Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____(Free Translation of the original in Portuguese) | ||
FEDERAL GOVERNMENT | ||
BRAZILIAN SECURITIES COMMISSION (CVM) | ||
QUARTERLY INFORMATION ITR | Brazilian Corporation Law | |
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES | Date: September 30, 2005 |
REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS AN EVALUATION OF THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED. |
01.01 - IDENTIFICATION
1 - CVM CODE 01866-0 |
2 - COMPANY NAME CPFL ENERGIA S.A |
3 - CNPJ (Federal Tax ID) 02.429.144/0001-93 |
4 - NIRE (State Registration Number) 353.001.861.33 |
01.02 - HEAD OFFICE
1 - ADDRESS Rua Gomes de Carvalho, 1510 14º andar Conjunto 2 |
2 - DISTRICT Vila Olímpia |
||||
3 - ZIP CODE 04547-005 |
4 - CITY São Paulo |
5 - STATE SP |
|||
6 - AREA CODE 019 |
7 - TELEPHONE 3756-8018 |
8 - TELEPHONE - |
9 - TELEPHONE - |
10 - TELEX |
|
11 - AREA CODE 019 |
12 - FAX 3756-8392 |
13 - FAX - |
14 - FAX - |
||
15 - E-MAIL ri@cpfl.com.br |
01.03 - INVESTOR RELATIONS OFFICER (Company Mailing Address)
1- NAME José Antonio de Almeida Filippo |
||||
2 ADDRESS Rodovia Campinas Mogi-Mirim, 1755, Km 2,5 |
3 - DISTRICT Jardim Santana |
|||
4 - ZIP CODE 13088-900 |
5 - CITY Campinas |
6 - STATE SP |
||
7 - AREA CODE 019 |
8 - TELEPHONE 3756-8704 |
9 - TELEPHONE - |
10 - TELEPHONE - |
11 - TELEX |
12 - AREA CODE 019 |
13 - FAX 3756-8777 |
14 - FAX - |
15 - FAX - |
|
16 - E-MAIL jfilippo@cpfl.com.br |
01.04 ITR REFERENCE AND AUDITOR INFORMATION
CURRENT YEAR | CURRENT QUARTER | PREVIOUS QUARTER | |||||
1 - BEGINNING | 2. END | 3 - QUARTER | 4 - BEGINNING | 5 - END | 6 - QUARTER | 7 - BEGINNING | 8 - END |
01.01.2005 | 12.31.2005 | 3 | 07.01.2005 | 09.30.2005 | 2 | 04.01.2005 | 06.30.2005 |
09 - INDEPENDENT ACCOUNTANT Deloitte Touche Tohmatsu Auditores Independentes |
10 - CVM CODE 00385-9 |
||||||
11. PARTNER IN CHARGE José Carlos Amadi |
12 - CPF (INDIVIDUAL TAX ID) 060.494.668-66 |
1
01.05 - CAPITAL STOCK
Number of Shares (in units) |
1 Current Quarter 09.30.2005 |
2 Previous Quarter 06.30.2005 |
3 Same Quarter of Last Year 09.30.2004 |
Paid-in Capital | |||
1 - Common | 460,894,313 | 456,734,666 | 411,869,796 |
2 - Preferred | 0 | 0 | 0 |
3 - Total | 460,894,313 | 456,734,666 | 411,869,796 |
Treasury Stock | |||
4 - Common | 1 | 0 | 0 |
5 - Preferred | 0 | 0 | 0 |
6 - Total | 1 | 0 | 0 |
01.06 - COMPANY PROFILE
1 - TYPE OF COMPANY Commercial, Industrial and Other |
2 - STATUS Operational |
3 - NATURE OF OWNERSHIP Private National |
4 - ACTIVITY CODE 112 Electric energy |
5 - MAIN ACTIVITY Holding |
6 - CONSOLIDATION TYPE Full |
7 TYPE OF REPORT OF INDEPENDENT AUDITORS Unqualified |
01.07 - COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS
1 - ITEM | 2 - CNPJ (Federal Tax ID) | 3 - COMPANY NAME |
01.08 - CASH DIVIDENDS
1 ITEM | 2 EVENT | 3 APPROVAL | 4 TYPE Dividends |
5 - DATE OF PAYMENT |
6 - TYPE OF SHARE | 7 - AMOUNT PER SHARE |
01 | RCA | 06.29.2005 | Interest on equity | 09.09.2005 | ON | 0.1684122660 |
02 | RCA | 08.09.2005 | Dividends | 09.09.2005 | ON | 0.7086771370 |
2
01.09 - SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR
1 - ITEM | 2 - DATE OF CHANGE | 3 - CAPITAL STOCK (IN THOUSANDS OF REAIS) |
4 - AMOUNT OF CHANGE (IN THOUSANDS OF REAIS) |
5 - NATURE OF CHANGE | 7 - NUMBER OF SHARES ISSUED (IN UNITS) |
8 -SHARE PRICE WHEN ISSUED (IN REAIS) |
01 | 05.06.2005 | 4,107,344 | 25,308 | Assets or Credits Subscription |
1,440,409 | 17.5700000000 |
02 | 06.20.2005 | 4,192,921 | 85,577 | Merger of Shares | 3,665,488 | 23.3467911640 |
03 | 07.25.2005 | 4,266,589 | 73,668 | Assets or Credits Subscription |
4,159,647 | 17.7100000000 |
01.10 - INVESTOR RELATIONS OFFICER
1- DATE 11/08/2005 |
2 SIGNATURE |
3
02.01 - BALANCE SHEET - ASSETS (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 09/30/2005 | 4 - 06/30/2005 |
1 | Total assets | 4,548,535 | 4,722,176 |
1.01 | Current assets | 392,169 | 754,493 |
1.01.01 | Cash and banks | 94,214 | 228,597 |
1.01.02 | Credits | 296,830 | 525,896 |
1.01.02.01 | Dividends and interest on equity | 231,677 | 444,994 |
1.01.02.02 | Other receivables | 0 | 2 |
1.01.02.03 | Financial Investments | 21,814 | 19,451 |
1.01.02.04 | Recoverable taxes | 43,339 | 61,449 |
1.01.03 | Inventories | 0 | 0 |
1.01.04 | Other | 1,125 | 0 |
1.01.04.01 | Derivative contracts | 1,125 | 0 |
1.02 | Noncurrent assets | 108,341 | 152,538 |
1.02.01 | Other receivables | 107,772 | 109,209 |
1.02.01.01 | Financial Investments | 107,772 | 109,209 |
1.02.02 | Related parties | 0 | 43,329 |
1.02.02.01 | Associated companies | 0 | 0 |
1.02.02.02 | Subsidiaries | 0 | 43,329 |
1.02.02.03 | Other related parties | 0 | 0 |
1.02.03 | Other | 569 | 0 |
1.02.03.01 | Derivative contracts | 569 | 0 |
1.03 | Permanent assets | 4,048,025 | 3,815,145 |
1.03.01 | Investments | 4,047,736 | 3,814,991 |
1.03.01.01 | Associated companies | 0 | 0 |
1.03.01.02 | Investments in subsidiaries | 4,047,736 | 3,814,991 |
1.03.01.02.01 | Permanent equity interests | 3,014,361 | 2,767,664 |
1.03.01.02.02 | Goodwill and negative goodwill | 1,033,375 | 1,047,327 |
1.03.01.03 | Other investments | 0 | 0 |
1.03.02 | Property, plant and equipment | 87 | 0 |
1.03.03 | Deferred charges | 202 | 154 |
4
02.02 - BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 09/30/2005 | 4 - 06/30/2005 |
2 | Total liabilities and shareholders' equity | 4,548,535 | 4,722,176 |
2.01 | Current liabilities | 2,836 | 435,550 |
2.01.01 | Loans and financing | 0 | 17,297 |
2.01.01.01 | Interest on debts | 0 | 3,195 |
2.01.01.02 | Loans and financing | 0 | 14,102 |
2.01.02 | Debentures | 0 | 0 |
2.01.03 | Suppliers | 1,161 | 2,296 |
2.01.04 | Taxes and social contributions payable | 325 | 19,485 |
2.01.05 | Dividends and interest on equity | 1,278 | 389,059 |
2.01.06 | Reserves | 0 | 0 |
2.01.07 | Related parties | 0 | 0 |
2.01.08 | Other | 72 | 7,413 |
2.01.08.01 | Accrued liabilities | 10 | 10 |
2.01.08.02 | Derivative contracts | 0 | 7,398 |
2.01.08.03 | Other | 62 | 5 |
2.02 | Long-term liabilities | 25,200 | 79,759 |
2.02.01 | Loans and financing | 0 | 56,409 |
2.02.02 | Debentures | 0 | 0 |
2.02.03 | Reserves | 0 | 0 |
2.02.04 | Related parties | 0 | 0 |
2.02.05 | Other | 25,200 | 23,350 |
2.02.05.01 | Derivative contracts | 25,200 | 23,350 |
2.03 | Deferred income | 0 | 0 |
2.05 | Shareholders equity | 4,520,499 | 4,206,867 |
2.05.01 | Capital | 4,266,589 | 4,192,921 |
2.05.02 | Capital reserves | 0 | 0 |
2.05.03 | Revaluation reserves | 0 | 0 |
2.05.03.01 | Own assets | 0 | 0 |
2.05.03.02 | Subsidiary/associated companies | 0 | 0 |
2.05.04 | Profit reserves | 13,946 | 13,946 |
2.05.04.01 | Legal | 13,946 | 13,946 |
2.05.04.02 | Statutory | 0 | 0 |
2.05.04.03 | For contingencies | 0 | 0 |
2.05.04.04 | Unrealized profits | 0 | 0 |
2.05.04.05 | Profit retention | 0 | 0 |
2.05.04.06 | Special reserve for undistributed dividends | 0 | 0 |
2.05.04.07 | Other profit reserves | 0 | 0 |
2.05.05 | Retained earnings | 239,964 | 0 |
5
03.01 - INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 |
4 - 01/01/2005 to 09/30/2005 |
5 - 07/01/2004 to 09/30/2004 |
5 - 01/01/2004 to 09/30/2004 |
3.01 | Operating revenues | 0 | 0 | 0 | 0 |
3.02 | Deductions from operating revenues | 0 | 0 | 0 | 0 |
3.03 | Net operating revenues | 0 | 0 | 0 | 0 |
3.04 | Cost of sales and/or services | 0 | 0 | 0 | 0 |
3.05 | Gross operating income | 0 | 0 | 0 | 0 |
3.06 | Operating expenses/income | 242,197 | 648,158 | (5,991) | 171,149 |
3.06.01 | Selling | 0 | 0 | 0 | 0 |
3.06.02 | General and administrative | (1,791) | (5,612) | (6,567) | (17,661) |
3.06.03 | Financial | (2,708) | (19,888) | (18,428) | (35,778) |
3.06.03.01 | Financial income | 16,664 | 119,863 | 22,326 | 88,867 |
3.06.03.01.01 | Interest on equity | 0 | 80,273 | 0 | 52,110 |
3.06.03.01.02 | Other financial income | 16,664 | 39,590 | 22,326 | 36,757 |
3.06.03.02 | Financial expenses | (19,372) | (139,751) | (40,754) | (124,645) |
3.06.03.02.01 | Interest on equity | 0 | (76,920) | 0 | 0 |
3.06.03.02.02 | Goodwill amortization | (13,954) | (40,829) | (18) | (54) |
3.06.03.02.03 | Other financial expenses | (5,418) | (22,002) | (40,736) | (124,591) |
3.06.04 | Other operating income | 0 | 0 | 0 | 0 |
3.06.05 | Other operating expenses | 0 | 0 | 0 | 0 |
6
03.01 - INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 |
4 - 01/01/2005 to 09/30/2005 |
5 - 07/01/2004 to 09/30/2004 |
5 - 01/01/2004 to 09/30/2004 |
3.06.06 | Equity in subsidiaries | 246,696 | 673,658 | 19,004 | 224,588 |
3.06.06.01 | Companhia Paulista de Força e Luz | 180,613 | 475,795 | (19,503) | 98,097 |
3.06.06.02 | CPFL Geração de Energia S.A. | 31,821 | 85,454 | 13,746 | 50,468 |
3.06.06.03 | CPFL Comercialização Brasil S.A. | 34,200 | 112,325 | 24,761 | 76,023 |
3.06.06.04 | Companhia Piratininga de Força e Luz | 62 | 84 | 0 | 0 |
3.07 | Income (loss) from operations | 242,197 | 648,158 | (5,991) | 171,149 |
3.08 | Nonoperating income/expense | (21) | (648) | 0 | (204) |
3.08.01 | Income | (21) | 10 | 0 | 33 |
3.08.02 | Expenses | 0 | (658) | 0 | (237) |
3.09 | Income before taxes on income and minority interest | 242,176 | 647,510 | (5,991) | 170,945 |
3.10 | Income tax and social contribution | (2,212) | (3,596) | 0 | 0 |
3.10.01 | Social contribution | (563) | (931) | 0 | 0 |
3.10.02 | Income Tax | (1,649) | (2,665) | 0 | 0 |
3.11 | Deferred income tax | 0 | 0 | 0 | 0 |
3.12 | Statutory profit sharing/contributions | 0 | 0 | 0 | 0 |
3.12.01 | Profit sharing | 0 | 0 | 0 | 0 |
3.12.02 | Contributions | 0 | 0 | 0 | 0 |
3.13 | Reversal of interest on equity | 0 | (3,353) | 0 | (52,110) |
3.15 | Net income (loss) for the period | 239,964 | 640,561 | (5,991) | 118,835 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 460,894,312 | 460,894,312 | 411,869,796 | 411,869,796 | |
INCOME PER SHARE | 0.52065 | 1.38982 | 0.28853 | ||
LOSS PER SHARE | (0.01455) |
7
04.01 NOTES TO THE INTERIM FINANCIAL STATEMENTS
( 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 commercialization activities.
