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)
Registration Form 2011 CPFL ENERGIA S.A. Version: 1
Summary
Registration data | |
General information | 1 |
Address | 2 |
Marketable securities | 2 |
Auditor | 2 |
Share registrer | 3 |
Investor Relations Officer or equivalent | 3 |
Shareholders Department | 3 |
(Free Translation of the original in Portuguese)
Registration Form 2011 CPFL ENERGIA S.A. Version: 1
1 - General information
Company Name: CPFL ENERGIA S.A.
Initial Company name: 08/06/2002
Type of participant: Publicly quoted corporation
Previous
company name: Draft II Participações S.A
Date of Incorporation: 03/20/1998
CNPJ (Federal Tax ID): 02.429.144/0001-93
CVM CODE: 01866-0
Registration
Date CVM: 05/18/2000
State of CVM
Registration: Active
Starting date
of situation: 05/18/2000
Country: Brasil
Country in which the
marketable securities
are held in custody: Brasil
Foreign countries in
which the marketable
securities are accepted
for trading
Country Date of admission
United States 09/20/2004
Sector of activity: Holding ( Electric Energy)
Description of activity: Holdings
Issuers Category: Category A
Registration Date
on actual category: 01/01/2010
Issuers Situation: Operational
Starting date
of situation: 05/18/2000
Type of share control: Private Holding
Date of last change of
share control: 11/30/2009
Date of last change
of company year:
1
(Free Translation of the original in Portuguese)
Registration Form 2011 CPFL ENERGIA S.A. Version: 1
Day/Month of
year end: 31/12
Web address: www.cpfl.com.br
Newspapers in which
issuer discloses its information: Name of paper Jornal in which issuer discloses its information FU | |
Valor Econômico SP |
2 - ADDRESS
3 - MARKETABLE SECURITIES
Trading mkt Managing body Start date End Segment Start date End
Stock Exchange BM&FBOVESPA 05/18/2000 New Market 9/29/2004
Trading mkt Managing body Start date End Segment Start date End
Organized
Market CETIP 05/11/2000 Traditional 05/11/2000
4 - AUDITOR INFORMATION
Is there an auditor? Yes
CVM CODE: 418-9
Type of Auditor: Brazilian
INDEPENDENT ACCOUNTANT: KPMG Auditores Independentes
CNPJ: 57.755.217/0011-09
Service Provision Period: 04/01/2007
PARTNER IN CHARGE Service Provision Period CPF (INDIVIDUAL TAX ID)
Jarib Brisola Duarte Fogaça 04/01/2007 012.163.378-02
2
(Free Translation of the original in Portuguese)
Registration Form 2011 CPFL ENERGIA S.A. Version: 1
5 SHARE REGISTRER
Do you have service provider: Yes
Corporate Name: Banco Bradesco S.A
CNPJ: 60.746.948/0001-12
Service Provision Period: 01/17/2002 a 12/31/2010
Address: Cidade de Deus Prédio Amarelo Velho, 2ª floor, Vila Yara, Osasco, SP, Brasil, ZIP CODE: 06029-900, Telephone (011) 36849441, FAX: (011) 36842811, e-mail: 4010.acoes@bradesco.com.br
Corporate Name: Banco do Brasil
CNPJ: 00.000.000/0001-91
Service Provision Period: 01/01/2011
Address: Rua Lélio Gama, 105 38º floor, Gecin, Centro, Rio de Janeiro, RJ, Brasil, ZIP CODE: 20031-080, Telephone (021) 38083551, FAX: (021) 38086088, e-mail: aescriturais@bb.com.br
6 INVESTOR RELATIONS OFFICER OR EQUIVALENT
NAME: Wilson P. Ferreira Junior
Director of Investor Relations
CNPJ: 012.217.298-10
Address: Rodovia Campinas Mogi Mirim, Km 2,5, Jardim Santana, Campinas, SP, ZIP CODE: 13088-900, Telephone (019) 3756-8700, FAX: (019) 3756-8075, e-mail: wferreira@cpfl.com.br
Start date of activity: 03/09/2010
End date of activity:
7 SHAREHOLDERS DEPARTMENT
Contact Gustavo Estrella
Start date of activity: 03/09/2010
End date of activity:
Address: Rodovia Campinas Mogi Mirim, Km 2,5, Jardim Santana, Campinas, SP, ZIP CODE: 13088-900, Telephone (019) 3756-8700, FAX: (019) 3756-8075, e-mail: gustavoestrella@cpfl.com.br
3
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Table of Contents
Identification of Company | |
Capital Stock |
1 |
Cash dividend |
1 |
DFP | |
Balance Sheet Assets |
2 |
Balance Sheet Liabilities |
3 |
Income Statement |
4 |
Cash Flow Statements |
5 |
Statement of Changes in Shareholders Equity |
|
01/01/2010 to 12/31/2010 |
6 |
01/01/2009 to 12/31/2009 |
7 |
Statements of Added Value |
8 |
Consolidated |
|
Balance Sheet Assets |
9 |
Balance Sheet Liabilities |
10 |
Income Statement |
11 |
Cash Flow Statements |
12 |
Statement of Changes in Shareholders Equity | |
01/01/2010 to 12/31/2010 |
13 |
01/01/2009 to 12/31/2009 |
14 |
Statements of Added Value |
15 |
Management Report / Comments on Performance | |
Notes to Financial Statements | |
Reports |
|
Independent Auditors Unqualified Report | |
Report of the Audit Committee | |
Management Declaration on financial Statements |
|
Management Declaration on Independent Auditors Report |
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Identification of Company / Capital Stock
Number of Shares (in units) |
Closing date 12/31/2010 |
Paid in Capital | |
Common |
481,137,130 |
Preferred |
0 |
Total |
481,137,130 |
Treasury Stock | |
Common |
0 |
Preferred |
0 |
Total |
0 |
Identification of Company/ Cash dividend
Event |
Approval |
Type |
Beginning of Payment |
Type of Share |
Class of share |
Amount per Share (Reais/share) |
AGM |
04/26/2010 |
Dividend |
04/30/2010 |
ON (Common shares) |
|
1.36487 |
RCA |
08/11/2010 |
Dividend |
09/30/2010 |
ON (Common shares) |
|
1.60958 |
RCA |
03/23/2011 |
Dividend |
|
ON (Common shares) |
|
1.01019 |
1
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
BALANCE SHEET - ASSETS (in thousands of Brazilian reais R$)
Code |
Description |
12/31/2010 |
12/31/2009 |
12/31/2008 |
1 |
Total assets |
7,041,920 |
6,841,525 |
6,415,251 |
1.01 |
Current assets |
601,636 |
507,356 |
255,206 |
1.01.01 |
Cash and cash equivalents |
110,958 |
219,126 |
15,702 |
1.01.02 |
Financial Investments |
42,533 |
39,253 |
38,249 |
1.01.02.02 |
Financial Investments at amortized cost |
42,533 |
39,253 |
38,249 |
1.01.02.02.01 |
Held for trade |
42,533 |
39,253 |
38,249 |
1.01.06 |
Recoverable taxes |
34,992 |
44,310 |
37,160 |
1.01.06.01 |
Current Recoverable taxes |
34,992 |
44,310 |
37,160 |
1.01.08 |
Other current assets |
413,153 |
204,667 |
164,095 |
1.01.08.03 |
Other |
413,153 |
204,667 |
164,095 |
1.01.08.03.01 |
Other credits |
505 |
2,643 |
5,892 |
1.01.08.03.02 |
Dividends and interest on shareholders equity |
412,648 |
201,772 |
158,203 |
1.01.08.03.03 |
Derivatives |
0 |
252 |
0 |
1.02 |
Noncurrent assets |
6,440,284 |
6,334,169 |
6,160,045 |
1.02.01 |
Long - term assets |
272,797 |
327,471 |
675,210 |
1.02.01.02 |
Financial Investments at amortized cost |
39,216 |
62,179 |
87,117 |
1.02.01.02.01 |
Held to maturity |
39,216 |
62,179 |
87,117 |
1.02.01.06 |
Deferred taxes |
177,729 |
176,199 |
127,556 |
1.02.01.06.02 |
Deferred taxes credits |
177,729 |
176,199 |
127,556 |
1.02.01.08 |
Related parties |
14,875 |
25,102 |
1,045 |
1.02.01.08.02 |
Subsidiaries |
14,875 |
25,102 |
1,045 |
1.02.01.09 |
Other noncurrent assets |
40,977 |
63,991 |
459,492 |
1.02.01.09.03 |
Escrow deposits |
10,676 |
9,810 |
8 |
1.02.01.09.04 |
Recoverable taxes |
2,787 |
2,787 |
2,787 |
1.02.01.09.05 |
Other credits |
27,514 |
51,394 |
456,697 |
1.02.02 |
Investments |
6,167,075 |
6,006,277 |
5,484,445 |
1.02.02.01 |
Permanent equity interests |
6,167,075 |
6,006,277 |
5,484,445 |
1.02.02.01.02 |
Investments in subsidiares |
6,167,075 |
6,006,277 |
5,484,445 |
1.02.03 |
Property, plant and equipment |
157 |
1 |
10 |
1.02.04 |
Intangible assets |
255 |
420 |
380 |
2
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
BALANCE SHEET ( LIABILITIES - in thousands of Brazilian reais R$)
Code |
Description |
12/31/2010 |
12/31/2009 |
12/31/2008 |
2 |
Total liabilities |
7,041,920 |
6,841,525 |
6,415,251 |
2.01 |
Current liabilities |
41,239 |
40,149 |
41,016 |
2.01.01 |
Social and Labor Obligations |
204 |
78 |
100 |
2.01.01.02 |
Labor Obligations |
204 |
78 |
100 |
2.01.01.02.01 |
Estimated Labor Obligation |
204 |
78 |
100 |
2.01.02 |
Suppliers |
1,768 |
2,658 |
1,810 |
2.01.02.01 |
Local Suppliers |
1,768 |
2,658 |
1,810 |
2.01.03 |
Tax Obligations |
437 |
102 |
63 |
2.01.03.01 |
Federal Tax Obligations |
437 |
102 |
63 |
2.01.03.01.02 |
Other |
437 |
102 |
63 |
2.01.04 |
Loans and financing |
15,529 |
12,788 |
20,047 |
2.01.04.02 |
Debentures |
15,529 |
12,788 |
20,047 |
2.01.04.02.01 |
Interest on debentures |
15,529 |
12,788 |
20,047 |
2.01.05 |
Other Current liabilities |
23,301 |
24,523 |
18,996 |
2.01.05.02 |
Other |
23,301 |
24,523 |
18,996 |
2.01.05.02.01 |
Dividends and interest on shareholders equity |
16,360 |
17,036 |
16,764 |
2.01.05.02.04 |
Derivatives |
123 |
0 |
365 |
2.01.05.02.05 |
Other payable |
6,818 |
7,487 |
1,867 |
2.02 |
Noncurrent liabilities |
506,973 |
532,028 |
581,552 |
2.02.01 |
Loans and financing |
450,000 |
450,000 |
450,000 |
2.02.01.02 |
Debentures |
450,000 |
450,000 |
450,000 |
2.02.02 |
Other Noncurrent liabilities |
46,307 |
72,228 |
64,676 |
2.02.02.02 |
Other |
46,307 |
72,228 |
64,676 |
2.02.02.02.03 |
Derivatives |
460 |
1,056 |
961 |
2.02.02.02.04 |
Other payable |
45,847 |
71,172 |
63,715 |
2.02.04 |
Provisons |
10,666 |
9,800 |
66,876 |
2.02.04.01 |
Civil, Labor, Social and Tax Provisions |
10,666 |
9,800 |
66,876 |
2.02.04.01.01 |
Tax Provisions |
10,666 |
9,800 |
66,876 |
2.03 |
Shareholders equity |
6,493,708 |
6,269,348 |
5,792,683 |
2.03.01 |
Capital |
4,793,424 |
4,741,175 |
4,741,175 |
2.03.02 |
Capital reserves |
16 |
16 |
16 |
2.03.04 |
Profit reserves |
904,705 |
996,768 |
883,533 |
2.03.04.01 |
Legal reserves |
418,665 |
341,751 |
277,428 |
2.03.04.08 |
Additional Proposed dividend |
486,040 |
655,017 |
606,105 |
2.03.05 |
Accumulated profit or loss |
0 |
(234,278) |
(631,911) |
2.03.06 |
Revaluation Reserve |
795,563 |
765,667 |
799,870 |
2.06.06.01 |
Revaluation Reserve |
795,563 |
765,667 |
799,870 |
3
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
3.01 |
Net revenues |
1,795 |
4 |
0 |
3.03 |
Operating income |
1,795 |
4 |
0 |
3.04 |
Operating income (expense) |
1,575,292 |
1,649,146 |
0 |
3.04.02 |
General and administrative |
(34,676) |
(18,339) |
0 |
3.04.05 |
Other |
(145,302) |
(150,114) |
0 |
3.04.06 |
Equity in subsidiaries |
1,755,270 |
1,817,599 |
0 |
3.05 |
Income before financial income and taxes |
1,577,087 |
1,649,150 |
0 |
3.06 |
Financial income / expense |
(3,287) |
(29,516) |
0 |
3.06.01 |
Financial income |
92,941 |
37,184 |
0 |
3.06.02 |
Financial expense |
(96,228) |
(66,700) |
0 |
3.07 |
Income before taxes |
1,573,800 |
1,619,634 |
0 |
3.08 |
Income tax and social contribution |
(35,519) |
37,663 |
0 |
3.08.01 |
Current |
(37,052) |
(18,568) |
0 |
3.08.02 |
Deferred |
1,533 |
56,231 |
0 |
3.09 |
Net income from continuing operations |
1,538,281 |
1,657,297 |
0 |
3.11 |
Net income |
1,538,281 |
1,657,297 |
0 |
3.99 |
Net Income per Share (Reais) |
|
|
|
3.99.01 |
Basic earnings per share |
|
|
|
3.99.01.01 |
Common shares |
3.19977 |
3.45334 |
0.0000 |
4
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
STATEMENTS OF CASH FLOW INDIRECT METHOD (in thousands of Brazilian reais R$)
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
6.01 |
Net cash from operating activities |
1,272,229 |
1,298,906 |
0 |
6.01.01 |
Cash generated from operations |
(14,486) |
2,573 |
0 |
6.01.01.01 |
Net income, including income tax and social contribution |
1,573,800 |
1,619,634 |
0 |
6.01.01.02 |
Depreciation and amortization |
145,452 |
148,868 |
0 |
6.01.01.03 |
Reserve for contingencies |
0 |
9,800 |
0 |
6.01.01.04 |
Interest and monetary and exchange restatement |
21,532 |
40,500 |
0 |
6.01.01.06 |
Equity in subsidiaries |
(1,755,270) |
(1,817,599) |
0 |
6.01.01.07 |
Losses on disposal of noncurrent assets |
0 |
1,370 |
0 |
6.01.02 |
Variation on assets and liabilities |
1,286,715 |
1,296,333 |
0 |
6.01.02.01 |
Dividend and interest on shareholders equity received |
1,317,799 |
1,423,009 |
0 |
6.01.02.02 |
Recoverable taxes |
38,945 |
22,812 |
0 |
6.01.02.03 |
Escrow deposits |
0 |
(9,450) |
0 |
6.01.02.04 |
Intercompany loans with subsidiaries and associated companies |
10,227 |
0 |
0 |
6.01.02.05 |
Other operating assets |
(309) |
(3,580) |
0 |
6.01.02.06 |
Suppliers |
(890) |
848 |
0 |
6.01.02.07 |
Taxes and social contributions paid |
(38,003) |
(21,215) |
0 |
6.01.02.08 |
Other taxes and social contributions |
3,295 |
2,688 |
0 |
6.01.02.09 |
Interest on debts (paid) |
(44,895) |
(52,998) |
0 |
6.01.02.10 |
Other operating liabilities |
546 |
(65,781) |
0 |
6.02 |
Net cash in investing activities |
43,351 |
77,649 |
0 |
6.02.01 |
Decrease of capital in subsidiaries |
0 |
60,236 |
0 |
6.02.02 |
Acquisition of property, plant and equipment |
2 |
0 |
0 |
6.02.03 |
Financial investments |
43,627 |
41,709 |
0 |
6.02.04 |
Acquisition of intangible assets |
0 |
(99) |
0 |
6.02.05 |
Sale of noncurrent assets |
(45) |
0 |
0 |
6.02.06 |
Advances for future capital increase |
0 |
(140) |
0 |
6.02.07 |
Intercompany loans with subsidiaries and associated companies |
0 |
(24,057) |
0 |
6.02.08 |
Other |
(233) |
0 |
0 |
6.03 |
Net cash in financing activities |
(1,423,748) |
(1,173,131) |
0 |
6.03.01 |
Payments of Loans, financing and debentures , net of derivatives |
(198) |
(170) |
0 |
6.03.02 |
Dividend and interest on shareholders equity paid |
(1,423,550) |
(1,172,961) |
0 |
6.05 |
Increase (decrease) in cash and cash equivalents |
(108,168) |
203,424 |
0 |
6.05.01 |
Cash and cash equivalents at beginning of period |
219,126 |
15,702 |
0 |
6.05.02 |
Cash and cash equivalents at end of period |
110,958 |
219,126 |
0 |
5
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
Capital |
Capital Reserves |
Profit Reserves |
Retained earnings |
Other comprehensive income |
Shareholders Equity Total |
5.01 |
Opening balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
5.03 |
Adjusted balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
5.04 |
Capital transactions within shareholders |
52,249 |
0 |
(655,017) |
(768,023) |
0 |
(1,370,791) |
5.04.01 |
Capital Increase/Decrease |
52,249 |
0 |
0 |
0 |
0 |
52,249 |
5.04.06 |
Dividend |
0 |
0 |
0 |
(774,429) |
0 |
(774,429) |
5.04.08 |
Dividends proposal approval |
0 |
0 |
(655,017) |
0 |
0 |
(655,017) |
5.04.09 |
Prescribed dividend |
0 |
0 |
0 |
6,406 |
0 |
6,406 |
5.05 |
Total comprehensive income |
0 |
0 |
0 |
1,565,255 |
29,896 |
1,595,151 |
5.05.01 |
Net income / Loss for the period |
0 |
0 |
0 |
1,538,281 |
0 |
1,538,281 |
5.05.02 |
Other comprehensive income |
0 |
0 |
0 |
26,974 |
29,896 |
56,870 |
5.05.02.03 |
Equity valuation adjustments |
0 |
0 |
0 |
26,974 |
29,896 |
56,870 |
5.06 |
Internal changes of shareholders equity |
0 |
0 |
562,954 |
(562,954) |
0 |
0 |
5.06.01 |
Constitution/Realization of capital reserve |
0 |
0 |
76,914 |
(76,914) |
0 |
0 |
5.06.04 |
Dividend proposed |
0 |
0 |
486,040 |
(486,040) |
0 |
0 |
5.07 |
Final balance |
4,793,424 |
16 |
904,705 |
0 |
795,563 |
6,493,708 |
6
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
Capital |
Capital Reserves |
Profit Reserves |
Retained earnings |
Other comprehensive income |
Shareholders Equity Total |
5.01 |
Opening balance |
4,741,175 |
16 |
883,533 |
(631,911) |
799,870 |
5,792,683 |
5.03 |
Adjusted balance |
4,741,175 |
16 |
883,533 |
(631,911) |
799,870 |
5,792,683 |
5.04 |
Capital transactions within shareholders |
0 |
0 |
(606,105) |
(567,130) |
0 |
(1,173,235) |
5.04.06 |
Dividend |
0 |
0 |
0 |
(571,671) |
0 |
(571,671) |
5.04.08 |
Dividends proposal approval |
0 |
0 |
(606,105) |
0 |
0 |
(606,105) |
5.04.09 |
Prescribed dividend |
0 |
0 |
0 |
4,541 |
0 |
4,541 |
5.05 |
Total comprehensive income |
0 |
0 |
0 |
1,684,103 |
(34,203) |
1,649,900 |
5.05.01 |
Net income / Loss for the period |
0 |
0 |
0 |
1,657,297 |
0 |
1,657,297 |
5.05.02 |
Other comprehensive income |
0 |
0 |
0 |
26,806 |
(34,203) |
(7,397) |
5.05.02.03 |
Equity valuation adjustments |
0 |
0 |
0 |
26,806 |
(34,203) |
(7,397) |
5.06 |
Internal changes of shareholders equity |
0 |
0 |
719,340 |
(719,340) |
0 |
0 |
5.06.01 |
Constitution/Realization of capital reserve |
0 |
0 |
64,323 |
(64,323) |
0 |
0 |
5.06.04 |
Dividend proposed |
0 |
0 |
655,017 |
(655,017) |
0 |
0 |
5.07 |
Final balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
7
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
7.01 |
Revenues |
1,971 |
103 |
0 |
7.01.01 |
Sales of goods, products and services |
1,971 |
4 |
0 |
7.01.03 |
Revenues related to the construction of own assets |
0 |
99 |
0 |
7.02 |
Inputs |
(30,554) |
(17,104) |
0 |
7.02.02 |
Material-Energy-Outsourced services-Other |
(19,499) |
(7,900) |
0 |
7.02.04 |
Other |
(11,055) |
(9,204) |
0 |
7.03 |
Gross added value |
(28,583) |
(17,001) |
0 |
7.04 |
Retentions |
(145,452) |
(148,868) |
0 |
7.04.01 |
Depreciation and amortization |
(150) |
(119) |
0 |
7.04.02 |
Other |
(145,302) |
(148,749) |
0 |
7.04.02.01 |
Intangible concession asset - amortization |
(145,302) |
(148,749) |
0 |
7.05 |
Net added value generated |
(174,035) |
(165,869) |
0 |
7.06 |
Added value received in transfer |
1,866,476 |
1,873,259 |
0 |
7.06.01 |
Equity in subsidiaries |
1,755,270 |
1,817,599 |
0 |
7.06.02 |
Financial expense |
111,206 |
55,660 |
0 |
7.07 |
Added Value to be Distributed |
1,692,441 |
1,707,390 |
0 |
7.08 |
Distribution of Added Value |
1,692,441 |
1,707,390 |
0 |
7.08.01 |
Personnel |
3,293 |
1,997 |
0 |
7.08.01.01 |
Direct Remuneration |
3,055 |
1,857 |
0 |
7.08.01.02 |
Benefits |
131 |
49 |
0 |
7.08.01.03 |
Government severance indemnity fund for employees - F.G.T.S. |
107 |
91 |
0 |
7.08.02 |
Taxes, Fees and Contributions |
54,548 |
(18,661) |
0 |
7.08.02.01 |
Federal |
54,532 |
(18,666) |
0 |
7.08.02.03 |
Municipal |
16 |
5 |
0 |
7.08.03 |
Remuneration on third parties capital |
96,319 |
66,757 |
0 |
7.08.03.01 |
Interest |
96,195 |
66,635 |
0 |
7.08.03.02 |
Rental |
124 |
122 |
0 |
7.08.04 |
Remuneration on own capital |
1,538,281 |
1,657,297 |
0 |
7.08.04.02 |
Dividends |
1,254,063 |
1,222,147 |
0 |
7.08.04.03 |
Retained earnings / losses |
284,218 |
435,150 |
0 |
8
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
12/31/2010 |
12/31/2009 |
12/31/2008 |
1 |
Total assets |
20,056,805 |
18,490,759 |
17,727,256 |
1.01 |
Current assets |
3,898,188 |
3,649,296 |
2,755,105 |
1.01.01 |
Cash and cash equivalents |
1,562,895 |
1,487,243 |
758,454 |
1.01.02 |
Financial Investments |
42,533 |
39,253 |
38,249 |
1.01.02.02 |
Financial Investments at amortized cost |
42,533 |
39,253 |
38,249 |
1.01.02.02.01 |
Held for trade |
42,533 |
39,253 |
38,249 |
1.01.03 |
Accounts Receivable |
1,816,091 |
1,752,858 |
1,603,155 |
1.01.03.01 |
Consumers |
1,816,091 |
1,752,858 |
1,603,155 |
1.01.04 |
Materials and suppliers |
25,234 |
17,360 |
23,230 |
1.01.06 |
Recoverable taxes |
193,025 |
192,278 |
175,967 |
1.01.06.01 |
Current recoverable taxes |
193,025 |
192,278 |
175,967 |
1.01.08 |
Other current assets |
258,410 |
160,304 |
156,050 |
1.01.08.03 |
Other |
258,410 |
160,304 |
156,050 |
1.01.08.03.01 |
Other credits |
253,412 |
156,560 |
118,397 |
1.01.08.03.02 |
Derivatives |
244 |
795 |
36,520 |
1.01.08.03.03 |
Leases |
4,754 |
2,949 |
1,133 |
1.02 |
Noncurrent assets |
16,158,617 |
14,841,463 |
14,972,151 |
1.02.01 |
Long Term assets |
3,787,274 |
3,565,323 |
4,213,470 |
1.02.01.02 |
Financial Investments amortized at cost |
72,822 |
79,835 |
96,786 |
1.02.01.02.01 |
Held to Maturity |
72,822 |
79,835 |
96,786 |
1.02.01.03 |
Accounts Receivable |
195,739 |
224,887 |
278,330 |
1.02.01.03.01 |
Consumers |
195,739 |
224,887 |
278,330 |
1.02.01.06 |
Deferred taxes |
1,183,458 |
1,286,805 |
1,594,131 |
1.02.01.06.02 |
Deferred taxes credits |
1,183,458 |
1,286,805 |
1,594,131 |
1.02.01.09 |
Other noncurrent assets |
2,335,255 |
1,973,796 |
2,244,223 |
1.02.01.09.03 |
Derivatives |
82 |
7,881 |
396,875 |
1.02.01.09.04 |
Escrow deposits |
890,694 |
794,177 |
794,974 |
1.02.01.09.05 |
Recoverable taxes |
138,969 |
113,235 |
105,167 |
1.02.01.09.06 |
Leases |
26,314 |
21,243 |
5,256 |
1.02.01.09.07 |
Concession Financial assets |
934,646 |
674,029 |
582,241 |
1.02.01.09.08 |
Employee Pension Plan |
5,800 |
9,725 |
0 |
1.02.01.09.09 |
Investments at cost |
116,654 |
116,477 |
116,249 |
1.02.01.09.10 |
Other |
222,106 |
237,029 |
288,461 |
1.02.03 |
Property, Plant and Equipment |
5,786,466 |
5,213,039 |
4,706,537 |
1.02.03.01 |
Property, Plant and Equipment - in service |
4,989,236 |
3,909,585 |
3,982,149 |
1.02.03.03 |
Property, Plant and Equipment - in course |
797,230 |
1,303,454 |
724,388 |
1.02.04 |
Intangible assets |
6,584,877 |
6,063,101 |
6,052,144 |
1.02.04.01 |
Intangible assets |
6,584,877 |
6,063,101 |
6,052,144 |
9
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
CONSOLIDATED BALANCE SHEET LIABILITIES AND SHAREHOLDERS EQUITY (in thousands of Brazilian reais R$)
Code |
Description |
12/31/2010 |
12/31/2009 |
12/31/2008 |
2 |
Total liabilities |
20,056,805 |
18,490,759 |
17,727,256 |
2.01 |
Current liabilities |
4,428,324 |
3,422,933 |
3,263,030 |
2.01.01 |
Social and Labor Obligations |
58,688 |
50,898 |
46,384 |
2.01.01.02 |
Labor Obligations |
58,688 |
50,898 |
46,384 |
2.01.01.02.01 |
Estimated Labor Obligation |
58,688 |
50,898 |
46,384 |
2.01.02 |
Suppliers |
1,047,392 |
1,021,452 |
985,904 |
2.01.02.01 |
Local Suppliers |
1,047,392 |
1,021,452 |
985,904 |
2.01.03 |
Tax payable |
455,243 |
498,610 |
456,672 |
2.01.03.01 |
Federal Tax payable |
207,353 |
182,704 |
180,560 |
2.01.03.01.01 |
Income tax and social contribution payable |
108,085 |
88,063 |
108,419 |
2.01.03.01.02 |
PIS (Tax on Revenue) |
13,565 |
11,762 |
9,022 |
2.01.03.01.03 |
COFINS (Tax on Revenue) |
63,668 |
54,978 |
41,591 |
2.01.03.01.04 |
Other |
22,035 |
27,901 |
21,528 |
2.01.03.02 |
State Tax Obligations |
247,890 |
315,906 |
276,112 |
2.01.04 |
Loans and financing |
2,247,412 |
1,356,885 |
1,268,412 |
2.01.04.01 |
Loans and financing |
619,386 |
756,576 |
586,223 |
2.01.04.01.01 |
In local currency |
615,204 |
646,124 |
413,412 |
2.01.04.01.02 |
In foreigh currency |
4,182 |
110,452 |
172,811 |
2.01.04.02 |
Debentures |
1,628,026 |
600,309 |
682,189 |
2.01.04.02.01 |
Debentures |
1,509,960 |
499,025 |
580,076 |
2.01.04.02.02 |
Interest on Debentures |
118,066 |
101,284 |
102,113 |
2.01.05 |
Other Obligations |
619,589 |
495,088 |
505,658 |
2.01.05.02 |
Other |
619,589 |
495,088 |
505,658 |
2.01.05.02.01 |
Dividends and interest on equity |
23,815 |
25,284 |
17,512 |
2.01.05.02.04 |
Derivatives |
3,981 |
7,012 |
53,443 |
2.01.05.02.05 |
Employee pension plans |
40,103 |
44,484 |
45,257 |
2.01.05.02.06 |
Regulatory charges |
123,542 |
63,750 |
94,530 |
2.01.05.02.07 |
Public Utilities |
17,287 |
15,697 |
15,228 |
2.01.05.02.08 |
Other Payables |
410,861 |
338,861 |
279,688 |
2.02 |
Noncurrent liabilities |
8,878,825 |
8,531,047 |
8,413,380 |
2.02.01 |
Loans and financing |
7,159,311 |
6,542,638 |
6,187,133 |
2.02.01.01 |
Loans and financing |
4,946,997 |
3,791,469 |
4,160,243 |
2.02.01.01.01 |
In local currency |
4,481,420 |
2,740,587 |
2,662,783 |
2.02.01.01.02 |
In foreign currency |
465,577 |
1,050,882 |
1,497,460 |
2.02.01.02 |
Debenture |
2,212,314 |
2,751,169 |
2,026,890 |
2.02.02 |
Other Obligations |
1,150,481 |
1,405,755 |
1,568,878 |
2.02.02.02 |
Other |
1,150,481 |
1,405,755 |
1,568,878 |
2.02.02.02.03 |
Derivatives |
7,883 |
5,694 |
961 |
2.02.02.02.04 |
Employee pension plans |
570,878 |
723,286 |
801,964 |
2.02.02.02.05 |
Tax payable |
959 |
1,639 |
2,243 |
2.02.02.02.06 |
Public Utilities |
429,631 |
405,837 |
408,887 |
2.02.02.02.07 |
Other Payables |
141,130 |
226,644 |
269,512 |
2.02.02.02.08 |
Suppliers |
0 |
42,655 |
85,311 |
2.02.03 |
Deferred taxes |
277,767 |
282,010 |
274,842 |
2.02.03.01 |
Income tax and social contribution deferred |
277,767 |
282,010 |
274,842 |
2.02.04 |
Provisions |
291,266 |
300,644 |
382,527 |
2.02.04.01 |
Civil, Labor, Social and Tax Provisions |
291,266 |
300,644 |
382,527 |
2.02.04.01.01 |
Tax Provisions |
219,497 |
223,779 |
280,742 |
2.02.04.01.02 |
Labor and Social Provisions |
39,151 |
42,752 |
55,106 |
2.02.04.01.04 |
Civil Provisions |
32,618 |
34,113 |
46,679 |
2.03 |
Consolidated Shareholders Equity |
6,749,656 |
6,536,779 |
6,050,846 |
2.03.01 |
Capital |
4,793,424 |
4,741,175 |
4,741,175 |
2.03.02 |
Capital reserves |
16 |
16 |
16 |
2.03.04 |
Profit reservers |
904,705 |
996,768 |
883,533 |
2.03.04.01 |
Legal |
418,665 |
341,751 |
277,428 |
2.03.04.08 |
Additional Proposed Dividend |
486,040 |
655,017 |
606,105 |
2.03.05 |
Accumulated profit or loss |
0 |
(234,278) |
(631,911) |
2.03.06 |
Revaluation Reserve |
795,563 |
765,667 |
799,870 |
2.03.06.01 |
Revaluation Reserve |
795,563 |
765,667 |
799,870 |
2.03.09 |
Noncontrolling interests |
255,948 |
267,431 |
258,163 |
10
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
3.01 |
Net revenues |
12,023,729 |
11,358,006 |
0 |
3.02 |
Cost of electric energy services |
(8,340,963) |
(7,689,391) |
0 |
3.02.01 |
Cost of electric energy |
(6,222,490) |
(6,014,509) |
0 |
3.02.02 |
Operation cost |
(1,067,493) |
(1,053,938) |
0 |
3.02.03 |
Cost of services to third parties |
(1,050,980) |
(620,944) |
0 |
3.03 |
Operating income |
3,682,766 |
3,668,615 |
0 |
3.04 |
Operating expenses |
(943,451) |
(885,932) |
0 |
3.04.01 |
Sales |
(300,435) |
(255,199) |
0 |
3.04.02 |
General and administrative |
(443,212) |
(403,390) |
0 |
3.04.05 |
Others |
(199,804) |
(227,343) |
0 |
3.05 |
Income before financial income and taxes |
2,739,315 |
2,782,683 |
0 |
3.06 |
Financial income / expense |
(353,943) |
(309,706) |
0 |
3.06.01 |
Financial income |
483,115 |
351,360 |
0 |
3.06.02 |
Financial expense |
(837,058) |
(661,066) |
0 |
3.07 |
Income before taxes |
2,385,372 |
2,472,977 |
0 |
3.08 |
Income tax and social contribution |
(825,335) |
(784,109) |
0 |
3.08.01 |
Current |
(755,321) |
(505,203) |
0 |
3.08.02 |
Deferred |
(70,014) |
(278,906) |
0 |
3.09 |
Net income from continuing operations |
1,560,037 |
1,688,868 |
0 |
3.11 |
Consolidated net income |
1,560,037 |
1,688,868 |
0 |
3.11.01 |
Attributable to controlling shareholders |
1,538,280 |
1,657,297 |
0 |
3.11.02 |
Attributable to noncontrolling shareholders |
21,757 |
31,571 |
0 |
3.99 |
Earnins per share (reais/share) |
|
|
|
3.99.01 |
Basic earnings per share |
|
|
|
3.99.01.01 |
Common shares |
3.24240 |
3.51913 |
0 |
11
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
6.01 |
Net cash from operating activities |
2,029,213 |
2,439,261 |
0 |
6.01.01 |
Cash generated from operations |
3,584,715 |
3,776,794 |
0 |
6.01.01.01 |
Net income, including income tax and social contribution |
2,385,372 |
2,472,977 |
0 |
6.01.01.02 |
Depreciation and amortization |
691,793 |
673,073 |
0 |
6.01.01.03 |
Reserve for contingencies |
(29,598) |
(13,623) |
0 |
6.01.01.04 |
Interest and monetary and exchange restatement |
613,946 |
572,470 |
0 |
6.01.01.05 |
Gain / (loss) on pension plan |
(80,629) |
(3,066) |
0 |
6.01.01.06 |
Losses on disposal of noncurrent assets |
1,142 |
(686) |
0 |
6.01.01.07 |
Deferred taxes - PIS and COFINS |
2,153 |
75,649 |
0 |
6.01.01.08 |
Other |
536 |
0 |
0 |
6.01.02 |
Variation on assets and liabilities |
(1,555,502) |
(1,337,533) |
0 |
6.01.02.01 |
Consumers, Concessionaires and Licensees |
(34,085) |
(96,260) |
0 |
6.01.02.02 |
Recoverable Taxes |
3,146 |
9,265 |
0 |
6.01.02.03 |
Leases |
(2,945) |
(2,276) |
0 |
6.01.02.04 |
Escrow deposits |
(52,109) |
948 |
0 |
6.01.02.05 |
Other operating assets |
(78,202) |
1,165 |
0 |
6.01.02.06 |
Suppliers |
(16,714) |
(7,853) |
0 |
6.01.02.07 |
Taxes and social contributions paid |
(705,366) |
(524,248) |
0 |
6.01.02.08 |
Other taxes and social contributions |
(88,996) |
47,212 |
0 |
6.01.02.09 |
Employee Pension Plans |
(72,235) |
(86,110) |
0 |
6.01.02.10 |
Interest paid on debt |
(573,170) |
(546,705) |
0 |
6.01.02.11 |
Regulatory Charges |
59,792 |
(30,780) |
0 |
6.01.02.12 |
Other operating liabilities |
5,382 |
(101,891) |
0 |
6.02 |
Net cash in investing activities |
(1,801,887) |
(1,238,901) |
0 |
6.02.01 |
Addition to Interest in subsidiaries |
(5,752) |
(31,922) |
0 |
6.02.02 |
Acquisition of property, plant and equipment |
(634,931) |
(549,045) |
0 |
6.02.03 |
Financial investments |
17,777 |
65,527 |
0 |
6.02.04 |
Energy purchase in advance |
(10,077) |
(29,972) |
0 |
6.02.05 |
Acquisition of intangible assets |
(1,165,609) |
(679,054) |
0 |
6.02.06 |
Leases |
(3,931) |
(15,527) |
0 |
6.02.07 |
Sale of noncurrent assets |
828 |
1,092 |
0 |
6.02.08 |
Other |
(192) |
0 |
0 |
6.03 |
Net cash in financing activities |
(151,674) |
(471,571) |
0 |
6.03.01 |
Loans, financing and debentures obtained |
2,571,002 |
2,552,433 |
0 |
6.03.02 |
Payments of Loans, financing and debentures , net of derivatives |
(1,280,290) |
(1,843,792) |
0 |
6.03.03 |
Dividend and interest on shareholders equity paid |
(1,440,094) |
(1,178,365) |
0 |
6.03.04 |
Sale of treasury shares |
137 |
0 |
0 |
6.03.05 |
Other |
(2,429) |
(1,847) |
0 |
6.05 |
Increase (decrease) in cash and cash equivalents |
75,652 |
728,789 |
0 |
6.05.01 |
Cash and cash equivalents at beginning of period |
1,487,243 |
758,454 |
0 |
6.05.02 |
Cash and cash equivalents at end of period |
1,562,895 |
1,487,243 |
0 |
12
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
Capital |
Capital Reserves |
Profit Reserves |
Retained earnings |
Other comprehensive income |
Shareholders´ Equity |
Noncontrolling Shareholders Equity |
Consolidated Shareholders Equity |
5.01 |
Opening balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
267,431 |
6,536,779 |
5.03 |
Adjusted opening balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
267,431 |
6,536,779 |
5.04 |
Capital transactions within shareholders |
52,249 |
0 |
(655,017) |
(768,023) |
0 |
(1,370,791) |
(17,148) |
(1,387,939) |
5.04.01 |
Capital increase |
52,249 |
0 |
0 |
0 |
0 |
52,249 |
0 |
52,249 |
5.04.06 |
Dividend |
0 |
0 |
0 |
(774,429) |
0 |
(774,429) |
(6,181) |
(780,610) |
5.04.08 |
Approval of dividend proposal |
0 |
0 |
(655,017) |
0 |
0 |
(655,017) |
(10,967) |
(665,984) |
5.04.09 |
Prescribed dividend |
0 |
0 |
0 |
6,406 |
0 |
6,406 |
0 |
6,406 |
5.05 |
Total comprehensive income |
0 |
0 |
0 |
1,539,116 |
56,035 |
1,595,151 |
19,426 |
1,614,577 |
5.05.01 |
Net income |
0 |
0 |
0 |
1,538,281 |
0 |
1,538,281 |
21,756 |
1,560,037 |
5.05.02 |
Other comprehensive income |
0 |
0 |
0 |
835 |
56,035 |
56,870 |
(2,330) |
54,540 |
5.05.02.01 |
Adjustment of financial instruments |
0 |
0 |
0 |
835 |
85,332 |
86,167 |
(3,531) |
82,636 |
5.05.02.02 |
Tax on Adjustment of financial instruments |
0 |
0 |
0 |
0 |
(29,297) |
(29,297) |
1,201 |
(28,096) |
5.06 |
Internal changes of shareholders equity |
0 |
0 |
562,954 |
(536,815) |
(26,139) |
0 |
(13,761) |
(13,761)) |
5.06.01 |
Constitution of capital reserve |
0 |
0 |
76,914 |
(76,914) |
0 |
0 |
0 |
0 |
5.06.02 |
Realization of revaluation reserve |
0 |
0 |
0 |
39,605 |
(39,605) |
0 |
0 |
0 |
5.06.03 |
Tax on Realization of revaluation reserve |
0 |
0 |
0 |
(13,466) |
13,466 |
0 |
0 |
0 |
5.06.04 |
Dividend proposal |
0 |
0 |
486,040 |
(486,040) |
0 |
0 |
0 |
0 |
5.06.05 |
Other transactions within noncontrolling shareholders |
0 |
0 |
0 |
0 |
0 |
0 |
(13,761) |
(13,761) |
5.07 |
Final balance |
4,793,424 |
16 |
904,705 |
0 |
795,563 |
6,493,708 |
255,948 |
6,749,656 |
13
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
Capital |
Capital Reserve |
Profit Reserves |
Retained earnings |
Other comprehensive income |
Shareholders´ Equity |
Noncontrolling Shareholders Equity |
Consolidated Shareholders Equity |
5.01 |
Opening balance |
4,741,175 |
16 |
883,533 |
(631,911) |
799,870 |
5,792,683 |
258,163 |
6,050,846 |
5.03 |
Adjusted opening balance |
4,741,175 |
16 |
883,533 |
(631,911) |
799,870 |
5,792,683 |
258,163 |
6,050,846 |
5.04 |
Capital transactions within shareholders |
0 |
0 |
(606,105) |
(567,130) |
0 |
(1,173,235) |
(21,011) |
(1,194,246) |
5.04.06 |
Dividend |
0 |
0 |
0 |
(571,671) |
0 |
(571,671) |
(6,767) |
(578,438) |
5.04.08 |
Approval of dividend proposal |
0 |
0 |
(606,105) |
0 |
0 |
(606,105) |
(14,244) |
(620,349) |
5.04.09 |
Prescribed dividend |
0 |
0 |
0 |
4,541 |
0 |
4,541 |
0 |
4,541 |
5.05 |
Total comprehensive income |
0 |
0 |
0 |
1,657,999 |
(8,099) |
1,649,900 |
31,456 |
1,681,356 |
5.05.01 |
Net income |
0 |
0 |
0 |
1,657,297 |
0 |
1,657,297 |
31,571 |
1,688,868 |
5.05.02 |
Other comprehensive income |
0 |
0 |
0 |
702 |
(8,099) |
(7,397) |
(115) |
(7,512) |
5.05.02.01 |
Adjustment of financial instruments |
0 |
0 |
0 |
702 |
(11,910) |
(11,208) |
(174) |
(11,382) |
5.05.02.02 |
Tax on Adjustment of financial instruments |
0 |
0 |
0 |
0 |
3,811 |
3,811 |
59 |
3,870 |
5.06 |
Internal changes of shareholders equity |
0 |
0 |
719,340 |
(693,236) |
(26,104) |
0 |
(1,177) |
(1,177) |
5.06.01 |
Constitution of capital reserve |
0 |
0 |
64,323 |
(64,323) |
0 |
0 |
0 |
0 |
5.06.02 |
Realization of revaluation reserve |
0 |
0 |
0 |
39,552 |
(39,552) |
0 |
0 |
0 |
5.06.03 |
Tax on Realization of revaluation reserve |
0 |
0 |
0 |
(13,448) |
13,468 |
0 |
0 |
0 |
5.06.04 |
Dividend proposal |
0 |
0 |
655,017 |
(655,017) |
0 |
0 |
0 |
0 |
5.06.05 |
Other transactions within noncontrolling shareholders |
0 |
0 |
0 |
0 |
0 |
0 |
(1,177) |
(1,177) |
5.07 |
Final balance |
4,741,175 |
16 |
996,768 |
(234,278) |
765,667 |
6,269,348 |
267,431 |
6,536,779 |
14
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Code |
Description |
01/01/2010 to 12/31/2010 |
01/01/2009 to 12/31/2009 |
01/01/2008 to 12/31/2008 |
7.01 |
Revenues |
18,421,036 |
16,963,483 |
0 |
7.01.01 |
Sales of goods, products and services |
16,513,001 |
15,875,755 |
0 |
7.01.02 |
Other revenue |
1,043,678 |
615,557 |
0 |
7.01.02.01 |
Revenue from construction of infrastructure distribution |
1,043,678 |
615,557 |
0 |
7.01.03 |
Revenues related to the construction of own assets |
916,026 |
508,421 |
0 |
7.01.04 |
Allowance for doubtful accounts |
(51,669) |
(36,250) |
0 |
7.02 |
Inputs |
(9,535,417) |
(8,461,851) |
0 |
7.02.01 |
Cost of sales |
(6,914,197) |
(6,695,256) |
0 |
7.02.02 |
Material-Energy-Outsourced services-Other |
(2,281,569) |
(1,416,374) |
0 |
7.02.04 |
Other |
(339,651) |
(350,221) |
0 |
7.03 |
Gross added value |
8,885,619 |
8,501,632 |
0 |
7.04 |
Retentions |
(720,528) |
(697,869) |
0 |
7.04.01 |
Depreciation and amortization |
(537,913) |
(510,970) |
0 |
7.04.02 |
Other |
(182,615) |
(186,899) |
0 |
7.04.02.01 |
Intangible concession asset - amortization |
(182,615) |
(186,899) |
0 |
7.05 |
Net added value generated |
8,165,091 |
7,803,763 |
0 |
7.06 |
Added value received in transfer |
521,084 |
378,423 |
0 |
7.06.02 |
Financial income |
521,084 |
378,423 |
0 |
7.07 |
Added Value to be Distributed |
8,686,175 |
8,182,186 |
0 |
7.08 |
Distribution of Added Value |
8,686,175 |
8,182,186 |
0 |
7.08.01 |
Personnel |
498,110 |
533,508 |
0 |
7.08.01.01 |
Direct Remuneration |
379,198 |
357,309 |
0 |
7.08.01.02 |
Benefits |
89,235 |
147,277 |
0 |
7.08.01.03 |
Government severance indemnity fund for employees - F.G.T.S. |
29,677 |
28,922 |
0 |
7.08.02 |
Taxes, Fees and Contributions |
5,681,647 |
5,251,649 |
0 |
7.08.02.01 |
Federal |
2,940,759 |
2,628,151 |
0 |
7.08.02.02 |
State |
2,731,991 |
2,615,272 |
0 |
7.08.02.03 |
Municipal |
8,897 |
8,226 |
0 |
7.08.03 |
Remuneration on third parties capital |
946,381 |
708,161 |
0 |
7.08.03.01 |
Interest |
931,649 |
698,622 |
0 |
7.08.03.02 |
Rental |
14,732 |
9,539 |
0 |
7.08.04 |
Remuneration on own capital |
1,560,037 |
1,688,868 |
0 |
7.08.04.02 |
Dividends |
1,260,244 |
1,228,914 |
0 |
7.08.04.03 |
Retained earnings / losses |
299,793 |
459,954 |
0 |
15
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Management Report
Dear Shareholders,
In accordance with the legal and statutory provisions, the Management of CPFL Energia S.A. (CPFL Energia) submits for your examination the companys Management Report and Financial Statements, including the report of the independent auditors and the Fiscal Council for the fiscal year ended December 31, 2010. All comparisons in this Report are based on consolidated data for the same period a year earlier, except when otherwise stated.
