFICATION | 1 |
01 | 02 | HEAD OFFICE | 1 |
01 | 03 | INVESTOR RELATIONS OFFICER (Company Mailing Address) | 1 |
01 | 04 | ITR REFERENCE AND AUDITOR INFORMATION | 1 |
01 | 05 | CAPITAL STOCK | 2 |
01 | 06 | COMPANY PROFILE | 2 |
01 | 07 | COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS | 2 |
01 | 08 | CASH DIVIDENDS | 2 |
01 | 09 | SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR | 3 |
01 | 10 | INVESTOR RELATIONS OFFICER | 3 |
02 | 01 | BALANCE SHEET ASSETS | 4 |
02 | 02 | BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY | 5 |
03 | 01 | INCOME STATEMENT | 7 |
04 | 01 | NOTES TO THE INTERIM FINANCE STATEMENTS | 10 |
05 | 01 | COMMENTS ON PERFORMANCE IN THE QUARTER | 56 |
06 | 01 | CONSOLIDATED BALANCE SHEET - ASSETS | 57 |
06 | 02 | CONSOLIDATED BALANCE SHEET - LIABILITIES & SHAREHOLDERS' EQUITY | 58 |
07 | 01 | CONSOLIDATED INCOME STATEMENT | 60 |
08 | 01 | COMMENTS ON CONSOLIDATED PERFORMANCE OF THE QUARTER | 63 |
09 | 01 | INVESTMENTS IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES | 67 |
10 | 01 | CHARACTERISTICS OF PUBLIC OR PRIVATE ISSUE OF DEBENTURES | 68 |
15 | 01 | INVESTMENTS | 69 |
16 | 01 | OTHER IMPORTANT INFORMATION ON THE COMPANY | 70 |
17 | 01 | REPORT ON SPECIAL REVIEW-UNQUALIFIED | 79 |
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 81 |
COMPANHIA PAULISTA DE FORÇA E LUZ - CPFL | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 82 |
CPFL GERAÇÃO DE ENERGIA S.A. | |||
18 | 01 | INCOME STATEMENT OF SUBSIDIARIES | 83 |
CPFL COMERCIALIZAÇÃO BRASIL LTDA | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 85 |
CPFL COMERCIALIZAÇÃO BRASIL LTDA | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 86 |
COMPANHIA PIRATININGA DE FORÇA E LUZ | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 87 |
RIO GRANDE ENERGIA S.A. |
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CPFL ENERGIA S.A.
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By: | /S/
JOSÉ ANTONIO DE ALMEIDA FILIPPO
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Name: Title: |
José Antonio de Almeida Filippo
Chief Financial Officer and Head of Investor Relations
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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.