The Company has direct and indirect interests in the following operational subsidiaries, allocated by line of business:
Subsidiary | Consolidation Method |
Equity Interest - % | ||||
Direct | Indirect (*) | |||||
Energy Distribution | ||||||
Companhia Paulista de Força e Luz ("CPFL Paulista") | Full | 94.94 | - | |||
Companhia Piratininga de Força e Luz ("CPFL Piratininga") | Full | 0.13 | 97.41 | |||
Rio Grande Energia S.A. ("RGE") | Proportionate | - | 67.07 | |||
Energy Generation | ||||||
CPFL Geração de Energia S.A. ("CPFL Geração") | Full | 100.00 | - | |||
CPFL Centrais Elétricas S.A. ("CPFL Centrais Elétricas") | Full | - | 100.00 | |||
SEMESA S.A. ("SEMESA") | Full | - | 100.00 | |||
CPFL Sul Centrais Elétricas Ltda ("CPFL Sul Centrais Elétricas") | Full | - | 100.00 | |||
CERAN - Companhia Energética Rio das Antas ("CERAN") | Proportionate | - | 65.00 | |||
Foz do Chapecó Energia S.A. ("Foz do Chapecó") | Proportionate | - | 66.67 | |||
Campos Novos Energia S.A. ("ENERCAN") | Proportionate | - | 48.72 | |||
BAESA - Energética Barra Grande S.A. ("BAESA") | Proportionate | - | 25.01 | |||
Energy Commercialization | ||||||
CPFL Comercialização Brasil S.A. ("CPFL Brasil") | Full | 100.00 | - | |||
Clion Assessoria e Comercialização de Energia Elétrica Ltda. ("Clion") | Full | - | 100.00 | |||
Sul Geradora Participações S.A. ("SGP") | Proportionate | - | 67.23 |
(*) Refer to the interests held by direct subsidiaries.
( 2 ) PRESENTATION OF THE INTERIM FINANCIAL STATEMENTS | ||
The parent company's and consolidated interim financial statements have been prepared in accordance with principles, practices and criteria consistent with those adopted for preparing the prior years financial statements, and should be analyzed together with those statements. These interim financial statements are presented in thousands of Brazilian reais and were prepared in accordance with generally accepted accounting principles in Brazil, in accordance with the Accounting Manual of the Public Electric Energy Service, as defined by National Electric Energy Agency (ANEEL) and the standards published by the Brazilian Securities Commission (CVM).
8
The Cash Flow Statements were prepared in accordance with the criteria established by FAS 95 Statement of Cash Flows, with respect to the presentation format, within the context of registering the Company's financial statements with the Securities and Exchange Commission SEC in the United States of America, which occurred during 2004. Therefore, in order to ensure the comparability of information, reclassifications were made in the Cash Flow Statement for the nine months ended in September 30, 2004.
The Company and its subsidiaries recorded, in the three-month and nine-month periods ended September 30, 2005, the credits on operating costs and expenses offset in the PIS and COFINS calculations, net of the respective cost and expense accounts, according to the provisions of IBRACON Technical Interpretation No. 1/2004. The income statements for the three-month and nine-month periods ended September 30, 2004 were reclassified, with respect to these criteria, in order to ensure the comparability of the information.
Consolidation Principles
The consolidated interim financial statements cover the balances and transactions of the Company and its subsidiaries CPFL Paulista, CPFL Geração and CPFL Brasil. As of September 30, 2005, June 30, 2005, and September 30, 2004, the asset, liability and income balances were fully consolidated. Prior to consolidation into the Company's financial statements, the financial statements of CPFL Paulista, CPFL Geração and CPFL Brasil were consolidated with those of their subsidiaries, fully (majority-owned subsidiaries) or proportionally (joint subsidiaries), according to the rules defined in CVM Instruction No. 247/96. Observing the conditions described above, the portion related to the non-controlling shareholders is stated separately in liabilities and in the income statements for the period.
( 3 ) REGULATORY ASSETS AND LIABILITIES | ||
Consolidated | ||||||||
Current | Noncurrent | |||||||
September | June | September | June | |||||
30, 2005 | 30, 2005 | 30, 2005 | 30, 2005 | |||||
Assets | ||||||||
Consumers, Concessionaires and Licensees (note 5) | ||||||||
RTE - Extraordinary Tariff Adjustment (a) | 262,792 | 267,492 | 227,687 | 260,960 | ||||
Tariff Review and Tariff Increase (b) | 40,952 | 25,495 | 22,398 | 22,398 | ||||
PIS and COFINS - Generators pass-through (b) | 16,715 | 12,641 | - | - | ||||
Free Energy (a) | 102,728 | 103,792 | 151,510 | 163,266 | ||||
Deferred Costs Variations (note 10) | ||||||||
Parcel "A" (a) | - | - | 466,462 | 445,328 | ||||
CVA and Interministerial Ordinance 116 (c) | 357,913 | 341,852 | 73,129 | 117,222 | ||||
Interministerial Ordinance 361 (c) | 143,612 | 90,146 | - | 4,558 | ||||
Prepaid Expenses | ||||||||
PIS and COFINS - Change in legislation (d) | 34,715 | 39,427 | 16,146 | 18,264 |
9
Surplus Energy from 2005 Auctions (f) | 3,094 | - | 5,089 | - | ||||
Other Credits (note 12) | ||||||||
PERCEE | 2,067 | 2,350 | - | - | ||||
Low Income Consumers' Subsidy - Losses (e) | 46,282 | 48,634 | - | - | ||||
Liabilities | ||||||||
Suppliers (note 19) | ||||||||
Free Energy (a) | (92,717) | (93,743) | (167,979) | (219,340) | ||||
PIS and COFINS - Generators pass-through (b) | (16,562) | (12,793) | - | - | ||||
Deferred Gains Variations (note 10) | ||||||||
Parcel "A" (a) | - | - | (10,275) | (9,810) | ||||
CVA and Interministerial Ordinance 116 (c) | (76,323) | (99,499) | (1,389) | (4,550) | ||||
Interministerial Ordinance 361 (c) | (173,835) | (95,298) | - | - | ||||
Other Accounts Payable (note 23) | ||||||||
2003 Tariff Review (b) | (120,588) | (88,493) | (8,326) | (24,118) | ||||
Low Income Consumers' Subsidy - Gains (e) | (5,829) | (6,049) | - | - | ||||
Total | 525,016 | 535,954 | 774,452 | 774,178 |
a) Rationing:
At the end of 2001, as a result of the Emergency Program for the Reduction of Electric Energy Consumption which remained in effect between June 2001 and February of 2002, an agreement was signed between the generators, power distributors and the Federal Government, called the "Overall Agreement for the Electric Energy Sector", which introduced, as a mechanism to reimburse the losses incurred by the electrical sector with this program, an Extraordinary Tariff Increase of 2.9% on electric power supply tariffs to residential consumers (except those considered to be a "low income consumer"), rural and public lighting and 7.9% for all other consumers.
This increase is being used to compensate the regulatory assets recorded by the subsidiaries related to the Extraordinary Tariff Adjustment - (RTE) and the Electricity from Independent Suppliers (Free Energy). The periods stipulated for realizing the RTE and the Free Energy at the subsidiaries CPFL Paulista and CPFL Piratininga are 72 and 61 months respectively, as from January 1, 2002, according to the republication on June 1, 2004 of ANEEL Normative Resolution No. 1, dated January 12, 2004. After recovering these assets, the Parcel "A" will be realized through a mechanism similar to the RTEs.
As of September 30, 2005 and June 30, 2005, the subsidiaries CPFL Paulista and CPFL Piratininga posted provisions for losses on the realization of the Extraordinary Tariff Adjustment in the consolidated amount of R$ 32,250, recorded as a reduction of the noncurrent balances, and posted based on the projected results of the subsidiaries considering the growth of their markets, expectations of inflation, interest rates and regulatory aspects.
The movements of these regulatory assets and liabilities for the nine-month period ended September 30, 2005, net of the provision for losses, are as follows:
10
Consolidated | ||||||||
Free Energy | ||||||||
Description | RTE | Asset | Liability | Parcel "A" | ||||
Balances as of December 31, 2004 | 599,711 | 291,128 | 321,712 | 399,753 | ||||
Monetary Restatement | 81,562 | 37,859 | 36,929 | 56,434 | ||||
Realization/Payment | (190,794) | (74,749) | (97,945) | - | ||||
Balances as of September 30, 2005 | 490,479 | 254,238 | 260,696 | 456,187 | ||||
b) Periodic Tariff Review and Annual Tariff Increase:
CPFL Paulista
Periodic Tariff Review of 2003
Through Approved Resolution 75, dated April 6, 2005, ANEEL approved the final result of the first periodic tariff review for April 2003 of the subsidiary CPFL Paulista, and established that the electric energy supply tariffs were to be realigned by 20.29% . In addition it established the Xe factor (which reflects the productivity gains) at 1.1352%, to be applied as a reduction factor to the manageable costs Parcel B, for the subsequent Annual Tariff Increases until the next periodic review in April of 2008.
With the validation of the regulatory remuneration base and the reintegration quota under the terms of Resolution 493, dated September 3, 2002, the subsidiary CPFL Paulista recognized a liability (note 23) as a balancing item to Revenue from Electricity Sales, in the amount of R$ 48,888 (see note 25). These amounts are being deducted from the Annual Tariff Increase that came into force on April 8, 2005, as Approved by ANEEL. The amount deducted and amortized in the accounts up to September 30, 2005 was R$ 19,882 (R$ 11,251 in this quarter).
In addition, the subsidiary CPFL Paulista recognized an asset in the amount of R$ 22,398 (note 5), recorded under noncurrent, as a balancing item to Electricity Sales to Final Consumers (note 25). This asset is due to the difference found in the tariff approved, as a function of the review of the regulatory depreciation rate of 4.64% per annum, used by ANEEL to calculate the reintegration quota and the percentage of 4.85% per annum, calculated by the subsidiary CPFL Paulista, based on information provided by the granting authority.
The management of the subsidiary CPFL Paulista substantiated the regulatory depreciation rate of 4.85% per annum, and began immediate discussions with ANEEL to clarify the issue. Due to the nature and clarity with which the data to be used by ANEEL in the review of this percentage can be substantiated, the subsidiarys management considers that it will be successful in these discussions. Bearing in mind this situation, which will require additional discussions with the Regulatory Agency, the subsidiary CPFL Paulista considers that the tariff review of April 2003 will continue to be provisional with respect to the depreciation percentage.