1. Initial Considerations
CPFL Energias performance in 2010 presented significant progress, mainly reflecting the solid development cycle that Brazil has been undergoing, the immense growth potential of the domestic market, evidenced by the growth of energy consumption in the areas that are served by our distribution companies, the results of the strategy to expand and diversify the Companys portfolio of businesses and a permanent commitment to enhance the efficiency of the Groups companies.
Capital expenditures for the period totaled R$ 1.8 billion. Of this, R$ 1.1 billion went to the distribution segment for the expansion and reinforcement of the electrical system. A further R$ 645 million was allocated to the generation segment, mainly to projects already under construction during the year while R$ 28 million was earmarked for the energy sales and value-added services segment.
Among the main factors leading to the Groups performance, of particular note was the growth in sales within the distribution companies concession areas, which totaled 52,044 GWh, a 7.2% increase. Of this, 12,794 GWh were invoiced in the form of the Tariff for the Use of the Distribution System (TUSD). Sales to the captive market totaled 39,250 GWh, up 3.8%. On the other hand, generation and commercialization sales totaled 13,000 GWh, a 2.0% decline.
In the generation segment, the Group put three new projects that had been under construction into operation. In August, the Baldin Thermoelectric Plant (45 MW), which uses sugarcane biomass as fuel, came on stream. In October, the Foz do Chapecó Hydroelectric Plant (855 MW), in which the Group has a 51% ownership interest, was put into operation. In December, the Termonordeste Thermoelectric Plant (170.76 MW), in which the Group owns a 51% stake, went on the grid. Moreover, the Group acquired the Diamante Small Hydroelectric Power Plant (4.23 MW) located in the state of Mato Grosso. As a result, the CPFL Groups total installed generating capacity ended 2010 with 2,309 MW.
We would like to highlight that, at the end of 2011, installed capacity will reach 2,511 MW, taking into account the startup of the Termoparaíba Thermoelectric Plant (January 2011) and the Bio Buriti, Ipê and Formosa biomass plants (scheduled for the second and the third quarters of 2011). In 2012, when the Bio Pedra and seven wind parks under construction in the state of Rio Grande do Norte (Santa Clara I, II, III, IV, V and VI and Euros VI) come on stream, the CPFL Groups installed capacity will be 2,769 MW.
1 |
It is also important to point out that the CPFL Group was one of the winners of the renewable energy auction held in August (ANEEL Auction no. 05/2010), as a result of which it will sell energy from the Campo dos Ventos II Wind Park (30 MW).
The performance and results achieved in 2010 reaffirm the Groups business strategy, which is based on expanding its share of the Brazilian energy market and the constant striving toward achieving efficiency and productivity gains.
Projections for the next few years indicate consistent expansion of the Brazilian energy market as a result of the continuity of the countrys economic growth cycle. Planning for the expansion of the supply of electric energy has been pointing towards a diversification of the generation matrix, based on clean and renewable sources, two fields in which the Group has been demonstrating competence and competitiveness over the past few years. The prospects for consolidation of the Brazilian electricity industry remain intact. This is a trend that is directly related to the treatment that will be given the generation, transmission and distribution concession contracts that are to expire in the upcoming years. In the case of the energy distribution segment, the 3rd Tariff Revision Cycle will be an important vector for the segment, which is fundamental for the functioning and the sustainability of the entire Brazilian electric sector.
The CPFL Energia Group over the past few years has been developing the competencies necessary to position itself strategically and take advantage of the opportunities that are being created by the growth and diversification of the Brazilian economy, as demonstrated by the upwardly mobile movement of a number segments of the population along with a permanent striving to increase efficiency and competitiveness in an industry that is of strategic importance for the development of the country.
2 |
SHAREHOLDING STRUCTURE (Simplified)
CPFL Energia is a holding company with stock participation in other companies:
Notes:
(1) Includes 0.1% of Camargo Corrêa S.A.s stake;
(2) Controlling shareholders;
(3) Comprises 8 companies: Santa Clara I, II, III, IV, V and VI, Eurus VI and Campo dos Ventos II;
(4) Base: 12/31/2010.
3 |
2. Comments on the Situation
MACROECONOMIC ENVIRONMENT
The international economy suffered a major reversal between the second quarter of 2008 and the year of 2009. However, during the course of 2010 the world saw the recovery of the central countries and, to a greater extent, the emerging nations. Both groups of countries were stimulated through fiscal and monetary measures, seeking to stimulate domestic demand, which resulted in a strong increase in government spending and a resumption of consumer spending.
This recovery process, however, did not occur homogeneously. In fact, the emerging nations presented quick and intense recovery in view of the fact that their financial systems were not as shaken up by the crisis. Moreover, a number of emerging countries, such as China and Brazil, benefited from an investment cycle supported by expectations regarding the growth of their domestic markets. Finally, strong Chinese demand for basic inputs and food assured the recovery of the exports of the entire emerging nations bloc, contributing to the strengthening of their external accounts and for a resumption of economic activity, in some cases. The financial systems of the central and European countries, on the other hand, were strongly impacted during the crisis. As a result, these nations underwent a more critical stage involving restriction of credit, a drop in confidence and a decline in investments.
Nevertheless, since the last months of 2010, a different scenario has been emerging that should persist through 2011. Effectively, the U.S. economy has been recovering in a clearer manner due to the renewal and more aggressive nature of the anti-crisis measures. For their part, the emerging countries already have found the path to stability, a reflection of the elimination of fiscal and monetary stimuli in order to control inflation. In summary, this also should be the scenario for the Brazilian economy in 2011. It is estimated that the increase of the Brazilian GDP will be slow from over 7.5% in 2010 to 4.3% in 2011. The outlook for domestic consumption continues to be positive, in view of the investment cycle and the increase in family incomes within a context of low unemployment.
REGULATORY ENVIRONMENT
For the distribution segment, highlights of 2010 included the signing of the amendments to the distribution concession contracts for calculating the neutrality of sector charges, pursuant to AP 043/2009, and the proposal of general methodology and criteria for the tariff revisions of ht third cycle that was discussed in a Public Hearing in September, through AP 040. At the same time, the National Electric Energy Agency (ANEEL) concluded or placed into discussion other subjects considered to be important for the distribution companies, of which were notable: (i) Public Hearing no. 052/2009, with methodology for the composition of the construction modules of the distribution companies, in order to define their price lists for calculating the regulatory asset base (underway); (ii) Public Hearing no. 048/2010, for the consolidation of the regulation of tariff processes, for the preparation of the Tariff Regulation Procedures PRORET (underway); (iii) Publication of REN 414/2010, which updates the general conditions for the supply of electric energy established pursuant to REN 456/1999, which it revokes; (iv) Public Hearing no. 120/2010, which proposes changes to the Tariff Structure applied to the distribution companies (underway); (v) Public Hearing no. 121/2010, proposing review of the useful life of the distributors assets and facilities (underway).
4 |
On February 3, 2011 ANEEL held Public Hearing no. 005/2011, suspending tariff revisions of the companies until the approval of the proposed third cycle methodology.
In the generation segment, the main regulatory highlights during the year were: (i) application of MME Directive no. 463/2009, revising physical guarantees for hydroelectric power plants that are not centrally discharged; (ii) publication of ANEEL Resolution no. 409/2010, which deals with hydroelectric power plants that are not centrally discharged, participants in the Energy Reallocation Mechanism (MRE); (iii) publication of MME Directive no. 735/2010, which established the methodology for reviewing the physical guarantees for energy from inflexible thermoelectric plants; (iv) publication of MME Directive no. 861/2010, which established the methodology for reviewing the physical guarantees for hydroelectric power plants that are centrally discharged; and (v) preparation on the part of the MME of a draft of a Regulatory Decree for Art. 20 of Law no. 10.848/2004, in a manner to permit the change in the public service concession regime to independent production.
ELECTRIC ENERGY TARIFFS AND PRICES
Distribution Segment
2010 Annual Tariff Adjustment: ANEEL approved the annual Tariff Adjustment Index (IRT) for 2010 for the Groups eight distribution companies as shown in the following table:
Annual Tariff Adjustment Index (IRT) |
CPFL Santa Cruz |
CPFL Leste Paulista |
CPFL Jaguari |
CPFL Sul Paulista |
CPFL Mococa |
CPFL Paulista |
RGE | CPFL Piratininga |
Term >>>>>> | 02/03/2011 | 02/03/2011 | 02/03/2011 | 02/03/2011 | 02/03/2011 | 04/08/2010 | 06/19/2010 | 10/23/2010 |
Economic IRT | 1.90% | -6.32% | 5.81% | 4.30% | 4.15% | 1.55% | 1.72% | 8.59% |
Financial Components | 8.19% | -6.89% | -0.65% | 1.36% | -0.17% | 1.15% | 10.65% | 1.52% |
Total IRT | 10.09% | -13.21% | 5.16% | 5.66% | 3.98% | 2.70% | 12.37% | 10.11% |
2011 Annual Tariff Adjustment: in February 2011, ANEEL approved the annual Tariff Adjustment Index (IRT) for 2011 of five distribution companies of the Group as shown in the following table:
Annual Tariff Adjustment Index (IRT) |
CPFL Santa Cruz |
CPFL Leste Paulista |
CPFL Jaguari |
CPFL Sul Paulista |
CPFL Mococa |
Term >>>>>> | 02/03/2011 | 02/03/2011 | 02/03/2011 | 02/03/2011 | 02/03/2011 |
Economic IRT | 8.01% | 6.42% | 5.22% | 6.57% | 6.84% |
Financial Components | 15.61% | 1.34% | 0.25% | 1.45% | 2.66% |
Total IRT | 23.61% | 7.76% | 5.47% | 8.02% | 9.50% |
Third Periodic Tariff Revision: The third periodic tariff revision cycle will begin in 2011. For this cycle, ANEEL is proposing new methodology for public hearings, with all of the proposals currently under discussion.
Generation Segment
The generators energy sales contracts contain specific clauses dealing with tariff adjustments, the main adjustment index being the annual change presented by the General Market Price Index (IGP-M). The contracts signed within the Regulated Contracting Environment (ACR) use the IPCA as the indexing indicator and the bilateral contracts signed with ENERCAN use a combination of dollar indexes and the IGP-M.
5 |
3. Operating performance
ENERGY SALES
Energy sales by distributors in the concession area totaled 52,044 GWh, an increase of 7.2% compared to the 48,568 GWh sold in 2009. Sales to the captive market totaled 39,250 GWh, up 3.8%, and 12,794 GWh were billed through the Tariff for the Use of the Distribution System (TUSD). Commercialization and generation sales totaled 13,000 GWh, representing a reduction of 2.0%.
The captive market highlights were the growths of residential and commercial classes, which together represented 52.4% of total consumption by the captive consumers of the Groups distributors:
· Residential and commercial classes: increases of 5.2%, for both classes. Higher temperatures than seen in 2009 and the accumulated effects of economic growth (increase in income and employment, access to credit, sales of electric and electronic appliances and sales of the retailers) that have been seen in the past several years allowed these classes to maintain a high level of consumption in 2010.
· Industrial class: increase of 0.5%, influenced by the recovery of industrial activity and the weak comparison base of 2009 (international financial crisis), partially offset by the migration of customers to the free market, reflected in the growth of the TUSD.
The volume of energy corresponding to the consumption of free consumers in CPFL Energias concession areas invoiced in the form of the Tariff for the Use of the Distribution System (TUSD) was 12,794 GWh, an increase of 19.0%, a reflection of the recovery of industrial activity and the migration of customers to the free market.
Commercialization and generation sales (excluding related parties) totaled 13,000 GWh, which represented a 2.0% reduction, mainly due to the lower sales through bilateral contracts.
PERFORMANCE IN THE ELECTRIC ENERGY DISTRIBUTION SEGMENT
The Group continued its strategy of encouraging the dissemination and sharing of best management and operational practices among the distribution companies, with the intention of raising operating efficiency and improving the quality of client service.
Client service: during the year, the Group developed new actions through its Projeto Ligado no Cliente (Focused on the Client Project), which seeks to establish excellent relationships through continuous improvement in the quality of its processes and makes available services that are adjusted for the specific characteristics, interests and expectations of each segment.
6 |
Quality of energy supply: one of the main backbones of the Groups operating efficiency strategy. Below we are presenting the results achieved by the distribution This change stems, among other factors, from the following effects: increase of 3.8% in energy sales to the captive market and an increase of 42.9% (R$ 338 million with taxes) on revenues from the TUSD of free consumers. This result was partially offset by the companies with regard to the main indicators that measure the quality and reliability of their supply of electric energy. The DEC index (System Average Interruption Duration Index) measures the average duration, in hours, of interruption per consumer per year. The FEC index (System Average Interruption Frequency Index) measures the average number of interruptions per consumer per year.
Indicadores DEC e FEC 2010 (Valores anualizados) | ||||||||
Empresa | CPFL Paulista |
CPFL Piratininga |
RGE | CPFL Santa Cruz |
CPFL Leste Paulista |
CPFL Jaguari |
CPFL Sul Paulista |
CPFL Mococa |
Indicador | ||||||||
DEC | 5,65 | 6,88 | 14,70 | 5,50 | 8,26 | 9,23 | 9,22 | 4,56 |
FEC | 5,05 | 5,23 | 9,65 | 6,53 | 7,68 | 7,79 | 7,75 | 4,49 |
PERFORMANCE IN THE ELECTRIC ENERGY GENERATION SEGMENT
The Groups installed generation capacity reached 2,309 MW in 2010. The Baldin, Foz do Chapecó and Termonordeste (Epasa) plants were placed into operation in August, October and December, respectively.
Also during the year, the Group acquired the Diamante Small Hydroelectric Power Plant, won the ANEEL Auction no. 05/2010, held in August 2010 for the commercialization of energy from the Campo dos Ventos II Wind Park located in the state of Rio Grande do Norte, and constituted CPFL Bio Buriti, CPFL Bio Ipê and CPFL Bio Pedra in order to develop sugarcane biomass generation projects in partnership with the Pedra Agroindustrial Group.
In January 2011, the Termoparaíba power plant initiated operations and, as a result of the energy projects currently under construction the installed capacity of the Group will increase 21.5% by 2013.
4. Economic-financial performance
Managements comments on the economic-financial performance and operating results should be read in conjunction with the audited financial statements and explanatory notes.
In 2010, CPFL Energia adopted the directives issued by the Accounting Pronouncements Committee (CPC), which are consistent with international accounting standards (IFRS). Therefore, the statements and balances relating to 2009 (previously disclosed) were adjusted to reflect the changes stemming from the new procedures, making it possible to compare the periods that were presented.
Operating revenue
Net operating revenue grew 5.9% (R$ 666 million), reaching R$ 12,024 million. Excluding revenues earned through concession infrastructure construction (which does not affect the result due to the corresponding cost, in the same amount), net revenues would be R$ 10,980 million, an increase of 2.2% (R$ 238 million).
7 |
following factors: (i) the positive impact on revenues in 2009 due to the inclusion of financial components in the tariff, such as: the pass-through of cost increases resulting from the switching on of thermal plants and the increase in foreign exchange rate in 2008 and the charging of an extraordinary rate adjustment to compensate losses incurred during the rationing period of 2001 (ending in 2009); and (ii) reduction of revenues through commercialization and generation by 2.0%, excluding related parties, mainly due to sales reduction in short term bilateral contracts that were in force in 2009, on the commercialization side.
Operating cash generation EBITDA
EBITDA is a non-accounting measurement calculated by Management based on the sum of the earnings, taxes, financial income, depreciation/amortization and private pension fund.
Operating cash generation, measured by EBITDA, totaled R$ 3,350 million, a 3.0% reduction (R$ 102 million), mainly reflecting the positive impact of the 2009 tariff adjustment cited in the previous item. The cost of electric energy registered an increase of 3.5% (R$ 208 million), which was substantially covered in the revenue, with no material impact on EBITDA. The operating costs and expenses, from which are excluded expenses involving the private pension plan, depreciation and amortization, registered an increase of 10.3% (R$ 132 million).
The increase in the operating costs and expenses occurred as a result of the following factors: (i) increase of 7.3% (R$ 41 million) in personnel expenses, stemming mainly from the salary increases based on the collective bargaining agreements of 2009 and 2010; (ii) increase of 11.4% (R$ 8 million) in expenses incurred for materials; (iii) a 20.2% (R$ 78 million) rise in spending on third-party services; and (iv) 1.8% (R$ 5 million) increase in the other operating costs/expenses.
Net income
CPFL Energia posted net income of R$ 1,560 million in 2010, a 7.6% (R$ 129 million) reduction, mainly due to the following factors: (i) a 3.0% (R$ 102 million) reduction in EBITDA; (ii) a negative effect of 5.3% (R$ 41 million) with regard to Income Taxes and Social Contribution, mainly resulting from a lower volume of fiscal credits used in 2010, in the amount of R$ 59 million; (iii) a 14.3% (R$ 44 million) increase in net financial expenses; and (iv) a 4.7% net increase in depreciation and amortization (R$ 23 million) expenses. This result was partially offset by the positive effect (R$ 78 million) in the Private Pension Fund expense.
Dividends
The Management proposes the distribution of R$ 1,260 million in dividends to the holders of common shares, traded on BM&FBovespa Bolsa de Valores, Mercadorias e Futuros S.A. (São Paulo Stock Exchange). The proposed amount corresponds to R$ 2.619770369 per share. As a result, the Company exceeded the minimum payment of 50% of net income defined in the dividend policy.
Excluding the R$ 774 million regarding the first half of 2010 (paid on September 30, 2010), the amount to be effectively paid will be R$ 486 million, equivalent to R$ 1,010190770 per share.
8 |
Indebtedness
The companys indebtedness at the end of 2010 (including hedges) amounted to R$ 9,418 million, up 19.2%.
5. Investments
In 2010, capital expenditures in the amount of R$ 1,801 million were carried out for maintenance and business expansion, of which R$ 1,128 million was earmarked for distribution, R$ 645 million went to generation and R$ 28 million was directed towards commercialization and services.
Among CPFL Energias investments in 2010, the following were highlights:
Acquisitions during the period through the subsidiary CPFL Geração, 100% of the following projects were acquired: (i) PCH Diamante (4.23 MW) and (ii) Campo dos Ventos II Wind Park (30 MW).
6. Corporate governance
CPFL Energias corporate governance model is based on four basic principles: transparency, equity, accountability and corporate responsibility, applied by all the companies in the Group.
CPFL Energia is listed on the segments of the highest governance level - the Novo Mercado of the BM&FBOVESPA and Level III ADRs on the New York Stock Exchange (NYSE). CPFL Energias capital stock is composed exclusively of common shares, and ensures 100% tag-along rights in the case of disposal of control.
The Board of Directors duties include defining the overall business guidelines and electing the Board of Executive Officers, among other responsibilities determined by the law and the Companys Bylaws. Its rules were defined in the Board of Directors internal rules document. The Board is composed of one independent member and six members nominated by the controlling shareholders and all of them carry a one-year term of office, reelection being admitted. It normally meets once a month but may be convened whenever necessary. The Chairman and the Vice-Chairman are elected among the Board of Directors members and no member may serve on the Board of Executive Officers.
9 |
The Board of Directors constituted three committees and defined their competences in a sole Internal Rules. They are: the Human Resources Committee, Related Parties Committee and Management Processes Committee. Whenever necessary, ad hoc commissions are installed to advise the Board on such specific issues as: corporate governance, strategy, budgets, energy purchase, new operations and financial policies.
CPFL Energia maintains a permanent Fiscal Council comprising five members who also carry out the attributes of the Audit Committee, pursuant to the rules of the Securities and Exchange Commission (SEC). The Fiscal Council rules were defined in its internal rules document and in the Fiscal Council Guide.
The Board of Executive Officers is comprised of seven Executive Officers, all with a two-year term of office, with reelection admitted. The Executive Officers represent the Company and manage its business in accordance with the lines of direction defined by the Board of Directors. The Chief Executive Officer is responsible for nominating the other statutory Executive Officers.
7. The stock market
CPFL Energias free float currently comprises 30.7% of its total capital stock and its shares are traded in Brazil (BM&FBovespa) and on the New York Stock Exchange (NYSE). In 2010, CPFL Energias shares appreciated by 25.7% on the BM&FBovespa and 33.7% on the NYSE, surpassing the Ibovespa and Dow Jones indexes, respectively, closing the year at R$ 41.20 per share and US$ 76.81 per ADR. Daily traded volume averaged R$ 33.3 million, of which R$ 17.4 million on the BM&FBovespa and R$ 15.9 million on the NYSE, representing a 22.1% increase.
8. Sustainability and corporate responsibility
CPFL Energia has developed a permanent program to supervise the impact of its operations on its neighboring communities through the constant management of the economic, environmental and social risks inherent to its businesses. The years highlights:
Ethics Management and Development System: the Ethics Committee held 10 meetings and prepared and published an Orientation Summary about System Access Identification Care and Concerns.
Human Resources Management: at the year-end, the company had 7,924 employees (7,450 in 2009) with an attrition rate of 10.1%. The Groups companies ran a number of different management and training programs, focused on developing strategic business competencies, leadership succession productivity increases and employee occupational health and safety. The average number of hours of training per employee was 77.83, 7% higher than the benchmark suggested in the Sextante-2010 survey. Also during the year, for the ninth consecutive time CPFL Energia was ranked among the 150 Best Places for You to Work in Brazil,published by Guia Você S/A/Exame magazine.
10 |
Community relations: among other actions that seek to contribute to the development of the communities where CPFL Energias companies carry out their operations, the following were highlights: (i) CPFL Cultura - the cultural program continued to promote reflections about the contemporary world, with free meetings held in Campinas and regional locations that resulted in television programs, documentaries and other audiovisual products; (ii) CPFL Program for Reviving Philanthropic Hospitals - the 2008-2010 edition of the program benefited 42 hospitals located in 34 municipalities in the Araraquara, Araçatuba, Baixada Santista, Bauru, Jaú, Ribeirão Preto and Sorocaba regions; (iii) Program for Supporting Municipal Childrens and Teenagers Rights Programs (CMDCA) - in 2010, the CPFL Energia Groups allocated about R$ 2.2 million using tax incentive funds for 356 projects in 156 municipalities of the concession area; and (iv) CPFL Social Management - the program, which offers training for the third sector, was inaugurated and began operating in the cities of Itapetininga and Avaré, benefiting 24 participants and 13 social organizations.
Influence and Leadership in the Value Chain: the Value Network, a forum that was initially dedicated to suppliers to exchange ideas and help develop a common agenda, was expanded and now includes electricity sector clients and partners.
Corporate commitments: besides the commitments to which the company already is a signatory, in 2010 CPFL Energia adhered to the Climate Forum Workgroup Support Fund and the Business Movement for the Conservation and Sustainable Use of Biodiversity.
Environmental management: in 2010, CPFL Energia conducted a company-wide inventory of greenhouse gases for the year of 2009, calculating a total of 131,588 tCO2e. At the same time, each of the Groups companies develop projects designed to maximize the use of energy sources while mitigating the socio-environmental impact of their activities. The following were highlights: (i) Power generation - the sale of de 22,312 CO2 Emission Reduction Certificates (CERs) for small hydroelectric power plants and 111,354 CERs for the Monte Claro hydroelectric plant (Ceran); removal of 23,233 m³ of aquatic plants from the Americana small hydroelectric power plant reservoir; support for the Nature School Ship Association, which received 129,000 visits during the year; continuation of the activities of the Aquatic Biodiversity Conservation Program through the introduction of 65,000 fingerlings, the planting of 20,584 native seedlings in riparian zones and the maintenance of Fish Transposition Systems; at the Foz do Chapecó hydroelectric plant socio-environmental programs continued as planned, including the Basic Environmental Project and the New Path Program, designed to generate jobs and income. Furthermore, a partnership was signed with the Agricultural Secretariat of the municipality of Chapecó in order to develop the Good Water Program, whose goal is to preserve 700 hectares of headwaters and riparian areas; Ceran used the Cultural Incentive Law to sponsor a portion of the restoration of a cultural center in Veranópolis and a movie A Casa Elétrica; the activities of the Rural Development Fund (FDR) were continued, with funding being made available by Enercan for collective agribusiness activities, benefiting 417 families and helping social development in the region in the vicinity of the Campos Novos hydroelectric project; ISO 14.001:2004 environmental certification was achieved within the scope of the System for management of the environmental risks of the UHE Barra Grande (Reservoir management, Operation and Maintenance, Power Generation); participation in the fund for the Development of the North-Northeast of the State of Goiás in conjunction with the Interamerican Development Bank (IDB), the Ministry of Mines and Energy, Furnas, Sebrae-Goiás and Tractebel Energia, with the objective of creating employment and incomes for the families affected by the Cana Brava and Serra da Mesa hydroelectric plants; and (ii) Energy distribution - distribution of 240,000 seedlings through the urban street tree program; receipt of Environmental Certification (ISO 14001) extendable to its Energy Subtransmission activities covering11 substations and 3,223 km of transmission lines in the concession areas of CPFL Paulista and CPFL Piratininga; distribution of 35,000 noble tree species seedlings in RGEs concession area.
11 |
9. Independent auditors
KPMG Auditores Independentes were hired by CPFL Energia to provide external auditing services relative to the examination of the Companys financial statements. In accordance with CVM Instruction 381/03, we hereby declare that this firm did not provide, in 2010, any non-auditing-related services whose fees were more than 5% of its total auditing fees.
10. Closing acknowledgements
CPFL Energias Management would like to thank its shareholders, clients, suppliers and surrounding communities for the trust they have placed in the Company throughout 2010. We would like to offer a special thank you to our employees for their skill, diligence and commitment to achieving the established objectives and targets.
Management
For further information on the performance of this or any other CPFL Group company, please visit our website at www.cpfl.com.br/ir.
12 |
Annual Social Report / 2010 (*) | ||||||
Company: CPFL ENERGIA S.A. | ||||||
1 - Basis for Calculation | 2010 Value (R$ 000) | 2009 Value (R$ 000) | ||||
Net Revenues (NR) | 12,023,729 | 11,358,006 | ||||
Operating Result (OR) | 2,385,372 | 2,472,977 | ||||
Gross Payroll (GP) | 530,328 | 484,161 | ||||
2 - Internal Social Indicators | Value (000) | % of GP | % of NR | Value (000) | % of GP | % of NR |
Food | 42,132 | 7.94% | 0.35% | 39,268 | 8.11% | 0.35% |
Mandatory payroll taxes | 141,968 | 26.77% | 1.18% | 129,432 | 26.73% | 1.14% |
Private pension plan | 27,382 | 5.16% | 0.23% | 25,140 | 5.19% | 0.22% |
Health | 31,025 | 5.85% | 0.26% | 27,564 | 5.69% | 0.24% |
Occupational safety and health | 2,395 | 0.45% | 0.02% | 1,801 | 0.37% | 0.02% |
Education | 2,404 | 0.45% | 0.02% | 2,213 | 0.46% | 0.02% |
Culture | 0 | 0.00% | 0.00% | 0 | 0.00% | 0.00% |
Trainning and professional development | 10,297 | 1.94% | 0.09% | 7,343 | 1.52% | 0.06% |
Day-care / allowance | 1,560 | 0.29% | 0.01% | 1,570 | 0.32% | 0.01% |
Profit / income sharing | 38,412 | 7.24% | 0.32% | 37,902 | 7.83% | 0.33% |
Others | 9,123 | 1.72% | 0.08% | 4,202 | 0.87% | 0.04% |
Total - internal social indicators | 306,698 | 57.94% | 2.56% | 276,435 | 57.13% | 2.44% |
3 - External Social Indicators | Value (000) | % of OR | % of NR | Value (000) | % of OR | % of NR |
Education | 520 | 0.02% | 0.00% | 1,858 | 0.08% | 0.02% |
Culture | 11,971 | 0.50% | 0.10% | 7,879 | 0.32% | 0.07% |
Health and sanitation | 1,880 | 0.08% | 0.02% | 834 | 0.03% | 0.01% |
Sport | 2,306 | 0.10% | 0.02% | 1,333 | 0.05% | 0.01% |
War on hunger and malnutrition | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Others | 4,325 | 0.18% | 0.04% | 2,856 | 0.12% | 0.03% |
Total contributions to society | 21,002 | 0.88% | 0.18% | 14,760 | 0.60% | 0.14% |
Taxes (excluding payroll taxes) | 5,270,068 | 220.93% | 43.83% | 4,661,531 | 188.50% | 41.04% |
Total - external social indicators | 5,291,070 | 221.81% | 44.01% | 4,676,291 | 189.10% | 41.18% |
4 - Environmental Indicators | Value (000) | % of OR | % of NR | Value (000) | % of OR | % of NR |
Investments relalated to company production / operation | 89,476 | 3.75% | 0.74% | 90,167 | 3.65% | 0.79% |
Investments in external programs and/or projects | 92,260 | 3.87% | 0.77% | 69,215 | 2.80% | 0.61% |
Total environmental investments | 181,736 | 7.62% | 1.51% | 159,382 | 6.45% | 1.40% |
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 51 to 75% ( ) fulfill from 0 to 50% (X) fulfill from 76 to 100% |
( ) do not have targets ( ) fulfill from 51 to 75% ( ) fulfill from 0 to 50% (X) fulfill from 76 to 100% | ||||
5 - Staff Indicators | 2010 | 2009 | ||||
Nº of employees at the end of period | 7,924 | 7,450 | ||||
Nº of employees hired during the period | 1,671 | 1,068 | ||||
Nº of outsourced employees | ND | 5,578 | ||||
Nº of interns | 236 | 210 | ||||
Nº of employees above 45 years age | 2,086 | 1,841 | ||||
Nº of women working at the company | 1,847 | 1,414 | ||||
% of management position occupied by women | 11.58% | 9.43% | ||||
Nº of Afro-Brazilian employees working at the company | 960 | 746 | ||||
% of management position occupied by Afro-Brazilian employees | 2.72% | 1.27% | ||||
Nº of employees with disabilities | 289 | 294 | ||||
6 - Relevant information regarding the exercise of corporate citizenship | 2010 | 2009 | ||||
Ratio of the highest to the lowest compensation at company | 79.33 | 59.2 | ||||
Total number of work-related accidents | 28 | 21 | ||||
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 |
( ) does not get involved |
( ) follows the OIT rules |
(X) motivates and follows 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 |
( ) are not considered |
( ) are suggested |
(X) are required |
Regarding the participation of employees in voluntary work programs, the company: | ( ) does not get involved |
( ) supports | (X) organizes and motivates |
( ) does not get involved |
( ) supports | (X) organizes and motivates |
Total number of customer complaints and criticisms: | in the company 984,579 |
in Procon 2,303 |
in the Courts 4,083 |
in the company 801,942 |
in Procon 1,440 |
in the Courts 2,532 |
% of complaints and criticisms attended to or resolved: | in the company 100% |
in Procon 100% |
in the Courts 33.42% |
in the company 100% |
in Procon 100% |
in the Courts 46.95% |
Total value-added to distribute (R$ 000): | In 2010: 8,686,175 | In 2009 * : 8,182,186 | ||||
Value-Added Distribution (VAD): |
65.41% government 5.73% employees |
64.19% government 6.52% employees | ||||
7 - Other Information | ||||||
Consolidated information | ||||||
* Readjusted to adequate to IFRS Stardard. | ||||||
For the financial items, it was used the percentage of stock paticipation. For the other information, such as: the number of employees and the legal lawsuits, the information was available in full numbers. | ||||||
Responsible: Antônio Carlos Bassalo, phone: 55-19-3756-8018, bassalo@cpfl.com.br | ||||||
(*) Information not examined by the independent auditors |
13 |
CPFL ENERGIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED ON DECEMBER 31, 2010 AND 2009
(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 in Brazil.
The Companys headquarters are located at Rua Gomes de Carvalho, 1510 - 14º floor - Cj 2 - Vila Olímpia - São Paulo - SP - Brasil.
The Company has direct and indirect interests in the following operational subsidiaries (information on the concession area, number of consumers, energy production capacity and associated data not examined by the independent auditors):
Energy distribution |
Company Type |
Equity Interest |
Location (State) |
Number of municipalities |
Approximate number of consumers (in thousands) |
Concession term |
End of the concession | |||||||
Companhia Paulista de Força e Luz ("CPFL Paulista") |
Publicly-quoted corporation |
Direct |
Interior of S. Paulo |
234 |
3,661 |
30 years |
November 2027 | |||||||
Companhia Piratininga de Força e Luz ("CPFL Piratininga") |
Publicly-quoted corporation |
Direct |
Interior of S. Paulo |
27 |
1,439 |
30 years |
October 2028 | |||||||
Rio Grande Energia S.A. ("RGE") |
Publicly-quoted corporation |
Direct |
Interior of Rio Grande do Sul |
262 |
1,272 |
30 years |
November 2027 | |||||||
Companhia Luz e Força Santa Cruz ("CPFL Santa Cruz") |
Private corporation |
Direct |
Interior of São Paulo and Paraná |
27 |
180 |
16 years |
July 2015 | |||||||
Companhia Leste Paulista de Energia ("CPFL Leste Paulista") |
Private corporation |
Direct |
Interior of S. Paulo |
7 |
51 |
16 years |
July 2015 | |||||||
Companhia Jaguari de Energia ("CPFL Jaguari") |
Private corporation |
Direct |
Interior of S. Paulo |
2 |
33 |
16 years |
July 2015 | |||||||
Companhia Sul Paulista de Energia ("CPFL Sul Paulista") |
Private corporation |
Direct |
Interior of S. Paulo |
5 |
72 |
16 years |
July 2015 | |||||||
Companhia Luz e Força de Mococa ("CPFL Mococa") |
Private corporation |
Direct |
Interior of São Paulo and Minas Gerais |
4 |
41 |
16 years |
July 2015 |
Installed power | ||||||||||||
Energy generation - operational |
Company Type |
Equity Interest |
Location (State) |
Number of plants / type of energy |
Total |
CPFL participation | ||||||
CPFL Geração de Energia S.A. |
Publicly-quoted corporation |
Direct |
São Paulo, Goiás and Minas Gerais |
1 Hydroelectric, 20 PCHs e 1 Thermal* |
812 MW |
812 MW | ||||||
Foz do Chapecó Energia S.A. |
Private corporation |
Indirect |
Santa Catarina and |
1 Hydroelectric |
855 MW |
436 MW | ||||||
Campos Novos Energia S.A. |
Private corporation |
Indirect |
Santa Catarina |
1 Hydroelectric |
880 MW |
429 MW | ||||||
CERAN - Companhia Energética Rio das Antas |
Private corporation |
Indirect |
Rio Grande do Sul |
3 Hydroelectric |
360 MW |
234 MW | ||||||
BAESA - Energética Barra Grande S.A. |
Publicly-quoted corporation |
Indirect |
Santa Catarina and |
1 Hydroelectric |
690 MW |
173 MW | ||||||
Centrais Elétricas da Paraíba S.A. ("EPASA") |
Private corporation |
Indirect |
Paraíba |
2 Thermals |
342 MW |
174 MW | ||||||
Paulista Lajeado Energia S.A. |
Private corporation |
Indirect |
São Paulo |
1 Hydroelectric |
903 MW |
63 MW | ||||||
CPFL Bioenergia S.A. |
Private corporation |
Indirect |
São Paulo |
1 Thermal |
45 MW |
45 MW | ||||||
CPFL Sul Centrais Elétricas Ltda. |
Limited company |
Indirect |
Rio Grande do Sul |
4 Small Hydroelectric Plants (RS) |
2,65 MW |
2,65 MW | ||||||
(*) PCH - Small Hydropower Plant Central Hidrelétrica |
||||||||||||
(**) Paulista Lajeado has a 7% participation in the installed power of Investco S.A. |
1
Energy generation - under development |
Company Type |
Equity Interest |
Location |
Number of plants / type of energy |
Scheduled start-up date |
Projected installed power | ||||||
CPFL Bio Formosa S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Thermal |
2011 |
40 MW | ||||||
CPFL Bio Buriti S.A. |
Private corporation |
Indirect |
São Paulo |
1 Thermal |
2011 |
50 MW | ||||||
CPFL Bio Ipê S.A. |
Private corporation |
Indirect |
São Paulo |
1 Thermal |
2011 |
25 MW | ||||||
CPFL Bio Pedra S.A. |
Private corporation |
Indirect |
São Paulo |
1 Thermal |
2012 |
70 MW | ||||||
Santa Clara I Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Santa Clara II Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Santa Clara III Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Santa Clara IV Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Santa Clara V Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Santa Clara VI Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Eurus VI Energias Renováveis Ltda. |
Limited Company |
Indirect |
Rio Grande do Norte |
1 Wind power |
2012 |
30 MW | ||||||
Campo dos Ventos I Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
Campo dos Ventos II Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
Campo dos Ventos III Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
Campo dos Ventos IV Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
Campo dos Ventos V Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
Eurus V Energias Renovaveis S.A. |
Private corporation |
Indirect |
Rio Grande do Norte |
1 Wind power |
2013 |
30 MW | ||||||
(*) The predicted installed power for the Santa Clara Wind Power complex is 188 MW. |
||||||||||||
(**) The projected installed power for the Campo dos Ventos Wind Power complex is 160 MW. |
2
Commercialization of Energy and Services |
Company Type |
Core activity |
Equity Interest | |||
CPFL Comercialização Brasil S.A. ("CPFL Brasil") |
Private corporation |
Energy commercialization, consultancy and advisory services to agents in the energy sector |
Direct | |||
Clion Assessoria e Comercialização de Energia Elétrica Ltda. |
Limited company |
Commercialization and provision of energy services |
Indirect | |||
CPFL Comercialização Cone Sul S.A. ("CPFL Cone Sul") |
Private corporation |
Energy commercialization |
Indirect | |||
CPFL Planalto Ltda. ("CPFL Planalto") |
Limited company |
Energy commercialization |
Direct | |||
CPFL Serviços, Equipamentos, Industria e Comércio S.A. |
Private corporation |
Manufacturing, commercialization, rental and maintenance of electro-mechanical equipment and service provision |
Direct | |||
Chumpitaz Serviços S.A. ("Chumpitaz") |
Private corporation |
Provision of administrative services |
Direct | |||
CPFL Atende Centro de Contatos e Atendimento Ltda. ("CPFL Atende") |
Limited company |
Provision of telephone answering services |
Direct | |||
Other |
Company Type |
Core activity |
Equity Interest | |||
CPFL Jaguariuna S.A. ("CPFL Jaguariuna") |
Private corporation |
Venture capital company |
Direct | |||
Companhia Jaguari de Geração de Energia ("Jaguari Geração") |
Private corporation |
Venture capital company |
Direct | |||
Chapecoense Geração S.A. ("Chapecoense") |
Private corporation |
Venture capital company |
Indirect | |||
CPFL Bio Anicuns S.A. |
Private corporation |
Energy generation studies and projects |
Indirect | |||
CPFL Bio Itapaci S.A |
Private corporation |
Energy generation studies and projects |
Indirect | |||
Sul Geradora Participações S.A. ("Sul Geradora") |
Private corporation |
Venture capital company |
Indirect |
Subsidiaries that started its operations in 2010
CPFL Bioenergia S.A.
The main objective of CPFL Bioenergia S.A., which started operations on August 27, 2010, is the thermal and steam generation of electric energy using co-generation plants powered by sugarcane waste and straw.
Centrais Elétricas da Paraíba S.A.
The objective of Epasa is to develop, implement, operate and exploit two thermoelectric plants, UTE Termoparaíba and UTE Termonordeste, both powered by fuel oil. UTE Termonordeste started its operations on December 24, 2010 and UTE Termoparaíba on January 13, 2011.
Chapecoense Geração S.A.
The objective of the jointly-controlled subsidiary Chapecoense Geração is to build, operate and exploit the Foz do Chapecó Hydropower Plant. Three (3) generator units, with installed power of 213.75 MW each, started operations in 2010, on October 14, November 23 and December 30. The last generator unit is scheduled to start operations by the end of the first quarter of 2011.
( 2 ) PRESENTATION OF THE FINANCIAL STATEMENTS
3
2.1 Basis of preparation
The individual (Parent Company) and consolidated financial statements were prepared in accordance with generally accepted accounting principles in Brazil, based on the guidelines provided by the Brazilian Committee on Accounting Pronouncements (Comitê de Pronunciamentos Contábeis - CPC) and approved by the Brazilian Securities Commission (Comissão de Valores Mobiliários - CVM).