Tariff increase of 2005
ANEEL, through Approved Resolution 81, dated April 6, 2005, established the annual tariff increase for the subsidiary CPFL Paulista at an average percentage of 17.74%, in force for the tariffs as from April 8, 2005, composed as follows: (i) 10.58% due to the annual tariff increase; (ii) 7.16% due to the financial tariff components over and above the annual increase, especially the CVA, for the current year and 50%
11
of the CVA for the period from April 2002 to March of 2003, as established in Interministerial Ordinance 116, dated April 4, 2003.
In accordance with the Amendment to the Concession Contract signed on March 14, 2005, PIS and COFINS expenses effectively incurred by the Concessionaire were included in the Revenue from Electricity Sales accounts as from July 1, 2005, and they are accordingly not included in the tariff disclosed above.
Also, as a function of the basis stated in the approved Resolution, the subsidiary CPFL Paulista recognized under current assets the amount of R$ 16,875 (note 5), referring to reimbursement of the following costs: (i) Appraisal Report of Assets in the amount of R$ 1,350, (ii) PIS and COFINS in the amount of R$ 13,002, levied on the financial effects related to the April 2004 tariff increase, basically on amortization of the CVA billed in 2004, and (iii) the discounts applied to the Network Usage Charge TUSD, billed in 2004 in the amount of R$ 2,523. These amounts were recorded in the first quarter of 2005 as a balancing item to the corresponding income accounts and are being passed through in the Annual Tariff Increased effective as from April 8, 2005, as Approved by ANEEL. The amount passed through and amortized in the accounts up to September 30, 2005 was R$ 6,863 (R$ 3,884 in this quarter).
The effects of increasing the PIS and COFINS rates were also taken into account in this Tariff Increase to be passed through to the generators, in the amount of R$ 15,351. The subsidiary CPFL Paulista recorded a liability (note 19) as a balancing item to the expense (note 26), of what is being passed through monthly to the generators, amounting to R$ 1,279 as from May 2005. The subsidiary CPFL Paulista also recorded an asset (note 5) as a balancing item to revenue (note 25), in the same amount as the liability, which is being amortized according to the billing to consumers. Up to September 30, 2005 the subsidiary CPFL Paulista amortized R$ 6,243 (R$ 3,533 in this quarter).
The amounts passed through to the tariffs corresponding to the PIS and COFINS mentioned in the above paragraphs are not final, since the criteria for including these taxes in the tariffs were the object of a specific discussion in a Public Hearing held on July 20, 2005 (ANEEL Convention No. 014/2005) and should be the subject of final regulation after completion of the work of the public hearing mentioned. Any differences that may exist in the amounts passed through should be compensated in the future.
In addition, ANEEL, through Official Letter No. 176/2005-SRE/ANEEL dated July 12, 2005, informed an inconsistency in the value of the expense for the purchase of electric energy from Itaipu Binacional considered in the calculation of the Annual Tariff Increase dated April 8, 2005. This inconsistency allowed the subsidiary CPFL Paulista to recognize the right to complementary revenue in the amount of R$ 41,206 net of PIS and COFINS (R$ 45,406 with PIS and COFINS), which will be restated according to the IGP-M and considered in the tariff increase of 2006. Of the total amount mentioned, the subsidiary CPFL Paulista recognized, up to September 30, 2005, a pro rata daily revenue of R$ 21,738, R$ 11,288 in this quarter (note 25) as a balancing item to the Tariff Increase Asset (note 5).
RGE
Tariff increase of 2005
ANEEL, through Approved Resolution 92, dated April 18, 2005, established the annual tariff increase for the jointly-owned subsidiary RGE, increasing the electric energy tariffs by an average percentage of 21.93%, composed as follows: (i) 14.57% due to the annual tariff increase; (ii) 7.35% due to the financial tariff components over and above the annual increase, especially the CVA, for the current year and 50% of the CVA amounts for the prior period, as established in Interministerial Ordinance 116, dated April 4, 2003.
12
CPFL Piratininga
2003 Tariff Review
Through Approved Resolution nº 228, of October 18, 2005, ANEEL finally approved the result of the first periodical tariff review of the subsidiary CPFL Piratininga, of October 2003, with the approval of the Regulatory Remuneration Base and the reintegration quota, pursuant to Resolution 493, of September 3, 2002, and of the operating costs, based on the methodology of the referenced company, and the adjustment in the electricity supply tariffs was set at 9.67% .
Resolution ANEEL nº 336, dated August 16, 2001, concerning consent to the application for partial spinoff of Bandeirante Energia S.A. and partial transfer of the concession to the indirect subsidiary CPFL Piratininga, established that, at the time of the first tariff review of these companies, the lower of the two price adjustment indexes applied by the two concessionaires would apply. As Bandeirante obtained an index of 9.67 % and the indirect subsidiary CPFL Piratininga one of 11.52%, the index of 9.67% was adopted.
The permanent value for the component Xe of Factor X, which reflects the productivity gains, was also established at 0.8294%, to be applied to reduce manageable costs Parcel B, for subsequent annual tariff adjustments.
In view of the difference in income between the provisional tariff review of 10.51%, applied since October 23, 2004 on the electricity tariffs, and the final tariff review of 9.67%, it was determined that R$ 103,057 would be refunded to consumers, at base date October 22, 2005, to be compensated as from October 23, 2005 in the annual tariff adjustment approved by ANEEL. The indirect subsidiary CPFL Piratininga recognized a liability of R$ 99,908 (note 23) pro rata to September 30, 2005, of which R$ 28,649 (note 25) is balancing item against Income from Electric Energy Supply, in addition to the amount of R$ 71,259, which is being recognized since September 2004.
Tariff increase of 2005
Through Approved Resolution nº 229, dated October 18, 2005, ANEEL established the annual tariff adjustment of the indirect subsidiary CPFL Piratininga, increasing the electricity tariffs by an average of 1.54%, broken down as follows: 0.74% related to the annual tariff adjustment and 0.80% related to the tariff components not included in the annual adjustment. The external components include the last part of 50% of the CVA balance, determined in the period October 2002 to September 2003, and the tariff return arising from final approval of the 2003 Tariff Review.
In accordance with the Amendment to the Concession Contract signed on September 1, 2005, PIS and COFINS expenses effectively incurred by the indirect subsidiary CPFL Piratininga will be included in the Revenue from Electricity Sales accounts as from October 23, 2005, and are accordingly not included in the tariff disclosed above.
Also, as a function of the basis stated in the approved Resolution, the indirect subsidiary CPFL Piratininga recognized under current assets the amount of R$ 8,632 (note 5), referring to reimbursement of the following costs: (i) Appraisal Report of Assets in the amount of R$ 1,952, (ii) PIS and COFINS in the amount of R$ 3,234, levied on the financial effects related to the October 2004 tariff increase, basically on amortization of the CVA billed in 2004, (iii) the discounts applied to the Network Usage Charge TUSD, billed in 2004 in the amount of R$ 1,486, and (iv) adjustment in the amount of R$ 1,960, pro rata to September 30, 2005, relating to the 2002 RGR difference wrongly deducted by ANEEL in the October 2004 tariff adjustment.
13
The indirect subsidiary CPFL Piratininga also has a TUSD regulatory assets relating to the 2004 tariff adjustment, amounting to R$ 570 as of September 30, 2005 (R$ 1,149 as of June 30, 2005).
The effects of increasing the PIS and COFINS rates were taken into account in this Tariff Increase to be passed through to the generators, in the amount of R$ 7,607. The indirect subsidiary CPFL Piratininga recorded a liability (note 19) as a balancing item to the expense (note 26), which will be passed through monthly in installments of R$ 634, as from November 2005. The indirect subsidiary CPFL Piratininga also recorded an asset (note 5) as a balancing item in income (note 25), in the same amount as the liability, which will be amortized in line with billing to the consumers, as from October 23, 2005.
The amounts passed through to the tariffs corresponding to the PIS and COFINS mentioned in the above paragraphs are not final, since the criteria for including these taxes in the tariffs were the object of a specific discussion in a Public Hearing held on July 20, 2005 (ANEEL Convention No. 014/2005) and should be the subject of final regulation after completion of the work of the public hearing mentioned. Any differences that may exist in the amounts passed through should be compensated in the future.
c) Deferred Costs and Gains Variations (CVA) and Interministerial Ordinances 116 and 361:
Refer to the compensation mechanism for the variations occurred in unmanageable costs incurred by the electric power distribution utilities. This variation is calculated from the difference between the expenses effectively incurred and the expenses estimated at the time of composing the tariffs for the annual tariff increases. Unmanageable costs are considered to be the expenses described in note 10.
By means of Interministerial Ordinance No. 116, dated April 4, 2003, the recovery of the balance of the CVA corresponding to the twelve-month period prior to the 2003 tariff increase was postponed for twelve months, and should be compensated in the supply tariffs for the twenty-four months subsequent to the Annual Tariff Increase for 2004.
Through Normative Resolution nº 153 dated March 14, 2005, ANEEL established criteria and procedures to calculate and pass through to the tariff, the costs related to the CVA of energy purchased, which was the object of the Interministerial Ordinance No. 361, dated November 26, 2004. As of September 30, 2005, the amounts related to Interministerial Ordinance No. 361 correspond to a net liability of R$ 30,223, in the consolidated. The net liabilities of the distributors in the amount of R$ 8,958 are pending approval by the regulatory organ, and are liable to change on their final approval.
d) Regulatory Asset resulting from the increase in PIS and COFINS:
Refers to the difference between the cost of the PIS and COFINS amounts determined in accordance with the current legislation and those incorporated into the tariff. Although the 2005 tariff adjustments already include the majority of these costs, this matter should be subject to final regulation after the conclusion of the public hearing called by ANEEL on July 20, 2005.
In the case of the indirect subsidiary CPFL Centrais Elétricas, ANEEL, through Approved Resolution nº 78 of April 6, 2005, provisionally approved the differences not covered by the tariffs for the period February 2004 to March 2005, and the amount of R$ 1,264 in this respect is being reimbursed by the subsidiary CPFL Paulista in 12 monthly installments of R$ 105 as from May 2005.
In view of their provisional nature, these amounts are subject to change at the time of their final approval by the regulatory agency.
14
e) Low Income Consumers Subsidy:
Due to the new guidelines and criteria for classifying consumer units in the low income residential subclass, a mismatch was found between the subsidies foreseen and those incorporated into the tariffs. Since these differences affect the energy distribution concessionaires or the final consumers, ANEEL has established a calculation methodology to be applied to enable the matching of accounts by means of previously established settlement criteria.
These differences were surveyed by the distributors on a monthly basis and are still subject to inspection by the regulatory agency.
The movements of the balances for the nine-month period ended September 30, 2005 were as follows:
Consolidated | ||||
Asset | Liability | |||
Balances as of December 31, 2004 | 43,995 | (5,175) | ||
Loss (Gain) of Revenue | 15,280 | (2,036) | ||
Amortization 2005 Tariff Increase | - | 2,063 | ||
Receivables Approved by ANEEL | (12,993) | - | ||
Monetary Restatement | - | (681) | ||
Balances as of September 30, 2005 | 46,282 | (5,829) | ||
f) Surplus Energy from 2005 Auctions:
Decree nº 5,163, on July 30, 2004, obliges electric energy distribution concessionaires to guarantee 100% of their energy and power market through approved contracts, registered and Approved by ANEEL. Articles 28 and 29 of this Decree also guarantee that tariffs for electricity surpluses or shortfalls will be passed on to the distribution concessionaires, limited to 3% of the load requirement.
Net energy surpluses of the subsidiaries CPFL Paulista and CPFL Piratininga for the nine-month period ended September 30, 2005, were made available to CCEE for short-term sale, and are consequently liquidated at the spot market price, which is lower than the average Auction price.
This price difference in the cost of energy acquired through the Auction in 2005 and sold on the spot market resulted in a financial loss of R$ 8,183 for the subsidiaries CPFL Paulista and CPFL Piratininga, recorded as Prepaid Expenses in the account Surplus Energy from the 2005 Auctions. This loss is to be passed through to the final consumers in the 2006 Tariff Adjustment.
15
( 4 ) CASH AND BANKS | ||
Parent Company | Consolidated | |||||||
September 30,2005 |
June | September | June | |||||
30,2005 | 30,2005 | 30,2005 | ||||||
Bank deposits | 746 | 41,099 | 174,153 | 215,247 | ||||
Short-term financial investments | 93,468 | 187,498 | 297,094 | 489,972 | ||||
Total | 94,214 | 228,597 | 471,247 | 705,219 | ||||
The short-term financial investments correspond to operations with financial institutions under normal market conditions and rates and remunerated based on the variation of the Interbank Certificate of Deposit rate ("CDI").
16
( 5 ) CONSUMERS, CONCESSIONAIRES AND LICENSEES | ||
Consolidated | ||||||||||
Past due | Total | |||||||||
Balances | Up to 90 | More than | ||||||||
Coming Due | days | 90 days | September | June | ||||||
30,2005 | 30,2005 | |||||||||
Current | ||||||||||
Consumer Classes | ||||||||||
Residential | 186,358 | 115,317 | 21,778 | 323,453 | 311,051 | |||||
Industrial | 155,102 | 60,381 | 43,204 | 258,687 | 257,299 | |||||
Commercial | 68,779 | 36,182 | 26,894 | 131,855 | 125,915 | |||||
Rural | 22,365 | 4,926 | 1,787 | 29,078 | 26,748 | |||||
Public Administration | 20,488 | 8,446 | 4,111 | 33,045 | 29,134 | |||||
Public Lighting | 23,390 | 7,248 | 32,381 | 63,019 | 59,913 | |||||
Public Service | 19,223 | 5,926 | 9,160 | 34,309 | 35,418 | |||||
Billed | 495,705 | 238,426 | 139,315 | 873,446 | 845,478 | |||||
Unbilled | 335,486 | - | - | 335,486 | 327,066 | |||||
Tariff Review and Tariff Increase (note 3) | 40,952 | - | - | 40,952 | 25,495 | |||||
PIS and COFINS - Generators Pass-through (note 3) | 16,715 | - | - | 16,715 | 12,641 | |||||
CCEE Transactions | 12,236 | - | - | 12,236 | 16,502 | |||||
Concessionaires and Licensees | 71,284 | - | 82 | 71,366 | 73,263 | |||||
Other | 43,021 | - | - | 43,021 | 40,354 | |||||
Subtotal | 1,015,399 | 238,426 | 139,397 | 1,393,222 | 1,340,799 | |||||
Extraordinary Tariff Adjustment (note 3) | 262,792 | - | - | 262,792 | 267,492 | |||||
Free Energy (note 3) | 102,728 | - | - | 102,728 | 103,792 | |||||
Total | 1,380,919 | 238,426 | 139,397 | 1,758,742 | 1,712,083 | |||||
Noncurrent | ||||||||||
CCEE Transactions | 44,725 | - | - | 44,725 | 49,750 | |||||
Extraordinary Tariff Adjustment (note 3) | 227,687 | - | - | 227,687 | 260,960 | |||||
Tariff Review (note 3) | 22,398 | - | - | 22,398 | 22,398 | |||||
Free Energy (note 3) | 151,510 | - | - | 151,510 | 163,266 | |||||
Total | 446,320 | - | - | 446,320 | 496,374 | |||||
Electric Energy Trading Chamber (CCEE) transactions
The amounts refer to the accounting of the Electric Energy Trading Chamber CCEE (former MAE) related to the period from September 2000 to September 2005. The balance receivable as of September 30, 2005, derived from the sale of energy, principally comprises: (i) legal adjustments, established as a function of suits brought by agents in the sector; (ii) provisional registers established by CCEE; (iii) estimates made by the subsidiaries for periods not yet provided by the CCEE; and (iv) amounts bilaterally renegotiated pending settlement. The subsidiaries CPFL Paulista, CPFL Piratininga, RGE and CPFL Geração consider that there is no significant risk on the realization of these assets and consequently no provision was posted in the accounts.
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( 6 ) OTHER RECEIVABLES | ||
Consolidated | ||||
September | June | |||
30,2005 | 30,2005 | |||
Current | ||||
Receivables from CESP | 22,963 | 24,322 | ||
Employees | 17,336 | 17,242 | ||
Advances - Fundação CESP | 7,649 | 7,638 | ||
Indemnities | 6,096 | 6,096 | ||
Other | 5,809 | 6,071 | ||
Total | 59,853 | 61,369 | ||
Noncurrent | ||||
Receivables from CESP | 79,636 | 96,262 | ||
Other | 3,403 | 3,183 | ||
Total | 83,039 | 99,445 | ||
( 7 ) FINANCIAL INVESTMENTS | ||
On April 28, 2005, the company acquired, by means of a Private Credit Assignment Instrument, the credit derived from the Electric Energy Purchase and Sale Contract between CESP Companhia Energética de São Paulo (seller) and CPFL Comercialização Brasil S.A. (buyer), corresponding to the supply of energy for an 8-year period.
The Credit Assignment was purchased by the Company for the amount of R$ 127,875, and is remunerated at an interest rate of 17.5% p.a., plus the annual variation of the IGP-M, and is being amortized through monthly installments of an amount corresponding to the energy purchase transaction up to January of 2013. The balance on September 30, 2005 was R$ 129,586.
( 8 ) RECOVERABLE TAXES | ||
Parent Company | Consolidated | |||||||
September | June | September | June | |||||
30,2005 | 30,2005 | 30,2005 | 30,2005 | |||||
Current | ||||||||
Social Contribution Prepayments - CSLL | - | - | 62,745 | 39,527 | ||||
Income Tax Prepayments - IRPJ | - | - | 158,887 | 104,297 | ||||
Social Contribution and Income Tax | 34,743 | 41,560 | 45,459 | 59,283 | ||||
Withholding Income Tax | 5,797 | 15,765 | 38,328 | 48,926 | ||||
State VAT (ICMS) | - | - | 30,125 | 24,673 | ||||
PIS (Tax on Revenue) | 2,787 | 4,112 | 4,637 | 5,950 | ||||
COFINS (Tax on Revenue) | 8 | 8 | 5,475 | 4,644 | ||||
INSS (Social Security) | - | - | 976 | 957 | ||||
Other | 4 | 4 | 1,798 | 1,878 | ||||
Total | 43,339 | 61,449 | 348,430 | 290,135 | ||||
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Noncurrent | |||||||
Social Contribution Tax | - | - | 19,364 | 19,364 | |||
Social Contribution and Income Tax | - | - | 8,080 | 9,201 | |||
PIS (Tax on Revenue) | - | - | 1,211 | 1,211 | |||
COFINS (Tax on Revenue) | - | - | 4,696 | 4,696 | |||
ICMS (State VAT) | - | - | 39,799 | 30,809 | |||
Total | - | - | 73,150 | 65,281 | |||
In noncurrent, the balance of the Social Contribution Tax refers to the definitive gain of a lawsuit brought by the subsidiary company CPFL Paulista, recognized in the 2004 financial year. This amount is recorded in noncurrent, as the subsidiary CPFL Paulista is awaiting the outcome of the administrative procedures with the Federal Revenue Office, for compensation.
( 9 ) ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||
The movements in the Provision for Doubtful Accounts, including a portion to cover any losses with refinancing of consumer debts (note 12), between the period from June 30, 2005 and September 30, 2005, are as follows:
Consolidated | ||
Balance as of June 30, 2005 | (53,459) | |
Additional Allowance Recorded | (20,532) | |
Recovery of Revenue | 9,469 | |
Write-off of Accounts Receivable | 20,566 | |
Balance as of September 30, 2005 | (43,956) | |
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( 10 ) DEFERRED COSTS AND GAINS VARIATIONS |
Consolidated | ||||||||||||||||
ASSETS | LIABILITIES | |||||||||||||||
Current | Noncurrent | Current | Long Term | |||||||||||||
September | June | September | June | September | June | September | June | |||||||||
30,2005 | 30,2005 | 30,2005 | 30,2005 | 30,2005 | 30,2005 | 30,2005 | 30,2005 | |||||||||
Detailing: | ||||||||||||||||
Energy Purchased - Itaipu | 93,543 | 121,897 | 225,321 | 215,112 | 46,090 | 60,141 | 1,192 | 4,550 | ||||||||
System Service Charge | 72,916 | 69,567 | 13,240 | 27,958 | - | - | - | - | ||||||||
Transmission of Energy Itaipu | 4,886 | 3,411 | 5,155 | 5,442 | - | - | - | - | ||||||||
Energy Purchased - Other | 147,970 | 92,631 | 104,942 | 104,745 | 176,377 | 98,721 | 197 | - | ||||||||
Fuel Consumption Account CCC | 77,675 | 53,308 | 131,242 | 144,591 | 27,691 | 35,935 | - | - | ||||||||
Energy Development Account - CDE | 59,862 | 48,644 | 11,510 | 25,226 | - | - | - | - | ||||||||
Basic Network Charges | 44,673 | 42,540 | 43,545 | 39,607 | - | - | - | - | ||||||||
Global Reversal Quota RGR | - | - | 1,973 | 1,885 | - | - | 9,828 | 9,383 | ||||||||
Inspection Fee | - | - | 754 | 720 | - | - | 447 | 427 | ||||||||
Connection Charges | - | - | 1,909 | 1,822 | - | - | - | - | ||||||||
Total | 501,525 | 431,998 | 539,591 | 567,108 | 250,158 | 194,797 | 11,664 | 14,360 | ||||||||
Summary: | ||||||||||||||||
CVA | 105,313 | 76,199 | 67,325 | 95,058 | 23,120 | 29,357 | 274 | 294 | ||||||||
Parcel "A" | - | - | 466,462 | 445,328 | - | - | 10,275 | 9,810 | ||||||||
Interministerial Ordinance 116 | 252,600 | 265,653 | 5,804 | 22,164 | 53,203 | 70,142 | 1,115 | 4,256 | ||||||||
Interministerial Ordinance 361 | 143,612 | 90,146 | - | 4,558 | 173,835 | 95,298 | - | - | ||||||||
Total | 501,525 | 431,998 | 539,591 | 567,108 | 250,158 | 194,797 | 11,664 | 14,360 | ||||||||
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( 11 ) DEFERRED TAX CREDITS |
11.1 Composition of the income tax and social contribution credits:
Consolidated | ||||
September | June | |||
30, 2005 | 30, 2005 | |||
Income Tax Credit on: | ||||
Tax Loss Carryforwards | 114,388 | 133,988 | ||
Tax Benefit on Merged Goodwill | 504,276 | 511,340 | ||
Temporarily Nondeductible Differences | 108,471 | 105,221 | ||
Subtotal | 727,135 | 750,549 | ||
Social Contribution Credit on: | ||||
Tax Loss Carryforwards | 53,377 | 59,976 | ||
Tax Benefit of Merged Goodwill | 174,156 | 176,587 | ||
Temporarily Nondeductible Differences | 30,930 | 29,997 | ||
Subtotal | 258,463 | 266,560 | ||
Total | 985,598 | 1,017,109 | ||
The tax benefit for the merged goodwill is derived from the mergers of the former controlling companies by CPFL Paulista (DOC 4) and CPFL Piratininga (DRAFT I), and has been realized proportionally to the amortization of the merged goodwill that gave rise to it, according to the net income foreseen during the remaining concession period.
For the nine-month period ended September 30, 2005, annual rates of 4.997631% and 5.777282% were used for the subsidiaries CPFL Paulista and the indirect subsidiary CPFL Piratininga, respectively. These rates were established in a projection approved by ANEEL in 2004 and are subject to periodic review.
Expectation of recovery
The expected recovery of the deferred tax credits derived from the tax loss carryforward and temporary nondeductible expenses is based on the income projections prepared by the subsidiaries. This forecast is subject to alteration, since the final results, at the time of realization in subsequent periods, could differ from those considered in the projections. On a conservative basis, the subsidiaries decided to classify these credits as noncurrent assets.
There is no data available that suggests the need to change the premises for the realization of the tax credits approved by the Board of Directors at the end of 2004.