The Company also follows the guidelines of the Accounting Manual of the Public Electric Energy and the standards laid down by the National Electric Energy Agency (Agência Nacional de Energia Elétrica ANEEL), when these are not in conflict with generally accepted accounting practices in Brazil and/or international accounting practices.
The individual financial statements are in conformity with the International Financial Reporting Standards IFRS, issued by the International Accounting Standard Board IASB, except for evaluation of investments in subsidiaries and jointly-owned entities, which are accounted for by the equity method, while for the IFRS they should be accounted for by the cost or fair value method.
The consolidated financial statements were also prepared and are presented in full conformity with the IFRS. These are the first consolidated statements prepared in accordance with this international practice.
Note 5 shows the main differences between the accounting practices adopted previously in Brazil and the current and effective standards presented herein.
The consolidated financial statements were authorized for issue by the Board of Directors on March 14, 2011.
2.2 Basis of measurement
The financial statements have been prepared on the historic cost basis except for the following material items recorded in the balance sheets: i) derivative financial instruments measured at fair value, ii) financial instruments at fair value through profit or loss measured, iii) available-for-sale financial assets are measured at fair value, iv) property, plant and equipment adjusted to reflect the deemed cost on the transition date, and v) actuarial assets, recognition of which is limited to the present value of the economic benefits available in the form of reimbursements or future reductions in contributions to the plan.
2.3 Use of estimates and judgments
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
By definition, the resulting accounting estimates are rarely the same as the actual results. Accordingly, Company Management reviews the estimates and assumptions on an ongoing basis. Adjustments derived from revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about assumptions and estimate that are subject to a greater degree of uncertainty and involve the risk of resulting in a material adjustment if these assumptions and estimates suffer significant changes during the next financial year is included in the following notes:
· Note 10 Deferred tax credits and debits;
· Note 12 Financial asset of concession;
· Note 16 Intangible assets;
· Note 20 Private Pension Fund;
· Note 23 Provision for contingency, and
· Note 35 Financial instruments.
4
2.4 Functional currency and presentation currency
The individual and consolidated financial statements are presented in thousands of Brazilian reais, which is the Company's functional currency.
2.5 Basis of consolidation:
(i) Business combinations
- Acquisitions made after January 1, 2009
In the case of acquisitions made after January 1, 2009, the Company measures goodwill as the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. If the excess is negative, a gain arising from the purchase agreement is recognized immediately in profit or loss for the period.
- Acquisitions prior to January 1, 2009
As part of the transition to the IFRS and CPC the Company opted not to re-present business combinations prior to January 1, 2009. In relation to acquisitions prior to January 1, 2009 the goodwill represents the amount recognized under the accounting practices adopted previously. This goodwill was tested for impairment at the transition date, in accordance with Note 3.6.
(ii) Subsidiaries and jointly-owned entities:
The financial statements of subsidiaries and jointly-owned entities (joint ventures) are included in the consolidated financial statements from the date that total or shared control commences until the date that control ceases.
A jointly controlled operation is a venture directly or indirectly controlled together with other investors, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.
The accounting policies of subsidiaries and jointly controlled entities taken into consideration in consolidation are aligned with the Company's accounting policies.
The financial information of subsidiaries and jointly controlled entities and of the associates is accounted for using the equity method.
The consolidated financial statements include the balances and transactions of the Company and its subsidiaries. The balances and transactions of assets, liabilities, income and expenses have been fully consolidated for fully owned subsidiaries and proportionately consolidated for the jointly-owned entities.
Intra-group balances and transactions, and any income and expenses derived from these transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Observing the conditions described above, the amount related to non-controlling interests is shown in shareholders' equity after the statement of income for the year in each year presented.
(iii) Acquisition of non-controlling interest
Accounted for as transactions within equity holders and therefore no goodwill is recognized as a result of such transactions.
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2.6 Segment information:
An operating segment is a component of the Company (i) that engages in operating activities from which it may earn revenues and incur expenses, (ii) whose operating results are regularly reviewed by Management to make decisions about resources to be allocated and assess the segment's performance, and (iii) for which discrete financial information is available.
Company Management bases strategic decisions on reports, segmenting the business into: (i) electric energy distribution activities (Distribution); (ii) electric energy generation activities (Generation); (iii) energy commercialization and service provision activities (Commercialization); and (iv) other, basically corresponding to corporate services and other activities not listed in the previous items.
Presentation of the operating segments includes items directly attributable to them, such as allocations required, including intangible assets.
2.7 Information on Corporate Interests
The interests directly or indirectly held by the Company in the subsidiaries and jointly-owned entities are described in Note 1. Except for the (i) jointly-owned entities ENERCAN, BAESA, Foz do Chapecó and EPASA, which are consolidated proportionately, and (ii) the investment in Investco recorded at cost by the subsidiary Paulista Lajeado, the other units are fully consolidated.
As of December 31, 2010, the participation of non-controlling interests stated in the consolidated statements refers to the third-party interests in the subsidiaries CERAN and Paulista Lajeado.
2.8 Value added statements:
The Company prepared individual and consolidated value added statements (DVA) in conformity with technical pronouncement CPC 09 - Value Added Statement, which are presented as an integral part of the financial statements in accordance with the CPC standards for public companies, while for the IFRS they represent additional financial information.
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( 3 ) SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these individual and consolidated financial statements.
3.1 Concession agreements:
ICPC 01 Concession Agreements establishes general guidelines for the recognition and measurement of obligations and rights related to concession agreements and applies to situations in which the granting power controls or regulates which services the concessionaire should provide with the infrastructure, to whom the services should be provided and at what price, and controls any significant residual interest in the infrastructure at the end of the concession period.
These definitions having been attended to, the infrastructure of distribution concessionaires is segregated and rollforwarded from the time of construction, complying with the provisions of the CPCs and IFRSs, so that the financial statements record (i) an intangible asset corresponding to the right to operate the concession and collect from the users of public utilities, and (ii) a financial asset corresponding to the unconditional contractual right to receive cash (compensation) by reversing the assets at the end of the concession.
The value of the concession financial assets is determined at fair value, based on the remuneration of the assets established by the regulatory authority. The financial asset is classified as available-for-sale and is restated and amortized annually in accordance with the adjustment of its fair value, against the revaluation reserve in equity.
The remaining amount is registered in intangible assets and corresponds to the right to charge consumers for electric energy distribution services, amortized in accordance with the consumption pattern that reflects the estimated economic benefit to the end of the concession.
Provision of infrastructure construction services is registered in accordance with CPC 17 Construction Contracts, against a financial asset corresponding to the amount subject to compensation. Residual amounts are classified as intangible assets and will be amortized over the concession period in accordance with the economic pattern against which the revenue from consumption of electric energy is collected.
In accordance with (i) the tariff model that does not provide for a profit margin for the infrastructure construction activity, (ii) the way in which the subsidiaries manage the building by using a high level of outsourcing, and (iii) there is no provision for gains on constructions in the Companys business plans, management is of the opinion that the margins on this operation are irrelevant, and therefore no additional value to the cost is considered in the composition of the revenue. The revenue and construction costs are therefore presented in profit or loss for the year at the same amounts.
3.2 Financial instruments:
- Financial assets:
Financial assets are recognized initially on the date that they are originated or on trade date at which the Company or its subsidiaries become one of the parties to the contractual provisions of the instrument. Derecognition of a financial asset occurs when the contractual rights to the cash flows from the asset expire or when the risks and rewards of ownership of the financial asset are transferred. The Company and its subsidiaries hold the following main financial assets:
i. Classified at fair value through profit or loss: these assets held for trading or designated as such upon initial recognition. The Company and its subsidiaries manage such assets and make purchase and sale decisions based on their fair value in accordance with their documented risk management or investment strategy. These financial assets are measured at fair value, and changes therein are recognized in profit or loss for the year.
The main financial assets classified by the Company and its subsidiaries in this category are: (i) bank balances and financial investments (Note 6), (ii) marketable securities (Note 8) and (iii) derivatives (Note 35.d).
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ii. Held-to-maturity: these are assets that the Company and its subsidiaries have the positive intent and ability to hold to maturity. Held-to-maturity financial assets are recognized initially at fair value and subsequent to initial recognition are measured at recognized cost using the effective interest method, less any impairment losses.
The Company and its subsidiaries classify the following financial assets in this category: (i) security receivable from CESP (Note 8) and (ii) receivables of the subsidiary CPFL Paulista from CESP (Note 13).
iii. Loans and receivables: these are assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value and, subsequent to initial recognition, measured at recognized cost using the effective interest method, less any impairment losses.
The main financial assets of the Company and its subsidiaries classified in this category are: (i) consumers, concessionaires and licensees (Note 7), (ii) dividends and Interest on shareholders equity (Note 14.2) and (iii) other credits (Note 13).
iv. Available-for-sale: these are non-derivative financial assets that are designated as available-for-sale or that are not classified in any of the previous categories. Subsequent to initial recognition, interest calculated by the effective rate method is recognized in profit or loss as part of the net operating income. Changes for registration at fair value are recognized in the revaluation reserve in equity. The accumulated result in other comprehensive income is transferred to profit or loss when the asset is realized.
The main asset of the Company and its subsidiaries classified in this category is the right to compensation at the end of the concession. The option to designate this instrument as available-for-sale is due to its non-classification in the previous categories described. Since Management believes that the compensation will be made at least in accordance with the current tariff pricing model, this instrument cannot be registered as loans and receivables as the compensation will not be fixed or determinable, due to the uncertainty in relation to impairment for reasons other than deterioration of the credit. The main uncertainties relate to the risk of non-recognition of part of these assets by the regulatory authority and their replacement values at the end of the concession (Note 4).
- Financial liabilities:
Financial liabilities are initially recognized on the date that they are originated or on the trade date at which the Company or its subsidiaries become a party to the contractual provisions of the instrument. The Company and its subsidiaries have the following main financial liabilities:
i. Measured at fair value through profit or loss: these are financial liabilities that are: (i) held for short-term trading, (ii) designated at fair value in order to evaluate the effects of recognition of income and expenses to obtain more relevant and consistent accounting information, or (iii) derivatives. These liabilities are registered at fair value and for any change in the subsequent measurement of the fair value, set through profit or loss.
The Company and its subsidiaries classified the following financial liabilities in this category: (i) certain foreign currency debts (Note 18) and (ii) derivatives (Note 35.d).
ii. Not measured at fair value through profit or loss: these other financial liabilities that are not classified in any of the previous categories. They are measured initially at fair value less any attributable transaction cost and subsequently measured at recognized cost by the effective interest method.
The main financial liabilities classified in this category are: (i) suppliers (Note 17), (ii) loans and financing (Note 18), (iii) debt charges (Note 18); (iv) debenture charges (Note 19); (v) debentures (Note 19); (vi) public utilities (Note 24); (vii) dividends payable e (viii) other accounts payable (Note 25).
The Company accounts for warranties when these are issued to non-controlled entities or when the warranty is granted at a percentage higher than the Company's interest. Such warranties are initially measured at fair value, by (i) a liability equivalent to the income to be appropriated, which will subsequently be recognized as the Company is released from the obligations and (ii) an asset equivalent to the right to compensation by the guaranteed party, subsequently amortized by receipt of cash or on a straight-line basis to profit or loss.
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Financial assets and liabilities are offset and the net amount presented when, and only when, there is a legal right to offset the amounts and the intent to settle on a net basis or to realize the asset and settle the liability simultaneously.
- Capital
Common shares are classified as equity. Additional costs directly attributable to and share options are recognized as a deduction from equity, net of any tax effects.
3.3 Lease agreements:
It should be established at the inception of an agreement whether such arrangement is or contains a lease. A specific asset is the subject of a lease if fulfillment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the lessor the right to control the use of the underlying asset.
Leases in which substantially all the risks and rewards are with the lessor are classified as operating leases. Payments/receipts made under operating leases are recognized as expense/revenue in profit or loss on a straight-line basis, over the term of the lease.
Leases which involve not only the right to use assets, but also substantially transfer the risks and rewards to the lessee, are classified as finance leases.
In finance leases in which the Company or its subsidiaries act as lessee, the assets are capitalized to property, plant and equipment at the inception of the agreement against a liability measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. The property, plant and equipment is depreciated in accordance with the accounting policy applicable to that asset.
If the Company or its subsidiaries are the lessor in a finance lease, the investment is initially recognized at the construction/acquisition cost of the asset.
In both cases, the financial income/expense is recognized in profit or loss for the year over the term of the lease so as to produce a constant rate of interest on the remaining balance of the investment/liability.
3.4 Property, plant and equipment:
Items of property, plant and equipment are measured at acquisition, construction or formation cost less accumulated depreciation and, if applicable, accumulated impairment losses. Cost also includes any other costs attributable to bringing the assets to the place and in a condition to operate as intended by management, the cost of dismantling and removing the items and restoring the site on which they are located and capitalized borrowing costs on qualifying assets.
The assets were measured at the transition date in accordance with the CPC and IFRS rules by segregation into two groups:
- Assets measured at deemed cost at the transition date: model adopted for assets built and put into long-term service where it is not possible to reconstruct the cost formation or where the cost of the survey is of no benefit in presentation of the financial statements. The cost of these items at the transition date was therefore determined in accordance with market prices (deemed cost) and the revalued amounts are presented for both cost and accumulated depreciation. The effects of the deemed cost increased property, plant and equipment against equity, net of related tax effects.
- Assets measured at historic cost: model adopted by the Company for recently built assets where the basis for cost formation can be easily confirmed and the values at historic cost approximate the respective market values. In such cases, the subsidiaries performed an analysis to ensure that the cost formation is in accordance with current accounting practices.
The replacement cost of items of property, plant and equipment is recognized if it is probable that it will involve economic rewards for the subsidiaries and if the cost can be reliably measured, and the value of the replaced item is written off. Maintenance costs are recognized in profit or loss as they are incurred
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Depreciation is calculated on a straight-line basis, at annual rates of 2% to 20%, taking into consideration the estimated useful life of the assets, as instructed and defined by the regulatory authority. In the case of generators subject to regulation by Decree 2003, of 1996, the assets are depreciated at the rates established by the regulatory authority, provided they do not exceed the term of the concession.
Gains and losses derived from write-down of an item of property, plant and equipment are determined by comparing the resources produced by disposal with carrying amount of the asset, and are recognized net together with other operating income/expense.
Assets and facilities used in the regulated activities are tied to these services and may not be removed, disposed of, assigned or pledged in mortgage without the prior and express authorization of ANEEL. ANEEL regulates the release of Public Electric Energy Utility concession assets, granting prior authorization for release of assets of no use to the concession, intended for disposal and determines that the proceeds of the disposal be deposited in a tied bank account for use in the concession.
3.5 Intangible assets:
Includes rights related to non-physical assets such as goodwill, concession exploration rights, software and rights-of-way.
Goodwill that arises the acquisition of subsidiaries is measured at the difference between the amount paid and/or payable for acquisition of a business and the net fair value of the assets and liabilities of the subsidiary acquired.
Goodwill is measured at cost less accumulated impairment losses. Goodwill and other intangible assets with indefinite useful lives are not subject to amortization and tested annually for impairment.
Negative goodwill are registered as gains in profit or loss at the time of the acquisition.
In the individual financial statements, goodwill is included in the carrying amount of the investment, and stated as intangible in the consolidated financial statements.
Intangible assets corresponding to the right to operate concessions can have three separate origins, based on the following arguments:
i. Acquisitions through business combinations: the portion of goodwill arising from business combinations that corresponded to the right to operate the concession is stated as an intangible asset. Such amounts are amortized based on the net income curves projected for the concessionaires for the remaining term of the concession.
ii. Investments in infrastructure (Application of ICPC 01 Concession agreements): Under the electric energy distribution concession agreements with the subsidiaries, the intangible asset registered corresponds to the concessionaires' right to collection uses for use of the concession infrastructure. Since the exploration term is defined in the agreement, intangible assets with defined useful lives are amortized over the term of the concession in proportion to a curve that reflects the consumption pattern in relation to the anticipated economic rewards. For further information see Note 3.1.
iii. Public utilities: certain generation concessions were granted against payment to the federal government for use of a public utility. This obligation was registered on the date of signing the respective agreements, at present value, against the intangible assets account. These amounts, capitalized by interest incurred on the obligation to the start-update, are amortized on a straight-line basis over the remaining term of the concession.
3.6 Impairment
- Financial assets:
A financial asset not measured at fair value through profit or loss is reassessed at each reporting date to determine whether there is objective evidence that it is impaired. Impairment can occur after the initial recognition of the asset and have a negative effect on the estimated future cash flows.
The Company and its subsidiaries consider evidence of impairment of receivables and held-to-maturity investment securities at both a specific assets and collective level for all significant securities. Receivables and held-to-maturity investment securities that are not individually significant are collectively assessed for impairment by grouping together the securities with similar risk characteristics.
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In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgment as to whether the assumptions and current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historic trends.
An impairment loss of a financial asset is recognized as follows:
· Amortized cost: as the difference between the carrying amount and the present value of the estimated future cash flows discounted at the assets original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When a subsequent event indicates the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
· Available-for-sale: by reclassification of the cumulative loss that has been recognized in the revaluation reserve in equity, to profit or loss. This reclassified loss is the difference between the acquisition cost, net of any principal repayment and amortization of the principal, and the current fair value, less any impairment loss previously recognized in profit or loss. Changes in impairment provisions attributable to effective interest rate are reflected as a component of financial income.
If an increase (gain) is identified in periods subsequent to recognition of the loss, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale financial asset is recognized in the revaluation reserve in equity.
- Non-financial assets:
Non-financial assets that have indefinite useful lives, such as goodwill, are tested annually to check that the asset's carrying amount does not exceed the recoverable value. Other assets subject to amortization are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may be impaired.
In impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount, which is the greater of its value in use and its fair value less costs to sell.
The methods used to assess impairment include tests based on the asset's value in use. In such cases, the assets (e.g. goodwill) are segregated and grouped together at the lowest level that generates identifiable cash flows (the "cash generating unit", or CGU). If there is an indication of impairment, the loss is recognized in profit or loss. Except in the case of goodwill, where the loss cannot be reversed in the subsequent period, impairment losses are assessed annually for any possibility to reverse the impairment.
Goodwill included in the carrying amount of an investment in an associate, as it is not recognized individually, is tested with the investment, as if it were a single asset.
3.7 Provisions
A provision is recognized if, as a result of a past event, there is a legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If applicable, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessment and the risks specific to the liability.
3.8 Employee benefits
The subsidiaries have post-employment benefits and pension plans, recognized by the accrual method in accordance with CPC 33 Employee benefits. Although the plans have particularities, they have the following characteristics:
i. Defined distribution plan: a post-employment benefit plan under which the Company pays fixed contributions into a separate entity and will have no liability for the actuarial deficits of this plan. The obligations are recognized as an expense in profit or loss in the periods during which the services are rendered.
11
ii. Defined benefit plan: The net obligation is calculated as the difference between the present value of the actuarial obligation based on assumptions, biometric studies and interest rates in line with market rates, and the fair value of the plan assets of the reporting date. The actuarial liability is calculated annually by independent actuaries using the projected unit credit method. The subsidiaries use the corridor method to avoid fluctuations in the macroeconomic conditions distorting the profit or loss for the period. The accumulated differences between the actuarial estimates and the actual results are therefore not recognized in the financial statements unless they are in excess of 10% of the greater of the plan liabilities and assets. Unrecognized gains and losses in excess of this limit are recognized in profit or loss for the year over the estimated remaining service time of the employees. If the plan records a surplus and it becomes necessary to recognize an asset, recognition is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of reimbursements or future reductions in contributions to the plan.
3.9 Dividends and Interest on shareholders equity
Under Brazilian law, the Company is required to distribute a mandatory minimum annual dividend of 25% of net income adjusted in accordance with the bylaws. To December 31, 2008, dividends in excess of the minimum of 25% had to be proposed and provision at each reporting date, subject to approval in an Annual General Meeting (AGM). According to international accounting practices, CPC 24 and ICPC 08, a provision may only be made for the minimum mandatory dividend, and dividends declared but not yet approved are only recognized as a liability in the financial statements after approval by the competent body. They will therefore be held in equity, in the Additional dividend proposed account, as they do not meet the criteria of present liability at the reporting date.
As established in the Company's bylaws and in accordance with current Corporate law, the Board of Directors is responsible for declaring interim dividends and Interest on shareholders equity determined in a half-yearly balance sheet. Interim dividends declared at the base date of June 30 is only recognized as a liability in the Company's financial statement after the date of the Board's decision.
Under previous accounting practices, Interest on shareholders equity was recorded in profit or loss and reversed for purposes of presentation of the statement of income for the year. In accordance with the new accounting practice, Interest on shareholders equity is no longer shown in the statement of income for the year and the effects are only stated in changes in equity and in the effective income tax and social contribution rates.
3.10 Revenue recognition
Operating income in the course of ordinary activities of the subsidiaries is measured at the fair value of the consideration received or receivable. Operating revenue is recognized when persuasive evidence exists that the most significant risks and rewards have been transferred to the buyer, when it is probable that the financial and economic rewards will flow to the entity, that the associated costs can be reliably estimated, and the amount of the operating income can be reliably measured.
Revenue from distribution of electric energy is recognized when the energy is billed. Unbilled income related to the monthly billing cycle is appropriated based on the actual amount of energy provided in the month and the annualized loss rate. Historically, the difference between the unbilled revenue and the actual consumption, which is recognized in the subsequent month, has not been material. Revenue from energy generation sales is accounted for based on the assured energy and at tariffs specified in the terms of the contract or the current market price, as applicable. Energy commercialization revenue is accounted for based on bilateral contracts with market agents and duly registered with the Electric Energy Commercialization Chamber - CCEE. No single consumer represents 10% or more of the total billing.
Service revenue is recognized when the service is effectively provided, under a service agreement between the parties.
Revenue from construction contracts is recognized by the percentage of completion method (fixed-price), and losses are recognized in profit or loss as incurred.
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3.11 Income tax and Social contribution
Income tax and Social contribution expense for the period is calculated and recognized in accordance with the legislation in force and comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to an item recognized directly in equity or in the revaluation reserve in equity, which is recognized net of tax effects.
Current tax is the expected tax payable or receivable/to be offset on the taxable income or loss for the year. Deferred tax is recognized for temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the equivalent amounts used for tax purposes.
The Company and certain subsidiaries recorded in their financial statements the effects of tax loss carryforwards and temporary non-deductible differences, based on projections of future taxable profits, approved by the Boards of Directors and examined by the Fiscal Council. The subsidiaries also recognized tax credits on merged goodwill, which is amortized in proportion to the individual projected net incomes for the remaining term of each concession agreement.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
Deferred income tax and social contribution assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
3.12 Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to the Company by the weighted average number of common and preferred shares outstanding during the period. Diluted earnings per share is determined by the above-mentioned weighted average number of shares outstanding, adjusted for the effects of all dilutive potential convertible notes for the reporting periods, in accordance with CPC 41 e IAS 33.
3.13 Regulatory assets and liabilities
In accordance with the preliminary interpretation of IASB/IFRIC, regulatory assets and liabilities cannot be recognized in the Company's financial statements as they do not meet the requirements for assets and liabilities described in the Framework for the Preparation and Presentation of Financial Statements. The rights or offsetting are therefore only reflected in the financial statements to the extent that the electric energy is consumed by the captive customers.
3.14 New standards and interpretations not yet adopted
Certain standards, amendments to the IFRS standards and interpretations issued by the IASB not yet effective for the year ended December 31, 2010, are listed below:
Limited exemption from Comparative IFRS 7 Disclosures for First-time Adopters.
Improvements to IFRS 2010.
IFRS 9 Financial Instruments
Prepayment of a minimum fund requirement (Amendment to IFRIC 14)
Amendments to IAS 32 Classification of rights issues.
The CPC has not yet issued pronouncements equivalent to the above-mentioned IFRSs, but it is expected to do so prior to the date on which they become mandatory. Early adoption of the pronouncements on the IFRS is conditional on prior approval in a regulatory act of the Brazilian Securities Commission. The Company is analyzing the impact of these new standards on its financial statements.
( 4 ) DETERMINATION OF FAIR VALUES
A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
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- Property, plant and equipment and intangible assets
The fair value of property, plant and equipment and intangible assets recognized as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between knowledgeable and willing parties under normal market conditions. The fair value of items of property, plant and equipment is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate.
- Financial instruments
Financial instruments measured at fair values were recognized based on quoted prices in an active market, or assessed using pricing models, applied individually for each transaction, taking into consideration the future payment flows, based on the conditions contracted, discounted to present value at market interest rate curves, based on information obtained from the BM&F, BOVESPA and ANDIMA websites, when available. Accordingly, the market value of a security corresponds to its maturity value (redemption value) marked to present value by the discount factor (relating to the maturity date of the security) obtained from the market interest graph in Brazilian reais.
Financial assets classified as available-for-sale refer to the right to compensation to be paid by the Federal Government on reversal of the assets of the distribution concessionaires. The methodology adopted for marking these assets to market is based on the tariff review process for distributors. This review, conducted every four or five years according to each concessionaire, consists of revaluation at market price of the distribution infrastructure. This valuation basis is used for pricing the tariff, which is increased annually up to the next tariff review, based on the parameter of the main inflation indices.
Although the methodology and criteria for valuation of the compensation on reversal of the assets has not yet been defined by the Federal Government, company management believes that it will be based at least on the tariff pricing model. Accordingly, at the time of the tariff review, each concessionaire adjusts the position of the financial asset base for compensation at the amounts ratified by the regulatory authority and uses the General Market Price Index - IGP-M as best estimate for adjusting the original base to the fair value at subsequent dates, in conformity with the Tariff Review process.
( 5 ) FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
As a result of the enactment of Laws 11.638/07 and 11.941/09, in 2008, the CPC issued and the CVM approved a series of accounting Pronouncements and Interpretations with the objective of bringing Brazilian accounting practices into line with the international financial reporting standards (IFRS). These pronouncements have been fully applied, completing the first stage of the convergence.
In order to fully complete the process, further pronouncements were issued in the course of 2009 and 2010, so that the consolidated financial statements for the year ending December 31, 2010 would be in line with international standards.
These financial statements are the first to have been prepared in conformity with the IFRS. In order to make the accounting practices standardization process possilble, the Company applied CPCs 37 and 43 and IFRS 1, adopting January 1, 2009 as the transition date. Consequently, the 2009 financial statements are re-presented with the adjustments on adoption of the above-mentioned CPCs identified.
According to the pronouncements referred to above, there are mandatory retroactive application exceptions and optional exemptions.
Procedures adopted by the Company:
- Employee benefits: Recognition of the defined benefit type pension plans. In view of the impracticality of retroactive application, the Company took advantage of the exemption and all past gains and losses were recognized at January 1, 2009 against the accrued loss account.
- ICPC 01 Concession agreements: Retroactive reconciliation of the financial assets and intangible assets accounted for in accordance with ICPC 01 and IFRIC 12. Accordingly, the Company did not use the exemption allowed for the transition rules.
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- Business combinations: In accordance with the exemption permitted by CPC 37 and IFRS 1, the Company opted not to apply the requirements of CPC 15 Business combinations retroactively in the transition to the International accounting standards. Accordingly, only business combinations occurring after January 1, 2009 reflect the requirements of this pronouncement.
- Deemed cost: CPC 37 allows the option to measure an item of property, plant and equipment at the deemed cost at the transition date, in accordance with Technical Interpretation ICPC 10 - Interpretation on the First Application to Property, Plant and Equipment and to Investment Property of Technical Pronouncements CPC 27, 28, 37 and 43. The Company opted to recognize the property, plant and equipment of the subsidiaries CPFL Sul Centrais and CPFL Geração at market value at the transition date.
- The estimates used in preparation of these financial statements at January 1, 2009 and December 31, 2009 are consistent with the estimates made on the same dates in accordance with the practices previously adopted in Brazil.
The impact of the transition to the international accounting practices on the balance sheet and equity at January 1, 2009 and December 31, 2009, and the profit or loss for the year 2009 are described below.
5.1 Reconciliation of the adjustments and reclassifications on adoption of the new accounting practices:
a) Opening balance sheet at January 1, 2009:
ASSETS |
Reference |
Previous |
Reclassifications (see item 5.2) |
Consolidation (see item 5.3.1) |
Adjustments |
New practices | |||||
CURRENT |
|||||||||||
Cash and cash equivalents |
737,847 |
- |
20,607 |
- |
758,454 | ||||||
Consumers, Concessionaires and Licensees |
5.3.2 |
1,721,028 |
(82,462) |
6,121 |
(41,532) |
1,603,155 | |||||
Dividend and Interest on Capital |
- |
- |
- |
- |
- | ||||||
Financial investments |
38,249 |
- |
- |
- |
38,249 | ||||||
Tax credits |
174,294 |
- |
1,673 |
- |
175,967 | ||||||
Derivatives |
36,520 |
- |
- |
- |
36,520 | ||||||
Provision for doubtful accounts |
(82,462) |
82,462 |
- |
- |
- | ||||||
Inventories |
15,594 |
7,636 |
- |
- |
23,230 | ||||||
Leasing |
- |
1,133 |
- |
- |
1,133 | ||||||
Deferred tax credits |
220,144 |
(220,144) |
- |
- |
- | ||||||
Prepaid expenses |
5.3.2 |
101,882 |
(14,065) |
745 |
(88,562) |
- | |||||
Deferral of tariff costs |
5.3.2 |
638,229 |
- |
- |
(638,229) |
- | |||||
Other |
110,793 |
5,296 |
85 |
2,223 |
118,397 | ||||||
3,712,118 |
(220,144) |
29,231 |
(766,100) |
2,755,105 | |||||||
NONCURRENT |
|||||||||||
Consumers, Concessionaires and Licensees |
5.3.2 |
286,144 |
- |
- |
(7,814) |
278,330 | |||||
Associates, Subsidiaries and Parent Company |
- |
- |
- |
- |
- | ||||||
Escrow deposits |
599,973 |
149,998 |
3 |
- |
749,974 | ||||||
Financial investments |
96,786 |
- |
- |
- |
96,786 | ||||||
Tax credits |
101,948 |
- |
3,219 |
- |
105,167 | ||||||
Derivatives |
396,875 |
- |
- |
- |
396,875 | ||||||
Deferred tax credits |
1,132,736 |
220,144 |
- |
241,251 |
1,594,131 | ||||||
Leasing |
- |
5,256 |
- |
- |
5,256 | ||||||
Financial asset of concession |
5.3.3 |
- |
- |
- |
582,241 |
582,241 | |||||
Private pension fund |
- |
- |
- |
- |
- | ||||||
Other investments at cost |
- |
116,249 |
- |
- |
116,249 | ||||||
Prepaid expenses |
5.3.2 |
99,210 |
(10,258) |
- |
(88,952) |
- | |||||
Deferral of tariff costs |
5.3.2 |
157,435 |
- |
- |
(157,435) |
- | |||||
Other |
5.3.8 |
221,330 |
5,002 |
15,891 |
46,238 |
288,461 | |||||
Investments |
5.3.8 |
103,598 |
(117,393) |
- |
13,795 |
- | |||||
Property, plant and equipment |
5.3.3 /5.3.4 /5.3.6 |
6,614,347 |
- |
398,467 |
(2,306,277) |
4,706,537 | |||||
Intangible assets |
5.3.3 / 5.3.5 |
2,700,136 |
29,492 |
53 |
3,322,463 |
6,052,144 | |||||
Deferred assets |
20,536 |
(28,348) |
7,812 |
- |
- | ||||||
TOTAL NONCURRENT ASSETS |
12,531,054 |
370,142 |
425,445 |
1,645,510 |
14,972,151 | ||||||
TOTAL ASSETS |
16,243,172 |
149,998 |
454,676 |
879,410 |
17,727,256 |
15
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||||
CURRENT LIABILITIES |
Reference |
Previous |
Reclassifications (see item 5.2) |
Consolidation (see item 5.3.1) |
Adjustments |
New practices | |||||
Suppliers |
982,344 |
- |
3,560 |
- |
985,904 | ||||||
Interest on debt |
29,081 |
- |
937 |
- |
30,018 | ||||||
Interest on debentures |
102,112 |
- |
1 |
- |
102,113 | ||||||
Loans and financing |
523,167 |
- |
33,038 |
- |
556,205 | ||||||
Debentures |
580,076 |
- |
- |
- |
580,076 | ||||||
Private pension fund |
5.3.7 |
44,088 |
- |
- |
1,169 |
45,257 | |||||
Regulatory charges |
94,054 |
- |
476 |
- |
94,530 | ||||||
Taxes and contributions |
464,339 |
- |
437 |
(8,104) |
456,672 | ||||||
Dividends and interest on equity |
5.3.8 |
632,087 |
- |
69 |
(614,644) |
17,512 | |||||
Estimated personnel costs |
46,244 |
- |
140 |
- |
46,384 | ||||||
Provision for contingencies |
15 |
(23) |
8 |
- |
- | ||||||
Derivatives |
53,443 |
- |
- |
- |
53,443 | ||||||
Public utilities |
5.3.5 |
- |
- |
- |
15,228 |
15,228 | |||||
Deferred tax debts |
- |
- |
- |
- |
- | ||||||
Deferral of tariff gains |
5.3.2 |
165,871 |
- |
- |
(165,871) |
- | |||||
Other accounts payable |
5.3.2 |
524,898 |
(124,865) |
978 |
(121,323) |
279,688 | |||||
TOTAL CURRENT LIABILITIES |
4,241,819 |
(124,888) |
39,644 |
(893,545) |
3,263,030 | ||||||
NONCURRENT LIABILITIES |
|||||||||||
Suppliers |
85,311 |
- |
- |
- |
85,311 | ||||||
Interest on debt |
74,104 |
- |
- |
- |
74,104 | ||||||
Loans and financing |
3,836,882 |
- |
249,257 |
- |
4,086,139 | ||||||
Debentures |
2,026,890 |
- |
- |
- |
2,026,890 | ||||||
Private pension fund |
5.3.7 |
508,194 |
- |
- |
293,770 |
801,964 | |||||
Taxes and contributions |
2,242 |
- |
1 |
- |
2,243 | ||||||
Deferred tax debts |
4,203 |
- |
- |
270,639 |
274,842 | ||||||
Provision for contingencies |
107,642 |
274,886 |
(1) |
- |
382,527 | ||||||
Derivatives |
961 |
- |
- |
- |
961 | ||||||
Public utilities |
5.3.5 |
- |
- |
- |
408,887 |
408,887 | |||||
Deferral of tariff gains |
5.3.2 |
40,779 |
- |
- |
(40,779) |
- | |||||
Other accounts payable |
5.3.2/5.3.8 |
207,194 |
- |
- |
62,318 |
269,512 | |||||
TOTAL NONCURRENT LIABILITIES |
6,894,402 |
274,886 |
249,257 |
994,835 |
8,413,380 | ||||||
SHAREHOLDERS' EQUITY |
|||||||||||
Capital |
4,741,175 |
- |
- |
- |
4,741,175 | ||||||
Capital reserve |
16 |
- |
- |
- |
16 | ||||||
Revenue reserve |
277,428 |
- |
- |
- |
277,428 | ||||||
Additional dividend proposed |
5.3.8 |
- |
- |
- |
606,105 |
606,105 | |||||
Revaluation reserve |
5.3.8 |
- |
- |
- |
799,870 |
799,870 | |||||
Accumulated profit (loss) |
- |
- |
- |
(631,911) |
(631,911) | ||||||
Equity attributed to controlling shareholders |
5,018,619 |
- |
- |
774,064 |
5,792,683 | ||||||
Equity attributed to noncontrolling shareholders |
88,332 |
- |
165,775 |
4,056 |
258,163 | ||||||
TOTAL SHAREHOLDERS' EQUITY |
5,106,951 |
- |
165,775 |
778,120 |
6,050,846 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
16,243,172 |
149,998 |
454,676 |
879,410 |
17,727,256 |
16
b) Balance sheet at December 31, 2009
ASSETS |
Reference |
Previous |
Reclassifications (see item 5.2) |
Consolidation (see item 5.3.1) |
Adjustments |
New practices | |||||
CURRENT |
|||||||||||
Cash and cash equivalents |
1,473,175 |
- |
14,068 |
- |
1,487,243 | ||||||
Consumers, Concessionaires and Licensees |
5.3.2 |
1,840,107 |
(81,974) |
6,250 |
(11,525) |
1,752,858 | |||||
Dividend and Interest on Capital |
- |
- |
- |
- |
- | ||||||
Financial investments |
39,253 |
- |
- |
- |
39,253 | ||||||
Tax credits |
190,983 |
- |
1,295 |
- |
192,278 | ||||||
Derivatives |
795 |
- |
- |
- |
795 | ||||||
Provision for doubtful accounts |
(81,974) |
81,974 |
- |
- |
- | ||||||
Inventories |
17,360 |
- |
- |
- |
17,360 | ||||||
Leasing |
- |
2,949 |
- |
- |
2,949 | ||||||
Deferred tax credits |
162,779 |
(162,779) |
- |
- |
- | ||||||
Prepaid expenses |
5.3.2 |
124,086 |
(14,354) |
28 |
(109,760) |
- | |||||
Deferral of tariff costs |
5.3.2 |
332,813 |
- |
- |
(332,813) |
- | |||||
Other |
145,055 |
11,405 |
100 |
- |
156,560 | ||||||
4,244,432 |
(162,779) |
21,741 |
(454,098) |
3,649,296 | |||||||
NONCURRENT |
|||||||||||
Consumers, Concessionaires and Licensees |
5.3.2 |
226,314 |
- |
- |
(1,427) |
224,887 | |||||
Associates, Subsidiaries and Parent Company |
- |
- |
- |
- |
- | ||||||
Escrow deposits |
654,506 |
139,671 |
- |
- |
794,177 | ||||||
Financial investments |
79,835 |
- |
- |
- |
79,835 | ||||||
Tax credits |
110,014 |
- |
3,221 |
- |
113,235 | ||||||
Derivatives |
7,881 |
- |
- |
- |
7,881 | ||||||
Deferred tax credits |
1,117,736 |
162,779 |
- |
6,290 |
1,286,805 | ||||||
Leasing |
- |
21,243 |
- |
- |
21,243 | ||||||
Financial asset of concession |
5.3.3 |
- |
- |
- |
674,029 |
674,029 | |||||
Private pension fund |
5.3.7 |
- |
3,054 |
- |
6,671 |
9,725 | |||||
Other investments at cost |
- |
116,477 |
- |
- |
116,477 | ||||||
Prepaid expenses |
5.3.2 |
64,201 |
(6,573) |
- |
(57,628) |
- | |||||
Deferral of tariff costs |
5.3.2 |
42,813 |
- |
- |
(42,813) |
- | |||||
Other |
5.3.8 |
160,760 |
(14,670) |
12,826 |
78,113 |
237,029 | |||||
Investments |
5.3.8 |
104,801 |
(117,621) |
- |
12,820 |
- | |||||
Property, plant and equipment |
5.3.3 / 5.3.4 / 5.3.6 |
7,487,216 |
- |
399,445 |
(2,673,622) |
5,213,039 | |||||
Intangible assets |
5.3.3 / 5.3.5 |
2,554,400 |
22,218 |
347 |
3,486,136 |
6,063,101 | |||||
Deferred assets |
15,081 |
(21,074) |
5,993 |
- |
- | ||||||
TOTAL NONCURRENT ASSETS |
12,625,558 |
305,504 |
421,832 |
1,488,569 |
14,841,463 | ||||||
TOTAL ASSETS |
16,869,990 |
142,725 |
443,573 |
1,034,471 |
18,490,759 |
17
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||||
CURRENT LIABILITIES |
Reference |
Previous |
Reclassifications (see item 5.2) |
Consolidation (see item 5.3.1) |
Adjustments |
New practices | |||||
Suppliers |
1,021,348 |
- |
104 |
- |
1,021,452 | ||||||
Interest on debt |
26,543 |
- |
1,119 |
- |
27,662 | ||||||
Interest on debentures |
101,284 |
- |
- |
- |
101,284 | ||||||
Loans and financing |
697,223 |
- |
31,691 |
- |
728,914 | ||||||
Debentures |
499,025 |
- |
- |
- |
499,025 | ||||||
Private pension fund |
44,484 |
- |
- |
- |
44,484 | ||||||
Regulatory charges |
62,999 |
- |
751 |
- |
63,750 | ||||||
Taxes and contributions |
489,976 |
- |
8,634 |
- |
498,610 | ||||||
Dividends and interest on equity |
5.3.8 |
684,185 |
- |
4,836 |
(663,737) |
25,284 | |||||
Estimated personnel costs |
50,620 |
- |
278 |
- |
50,898 | ||||||
Derivatives |
5.3.5 |
7,012 |
- |
- |
- |
7,012 | |||||
Public utilities |
- |
- |
- |
15,697 |
15,697 | ||||||
Deferred tax debts |
5.3.2 |
2,258 |
(2,258) |
- |
- |
- | |||||
Deferral of tariff gains |
5.3.2 |
313,463 |
- |
- |
(313,463) |
- | |||||
Other accounts payable |
584,614 |
(122,792) |
1,055 |
(124,016) |
338,861 | ||||||
TOTAL CURRENT LIABILITIES |
4,585,034 |
(125,050) |
48,468 |
(1,085,519) |
3,422,933 | ||||||
NONCURRENT LIABILITIES |
|||||||||||
Suppliers |
42,655 |
- |
- |
- |
42,655 | ||||||
Interest on debt |
62,427 |
- |
- |
- |
62,427 | ||||||
Loans and financing |
3,515,236 |
- |
213,806 |
- |
3,729,042 | ||||||
Debentures |
5.3.7 |
2,751,169 |
- |
- |
- |
2,751,169 | |||||
Private pension fund |
425,366 |
3,054 |
- |
294,866 |
723,286 | ||||||
Taxes and contributions |
1,639 |
- |
- |
- |
1,639 | ||||||
Deferred tax debts |
4,376 |
2,258 |
- |
275,376 |
282,010 | ||||||
Provision for contingencies |
38,181 |
262,463 |
- |
- |
300,644 | ||||||
Derivatives |
5.3.5 |
5,694 |
- |
- |
- |
5,694 | |||||
Public utilities |
5.3.2 |
- |
- |
- |
405,837 |
405,837 | |||||
Deferral of tariff gains |
5.3.2/5.3.8 |
108,691 |
- |
- |
(108,691) |
- | |||||
Other accounts payable |
161,540 |
- |
- |
65,105 |
226,645 | ||||||
TOTAL NONCURRENT LIABILITIES |
7,116,974 |
267,775 |
213,806 |
932,493 |
8,531,048 | ||||||
SHAREHOLDERS' EQUITY |
|||||||||||
Capital |
4,741,175 |
- |
- |
- |
4,741,175 | ||||||
Capital reserve |
16 |
- |
- |
- |
16 | ||||||
Revenue reserve |
5.3.8 |
341,751 |
- |
- |
- |
341,751 | |||||
Additional dividend proposed |
5.3.8 |
- |
- |
- |
655,017 |
655,017 | |||||
Revaluation reserve |
- |
- |
- |
765,667 |
765,667 | ||||||
Accumulated profit (loss) |
- |
- |
- |
(234,278) |
(234,278) | ||||||
Equity attributed to controlling shareholders |
5,082,942 |
- |
- |
1,186,406 |
6,269,348 | ||||||
Equity attributed to noncontrolling shareholders |
85,041 |
- |
181,300 |
1,089 |
267,430 | ||||||
TOTAL SHAREHOLDERS' EQUITY |
5,167,983 |
- |
181,300 |
1,187,495 |
6,536,778 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
16,869,991 |
142,725 |
443,574 |
1,034,469 |
18,490,759 |
18
Reference |
Previous |
Consolidation |
Adjustments |
New practices | |||||
NET OPERATING REVENUE |
5.3.2 / 5.3.3 / 5.3.5 / 5.3.8 |
10,565,982 |
73,364 |
718,660 |
11,358,006 | ||||
COST OF ELECTRIC ENERGY SERVICES |
|||||||||
Cost of electric energy |
5.3.2 |
(6,531,022) |
(5,049) |
521,562 |
(6,014,509) | ||||
Operating cost |
5.3.2 / 5.3.3 / 5.3.4 / 5.3.5 / 5.3.6 / 5.3.7 |
(943,492) |
(18,199) |
(92,247) |
(1,053,938) | ||||
Cost of services to third parties |
5.3.3 |
(5,387) |
- |
(615,557) |
(620,944) | ||||
OPERATING INCOME |
3,086,081 |
50,116 |
532,418 |
3,668,615 | |||||
Operating expense |
|||||||||
Cost of sales |
5.3.2 |
(255,114) |
- |
(85) |
(255,199) | ||||
General and administrative expenses |
5.3.2 / 5.3.3 |
(384,086) |
(1,723) |
(17,581) |
(403,390) | ||||
Other operating expenses |
5.3.2 / 5.3.3 / 5.3.4 |
(245,562) |
(255) |
18,474 |
(227,343) | ||||
(884,762) |
(1,978) |
808 |
(885,932) | ||||||
INCOME FROM ELECTRIC ENERGY SERVICE |
2,201,319 |
48,138 |
533,226 |
2,782,683 | |||||
Financial income |
|||||||||
Income |
5.3.2 / 5.3.8 |
376,996 |
2,851 |
(28,487) |
351,360 | ||||
Expense |
5.3.3 / 5.3.5 / 5.3.8 |
(692,927) |
(20,100) |
51,961 |
(661,066) | ||||
(315,931) |
(17,249) |
23,474 |
(309,706) | ||||||
INCOME BEFORE TAXES |
1,885,388 |
30,889 |
556,700 |
2,472,977 | |||||
Social contribution |
(155,459) |
(2,787) |
(50,101) |
(208,348) | |||||
Income tax |
(428,847) |
(7,739) |
(139,176) |
(575,761) | |||||
(584,306) |
(10,526) |
(189,277) |
(784,109) | ||||||
Net income for the year |
1,301,082 |
20,363 |
367,423 |
1,688,868 | |||||
Net income attributed to controlling shareholders |
1,286,470 |
- |
370,827 |
1,657,297 | |||||
Net income attributed to noncontrolling shareholders |
14,612 |
20,363 |
(3,404) |
31,571 |
d) Reconciliation of assets, liabilities, equity and net income:
Shareholders' equity | ||||||||||||||||||||
Revaluation reserve |
||||||||||||||||||||
January 1, 2009 |
Assets |
Liabilities |
Capital and reserves |
Additional dividend proposed |
Deemed cost |
Financial instruments |
Accumulated profit or loss |
Net Equity Parent Company |
Noncontrolling interest |
Total net Equity | ||||||||||
Previous |
16,243,172 |
11,136,221 |
5,018,619 |
- |
- |
5,018,619 |
88,332 |
5,106,951 | ||||||||||||
Reclassifications |
- | |||||||||||||||||||
Escrow deposit |
149,998 |
149,998 |
- |
- |
- | |||||||||||||||
Other |
(6,104) |
(6,104) |
- |
- | ||||||||||||||||
Consolidation |
454,847 |
289,074 |
- |
165,773 |
165,773 | |||||||||||||||
Adjustments |
- |
- | ||||||||||||||||||
Reversal of regulatory assets and liabilities |
(1,022,524) |
(331,569) |
(690,794) |
(690,794) |
(162) |
(690,956) | ||||||||||||||
Pension plan |
- |
294,939 |
(294,939) |
(294,939) |
- |
(294,939) | ||||||||||||||
ICPC 01 - Concession agreements |
200,186 |
- |
208,930 |
(12,229) |
196,701 |
3,485 |
200,186 | |||||||||||||
Property, plant and equipment - deemed cost |
1,002,991 |
- |
1,002,991 |
- |
1,002,991 |
- |
1,002,991 | |||||||||||||
Write-off of discount |
12,828 |
- |
12,828 |
12,828 |
- |
12,828 | ||||||||||||||
Guarantees |
45,860 |
63,692 |
(17,832) |
(17,832) |
- |
(17,832) | ||||||||||||||
Public utility |
395,247 |
424,115 |
(18,764) |
(18,764) |
(10,104) |
(28,868) | ||||||||||||||
Other |
372 |
(5) |
377 |
377 |
- |
377 | ||||||||||||||
Dividend |
- |
(614,642) |
606,105 |
606,105 |
8,537 |
614,642 | ||||||||||||||
Tax effects |
250,383 |
270,691 |
|
|
(341,016) |
(71,035) |
389,442 |
(22,609) |
2,302 |
(20,307) | ||||||||||
Balance after application of new practices |
17,727,256 |
11,676,410 |
5,018,619 |
606,105 |
661,975 |
137,895 |
(631,911) |
5,792,683 |
258,163 |
6,050,846 |
19
Shareholders' equity |
||||||||||||||||||||||
Revaluation reserve |
||||||||||||||||||||||
December 31, 2009 |
Assets |
Liabilities |
Capital and reserves |
Additional dividend proposed |
Deemed cost |
Financial instruments |
Accumulated profit or loss |
Net Equity Parent Company |
Noncontrolling interest |
Total net Equity |
Net income 2009 | |||||||||||
Previous |
16,869,991 |
11,702,008 |
5,082,942 |
5,082,942 |
85,041 |
5,167,983 |
1,301,082 | |||||||||||||||
Reclassifications |
||||||||||||||||||||||
Escrow deposit |
139,671 |
139,671 |
- |
- |
- | |||||||||||||||||
Pension plan |
3,054 |
3,054 |
- |
- |
||||||||||||||||||
Consolidation |
443,576 |
262,275 |
- |
181,301 |
181,301 |
20,363 | ||||||||||||||||
Adjustments |
- |
|||||||||||||||||||||
Reversal of regulatory assets and liabilities |
(555,966) |
(548,095) |
(7,987) |
(7,987) |
116 |
(7,871) |
619,898 | |||||||||||||||
Pension plan |
6,671 |
294,863 |
(288,192) |
(288,192) |
- |
(288,192) |
6,747 | |||||||||||||||
ICPC 01 - Concession agreements |
185,027 |
- |
196,817 |
(15,071) |
181,746 |
3,280 |
185,026 |
(4,329) | ||||||||||||||
Property, plant and equipment - deemed cost |
963,440 |
- |
963,440 |
963,440 |
- |
963,440 |
(39,551) | |||||||||||||||
Write-off of discount |
12,828 |
- |
12,828 |
12,828 |
- |
12,828 |
- | |||||||||||||||
Guarantees |
50,052 |
71,151 |
(21,099) |
(21,099) |
- |
(21,099) |
(3,267) | |||||||||||||||
Public utility |
392,217 |
421,534 |
(19,291) |
(19,291) |
(10,026) |
(29,317) |
(450) | |||||||||||||||
Depreciation generation assets |
(27,288) |
- |
(21,730) |
(21,730) |
(5,558) |
(27,288) |
(27,288) | |||||||||||||||
Other |
1,197 |
(3,336) |
(348) |
5,311 |
4,963 |
(430) |
4,533 |
4,941 | ||||||||||||||
Dividend |
- |
(664,522) |
655,017 |
655,017 |
9,505 |
664,522 |
- | |||||||||||||||
Tax effects |
6,289 |
275,377 |
|
|
(327,570) |
(66,672) |
120,953 |
(273,289) |
4,202 |
(269,087) |
(189,278) | |||||||||||
Balance after application of new practices |
18,490,759 |
11,953,980 |
5,082,942 |
655,017 |
635,870 |
129,797 |
(234,278) |
6,269,348 |
267,431 |
6,536,779 |
1,688,868 |
e) 2009 Statement of Cash Flow:
Previous |
Consolidation |
Adjustments |
New practices | ||||
Income including CSLL and IRPJ |
1,870,776 |
25,406 |
576,795 |
2,472,977 | |||
Adjustments to income |
1,181,792 |
35,414 |
86,612 |
1,303,818 | |||
Operating assets |
364,677 |
343 |
(452,179) |
(87,159) | |||
Operating liabilities |
(995,105) |
(30,027) |
(225,243) |
(1,250,375) | |||
Cash from operations |
2,422,140 |
31,136 |
(14,015) |
2,439,261 | |||
Acquisitions of property, plant and equipment |
(1,233,695) |
(10,620) |
695,269 |
(549,046) | |||
Additions of intangible assets |
(93,317) |
(31) |
(585,706) |
(679,054) | |||
Other |
78,755 |
4,208 |
(93,764) |
(10,801) | |||
Cash from investments |
(1,248,257) |
(6,443) |
15,799 |
(1,238,901) | |||
Cash from financing |
(438,555) |
(31,232) |
(1,784) |
(471,571) | |||
Increase (decrease) in cash and cash equivalents |
735,328 |
(6,539) |
- |
728,789 | |||
Opening cash and cash equivalents balance |
737,847 |
20,607 |
- |
758,454 | |||
Closing cash equivalents balance |
1,473,175 |
14,068 |
- |
1,487,243 |
5.2 Reclassification of the amounts of the financial statements published previously:
Certain reclassifications were made in order to adjust presentation of the financial statements to the new accounting standard, with a view to facilitating understanding of the Company's operations. These reclassifications relate basically to (i) reclassification of balances of escrow deposits that were previously presented net of provisions for contingencies, (ii) transfer of the balance of tax credits or debits from current to non-current and consequent offset of the balances of assets and liabilities in compliance with the provisions of CPC 26 Presentation of the financial statements and CPC 32 Income taxes, and (iii) transfer of balances between accounts to open or group items that became or ceased relevant in presentation of the balance sheet, after adoption of new practices.
5.3 Nature of the adjustments on first application of the IFRS
5.3.1 Consolidation adjustments:
The concept of consolidation applied by the accounting practices applied previously differs from the concepts established by CPCs 36 and 19, which are based on the control criterion. According to CPC 36, control is the ability to preside over the financial and operational policies of the entity so as to obtain the rewards of its activities. CPC 19 establishes that joint control exists when the strategic and operating decisions in relation to the activity require a unanimous consensus of the parties sharing the control, thereby permitting proportionate consolidation of the subsidiary's financial statements.
20
Application of these concepts for the investments held by the Company resulted in a change in the consolidation criterion for the subsidiary CERAN, which is now fully consolidated. The adjustment recognized in this lines refers to the amounts of the difference between 100% and the interest held in the subsidiary, which were added line by line for consolidation purposes.
5.3.2 Reversal of regulatory assets and liabilities
To December 31, 2008, the electric energy concessionaires had regulatory asset balances referring to pre-payments made by the concessionaire in relation to the increase in the electric energy acquisition cost and expenditure on system charges, among others, which were received by tariff increase granted by the regulatory authority in the following years. They also had regulatory liability balances in relation to the decrease in these non-manageable costs to be returned to the consumers by a subsequent reduction in the tariff.
In accordance with the new practices (Note 3.13), these regulatory assets and liabilities cannot be recognized, as they do not meet the criteria for definition of assets and liabilities as established in the Framework for the Preparation and Presentation of Financial Statements.
The adjustment made refers to the reversal of the balances of regulatory assets and liabilities of the distribution subsidiaries. Note 38 shows a breakdown of these balances for the reporting dates presented.
5.3.3 ICPC 01 Concession Agreements and adjustment for reconciliation of the intangible infrastructure asset
In accordance with the previous accounting practices, the whole concession infrastructure was accounted for as a fixed asset tied to the concession. ICPC 01 changes the method for recognizing the concessions if certain conditions are met, such as: (i) control over the activities to be provided, to whom the services are provided and at what price, and (ii) the reversal of the assets to the Granting Authority at the end of the concession.
These definitions having been met, the infrastructure of the distribution concessionaires has been segregated and rollforwarded since the construction date, complying with the provisions of the CPCs and IFRSs, so that the following was recognized in the financial statements (i) an intangible asset corresponding to the right to operate the concession by collecting from the users of the public utilities, and (ii) a financial asset corresponding to the unconditional contractual right to receive payment (compensation) by reversal of the assets at the end of the concession.
The financial concession asset was measured at fair value, based on the remuneration of the assets fixed by the regulatory body. The financial asset is classified as available-for-sale and is restated and amortized annually in accordance with the adjustment of its fair value, against the revaluation reserve in equity account.
The remaining amount was recognized in intangible assets and corresponds to the right to collect from consumers for the electricity energy distribution services, and amortized in accordance with the consumption pattern that reflects the estimated economic benefit to the end of the concession.
In accordance with ICPC01 and OCPC05, the distribution subsidiaries applied the concepts retroactively and reconstructed the infrastructure accounting base so that the costs used in formation of the intangible and financial asset are fully aligned with the provisions of the international accounting standards.
The adjustments to the lines of net income and services cost relate to recognition of the revenue from construction work of the distribution assets carried out by the concessionaires. For further details, see Note 3.1.
The following tables show the reclassifications and adjustments made in the distribution companies to comply with ICPC01, at January 1, 2009 and December 31, 2009.
21
January 1, 2009 | |||||||
Previous |
Transfers between asset accounts |
Adjustments to equity and income statement |
New practices | ||||
Property, plant and equipment |
3,308,975 |
(3,308,975) |
- |
- | |||
Intangible assets |
717,570 |
2,938,831 |
(11,912) |
3,644,489 | |||
Financial assets |
- |
370,144 |
212,097 |
582,241 | |||
December 31, 2009 | |||||||
Previous |
Transfers between asset accounts |
Adjustments to equity and income statement |
New practices | ||||
Property, plant and equipment |
3,579,720 |
(3,579,720) |
- |
- | |||
Intangible assets |
741,307 |
3,105,894 |
(15,177) |
3,832,024 | |||
Financial assets |
- |
473,826 |
200,204 |
674,030 |
5.3.4 Recognition of property, plant at equipment at deemed cost
As previously mentioned, the Company opted to apply the exemption foreseen in CPC 37 in respect of evaluation of property, plant and equipment, at the transition date, for the assets of the subsidiaries CPFL Sul Centrais and CPFL Geração, taking the fair value of the transition date as the deemed cost.
The adjustment of this line corresponds to the recognition of the added value attributed to the revalued assets, against equity, amounting to R$ 1,002,991 (R$ 661,974 net of tax effects, at January 1, 2009).
5.3.5 Public utilities
On signing their Concession Agreements, the subsidiary CERAN and the jointly-controlled ENERCAN, BAESA and Foz do Chapecó assumed obligations to the Federal Government in relation to the granting of the concession, as Public Utilities. The liabilities are restated annually by the variation in the General Market Price Index IGP-M.
To December 31, 2008, the subsidiaries recognized the granting expenses in profit or loss in accordance with their maturities. Under the new practices, the Public Utilities liabilities, discounted to present value in accordance with the fundraising rates of each venture, have been recognized on the date of signing the contract, against an intangible asset related to the right to exploit the concession.
The adjustment at the transition date relates to recognition of the Public Utilities liability (less expenses recognized by the practices adopted previously), in the amount of R$ 424,115, against R$ 395,247 and R$ 28,868 (R$19,053 net of tax effects) in relation to recognition of the intangible asset and accumulated loss for the period.
5.3.6 Depreciation over the concession term
The concession agreements of the subsidiary CERAN and the jointly-owned subsidiaries ENERCAN, BAESA and Foz do Chapecó are ruled by Decree 2003, of 1996. In view of all the legal disputes and potential conflicts between (i) the wording of the Concessions Law, (ii) interpretations of the decree itself, and (iii) the way in which the concession agreements were drawn up, the Company conservatively made the adjustment to the related depreciation rates so that the property, plant and equipment related to the basic project would be depreciated over the useful life of the asset, provided it is restricted to the term of the concession.
5.3.7 Pension plan
- Employee benefit (pension plan)
As previously mentioned, the Company opted to recognize all accumulated actuarial gains and losses at January 1, 2009. The adjustment of R$ 294,939 (R$ 194,660 net of tax effects) corresponds to recognition of the accumulated actuarial loss at the transition date, in accordance with CPC 37, for all the defined benefit plans of the subsidiaries CPFL Paulista, CPFL Piratininga, CPFL Geração and RGE.
22
5.3.8 Other adjustments:
- Write-down of negative goodwill
In accordance with CPC 15 Business Combinations, negative goodwill recognized in accordance with the previous accounting practices should be written down at the transition date for the international accounting practices.
An adjustment of R$ 12,828 (R$ 8,466 net of tax effects) was made in the Investment in relation to the write-down against retained earnings in the opening equity at the transition date.
- Guarantees provided
The accounting practices adopted in Brazil to December 31, 2008 contained no specific pronouncement in respect of the requirements for accounting for guarantees, and issuing of guarantees was therefore not recognized in the financial statements.
As a result of adoption of the pronouncements on recognition, measurement, presentation and disclosure of financial instruments (CPC 38, CPC 39 and CPC 40) from January 1, 2009, the Company now recognizes guarantees issued in excess of its participation in the joint ventures.
These guarantees are recognized initially at the fair value of the obligation on issue. The Company therefore recognized a liability in Other Payables corresponding to the fair value of the guarantee contracted on January 1, 2009 to a total amount of R$ 63,692, which will be amortized by a credit in finance income as the guarantee risk is discharged.
The balancing items of R$ 45,860 were recognized as Other assets. The amount corresponding to the Company's participation in each jointly-owned subsidiary and the amounts that will not be reimbursed by the other shareholders of the jointly-owned subsidiaries are recognized in profit or loss as finance expense to maturity. Any remaining amount is subject to reimbursement by the other shareholders of the jointly-owned subsidiaries. The net adjustment against retained earnings at January 1, 2009 was R$ 17,832 (R$11,769 net of tax effects).
- Dividend and Interest on shareholders equity
The practices adopted previously determined that retained earnings should be distributed at the end of the year. A provision was recognized for the amount corresponding to appropriation of dividends as proposed by management even if it was subject to approval by the AGM.
In accordance with current accounting practices, as mentioned in Note 3.9, provisions are only recognized for amounts in excess of the minimum mandatory dividend after approval in an AGM, at which point they meet the obligation criteria determined by CPC 25. The adjustment stated reflects a reversal of the provision for an additional dividend to be paid in excess of the mandatory dividend not yet approved in a meeting payable.
- Revaluation reserve
The adjustments in this group relate to (i) recognition of the value-added of the cost allocated to the property, plant and equipment of the generators and (ii) the balancing item of the restatement of the financial concession asset.
- Non-controlling interest
In accordance with the new accounting practices (CPC 26), since January 1, 2009, the Company has classified the participation of non-controlling shareholders as part of the consolidated results and of equity in the consolidated financial statements.
23
To December 31, 2008, this amount was stated in liabilities in the consolidated balance sheet and the adjustment in this line corresponded to reclassification of the liability to equity.
The amount previously stated in net income is now stated as net income attributable to the Company and the portion of the noncontrolling interests as net income attributable to noncontrolling interests.
Re-presentation of the quarterly financial statements
The reconciliation of the effects of adoption of the new accounting practices on net income and equity for the quarters ended March 31, 2009, June 30, 2009, September 30, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 is presented below, in conformity with CVM Decision 656/2011:
24
Consolidated | |||||||||||
Changes in the quarter |
Changes in the quarter | ||||||||||
1st Quarter 09 |
2nd Quarter 09 |
3rd Quarter 09 |
1st Quarter 10 |
2nd Quarter 10 |
3rd Quarter 10 | ||||||
Previous net income |
282,703 |
288,968 |
289,674 |
390,199 |
384,230 |
387,659 | |||||
Adjustments |
|||||||||||
Reversal of regulatory assets and liabilities |
(11,811) |
217,435 |
281,226 |
164,329 |
(37,348) |
(61,391) | |||||
Pension plan |
19 |
19 |
18 |
3 |
3 |
3 | |||||
ICPC 01 - Concession agreements |
(1,028) |
(1,170) |
(831) |
10,646 |
10,591 |
10,504 | |||||
Property, plant and equipment - deemed cost |
(9,884) |
(9,885) |
(9,891) |
(9,887) |
(9,880) |
(9,906) | |||||
Write-down of discount |
- |
- |
- |
- |
- |
- | |||||
Guarantees |
(972) |
521 |
436 |
(3,481) |
(4,638) |
(4,714) | |||||
Public utility |
153 |
236 |
215 |
(2,510) |
(3,435) |
(2,707) | |||||
Depreciation rate |
(6,822) |
(6,822) |
(6,822) |
(6,822) |
(6,822) |
(6,822) | |||||
Other |
709 |
1,196 |
1,458 |
1,867 |
1,265 |
1,546 | |||||
Tax effects |
10,797 |
(81,794) |
(107,544) |
(62,442) |
19,370 |
28,733 | |||||
Effects of adjustments on the Noncontrolling interests |
844 |
614 |
827 |
1,024 |
1,766 |
1,243 | |||||
Net parent company income after application of the new practices |
264,708 |
409,318 |
448,766 |
482,926 |
355,102 |
344,148 | |||||
Noncontrolling interests as a result of the change in consolidation practices |
2,927 |
6,914 |
6,235 |
3,542 |
4,011 |
5,847 | |||||
Effects of adjustments on the Noncontrolling interests |
(845) |
(614) |
(827) |
(1,024) |
(1,766) |
(1,243) | |||||
Previous Noncontrolling interests |
2,086 |
2,699 |
3,510 |
2,419 |
2,423 |
2,029 | |||||
Total net income after adoption of the new practices |
268,877 |
418,317 |
457,684 |
487,863 |
359,770 |
350,781 | |||||
Consolidated | |||||||||||
Changes in the period |
Changes in the period | ||||||||||
1st Quarter 09 |
2nd Quarter 09 |
3rd Quarter 09 |
1st Quarter 10 |
2nd Quarter 10 |
3rd Quarter 10 | ||||||
Previous net income |
282,703 |
571,671 |
861,345 |
390,199 |
774,429 |
1,162,088 | |||||
Adjustments |
|||||||||||
Reversal of regulatory assets and liabilities |
(11,811) |
205,624 |
486,850 |
164,329 |
126,981 |
65,590 | |||||
Pension plan |
19 |
38 |
56 |
3 |
6 |
9 | |||||
ICPC 01 - Concession agreements |
(1,028) |
(2,198) |
(3,029) |
10,646 |
21,237 |
31,741 | |||||
Property, plant and equipment - deemed cost |
(9,884) |
(19,769) |
(29,660) |
(9,887) |
(19,767) |
(29,673) | |||||
Write-off of discount |
- |
- |
- |
- |
- |
- | |||||
Guarantees |
(972) |
(451) |
(15) |
(3,481) |
(8,119) |
(12,833) | |||||
Public utility |
153 |
389 |
604 |
(2,510) |
(5,945) |
(8,652) | |||||
Depreciation rate |
(6,822) |
(13,644) |
(20,466) |
(6,822) |
(13,644) |
(20,466) | |||||
Other |
709 |
1,905 |
3,363 |
1,867 |
3,132 |
4,678 | |||||
Tax effects on the adjustments |
10,797 |
(70,997) |
(178,541) |
(62,442) |
(43,072) |
(14,339) | |||||
Effects of adjustments on the Noncontrolling interests |
845 |
1,459 |
2,286 |
1,024 |
2,790 |
4,033 | |||||
Net parent company income after application of the new practices |
264,709 |
674,027 |
1,122,793 |
482,926 |
838,028 |
1,182,176 | |||||
Non-cntrolling interests as a result of the change in consolidation practices |
2,927 |
9,841 |
16,076 |
3,542 |
7,553 |
13,400 | |||||
Effects of adjustments on Noncontrolling interests |
(845) |
(1,459) |
(2,286) |
(1,024) |
(2,790) |
(4,033) | |||||
Previous Noncontrolling interests |
2,086 |
4,785 |
8,295 |
2,419 |
4,842 |
6,871 | |||||
Total net income after application of the new practices |
268,877 |
687,194 |
1,144,878 |
487,863 |
847,633 |
1,198,414 | |||||
Consolidated | |||||||||||
Quarter ended in |
Quarter ended in | ||||||||||
March 31, 2009 |
June 30, 2009 |
September 30, 2009 |
March 31, 2010 |
June 30, 2010 |
September 30, 2010 | ||||||
Previous equity |
5,301,322 |
5,020,641 |
5,312,835 |
5,473,141 |
5,138,168 |
5,525,827 | |||||
Adjustments |
|||||||||||
Reversal of regulatory assets and liabilities |
(702,768) |
(485,332) |
(204,106) |
156,457 |
119,110 |
57,718 | |||||
Pension plan |
(294,920) |
(294,901) |
(294,883) |
(288,212) |
(288,206) |
(288,200) | |||||
ICPC 01 - Concession agreements |
193,965 |
191,203 |
188,099 |
216,120 |
247,023 |
274,073 | |||||
Property, plant and equipment - deemed cost |
993,107 |
983,222 |
973,331 |
953,553 |
943,673 |
933,767 | |||||
Write-down of discount |
12,828 |
12,828 |
12,828 |
12,828 |
12,828 |
12,828 | |||||
Guarantees |
(18,804) |
(18,283) |
(17,847) |
(24,580) |
(29,218) |
(33,932) | |||||
Public utility |
(28,715) |
(28,478) |
(28,263) |
(59,117) |
(62,549) |
(65,258) | |||||
Depreciation rate |
(6,822) |
(13,644) |
(20,466) |
(6,822) |
(13,644) |
(20,466) | |||||
Other |
827 |
1,704 |
2,889 |
4,928 |
7,294 |
8,673 | |||||
Dividend |
614,647 |
576,624 |
- |
664,522 |
780,941 |
- | |||||
Tax effects on the adjustments |
(7,656) |
(88,801) |
(195,397) |
(337,707) |
(325,620) |
(302,456) | |||||
Effects of adjustments on the Noncontrolling interests |
(3,186) |
1,053 |
6,853 |
87 |
6,384 |
14,142 | |||||
Parent company equity after application of the new practices |
6,053,825 |
5,857,836 |
5,735,873 |
6,765,198 |
6,536,184 |
6,116,716 | |||||
Effects of adjustments on Noncontrolling interests |
3,186 |
(1,053) |
(6,853) |
(87) |
(6,384) |
(14,142) | |||||
Noncontrolling interests as a result of the change in consolidation practices |
168,700 |
175,614 |
181,850 |
184,843 |
188,852 |
194,699 | |||||
Previous Noncontrolling interests |
85,384 |
82,611 |
85,612 |
87,195 |
72,905 |
74,494 | |||||
Total equity after adoption of the new practices |
6,311,095 |
6,115,008 |
5,996,482 |
7,037,149 |
6,791,557 |
6,371,767 | |||||
Equity of the controlling interests |
6,053,825 |
5,857,836 |
5,735,873 |
6,765,198 |
6,536,184 |
6,116,716 | |||||
Noncontrolling interests |
257,270 |
257,172 |
260,609 |
271,951 |
255,373 |
255,051 |
( 6 ) CASH AND CASH EQUIVALENTS
25
Parent Company |
Consolidated | |||||||||||
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 |
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 | |||
Bank balances |
4,700 |
5,029 |
325 |
361,746 |
313,104 |
123,760 | ||||||
Short-term financial investments |
106,258 |
214,097 |
15,377 |
1,201,149 |
1,174,139 |
634,694 | ||||||
|
|
| ||||||||||
Total |
110,958 |
219,126 |
15,702 |
1,562,895 |
1,487,243 |
758,454 |
Short-term financial investments are short-term transactions with institutions operating in the Brazilian financial market, with daily liquidity, low credit risk and average interest of 100% of the Interbank deposit rate (CDI).
26
( 7 ) CONSUMERS, CONCESSIONAIRES AND LICENSEES
In the consolidated financial statements, the balance derives mainly from the supply of electric energy. The following table shows the breakdown at December 31, 2010, 2009 and January 1, 2009:
Consolidated | ||||||||||||
Amounts |
Past due |
Total | ||||||||||
coming due |
until 90 dias |
> 90 dias |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
Current |
||||||||||||
Consumer classes |
||||||||||||
Residential |
289,992 |
191,137 |
21,410 |
502,539 |
485,541 |
407,544 | ||||||
Industrial |
119,408 |
75,898 |
37,637 |
232,943 |
264,798 |
249,592 | ||||||
Commercial |
113,061 |
43,835 |
13,059 |
169,955 |
189,080 |
154,569 | ||||||
Rural |
29,486 |
7,082 |
2,526 |
39,094 |
32,671 |
32,079 | ||||||
Public administration |
26,663 |
5,049 |
902 |
32,614 |
60,943 |
29,396 | ||||||
Public lighting |
24,372 |
2,166 |
15,211 |
41,749 |
60,557 |
81,159 | ||||||
Public utilities |
34,814 |
4,743 |
498 |
40,055 |
35,380 |
31,324 | ||||||
Billed |
637,796 |
329,910 |
91,243 |
1,058,949 |
1,128,970 |
985,663 | ||||||
Unbilled |
465,077 |
- |
- |
465,077 |
388,162 |
355,627 | ||||||
Financing of Consumers' Debts |
81,150 |
7,007 |
23,984 |
112,141 |
91,437 |
55,902 | ||||||
Free energy |
3,727 |
- |
- |
3,727 |
3,506 |
457 | ||||||
CCEE transactions |
23,932 |
- |
- |
23,932 |
14,722 |
45,364 | ||||||
Concessionaires and Licensees |
193,852 |
- |
- |
193,852 |
184,891 |
175,282 | ||||||
Provision for doubtful accounts |
- |
- |
(80,691) |
(80,691) |
(81,974) |
(82,462) | ||||||
Other |
35,485 |
2,542 |
1,078 |
39,104 |
23,144 |
67,322 | ||||||
Total |
1,441,019 |
339,459 |
35,614 |
1,816,091 |
1,752,858 |
1,603,155 | ||||||
Non current |
||||||||||||
Financing of Consumers' Debts |
154,438 |
- |
- |
154,438 |
140,893 |
151,573 | ||||||
Free energy |
- |
- |
- |
- |
38 |
145 | ||||||
CCEE transactions |
41,301 |
- |
- |
41,301 |
41,301 |
39,416 | ||||||
Concessionaires and Licensees |
- |
- |
- |
- |
42,655 |
87,196 | ||||||
Total |
195,739 |
- |
- |
195,739 |
224,887 |
278,330 |
Financing of Consumers' Debts - Refers to the negotiation of overdue receivables from consumers, principally public organizations. Payment of some of these credits is guaranteed by the debtors, in the case of public entities, by pledging the bank accounts through which their ICMS revenue is received. Allowances for doubtful accounts are based on best estimates of the subsidiaries' managements for unsecured amounts and losses regarded as probable.
Electric Energy Trading Chamber (CCEE) transactions - The amounts refer to the sale of electric energy on the short-term market. The noncurrent amount receivable mainly comprises: (i) legal adjustments, established as a result of suits brought by agents in the sector; (ii) lawsuits challenging the CCEE accounting for the period from September 2000 to December 2002; and (iii) provisional accounting entries established by the CCEE. The subsidiaries consider that there is no significant risk on the realization of these assets and consequently no provision was posted in the accounts.
Concessionaires and licensees - Refers basically to accounts receivable in respect of the supply of electric energy to other Concessionaires and Licensees, mainly by the subsidiaries CPFL Geração and CPFL Brasil, and to transactions relating to the partial spin-off of Bandeirante Energia S.A. by the subsidiary CPFL Piratininga. The amounts are set off against accounts payable, through a settlement of accounts.
In 2008, amounts receivable of R$ 127,965 from AES Tietê S/A (AES Tietê) were also recognized by the subsidiaries CPFL Paulista and CPFL Leste Paulista, for use of the distribution system, and the respective pass-through (recognizing of the same amount as accounts payable) to CTEEP Companhia de Transmissão de Energia Elétrica Paulista in respect of the charge for use of the Border Transmission Systems.
Under an agreement made between the parties involved, through the intermediary of ANEEL, the amounts are being paid both by the generator and by the subsidiaries to CTEEP, in 36 monthly installments as from January 2009, restated at the SELIC rate. The balance of the operation at December 31, 2010 was R$ 42,655, classified in current assets.
27
Allowance for doubtful accounts
Changes in the allowance for doubtful accounts are shown below:
Consolidated | |
At January 1, 2009 |
(82,462) |
Provision recognized |
(88,298) |
Recovery of revenue |
52,048 |
Write-off of accounts receivable provisioned |
36,738 |
At December 31, 2009 |
(81,974) |
Provision recognized |
(108,663) |
Recovery of revenue |
56,995 |
Write-off of accounts receivable provisioned |
52,951 |
At December 31, 2010 |
(80,691) |
( 8 ) FINANCIAL INVESTMENTS
In 2005, through a Private Credit Agreement, the Company acquired the credit arising from the Purchase and Sale of Electric Energy 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 by CPFL Brasil using the funds derived from the acquisition of energy produced by that company.
At December 31, 2010, current assets balance of the parent company is R$ 42,533 (R$ 39,253 in 2009 and R$ 38,249 at January 1, 2009), and noncurrent is R$ 39,216 (R$ 62,179 in 2009 and R$ 87,117 at January 1, 2009). The operation is subject to interest of 17.5% p.a., plus the annual variation of the IGP-M, and is amortized in monthly installments of amounts corresponding to the purchase of energy.
( 9 ) RECOVERABLE TAXES
28
Parent Company |
Consolidated | |||||||||||
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 |
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 | |||
Current |
||||||||||||
Prepayments of social contribution - CSLL |
- |
- |
486 |
1,046 |
8,189 |
24,135 | ||||||
Prepayments of income tax - IRPJ |
379 |
42 |
1,637 |
2,298 |
19,549 |
5,531 | ||||||
Income tax and social contribution to be offset |
872 |
3,023 |
3,485 |
11,560 |
15,424 |
14,361 | ||||||
Withholding tax - IRRF |
761 |
9,367 |
31,479 |
38,927 |
42,959 |
69,681 | ||||||
IRRF on interest on equity |
32,909 |
31,867 |
- |
34,088 |
33,095 |
25 | ||||||
ICMS to be offset |
- |
- |
- |
71,833 |
48,271 |
40,421 | ||||||
Social integration program - PIS |
- |
- |
- |
3,852 |
4,545 |
3,390 | ||||||
Contribution for Social Security financing- COFINS |
42 |
- |
9 |
13,401 |
12,028 |
11,177 | ||||||
National Social Security Institute - INSS |
- |
- |
- |
2,192 |
1,115 |
961 | ||||||
Other |
29 |
11 |
64 |
13,828 |
7,103 |
6,285 | ||||||
Total |
34,992 |
44,310 |
37,160 |
193,025 |
192,278 |
175,967 | ||||||
Noncurrent |
||||||||||||
Social contribution to be offset - CSLL |
- |
- |
- |
32,389 |
29,999 |
27,315 | ||||||
Income tax to be offset - IRPJ |
- |
- |
- |
1,002 |
1,001 |
3,400 | ||||||
Social integration program - PIS |
2,787 |
2,787 |
2,787 |
2,787 |
2,787 |
2,787 | ||||||
ICMS to be offset |
- |
- |
- |
101,381 |
74,212 |
70,161 | ||||||
Other |
- |
- |
- |
1,410 |
5,236 |
1,504 | ||||||
Total |
2,787 |
2,787 |
2,787 |
138,969 |
113,235 |
105,167 |
Social contribution to be offset In noncurrent, the balance refers basically to the final favorable decision in a lawsuit filed by the subsidiary CPFL Paulista. The subsidiary CPFL Paulista is awaiting the outcome of the administrative procedures for ratification of the credit with the Federal Revenue Office, in order to offset the credit.
ICMS to be offset - mainly refers to the credit recorded on acquisition of a permanent asset.
( 10 ) DEFERRED TAXES
10.1- Breakdown of tax credits and debits:
29
Parent Company |
Consolidated | |||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
Social contribution credit |
||||||||||||
Tax loss carryforwards |
42,715 |
42,048 |
24,123 |
51,805 |
52,174 |
38,707 | ||||||
Tax benefit of merged goodwill |
- |
- |
- |
172,255 |
191,184 |
199,103 | ||||||
Temporarily non-deductible differences |
724 |
833 |
588 |
(12,418) |
(3,941) |
58,777 | ||||||
Subtotal |
43,439 |
42,881 |
24,711 |
211,642 |
239,417 |
296,587 | ||||||
Income tax credit |
||||||||||||
Tax losses |
129,690 |
128,553 |
84,493 |
143,867 |
132,471 |
93,782 | ||||||
Tax benefit of merged goodwill |
- |
- |
- |
583,723 |
641,757 |
672,155 | ||||||
Temporarily non-deductible differences |
4,599 |
4,765 |
18,352 |
(33,619) |
(11,081) |
178,885 | ||||||
Subtotal |
134,289 |
133,318 |
102,845 |
693,971 |
763,147 |
944,822 | ||||||
PIS and COFINS credit |
||||||||||||
Temporary non-deductible differences |
- |
- |
- |
78 |
2,231 |
77,880 | ||||||
Total |
177,729 |
176,199 |
127,556 |
905,691 |
1,004,795 |
1,319,289 | ||||||
Total tax credit |
177,729 |
176,199 |
127,556 |
1,183,458 |
1,286,805 |
1,594,131 | ||||||
Total tax debit |
- |
- |
- |
(277,767) |
(282,010) |
(274,842) |
10.2 - Tax Benefit of Merged Goodwill:
The tax benefit on merged goodwill refers to the tax credit calculated on the merged goodwill on acquisition and is recorded in accordance with CVM Instructions nº 319/99 and nº 349/01. The benefit is realized in proportion to amortization of the merged goodwill that gave rise to it, in accordance with the projected net income of the subsidiaries during the remaining term of the concession, as shown in Note 16.
Consolidated | ||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||||||
CSLL |
IRPJ |
CSLL |
IRPJ |
CSLL |
IRPJ | |||||||
CPFL Paulista |
94,584 |
262,733 |
103,736 |
288,152 |
113,571 |
315,477 | ||||||
CPFL Piratininga |
21,274 |
73,002 |
23,207 |
79,630 |
25,285 |
86,760 | ||||||
RGE |
41,117 |
169,806 |
44,378 |
183,269 |
47,447 |
195,943 | ||||||
CPFL Santa Cruz |
4,705 |
14,794 |
5,862 |
18,435 |
7,126 |
22,405 | ||||||
CPFL Leste Paulista |
2,622 |
7,986 |
3,451 |
9,586 |
1,714 |
4,761 | ||||||
CPFL Sul Paulista |
3,767 |
11,758 |
5,020 |
13,943 |
1,678 |
4,662 | ||||||
CPFL Jaguari |
2,305 |
7,001 |
3,027 |
8,411 |
1,603 |
4,452 | ||||||
CPFL Mococa |
1,456 |
4,527 |
1,966 |
5,461 |
679 |
1,887 | ||||||
CPFL Geração |
- |
30,877 |
- |
33,379 |
- |
35,808 | ||||||
CPFL Serviços |
425 |
1,239 |
537 |
1,491 |
- |
- | ||||||
Total |
172,255 |
583,723 |
191,184 |
641,757 |
199,103 |
672,155 |
10.3 - Accumulated balances on temporary nondeductible differences:
30
Consolidated | ||||||||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||||||||||||
CSLL |
IRPJ |
PIS/COFINS |
CSLL |
IRPJ |
PIS/COFINS |
CSLL |
IRPJ |
PIS/COFINS | ||||||||||
Temporary non-deductible differences: |
||||||||||||||||||
Provision for contingencies |
18,396 |
50,984 |
- |
21,884 |
60,454 |
- |
22,217 |
76,500 |
- | |||||||||
Tariff review - remuneration base |
- |
- |
- |
- |
- |
- |
2,819 |
7,830 |
- | |||||||||
Private pension fund |
3,051 |
9,473 |
- |
4,097 |
12,377 |
- |
4,770 |
14,247 |
- | |||||||||
Allowance for doubtful accounts |
7,426 |
21,026 |
- |
7,389 |
20,927 |
- |
7,101 |
20,123 |
- | |||||||||
Free energy provision |
3,730 |
10,362 |
- |
2,410 |
6,694 |
- |
- |
- |
- | |||||||||
Research and Development and Energy Efficiency Programs |
15,079 |
41,883 |
- |
16,736 |
46,477 |
- |
16,703 |
46,396 |
- | |||||||||
Profit-sharing |
2,338 |
7,160 |
- |
1,986 |
6,267 |
- |
1,864 |
5,924 |
- | |||||||||
Depreciation rate difference - Revaluation |
9,306 |
25,846 |
- |
9,898 |
27,494 |
- |
11,036 |
30,650 |
- | |||||||||
Financial instruments (IFRS / CPC) |
623 |
1,595 |
- |
832 |
2,255 |
- |
533 |
1,464 |
- | |||||||||
Recognition of the concession - adjustment of intangible assets (IFRS / CPC) |
(6,276) |
(17,433) |
- |
(4,025) |
(11,183) |
- |
(4,174) |
(11,593) |
- | |||||||||
Reversal of regulatory assets and liabilities (IFRS / CPC) |
(1,076) |
(3,030) |
(1,399) |
1,561 |
4,337 |
1,607 |
69,887 |
194,138 |
77,800 | |||||||||
Actuarial losses on the transition of accounting practices (IFRS/CPC) |
27,035 |
75,098 |
- |
26,042 |
72,340 |
- |
26,673 |
74,086 |
- | |||||||||
Other adjustments changes in practices |
63 |
174 |
- |
13 |
36 |
473 |
2,726 |
7,577 |
80 | |||||||||
Other |
12,390 |
33,540 |
1,477 |
6,387 |
15,860 |
151 |
540 |
205 |
- | |||||||||
Temporarily non-deductible differences - comprehensive income: |
||||||||||||||||||
Recognition of the concession - financial adjustment (IFRS / CPC) |
(25,337) |
(70,388) |
- |
(18,019) |
(50,051) |
- |
(19,090) |
(53,027) |
- | |||||||||
Property, plant and equipment - deemed cost adjustments (IFRS/CPC) |
(79,166) |
(219,909) |
- |
(81,132) |
(225,365) |
- |
(84,828) |
(235,635) |
- | |||||||||
Total |
(12,418) |
(33,619) |
78 |
(3,941) |
(11,081) |
2,231 |
58,777 |
178,885 |
77,880 |
10.4 Expected Recovery
Parent Company |
Consolidated | |||
2011 |
17,872 |
193,580 | ||
2012 |
16,214 |
93,750 | ||
2013 |
15,227 |
85,683 | ||
2014 |
14,194 |
62,181 | ||
2015 |
13,096 |
58,847 | ||
2016 to 2018 |
33,676 |
130,816 | ||
2019 to 2021 |
26,313 |
87,942 | ||
2022 to 2024 |
20,803 |
48,438 | ||
2025 to 2027 |
16,023 |
124,183 | ||
2028 to 2030 |
4,311 |
20,271 | ||
Total |
177,729 |
905,691 |
10.5 - Reconciliation of the amounts of income tax and social contribution reported in the income statements for 2010 and 2009:
31
Parent Company | ||||||||
2010 |
2009 | |||||||
CSLL |
IRPJ |
CSLL |
IRPJ | |||||
Income before taxes |
1,573,800 |
1,573,800 |
1,619,634 |
1,619,634 | ||||
Adjustments to reflect effective rate: |
||||||||
- Equity in subsidiaries |
(1,755,270) |
(1,755,270) |
(1,817,599) |
(1,817,599) | ||||
- Amortization of intangible asset acquired |
115,782 |
145,302 |
121,319 |
148,749 | ||||
- Other permanent additions, net |
3,536 |
3,225 |
4,546 |
3,811 | ||||
- Income from interest in equity |
197,444 |
197,444 |
199,745 |
199,745 | ||||
- Elimination Law 11.941/09 art. 4 |
- |
- |
(30,316) |
(30,316) | ||||
Calculation base |
135,292 |
164,501 |
97,329 |
124,024 | ||||
Statutory rate |
9% |
25% |
9% |
25% | ||||
Tax credit result |
(12,176) |
(41,126) |
(8,760) |
(31,006) | ||||
- Tax credit allocated |
4,343 |
13,440 |
20,639 |
56,790 | ||||
Total |
(7,833) |
(27,686) |
11,879 |
25,784 | ||||
Current |
(8,392) |
(28,660) |
(6,292) |
(12,276) | ||||
Deferred |
559 |
974 |
18,171 |
38,060 | ||||
Consolidated | ||||||||
2010 |
2009 | |||||||
CSLL |
IRPJ |
CSLL |
IRPJ | |||||
Income before taxes |
2,385,372 |
2,385,372 |
2,472,977 |
2,472,977 | ||||
Adjustments to reflect effective rate: |
||||||||
- Amortization of intangible asset acquired |
115,782 |
146,194 |
121,319 |
149,623 | ||||
- Realization CMC |
11,589 |
- |
13,549 |
- | ||||
- Tax incentives - PIIT |
(6,058) |
(6,050) |
(483) |
(483) | ||||
- Effect of presumed profit system |
(17,622) |
(20,448) |
(34,090) |
(39,790) | ||||
- Other permanent additions/(eliminations), net |
16,838 |
(35,338) |
2,256 |
(20,876) | ||||
- Elimination Law 11.941/09 art. 4 |
(32,143) |
(32,143) | ||||||
Calculation base |
2,505,901 |
2,469,730 |
2,543,385 |
2,529,308 | ||||
Statutory rate |
9% |
25% |
9% |
25% | ||||
Tax credit result |
(225,531) |
(617,433) |
(228,905) |
(632,327) | ||||
- Tax credit allocated |
4,296 |
13,333 |
20,557 |
56,566 | ||||
Total |
(221,235) |
(604,100) |
(208,348) |
(575,761) | ||||
Current |
(200,878) |
(554,443) |
(138,771) |
(366,432) | ||||
Deferred |
(20,357) |
(49,657) |
(69,577) |
(209,329) |
Amortization of Intangible asset acquired business combinations - Refers to the non-deductible portion of amortization of intangible assets derived from the acquisition of investees.