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11.2 Temporary nondeductible differences:
Consolidated | ||||||||
Income Tax (IRPJ) | Social Contribution Tax (CSLL) | |||||||
September | June | September | June | |||||
30, 2005 | 30, 2005 | 30, 2005 | 30, 2005 | |||||
Reserve for Contingencies | 53,025 | 52,824 | 11,520 | 11,627 | ||||
Pension Plan Expenses | 31,248 | 28,519 | 10,912 | 9,909 | ||||
Allowance for Doubtful Accounts | 10,920 | 10,945 | 4,402 | 4,411 | ||||
Accounts Receivable from Government Entities | 5,269 | 5,938 | 1,897 | 2,137 | ||||
Profit Sharing | 2,131 | 1,437 | 769 | 573 | ||||
Other | 5,878 | 5,558 | 1,430 | 1,340 | ||||
Total | 108,471 | 105,221 | 30,930 | 29,997 | ||||
11.3 Reconciliation of the amounts of income tax and social contribution reported in income in the three-month period and nine-month period ended September 30, 2005 and 2004:
Consolidated | ||||||||
IRPJ | ||||||||
2005 | 2004 | |||||||
3rd Quarter | Nine Months | 3rd Quarter | Nine Months | |||||
Income before IRPJ | 409,663 | 985,117 | 26,342 | 293,299 | ||||
Adjustments to Reflect Effective Rate: | ||||||||
- Goodwill Amortization | 29,255 | 86,733 | 14,761 | 44,279 | ||||
- Fundação Cesp - PSAP | - | - | 5,189 | 15,175 | ||||
- Realization of Revaluation Reserve | 3,849 | 10,536 | 3,731 | 12,748 | ||||
- Other net Additions/Deductions | 201 | (2,151) | (6,714) | (8,156) | ||||
Calculation base |
442,968 | 1,080,235 | 43,309 | 357,345 | ||||
Applicable Rate | 25% | 25% | 25% | 25% | ||||
Tax Credit (Debit) Result | (110,742) | (270,059) | (10,827) | (89,336) | ||||
Tax Credit Unallocated | (592) | (2,861) | (8,333) | (17,695) | ||||
Total | (111,334) | (272,920) | (19,160) | (107,031) | ||||
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Consolidated | ||||||||
CSLL | ||||||||
2005 | 2004 | |||||||
3rd Quarter | Nine Months | 3rd Quarter | Nine Months | |||||
Income before CSLL | 409,663 | 985,117 | 26,342 | 293,299 | ||||
Adjustments to Reflect Effective Rate: | ||||||||
- Goodwill Amortization | 15,892 | 45,871 | - | - | ||||
- Realization CMC | 5,954 | 18,677 | 7,446 | 24,800 | ||||
- Fundação Cesp - PSAP | - | - | 5,189 | 15,175 | ||||
- Realization of Revaluation Reserve | 3,849 | 10,536 | 3,731 | 12,748 | ||||
- Other net Additions/Deductions | (4,691) | (1,924) | (9,070) | (3,112) | ||||
Calculation base |
430,667 | 1,058,277 | 33,638 | 342,910 | ||||
Applicable Rate | 9% | 9% | 9% | 9% | ||||
Tax Credit (Debit) Result | (38,760) | (95,245) | (3,027) | (30,862) | ||||
Tax Credit Unallocated | (708) | (2,120) | (3,630) | (7,018) | ||||
Total | (39,468) | (97,365) | (6,657) | (37,880) | ||||
The Unallocated Tax Credit refers to the tax loss carryforward of certain subsidiaries, which exceed the balances recorded in accordance with the estimated realization.
( 12 ) OTHER CREDITS |
Consolidated | ||||||||
Current | Noncurrent | |||||||
September | June | September | June | |||||
30, 2005 | 30, 2005 | 30, 2005 | 30, 2005 | |||||
Refinancing of Consumer Debts | 30,449 | 41,461 | 107,310 | 105,357 | ||||
Low Income Consumer Subsidies (note 3) | 46,282 | 48,634 | - | - | ||||
Collateral linked to Foreign Currency Loans | - | - | 20,849 | 22,052 | ||||
PERCEE | 2,067 | 2,350 | - | - | ||||
Orders in Progress | 7,038 | 8,684 | - | - | ||||
Services Rendered to Third Parties | 24,947 | 18,372 | 616 | 616 | ||||
Reimbursement RGR | 3,644 | 3,450 | - | - | ||||
Assets and Rights for Disposal | - | - | 2,390 | 3,000 | ||||
Other | 4,467 | 7,202 | 9,553 | 5,540 | ||||
Total | 118,894 | 130,153 | 140,718 | 136,565 | ||||
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( 13 ) CREDITS WITH RELATED PARTIES |
As of June 30, 2005, the Noncurrent balance corresponds to loan contracts between the company and the direct subsidiary CPFL Paulista (R$ 25,340) and indirect subsidiary Semesa (R$ 17,989), the remuneration on which is 110% of the CDI-CETIP, which was liquidated in this quarter.
( 14 ) INVESTMENTS |
Parent Company | Consolidated | |||||||
September | June | September | June | |||||
30, 2005 | 30, 2005 | 30, 2005 | 30, 2005 | |||||
Permanent Equity Interests | 3,014,361 | 2,767,664 | - | - | ||||
Goodwill / Negative Goodwill | 1,033,375 | 1,047,327 | 1,987,289 | 2,016,543 | ||||
Leased Assets | - | - | 772,095 | 777,795 | ||||
Other Investments | - | - | 30,249 | 30,249 | ||||
Total | 4,047,736 | 3,814,991 | 2,789,633 | 2,824,587 | ||||
14.1 - Permanent Equity Interests:
The principal information on the investments in permanent equity interests is as follows:
Parent Company | ||||||||||||||||
September 30, 2005 | June 30, 2005 | |||||||||||||||
CPFL | CPFL | CPFL | CPFL | CPFL | CPFL | CPFL | CPFL | |||||||||
Information on Equity Interests | Paulista | Piratininga | Geração | Brasil | Paulista | Piratininga | Geração | Brasil | ||||||||
Subsidiary | ||||||||||||||||
Number of Shares - (in thousands) | ||||||||||||||||
- Common Share | 12,491,807 | 29,498,491 | 68,495,905 | 456 | 12,491,807 | 29,498,491 | 68,495,905 | 456 | ||||||||
- Preferred Share | 21,113,254 | 23,532,768 | 136,991,811 | - | 21,113,254 | 23,532,768 | 136,991,811 | - | ||||||||
- Total Number of Shares | 33,605,061 | 53,031,259 | 205,487,716 | 456 | 33,605,061 | 53,031,259 | 205,487,716 | 456 | ||||||||
- Treasury Shares (a) | 35 | - | 2 | - | 35 | - | - | - | ||||||||
Shareholders' Equity - (R$ thousands) | ||||||||||||||||
- Capital | 1,226,556 | 331,100 | 1,039,618 | 456 | 1,226,556 | 331,100 | 1,039,618 | 456 | ||||||||
- Net Income (b) | 501,167 | 63,948 | 87,083 | 112,325 | 310,922 | 16,571 | 55,262 | 78,125 | ||||||||
- Shareholders' Equity | 2,004,170 | 581,792 | 1,076,222 | 34,657 | 1,813,925 | 534,416 | 1,044,401 | 457 | ||||||||
Parent Company | ||||||||||||||||
Held by Parent Company - (in thousands) | ||||||||||||||||
- Common Share | 12,084,042 | - | 68,495,905 | 456 | 12,084,042 | - | 68,495,905 | 456 | ||||||||
- Preferred Share | 19,819,681 | 70,800 | 136,991,809 | - | 19,819,681 | 70,800 | 136,991,811 | - | ||||||||
- Total Number of Shares | 31,903,723 | 70,800 | 205,487,714 | 456 | 31,903,723 | 70,800 | 205,487,716 | 456 | ||||||||
Ownership - (%) | ||||||||||||||||
- Voting | 96.7357% | 0.0000% | 100.0000% | 100.00% | 96.7357% | 0.0000% | 100.0000% | 100.00% | ||||||||
- Total | 94.9373% | 0.1335% | 100.0000% | 100.00% | 94.9373% | 0.1335% | 100.0000% | 100.00% | ||||||||
- Adjusted (a) | 94.9374% | - | 100.0000% | - | 94.9374% | - | - | - | ||||||||
Permanent Equity Interests - (R$ thousands) | 1,902,706 | 776 | 1,076,222 | 34,657 | 1,722,092 | 714 | 1,044,401 | 457 | ||||||||
Result Equity in Subsidiaries (c) - (R$ thousands) | 475,795 | 84 | 85,454 | 112,325 | 295,182 | 22 | 53,633 | 78,125 |
(a) The interest in total capital is adjusted as a function of the treasury shares
(b) The Result of CPFL Piratininga refers to the period June 1, 2005 to September 30, 2005
(c) The income for the period of September 30, 2005 refers to the nine-month period
24
Purchase of shares in Sul Geradora Participações (SGP)
On September 16, 2005, the subsidiary CPFL Brasil purchased 145,085,020 shares issued by SGP, a wholly-owned subsidiary of the indirect subsidiary RGE, corresponding to 67.23% of its capital, for the amount of R$ 163. The remaining interest was acquired by IPE Energia S/A (joint controller of RGE).
The purchase was made with a view to complying with Approved Resolution nº 166 of July 13, 2004 and Law 10,848, of March 15, 2004, which ruled for the elimination of the interest of RGE in the capital of Sul Geradora Participações by September 16, 2005.
Purchase of shares in CPFL Sul Centrais Elétricas
CPFL Sul Centrais Elétricas is the wholly-owned of subsidiary CPFL Geração set up for the purpose of acquiring the PCH Guaporé, PCH Andorinhas, PCH Pirapó and PCH Saltinho plants owned by Rio Grande Energia RGE. This acquisition was formalized through the purchase and sale agreement, and approved by ANEEL through Order nº 1,104 of August 31, 2005.
These assets and their financial liquidation in the amount of R$ 3,729 will be recognized in the accounts after confirmation from ANEEL of the request forwarded by CPFL Sul Centrais Elétricas on September 22, 2005 requesting: (i) registration of the hydroelectric potential in the name of CPFL Sul Centrais Elétricas and (ii) allocation of the energy for commercialization under the Independent Production system.
Dividend and Interest on Equity
Based on the retained earnings as of June 30, 2005 and in the form stipulated in the corresponding Bylaws, the subsidiaries listed below proposed dividends and declared Interest on Equity of the following amounts:
June 30,2005 | ||
CPFL Paulista | 282,946 | |
CPFL Piratininga | 192 | |
CPFL Geração | 55,262 | |
CPFL Brasil | 78,125 | |
Total | 416,525 | |
The proposed dividends of CPFL Geração in 2005 and 2004 (in the amount of R$ 55,262 and R$ 28,469, respectively) and a portion of the 2005 dividends of CPFL Paulista (in the amount of R$ 147,946) have not yet been received.
25
14.2 - Goodwill or Negative Goodwill:
Consolidated | ||||||||||
September 30, 2005 | June 30,2005 | |||||||||
Investee | Historical | Accumulated | Net Value | Net Value | ||||||
Investor | Cost | Amortization | ||||||||
CPFL Energia | CPFL Paulista | (12,828) | - | (12,828) | (12,828) | |||||
CPFL Energia | CPFL Piratininga | 974 | (15) | 959 | 974 | |||||
CPFL Energia | CPFL Paulista | 1,074,026 | (82,543) | 991,483 | 1,004,901 | |||||
CPFL Energia | CPFL Geração | 54,555 | (794) | 53,761 | 54,280 | |||||
CPFL Paulista | RGE | 756,443 | (232,594) | 523,849 | 530,939 | |||||
CPFL Paulista | CPFL Piratininga | 124,895 | (7,267) | 117,628 | 119,494 | |||||
CPFL Geração | SEMESA | 426,450 | (128,195) | 298,255 | 304,601 | |||||
CPFL Geração | Fóz do Chapecó | 770 | - | 770 | 770 | |||||
CPFL Geração | ENERCAN | 15,693 | (5,460) | 10,233 | 10,233 | |||||
CPFL Geração | Barra Grande | 3,081 | - | 3,081 | 3,081 | |||||
CPFL Brasil | Clion | 98 | - | 98 | 98 | |||||
Total | 2,444,157 | (456,868) | 1,987,289 | 2,016,543 | ||||||
Change in the criterion for amortizing Goodwill
The goodwill derived from the acquisition of the corporate interests of CPFL Energia in CPFL Paulista, and of CPFL Paulista and CPFL Geração in RGE, CPFL Piratininga and SEMESA, previously amortized on a straight-line basis over a 10-year period, began to be an amortized as from June 2004, backdated to January 2004, proportional to the projected net income curves for the remaining concession period of the subsidiaries CPFL Paulista, RGE and CPFL Piratininga and over the remaining term of the lease contract with the concession holder (FURNAS) in the case of the subsidiaries SEMESA.