Realization of Complimentary Restatement CMC - Refers to the depreciation of the portion of incremental cost of the complementary restatement introduced by Law 8.200/91, which is not deductible for purposes of determination of social contribution.
Tax Credit Allocated Credit recorded by the Company on tax loss carryforwards in the light of a revision of projections, which resulted in a margin recorded to complete the accounting entries.
Elimination under Law n° 11.941/09 Refers to the reductions in interest, fines and legal charges on liabilities, as a result of adhering to REFIS IV, in accordance with the sole paragraph of article 4 of Law nº 11.941/09.
32
10.6 Unrecognized tax credits
The parent company has tax loss carryforwards of R$ 158,028 that could be recognized in the future, in accordance with reviews of the annual projections of taxable income.
The subsidiary Sul Geradora has income tax and social contribution assets on tax loss carryforwards of R$ 72,492 that were not recognized as it could not be reliable estimated whether future taxable profit will be available against which they can be utilized. There is also no prescriptive period for use of the tax loss carryforwards.
( 11 ) LEASES
The subsidiary CPFL Brasil provides services and leases equipment relating to own power production, in which it is the lessor, and the main risks and rewards of ownership of the assets are transferred to the lessees.
Investments in these finance lease projects are recognized at the present value of the minimum payments receivable which are treated as amortization of the investment and financial income is recognized in profit and loss for the year over the term of the contracts.
The investments produced financial income for the year of R$ 5,363 (R$ 2,276 in 2009).
Consolidated |
|||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
|||||
Present value of the minimum payments receivable |
102,769 |
104,835 |
21,339 |
||||
Unrealized financial income |
(71,701) |
(80,643) |
(14,950) |
||||
Gross investment |
31,068 |
24,192 |
6,389 |
||||
|
|||||||
Current |
4,754 |
2,949 |
1,133 |
||||
Noncurrent |
26,314 |
21,243 |
5,256 |
||||
Within 1 year |
|
1 to 5 years |
|
Over 5 years |
|
Total | |
Present value of the minimum payments receivable |
13,591 |
48,495 |
40,683 |
102,769 |
( 12 ) FINANCIAL ASSET OF CONCESSION
Consolidated | |
At January 1, 2009 |
582,241 |
Additions |
104,587 |
Marked to market |
(10,830) |
Disposal |
(1,969) |
At December 31, 2009 |
674,029 |
Additions |
179,501 |
Marked to market |
82,637 |
Disposal |
(1,521) |
At December 31, 2010 |
934,646 |
33
The balance refers to the fair value of the financial asset in relation to the right established in the concession agreements of the energy distributors to receive payment on reversal of the assets at the end of the concession.
Under the current tariff model, interest on the asset is recognized in profit or loss on billing of the consumers and realized on receipt of the electric energy bills. The difference in relation to the adjustment to market value is recognized against the revaluation reserve in equity.
( 13 ) OTHER CREDITS
Consolidated | ||||||||||||
Current |
Noncurrent | |||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
Receivables from CESP |
- |
8,923 |
24,021 |
- |
- |
11,964 | ||||||
Receivables from BAESA's shareholders |
17,128 |
15,503 |
14,147 |
- |
15,503 |
28,296 | ||||||
Advances - Fundação CESP |
7,995 |
6,299 |
5,700 |
- |
- |
- | ||||||
Advances to suppliers |
16,659 |
6,134 |
- |
- |
- |
- | ||||||
Pledges, funds and tied deposits |
2,108 |
1,804 |
513 |
89,051 |
99,762 |
132,906 | ||||||
Fund tied to foreign currency loans |
- |
- |
- |
21,221 |
19,148 |
30,023 | ||||||
Orders in progress |
13,988 |
4,484 |
16,214 |
- |
- |
2,379 | ||||||
Services rendered to third parties |
73,163 |
48,845 |
18,600 |
- |
- |
42 | ||||||
Reimbursement RGR |
5,683 |
5,504 |
5,173 |
1,909 |
1,611 |
766 | ||||||
Advance energy purchase agreements |
15,817 |
13,989 |
12,061 |
65,786 |
61,847 |
40,970 | ||||||
Prepaid expenses |
29,565 |
14,351 |
9,050 |
2,724 |
6,573 |
5,443 | ||||||
Collection agreements |
26,573 |
4,263 |
- |
- |
- |
- | ||||||
Other |
44,733 |
26,461 |
12,918 |
41,415 |
32,585 |
35,672 | ||||||
Total |
253,412 |
156,560 |
118,397 |
222,106 |
237,029 |
288,461 |
Receivables - BAESA Shareholders - From 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 results of the indirect subsidiary BAESA. To settle this question, BAESAs shareholders agreed in 2007 that the excess contributions made by the subsidiary CPFL Geração should be restated in accordance with the CDI rate and offset over 36 months from January, 2009.
Advances - Fundação CESP Refers to advances to employee for welfare programs and operational maintenance of the entity.
Pledges, Funds and Tied Deposits: collateral offered to guarantee CCEE operations and guarantees granted to jointly-owned subsidiaries.
Fund Tied to Foreign Currency Loans: These are guarantees offered when negotiating or renegotiating loans.
Services Rendered to Third Parties: Refers to accounts receivable for services provided to consumers in relation to electric energy distribution.
Refund of RGR: Refers to amounts to be offset in relation to the difference between the RGR - Global Reversal Reserve approved by ANEEL and the amount actually incurred, based on property, plant and equipment in use.
Advance Energy Purchase Agreements: Refers to prepayments of energy purchases by the subsidiaries, which will be liquidated on delivery of the energy to be supplied.
Collection agreements - Refers to agreements between the distributors and city halls and companies for collection through the electric energy bills and subsequent pass-through of amounts related to public letting, newspapers, healthcare, residential insurance, etc. From April 2010, as a result of introduction of the new billing system - CCS, the subsidiaries change the accounting method (from collection-based to billing-based recognition), affecting accounting for both receivables and payables (Note 25).
34
( 14 ) INVESTMENTS
Parent Company | ||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||
Permanent equity interests - equity method |
||||||
By equity method of the subsidiary |
4,764,697 |
4,493,465 |
3,946,113 | |||
Value-added of assets, net |
1,396,323 |
1,508,764 |
1,538,332 | |||
Goodwill |
6,055 |
4,048 |
- | |||
Total |
6,167,075 |
6,006,277 |
5,484,445 |
14.1 - Permanent equity interests:
December 31, 2010 |
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 | ||||||||||||||
Investment (*) |
Number of shares held (thousands) |
Total assets |
Capital |
Shareholders' Equity |
Profit or loss for the year |
Shareholders Equity Interest |
Equity in Subsidiaries | |||||||||||
CPFL Paulista |
109,810 |
4,750,491 |
109,810 |
808,682 |
695,761 |
808,682 |
689,479 |
695,761 |
750,347 | |||||||||
CPFL Piratininga |
53,031,259 |
2,235,605 |
70,587 |
396,907 |
301,746 |
396,907 |
278,139 |
301,746 |
273,790 | |||||||||
RGE |
807,168 |
2,724,908 |
867,604 |
1,186,850 |
245,090 |
1,186,850 |
1,147,092 |
245,190 |
193,691 | |||||||||
CPFL Santa Cruz |
371,772 |
232,476 |
45,330 |
101,759 |
18,291 |
101,759 |
110,228 |
18,290 |
34,810 | |||||||||
CPFL Leste Paulista |
895,373 |
144,696 |
12,217 |
66,912 |
12,465 |
66,912 |
64,713 |
12,330 |
14,908 | |||||||||
CPFL Jaguari |
212,126 |
82,409 |
5,716 |
43,433 |
11,578 |
43,433 |
39,802 |
11,212 |
9,577 | |||||||||
CPFL Sul Paulista |
463,482 |
121,101 |
10,000 |
62,467 |
15,839 |
62,467 |
53,208 |
15,341 |
12,790 | |||||||||
CPFL Mococa |
121,761 |
63,597 |
9,850 |
36,691 |
8,563 |
36,691 |
33,566 |
8,296 |
8,813 | |||||||||
CPFL Geração |
205,487,716 |
3,982,955 |
1,039,618 |
1,908,873 |
232,673 |
1,908,873 |
1,913,900 |
232,673 |
299,865 | |||||||||
CPFL Brasil |
2,999 |
544,728 |
2,999 |
94,234 |
193,076 |
94,234 |
114,116 |
193,076 |
211,447 | |||||||||
CPFL Atende (**) |
1 |
16,275 |
1 |
(755) |
504 |
(755) |
(1,259) |
504 |
(376) | |||||||||
CPFL Planalto |
630 |
8,501 |
630 |
6,350 |
11,114 |
6,350 |
4,782 |
11,114 |
7,531 | |||||||||
CPFL Serviços |
1,482,334 |
34,168 |
5,800 |
4,307 |
1,844 |
4,307 |
2,351 |
2,005 |
(8,144) | |||||||||
CPFL Jaguariuna |
189,620 |
2,677 |
2,481 |
1,654 |
(526) |
1,654 |
2,180 |
(526) |
(301) | |||||||||
CPFL Jaguari Geração |
40,108 |
46,406 |
40,108 |
46,333 |
8,451 |
46,333 |
41,168 |
8,258 |
8,851 | |||||||||
Chumpitaz |
100 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||
Total |
4,764,697 |
4,493,465 |
1,755,270 |
1,817,599 | ||||||||||||||
(*) At December 31, 2010, the Company held 100% of the capital of all the subsidiaries |
||||||||||||||||||
(**) Number of Quotas |
14.2 - Interest on shareholders equity (JCP) and dividends receivable
Parent Company | ||||||||||||||||
Dividend |
Interest on equity |
Total | ||||||||||||||
Subsidiaries |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||||
CPFL Paulista |
237,000 |
- |
- |
- |
- |
237,000 |
- |
- | ||||||||
CPFL Piratininga |
- |
132,706 |
- |
6,123 |
- |
- |
138,829 |
- | ||||||||
RGE |
- |
41,002 |
- |
- |
- |
- |
41,002 |
- | ||||||||
CPFL Santa Cruz |
12,000 |
7,000 |
10,000 |
- |
- |
12,000 |
7,000 |
10,000 | ||||||||
CPFL Geração |
85,000 |
- |
118,232 |
- |
29,971 |
85,000 |
- |
148,203 | ||||||||
CPFL Brasil |
75,000 |
- |
- |
- |
- |
75,000 |
- |
- | ||||||||
CPFL Leste Paulista |
- |
3,582 |
- |
1,375 |
- |
- |
4,957 |
- | ||||||||
CPFL Sul Paulista |
- |
4,800 |
- |
1,036 |
- |
- |
5,836 |
- | ||||||||
CPFL Mococa |
3,648 |
500 |
- |
- |
- |
3,648 |
500 |
- | ||||||||
CPFL Serviços |
- |
3,648 |
- |
- |
- |
- |
3,648 |
- | ||||||||
412,648 |
193,238 |
128,232 |
8,534 |
29,971 |
412,648 |
201,772 |
158,203 |
35
In 2010, the Company received R$ 1,317,799 in relation to the dividends and interest on shareholders equity.
14.3 Added value on assets and goodwill
Added value on assets refers mainly to the right to exploit the concession acquired through business combinations. The goodwill relates mainly to the acquisition of investments, based on projections of future income.
The amounts have been reclassified to intangible assets in the consolidated financial statements, as mentioned in Note 16.
36
( 15 ) PROPERTY, PLANT AND EQUIPMENT
Consolidated | ||||||||||||||||
Land |
Reservoirs, dams and water mains |
Buildings, construction and improvements |
Machinery and equipment |
Vehicles |
Furniture and fittings |
In progress |
Total | |||||||||
At January 1, 2009 |
51,125 |
976,545 |
1,272,879 |
1,674,210 |
2,402 |
4,988 |
724,388 |
4,706,537 | ||||||||
Historic cost |
51,125 |
1,186,753 |
1,499,868 |
2,267,321 |
3,878 |
6,617 |
724,388 |
5,739,950 | ||||||||
Accumulated depreciation |
- |
(210,208) |
(226,989) |
(593,111) |
(1,476) |
(1,629) |
- |
(1,033,413) | ||||||||
Additions |
1,906 |
4,910 |
6,481 |
3,566 |
1,082 |
274 |
642,156 |
660,375 | ||||||||
Disposals |
- |
- |
- |
(420) |
(114) |
(16) |
(18) |
(568) | ||||||||
Transfers |
1,510 |
1,220 |
30,990 |
27,972 |
82 |
1,298 |
(63,072) |
- | ||||||||
Depreciation |
(1,195) |
(33,077) |
(45,262) |
(71,605) |
(1,414) |
(752) |
- |
(153,304) | ||||||||
At December 31, 2009 |
53,346 |
949,598 |
1,265,088 |
1,633,723 |
2,038 |
5,792 |
1,303,454 |
5,213,039 | ||||||||
Historic cost |
54,541 |
1,192,883 |
1,537,339 |
2,298,439 |
4,927 |
8,174 |
1,303,454 |
6,399,757 | ||||||||
Accumulated depreciation |
(1,195) |
(243,285) |
(272,251) |
(664,715) |
(2,889) |
(2,382) |
- |
(1,186,717) | ||||||||
Additions |
- |
3,851 |
3,471 |
(13,181) |
1,457 |
2,044 |
754,298 |
751,940 | ||||||||
Disposals |
(48) |
- |
- |
(15,508) |
(355) |
(37) |
(8) |
(15,956) | ||||||||
Transfers |
128,287 |
617,391 |
132,256 |
376,536 |
847 |
5,197 |
(1,260,514) |
- | ||||||||
Depreciation |
(1,195) |
(37,613) |
(49,329) |
(72,696) |
(784) |
(941) |
- |
(162,557) | ||||||||
At December 31, 2010 |
180,390 |
1,533,227 |
1,351,486 |
1,908,875 |
3,203 |
12,055 |
797,230 |
5,786,466 | ||||||||
Historic cost |
182,780 |
1,814,125 |
1,673,066 |
2,646,286 |
6,877 |
15,378 |
797,230 |
7,135,742 | ||||||||
Accumulated depreciation |
(2,390) |
(280,898) |
(321,580) |
(737,411) |
(3,674) |
(3,323) |
- |
(1,349,276) | ||||||||
Average depreciation rate |
- |
2.36% |
3.86% |
3.11% |
20.00% |
10.00% |
- |
As mentioned in item 3.4, assets not acquired recently were measured at deemed cost at the transition date, while the assets of recently-built plants are recognized at cost, which in Managements opinion, approximates market value. Property, plant and equipment were valuated to their market values based on an appraisal carried out by an independent engineering company specializing in equity valuation. Added value of R$ 1,002,991 was determined at January 1, 2009 and recognized in the revaluation reserve in equity. The amortization of the value-added with an impact on the profit or loss for the years ended December 31, 2010 and 2009, determined based on the remaining useful life of the assets, was R$ 39,605 and R$ 39,552.
Construction in progress - the consolidated balance mainly refers to work in progress of the operating subsidiaries and/or those under development, particularly the EPASA and Foz do Chapecó generation projects, with total property, plant and equipment of R$ 630,616 and R$ 295,673 (R$ 321,614 and R$ 150,793 in proportion to the participation of the subsidiary CPFL Geração).
In conformity with CPC 20, the interest on the loans taken out by the projects to finance the construction is capitalized during the construction phase. During 2010, R$ 84,839 was capitalized in the consolidated financial statements (R$ 56,106 in 2009). For further details of construction assets and fund raising costs, see notes 1, 18 and 19.
37
Impairment testing: The Company checked in respect of all the reporting periods for indications of devaluation of its assets that might involve the need for impairment tests. The valuation was based on external and internal information sources, taking into account variations in interest rates, changes in market conditions and other factors.
The result of the assessment indicated no signs of impairment of these assets in any of the reporting periods and therefore no impairment losses were recognized.
38
( 16 ) INTANGIBLE ASSETS
Consolidated | |||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
Historic cost |
Accumulated amortization |
Net value |
Net value |
Net value | |||||
Goodwill |
6,055 |
- |
6,055 |
4,048 |
- | ||||
Intangible assets - Concession rights: |
|||||||||
Acquired in business combinations |
3,734,995 |
(1,692,863) |
2,042,132 |
2,185,780 |
2,386,304 | ||||
Distribution infrastructure - operational |
8,222,686 |
(4,886,917) |
3,335,769 |
2,879,341 |
2,802,271 | ||||
Distribution infrastructure - in progress |
694,343 |
- |
694,343 |
521,147 |
387,645 | ||||
Public utility |
407,288 |
(9,305) |
397,983 |
392,221 |
395,247 | ||||
Other intangible assets |
162,943 |
(54,348) |
108,595 |
80,564 |
80,677 | ||||
Total intangible assets |
13,228,310 |
(6,643,433) |
6,584,877 |
6,063,101 |
6,052,144 | ||||
Historic cost |
13,228,310 |
12,209,040 |
11,742,436 | ||||||
Accumulated amortization |
(6,643,433) |
(6,145,939) |
(5,690,292) | ||||||
6,584,877 |
6,063,101 |
6,052,144 |
16.1 Intangible asset acquired in business combinations
The following table shows the breakdown of the intangible asset of the right to exploit the concession acquired in business combinations:
39
Consolidated | ||||||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
Annual amortization rate | |||||||||||||
Historic cost |
Accumulated amortization |
Net value |
Net value |
Net value |
2010 |
2009 |
2008 | |||||||||
Intangible asset - acquired in business combinations |
||||||||||||||||
Intangible asset acquired, not merged |
||||||||||||||||
Parent Company |
||||||||||||||||
CPFL Paulista |
304,861 |
(100,817) |
204,044 |
223,937 |
245,322 |
5.90% |
5.93% |
6.23% | ||||||||
CPFL Piratininga |
39,065 |
(12,461) |
26,604 |
29,019 |
31,619 |
6.19% |
6.19% |
6.70% | ||||||||
CPFL Geração |
54,555 |
(17,822) |
36,733 |
39,898 |
43,150 |
5.80% |
5.83% |
6.21% | ||||||||
RGE |
3,150 |
(590) |
2,560 |
2,765 |
2,959 |
6.53% |
6.53% |
6.07% | ||||||||
CPFL Santa Cruz |
9 |
(1) |
8 |
9 |
24 |
8.81% |
- |
- | ||||||||
CPFL Leste Paulista |
3,333 |
(446) |
2,887 |
- |
- |
8.37% |
- |
- | ||||||||
CPFL Sul Paulista |
7,288 |
(932) |
6,356 |
- |
- |
7.99% |
- |
- | ||||||||
CPFL Jaguari |
5,213 |
(710) |
4,503 |
- |
- |
8.51% |
- |
- | ||||||||
CPFL Mococa |
9,110 |
(1,268) |
7,842 |
- |
- |
8.70% |
- |
- | ||||||||
CPFL Jaguari Geração |
7,896 |
(474) |
7,422 |
- |
- |
3.75% |
- |
- | ||||||||
434,480 |
(135,521) |
298,959 |
295,628 |
323,074 |
||||||||||||
Subsidiaries |
||||||||||||||||
CPFL Jaguariúna |
- |
- |
- |
- |
120,815 |
- |
- |
11.81% | ||||||||
ENERCAN |
10,233 |
(2,316) |
7,917 |
8,626 |
9,319 |
6.93% |
6.93% |
4.83% | ||||||||
Barra Grande |
3,081 |
(1,010) |
2,071 |
2,252 |
2,432 |
5.93% |
5.93% |
6.65% | ||||||||
Chapecoense |
7,376 |
- |
7,376 |
7,376 |
7,319 |
- |
- |
- | ||||||||
EPASA |
498 |
- |
498 |
498 |
- |
- |
- |
- | ||||||||
Parque eólico Santa Clara |
31,735 |
- |
31,735 |
31,735 |
- |
- |
- |
- | ||||||||
Parque eólico Campo do Ventos |
5,576 |
- |
5,576 |
- |
- |
- |
- |
- | ||||||||
Other |
14,498 |
(11,063) |
3,435 |
3,628 |
7,022 |
6.22% |
6.22% |
4,99% a 11,65% | ||||||||
72,997 |
(14,389) |
58,608 |
54,115 |
146,907 |
||||||||||||
Subtotal |
507,477 |
(149,910) |
357,567 |
349,743 |
469,981 |
|||||||||||
Intangible asset acquired and merged Deductible |
||||||||||||||||
Subsidiaries |
||||||||||||||||
RGE |
1,120,266 |
(739,555) |
380,711 |
399,666 |
419,982 |
3.76% |
3.76% |
4.50% | ||||||||
CPFL Geração |
426,450 |
(219,960) |
206,490 |
223,226 |
239,464 |
6.22% |
6.22% |
5.74% | ||||||||
Subtotal |
1,546,716 |
(959,515) |
587,201 |
622,892 |
659,446 |
|||||||||||
Intangible asset acquired and merged Reassessed |
||||||||||||||||
Parent company |
||||||||||||||||
CPFL Paulista |
1,074,026 |
(415,524) |
658,502 |
722,207 |
790,690 |
5.90% |
5.93% |
6.23% | ||||||||
CPFL Piratininga |
115,762 |
(36,927) |
78,835 |
85,995 |
93,696 |
6.19% |
6.19% |
6.70% | ||||||||
RGE |
310,128 |
(66,832) |
243,296 |
262,839 |
281,236 |
6.33% |
6.33% |
5.88% | ||||||||
CPFL Santa Cruz |
61,685 |
(28,907) |
32,778 |
40,843 |
49,641 |
13.07% |
13.07% |
15.12% | ||||||||
CPFL Leste Paulista |
27,034 |
(8,526) |
18,508 |
22,693 |
- |
15.48% |
15.48% |
- | ||||||||
CPFL Sul Paulista |
38,168 |
(11,856) |
26,312 |
32,090 |
- |
15.14% |
15.14% |
- | ||||||||
CPFL Jaguari |
23,600 |
(7,300) |
16,300 |
20,018 |
- |
15.76% |
15.76% |
- | ||||||||
CPFL Mococa |
15,124 |
(4,950) |
10,174 |
12,588 |
- |
15.96% |
15.96% |
- | ||||||||
CPFL Jaguari Geração |
15,275 |
(2,616) |
12,659 |
13,872 |
- |
7.94% |
7.94% |
- | ||||||||
1,680,802 |
(583,438) |
1,097,364 |
1,213,145 |
1,215,263 |
||||||||||||
Subsidiaries |
||||||||||||||||
CPFL Leste Paulista |
- |
- |
- |
- |
12,570 |
- |
- |
8.67% | ||||||||
CPFL Sul Paulista |
- |
- |
- |
- |
12,308 |
- |
- |
8.59% | ||||||||
CPFL Jaguari |
- |
- |
- |
- |
11,754 |
- |
- |
8.56% | ||||||||
CPFL Mococa |
- |
- |
- |
- |
4,982 |
- |
- |
8.49% | ||||||||
- |
- |
- |
- |
41,614 |
||||||||||||
Subtotal |
1,680,802 |
(583,438) |
1,097,364 |
1,213,145 |
1,256,877 |
|||||||||||
Total |
3,734,995 |
(1,692,863) |
2,042,132 |
2,185,780 |
2,386,304 |
|||||||||||
The intangible asset acquired in business combinations comprises:
- Intangible asset acquired, not merged
Refers mainly to the remaining goodwill on acquisition of the shares held by the noncontrolling shareholders.
40
- Intangible asset acquired and merged - Deductible
Goodwill on the acquisition of the subsidiaries that was merged with the respective net equities, without application of CVM Instructions nº 319/99 and nº 349/01, that is, without segregation of the amount of the tax benefit.
- Intangible asset acquired and merged Reassessed
In order to comply with ANEEL instructions and avoid the goodwill amortization resulting from the merger of a parent company causing a negative impact on dividends paid to the shareholders, the subsidiaries applied the concepts of CVM Instructions nº 319/99 and nº 349/01 on the acquisition goodwill. A reserve was therefore recorded to adjust the goodwill, set against the equity reserves of the subsidiaries, 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 in order to adjust this, non-deductible goodwill was recorded for tax.
16.2 Changes in intangible assets:
The changes in intangible assets for the years ended December 31, 2010 and 2009 are as follows:
Consolidated | ||||||||||||||
Concession right | ||||||||||||||
Goodwill |
Acquired in business combinations |
Public utility |
Distribution infrastructure - operational |
Distribution infrastructure - in progress |
Other intangible assets |
TOTAL | ||||||||
Intangible asset at January 1, 2009 |
- |
2,386,304 |
395,247 |
2,802,271 |
387,645 |
80,677 |
6,052,144 | |||||||
Additions |
4,048 |
32,290 |
646 |
1,001 |
666,192 |
12,748 |
716,925 | |||||||
Amortization |
- |
(186,899) |
(3,672) |
(344,193) |
- |
(13,363) |
(548,127) | |||||||
Transfer - intangible assets |
- |
- |
- |
428,103 |
(428,103) |
- |
- | |||||||
Transfer - financial asset |
- |
- |
- |
- |
(104,587) |
- |
(104,587) | |||||||
Transfer - other assets |
- |
(45,915) |
- |
(7,841) |
- |
502 |
(53,254) | |||||||
Intangible asset at December 31, 2009 |
4,048 |
2,185,780 |
392,221 |
2,879,341 |
521,147 |
80,564 |
6,063,101 | |||||||
Additions |
2,007 |
38,286 |
11,395 |
5,133 |
1,159,601 |
41,146 |
1,257,568 | |||||||
Amortization |
- |
(182,615) |
(5,633) |
(351,690) |
- |
(12,878) |
(552,816) | |||||||
Transfer - intangible assets |
- |
- |
- |
806,904 |
(806,904) |
- |
- | |||||||
Transfer - financial asset |
- |
- |
- |
- |
(179,501) |
- |
(179,501) | |||||||
Transfer - other assets |
- |
681 |
- |
(3,919) |
- |
(237) |
(3,475) | |||||||
Intangible asset at December 31, 2010 |
6,055 |
2,042,132 |
397,983 |
3,335,769 |
694,343 |
108,595 |
6,584,877 |
In conformity with CPC 20, the interest on the loans taken out by the subsidiaries is capitalized to qualifying intangible assets. During 2010, R$ 48,099 was capitalized in the consolidated financial statements (R$ 28,825 in 2009) at a rate of 7.9% p.a. (6.3% p.a. in 2009).
16.3 Impairment test
The Company checked in respect of all the reporting periods for indications of devaluation of its assets that might involve the need for impairment tests. The valuation was based on external and internal information sources, taking into account variations in interest rates, changes in market conditions and other factors.
In analysis of impairment of intangible assets with an indefinite useful life (including goodwill), the Company used the value in use method to assess the recoverable value of each CGU. The cash flows were prepared in accordance with management's assessment of future trends in the electricity sector, based on external sources and historical data.
The result of the assessment indicated no signs of impairment of these assets in any of the reporting periods and there is no impairment loss to be recognized.
41
( 17 ) SUPPLIERS
Consolidated | ||||||
Current |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||
System Service Charges |
57,092 |
34,556 |
54,607 | |||
Energy purchased |
584,114 |
658,068 |
645,718 | |||
Electricity Network Usage Charges |
135,404 |
121,801 |
128,907 | |||
Materials and Services |
199,129 |
143,180 |
116,228 | |||
Free Energy |
70,262 |
61,341 |
28,731 | |||
Other |
1,391 |
2,506 |
11,713 | |||
Total |
1,047,392 |
1,021,452 |
985,904 | |||
Noncurrent |
||||||
Electricity Network Usage Charges |
- |
42,655 |
85,311 | |||
Total |
- |
42,655 |
85,311 |
The noncurrent liability refers to charges related to the Use of the Distribution System and the changes are due mainly to the pass-through to CTEEP, as mentioned in Note 7.
( 18 ) INTEREST ON DEBTS, LOANS AND FINANCING
Consolidated | ||||||||||||||||||||||||
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 | ||||||||||||||||||||
Interest - Current and Noncurrent |
Principal |
Total |
Interest - Current and Noncurrent |
Principal |
Total |
Interest - Current and Noncurrent |
Principal |
Total | ||||||||||||||||
Current |
Noncurrent |
Current |
Noncurrent |
Current |
Noncurrent |
|||||||||||||||||||
Measured at cost |
||||||||||||||||||||||||
Brazilian currency |
||||||||||||||||||||||||
BNDES - Power increases |
55 |
5,040 |
8,498 |
13,593 |
86 |
7,321 |
13,538 |
20,945 |
128 |
10,108 |
20,868 |
31,104 | ||||||||||||
BNDES - Investment |
8,494 |
329,994 |
3,016,363 |
3,354,851 |
11,204 |
362,902 |
2,476,242 |
2,850,348 |
36,819 |
258,265 |
2,271,735 |
2,566,819 | ||||||||||||
BNDES - Other |
1,028 |
72,123 |
146,414 |
219,565 |
49 |
661 |
5,628 |
6,338 |
30 |
194 |
3,356 |
3,580 | ||||||||||||
Furnas Centrais Elétricas S.A. |
- |
- |
- |
- |
379 |
46,028 |
- |
46,407 |
1,158 |
93,666 |
46,833 |
141,657 | ||||||||||||
Financial Institutions |
50,277 |
144,624 |
1,255,312 |
1,450,213 |
10,408 |
194,766 |
164,054 |
369,228 |
5,241 |
52,879 |
209,066 |
267,186 | ||||||||||||
Other |
578 |
23,336 |
34,488 |
58,402 |
554 |
22,174 |
30,693 |
53,421 |
511 |
28,517 |
36,821 |
65,849 | ||||||||||||
Subtotal |
60,432 |
575,117 |
4,461,075 |
5,096,624 |
22,680 |
633,852 |
2,690,155 |
3,346,687 |
43,887 |
443,629 |
2,588,679 |
3,076,195 | ||||||||||||
Foreign currency |
||||||||||||||||||||||||
BID |
- |
- |
- |
- |
260 |
3,652 |
51,379 |
55,291 |
541 |
4,500 |
73,862 |
78,903 | ||||||||||||
Financial Institutions |
432 |
3,750 |
40,750 |
44,932 |
541 |
3,920 |
46,503 |
50,964 |
860 |
5,999 |
67,676 |
74,535 | ||||||||||||
Subtotal |
432 |
3,750 |
40,750 |
44,932 |
801 |
7,572 |
97,882 |
106,255 |
1,401 |
10,499 |
141,538 |
153,438 | ||||||||||||
Total at Cost |
60,864 |
578,867 |
4,501,825 |
5,141,556 |
23,481 |
641,424 |
2,788,037 |
3,452,942 |
45,288 |
454,128 |
2,730,217 |
3,229,633 | ||||||||||||
Measured at fair value |
||||||||||||||||||||||||
Foreign currency |
||||||||||||||||||||||||
Financial Institutions |
8,799 |
- |
416,028 |
424,827 |
66,608 |
87,490 |
941,005 |
1,095,103 |
58,834 |
102,077 |
1,355,922 |
1,516,833 | ||||||||||||
Total |
8,799 |
- |
416,028 |
424,827 |
66,608 |
87,490 |
941,005 |
1,095,103 |
58,834 |
102,077 |
1,355,922 |
1,516,833 | ||||||||||||
Total |
69,663 |
578,867 |
4,917,853 |
5,566,383 |
90,089 |
728,914 |
3,729,042 |
4,548,045 |
104,122 |
556,205 |
4,086,139 |
4,746,466 |
42
Consolidated |
||||||||||||
Measured at cost |
December 31, 2010 |
December 31, 2009 |
|
January 1, 2009 |
Annual interest |
Amortization |
Collateral | |||||
Brazilian currency |
||||||||||||
BNDES - Power increases |
||||||||||||
CPFL Geração |
13,593 |
20,847 |
30,635 |
TJLP + 3.1% to 4.3% |
36 to 84 monthly installments from February 2003 to December 2008 |
CPFL Energia and Paulista guarantee | ||||||
CPFL Geração |
- |
98 |
469 |
UMBND + 4.0% |
72 monthly installments from September 2004 |
CPFL Energia and Paulista guarantee | ||||||
BNDES/BNB - Investment |
||||||||||||
CPFL Paulista - FINEM II |
- |
63,655 |
127,157 |
TJLP + 5.4% |
48 monthly installments from January 2007 |
CPFL Energia guarantee and receivables | ||||||
CPFL Paulista - FINEM III |
80,711 |
107,614 |
134,356 |
TJLP + 3.3% |
72 monthly installments from January 2008 |
CPFL Energia guarantee and receivables | ||||||
CPFL Paulista - FINEM IV |
256,572 |
237,325 |
100,498 |
TJLP + 3.28% to 3.4% |
60 monthly installments from January 2010 |
CPFL Energia guarantee and receivables | ||||||
CPFL Paulista - FINEM V |
98,051 |
- |
- |
TJLP + 2.12% to 3.3% |
72 monthly installments from February 2012 |
CPFL Energia guarantee and receivables | ||||||
CPFL Paulista - FINEM V |
35,135 |
- |
- |
Fixed rate 5.5% to 8.0% |
114 monthly installments from August 2011 |
CPFL Energia guarantee and receivables | ||||||
CPFL Paulista - FINAME |
36,067 |
- |
- |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | ||||||
CPFL Piratininga - FINEM I |
- |
23,702 |
47,349 |
TJLP + 5.4% |
48 monthly installments from January 2007 |
CPFL Energia guarantee and receivables | ||||||
CPFL Piratininga - FINEM II |
47,945 |
63,927 |
79,813 |
TJLP + 3.3% |
72 monthly installments from January 2008 |
CPFL Energia guarantee and receivables | ||||||
CPFL Piratininga - FINEM III |
106,944 |
104,990 |
54,768 |
TJLP + 3.28% to 3.4% |
60 monthly installments from January 2010 |
CPFL Energia guarantee and receivables | ||||||
CPFL Piratininga - FINEM IV |
55,099 |
- |
- |
TJLP + 2.12% to 3.3% |
72 monthly installments from February 2012 |
CPFL Energia guarantee and receivables | ||||||
CPFL Piratininga - FINEM IV |
13,081 |
- |
- |
Fixed rate 5.5% to 8.0% |
114 monthly installments from August 2011 |
CPFL Energia guarantee and receivables | ||||||
CPFL Piratininga - FINAME |
22,905 |
- |
- |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | ||||||
RGE - FINEM III |
44,858 |
67,285 |
89,606 |
TJLP + 5.0% |
60 monthly installments from January 2008 |
Receivables / Reserve account | ||||||
RGE - FINEM IV |
163,321 |
173,424 |
96,481 |
TJLP + 3.28 to 3.4% |
60 monthly installments from January 2010 |
Receivables / CPFL Energia guarantee | ||||||
RGE - FINEM V |
59,967 |
- |
- |
TJLP + 2.12 to 3.3% a.a. |
72 monthly installments from February 2012 |
Receivables / CPFL Energia guarantee | ||||||
RGE - FINEM V |
9,710 |
- |
- |
5.5% a.a. Fixed rate |
96 monthly installments from February 2013 |
Receivables / CPFL Energia guarantee | ||||||
RGE - FINAME |
4,857 |
- |
- |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | ||||||
CPFL Santa Cruz |
10,483 |
2,255 |
2,275 |
TJLP + 2.90% |
54 monthly installments from December 2010 |
CPFL Energia guarantee | ||||||
CPFL Mococa |
5,475 |
3,018 |
3,014 |
TJLP + 2.9% |
54 monthly installments from January 2011 |
CPFL Energia guarantee and receivables | ||||||
CPFL Jaguari |
4,825 |
2,498 |
2,495 |
TJLP + 2.9% |
54 monthly installments from December 2010 |
CPFL Energia guarantee and receivables | ||||||
CPFL Leste Paulista |
3,261 |
2,024 |
2,004 |
TJLP + 2.9% |
54 monthly installments from June 2011 |
CPFL Energia guarantee and receivables | ||||||
CPFL Sul Paulista |
4,735 |
3,350 |
2,004 |
TJLP + 2.9% |
54 monthly installments from June 2011 |
CPFL Energia guarantee and receivables | ||||||
CPFL Geração |
74,531 |
- |
- |
TJLP + 1.72% |
192 monthly installments from September 2013 |
CPFL Energia and Paulista guarantee | ||||||
BAESA |
120,347 |
136,045 |
151,561 |
TJLP + 3.125% to 4.125% |
144 monthly installments from September 2006 |
Pledge of shares, credit rights and revenue | ||||||
BAESA |
24,244 |
28,058 |
42,015 |
UMBND + 3.125% (1) |
144 monthly installments from November 2006 |
Pledge of shares, credit rights and revenue | ||||||
ENERCAN |
273,992 |
307,203 |
340,007 |
TJLP + 4% |
144 monthly installments from April 2007 |
Letters of guarantee | ||||||
ENERCAN |
15,932 |
18,557 |
27,663 |
UMBND + 4% |
144 monthly installments from April 2007 |
Letters of guarantee | ||||||
CERAN |
382,730 |
417,440 |
445,414 |
TJLP + 5% |
168 monthly installments from December 2005 |
CPFL Energia guarantee | ||||||
CERAN |
53,845 |
60,981 |
87,085 |
UMBND + 5% (1) |
168 monthly installments from February 2006 |
CPFL Energia guarantee | ||||||
CERAN |
174,721 |
189,283 |
195,425 |
TJLP + 3.69% (Average of percentage) |
168 monthly installments from November 2008 |
CPFL Energia guarantee | ||||||
Foz do Chapecó |
996,013 |
792,209 |
535,829 |
TJLP + 2.49% to 2.95% |
192 monthly installments from October 2011 |
Pledge of shares, credit and concession rights and revenue and CPFL Energia guarantee | ||||||
CPFL Bioenergia - FINEM |
39,512 |
15,248 |
- |
TJLP + 1.9% |
144 monthly installments from June 2011 |
Mortgage, credit rights and CPFL Energia guarantee | ||||||
CPFL Bioenergia - FINAME |
39,369 |
30,257 |
- |
Fixed rate 4.5% |
102 monthly installments from June 2011 |
Mortgage, credit rights and CPFL Energia guarantee | ||||||
EPASA - BNB |
95,613 |
- |
- |
Fixed rate 10% |
132 monthly installments from January 2013 |
Bank guarantee | ||||||
BNDES - Other |
||||||||||||
CPFL Brasil - Purchase of assets |
6,785 |
6,338 |
3,580 |
TJLP + from 1.94% to 2.5% |
36 monthly installments from May 2009 |
Tied to the asset acquired | ||||||
CPFL Piratininga - Working capital |
105,652 |
- |
- |
TJLP + 5.0% (2) |
32 monthly installments from February 2011 |
No guarantee | ||||||
CPFL Geração - FINEM - Working capital |
53,232 |
- |
- |
TJLP + 4.95% |
24 monthly installments from February 2011 |
CPFL Energia guarantee | ||||||
CPFL Geração - FINAME - Working capital |
53,896 |
- |
- |
TJLP + 4.95% (3) |
23 monthly installments from February 2011 |
CPFL Energia guarantee | ||||||
Furnas Centrais Elétricas S.A. |
||||||||||||
CPFL Geração |
- |
46,407 |
141,657 |
IGP-M + 10% |
24 monthly installments from June 2008 |
Energy produced by plant | ||||||
Financial Institutions |
||||||||||||
CPFL Paulista |
||||||||||||
Banco do Brasil - Law 8727 |
34,874 |
39,314 |
47,548 |
IGP-M + 7.42% |
240 monthly installments from May 1994 |
Receivables | ||||||
Banco do Brasil |
104,890 |
- |
- |
107% of CDI |
1 installment in April 2015 |
CPFL Energia guarantee | ||||||
Banco do Brasil-Rural Credit (*) |
199,622 |
- |
- |
98.50% of CDI |
4 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Piratininga |
||||||||||||
Banco Alfa |
- |
50,017 |
- |
105.1% of CDI |
1 installment in January 2010 |
No guarantee | ||||||
Banco do Brasil-Rural Credit (*) |
18,360 |
- |
- |
98.5% of CDI |
4 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
RGE |
||||||||||||
Banco do Brasil-Rural Credit (*) |
236,830 |
- |
- |
98.5% of CDI |
2 and 4 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Brasil |
||||||||||||
FINEP |
3,682 |
- |
- |
5% Pré-fixada |
81 monthly installments from August 2011 |
Receivables | ||||||
CPFL Santa Cruz |
||||||||||||
HSBC |
45,206 |
40,747 |
36,677 |
CDI + 1.10% |
1 installment in June 2011 |
CPFL Energia guarantee | ||||||
Banco do Brasil-Rural Credit (*) |
16,337 |
- |
- |
98.5% of CDI |
2 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Sul Paulista |
||||||||||||
Banco do Brasil-Rural Credit (*) |
10,109 |
- |
- |
98.5% of CDI |
2 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Leste Paulista |
||||||||||||
Banco do Brasil-Rural Credit (*) |
16,798 |
- |
- |
98.5% of CDI |
2 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Mococa |
||||||||||||
Banco do Brasil-Rural Credit (*) |
8,476 |
- |
- |
98.5% of CDI |
2 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Jaguari |
||||||||||||
Banco do Brasil-Rural Credit (*) |
1,786 |
- |
- |
98.5% of CDI |
2 annual installments from July 2012 |
CPFL Energia guarantee | ||||||
CPFL Geração |
||||||||||||
Banco Itaú BBA |
103,371 |
102,750 |
101,650 |
106.0% of CDI |
1 installment in March 2011 |
CPFL Energia guarantee | ||||||
Banco do Brasil |
627,432 |
- |
- |
107.0% of CDI |
1 installment in April 2015 |
CPFL Energia guarantee | ||||||
Banco Alfa |
- |
99,485 |
- |
105.1% of CDI |
1 installment in April 2010 |
CPFL Energia guarantee | ||||||
CERAN |
||||||||||||
Banco Bradesco |
- |
36,915 |
81,311 |
CDI + 2% |
24 monthly installments from November 2008 |
No guarantee | ||||||
Banco Bradesco |
22,440 |
- |
- |
CDI + 1.75% |
1 installment in April 2012 |
No guarantee | ||||||
Other |
||||||||||||
Eletrobrás |
||||||||||||
CPFL Paulista |
10,358 |
8,648 |
8,887 |
RGR + 6.0% to 9.0% |
Monthly installments até July 2016 |
Receivables and promissory notes | ||||||
CPFL Piratininga |
925 |
1,415 |
1,903 |
RGR + 6% |
Monthly installments até July 2016 |
Receivables and promissory notes | ||||||
RGE |
18,097 |
12,095 |
11,309 |
RGR + 6% |
Monthly installments até June 2020 |
Receivables and promissory notes | ||||||
CPFL Santa Cruz |
3,947 |
4,660 |
5,509 |
RGR + 6% |
Monthly installments até April 2018 |
Receivables and promissory notes | ||||||
CPFL Leste Paulista |
1,096 |
1,011 |
1,136 |
RGR + 6% |
Monthly installments até February 2022 |
Receivables and promissory notes | ||||||
CPFL Sul Paulista |
1,837 |
1,779 |
1,694 |
RGR + 6% |
Monthly installments até July 2018 |
Receivables and promissory notes | ||||||
CPFL Jaguari |
109 |
31 |
35 |
RGR + 6% |
Monthly installments até May 2017 |
Receivables and promissory notes | ||||||
CPFL Mococa |
415 |
285 |
321 |
RGR + 6% |
Monthly installments até February 2022 |
Receivables and promissory notes | ||||||
Other |
21,618 |
23,497 |
35,055 |
|||||||||
Subtotal Brazilian Currency - Cost |
5,096,624 |
3,346,687 |
3,076,195 |
|||||||||
Foreign Currency |
||||||||||||
BID - Enercan |
- |
55,291 |
78,903 |
US$ + Libor + 3.5% |
49 quarterly installments from June 2007 |
CPFL Energia guarantee | ||||||
Financial Institutions |
||||||||||||
CPFL Paulista (5) |
||||||||||||
Debt Conversion Bond |
2,982 |
5,207 |
9,807 |
US$ + Libor 6 months + 0.875% |
17 semiannual installments from April 2004 |
Revenue/Government SP guaranteed | ||||||
New Money Bond |
- |
- |
370 |
US$ + Libor 6 months+ 0.875% |
17 semiannual installments from April 2001 |
Revenue/Government SP guaranteed | ||||||
FLIRB |
- |
- |
375 |
US$ + Libor 6 months+ 0.8125% |
14 semiannual installments from April 2003 |
Revenue/Government SP guaranteed | ||||||
C-Bond |
6,298 |
8,462 |
13,881 |
US$ + 8% |
21 semiannual installments from April 2004 |
Revenue/Government SP guaranteed | ||||||
Discount Bond |
14,570 |
15,264 |
20,533 |
US$ + Libor 6 months + 0.8125% |
1 installment in April 2024 |
Escrow deposits and revenue/ Gov.SP guarantee | ||||||
PAR-Bond |
21,082 |
22,031 |
29,569 |
US$ + 6% |
1 installment in April 2024 |
Escrow deposits and revenue/ Gov.SP guarantee | ||||||
Subtotal Foreign Currency - Cost |
44,932 |
106,255 |
153,438 |
|||||||||
Total Measured at cost |
5,141,556 |
3,452,942 |
3,229,633 |
|||||||||
Foreign Currency |
||||||||||||
Measured at fair value |
||||||||||||
Financial Institutions |
||||||||||||
CPFL Paulista |
||||||||||||
Banco do Brasil |
- |
101,233 |
131,435 |
Yen + 5.7778% |
1 installment in January 2011 |
No guarantee | ||||||
Banco ABN AMRO Real |
424,827 |
385,969 |
490,276 |
Yen +1.49% (4) |
1 installment in January 2012 |
No guarantee | ||||||
CPFL Piratininga |
||||||||||||
Banco BNP Paribas |
- |
- |
60,548 |
US$ + 4.10% . |
1 installment in February 2009 |
Promissory notes | ||||||
RGE |
||||||||||||
Banco do Brasil |
46,687 |
103.5% CDI |
1 installment in September 2009 |
No guarantee | ||||||||
CPFL Geração |
||||||||||||
Banco do Brasil |
- |
101,332 |
131,564 |
Yen + 5.8% . |
1 installment in April 2010 |
CPFL Energia guarantee | ||||||
Banco do Brasil |
- |
506,569 |
656,323 |
Yen + 2.5% to 5.8% . |
1 installment in January 2011 |
CPFL Energia guarantee | ||||||
Total Foreign Currency - fair value |
424,827 |
1,095,103 |
1,516,833 |
|||||||||
Total - Consolidated |
5,566,383 |
4,548,045 |
4,746,466 |
|||||||||
The subsdiaries hold swaps converting the operating cost of currency variation to interest tax variation in reais, corresponding to : |
||||||||||||
(1) 160.5% of the CDI |
(3) 106.0% of the CDI |
|||||||||||
(2) 106.0% to 106.5% of the CDI |
(4) 104.98% of the CDI |
|||||||||||
(5) As certain assets are dollar indexed, a partial swap of R$ 21,221 was contracted, converting the currency variation to 105.95% of the CDI. |
||||||||||||
(*) Effective rate: 98.5% CDI + 2.88% p.a. (CPFL Paulista and CPFL Piratininga) and 98.5% CDI + 2.5% p.a. (RGE) |
43
In conformity with CPCs 38 and 39 (Financial Instruments), the Company and its subsidiaries classified their debts, as segregated in the tables above, as (i) financial liabilities not measured at fair value (or measured at cost), and (ii) financial liabilities measured at fair value through profit or loss.
The objective of classification of financial liabilities measured at fair value is to compare the effects of recognition of income and expense derived from marking hedge derivatives to market, tied to the debts, in order to obtain more relevan and consistent accounting information. At December 31, 2010, the total balance of the debt measured at fair value was R$ 424,827 (R$ 1,095,103 at December 31, 2009), and the amount related to the cost was R$ 429,792 (R$ 1,100,120 at December 31, 2009).
The changes in the fair values of these debts are recognized in the financial income (expense) of the Company and its subsidiaries. The gains of R$ 4,965 (gain of R$ 5,017 in 2009) obtained by marking the debts to market are offset by the effects of R$ 7,607 (R$ 12,428 in 2009) obtained by marking to market the derivative financial instruments contracted as a hedge against exchange variations (Note 35), resulting in a net accumulated loss of R$ 2,642 (R$ 7,411 in 2009).
Main fund-raising in the period:
Brazilian currency
BNDES Investment:
44
- FINEM IV (CPFL Paulista) - The subsidiary obtained financing of R$ 345,990 from the BNDES in 2008, part of a FINEM credit line, to be invested in expanding and upgrading the Electricity System. The amount of R$ 72,761 was released during the year and the outstanding balance of R$ 37,101 was cancelled.
- FINEM V (CPFL Paulista) The subsidiary received approval for financing of R$ 291,043 from the BNDES in 2010, part of a FINEM credit line, to be invested in implementation of the investment plan for the second half-year of 2010 and for 2011. The subsidiary received the amount of R$ 133,072 during the year and the outstanding balance of R$ 157,971 is scheduled for release by the end of 2011.
- FINEM IV (CPFL Piratininga) The subsidiary received approval for financing from the BNDES in 2010, of R$ 165,621 part of a FINEM credit line, to be used for the implementation of the investment plan for the second half-year of 2010 and for 2011. The subsidiary received the amount of R$ 68,120 during the year, and the outstanding balance of R$ 97,501 is scheduled for release by the end of 2011. The interest will be paid quarterly during the grace period and monthly during the amortization term.
- FINEM V (RGE) The subsidiary received approval for financing of R$ 167,861 from the BNDES in 2010, part of a FINEM credit line, to be invested in implementation of the investment plan for the second half-year of 2010 and for 2011. The amount of R$ 69,616 was received during the year and the outstanding balance of R$ 98,245 is scheduled for release by the end of 2011.
- FINAME (CPFL Paulista) The subsidiary received approval for financing from the BNDES in 2009, of R$ 92,183 part of a FINAME credit line, to be invested in acquisition of equipment for the Electricity System in 2010 and 2011. The subsidiary received the amount of R$ 36,014 in 2010, and the outstanding balance of R$ 56,169 is scheduled for release by the end of 2011. The interest will be paid quarterly, and amortized monthly from January 15, 2012.
- FINAME (CPFL Piratininga) The subsidiary received approval for financing of R$ 48,116 from the BNDES in 2009, part of a FINAME credit line, to be invested in to acquire equipment for the Electricity System in 2010 and 2011. The amount of R$ 22,860 was received in 2010 and the outstanding balance of R$ 25,257 is scheduled for release by the end of 2011. The interest will be paid quarterly, and amortized monthly from January 15, 2012. There are no restrictive covenants.
- FINEM/FINAME (Bioenergia) the indirect subsidiary received approval for financing of a total amount of R$ 75,297 from the BNDES in 2009, comprised of R$ 37,491 from FINEM and R$ 37,806 from FINAME, to be invested in construction of the Thermoelectric Plant. The outstanding balance of R$ 29,805 was released in 2010, comprising R$ 22,250 from FINEM and R$ 7,555 from FINAME. The interest is capitalized during the grace period and will be paid monthly from June 2011, together with the installment of the principal
- Investment (CPFL Geração) The subsidiary obtained approval for FINEM financing of R$ 574,098 from the BNDES in 2010, to be invested in the subsidiaries Santa Clara I to VI and Eurus VI for construction and installation of the wind power complex, with a total installed capacity of 188 MW, in the municipality of Parazinho, State of Rio Grande do Norte. The amount of R$ 75,538 was released in 2010.
- Investment (Foz do Chapecó) The subsidiary obtained financing of R$ 1,633.155 from the BNDES, in 2007, (R$ 832,909 in proportion to the participation of the subsidiary CPFL Geração), to be invested in financing the construction work on the Foz do Chapecó Hydroelectric Power Plant. The amount of R$ 249,841 was released in 2010 (R$ 127,419 in proportion to the participation of the subsidiary CPFL Geração) to complete construction of the hydropower plant. The interest and principal will be paid monthly from October 2011.
- BNB Investment (EPASA) In December 2009, the indirect subsidiary contracted a loan of R$ 214,278 (R$ 109,282 in proportion to the Company's participation) from Banco Nordeste do Brasil BNB, to be invested in the construction of the Termoparaíba and Termonordeste thermoelectric power plants. The amount of R$ 190,439 was released in 2010 (R$ 97,124 in proportion to the Companys participation) and release of the outstanding balance is conditional upon physical and financial verification of the funds obtained. The interest will be paid quarterly to December 2012 and monthly from January 2013. There are no restrictive covenants for this financing agreement.
BNDES Other:
- Working capital (CPFL Piratininga) - The subsidiary obtained financing of R$ 100,000 from the BNDES in 2010, in two installments of R$ 50,000, part of a BNDES pass-through credit line with Banco Bradesco, to reinforce the cash position. The interest will be capitalized monthly during the grace period, to February 15, 2011 and October 17, 2011, and will be paid monthly, together with the installments of the principal, in 24 installments from February 15, 2011 and October 17, 2011, respectively. There are no restrictive covenants.
45
- Working capital (CPFL Geração) - The subsidiary obtained financing of R$ 100,000 from the BNDES in 2010, in two installments of R$ 50,000, part of a BNDES pass-through credit line with the Banco do Brasil, to reinforce its cash position. The interest will be capitalized monthly during the grace period, to February 15, 2011 and July 17, 2011 and will be paid monthly, together with the installments of the principal, in 24 installments from February 15, 2011 and July 17, 2011, respectively. There are no restrictive covenants.
Financial institutions:
- Banco do Brasil Crédito Rural (CPFL Paulista, CPFL Piratininga, RGE, CPFL Santa Cruz, CPFL Leste Paulista, CPFL Mococa, CPFL Jaguari and CPFL Sul Paulista) - these subsidiaries obtained approval for rural credit financing, of which a total amount of R$ 499,800 was released (R$ 435,849 net of costs), to cover working capital. The interest will be capitalized monthly and amortized together with the installments of the principal.
- CPFL Paulista and CPFL Geração in 2010, the subsidiaries CPFL Paulista and CPFL Geração renewed debts to the Banco do Brasil. The objective of the renewals was to extend the maturities of the loans, and also resulted in changes in the rates, which are now tied to the CDI. The interest will be paid half-yearly from October 2010.
The maturities of the principal long-term balances of loans and financing, taking into consideration only the amounts recorded at cost, are scheduled as follows:
Maturity |
Consolidated | |
2012 |
1,166,436 | |
2013 |
649,914 | |
2014 |
463,383 | |
2015 |
1,044,681 | |
2016 |
246,573 | |
After 2016 |
1,351,831 | |
Subtotal |
4,922,818 | |
Marked to Market |
(4,965) | |
Total |
4,917,853 |
The main financial rates used for restatement of Loans and Financing and the breakdown of the indebtedness in local and foreign currency, taking into consideration the effects of translation of the derivative instruments, are shown below:
Accumulated variation - % |
% of debt | |||||||||||
Index |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||
IGP-M |
11.32 |
(1.71) |
9.81 |
0.77 |
2.12 |
4.24 | ||||||
UMBND |
0.72 |
(25.66) |
33.86 |
1.69 |
3.29 |
5.62 | ||||||
TJLP |
6.00 |
6.13 |
6.25 |
58.23 |
58.76 |
49.74 | ||||||
CDI |
9.71 |
9.88 |
12.38 |
33.80 |
34.01 |
38.93 | ||||||
SELIC |
9.91 |
12.48 |
- |
- |
- | |||||||
Other |
- |
- |
- |
5.53 |
1.82 |
1.47 | ||||||
100 |
100 |
100 |
46
RESTRICTIVE COVENANTS
BNDES:
Financing from the BNDES restricts the subsidiaries CPFL Paulista, CPFL Piratininga and RGE to: (i) not paying dividends and interest on shareholders equity totaling more than the minimum mandatory dividend laid down by law without prior agreement of the BNDES, and the lead bank in the operation; (ii) full compliance with the restrictive conditions established in the agreement; and (iii) maintaining certain financial ratios within pre-established parameters, as follows:
CPFL Paulista
· Net indebtedness divided by EBITDA maximum of 3.0;
· Net indebtedness divided by the sum of net indebtedness and net equity maximum of 0.90.
CPFL Piratininga
· Net indebtedness divided by EBITDA maximum of 2.5;
· Net indebtedness divided by the sum of net indebtedness and net equity maximum of 0.80.
RGE
· Net indebtedness divided by EBITDA maximum of 2.5;
· Net indebtedness divided by the sum of net indebtedness and net equity maximum of 0.5.
CPFL Geração
The loans from the BNDES raised by the subsidiary CERAN and the jointly-owned subsidiaries ENERCAN, BAESA and Foz do Chapecó establish restrictions on the payment of dividends to the subsidiary CPFL Geração higher than the minimum mandatory dividend of 25% without the prior agreement of the BNDES.
The loan agreement for CPFL Bioenergias loan from BNDES, stipulates that the subsidiary may not pay out dividends for the years of 2009 to 2012, and may only do so from 2013 onwards if all the following conditions are met:
i) Full compliance with its contractual obligations;
ii) Minimum debt coverage ratio of 1.0 ; and
iii) Maximum overall Indebtedness ratio of 0.8
Banco do Brasil Crédito Rural
· Net indebtedness divided by EBITDA maximum of 3.0.
Other loan and financing agreements of the direct and indirect subsidiaries are subject to early settlement in the event of changes in the Companys structure or in the corporate structure of the subsidiaries that result in the loss of the share control or of control over management of the Company by the Companys current shareholders.
Furthermore, failure to comply with the obligations or restrictions mentioned could result in default in relation to other contractual obligations (cross default).
The Management of the Company and its subsidiaries monitor these ratios 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 adequately complied with.
47
( 19 ) DEBENTURES
Consolidated | |||||||||||||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||||||||||||||||
Interest |
Current |
Noncurrent |
Total |
Interest |
Current |
Noncurrent |
Total |
Interest |
Current |
Noncurrent |
Total | ||||||||||||
Parent Company |
|
|
|
|
|
|
|||||||||||||||||
3rd Issue |
|||||||||||||||||||||||
Single series |
15,529 |
- |
450,000 |
465,529 |
12,788 |
- |
450,000 |
462,788 |
20,047 |
- |
450,000 |
470,047 | |||||||||||
CPFL Paulista |
|||||||||||||||||||||||
2nd Issue |
|||||||||||||||||||||||
1st Series |
- |
- |
- |
- |
- |
- |
- |
- |
8,606 |
119,680 |
- |
128,286 | |||||||||||
2nd Series |
- |
- |
- |
- |
- |
- |
- |
- |
8,430 |
170,599 |
- |
179,029 | |||||||||||
3rd Issue |
|||||||||||||||||||||||
1st Series |
5,925 |
213,333 |
426,667 |
645,925 |
4,618 |
- |
640,000 |
644,618 |
7,083 |
- |
640,000 |
647,083 | |||||||||||
4th Issue |
|||||||||||||||||||||||
Single series |
6,322 |
109,601 |
- |
115,923 |
8,285 |
64,303 |
109,601 |
182,189 |
- |
- |
- |
- | |||||||||||
12,248 |
322,934 |
426,667 |
761,849 |
12,903 |
64,303 |
749,601 |
826,807 |
24,119 |
290,279 |
640,000 |
954,398 | ||||||||||||
CPFL Piratininga |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
1st Series |
10,733 |
200,000 |
- |
210,733 |
17,690 |
200,000 |
200,000 |
417,690 |
27,176 |
- |
400,000 |
427,176 | |||||||||||
2nd Issue |
|||||||||||||||||||||||
Single series |
- |
- |
- |
- |
2,189 |
- |
100,000 |
102,189 |
3,479 |
- |
100,000 |
103,479 | |||||||||||
3rd Issue |
|||||||||||||||||||||||
Single series |
7,013 |
- |
258,868 |
265,881 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||
4th Issue |
|||||||||||||||||||||||
Single series |
1,845 |
- |
278,043 |
279,888 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||
19,591 |
200,000 |
536,911 |
756,502 |
19,879 |
200,000 |
300,000 |
519,879 |
30,655 |
- |
500,000 |
530,655 | ||||||||||||
RGE |
|||||||||||||||||||||||
2nd Issue |
|||||||||||||||||||||||
1st Series |
2,019 |
28,370 |
- |
30,389 |
1,630 |
- |
26,200 |
27,830 |
2,033 |
1,903 |
26,200 |
30,136 | |||||||||||
2nd Series |
- |
- |
- |
- |
- |
- |
- |
- |
7,058 |
203,800 |
- |
210,858 | |||||||||||
3rd Issue |
|||||||||||||||||||||||
1st Series |
939 |
33,333 |
66,667 |
100,939 |
741 |
- |
100,000 |
100,741 |
1,110 |
- |
100,000 |
101,110 | |||||||||||
2nd Series |
7,721 |
46,667 |
93,333 |
147,721 |
6,437 |
- |
140,000 |
146,437 |
9,671 |
- |
140,000 |
149,671 | |||||||||||
3rd Series |
1,824 |
13,333 |
26,667 |
41,824 |
1,491 |
- |
40,000 |
41,491 |
2,290 |
- |
40,000 |
42,290 | |||||||||||
4th Series |
1,335 |
16,667 |
33,333 |
51,335 |
1,103 |
- |
50,000 |
51,103 |
1,711 |
- |
50,000 |
51,711 | |||||||||||
5ª Series |
1,335 |
16,667 |
33,333 |
51,335 |
1,103 |
- |
50,000 |
51,103 |
1,711 |
- |
50,000 |
51,711 | |||||||||||
4th Issue |
|||||||||||||||||||||||
Single series |
10,633 |
184,623 |
- |
195,256 |
8,758 |
- |
183,804 |
192,562 |
- |
- |
- |
- | |||||||||||
25,806 |
339,660 |
253,333 |
618,799 |
21,263 |
- |
590,004 |
611,267 |
25,584 |
205,703 |
406,200 |
637,487 | ||||||||||||
CPFL Leste Paulista |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
Single series |
1,400 |
23,965 |
- |
25,365 |
1,153 |
- |
23,894 |
25,047 |
- |
- |
- |
- | |||||||||||
CPFL Sul Paulista |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
Single series |
926 |
15,979 |
- |
16,905 |
762 |
- |
15,936 |
16,698 |
- |
- |
- |
- | |||||||||||
CPFL Jaguari |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
Single series |
583 |
9,983 |
- |
10,566 |
480 |
- |
9,948 |
10,428 |
- |
- |
- |
- | |||||||||||
CPFL Brasil |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
Single series |
9,545 |
164,728 |
- |
174,273 |
7,862 |
- |
164,221 |
172,083 |
- |
- |
- |
- | |||||||||||
CPFL Geração |
|||||||||||||||||||||||
2nd Issue |
|||||||||||||||||||||||
Single series |
24,327 |
424,266 |
- |
448,593 |
20,039 |
- |
423,295 |
443,334 |
646 |
80,930 |
- |
81,576 | |||||||||||
3rd Issue |
|||||||||||||||||||||||
Single series |
7,121 |
- |
263,137 |
270,258 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||
EPASA |
|||||||||||||||||||||||
1st Issue |
|||||||||||||||||||||||
Single series |
- |
- |
- |
- |
3,504 |
228,473 |
- |
231,977 |
- |
- |
- |
- | |||||||||||
2nd Issue |
|||||||||||||||||||||||
Single series |
- |
- |
204,406 |
204,406 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||
BAESA |
|||||||||||||||||||||||
1st Series |
357 |
3,165 |
15,030 |
18,552 |
308 |
3,164 |
18,195 |
21,667 |
532 |
3,164 |
21,359 |
25,055 | |||||||||||
2nd Series |
294 |
2,569 |
12,207 |
15,070 |
343 |
3,085 |
6,075 |
9,503 |
530 |
- |
9,331 |
9,861 | |||||||||||
Enercan |
|||||||||||||||||||||||
1st Series |
339 |
2,711 |
50,623 |
53,673 |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||
990 |
8,445 |
77,860 |
87,295 |
651 |
6,249 |
24,270 |
31,170 |
1,062 |
3,164 |
30,690 |
34,916 | ||||||||||||
118,066 |
1,509,960 |
2,212,314 |
3,840,340 |
101,284 |
499,025 |
2,751,169 |
3,351,478 |
102,113 |
580,076 |
2,026,890 |
2,709,079 |
48
Issued |
Annual Remuneration |
Annual Effective rate |
Amortization Conditions |
Collateral | ||||||
Parent Company |
|
|
||||||||
3rd Issue |
||||||||||
Single series |
45,000 |
CDI + 0,45% (1) |
CDI + 0.53% |
3 annual installments from September 2012 |
Unsecured | |||||
CPFL Paulista |
||||||||||
2nd Issue |
||||||||||
1st Series |
11,968 |
109% of CDI . |
109% CDI + 0.24% |
July 1st, 2009 |
Unsecured | |||||
2nd Series |
13,032 |
IGP-M + 9,8% . |
IGP-M + 10.04% |
July 1st, 2009 |
Unsecured | |||||
3rd Issue |
||||||||||
1st Series |
64,000 |
104,4% of CDI |
104.4% CDI + 0.05% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
4th Issue |
||||||||||
Single series |
175,000 |
110.3% of CDI |
110.3% CDI + 0.79% |
2 annual installments from July 2010 |
CPFL Energia guarantee | |||||
CPFL Piratininga |
||||||||||
1st Issue |
||||||||||
1st Series |
40,000 |
104.0% of CDI |
104.0% CDI + 0.16% |
2 annual installments from January 2010 |
CPFL Energia guarantee | |||||
2nd Issue |
||||||||||
Single series |
1 |
106.45% of CDI |
106.45% CDI + 0.3% |
May 2nd, 2011 |
Unsecured | |||||
3rd Issue |
||||||||||
Single series |
260 |
107.0% of CDI |
107.0% CDI + 0.67% |
April 1st, 2015 |
CPFL Energia guarantee | |||||
4th Issue |
||||||||||
Single series |
280 |
109.09% of CDI |
109.09% CDI |
December 10, 2013 |
CPFL Energia guarantee | |||||
RGE |
||||||||||
2nd Issue |
||||||||||
1st Series |
2,620 |
IGP-M + 9,6% |
IGP-M + 9.73% |
April 1st, 2011 |
Unsecured | |||||
2nd Series |
20,380 |
106.0% of CDI |
106.0% CDI + 0.12% |
April 1st, 2009 |
Unsecured | |||||
3rd Issue |
||||||||||
1st Series |
1 |
CDI + 0.60% (2) |
CDI + 0.71% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
2nd Series |
1 |
CDI + 0.60% (3) |
CDI + 0.71% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
3rd Series |
1 |
CDI + 0.60% (4) |
CDI + 0.71% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
4th Series |
1 |
CDI + 0.60% (5) |
CDI + 0.84% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
5ª Series |
1 |
CDI + 0.60% (5) |
CDI + 0.84% |
3 annual installments from December 2011 |
CPFL Energia guarantee | |||||
4th Issue |
||||||||||
Single series |
185,000 |
110.30% of CDI |
110.3% CDI + 0.82% |
July 1st, 2011 |
Unsecured | |||||
CPFL Leste Paulista |
||||||||||
1st Issue |
||||||||||
Single series |
2,400 |
111.90% of CDI |
111.9% CDI + 0.65% |
July 1st, 2011 |
CPFL Energia guarantee | |||||
CPFL Sul Paulista |
||||||||||
1st Issue |
||||||||||
Single series |
1,600 |
111.00% of CDI |
111% CDI + 0.6% |
July 1st, 2011 |
CPFL Energia guarantee | |||||
CPFL Jaguari |
||||||||||
1st Issue |
||||||||||
Single series |
1,000 |
111.90% of CDI |
111.9% CDI + 0.79% |
July 1st, 2011 |
CPFL Energia guarantee | |||||
CPFL Brasil |
||||||||||
1st Issue |
||||||||||
Single series |
16,500 |
111% of CDI |
111% CDI + 0.57% |
July 1st, 2011 |
CPFL Energia guarantee | |||||
CPFL Geração |
||||||||||
2nd Issue |
||||||||||
Single series |
425,250 |
109.8% of CDI |
109.8% CDI + 0.58% |
July 1st, 2011 |
CPFL Energia guarantee | |||||
3rd Issue |
||||||||||
Single series |
264 |
107.0% of CDI |
107.0% of CDI + 0.67% |
1 installment in April 2015 |
CPFL Energia guarantee | |||||
EPASA |
||||||||||
1st Issue |
||||||||||
Single series |
450 |
112.6% of CDI |
116.9% of CDI |
1 installment in December 2010 |
CPFL Energia guarantee | |||||
2nd Issue |
||||||||||
Single series |
400 |
111% of CDI |
12 monthly installments from December 2012 |
CPFL Energia guarantee | ||||||
BAESA |
||||||||||
1st Series |
9,000 |
CDI + 0,3% |
CDI + 0.43% |
Quarterly with settlement in August 2016 |
Letters of Guarantee | |||||
2nd Series |
3,236 |
CDI + 0,4% |
106% CDI + 0.12% |
Annual with settlement in August 2016 |
Letters of Guarantee | |||||
Enercan |
||||||||||
1st Series |
110 |
100% of CDI + 1.25% p.a |
Quarterly with settlement in December 2025 |
|||||||
The Company and its subsdiaries hold swap converting the local cost of currency variation to interest tax variation in reais, corresponding to | ||||||||||
(1) 104.4% of CDI |
(3) 104.85% of CDI |
(5) 104.87% of CDI |
||||||||
(2) 105.07% of CDI |
(4) 104.9% of CDI |
49
Interest
Interest on the debentures will be paid half yearly, except for: (i) 1st series of the jointly-owned subsidiary BAESA, which will be paid quarterly; (ii) 1st issue of the subsidiary CPFL Piratininga and 1st series of the 2nd issue of the subsidiary RGE, which will be paid annually and (iii) 2nd issue of the jointly-owned subsidiary EPASA which will be paid monthly (2012).
The maturities of the long-term balance of debentures are scheduled as follow:
Maturity |
Consolidated | |
2012 |
553,552 | |
2013 |
777,436 | |
2014 |
159,393 | |
2015 |
681,398 | |
2016 |
7,834 | |
After 2016 |
32,701 | |
Total |
2,212,314 |
RESTRICTIVE COVENANTS
The debentures are subject to certain restrictive covenants and include clauses that require the Company and its subsidiaries to maintain certain financial ratios within pre-established parameters. The main ratios are as follows:
CPFL Energia
· Net indebtedness divided by EBITDA maximum of 3.75;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
CPFL Paulista
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
CPFL Piratininga
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
RGE
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.0;
CPFL Geração
· Net indebtedness divided by EBITDA maximum of 3.5;
· EBITDA divided by Financial Income (Expense) minimum of 2.0;
CPFL Brasil
50
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
CPFL Jaguari
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
CPFL Leste Paulista
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.0;
CPFL Sul Paulista
· Net indebtedness divided by EBITDA maximum of 3.0;
· EBITDA divided by Financial Income (Expense) minimum of 2.25;
BAESA
· Total indebtedness restricted to 75% of their total assets.
Certain debentures of subsidiaries and jointly-owned subsidiaries are subject to early settlement in the event of changes in the Companys structure or in the corporate structure of the subsidiaries that result in the loss of the share control or of control over management of the Company by the Companys current shareholders.
Failure to comply with the restrictions mentioned could result in default in relation to other contractual obligations (cross default).
In the opinion of the management of the Company and its subsidiaries and jointly-owned subsidiaries, these restrictive covenants and clauses are being adequately complied with.
( 20 ) PRIVATE PENSION FUND
The subsidiaries CPFL Paulista, CPFL Piratininga and CPFL Geração, through Fundação CESP, the subsidiary RGE, through Fundação CEEE de Seguridade Social ELETROCEEE and Bradesco Vida e Previdência, the subsidiary CPFL Santa Cruz through BB Previdência Fundo de Pensão Banco do Brasil and the subsidiary CPFL Jaguariúna through IHPREV Fundo de Pensão, sponsor supplementary retirement and pension plans for their employees.
20.1 Characteristics
- CPFL Paulista
The plan currently in force for the employees of the subsidiary CPFL Paulista is a Mixed Benefit Plan, with the following characteristics:
a) Defined Benefit Plan (BD) in force until October 31, 1997 a defined benefit plan, which grants a Proportional Supplementary Defined Benefit (BSPS), in the form of a lifetime income convertible into a pension, to participants enrolled prior to October 31, 1997, the amount being defined in proportion to the accumulated past service time up to that date, based on compliance with the regulatory requirements for granting. The total responsibility for coverage of actuarial deficits of this plan falls to the subsidiary.
b) Mixed model, as from November 1, 1997, which covers:
· benefits for risk (disability and death), under a defined benefit plan, in which the subsidiary assumes responsibility for Plans actuarial deficit, and
· scheduled retirement, under a defined contribution plan, consisting of a benefit plan, which is a defined contribution plan up to the granting of the income, and does not generate any actuarial liability for the subsidiary CPFL Paulista. The benefit plan only becomes a defined benefit plan, consequently generating actuarial responsibility for the subsidiary, after the granting of a lifetime income, convertible or not into a pension.
51
As a result of modification of the Retirement Plan in October 1997, a liability was recognized as payable by the subsidiary CPFL Paulista in relation to the plan deficit calculated by the external actuaries of Fundação CESP. The liability, to be settled in 260 installments plus interest of 6% p.a. and restatement at the IGP-DI rate (FGV), is amortized on a monthly basis. 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, as of the base date of December 31, 2007, with final maturity on October 31, 2027. The balance of the obligation at December 31, 2010 is R$ 479,877 (R$ 508,706 in 2009). The contract amount differs from the carrying amount recorded by the subsidiary, which is in conformity with CPC 33.
Managers may opt for a Free Benefit Generator Plan PGBL (defined contribution), operated by either Banco do Brasil or Bradesco.
- CPFL Piratininga
As a result of the spin-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 spin-off, as well as the responsibilities relating to the active employees transferred to CPFL Piratininga.
On April 2, 1998, the Supplementary Welfare Office SPC, approved the restructuring of the retirement plan previously maintained by Bandeirante, creating a "Proportional Supplementary Defined Benefit Plan BSPS, and a "Mixed Benefit Plan", with the following characteristics:
a) Defined Benefit Plan (BD) - in force until March 31, 1998 a defined-benefit plan, which concedes a Proportional Supplementary Defined Benefit (BSPS), in the form of a lifetime income convertible into a pension to participants registered up to March 31, 1998, to an amount calculated in proportion to the accumulated past service time up to that date, based on compliance with the regulatory requirements for granting. In the event of death while working or the onset of a disability, the benefits incorporate the entire past service time. CPFL Piratininga has full responsibility for covering the actuarial deficits of this Plan.
b) Defined Benefit Plan - in force after March 31, 1998 defined-benefit type plan, which concedes a lifetime income convertible into a pension based on the past service time accumulated after March 31, 1998, based on 70% of the average actual monthly salary for the last 36 months of active service. In the event of death while working or the onset of a disability, the benefits incorporate the entire past service time (including the accumulated time up to March 31, 1998). The responsibility for covering the actuarial deficits of this Plan is equally divided between CPFL Piratininga and the participants.
c) Defined Contribution Plan implemented together with the Defined Benefit plan effective after March 31, 1998. This is a defined-benefit type pension plan up to the granting of the income, and generates no actuarial liability for CPFL Piratininga. The pension plan only becomes a Defined Benefit type plan after the concession of the lifetime income, convertible (or not) into a pension, and accordingly starts to generate actuarial liabilities for the subsidiary.
In September 1997, through a contractual instrument of adjustment of reserves to be amortized, Eletropaulo Metropolitana El. São Paulo S.A. (the predecessor of Bandeirante) recognized an obligation to pay referring to the plan deficit determined at the time by the external actuaries of the Fundação CESP, to be liquidated in 260 installments, amortized monthly, plus interest of 6% p.a. and restatement at the IGP-DI rate (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, as of December 31, 2007, with final maturity on May 31, 2026. The balance of the obligation at December 31, 2010 is R$ 133,170 (R$ 150,444 in 2009). The contract amount differs from the carrying amount recorded by the subsidiary, which is in conformity with CPC 33.
Managers may opt for a Free Benefit Generator Plan PGBL (defined contribution), operated by either Banco do Brasil or Bradesco.
- RGE
A defined benefit type plan, with a benefit level equal to 100% of the adjusted average of the most recent salaries, less the presumed Social Security benefit, with a Segregated Net Asset administered by ELETROCEEE. Only those whose work contracts were transferred from CEEE to RGE are entitled to this benefit. A private pension plan was set up in January 2006 with Bradesco Vida e Previdência for employees admitted from 1997.
52
- CPFL Santa Cruz
The benefits plan of the subsidiary CPFL Santa Cruz, administered by BB Previdência - Fundo de Pensão do Banco do Brasil, is a defined contribution plan.
- CPFL Jaguariúna
In December 2005, the companies joined the CMSPREV private pension plan, administered by IHPREV Pension Fund. The plan is structured as a defined contribution plan.
- CPFL Geração
The employees of the subsidiary CPFL Geração belong to the same pension plan as CPFL Paulista.
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, in relation to the plan deficit calculated by the external actuaries of Fundação CESP, to be amortized in 260 monthly installments, plus interest of 6% p.a. and restatement at the IGP-DI rate (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, as of December 31, 2007, with final maturity on October 31, 2027. The balance of the obligation at December 31, 2010 is R$ 17,689 (R$ 18,354 in 2009). The contract amount differs from the carrying amount recorded by the subsidiary, which is in conformity with CPC 33.
20.2 Changes in the defined benefit plans
December 31, 2010 | ||||||||||||
CPFL |
CPFL |
CPFL |
Total liability |
RGE |
Total asset | |||||||
Paulista |
Piratininga |
Geração |
||||||||||
Present value of actuarial liabilities |
3,088,723 |
784,933 |
67,543 |
3,941,199 |
207,759 |
207,759 | ||||||
Fair value of plan's assets |
(2,987,448) |
(785,231) |
(70,177) |
(3,842,856) |
(245,537) |
(245,537) | ||||||
Present value of liabilities (fair value of assets), net |
101,275 |
(298) |
(2,634) |
98,343 |
(37,778) |
(37,778) | ||||||
Adjustments due to deferments allowed |
||||||||||||
Unrecognized actuarial gains |
368,348 |
111,872 |
14,086 |
494,306 |
31,978 |
31,978 | ||||||
Net actuarial Liabilities (assets) recognized on balance sheet |
469,623 |
111,574 |
11,452 |
592,649 |
(5,800) |
(5,800) | ||||||
December 31, 2009 | ||||||||||||
CPFL |
CPFL |
CPFL |
Total liability |
RGE |
Total asset | |||||||
Paulista |
Piratininga |
Geração |
||||||||||
Present value of actuarial liabilities |
2,962,118 |
760,719 |
64,198 |
3,787,035 |
182,615 |
182,615 | ||||||
Fair value of plan assets |
(2,611,813) |
(676,790) |
(54,969) |
(3,343,572) |
(212,369) |
(212,369) | ||||||
Present value of liabilities (fair value of assets), net |
350,305 |
83,929 |
9,229 |
443,463 |
(29,754) |
(29,754) | ||||||
Adjustments due to deferments allowed |
||||||||||||
Unrecognized actuarial gains |
241,407 |
58,035 |
4,545 |
303,987 |
20,029 |
20,029 | ||||||
Net actuarial liabilities (assets) recognized in balance sheet |
591,712 |
141,964 |
13,774 |
747,450 |
(9,725) |
(9,725) | ||||||
January 1, 2009 | ||||||||||||
CPFL |
CPFL |
CPFL |
Total liability |
RGE |
Total asset | |||||||
Paulista |
Piratininga |
Geração |
||||||||||
Present value of actuarial liabilities |
3,067,116 |
774,598 |
66,094 |
3,907,808 |
174,721 |
174,721 | ||||||
Fair value of plan assets |
(2,413,252) |
(618,671) |
(51,207) |
(3,083,130) |
(180,708) |
(180,708) | ||||||
Present value of liabilities (fair value of assets), net |
653,864 |
155,927 |
14,887 |
824,678 |
(5,987) |
(5,987) | ||||||
Adjustments due to deferments allowed |
||||||||||||
Unrecognized actuarial gains |
- |
- |
- |
- |
5,987 |
5,987 | ||||||
Net actuarial liabilities (assets) recognized in balance sheet |
653,864 |
155,927 |
14,887 |
824,678 |
- |
- |
53
The changes in present value of the actuarial obligations and the fair values of the plan assets are as follows:
CPFL |
CPFL |
CPFL |
RGE |
Total liability | ||||||
Paulista |
Piratininga |
Geração |
||||||||
Present value of actuarial liabilities at January 1, 2009 |
3,067,116 |
774,598 |
66,094 |
174,721 |
4,082,529 | |||||
Gross current service cost |
1,413 |
4,172 |
165 |
152 |
5,902 | |||||
Interest on actuarial obligation |
303,015 |
76,981 |
6,532 |
17,626 |
404,154 | |||||
Participants' contributions transferred during the year |
68 |
1,249 |
2 |
1,104 |
2,423 | |||||
Actuarial (Gain)/loss |
(195,082) |
(51,310) |
(4,138) |
(3,456) |
(253,986) | |||||
Benefits paid during the year |
(214,412) |
(44,971) |
(4,457) |
(7,532) |
(271,372) | |||||
Present value of actuarial liabilities at December 31, 2009 |
2,962,118 |
760,719 |
64,198 |
182,615 |
3,969,650 | |||||
Gross current service cost |
1,061 |
3,550 |
142 |
202 |
4,955 | |||||
Interest on actuarial obligation |
292,456 |
75,535 |
6,345 |
18,349 |
392,685 | |||||
Participants' contributions transferred during the year |
190 |
1,156 |
1 |
1,597 |
2,944 | |||||
Actuarial (Gain)/loss |
64,883 |
(9,660) |
1,794 |
12,346 |
69,363 | |||||
Benefits paid during the year |
(231,985) |
(46,367) |
(4,937) |
(7,350) |
(290,639) | |||||
Present value of actuarial liabilities at December 31, 2010 |
3,088,723 |
784,933 |
67,543 |
207,759 |
4,148,958 | |||||
CPFL |
CPFL |
CPFL |
RGE |
Total asset | ||||||
Paulista |
Piratininga |
Geração |
||||||||
Present value of actuarial assets at January 1, 2009 |
(2,413,252) |
(618,671) |
(51,207) |
(180,708) |
(3,263,838) | |||||
Expected return during the year |
(304,351) |
(77,554) |
(6,468) |
(18,378) |
(406,751) | |||||
Participants' contributions transferred during the year |
(68) |
(1,249) |
(2) |
(1,104) |
(2,423) | |||||
Sponsors' contributions |
(62,229) |
(17,562) |
(1,342) |
(3,138) |
(84,271) | |||||
Actuarial (gain)/loss |
(46,325) |
(6,725) |
(407) |
(16,573) |
(70,030) | |||||
Benefits paid during the year |
214,412 |
44,971 |
4,457 |
7,532 |
271,372 | |||||
Current value of actuarial assets at December 31, 2009 |
(2,611,813) |
(676,790) |
(54,969) |
(212,369) |
(3,555,941) | |||||
Expected return during the year |
(364,286) |
(93,152) |
(7,679) |
(23,718) |
(488,835) | |||||
Participants' contributions transferred during the year |
(190) |
(1,156) |
(1) |
(1,597) |
(2,944) | |||||
Sponsors' contributions |
(51,320) |
(16,323) |
(1,129) |
(9,084) |
(77,856) | |||||
Actuarial (gain)/loss |
(191,824) |
(44,177) |
(11,336) |
(6,119) |
(253,456) | |||||
Benefits paid during the year |
231,985 |
46,367 |
4,937 |
7,350 |
290,639 | |||||
Current value of actuarial assets at December 31, 2010 |
(2,987,448) |
(785,231) |
(70,177) |
(245,537) |
(4,088,393) |
20.3 Changes in the assets and liabilities recognized:
The changes in net liabilities are as follows:
54
December 31, 2010 |
December 31, 2010 | |||||||||||
CPFL |
CPFL |
CPFL |
Total liability |
RGE |
Total asset | |||||||
Paulista |
Piratininga |
Geração |
||||||||||
Actuarial liabilities /(assets) at the beginning of the year |
591,712 |
141,964 |
13,774 |
747,450 |
(9,725) |
(9,725) | ||||||
Expense (Income) recognized in income statement |
(70,769) |
(14,068) |
(1,192) |
(86,029) |
5,400 |
5,400 | ||||||
Sponsors' contributions transferred during the year |
(51,320) |
(16,322) |
(1,130) |
(68,772) |
(1,475) |
(1,475) | ||||||
Actuarial liabilities /(assets) at the end of the year |
469,623 |
111,574 |
11,452 |
592,649 |
(5,800) |
(5,800) | ||||||
Other contributions |
13,875 |
375 |
177 |
14,427 |
- |
- | ||||||
Subtotal |
483,498 |
111,949 |
11,629 |
607,076 |
(5,800) |
(5,800) | ||||||
Other contributions RGE |
- |
- |
- |
3,905 |
||||||||
Total liabilities |
483,498 |
111,949 |
11,629 |
610,981 |
||||||||
Current |
40,103 |
- | ||||||||||
Noncurrent |
570,878 |
5,800 | ||||||||||
December 31, 2009 |
December 31, 2009 | |||||||||||
CPFL |
CPFL |
CPFL |
Total liability |
RGE |
Total asset | |||||||
Paulista |
Piratininga |
Geração |
||||||||||
Actuarial liabilities /(assets) at the beginning of the year |
653,864 |
155,927 |
14,887 |
824,678 |
- |
- | ||||||
Expense (Income) recognized in income statement |
77 |
3,599 |
229 |
3,905 |
(6,971) |
(6,971) | ||||||
Sponsors' contributions transferred during the year |
(62,229) |
(17,562) |
(1,342) |
(81,133) |
(2,754) |
(2,754) | ||||||
Actuarial liabilities /(assets) at the end of the year |
591,712 |
141,964 |
13,774 |
747,450 |
(9,725) |
(9,725) | ||||||
Other contributions |
13,342 |
243 |
281 |
13,866 |
- |
- | ||||||
Subtotal |
605,054 |
142,207 |
14,055 |
761,316 |
(9,725) |
(9,725) | ||||||
Other contributions RGE |
- |
- |
- |
6,454 |
||||||||
Total liabilities |
605,054 |
142,207 |
14,055 |
767,770 |
||||||||
Current |
44,484 |
- | ||||||||||
Noncurrent |
723,286 |
9,725 |
20.4 Recognition of income and expense of private pension fund:
The external actuarys estimate of the expense and/or revenue to be recognized in 2011 and the revenue recognized in 2010 is as follows:
2011 Estimated |
||||||||||
CPFL |
CPFL |
CPFL |
Consolidated |
|||||||
Paulista |
Piratininga |
Geração |
||||||||
Cost of service |
1,043 |
3,781 |
136 |
4,960 |
||||||
Interest on actuarial obligations |
304,730 |
77,929 |
6,673 |
389,332 |
||||||
Expected return on plan assets |
(369,344) |
(97,889) |
(8,706) |
(475,939) |
||||||
Amortization of unrecognized actuarial gains |
(4,730) |
(2,448) |
(585) |
(7,763) |
||||||
Total income |
(68,301) |
(18,627) |
(2,482) |
(89,410) |
||||||
2010 Realized | ||||||||||
CPFL |
CPFL |
CPFL |
RGE |
Consolidated | ||||||
Paulista |
Piratininga |
Geração |
||||||||
Cost of service |
1,061 |
3,550 |
142 |
1,153 |
5,906 | |||||
Interest on actuarial obligations |
292,456 |
75,534 |
6,345 |
18,349 |
392,684 | |||||
Expected return on plan assets |
(364,286) |
(93,152) |
(7,679) |
(23,717) |
(488,834) | |||||
Recognition of the asset (limited to paragraph 58-b of CPC 33) |
- |
- |
- |
9,615 |
9,615 | |||||
Total Expense (Income) |
(70,769) |
(14,068) |
(1,192) |
5,400 |
(80,629) | |||||
2009 Realized | ||||||||||
CPFL |
CPFL |
CPFL |
RGE |
Consolidated | ||||||
Paulista |
Piratininga |
Geração |
||||||||
Cost of service |
1,413 |
4,172 |
165 |
1,256 |
7,006 | |||||
Interest on actuarial obligations |
303,015 |
76,981 |
6,532 |
17,626 |
404,154 | |||||
Expected return on plan assets |
(304,351) |
(77,554) |
(6,468) |
(18,387) |
(406,760) | |||||
Recognition of the asset (limited to paragraph 58-b of CPC 33) |
- |
- |
- |
(7,466) |
(7,466) | |||||
Total Expense (Income) |
77 |
3,599 |
229 |
(6,971) |
(3,066) |
Since the changes in the RGE plan indicate the need to recognize an asset, and the amount to be recognized is restricted to the present value of the economic rewards available at the time, recognition in 2011 will require analysis of the possibility of recovery of the asset at the end of the year.