In the nine-month period ended September 30, 2005, the amortization of the goodwill was calculated based on an annual rate of 4.997631% for CPFL Paulista, 4.997631% for RGE, 5.777282% for CPFL Piratininga and 7.439278% for SEMESA, these rates being subject to periodic review.
The goodwill derived from the acquisitions of the interests in Foz do Chapecó, ENERCAN and Barra Grande, subsidiaries of CPFL Geração, is based on the expectation of future earnings derived from their concession contracts and will be amortized over the terms of the contract as from the starting date of commercial operations of the companies, forecast respectively for the year 2009, January of 2006 and October of 2005.
The goodwill in CPFL Energia referring to CPFL Piratininga and CPFL Geração, deriving from the public offer acquisition process and merger of shares, respectively, are amortized in proportion to the curves of net income in the remaining concession.
26
14.3 - Leased Assets:
In the consolidated, the balances refer principally to assets forming part of the Serra da Mesa Hydropower Plant, belonging to the indirect subsidiary SEMESA, leased to the concession holder (currently FURNAS) for a 30-year period ending 2028.
( 15 ) PROPERTY, PLANT AND EQUIPMENT |
Consolidated | ||||||||
September 30, 2005 | June 30, 2005 | |||||||
Historical Cost | Accumulated Depreciation |
Net Value | Net Value | |||||
In Service | ||||||||
- Distribution | 5,627,083 | (2,889,624) | 2,737,459 | 2,700,694 | ||||
- Generation | 367,671 | (94,558) | 273,113 | 275,249 | ||||
- Commercialization | 94,918 | (34,704) | 60,214 | 60,495 | ||||
- Administration | 190,034 | (121,977) | 68,057 | 72,209 | ||||
6,279,706 | (3,140,863) | 3,138,843 | 3,108,647 | |||||
In Progress | ||||||||
- Distribution | 150,397 | - | 150,397 | 150,056 | ||||
- Generation | 1,045,917 | - | 1,045,917 | 988,729 | ||||
- Commercialization | 8,430 | - | 8,430 | 6,566 | ||||
- Administration | 20,552 | - | 20,552 | 9,512 | ||||
1,225,296 | - | 1,225,296 | 1,154,863 | |||||
Subtotal | 7,505,002 | (3,140,863) | 4,364,139 | 4,263,510 | ||||
Other Assets not Tied to the Concession | 751,348 | (429,935) | 321,413 | 323,449 | ||||
Total Property, Plant and Equipment | 8,256,350 | (3,570,798) | 4,685,552 | 4,586,959 | ||||
Special Obligations linked to the Concession | (624,451) | (613,427) | ||||||
Net Property, Plant and Equipment | 4,061,101 | 3,973,532 | ||||||
The average depreciation rate of the assets is approximately 5.2% p.a.
Other Assets not Tied to the Concession Refers to the goodwill on the merger of RGE´s parent company, amortized over the remaining concession period, proportional to the projected net income curve for the period (annual rate of 2.41% in 2005). This rate is subject to periodic review.
( 16 ) DEFERRED CHARGES |
Consolidated | ||||||||
September 30, 2005 | June 30, 2005 | |||||||
Historical Cost | Accumulated | Net Value | Net Value | |||||
Amortization | ||||||||
Pre-Operating Expenses in Service | 27,966 | (9,012) | 18,954 | 18,575 | ||||
Expenses with the Issue of Debentures | 7,134 | (3,338) | 3,796 | 4,105 | ||||
Deferred Charges in Progress | 19,927 | - | 19,927 | 19,053 | ||||
Total | 55,027 | (12,350) | 42,677 | 41,733 | ||||
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( 17 ) INTEREST ON DEBTS, LOANS AND FINANCING | ||
Consolidated | ||||||||||||
September 30, 2005 | June 30, 2005 | |||||||||||
Principal | Principal | |||||||||||
Interest | Current | Long-term | Interest | Current | Long-term | |||||||
LOCAL CURRENCY | ||||||||||||
BNDES - Power Increases (PCH´s) | 65 | 3,673 | 12,941 | 68 | 3,663 | 13,825 | ||||||
BNDES Investment | 6,411 | 63,974 | 960,759 | 4,546 | 51,882 | 908,496 | ||||||
BNDES Parcel A, RTE and Free Energy | 2,485 | 206,662 | 452,638 | 2,893 | 175,633 | 508,738 | ||||||
BNDES - CVA and Interministerial | ||||||||||||
Ordinance 116 | 1,175 | 127,759 | 9,666 | 1,620 | 163,214 | 23,551 | ||||||
FIDC | 30,786 | 64,417 | 23,583 | 28,498 | 64,802 | 41,468 | ||||||
BRDE | - | 18,944 | 1,909 | - | 20,484 | 5,585 | ||||||
Financial Institutions | 3,897 | 38,786 | 128,224 | 3,839 | 18,207 | 144,710 | ||||||
Other | 526 | 22,789 | 112,309 | 514 | 23,529 | 110,900 | ||||||
Subtotal | 45,345 | 547,004 | 1,702,029 | 41,978 | 521,414 | 1,757,273 | ||||||
FOREIGN CURRENCY | ||||||||||||
IFC | - | - | - | 3,195 | 14,102 | 56,409 | ||||||
Floating Rate Notes | 4,488 | 231,998 | - | 525 | 227,049 | 42,307 | ||||||
Trade Finance | - | - | - | 361 | 29,951 | - | ||||||
IDB | 610 | - | 64,963 | - | - | 57,752 | ||||||
Financial Institutions | 2,320 | 11,781 | 89,052 | 1,347 | 12,461 | 95,768 | ||||||
Subtotal | 7,418 | 243,779 | 154,015 | 5,428 | 283,563 | 252,236 | ||||||
Total | 52,763 | 790,783 | 1,856,044 | 47,406 | 804,977 | 2,009,509 | ||||||
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Consolidated | ||||||||||
September 30, | ||||||||||
2005 | June 30, 2005 | Remuneration | Amortization | Collateral | ||||||
LOCAL CURRENCY | ||||||||||
BNDES - Power Increases (PCH's) | ||||||||||
CPFL Centrais Elétricas | 15,212 | 15,914 | TJLP + 3.5%p.a. and 4% p.a. | 84 monthly installments from February 2003 | Guarantee of CPFL Paulista | |||||
CPFL Centrais Elétricas | 1,467 | 1,642 | UMBND + 3.5% p.a. and 4% p.a. | 84 monthly installments from February 2003 | Guarantee of CPFL Paulista | |||||
BNDES - Investment | ||||||||||
CPFL Paulista - FINEM I | 44,463 | 50,325 | TJLP + 3.25%p.a. | 78 monthly installments from October 2000 and October 2001 | Revenue | |||||
CPFL Paulista - FINEM II | 121,841 | 91,346 | TJLP + 5.4%p.a. | 48 monthly installments from January 2007 | Guarantee of CPFL Energia and receivables | |||||
RGE - FINEM | 79,249 | 67,468 | TJLP + 3.5% to 4.5% p.a. | 84 monthly installments from October 2000 to 36 monthly installments from December 2005 | Revenue collection | |||||
RGE - FINEM | 9,655 | 8,625 | UMBNDES + 4.5% p.a. | 36 monthly installments from February 2006 | Revenue collection/reserve account | |||||
CPFL Piratininga - FINEM | 55,620 | 43,563 | TJLP + 5.4%p.a. | 48 monthly installments from January 2007 | Guarantee of CPFL Energia and receivables | |||||
CPFL Piratininga - FINAME | 95 | 135 | TJLP + 3.45%p.a. | 48 monthly installments from May 2002 | Promissory notes and receivables | |||||
BAESA | 150,997 | 146,611 | URTJLP + 3.125%p.a. | 144 monthly installments from September 2006 and November 2006 | Guarantee | |||||
BAESA | 43,870 | 45,129 | UMBND + 3.125% p.a. | 144 monthly installments from November 2006 | Guarantee | |||||
ENERCAN | 335,805 | 324,826 | TJLP + 4% p.a. | 144 monthly installments from April 2007 | Guarantee | |||||
ENERCAN | 26,504 | 27,403 | UMBND + 4% p.a. | 144 monthly installments from April 2007 | Guarantee | |||||
CERAN | 132,152 | 127,600 | TJLP + 5% p.a. | 120 monthly installments from December 2005 | Guarantee of CPFL Energia | |||||
CERAN | 30,893 | 31,893 | UMBND + 5% p.a. | 120 monthly installments from April 2006 | Guarantee of CPFL Energia | |||||
BNDES - Parcel "A", RTE and Free Energy | ||||||||||
CPFL Paulista - RTE | 225,575 | 254,970 | Selic + 1%p.a. | 62 monthly installments from March 2002 | Receivables | |||||
13 monthly installments from May 2007 | ||||||||||
CPFL Paulista - Parcel "A" | 268,771 | 255,042 | Selic + 1%p.a. | Receivables | ||||||
CPFL Piratininga - RTE | 58,993 | 73,252 | Selic + 1%p.a. | 54 monthly installments from March 2002 | Receivables | |||||
9 monthly installments from September 2007 | ||||||||||
CPFL Piratininga - Parcel "A" | 99,962 | 94,855 | Selic + 1%p.a. | Receivables | ||||||
RGE - Free Energy | 4,094 | 4,413 | Selic + 1%p.a. | 60 monthly installments from March 2003 | Receivables | |||||
CPFL Geração - Free Energy | 4,390 | 4,732 | Selic + 1%p.a. | 60 monthly installments from March 2003 | Receivables | |||||
BNDES - CVA and Interministerial | ||||||||||
Ordinance 116 | ||||||||||
CPFL Paulista | 74,730 | 104,126 | Selic + 1%p.a. | 24 monthly installments from May 2004 | Receivables | |||||
CPFL Piratininga | 61,724 | 73,138 | Selic + 1%p.a. | 24 monthly installments from December 2004 | Receivables | |||||
RGE | 2,146 | 11,121 | Selic + 1%p.a. | 60 monthly installments from march 2003 | Receivables | |||||
FIDC - CPFL Piratininga | 118,786 | 134,768 | 115% of CDI | 36 monthly installments from March 2004 | Receivables | |||||
BRDE - RGE | 20,853 | 26,069 | IGP-M + 12%p.a. | 180 monthly installments from September 1991 | Receivables | |||||
Financial Institutions | ||||||||||
CPFL Paulista | ||||||||||
Banco do Brasil - Law 8727 | 55,275 | 57,295 | Variation of IGPM + 7.42% p.a. | 240 montly installments from May 1994 | Receivables | |||||
RGE | ||||||||||
Banco Itaú BBA | 69,463 | 69,412 | CDI + 1.75%p.a. | 24 monthly installments from May 2006 | Letters of credits CPFL, Ipê and receivables in the amount of R$ 38,000 | |||||
Unibanco | 27,517 | 27,520 | CDI + 2.15%p.a. | 18 quarterly installments from January 2006 | No guarantee | |||||
Banco Santander | 12,549 | 12,529 | CDI + 2.0% p.a. | 7 quarterly installments from January 2006 | Promissory notes | |||||
Banco Safra | 6,103 | - | 104% of CDI | 1 installment October 2005 | Promissory notes | |||||
Other | ||||||||||
CPFL Paulista | ||||||||||
ELETROBRÁS | 15,694 | 16,845 | RGR + rate variable from 6% to 9% p.a. | Monthly installments to March 2016 | Receivables and promissory notes | |||||
Other | 7,738 | 7,738 | - | - | - | |||||
RGE | ||||||||||
FINEP | 805 | 797 | TJLP + 4.0%p.a. | 48 monthy installments from July 2006 | Receivables | |||||
ELETROBRÁS | 2,965 | 3,893 | RGR + rate variable from 6% to 9% p.a. | Monthly installments to July 2010 | Revenue / Promissory notes | |||||
Other | 8,123 | 7,869 | - | - | - | |||||
Piratininga | ||||||||||
ELETROBRÁS | 5,796 | 5,628 | RGR + rate variable from 6% to 6.5% p.a. | Monthly installments to July 2016 | Receivables/Promissory notes | |||||
Other | 898 | 1,893 | - | - | - | |||||
Semesa | ||||||||||
Furnas Centrais Elétricas | 93,605 | 90,280 | IGP-M + 10%p.a. | 24 monthly installments from August 2008 | Energy produced by plant | |||||
Subtotal | 2,294,378 | 2,320,665 | ||||||||
FOREIGN CURRENCY | ||||||||||
IFC - CPFL Energia | - | 73,706 | US$ + 6-month Libor+ 5.25%p.a. (***) | 10 semiannual installments from July 2005 | Share of CPFL Centrais Elétricas | |||||
Floating Rate Notes - CPFL Paulista | 236,486 | 269,881 | US$ + 6-month Libor + 2.95%p.a. (*) | 24 semiannual installments from February 2003 | Receivables, Guarantee and promissory notes | |||||
Trade Finance - Sul Geradora | - | 30,312 | US$ + Libor + 4.7%p.a. | 12 installments, 3 per year (May, June and July) - From May 2002 | Guarantee of RGE and Letters of credits | |||||
IDB - ENERCAN | 65,573 | 57,752 | US$ + Libor + 3.5%p.a. | 49 quarterly installments from June 2007 | Guarantee of CPFL Energia | |||||
Financial Institutions | ||||||||||
CPFL Paulista | ||||||||||
Debt Conversion Bond | 18,787 | 19,703 | US$ + 6-month Libor+ 0.875%p.a. | 17 semiannual installments from April 2004 | Revenue/Government SP guaranteed | |||||
New Money Bond | 2,831 | 2,970 | US$ + 6-month Libor+ 0.875%p.a. | 17 semiannual installments from April 2001 | Revenue/Government SP guaranteed | |||||
FLIRB | 2,872 | 3,014 | US$ + 6-month Libor+ 0.8125%p.a. | 13 semiannual installments from April 2003 | Revenue/Government SP guaranteed | |||||
C-Bond | 22,033 | 22,845 | US$ + 8%p.a. | 21 semiannual installments from April 2004 | Revenue/Government SP guaranteed | |||||
Discount Bond | 19,664 | 20,627 | US$ + 6-month Libor+ 0.8125%p.a. | 1 installments from 2024 | Escrow deposits and revenue/ GESP guarantee | |||||
PAR-Bond | 28,547 | 29,739 | US$ + 6%p.a. | 1 installments from 2024 | Escrow deposits and revenue/ GESP guarantee | |||||
EI Bond - Interest Bond | 2,431 | 2,549 | US$ + 6-month Libor+ 0.8125%p.a. | 19 semiannual from April 1997 | Revenue/Government SP guaranteed | |||||
RGE | ||||||||||
Unibanco | 5,988 | 8,129 | US$ + Libor + 7.25%p.a. (**) | 7 semiannual installments from September 2004 | Receivables and reserve account | |||||
Subtotal | 405,212 | 541,227 | ||||||||
Total | 2,699,590 | 2,861,892 | ||||||||
(*) Swap converted to local cost corresponding to 93.65 % and 94.75% of the CDI variation
(**) Swap converted to local cost corresponding to 62.03% of the CDI variation
(***) Swap converted to local cost corresponding to 105.3% of the CDI variation
29
BNDES Investment (FINEM II) - The subsidiary CPFL Paulista obtained approval for financing from the BNDES in the amount of R$ 240,856, which forms part of a line of credit from the FINEM to be invested in the expansion and modernization of the Electricity System, and the amounts of R$ 89,022 and R$ 28,920 were received on April 27 and August 25, 2005, respectively. The remaining balance will be released up to December 2006. The interest will be paid quarterly, from July 15, 2005 to January 15, 2007, and monthly as from February 15, 2007.
This contract is subject to certain restrictive conditions, which are being fully complied with, involving clauses that require the subsidiary CPFL Paulista to maintain certain financial ratios at preestablished levels and can be summarized as follows:
BNDES Investment (FINEM) The indirect subsidiary CPFL Piratininga comprises a credit agreement by the onlending of a loan contacted with the BNDES to the total amount of R$ 89,382, of which the amounts of R$ 33,568, R$ 8,876 and R$ 11,306 have already been released to the Company in March, June and August of 2005 respectively. The remaining balance will be released up to December of 2006. The interest will be paid quarterly from April 15, 2005 to January 15, 2007, and monthly as from February 15, 2007.
This contract is subject to certain restrictive conditions, which are being fully complied with, involving clauses that require the subsidiary indirect CPFL Piratininga to maintain certain financial ratios at preestablished levels and can be summarized as follows:
IFC On July 14, 2005, the International Finance Corporation (IFC) exercise the right in relation to the subscription bonus, converting the balance of the debt as of July 25, 2005 into 4,159,647 shares in the Company.
IDB In April of 2005, the indirect subsidiary ENERCAN obtained from the IDB Inter-American Development Bank release of a loan amounting to US$ 75 million for financing the Campos Novos Hydropower Plant venture. Of the total amount contracted, the amount of US$ 60 million (US$ 10 million in the first quarter of 2005) had been released as of September 30, 2005).
The interest are paid quarterly in February, May, August and November of each year, and the first installment was settled on May 15, 2005.
30
This contract is subject to certain restrictive conditions, which are being fully complied with, involving clauses that require the indirect subsidiary Enercan to maintain certain financial ratios at preestablished levels and can be summarized as follows:
SWAP Due to the subscription of the IFC loan for shares, in July 2005 , the Company no longer has any exposure in dollars
However, the Company opted to maintain part of the hedge arising from the loan transaction with IFC to cover the exchange exposure of the loans in the BNDES basket of currencies, in relation to its participation in the subsidiaries Ceran and Baesa.
Subsequently, since Ceran decided to cover its exposure in the BNDES basket of currencies in the company itself, CPFL Energia reversed part of the hedge, contracting a swap transaction, which consisted of exchanging the variation in the CDI percentage for the exchange variation plus interest.
The Company and its subsidiaries are in full compliance with the restrictive clauses related to the loans and financing with financial institutions.
31
( 18 ) DEBENTURES | ||
Consolidated | ||||||||||||||||||||
Characteristics of Debenture Issues | ||||||||||||||||||||
Balances as of: | ||||||||||||||||||||
September 30, 2005 | June 30, 2005 | |||||||||||||||||||
Entity | Issue | Series | Issued | Remuneration | Interest | Current | Long term | Interest | Current | Long term | ||||||||||
CPFL Paulista | 1st | 1st | 44.000 | IGP-M + 11.5% p.a. | 26,885 | - | 721,465 | 6,452 | - | 732,559 | ||||||||||
CPFL Paulista | 1st | 2nd | 30.142 | CDI + 0.6% p.a. | 9,851 | 150,710 | - | 2,355 | 150,710 | - | ||||||||||
CPFL Paulista | 2nd | 1st | 11.968 | 109% of CDI | 6,093 | - | 119,680 | 11,590 | - | 119,680 | ||||||||||
CPFL Paulista | 2nd | 2nd | 13.032 | IGP-M + 9.8% p.a. | 3,304 | - | 137,513 | 13,626 | - | 139,625 | ||||||||||
Subtotal | 46,133 | 150,710 | 978,658 | 34,023 | 150,710 | 991,864 | ||||||||||||||
RGE | 2nd | 1st | 2.620 | IGP-M + 9.6% p.a. | 214 | 379 | 17,572 | 62 | 379 | 17,572 | ||||||||||
RGE | 2nd | 2nd | 20.380 | 106% of CDI | 10,832 | 2,874 | 136,686 | 3,633 | 2,874 | 136,686 | ||||||||||
Subtotal | 11,046 | 3,253 | 154,258 | 3,695 | 3,253 | 154,258 | ||||||||||||||
SEMESA | 1st | - | 69.189 | TJLP + 4 to 5% p.a. | 17,374 | 114,997 | 418,702 | 4,077 | 113,981 | 414,998 | ||||||||||
BAESA | 1st | - | 23.094 | 105% of CDI | - | - | 27,648 | - | - | 25,858 | ||||||||||
BAESA | 2nd | - | 23.281 | IGP-M + 9.55% p.a. | - | - | 26,076 | - | - | 26,318 | ||||||||||
Subtotal | - | - | 53,724 | - | - | 52,176 | ||||||||||||||
Total | 74,553 | 268,960 | 1,605,342 | 41,795 | 267,944 | 1,613,296 | ||||||||||||||
On April 1, 2005, the jointly-owned subsidiary RGE made a second issue of regular debentures for public subscription, of the unsecured type, non-convertible into Company shares, with no optional renegotiation clause, issued in two series, as follows:
32
related to the remuneration of the debentures shall be paid half-yearly, always on the 1st day of the months of April and October of each year, the first payment falling due on October 1, 2005. |
The debentures issued by the indirect subsidiary RGE have restrictive clauses related to (i) a reduction in the Issuer's Capital and/or alteration to the Issuer's Bylaws that imply the concession of a right to the Issuer's shareholders to withdraw amounts that could directly or indirectly affect compliance with the Issuer's financial obligations stipulated in the Deed of Issue; (ii) transfer or assignment, directly or indirectly, of equity control, or upstream or downstream merger or spinoff, except in the case of direct sale of control to CPFL Energia and/or a wholly owned subsidiary of CPFL Energia; (iii) sale of the control of PSEG Américas Ltda, except in the case of transfer of control to the Exelon Group (iv) if VBC Participações S.A. no longer holds a majority interest amongst the controlling companies, or if VBC Participações S.A., PREVI and/or Bonaire Participações S.A. no longer hold, jointly, the direct or indirect control of the Issuer.
The financial covenants are:
These restrictive clauses and other clauses to which the Company is subject in the debenture issue contract with the financial institutions are being complied with.
( 19 ) SUPPLIERS |
Consolidated | ||||
September | June | |||
Current | 30, 2005 | 30, 2005 | ||
Energy Purchased in the CCEE | 199 | 1,075 | ||
System Service Charges | 4,674 | 2,837 | ||
Transactions in the CCEE (note 5) | 4,873 | 3,912 | ||
Energy Purchased | 417,537 | 416,222 | ||
Electricity Network Usage Charges | 70,875 | 56,240 | ||
Materials and Services | 67,516 | 61,616 | ||
Free Energy (note 3) | 92,717 | 93,743 | ||
PIS and COFINS - Generators Pass-Through (note 3) | 16,562 | 12,793 | ||
Other | 8,698 | 8,301 | ||
Total | 678,778 | 652,827 | ||
Long-term | ||||
Free Energy (note 3) | 167,979 | 219,340 | ||
33
( 20 ) TAXES AND SOCIAL CONTRIBUTIONS PAYABLE |
Consolidated | ||||||||
Current | Long-term | |||||||
September | June | September | June | |||||
30, 2005 | 30, 2005 | 30, 2005 | 30, 2005 | |||||
ICMS (State VAT) | 245,604 | 241,878 | - | - | ||||
PIS (Tax on Revenue) | 10,359 | 10,227 | 1,136 | 2,057 | ||||
COFINS (Tax on Revenue) | 44,452 | 44,051 | 5,229 | 9,470 | ||||
INSS (Social Security Contribution) | 4,195 | 3,736 | - | - | ||||
Corporate Income Tax - IRPJ | 230,029 | 139,729 | 25,543 | 38,477 | ||||
Social Contribution Tax - CSLL | 85,133 | 51,614 | 9,196 | 14,093 | ||||
Withholding income tax- Interest on | ||||||||
equity | - | 25,742 | - | - | ||||
Other | 6,624 | 6,765 | - | - | ||||
Total | 626,396 | 523,742 | 41,104 | 64,097 | ||||
The amounts reported under long-term refer to deferred taxes levied on the following assets: (i) Extraordinary Tariff Adjustment RTE, (ii) Regulatory Asset referring to PIS and COFINS, and (iii) Effects of the Tariff Review and tariff adjustment at the subsidiaries CPFL Paulista and CPFL Piratininga, which are considered payable by the subsidiaries to the extent that the amount of the principal is realized.