55
The principal assumptions taken into consideration in the actuarial calculations at the balance sheet date were:
CPFL Paulista, CPFL Piratininga and CPFL Geração |
RGE | ||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||
Nominal discount rate for actuarial liabilities: |
10.24% p.a. |
10.24% p.a. |
10.24% p.a. |
10.24% p.a. |
10.24% p.a. |
10.24% p.a. | |||||
Nominal Return Rate on Assets: |
(*) |
(**) |
(***) |
10.24% p.a. |
11.28% p.a. |
10.24% p.a. | |||||
Estimated Rate of nominal salary increase: |
6.08% p.a. |
6.08% p.a. |
6.08% p.a. |
6.08% p.a. |
6.08% p.a. |
6.08% p.a. | |||||
Estimated Rate of nominal benefits increase: |
0.0% p.a. |
0.0% p.a. |
0.0% p.a. |
0.0% p.a. |
0.0% p.a. |
0.0% p.a. | |||||
Estimated long-term inflation rate (basis for establishing |
|||||||||||
nominal rates above) |
4.0% p.a. |
4.0% p.a. |
4.0% p.a. |
4.0% p.a. |
4.0% p.a. |
4.0% p.a. | |||||
General biometric mortality table: |
AT-83 |
AT-83 |
AT-83 |
AT-83 |
AT-83 |
AT-83 | |||||
Biometric table for the onset of disability: |
MERCER TABLE |
MERCER TABLE |
MERCER TABLE |
MERCER TABLE |
Light-Average |
Light-Average | |||||
Expected turnover rate: |
0.30 / (Service time + 1) |
0.30 / (Service time + 1) |
0.30 / (Service time + 1) |
0.30 / (Service time + 1) |
null |
null | |||||
Likelihood of reaching retirement age: |
100% when a beneficiary of the Plan first becomes eligible |
100% when a beneficiary of the Plan first becomes eligible |
100% when a beneficiary of the Plan first becomes eligible |
||||||||
(*) CPFL Paulista and CPFL Geração 12.73% p.a. and CPFL Piratininga 12.71% p.a. |
|||||||||||
(**) CPFL Paulista and CPFL Geração 14.36% p.a. and CPFL Piratininga 14.05% p.a. |
|||||||||||
(***) CPFL Paulista and CPFL Geração 13.05% p.a, CPFL Piratininga 12.84% p.a |
( 21 ) REGULATORY CHARGES
Consolidated | ||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||
Fee for the Use of Water Resources |
4,452 |
4,080 |
3,636 | |||
Global Reverse Fund - RGR |
16,483 |
9,876 |
7,451 | |||
ANEEL Inspection Fee |
2,283 |
1,945 |
2,012 | |||
Fuel Consumption Account - CCC |
58,289 |
9,392 |
48,194 | |||
Energy Development Account - CDE |
42,035 |
38,457 |
33,237 | |||
Total |
123,542 |
63,750 |
94,530 |
( 22 ) TAXES AND CONTRIBUTIONS
Consolidated | ||||||||||||
Current |
Noncurrent | |||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
ICMS (State VAT) |
247,890 |
315,906 |
276,112 |
- |
- |
- | ||||||
PIS (Tax on Revenue) |
13,565 |
11,762 |
9,022 |
- |
- |
- | ||||||
COFINS (Tax on Revenue) |
63,668 |
54,978 |
41,591 |
959 |
1,639 |
2,243 | ||||||
IRPJ (Corporate Income Tax) |
85,999 |
69,480 |
94,944 |
- |
- |
- | ||||||
CSLL (Social Contribution Tax) |
22,086 |
18,583 |
13,475 |
- |
- |
- | ||||||
Other |
22,035 |
27,901 |
21,528 |
- |
- |
- | ||||||
Total |
455,243 |
498,610 |
456,672 |
959 |
1,639 |
2,243 | ||||||
( 23 ) PROVISION FOR CONTINGENCIES
56
Consolidated | ||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||||||
Reserve for contingencies |
Escrow Deposits |
Reserve for contingencies |
Escrow Deposits |
Reserve for contingencies |
Escrow Deposits | |||||||
Labor |
||||||||||||
Various |
39,151 |
147,062 |
42,752 |
127,750 |
55,106 |
108,646 | ||||||
Civil |
||||||||||||
General Damages |
11,126 |
75,003 |
9,897 |
59,434 |
14,450 |
64,407 | ||||||
Tariff Increase |
10,814 |
9,200 |
12,249 |
9,068 |
10,635 |
18,498 | ||||||
Energy Purchased |
- |
- |
- |
- |
14,899 |
13,228 | ||||||
Other |
10,678 |
16,698 |
11,967 |
15,674 |
6,695 |
15,588 | ||||||
32,618 |
100,901 |
34,113 |
84,176 |
46,679 |
111,721 | |||||||
Tax |
||||||||||||
FINSOCIAL |
18,714 |
53,322 |
18,601 |
52,998 |
18,478 |
52,649 | ||||||
Increase in basis - PIS and COFINS |
866 |
721 |
866 |
1,022 |
1,277 |
1,010 | ||||||
Interest on Shareholders Equity - PIS and COFINS |
10,666 |
10,666 |
9,800 |
9,800 |
70,301 |
- | ||||||
PIS and COFINS - Non-Cumulative Method |
87,672 |
- |
122,792 |
- |
124,887 |
- | ||||||
Income Tax |
73,401 |
539,601 |
63,914 |
498,347 |
59,708 |
456,519 | ||||||
Other |
28,178 |
38,411 |
7,806 |
20,084 |
6,091 |
19,429 | ||||||
219,497 |
642,721 |
223,779 |
582,251 |
280,742 |
529,607 | |||||||
Total |
291,266 |
890,684 |
300,644 |
794,177 |
382,527 |
749,974 | ||||||
The changes in the provisions for contingencies and escrow deposits are shown below:
Consolidated | |||||||||||
December 31, 2009 |
Addition |
Reversal |
Payment |
Monetary Restatement |
December 31, 2010 | ||||||
Labor |
42,752 |
28,769 |
(2,866) |
(29,504) |
- |
39,151 | |||||
Civil |
34,113 |
9,402 |
(5,512) |
(5,678) |
293 |
32,618 | |||||
Tax |
223,779 |
31,393 |
(40,098) |
(22) |
4,445 |
219,497 | |||||
Reserve for Contingencies |
300,644 |
69,564 |
(48,476) |
(35,204) |
4,738 |
291,266 | |||||
Escrow Deposits |
794,177 |
80,226 |
(13,737) |
(14,380) |
44,398 |
890,684 | |||||
Consolidated | |||||||||||
January 1, 2009 |
Addition |
Reversal |
Payment |
Monetary Restatement |
December 31, 2009 | ||||||
Labor |
55,106 |
1,016 |
(3,688) |
(9,682) |
- |
42,752 | |||||
Civil |
46,679 |
10,603 |
(667) |
(22,502) |
- |
34,113 | |||||
Tax |
280,742 |
13,444 |
(1,481) |
(72,844) |
3,918 |
223,779 | |||||
Reserve for Contingencies |
382,527 |
25,063 |
(5,836) |
(105,028) |
3,918 |
300,644 | |||||
Escrow Deposits |
749,974 |
64,268 |
(17,164) |
(48,052) |
45,151 |
794,177 | |||||
The provisions 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 more likely than not in the opinion of the legal advisers and the management of the Company and its subsidiaries.
The principal pending issues relating to litigation, legal cases and tax assessments are summarized below:
a) Labor: The main labor suits relate to claims filed by former employees or unions for additional salary payments (overtime, salary parity, severance payments and other claims).
b) Civil:
57
Bodily injury - mainly refer to claims for indemnities relating to accidents in the subsidiaries' electrical grids, damage to consumers, vehicle accidents, etc.
Tariff increase: Corresponds to various claims by industrial consumers as a result of increases imposed by DNAEE Ordinances 38 and 45, dated February 27 and March 4, 1986, when the Plano Cruzado economic plan price freeze was in effect.
c) Tax
FINSOCIAL - relates to legal challenges of the rate increase and collection of FINSOCIAL during the period June 1989 to October 1991.
PIS and COFINS - JCP - in 2009, the Company dropped its suit disputing PIS and COFINS charged on Interest on shareholders equity received, and paid the amounts in question, taking advantage of the benefit granted in Law n° 11,941/09 (REFIS IV), that is, a reduction in the fine, interest and legal charges. The Company is awaiting finalization of the legal procedures in order to offset the escrow deposits of the amounts.
PIS and COFINS Non-cumulative method refers to the tax disputes in relation to the non-cumulative levying of PIS and COFINS on certain sector charges. In 2010, the subsidiaries reversed the contingency of R$ 39,502 against the General and administrative expenses Legal, court fees and indemnities account and the restatement of the consolidated amount of R$ 4,136 against the Financial expense - Restatement and exchange variations account.
Income tax - The provision of R$ 53,356 (R$ 44,531 in 2009) recognized by the subsidiary CPFL Piratininga, refers to the lawsuit in relation to the tax deductibility of CSLL in determination of IRPJ.
Other - tax - Refers to other suits in progress at the judicial and administrative levels resulting from of the subsidiaries' operations, in relation to INSS, FGTS and SAT tax issues.
d) 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 position in these cases. It is not yet possible to predict the outcome of the courts decisions or any other decisions in similar proceedings considered probable or remote. Consequently, no provision has been established for these. The claims relating to possible losses, at December 31, 2010, were as follows: (i) R$ 341,608 labor (R$ 294,825 in 2009); (ii) R$ 604,603 civil cases related mainly to bodily injury, environmental impact and tariff increases (R$ 472,710 in 2009); and (iii) R$ 823,872 in tax claims, principally Income tax, ICMS, FINSOCIAL and PIS and COFINS (R$ 625,369 in 2009).
Based on the opinion of their legal advisers, Management of the Company and its subsidiaries consider that there are no significant contingent risks that are not covered by adequate provisions in the Financial Statements, or that might result in a significant impact on future earnings.
Escrow deposits - The deposit of R$ 483,355 (R$ 450,319 in 2009) by CPFL Paulista refers to the dispute on the deductibility for income tax purposes of expense recognized in 1997 in respect of settlement in respect of the welfare deficit of the employees pension plan in relation to Fundação CESP, due to the renegotiation and renewal of debt in that year. On consulting the Brazilian Federal Revenue Office, the subsidiary obtained a favorable reply in Note MF/SRF/COSIT/GAB nº 157, of April 9, 1998, and took advantage of the tax deductibility of the expense, thereby generating a tax loss for that year. In March 2000, the subsidiary 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 as a condition for continuing the discussions, the subsidiary made an escrow deposit. The deductibility resulted in other assessments and in order to be able to continue the discussions, the subsidiary offered collateral in the form of bank guarantees amounting to R$ 325,292. Based on the updated position of the legal counsel in charge of the case, the risk of loss continues to be classified as remote.
( 24 ) PUBLIC UTILITIES
58
Consolidated | ||||||||||
Companies |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
Number of remaining installments |
Interest rates | |||||
CERAN |
71,987 |
65,904 |
67,546 |
304 |
IGP-M + 9.6% p.a. | |||||
ENERCAN |
9,884 |
9,434 |
9,693 |
294 |
IGP-M + 8% p.a. | |||||
BAESA |
52,865 |
50,402 |
51,729 |
306 |
IGP-M + 8% p.a. | |||||
Foz do Chapecó |
312,182 |
295,794 |
295,147 |
313 |
IGP-M / IPC-A + 5.3% p.a. | |||||
TOTAL |
446,918 |
421,534 |
424,115 |
|||||||
Current |
17,287 |
15,697 |
15,228 |
|||||||
Noncurrent |
429,631 |
405,837 |
408,887 |
( 25 ) OTHER ACCOUNTS PAYABLE
Consolidated | ||||||||||||
Current |
Noncurrent | |||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||||||
Consumers and Concessionaires |
63,584 |
50,250 |
50,545 |
- |
- |
- | ||||||
Energy Efficiency Program - PEE |
63,698 |
55,889 |
36,979 |
32,039 |
56,915 |
63,992 | ||||||
Research & Development - P&D |
110,418 |
100,544 |
37,767 |
29,682 |
12,636 |
64,670 | ||||||
National Scientific and Technological Development Fund - FNDCT |
3,076 |
4,705 |
28,230 |
- |
- |
228 | ||||||
Energy Research Company - EPE |
1,206 |
2,008 |
13,593 |
- |
- |
114 | ||||||
Fund for Reversal |
- |
- |
- |
17,751 |
17,751 |
17,751 | ||||||
Advances |
14,517 |
9,652 |
6,962 |
8,680 |
55,987 |
48,441 | ||||||
Provision for environmental expenditure |
11,685 |
2,483 |
6,330 |
2,455 |
2,628 |
544 | ||||||
Payroll |
6,724 |
8,085 |
8,533 |
- |
- |
- | ||||||
Profit sharing |
37,970 |
32,490 |
25,870 |
- |
- |
- | ||||||
TAC ANEEL fine (DEC/FEC and voltage level) |
- |
10,877 |
- |
- |
- |
- | ||||||
Collections agreement |
51,271 |
27,138 |
14,584 |
- |
- |
- | ||||||
Guarantees |
- |
- |
- |
45,831 |
71,152 |
63,692 | ||||||
Other |
46,712 |
34,740 |
50,295 |
4,692 |
9,575 |
10,080 | ||||||
Total |
410,861 |
338,861 |
279,688 |
141,130 |
226,644 |
269,512 | ||||||
Consumers and concessionaires: refers to liabilities in connection with bills paid twice and adjustments to billing to be offset or returned to consumers as well the participation of consumers in the Programa de Universalização program. Liabilities to concessionaires refer principally to transactions relating to the partial spin-off of Bandeirante by the subsidiary CPFL Piratininga.
Research and Development and Energy Efficiency Programs: the subsidiaries recognized liabilities relating to amounts already billed in tariffs (1% of the Net Operating Income), but not yet invested in the Research and Development and Energy Efficiency Programs. These amounts are subject to monthly restatement, at the SELIC rates, to realization.
Advances: the noncurrent amount refers to the contribution (AFAC) made exclusively by EPASAs shareholders. In the future, the subsidiary CPFL Geração will contribute the funds relating to its participation. In 2009 the balance represented the contributions made by shareholders of Chapecoense.
ANEEL TAC Fine (DEC and FEC): fine imposed on the subsidiary RGE, in relation to meeting DEC (Equivalent Duration of Interruptions per Client) and FEC (Equivalent Frequency of Interruptions per Consumer) indexes.
59
Profit-sharing: in conformity with a collective labor agreement, the Company and its subsidiaries introduced an employee profit-sharing program, based on achievement of operating and financial targets established in advance.
60
( 26 ) SHAREHOLDERS EQUITY
The shareholders participations in the Companys equity as of December 31, 2010 and 2009 are shown below:
|
|
Number of shares |
|
|
|
|
|
|
|
| ||
|
|
December 31, 2010 |
|
December 31, 2009 |
|
January 1, 2009 |
|
| ||||
Shareholders |
|
Common Shares |
Interest % |
|
Common Shares |
Interest % |
|
Common Shares |
|
Interest % | ||
VBC Energia S.A. |
|
122,948,720 |
|
25.55 |
|
122,948,720 |
|
25.62 |
|
133,653,591 |
|
27.85 |
BB Carteira Livre I FIA |
|
149,233,727 |
|
31.02 |
|
149,233,727 |
|
31.10 |
|
149,233,727 |
|
31.10 |
Bonaire Participações S.A. |
|
60,713,511 |
|
12.62 |
|
60,713,511 |
|
12.65 |
|
60,713,511 |
|
12.65 |
BNDES Participações S.A. |
|
40,526,739 |
|
8.42 |
|
40,526,739 |
|
8.44 |
|
29,821,870 |
|
6.21 |
Brumado Holdings S.A. |
|
17,251,048 |
|
3.59 |
|
17,251,048 |
|
3.59 |
|
28,420,052 |
|
5.92 |
Board Members |
|
112 |
|
- |
|
112 |
|
- |
|
3,112 |
|
- |
Executive Officers |
|
2,824 |
|
- |
|
6,450 |
|
- |
|
31,152 |
|
0.01 |
Other Shareholders |
|
90,460,449 |
|
18.80 |
|
89,230,631 |
|
18.60 |
|
78,033,923 |
|
16.26 |
Total |
|
481,137,130 |
|
100.00 |
|
479,910,938 |
|
100.00 |
|
479,910,938 |
|
100.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
26.1 - Capital increase
The Annual and Extraordinary General Meetings of CPFL Energia held on April 26, 2010 approved the merger of all the shares held by the minority shareholders of the subsidiaries CPFL Leste Paulista, CPFL Jaguari, CPFL Sul Paulista, CPFL Mococa, Jaguari Geração, CPFL Serviços and CPFL Santa Cruz with the equity of CPFL Energia and conversion of these companies into wholly-owned subsidiaries. Accordingly, the capital of CPFL Energia increased by R$ 52,249, from R$ 4,741,175 to R$ 4,793,424 with the issue of 1,226,192 new common shares.
26.2 - Capital Reserve
Refers to profits on the sale of treasury shares, resulting from shareholders exercising their right to withdraw at the time of the incorporation of the shares of minority shareholders in November 2005.
26.3 - Profit Reserve
Comprises the balance of the Statutory Reserve of R$ 418,665.
26.4 - Dividends
In July 2010, the Companys Board of Directors approved the distribution of net income of R$ 774,429 as at June 30, 2010, as interim dividends, corresponding to R$ 1.609579599 per share.
During the year, the Company paid R$ 1,423,550 in respect of the dividends declared at December 31, 2009 and June 30, 2010.
61
26.5 - Allocation of Net Income for the Year
The Companys by-laws assure shareholders of a minimum dividend of 25% of net income, adjusted in accordance with the law.
For this year, Company management is proposing distribution of the remaining balance of the net income, by declaration of R$ 486,040 in the form of dividends, corresponding to R$ 1.010190770 per share, as shown below:
Net income - Parent company |
1,538,281 | |
Prescribed Dividend |
6,406 | |
Constitution of Legal Reserve |
(76,914) | |
Realization of comprehensive income |
26,974 | |
Net loss on first time adoption of IFRS |
(234,278) | |
Net Income Base for Allocation |
1,260,469 | |
Interim Dividend |
(774,429) | |
Proposed Dividend |
486,040 |
( 27 ) EARNINGS PER SHARE
Basic earnings per share
Calculation of the basic earnings per share at December 31, 2010 was based on the profit of R$ 1,538,281 attributable to CPFL Energia (R$ 1,657,297 at December 31, 2009) and the average weighted number of common shares outstanding during the year ended December 31, 2010, as shown below:
December 31, 2010 |
December 31, 2009 | |||
Net income attributable to CPFL Energia |
1,538,281 |
1,657,297 | ||
Weighted average number of common shares |
December 31, 2010 |
December 31, 2009 | ||
Shares issued on January 1 |
479,910,938 |
479,910,938 | ||
Shares issued on April 26, 2010 |
1,226,192 |
- | ||
Weighted average number of common shares as of December 31 |
480,747,436 |
479,910,938 | ||
Earnings per share |
3.20 |
3.45 | ||
Diluted earnings per share
In 2010 and 2009, the Company held no notes convertible into shares to be taken into account in calculating the earnings per share.
62
( 28 ) OPERATING REVENUE
Consolidated | ||||||||||||
Number of Consumers (*) |
GWh (*) |
R$ Thousand | ||||||||||
Revenue from Eletric Energy Operations |
2010 |
2009 |
2010 |
2009 |
2010 |
2009 | ||||||
Consumer class |
||||||||||||
Residential |
5,880,204 |
5,695,689 |
12,983 |
12,346 |
5,416,581 |
5,098,424 | ||||||
Industrial |
78,261 |
77,166 |
15,413 |
14,970 |
4,123,723 |
4,127,319 | ||||||
Commercial |
490,554 |
496,377 |
7,695 |
7,297 |
2,795,127 |
2,700,025 | ||||||
Rural |
237,903 |
238,566 |
2,100 |
2,257 |
434,519 |
438,666 | ||||||
Public Administration |
45,386 |
44,051 |
1,112 |
1,074 |
384,742 |
376,735 | ||||||
Public Lighting |
8,096 |
7,933 |
1,444 |
1,408 |
303,862 |
293,463 | ||||||
Public Services |
7,239 |
6,738 |
1,742 |
1,664 |
470,323 |
462,431 | ||||||
Billed |
6,747,643 |
6,566,520 |
42,489 |
41,016 |
13,928,877 |
13,497,063 | ||||||
Own Consumption |
783 |
768 |
33 |
33 |
||||||||
Unbilled (Net) |
1,304 |
43,217 | ||||||||||
Emergency Charges - ECE/EAEE |
7 |
(5) | ||||||||||
Reclassification to Network Usage Charge - TUSD - Captive Consumers |
(5,843,561) |
(6,025,716) | ||||||||||
Electricity sales to final consumers |
42,522 |
41,049 |
8,086,627 |
7,514,559 | ||||||||
Furnas Centrais Elétricas S.A. |
3,026 |
3,026 |
347,472 |
353,554 | ||||||||
Other Concessionaires and Licensees |
7,217 |
7,016 |
731,493 |
854,852 | ||||||||
Current Electric Energy |
2,495 |
2,883 |
117,156 |
90,732 | ||||||||
Electricity sales to wholesaler |
12,738 |
12,925 |
1,196,121 |
1,299,138 | ||||||||
Revenue due to Network Usage Charge - TUSD - Captive Consumers |
5,843,561 |
6,025,716 | ||||||||||
Revenue due to Network Usage Charge - TUSD - Free Consumers |
1,127,795 |
789,357 | ||||||||||
Revenue from construction of concession infrastructure |
1,043,678 |
615,557 | ||||||||||
Low Income Consumer´s Subsidy |
31,245 |
31,970 | ||||||||||
Other Revenue and Income |
227,651 |
215,013 | ||||||||||
Other operating revenues |
8,273,930 |
7,677,613 | ||||||||||
Total gross revenues |
17,556,678 |
16,491,310 | ||||||||||
Deductions from operating revenues |
||||||||||||
ICMS |
(2,728,416) |
(2,613,276) | ||||||||||
PIS |
(265,444) |
(263,951) | ||||||||||
COFINS |
(1,224,934) |
(1,216,563) | ||||||||||
ISS |
(3,847) |
(3,617) | ||||||||||
Global Reversal Reserve - RGR |
(53,985) |
(61,407) | ||||||||||
Fuel Consumption Account - CCC |
(593,630) |
(386,949) | ||||||||||
Energy Development Account - CDE |
(470,981) |
(449,417) | ||||||||||
Research and Development and Energy Efficiency Programs |
(134,772) |
(102,175) | ||||||||||
PROINFA |
(56,933) |
(35,954) | ||||||||||
Other |
(7) |
5 | ||||||||||
(5,532,949) |
(5,133,304) | |||||||||||
|
| |||||||||||
Net revenue |
12,023,729 |
11,358,006 | ||||||||||
(*) Information not examined by the independent auditors. |
The details of the tariff adjustments for the distributors are as follows:
63
2010 |
2009 | ||||||||
Company |
Month |
Total adjustment |
Effect perceived by consumers (*) |
Total adjustment |
Effect perceived by consumers (*) | ||||
CPFL Paulista |
April |
2.70% |
-5.69% |
21.22% |
21.56% | ||||
CPFL Piratininga |
October |
10.11% |
5.66% |
5.98% |
-2.12% | ||||
RGE |
June/April |
12.37% |
3.96% |
18.95% |
3.43% | ||||
CPFL Santa Cruz |
February |
10.09% |
-2.53% |
24.09% |
11.85% | ||||
CPFL Leste Paulista |
February |
-13.21% |
-8.47% |
12.94% |
10.61% | ||||
CPFL Jaguari |
February |
5.16% |
3.67% |
11.36% |
9.40% | ||||
CPFL Sul Paulista |
February |
5.66% |
4.94% |
11.64% |
10.23% | ||||
CPFL Mococa |
February |
3.98% |
3.24% |
11.18% |
5.59% | ||||
(*) 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 |
64
( 29 ) COST OF ELECTRIC ENERGY
Consolidated | ||||||||
Cost of Electric Energy |
GWh (*) |
R$ thousand | ||||||
Electricity Purchased for Resale |
2010 |
2009 |
2010 |
2009 | ||||
Energy Purchased in Restricted Framework - ACR |
||||||||
Tractebel Energia S.A. |
7,482 |
6,827 |
1,108,578 |
973,344 | ||||
Itaipu Binacional |
10,835 |
11,084 |
1,010,132 |
1,157,306 | ||||
Petróleo Brasileiro S.A. Petrobrás |
1,717 |
1,721 |
207,011 |
210,488 | ||||
CESP - Cia Energética de São Paulo |
1,759 |
1,808 |
175,467 |
171,837 | ||||
Furnas Centrais Elétricas S.A. |
1,673 |
1,649 |
156,197 |
147,681 | ||||
CEMIG - Cia Energética de Minas Gerais |
1,036 |
1,357 |
131,451 |
222,604 | ||||
CHESF - Cia Hidro Elétrica do São Francisco |
1,343 |
1,318 |
119,594 |
113,143 | ||||
Termorio S.A. |
454 |
248 |
119,028 |
75,286 | ||||
Copel Geração e Transmissão S.A. |
694 |
713 |
69,817 |
69,126 | ||||
Tractebel Energia Comercializadora Ltda. |
397 |
136 |
43,500 |
14,325 | ||||
Câmara de Comercialização de Energia Elétrica - CCEE |
3,373 |
3,101 |
198,789 |
57,748 | ||||
PROINFA |
1,133 |
958 |
182,674 |
169,706 | ||||
Other |
4,726 |
5,574 |
593,054 |
663,391 | ||||
36,622 |
36,494 |
4,115,292 |
4,045,985 | |||||
Energy Purchased in the Free Market - ACL |
15,762 |
16,180 |
1,443,246 |
1,455,049 | ||||
52,384 |
52,674 |
5,558,538 |
5,501,034 | |||||
Credit of PIS and COFINS |
(508,463) |
(521,366) | ||||||
Subtotal |
5,050,075 |
4,979,668 | ||||||
Electricity Network Usage Charge |
||||||||
Basic Network Charges |
899,112 |
901,589 | ||||||
Transmission from Itaipu |
88,568 |
84,281 | ||||||
Connection Charges |
68,985 |
59,475 | ||||||
Charges of Use of the Distribution System |
30,217 |
25,657 | ||||||
System Service Charges - ESS |
174,230 |
80,727 | ||||||
Reserve Energy charges |
32,281 |
3,220 | ||||||
1,293,393 |
1,154,949 | |||||||
Credit of PIS and COFINS |
(120,978) |
(120,108) | ||||||
Subtotal |
1,172,415 |
1,034,841 | ||||||
Total |
6,222,490 |
6,014,509 | ||||||
(*) Information not examined by the independent auditors. |
65
( 30 ) OPERATING COSTS AND EXPENSES
Parent Company | ||||||
Operating expenses |
Total | |||||
General |
Other | |||||
2010 |
2009 |
2010 |
2009 |
2010 |
2009 | |
Personnel |
3,837 |
2,451 |
- |
- |
3,837 |
2,451 |
Employee Pension Plans |
- |
- |
- |
- |
- |
- |
Materials |
57 |
42 |
- |
- |
57 |
42 |
Outside Services |
19,442 |
7,759 |
- |
- |
19,442 |
7,759 |
Depreciation and Amortization |
150 |
119 |
- |
- |
150 |
119 |
Costs related to infrastructure construction |
- |
- |
- |
- |
- |
- |
Other: |
||||||
Leases and Rentals |
124 |
122 |
- |
- |
124 |
122 |
Publicity and Advertising |
1,530 |
1,589 |
- |
- |
1,530 |
1,589 |
Legal, Judicial and Indemnities |
410 |
414 |
- |
- |
410 |
414 |
Donations, Contributions and Subsidies |
150 |
43 |
- |
- |
150 |
43 |
Loss (gain) on the write-off of noncurrent assets |
- |
- |
- |
1,365 |
- |
1,365 |
Intangible of concession amortization |
145,302 |
148,749 |
145,302 |
148,749 | ||
Other: |
8,976 |
5,800 |
- |
- |
8,976 |
5,800 |
Total |
34,676 |
18,339 |
145,302 |
150,114 |
179,978 |
168,453 |
66
Consolidated | ||||||||||||||||||||||||
Operating costs |
Services Rendered to Third Parties |
Operating expenses |
Total | |||||||||||||||||||||
Sales |
|
General |
Other |
|||||||||||||||||||||
2010 |
2009 |
2010 |
2009 |
2010 |
2009 |
2010 |
2009 |
2010 |
2009 |
2010 |
2009 | |||||||||||||
Personnel |
351,447 |
332,033 |
279 |
640 |
80,013 |
69,253 |
161,878 |
151,186 |
- |
- |
593,617 |
553,112 | ||||||||||||
Employee Pension Plans |
(80,629) |
(3,066) |
- |
- |
- |
- |
- |
- |
- |
- |
(80,629) |
(3,066) | ||||||||||||
Materials |
62,175 |
58,787 |
2,368 |
1,246 |
4,402 |
4,277 |
11,678 |
8,048 |
- |
- |
80,623 |
72,358 | ||||||||||||
Outside Services |
199,065 |
160,887 |
2,358 |
1,742 |
84,488 |
72,648 |
181,493 |
153,642 |
- |
- |
467,404 |
388,919 | ||||||||||||
Depreciation and Amortization |
475,647 |
451,712 |
- |
- |
9,212 |
10,944 |
24,167 |
23,518 |
152 |
- |
509,178 |
486,174 | ||||||||||||
Costs related to infrastructure construction |
- |
- |
1,043,678 |
615,557 |
- |
- |
- |
- |
- |
- |
1,043,678 |
615,557 | ||||||||||||
Other: |
||||||||||||||||||||||||
Collection charges |
- |
- |
- |
- |
55,910 |
50,367 |
- |
- |
- |
- |
55,910 |
50,367 | ||||||||||||
Allowance for doubtful accounts |
- |
- |
- |
- |
51,668 |
36,250 |
- |
- |
- |
- |
51,668 |
36,250 | ||||||||||||
Leases and Rentals |
15,068 |
15,633 |
- |
- |
1,676 |
65 |
9,764 |
4,866 |
13 |
- |
26,521 |
20,564 | ||||||||||||
Publicity and Advertising |
- |
- |
- |
- |
- |
- |
19,852 |
7,970 |
- |
- |
19,852 |
7,970 | ||||||||||||
Legal, Judicial and Indemnities |
- |
- |
- |
- |
- |
- |
5,416 |
25,209 |
- |
- |
5,416 |
25,209 | ||||||||||||
Donations, Contributions and Subsidies |
- |
- |
- |
- |
- |
- |
5,810 |
7,095 |
27 |
- |
5,837 |
7,095 | ||||||||||||
Inspection fee |
- |
- |
- |
- |
- |
- |
- |
- |
24,769 |
23,563 |
24,769 |
23,563 | ||||||||||||
Loss (gain) on the write-off of noncurrent assets |
- |
- |
- |
- |
- |
- |
- |
- |
(11,308) |
(2,240) |
(11,308) |
(2,240) | ||||||||||||
Free energy adjustment |
- |
- |
- |
- |
- |
- |
- |
- |
2,782 |
19,378 |
2,782 |
19,378 | ||||||||||||
Intangible of concession amortization |
- |
- |
- |
- |
- |
- |
- |
- |
182,615 |
186,899 |
182,615 |
186,899 | ||||||||||||
Other: |
44,720 |
37,952 |
2,297 |
1,759 |
13,066 |
11,395 |
23,154 |
21,856 |
754 |
(257) |
83,991 |
72,705 | ||||||||||||
Total |
1,067,493 |
1,053,938 |
1,050,980 |
620,944 |
300,435 |
255,199 |
443,212 |
403,390 |
199,804 |
227,343 |
3,061,924 |
2,560,814 |
67
( 31 ) FINANCIAL INCOME AND EXPENSES
Parent Company |
Consolidated | |||||||
2010 |
2009 |
2010 |
2009 | |||||
Financial Income |
||||||||
Income from Financial Investments |
32,068 |
23,717 |
156,420 |
94,356 | ||||
Arrears of interest and fines |
22 |
5 |
136,181 |
124,713 | ||||
Restatement of tax credits |
2,943 |
2,961 |
7,789 |
3,860 | ||||
Restatement of Escrow Deposits |
866 |
352 |
44,366 |
45,154 | ||||
Monetary and Exchange Variations |
- |
- |
42,548 |
22,171 | ||||
Discount on purchase of ICMS credit |
- |
- |
7,806 |
7,803 | ||||
Interest - Extraordinary Tariff Adjustment |
- |
- |
191 |
147 | ||||
Interest on intercompany loans |
4,290 |
- |
5,894 |
2,460 | ||||
PIS and COFINS of Interest on Shareholders' Equity |
(18,253) |
(18,476) |
(18,253) |
(18,476) | ||||
Guarantees |
45,256 |
6,034 |
45,256 |
6,034 | ||||
Other |
25,749 |
22,591 |
54,917 |
63,138 | ||||
Total |
92,941 |
37,184 |
483,115 |
351,360 | ||||
Financial Expense |
||||||||
Debt Charges |
(45,430) |
(46,199) |
(740,973) |
(619,582) | ||||
Monetary and Exchange Variations |
(5,435) |
(414) |
(90,381) |
(37,107) | ||||
(-) Capitalized borrowing costs |
- |
- |
132,938 |
84,931 | ||||
Public utilities |
- |
- |
(31,578) |
(8,651) | ||||
Guarantees |
(37,835) |
(9,301) |
(37,835) |
(9,301) | ||||
Other |
(7,528) |
(10,786) |
(69,229) |
(71,356) | ||||
Total |
(96,228) |
(66,700) |
(837,058) |
(661,066) | ||||
Net financial income (expense) |
(3,287) |
(29,516) |
(353,943) |
(309,706) | ||||
( 32 ) SEGMENT INFORMATION
The Companys operating segments are separated by business segment (electric energy distribution, generation and commercialization), based on the internal financial information and management structure.
Profit or loss, assets and liabilities per segment include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis, if applicable. Prices charged between the segments are based on similar market transactions. Note 1 shows the subsidiaries in accordance with their areas of operation and provides further information about each subsidiary and its business area.
The segregated information by segment of activity is shown below, in accordance with the criteria established by Company management:
68
Distribution |
Generation |
Commercialization |
Other (*) |
Elimination |
Total | ||||||
2010 |
|||||||||||
Net revenue |
10,471,192 |
538,217 |
1,012,525 |
1,795 |
- |
12,023,729 | |||||
(-) Intersegment revenues |
13,904 |
650,571 |
766,922 |
- |
(1,431,397) |
- | |||||
Income from electric energy service |
1,852,867 |
616,416 |
302,981 |
(32,949) |
- |
2,739,315 | |||||
Financial income |
316,020 |
53,725 |
22,389 |
90,981 |
- |
483,115 | |||||
Financial expense |
(394,999) |
(323,441) |
(22,311) |
(96,307) |
- |
(837,058) | |||||
Income before taxes |
1,773,749 |
345,914 |
302,024 |
(36,315) |
- |
2,385,372 | |||||
Income tax and social contribution |
(604,865) |
(88,731) |
(95,840) |
(35,899) |
- |
(825,335) | |||||
Net Income |
1,168,884 |
257,183 |
206,184 |
(72,214) |
- |
1,560,037 | |||||
Total Assets (**) |
11,689,503 |
7,568,600 |
349,047 |
449,655 |
- |
20,056,805 | |||||
Capital Expenditures and other intangible assets |
1,127,637 |
645,040 |
27,853 |
10 |
- |
1,800,540 | |||||
Depreciation and Amortization |
352,806 |
188,981 |
4,553 |
145,453 |
- |
691,793 | |||||
2009 |
|||||||||||
Net revenue |
9,764,670 |
453,711 |
1,139,621 |
4 |
- |
11,358,006 | |||||
(-) Intersegment revenues |
14,127 |
611,335 |
644,620 |
- |
(1,270,082) |
- | |||||
Income from electric energy service |
1,860,801 |
649,561 |
292,543 |
(20,222) |
- |
2,782,683 | |||||
Financial income |
262,914 |
30,884 |
20,113 |
37,449 |
- |
351,360 | |||||
Financial expense |
(361,852) |
(222,990) |
(9,764) |
(66,460) |
- |
(661,066) | |||||
Income before taxes |
1,761,863 |
457,455 |
302,892 |
(49,233) |
- |
2,472,977 | |||||
Income tax and social contribution |
(602,761) |
(125,711) |
(93,300) |
37,663 |
- |
(784,109) | |||||
Net Income |
1,159,102 |
331,744 |
209,592 |
(11,570) |
- |
1,688,868 | |||||
Total Assets (**) |
10,696,228 |
6,761,330 |
422,816 |
610,385 |
- |
18,490,759 | |||||
Capital Expenditures and other intangible assets |
667,614 |
550,565 |
9,789 |
131 |
- |
1,228,099 | |||||
Depreciation and Amortization |
344,499 |
175,825 |
3,882 |
148,867 |
- |
673,073 | |||||
(*) Other - Refers basically to the CPFL Energia figures after eliminations of balances with related parties |
|||||||||||
(**) The goodwill created in an acquisition and recorded in CPFL Energia was allocated to the respective segments |
( 33 ) TRANSACTIONS WITH RELATED PARTIES
The Company is controlled by the following Companies:
· VBC Energia S.A.
Controlled by the Camargo Corrêa group, with operations in a number of segments, such as construction, cement, footwear, textiles, aluminum and highway concessions, among others.
· Bonaire Participações S.A.
Controlled by Energia São Paulo Fundo de Investimento em Participações, which in turn is controlled by the following pension funds: (a) Fundação CESP, (b) Fundação SISTEL de Seguridade Social, (c) Fundação Petrobras de Seguridade Social - PETROS, and (d) Fundação SABESP de Seguridade Social - SABESPREV.
· Fundo BB Carteira Livre I - Fundo de Investimento em Ações (Fund")
Fund controlled by PREVI - Caixa de Previdência dos Funcionários do Banco do Brasil.
The direct and indirect participations in operating subsidiaries are described in Note 1.
Controlling shareholders, subsidiaries and associated companies, jointly controlled corporations and entities under common control and that in some way exercise significant influence over the Company are regarded as related parties. Balances and transactions involving related parties are shown in tables 33.1 and 33.2.
69
33.1) Transactions between related parties involving controlling shareholders, entities under common control or with significant influence:
ASSETS |
LIABILITIES |
REVENUE |
EXPENSE | ||||||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
2010 |
2009 |
2010 |
2009 | ||||||||||
Bank deposits and short-term investments |
|||||||||||||||||||
Banco do Brasil S.A. |
141,372 |
179,781 |
67,480 |
- |
- |
- |
13,147 |
7,030 |
494 |
4 | |||||||||
Banco Nossa Caixa S.A. |
- |
196 |
- |
- |
- |
- |
- |
- |
- |
10 | |||||||||
Loans and Financing, Debentures and Derivatives contracts (*) |
|||||||||||||||||||
Banco do Brasil S.A. |
- |
10,352 |
266,531 |
1,409,587 |
813,805 |
1,036,739 |
3,612 |
- |
110,671 |
78,832 | |||||||||
Other financial transactions |
|||||||||||||||||||
Banco do Brasil S.A. |
- |
- |
- |
4,012 |
6,824 |
8,646 |
1,458 |
1,819 |
4,005 |
3,215 | |||||||||
Banco Nossa Caixa S.A. |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1,469 | |||||||||
Energy sales in the free market |
|||||||||||||||||||
Camargo Corrêa Cimentos S.A. |
656 |
- |
- |
- |
- |
- |
7,737 |
- |
- |
- | |||||||||
Tavex Brasil S.A. |
- |
- |
- |
- |
- |
- |
19,983 |
18,549 |
- |
- | |||||||||
Energy purchases in the free market |
|||||||||||||||||||
NC Energia S.A. |
42 |
2,238 |
2,055 |
- |
- |
- |
18,745 |
24,961 |
- |
1,146 | |||||||||
Vale S.A |
- |
- |
- |
- |
- |
- |
- |
- |
- |
8,994 | |||||||||
Vale Energia S.A. |
- |
- |
- |
- |
1,348 |
- |
- |
- |
20,277 |
26,613 | |||||||||
Cia Energetica de Pernambuco - Celpe |
52 |
- |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||
Companhia de Eletricidade do Estado da Bahia - Coelba |
342 |
- |
- |
- |
- |
- |
2,834 |
- |
- |
- | |||||||||
Materials and Service Provision |
|||||||||||||||||||
Brasil Telecom S.A. |
- |
- |
- |
19 |
- |
56 |
- |
- |
834 |
831 | |||||||||
Camargo Corrêa Cimentos S.A. |
- |
- |
- |
- |
2 |
3 |
- |
- |
- |
20 | |||||||||
Camargo Corrêa Geração de Energia S.A. |
- |
5 |
- |
- |
- |
- |
- |
42 |
- |
- | |||||||||
Banco do Brasil S.A. |
- |
- |
- |
- |
- |
- |
- |
- |
220 |
- | |||||||||
Other revenue |
|||||||||||||||||||
Brasil Telecom S.A. |
2,671 |
890 |
- |
- |
- |
- |
10,684 |
9,794 |
- |
- | |||||||||
Property, plant and equipment acquisition |
|||||||||||||||||||
Construções e Comércio Camargo Correa S.A. |
55,986 |
36,536 |
145,114 |
1,957 |
1,850 |
863 |
|||||||||||||
(*) Cost value, both for loans and for derivatives |
|||||||||||||||||||
33.2) Transactions between related parties involving subsidiaries and jointly-owned subsidiaries:
70
ASSETS |
LIABILITIES |
REVENUE |
EXPENSE | |||||||||||||||||
Companies |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 |
2010 |
2009 |
2010 |
2009 | ||||||||||
Intercompany allocation of expense |
||||||||||||||||||||
Companhia Paulista de Força e Luz |
- |
- |
1 |
- |
150 |
141 |
- |
- |
1,598 |
1,440 | ||||||||||
Companhia Piratininga de Força e Luz |
- |
- |
- |
- |
27 |
20 |
- |
- |
314 |
219 | ||||||||||
CPFL Comercialização Brasil S.A |
- |
- |
- |
- |
14 |
15 |
- |
- |
239 |
182 | ||||||||||
CPFL Geração de Energia S.A. |
- |
- |
- |
- |
- |
- |
- |
- |
(30) | |||||||||||
Leasing and rental |
||||||||||||||||||||
Companhia Paulista de Força e Luz |
- |
- |
- |
- |
7 |
- |
- |
70 |
77 | |||||||||||
Intercompany loans |
||||||||||||||||||||
Centrais Elétricas da Paraiba S.A. |
- |
- |
- |
- |
165 |
- |
- | |||||||||||||
CPFL Atende Centro de Cont. e Aten. Ltda |
12,384 |
6,238 |
1,045 |
- |
- |
799 |
465 |
- |
- | |||||||||||
CPFL Bioenergia S.A. |
- |
14,422 |
- |
- |
- |
786 |
391 |
- |
- | |||||||||||
CPFL Serv. Equip. Ind. e Com. S.A. |
2,491 |
1,430 |
- |
- |
- |
211 |
13 |
- |
- | |||||||||||
Companhia Luz e Força de Mococa |
- |
3,012 |
- |
- |
- |
139 |
- |
- |
- | |||||||||||
Dividend / Interest on shareholders' equity |
||||||||||||||||||||
Companhia Luz e Força de Mococa |
3,648 |
500 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Companhia Luz e Força Santa Cruz |
12,000 |
7,000 |
10,000 |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Companhia Leste Paulista de Energia |
- |
4,957 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Companhia Paulista de Força e Luz |
237,000 |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Companhia Piratininga de Força e Luz |
- |
138,829 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Companhia Sul Paulista de Energia |
- |
5,836 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
CPFL Comercialização Brasil S.A |
75,000 |
- |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
CPFL Geração de Energia S.A. |
85,000 |
- |
148,203 |
- |
- |
- |
- |
- |
- |
- | ||||||||||
CPFL Serv. Equip. Ind. e Com. S.A. |
- |
3,648 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
Rio Grande Energia S.A. |
- |
41,002 |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||
- |
||||||||||||||||||||
Advance to future capital increase |
||||||||||||||||||||
CPFL Jaguariúna S.A. |
445 |
140 |
- |
- |
- |
- |
- |
- |
- | |||||||||||
Perácio Participações S.A. |
- |
- |
409,310 |
|||||||||||||||||
Other |
||||||||||||||||||||
Perácio Participações S.A. |
- |
- |
4,233 |
- |
- |
- |
- |
- |
- |
- |
33.3) The main transactions are described below:
a) Bank deposits and short-term investments refer mainly to bank deposits and short-term financial investments, as mentioned in Note 6.
b) Loans and Financing, Debentures and Derivatives relate to funds raised in accordance with Notes 18 and 19, contracted under the normal market conditions at the time.
c) Other Financial Transactions the amounts in relation to Banco do Brasil are bank costs and collection expenses. The balance recorded in liabilities comprises basically the rights over the payroll processing of certain subsidiaries, negotiated with Banco do Brasil, which are appropriated as an income in the statement of operations over the term of the contract. The Company also has an Exclusive Investment Fund managed by BB DTVM, which charges management fees under normal market conditions for such management.
d) Property, plant and equipment, Materials and Service Provision refers to the acquisition of equipment, cables and other materials for use in distribution and generation, and contracting of services such as construction and information technology consultancy. These operations were contracted under normal market conditions.
e) Energy sales to the free market refers basically to energy sales to free consumers, through short or long-term contracts made under conditions regarded by the Company as being market conditions at the time of the negotiation, in accordance with internal policies established in advance by Company management.
f) Energy purchased in the free market refers basically to energy purchased by the trading companies in accordance with short or long-term agreements made under conditions regarded by the Company as being market conditions at the time of the negotiation, in accordance with policies established in advance by Company management.
71
g) Other revenue refers basically to revenue from rental of use of the distribution system for telephony services.
The subsidiaries that are public distribution service concessionaires charge tariffs for the use of the distribution system (TUSD) and sell energy to related parties in their respective concession areas (captive consumers). The amounts charged are established in accordance with prices regulated by the regulatory agency. These distributors also purchase energy from related parties, mainly involving long-term agreements, in conformity with the rules established by the sector (principally by auction); these prices are also regulated and approved by ANEEL.
Additionally, certain subsidiaries have supplementary retirement plan maintained with Fundação CESP and offered to the employees of the subsidiaries, as mentioned in Note 20.
To ensure that commercial transactions with related parties are conducted under normal market conditions, the Company set up a Related Parties Committee, comprising representatives of the controlling shareholders, responsible for analyzing the main transactions with related parties.
The Company guarantees certain loans raised by its subsidiaries, as mentioned in Notes 18 and 19.
The total remuneration of key management personnel in 2010, in accordance with CVM Decision nº 560/2008, was R$ 18,260. This amount comprises R$ 16,152 in respect of short-term benefits, R$ 624 for post-employment benefits and R$ 1,484 for other long-term benefits, and refers to the amount recorded by the accrual method.
( 34 ) INSURANCE
The insurance cover maintained by the subsidiaries is based on specialized advice and takes into account the nature and degree of risk. The amounts are considered sufficient to cover any significant losses on assets and/or responsibilities. The principal insurance policies in the consolidated financial statements are:
Consolidated | ||||||||
DESCRIPTION |
TYPE OF COVER |
2010 |
2009 |
2008 | ||||
Property, Plant and Equipment |
Fire, Lightning, Explosion, Machinery breakdown, Electrical Damage and Engeneering Risk |
4,605,688 |
3,935,861 |
3,984,443 | ||||
Transport |
National Transport |
197,712 |
101,000 |
75,600 | ||||
Stored Materials |
Fire, Lightning, Explosion and Robbery |
18,729 |
30,423 |
27,830 | ||||
Automobiles |
Comprehensive Cover |
3,531 |
2,138 |
6,886 | ||||
Civil Liability |
Electric Energy Distributors |
20,134 |
19,996 |
19,999 | ||||
Personnel |
Group Life and Personal Accidents |
68,532 |
76,617 |
125,544 | ||||
Other |
Operational risks and other |
31,598 |
125,048 |
529,740 | ||||
Total |
4,945,924 |
4,291,083 |
4,770,042 | |||||
Information not examined by the independent auditors. |
( 35 ) FINANCIAL INSTRUMENTS
72
The main financial instruments, classified in accordance with the groups accounting practices, are:
a) Financial assets
a.1) Measured at amortized cost
Consolidated | |||||
Loans and receivables |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||
Consumers, Concessionaires and Licensees |
2,011,830 |
1,977,745 |
1,881,485 | ||
Leases |
31,068 |
24,192 |
6,389 | ||
Other |
|||||
Receivables from BAESA's shareholders |
17,128 |
31,006 |
42,443 | ||
Pledges, Funds and Tied Deposits |
91,159 |
101,566 |
133,419 | ||
Fund Tied to Foreign Currency Loans |
21,221 |
19,148 |
30,023 | ||
Services Rendered to Third Parties |
73,163 |
48,845 |
18,642 | ||
Reimbursement RGR |
7,592 |
7,115 |
5,939 | ||
Collection Agreements |
26,573 |
4,263 |
- | ||
2,279,734 |
2,213,880 |
2,118,340 | |||
Consolidated | |||||
Held to maturity |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||
Financial investments |
81,749 |
101,432 |
125,366 | ||
Receivables - CESP |
- |
8,923 |
35,985 | ||
81,749 |
110,355 |
161,351 | |||
a.2) Measured at fair value
Consolidated | |||||
Measured at fair value through profit or loss |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||
Cash and cash equivalent |
1,562,895 |
1,487,243 |
758,454 | ||
Derivatives |
326 |
8,676 |
433,395 | ||
Financial investments |
33,606 |
17,656 |
9,669 | ||
1,596,827 |
1,513,575 |
1,201,518 | |||
Consolidated | |||||
Available for sale |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||
Financial asset of concession |
934,646 |
674,029 |
582,241 | ||
b) Financial liabilities
73
b.1) Measured at amortized cost
Consolidated | |||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | |||
Suppliers |
(1,047,392) |
(1,064,107) |
(1,071,215) | ||
Loans and financing - Principal and interest |
(5,141,556) |
(3,452,942) |
(3,229,633) | ||
Debentures - Principal and interest |
(3,840,340) |
(3,351,478) |
(2,709,079) | ||
Dividends |
(23,815) |
(25,284) |
(17,512) | ||
Regulatory Charges |
(123,542) |
(63,750) |
(94,530) | ||
Other |
|||||
Consumers, Concessionaires and Licensees |
(63,584) |
(50,250) |
(50,545) | ||
National Scientific and Technological Development Fund - FNDCT |
(3,076) |
(4,705) |
(28,458) | ||
Energy Research Company - EPE |
(1,206) |
(2,008) |
(13,707) | ||
Collection Agreements |
(51,271) |
(27,137) |
(14,584) | ||
Reversal Fund |
(17,751) |
(17,751) |
(17,751) | ||
(10,313,533) |
(8,059,412) |
(7,247,014) | |||
b.2) Measured at fair value through profit or loss
Consolidated | |||||
Measured at fair value through profit or loss |
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||
Held for trade |
|||||
Derivatives |
(11,864) |
(12,706) |
(54,404) | ||
Initial recognition (1) |
|||||
Loans and financing - certain debts |
(424,827) |
(1,095,103) |
(1,516,833) | ||
(436,691) |
(1,107,809) |
(1,571,237) | |||
(1) Due to the initial recognition at fair value of the above financial liability, the consolidated result was a loss of R$ 52 in 2010 (R$ 56,609 in 2009). | |||||
c) Valuation of financial instruments
CPC 40 requires classification at three levels of hierarchy for measurement of the fair value of financial instruments, based on observable and unobservable information in relation to valuation of a financial instrument at the measurement date.
CPC 40 also defines observable information as market data obtained from independent sources and unobservable information that reflects market assumptions.
The three levels of fair value are:
· Level 1: quoted prices in an active market for identical instruments;
· Level 2: observable information other than quoted prices in an active market that are observable for the asset or liability, directly (i.e. as prices) or indirectly (i.e. derived from prices);
· Level 3: inputs for the instruments that are not based on observable market data (unobservable inputs).
74
The classification in accordance with the fair value hierarchy of the Companys financial instruments, measured at fair value, is as follows:
Consolidated | ||||||||||||||||||
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 | ||||||||||
Cash and cash equivalents |
1,562,895 |
- |
- |
1,487,243 |
- |
- |
758,454 |
- |
- | |||||||||
Derivatives |
- |
(11,538) |
- |
- |
(4,030) |
- |
- |
378,991 |
- | |||||||||
Loans and financing |
- |
(424,827) |
- |
- |
(1,095,103) |
- |
- |
(1,516,833) |
- | |||||||||
Financial investments |
33,606 |
- |
- |
17,656 |
- |
- |
9,669 |
- |
- | |||||||||
Financial asset of concession |
- |
- |
934,646 |
- |
- |
674,029 |
- |
- |
582,241 | |||||||||
1,596,501 |
(436,365) |
934,646 |
1,504,899 |
(1,099,133) |
674,029 |
768,123 |
(1,137,842) |
582,241 | ||||||||||
Since the distribution subsidiaries have classified their financial concession assets as available-for-sale, as mentioned in Note 3.2, the relevant factors for measurement at fair value are not publicly observable. The fair value hierarchy classification is therefore level 3. The changes between years and the respective gains (losses) in the equity valuation reserve are disclosed in Note 12.
The comparative information on marking to market the other financial instruments measured at amortized cost is described below:
It is assumed that financial instruments such as accounts receivable from consumers, concessionaires and licensees and accounts payable to suppliers are already close to the respective market values.
At December 31, 2010 and 2009, the market values of the financial instruments obtained by the methodology described in Note 4, are as follows:
Parent Company | ||||||||
December 31, 2010 |
December 31, 2009 | |||||||
Accounting balance |
Fair value |
Accounting balance |
Fair value | |||||
Debentures (note 19) |
(465,529) |
(470,262) |
(462,788) |
(468,993) | ||||
Total |
(465,529) |
(470,262) |
(462,788) |
(468,993) | ||||
Consolidated | ||||||||
December 31, 2010 |
December 31, 2009 | |||||||
Accounting balance |
Fair value |
Accounting balance |
Fair value | |||||
Loans and financing (note 18) |
(5,141,556) |
(4,870,909) |
(3,452,942) |
(3,194,735) | ||||
Debentures (note 19) |
(3,840,340) |
(3,891,397) |
(3,351,478) |
(3,392,071) | ||||
Total |
(8,981,896) |
(8,762,306) |
(6,804,420) |
(6,586,806) | ||||
In the case of specific electricity sector operations, where there are no similar transactions in the market and with low liquidity, mainly related to the regulatory aspects and credits receivable from CESP, the subsidiaries assumed that the market value is represented by the respective carrying amount. This is due to the uncertainties reflected in the variables which have to be taken into consideration in creating a pricing model.
The Company recognized in Investments at cost in the consolidated financial statements the 5.93% interest held by the indirect subsidiary Paulista Lajeado Energia S.A. in the total capital of Investco S/A, in the form of 28,154 common shares and 18,508 preferred shares. As the shares of that company are not quoted on the stock exchange and the main objective of it operations is to generate electric energy for commercialization by the shareholders who hold the concession, the Company opted to recognize the investment at cost.
75
d) Derivatives
The Company and its subsidiaries have a policy of using derivatives as a hedge against the risks of variations in exchange and interest rates, without any speculative purposes. The Company and its subsidiaries have an exchange hedge compatible with the net exposure to exchange risks, including all the assets and liabilities tied to exchange variation.
The hedge instruments contracted by the Company and its subsidiaries are currency or interest rate swaps with no leverage component, margin call requirements or daily or periodical adjustments. As terms of the majority of the derivatives contracted by the subsidiary CPFL Paulista are fully aligned with the debts protected, and in order to obtain more relevant and consistent accounting information through the recognition of income and expenses, certain debts were designated at fair value, for accounting purposes. Other debts with different terms from the derivatives contracted as a hedge continue to be recorded at amortized cost. Furthermore, the Company and its subsidiaries do not adopt hedge accounting for derivative operations.
At December 31, 2010, the Company and its subsidiaries had the following swap operations:
76
Market values (book values) |
||||||||||||||||||
Company / strategy / counterparts |
Asset |
(Liability) |
Market values, net |
Values at cost, net |
Gain (Loss) on marking to market |
Currency / index |
Maturity range |
Notional |
Negotiation market | |||||||||
Derivatives for protection of debts designated at fair value |
||||||||||||||||||
Exchange variation hedge |
||||||||||||||||||
CPFL Paulista |
||||||||||||||||||
ABN |
- |
(7,421) |
(7,421) |
186 |
(7,607) |
yen |
Jan, 2012 |
376,983 |
Over the counter | |||||||||
Subtotal |
- |
(7,421) |
(7,421) |
186 |
(7,607) |
|||||||||||||
Derivatives for protection of debts not designated at fair value |
||||||||||||||||||
Exchange variation hedge |
||||||||||||||||||
CPFL Paulista |
||||||||||||||||||
Itau BBA |
- |
(606) |
(606) |
(606) |
- |
dollar |
Oct 2010 |
30,121 |
Over the counter | |||||||||
CPFL Geração |
||||||||||||||||||
Itaú BBA |
- |
(2,760) |
(2,760) |
(2,618) |
(142) |
dollar |
65,237 |
|||||||||||
Oct 2010 to Mar 2011 |
Over the counter | |||||||||||||||||
Hedge interest rate variation (1) |
||||||||||||||||||
CPFL Energia |
||||||||||||||||||
Citibank |
- |
(583) |
(583) |
7 |
(590) |
CDI + spread |
Sep 2010 to Sep 2014 |
450,000 |
Over the counter | |||||||||
RGE |
||||||||||||||||||
Santander |
289 |
- |
289 |
95 |
194 |
CDI + spread |
Jan 2011 to Dec 2013 |
280,000 |
Over the counter | |||||||||
Citibank |
37 |
(2) |
35 |
8 |
27 |
CDI + spread |
Jun 2011 to Dec 2013 |
100,000 |
Over the counter | |||||||||
Hedge interest rate variation (2) |
||||||||||||||||||
CPFL Piratininga |
||||||||||||||||||
HSBC |
- |
(114) |
(114) |
6 |
(120) |
TJLP |
Jan 2013 |
25,453 |
Over the counter | |||||||||
Santander |
- |
(137) |
(137) |
(3) |
(134) |
TJLP |
Jan 2013 |
25,453 |
Over the counter | |||||||||
CPFL Geração |
||||||||||||||||||
HSBC |
- |
(241) |
(241) |
(9) |
(245) |
TJLP |
Dec 2012 |
50,377 |
Over the counter | |||||||||
Subtotal |
326 |
(4,443) |
(4,117) |
(3,120) |
(1,010) |
|||||||||||||
Total |
326 |
(11,864) |
(11,538) |
(2,934) |
(8,617) |
|||||||||||||
Circulante |
244 |
(3,981) |
||||||||||||||||
Não circulante |
82 |
(7,883) |
||||||||||||||||
Total |
326 |
(11,864) |
||||||||||||||||
* For further details of terms and information about debts and debentures, see Notes 18 and 19 |
||||||||||||||||||
(1) The interest rate hedge swaps have half-yearly validity, so the notional value reduces in accordance with amortization of the debt. |
||||||||||||||||||
(2) The interest rate hedge swaps have monthly validity, so the notional value reduces in accordance with amortization of the debt. |
The subsidiary CPFL Paulista opted to mark to market the debt with fully tied hedge instruments, resulting in a gain of R$ 4,965 at December 31, 2010 (Note 18). The gain minimized the loss on derivatives stated previously.
The Company and its subsidiaries have recorded gains and losses on their derivatives. However, as these derivatives are used as a hedge, these gains and losses minimized the impact of variations in exchange and interest rates on the protected indebtedness. For the years 2010 and 2009, the derivatives resulted in the following impacts on the consolidated result:
77
Gain (loss) | ||||||||
Company |
Hedged risk / Operation |
Account |
2010 |
2009 | ||||
CPFL Energia |
Interest rate variation |
Financial expense - Swap transactions |
(14) |
136 | ||||
CPFL Energia |
Marking to market |
Financial expense - Adjustment to fair value |
20 |
228 | ||||
CPFL Paulista |
Exchange variation |
Financial expense - Swap transactions |
(3,269) |
(230,440) | ||||
CPFL Paulista |
Marking to market |
Financial expense - Adjustment to fair value |
392 |
49,810 | ||||
CPFL Piratininga |
Interest rate variation |
Financial expense - Swap transactions |
3 |
- | ||||
CPFL Piratininga |
Marking to market |
Financial expense - Adjustment to fair value |
(254) |
- | ||||
CPFL Geração |
Exchange variation |
Financial expense - Swap transactions |
(16,094) |
(274,350) | ||||
CPFL Geração |
Interest rate variation |
Financial expense - Swap transactions |
567 |
(1,305) | ||||
CPFL Geração |
Marking to market |
Financial expense - Adjustment to fair value |
1,710 |
11,157 | ||||
RGE |
Exchange variation |
Financial expense - Other financial exp |
- |
(11,743) | ||||
RGE |
Interest rate variation |
Financial expense - Other financial exp |
553 |
514 | ||||
RGE |
Marking to market |
Financial expense - Derivative adjustment to fair value |
(71) |
198 | ||||
(16,457) |
|
(455,795) | ||||||
e) Sensitivity Analysis
In compliance with CVM Instruction n° 475/08, the Company and its subsidiaries performed sensitivity analyses of the main risks to which their financial instruments (including derivatives) are exposed, mainly comprising variations in exchange and interest rates, as shown below:
e.1) Exchange variation
If the level of exchange exposure at December 31, 2010 is maintained, the simulation of the consolidated effects by type of financial instrument for three different scenarios would be:
|
|
Consolidated | ||||||||
Instruments |
Exposure |
Risk |
Exchange depreciation of 8.9%* |
Exchange depreciation of 25%** |
Exchange depreciation of 50%** | |||||
Financial asset instruments |
21,221 |
apprec. dollar |
1,879 |
5,305 |
10,611 | |||||
Financial liability instruments |
(138,953) |
apprec. dollar |
(12,301) |
(34,741) |
(69,477) | |||||
Derivatives - Plain Vanilla Swap |
83,328 |
apprec. dollar |
7,377 |
20,834 |
41,664 | |||||
(34,404) |
(3,045) |
(8,602) |
(17,202) | |||||||
Financial liability instruments |
(424,827) |
apprec. yen |
(37,608) |
(106,207) |
(212,414) | |||||
Derivatives - Plain Vanilla Swap |
424,827 |
apprec. yen |
37,608 |
106,207 |
212,414 | |||||
- |
- |
- |
- | |||||||
(34,404) |
(3,045) |
(8,602) |
(17,202) | |||||||
* In accordance with exchange graphs contained in information provided by the BM&F |
||||||||||
**In compliance with CVM Instruction 475/08 |
e.2) Variation in interest rates
If (i) the scenario of exposure of the financial instruments indexed to variable interest rates at December 31, 2010 were to be maintained, and (ii) the respective accumulated annual indexes as of that date were to remain stable (CDI 9.71% p.a.; IGP-M 11.32% p.a.; TJLP 6.0% p.a.), the effects on the consolidated financial statements for the next company year would be a net financial expense R$ 526,941. In the event of fluctuations in the indexes in accordance with the three scenarios described, the effect on the net financial expense would as follows:
78
|
|
|
|
Consolidated | ||||||||||||||||
Instruments |
|
Exposure |
|
Risk |
|
Scenario I* |
|
Raising index by 25%** |
|
Raising index by 50%** | ||||||||||
Financial asset instruments |
|
1,718,110 |
|
CDI variation |
|
38,482 |
|
41,708 |
|
83,414 | ||||||||||
Financial liability instruments |
|
(5,242,137) |
|
CDI variation |
|
(116,323) |
|
(127,253) |
|
(254,505) | ||||||||||
Derivatives - Plain Vanilla Swap |
|
(628,272) |
|
CDI variation |
|
(14,325) |
|
(15,251) |
|
(30,502) | ||||||||||
|
|
(4,152,299) |
|
|
|
(92,166) |
|
(100,796) |
|
(201,593) | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Financial assets instruments |
|
81,749 |
|
IGP-M variation |
|
(4,831) |
|
2,313 |
|
4,627 | ||||||||||
Financial liability instruments |
|
(65,263) |
|
IGP-M variation |
|
3,857 |
|
(1,847) |
|
(3,694) | ||||||||||
|
|
16,486 |
|
|
|
(974) |
|
466 |
|
933 | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Financial liability instruments |
|
(3,238,304) |
|
TJLP variation |
|
5,099 |
|
(48,574) |
|
(97,150) | ||||||||||
Derivatives - Plain Vanilla Swap |
|
108,579 |
|
TJLP variation |
|
(173) |
|
1,629 |
|
3,257 | ||||||||||
|
|
(3,129,725) |
|
|
|
4,926 |
|
(46,945) |
|
(93,893) | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total increase |
|
(7,265,538) |
|
|
|
(88,214) |
|
(147,275) |
|
(294,553) | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
* The CDI, IGP-M and TJLP indexes considered of 11.99%, 5.41% and 5.84%, respectively, were obtained from information available in the market |
|
|
|
|
|
| ||||||||||||||
**In compliance with CVM Instruction 475/08 |
|
|
|
|
|
|
|
|
|
| ||||||||||
79
( 36 ) RISK MANAGEMENT
The business of the Company and its subsidiaries comprises principally generation, commercialization and distribution of electric energy. As public service concessionaires, the operations and/or tariffs of its principal subsidiaries are regulated by ANEEL.
Risk management structure:
The Board of Directors is responsible for allocating priorities in respect of the risks to be monitored by the Company, confirming the tolerance levels approved by the Executive Board and being aware of the corporate risk management model adopted by the Company. The Executive Board is responsible for developing and implementing action and risk monitoring plans. The Risk Management and Internal Controls Department and the Corporate Risk Management Committee were set up to assist it in this process. Since its creation, the Risk Management and Internal Controls Department has drawn up the Corporate Risk Management Policy, approved by the Executive Board and the Board of Directors, set up the Corporative Risk Management Committee, comprising directors appointed to represent each Management Unit, and the internal rules, and is implementing the Corporate Risk Management model for the Group with regard to Strategy (guidelines, risk map and treatment), Processes (planning, execution, monitoring and reports), Systems, Organization and Governance.
The risk management policies are established to identify, analyze and treats the risks faced by the Company and its subsidiaries, and includes reviewing the model adopted wherever necessary to reflect changes in market conditions and in the Group's activities, with a view to developing an environment of disciplined and constructive control.
The Group's Board of Directors is assisted in its supervisory role by the Internal Audit department. The Internal audit department conducts both the regular reviews and the ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors and the Fiscal Council.
The main market risk factors affecting the businesses are as follows:
Exchange rate risk: This risk derives from the possibility of the subsidiaries incurring losses and cash constraints on account of fluctuations in exchange rates, increasing the balances of foreign currency denominated liabilities. The exposure in relation to raising funds in foreign currency is largely covered by contracting swap operations, which allow the Company and its subsidiaries to exchange the original risks of the operation for the cost of the variation in the CDI. The operations of the Companys subsidiaries are also exposed to exchange variations on the purchase of electric energy from Itaipu. The compensation mechanism - CVA protects the companies against possible losses. However, the compensation only comes into effect through consumption and the consequent billing of energy after the next tariff adjustment in which such losses have been considered. The quantification of this risk is measured in Note 35 (e.1).
Interest Rate Risk: This risk derives from the possibility of the Company and its subsidiaries incurring losses due to fluctuations in interest rates that increase financial expenses on loans, financing and debentures. The subsidiaries have tried to increase the proportion of pre-indexed loans or loans tied to indexes with lower rates and little fluctuation in the short and long term. The quantification of this risk is measured in Note 35 (e.2).
Credit Risk: This risk arises from the possibility of the subsidiaries incurring losses resulting from difficulties in receiving amounts billed to customers. This risk is evaluated by the subsidiaries as low, as it is spread over the number of customers and in view of the collection policy and cancellation of supply to defaulting consumers.
Risk of Energy Shortages: The energy sold by the subsidiaries is basically generated by hydropower plants. A prolonged period of low rainfall, together with an unforeseen increase in demand, could result in a reduction in the volume of water in the power plants reservoirs, compromising the recovery of their volume, and resulting in losses due to the increase in the cost of purchasing energy or a reduction in revenue due to the introduction of another rationing program, as in 2001. According to the Annual Energy Operation Plan PEN of July 2010, drawn up by the Operador Nacional do Electricity System, National Electricity System Operator, the risk of any energy deficit is very low for 2011, and the likelihood of another energy rationing program is remote.
80
Risk of Acceleration of Debts: The subsidiaries have loan agreements, financing and debentures with restrictive clauses (covenants) normally applicable to these kinds of operation, related to compliance with economic and financial ratios, cash generation, etc. These covenants are monitored appropriately and do not restrict the capacity to operate normally.
Regulatory risk: The electric energy supplied tariffs charged to captive consumers by the distribution subsidiaries are fixed by ANEEL, at intervals established in the Concession Agreements entered into with the Federal Government and in conformity with the periodic tariff review methodology established for the tariff cycle. Once the methodology has been ratified, ANEEL establishes tariffs to be charged by the distributed to the end consumers. In accordance with Law 8.987/1995, the tariffs fixed should insure the economic and financial balance of the concession contract at the time of the tariff review, however, the risk of application of the tariffs falls to the electric energy distributors.
Risk Management for Financial instruments: The Company and its subsidiaries maintain operating and financial policies and strategies to protect the liquidity, safety and profitability of their assets. They accordingly 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 market conditions.
Risk management controls: In order to manage the risks inherent to the financial instruments and to monitor the procedures established by management, the Company and its subsidiaries use the MAPS software system to calculate the Mark to Market, Stress Testing and Duration of the instruments, and assess the risks to which the Company and its subsidiaries are exposed. Historically, the financial instruments contracted by the Company and its subsidiaries supported by these tools have produced adequate risk mitigation results. It must be stressed that the Company and its subsidiaries have a formal policy of contracting derivatives, always with the appropriate levels of approval, only in the event of exposure that management regards as a risk. The Company and its subsidiaries do not enter into transactions involving exotic or speculative derivatives. Furthermore, the Company and its subsidiaries meet the requirements of the Sarbanes-Oxley Law, and accordingly have internal control policies that aim for a strict control environment to minimize the exposure to risks.
( 37 ) COMMITTMENTS
The Companys commitments in relation to long-term energy purchase agreements and plant construction projects are as follows:
Commitments as of December 31, 2010 |
Duration |
2011 |
2012 |
2013 |
2014 |
Thereafter |
Total | |||||
Energy purchase contracts (except Itaipu) |
2 to 20 years |
6,096,973 |
6,348,357 |
6,185,466 |
5,885,869 |
61,564,231 |
86,080,896 | |||||
Itaipu |
20 years |
1,056,770 |
1,126,101 |
1,111,831 |
1,085,482 |
13,823,854 |
18,204,039 | |||||
Power plant construction projects (a) |
2 to 31 years |
493,531 |
232,616 |
31,559 |
30,759 |
391,509 |
1,179,974 | |||||
TOTAL |
7,647,275 |
7,707,074 |
7,328,855 |
7,002,111 |
75,779,595 |
105,464,909 | ||||||
(a) Power plant construction projects include commitments made by the Company corresponding to its proportional share on construction, concession acquisition and bank guarantees relating to the jointly-controlled under development companies. |
81
( 38 ) REGULATORY ASSETS AND LIABILITIES
The Company accounts for the following assets and liabilities for regulatory purposes, which are not recognized in the consolidated financial statements, as mentioned in Note 3.13.
Consolidated | |||||||
|
December 31, 2010 |
December 31, 2009 |
January 1, 2009 | ||||
Assets |
|||||||
Consumers, Concessionaires and Licensees |
|||||||
Extraordinary tariff adjustment |
- |
- |
328 | ||||
Free energy |
- |
- |
5,985 | ||||
Discounts TUSD (*) and Irrigation |
54,407 |
12,753 |
35,976 | ||||
Other financial components |
- |
199 |
7,058 | ||||
54,407 |
12,952 |
49,347 | |||||
Deferred Costs Variations |
|||||||
Parcel "A" |
332 |
1,290 |
236,307 | ||||
CVA (**) |
333,620 |
374,336 |
559,357 | ||||
333,952 |
375,626 |
795,664 | |||||
Prepaid Expenses |
|||||||
Overcontracting |
23,860 |
77,191 |
23,135 | ||||
Low income consumers' subsidy - Losses |
34,994 |
22,006 |
33,500 | ||||
Neutrality of the sector charges |
4,078 |
- |
- | ||||
Other financial components |
49,235 |
10,563 |
993 | ||||
126,058 |
167,388 |
177,513 | |||||
Liabilities |
|||||||
Deferred Gains Variations |
|||||||
Parcel "A" |
(11,472) |
(44,419) |
(15,360) | ||||
CVA |
(364,363) |
(377,735) |
(191,289) | ||||
(375,835) |
(422,154) |
(206,649) | |||||
Other Accounts Payable |
|||||||
Tariff review |
- |
(89,261) |
(34,692) | ||||
Discounts TUSD and Irrigation |
(1,923) |
(991) |
(797) | ||||
Tariff adjustment |
(3,556) |
- |
- | ||||
Overcontracting |
(61,391) |
(17,541) |
(51,634) | ||||
Low income consumers' subsidy - Gains |
(6,280) |
(6,011) |
(13,154) | ||||
Neutrality of the sector charges |
(63,905) |
- |
- | ||||
Other financial components |
(26,111) |
(12,137) |
(24,642) | ||||
|
(163,166) |
(125,941) |
(124,919) | ||||
Total net |
(24,584) |
7,871 |
690,956 | ||||
(*) Network Usage Charge - TUSD |
|||||||
(**) Deferred Tariff Costs and Gains Variations from Parcel "A" itens - ("CVA") |
The main characteristics of the regulatory assets and liabilities are:
a) TUSD Discounts and Irrigation
The distribution subsidiaries recognize regulatory assets and liabilities in relation to the special discounts applied on the TUSD to the free consumers, in respect of electric energy supplied from alternative sources and on the tariffs for energy supplied for irrigation and aquaculture.
b) Parcel A
82
Corresponds to the variation in the non-manageable costs representing Parcel "A" of the concession agreements between January 1 and October 25, 2001, during the rationing period.
c) CVA
Refers to the mechanism for offsetting 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 establishing the tariffs in the annual tariff adjustments. The amounts taken into consideration in the CVA are restated at the SELIC rate.
d) Overcontracting
Electric energy distribution concessionaires are obliged to guarantee 100% of their energy and power market through contracts approved, registered and ratified by ANEEL, and are also assured that costs or income derived from overcontracting will be passed on to the tariffs, restricted to 3% of the energy load requirement.
e) Subsidy - Low Income
Refers to the subsidies granted to consumers entitled to the Social Electric Energy Tariff (Low Income) if they are enrolled in the Sole Register for Federal Government Social (Cadastro Único para Programas Sociais do Governo Federal CadÚnico), irrespective of their energy consumption if they are enrolled in the Sole Register for Federal Government Social (Cadastro Único para Programas Sociais do Governo Federal CadÚnico), irrespective of their energy consumption.
f) Neutrality of the Sector Charges
Refers to the neutrality of the sector charges in the tariff, calculating the monthly differences between the amounts billed and the amounts considered in the tariff.
g) Tariff Adjustment and Tariff Review
Financial components were accepted in the Companys tariff adjustment, so as to adjust previous tariff reviews or adjustments.
h) Other Financial Components
Mainly refers to CCEAR exposure, financial guarantees, subsidies to cooperatives and licensees and TUSD G financial adjustment.
( 39 ) SUBSEQUENT EVENT
In Ratification Resolutions dated February 1, 2011, ANEEL fixed the tariff adjustments for the subsidiaries CPFL Santa Cruz, CPFL Jaguari, CPFL Mococa, CPFL Leste Paulista and CPFL Sul Paulista. The details of the adjustments are as follows.
CPFL |
CPFL |
CPFL Mococa |
CPFL Leste Paulista |
CPFL Sul Paulista | |
Average adjustment |
23.61% |
5.47% |
9.50% |
7.76% |
8.02% |
Economic adjustment |
8.01% |
5.22% |
6.84% |
6.42% |
6.57% |
Financial Components |
15.61% |
0.25% |
2.66% |
1.34% |
1.45% |
Effect perceived by consumers |
15.38% |
6.62% |
9.77% |
16.44% |
7.11% |
Ratification Resolution - ANEEL |
1.108/11 |
1.106/11 |
1.109/11 |
1.107/11 |
1.111/11 |
83
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
WILSON P. FERREIRA JUNIOR | ||
Chief Executive Officer, cumulating the functions of Chief Financial Officer and Head of Investor Relations | ||
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JOSÉ MARCOS CHAVES DE MELO Vice-president of Administration |
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MIGUEL NORMANDO ABDALLA SAAD Vice President of Generation |
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PAULO CEZAR COELHO TAVARES Vice President of Energy Management |
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HÉLIO VIANA PEREIRA Vice-president of Distribution |
ADRIANA WALTRICK Vice-president of Business Development
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BOARD OF DIRECTORS |
MURILO CESAR L.S. PASSOS | ||
Chairman
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ROBSON ROCHA | ||
Vice Chairman | ||
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ANA DOLORES MOURA CARNEIRO DE NOVAES CLAUDIO BORIN GUEDES PALAIA RICARDO CARVALHO GIAMBRONI
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FRANCISCO CAPRINO NETO MARTIN ROBERTO GLOGOWSKY
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ACCOUNTING DIVISION | ||
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ANTÔNIO CARLOS BASSALO |
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SÉRGIO LUIZ FELICE |
Accounting Director |
|
Accounting Manager |
CRC 1SP085131/O-8 |
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CRC 1SP192767/O-6 |
2
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Reports
Independent auditors´ report over financial statements
To Board of directors and Shareholders of
CPFL Energia S.A.
São Paulo - SP
We have audited the accompanying individual and consolidated financial statements of CPFL Energia S.A. (the Company), identified as Parent Company and Consolidated, respectively, which comprise the balance sheet as of December 31, 2010, the statements of income, comprehensive income, changes in shareholders equity, cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility over the Financial Statements
Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with accounting practices adopted in Brazil and the consolidated financial statements in accordance with International Financial Reporting Standards, (IFRS) issued by International Accounting Standard Board - IASB, and in accordance with accounting practices adopted in Brazil, as such with internal controls that management determined necessary to enable the preparation of financial statements that are free from material misstatement, independently if due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, conducted in accordance with Brazilian and International auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion over the individual financial statements
In our opinion, the abovementioned individual financial statements present fairly, in all material respects, the financial position of CPFL Energia S.A. as of December 31, 2010, and its financial operations and its cash flows for the year then ended, in accordance with accounting practices adopted in Brazil.
Opinion over the consolidated financial statements
In our opinion, the abovementioned consolidated financial statements present fairly, in all material respects, the consolidated financial position of CPFL Energia S.A. as of December 31, 2010, and its consolidated financial operations and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS) issued by International Accounting Standard Board - IASB and in accordance with accounting practices adopted in Brazil.
Emphasis of Matter
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
As described in explanatory notes 2.1, the individual financial statements were prepared in accordance with accounting practices adopted in Brazil. In the case of CPFL Energia S.A. those practices differ from IFRS, applicable to the stand alone financial statements, only for the evaluation of investments in subsidiary, associate and joint ventures for the equity method, while for IFRS it would be evaluated by cost or fair value.
Other matter
Statements of additional value
We also audited, the individual and consolidated statements of additional value (DVA), prepared under the Management´s responsibility, for the year ended December 31, 2010, whose presentation is required by the Brazilian statutory law for public companies, and as a supplemental information for IFRS that do not requires the DVA presentation. Those statements were subject to the same aforementioned audit procedures, and in our opinion, are presented fairly, in all material respects, in relation to the financial statements.
Campinas, March 14, 2011.
KPMG Auditores Independentes
CRC 2SP014428/O-6
Jarib Brisola Duarte Fogaça
Accountant CRC 1SP125991/O-0
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
The Audit Committee of CPFL Energia S/A, in the exercise of its legal prerogatives, having examined the Annual Management Report, the Financial Statements for Fiscal Year 2010, in the light of the clarifications given by the Directors of the Company, the representative of the External Auditors, and also based on the opinion of KPMG Auditores Independentes, dated March 14, 2011, is of the opinion that these documents are fit to be reviewed and voted on by the General Shareholders Meeting.
Daniela Corci Cardoso
|
Adalgiso Fragoso de Faria
|
Wilton de Medeiros Daher |
José Reinaldo Magalhães |
Susana Hanna S. Jabra
|
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Management Declaration on financial Statements
The Companys Management have declared that reviewed, discussed and agree with all of information included in the Financial Statements as of December 31, 2010, as well as the auditors opinion issued by KPMG Auditores Independentes.
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Management Declaration on Independent Auditors Report
The Companys Management have declared that reviewed, discussed and agree with all of information included in the Financial Statements as of December 31, 2010, as well as the auditors opinion issued by KPMG Auditores Independentes.
|
KPMG Auditores Independentes Av. Barão de Itapura, 950 - 6º 13020-431 - Campinas, SP - Brasil P.O. Box 737 13012-970 - Campinas, SP - Brasil |
Central Tel 55 (19) 2129-8700 Fax 55 (19) 2129-8728 Internet www.kpmg.com.br |
Independent auditors´ report over financial statements
To Board of directors and Shareholders of
CPFL Energia S.A.
São Paulo - SP
We have audited the accompanying individual and consolidated financial statements of CPFL Energia S.A. (the Company), identified as Parent Company and Consolidated, respectively, which comprise the balance sheet as of December 31, 2010, the statements of income, comprehensive income, changes in shareholders equity, cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility over the Financial Statements
Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with accounting practices adopted in Brazil and the consolidated financial statements in accordance with International Financial Reporting Standards, (IFRS) issued by International Accounting Standard Board - IASB, and in accordance with accounting practices adopted in Brazil, as such with internal controls that management determined necessary to enable the preparation of financial statements that are free from material misstatement, independently if due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, conducted in accordance with Brazilian and International auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
|
KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (KPMG International), uma entidade suíça. |
KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. |
Opinion over the individual financial statements
In our opinion, the abovementioned individual financial statements present fairly, in all material respects, the financial position of CPFL Energia S.A. as of December 31, 2010, and its financial operations and its cash flows for the year then ended, in accordance with accounting practices adopted in Brazil.
Opinion over the consolidated financial statements
In our opinion, the abovementioned consolidated financial statements present fairly, in all material respects, the consolidated financial position of CPFL Energia S.A. as of December 31, 2010, and its consolidated financial operations and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS) issued by International Accounting Standard Board - IASB and in accordance with accounting practices adopted in Brazil.
Emphasis of Matter
As described in explanatory notes 2.1, the individual financial statements were prepared in accordance with accounting practices adopted in Brazil. In the case of CPFL Energia S.A. those practices differ from IFRS, applicable to the stand alone financial statements, only for the evaluation of investments in subsidiary, associate and joint ventures for the equity method, while for IFRS it would be evaluated by cost or fair value.
Other matter
Statements of additional value
We also audited, the individual and consolidated statements of additional value (DVA), prepared under the Management´s responsibility, for the year ended December 31, 2010, whose presentation is required by the Brazilian statutory law for public companies, and as a supplemental information for IFRS that do not requires the DVA presentation. Those statements were subject to the same aforementioned audit procedures, and in our opinion, are presented fairly, in all material respects, in relation to the financial statements.
Campinas, March 14, 2011.
KPMG Auditores Independentes
CRC 2SP014428/O-6
Jarib Brisola Duarte Fogaça
Accountant CRC 1SP125991/O-0
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
The Audit Committee of CPFL Energia S/A, in the exercise of its legal prerogatives, having examined the Annual Management Report, the Financial Statements for Fiscal Year 2010, in the light of the clarifications given by the Directors of the Company, the representative of the External Auditors, and also based on the opinion of KPMG Auditores Independentes, dated March 14, 2011, is of the opinion that these documents are fit to be reviewed and voted on by the General Shareholders Meeting.
Daniela Corci Cardoso
|
Adalgiso Fragoso de Faria
|
Wilton de Medeiros Daher |
José Reinaldo Magalhães |
Susana Hanna S. Jabra
|
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Management Declaration on financial Statements
The Companys Management have declared that reviewed, discussed and agree with all of information included in the Financial Statements as of December 31, 2010, as well as the auditors opinion issued by KPMG Auditores Independentes.
(Free Translation of the original in Portuguese)
STANDARD FINANCIAL STATEMENTS DFP - Date: December 31, 2010 - CPFL Energia S. A
Management Declaration on Independent Auditors Report
The Companys Management have declared that reviewed, discussed and agree with all of information included in the Financial Statements as of December 31, 2010, as well as the auditors opinion issued by KPMG Auditores Independentes.
CPFL ENERGIA S.A. | ||
|
By: |
/S/ WILSON P. FERREIRA JUNIOR
|
Name: Title: |
Wilson P. Ferreira Junior Chief Financial Officer and Head of Investor Relations |
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.