At the parent company as of June 30, 2005, the amounts of withholding income tax and PIS/COFINS related to the Interest on Equity declared in the quarter were recorded in the amounts of R$ 11,538 and R$ 7,425 respectively.
( 21 ) EMPLOYEE PENSION PLANS | ||
The subsidiaries CPFL Paulista, CPFL Piratininga and CPFL Geração, through Fundação CESP, and the joint subsidiary RGE, through Fundação ELETROCEEE, maintain Supplementary Retirement and Pension Plans for their employees.
With the modification of the Retirement Plan, a liability was recognized in September of 1997 as being payable to the subsidiaries CPFL Paulista and CPFL Geração related to the plan's deficit calculated at the time by the external actuaries of Fundação CESP, which has been amortized in 240 monthly installments, plus interest of 6% p.a. and restated in accordance with the IGP-DI (FGV). The balance of the liability as of September 30, 2005 was R$ 715,030 (R$ 735,641 as of June 30, 2005), and the liability was adjusted to comply with the criteria of CVM Ruling 371, dated December 13, 2000.
Ruling No. 371 Pension Plan Accounting
In accordance with CVM Ruling No. 371, dated December 13, 2000, the subsidiaries opted to record under income the effects of the initial recognition of the post-employment benefits for which it is responsible as an extraordinary item, net of tax effects, for a five-year period beginning in the 2002 financial year.
34
The movements occurred in net liabilities are as follows:
September 30, 2005 | ||||||||||
CPFL | CPFL | RGE | CPFL | Consolidated | ||||||
Movements in Net Liabilities: | Paulista | Piratininga | Geração | |||||||
Net actuarial liability at the beginning of the year | 711,234 | 125,259 | 3,306 | 13,986 | 853,785 | |||||
Charges recorded to income during the year | 61,942 | 42,170 | (1,044) | 1,125 | 104,193 | |||||
Sponsors Contributions during the year | (70,209) | (16,844) | (532) | (1,587) | (89,172) | |||||
702,967 | 150,585 | 1,730 | 13,524 | 868,806 | ||||||
Current | 52,642 | 21,900 | - | 1,262 | 75,804 | |||||
Long term | 650,325 | 128,685 | 1,730 | 12,262 | 793,002 | |||||
702,967 | 150,585 | 1,730 | 13,524 | 868,806 | ||||||
The account balances of the subsidiaries as of September 30, 2005, related to the Entity Pension Plan also include R$ 39,563 referring to other contributions.
Nine Months | ||||||||||
CPFL | CPFL | RGE | CPFL | Consolidated | ||||||
Expenses and Income recognized up to | Paulista | Piratininga | Geração | |||||||
September 30, 2005 | ||||||||||
Cost of service | 731 | 4,035 | 660 | 21 | 5,447 | |||||
Interest on actuarial liabilities | 189,849 | 48,989 | 6,006 | 3,792 | 248,636 | |||||
Expected return on plan assets | (140,753) | (33,807) | (7,119) | (2,933) | (184,612) | |||||
Unrecognized cost of past service | - | 9 | - | - | 9 | |||||
Unrecognized actuarial losses (gains) | - | - | - | - | - | |||||
Increase in liabilities due to adoption of CVM Ruling | ||||||||||
nº 371 | 12,133 | 24,588 | - | 245 | 36,966 | |||||
Total expense | 61,960 | 43,814 | (453) | 1,125 | 106,446 | |||||
Expected participant´s contribution | (18) | (1,644) | (591) | - | (2,253) | |||||
61,942 | 42,170 | (1,044) | 1,125 | 104,193 | ||||||
In the income statement for the nine-month period ended September 30, 2005, the expenses were recorded under the following captions:
Nine Months | ||||||||||
CPFL | CPFL | RGE | CPFL | Consolidated | ||||||
Expenses with the Pension Entity | Paulista | Piratininga | Geração | |||||||
Operating Cost | 49,809 | 17,582 | (1,044) | 178 | 66,525 | |||||
General and Administrative Expenses | - | - | - | 702 | 702 | |||||
Extraordinary Item Net of Tax Effects | 8,008 | 16,228 | - | 184 | 24,420 | |||||
Taxation of Extraordinary Item | 4,125 | 8,360 | - | 61 | 12,546 | |||||
61,942 | 42,170 | (1,044) | 1,125 | 104,193 | ||||||
35
( 22 ) RESERVE FOR CONTINGENCIES |
Consolidated | ||||||||
September 30, 2005 | June 30, 2005 | |||||||
Escrow | Escrow | |||||||
Accrued | Deposits | Accrued | Deposits | |||||
Labor | ||||||||
Various | 57,927 | 37,324 | 61,514 | 31,225 | ||||
Civil | ||||||||
General Damages | 6,835 | 1,903 | 6,907 | 1,959 | ||||
Tariff Increase | 21,892 | 11,269 | 21,697 | 11,781 | ||||
Energy Purchased | 104,513 | 86,972 | 94,065 | 71,447 | ||||
Other | 9,078 | 3,609 | 8,651 | 3,215 | ||||
142,318 | 103,753 | 131,320 | 88,402 | |||||
Tax | ||||||||
FINSOCIAL | 17,568 | 49,721 | 17,416 | 49,290 | ||||
PIS | 11,966 | - | 11,694 | - | ||||
COFINS | 89,432 | 2,317 | 87,225 | 2,317 | ||||
Income Tax | 26,193 | 10,932 | 24,613 | 9,062 | ||||
Other | 10,283 | 8,195 | 9,657 | 8,079 | ||||
155,442 | 71,165 | 150,605 | 68,748 | |||||
Total | 355,687 | 212,242 | 343,439 | 188,375 | ||||
The reserve for contingencies was made based on an appraisal of the risk of losing litigation to which the subsidiaries are parties, whose likelihood of loss is probable in the opinion of the legal advisers and the management of the Company and its subsidiaries.
Possible losses: The subsidiaries are parties to other suits in which management, supported by its legal advisers, believes that the chances of a successful outcome are possible and therefore did not record any provision for losses on these amounts. There is not yet any indication as to whether the chances of a successful outcome of decisions on these issues by the courts or any other decision on similar cases are considered to be probable or remote. The claims related to possible losses as of September 30, 2005 were as follows: (i) labor cases in the amount of R$ 123,897; (ii) civil cases basically represented by personal injuries, in the amount of R$ 115,416; and (iii) claims related to tax issues, principally Income Tax, FINSOCIAL and PASEP, in the amount of R$ 151,403.
Management of the Company and its subsidiaries, based on the opinion of the legal advisers, considers that there are no significant risks that are not covered by provisions in the financial statements or that could result in a significant impact on future results.
36
( 23 ) OTHER ACCOUNTS PAYABLE |
Consolidated | ||||
September | June | |||
Current | 30, 2005 | 30, 2005 | ||
Consumers and Concessionaires | 48,013 | 44,875 | ||
2003 Tariff Review (note 3) | 120,588 | 88,493 | ||
Low Income Consumer Subsidy (note 3) | 5,829 | 6,049 | ||
Advances | 16,629 | 17,299 | ||
Interest on Compulsory Loan | 4,419 | 4,026 | ||
Emergency Capacity Charge - ECE | 23,644 | 31,508 | ||
Emergency Energy Purchase Charge - EAEE | 879 | 886 | ||
Other | 19,096 | 18,479 | ||
Total | 239,097 | 211,615 | ||
Long term | ||||
Funds for Capital Increase | 5,456 | 5,456 | ||
2003 Tariff Review (note 3) | 8,326 | 24,118 | ||
Fund for Reversal | 13,987 | 13,987 | ||
Other | 963 | 2,614 | ||
Total | 28,732 | 46,175 | ||
Emergency Capacity Charges ECE - As from July 20, 2005, consumers of the Interconnected National System have paid 41% less for the Emergency Capacity Charge (ECE) charged on the electricity invoices. As approved by ANEEL, through Resolution nº 154, of July 18, 2005, the charge was reduced from R$ 0.0060 per kilowatt-hour (kWh) to R$ 0.0035/kWh.
( 24 ) SHAREHOLDERS' EQUITY |
The participation of the shareholders in the Equity of the Company as of September 30, 2005 is distributed as follows:
Shareholdings | ||||
September 30, 2005 | ||||
Common Shares |
Interest % | |||
Shareholders | ||||
VBC Energia S.A. | 173,533,244 | 37.65 | ||
521 Participações S.A. | 149,230,369 | 32.38 | ||
Bonaire Participações S.A. | 60,713,509 | 13.17 | ||
BNDES Participações S.A. | 23,005,251 | 4.99 | ||
Board Members | 21 | 0.00 | ||
Executive Officers | 45,078 | 0.01 | ||
Other Shareholders | 54,366,840 | 11.80 | ||
Treasury Shares | 1 | 0.00 | ||
Total | 460,894,313 | 100.00 | ||
37
24.1 Merger of shares of the subsidiary CPFL Geração by CPFL Energia
In Extraordinary General Meetings of CPFL Energia and the subsidiary CPFL Geração held on June 20, 2005, the merger of all the common and preferred shares of the subsidiary CPFL Geração into the equity of CPFL Energia, and the resulting increase of capital in that company were approved. The non-controlling shareholders of CPFL Geração received 1 (one) new common share in CPFL Energia for every 1,622 common or preferred shares held in the subsidiary CPFL Geração.
The conditions of exchange established were based on market price reports, using the discounted cash flow method at current values of the two companies, prepared by an independent, specialized financial institution.
Of the total of 205,487,716 thousand shares, only three shareholders exercised the right to withdraw, at the time of the transaction, in accordance with corporate legislation, representing 2 thousand shares. At the end of this process, CPFL Energia held 100% of the capital of the subsidiary CPFL Geração.
24.2 Capital Increase
On July 14, 2005, the IFC formalized its intention to exercise all its rights arising from the Subscription Bonus issued by the Company on December 5, 2003, by conversion of a loan of R$ 73,668 at the base date July 25, 2005, at the price of R$ 17.71 per share. Issue of 4,159,647 common shares and an increase in the capital of the Company were approved by a Meeting of the Board of Directors held on July 25, 2005.
24.3 Dividend for 2004
In the second quarter of 2005, the Company made a payment of R$ 140,147 referring to the dividend declared and recorded for on the base date December 31, 2004
24.4 Interim Interest on Equity - June 30, 2005
In a meeting of the Board of Directors held on June 29, 2005, it was agreed to declare gross Interest on Equity of R$ 76,920 (R$ 65,382 net of withholding tax - IRRF), corresponding to the gross amount of R$ 0.168412266 and net amount of R$ 0.143150426, per common share. Payment of R$ 65,302 took place in this quarter.
24.5 Distribution of Interim Dividend - June 30, 2005
In a meeting held on August 9, 2005, the Board of Directors approved the distribution and payment of the Interim Dividend for the first half of year 2005, in the amount of R$ 323,677, equivalent to R$ 0.708677137 per common share. Payment of R$ 322,479 was made in the quarter.
38
( 25 ) OPERATING REVENUES |
Consolidated | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Revenue from Electric Energy | ||||||||
Consumer class | ||||||||
Residential | 894,339 | 2,633,327 | 781,077 | 2,290,191 | ||||
Industrial | 879,703 | 2,459,739 | 848,702 | 2,330,729 | ||||
Commercial | 456,136 | 1,370,516 | 394,267 | 1,156,591 | ||||
Rural | 80,437 | 226,988 | 71,659 | 196,049 | ||||
Public Administration | 67,864 | 191,552 | 57,554 | 162,018 | ||||
Public Lighting | 57,344 | 168,395 | 52,907 | 153,201 | ||||
Public Service | 86,704 | 242,092 | 74,800 | 207,386 | ||||
Billed | 2,522,527 | 7,292,609 | 2,280,966 | 6,496,165 | ||||
Unbilled (Net) | 9,911 | 39,398 | 3,006 | 3,020 | ||||
Emergency Charges - ECE/EAEE | 49,341 | 189,704 | 90,285 | 276,569 | ||||
Realization of Extraordinary Tariff Adjustment (note 3) | (64,830) | (190,794) | (54,024) | (174,672) | ||||
Realization of Free Energy (note 3) | (24,512) | (71,740) | (31,984) | (67,035) | ||||
Adjusted of Approved Value of Free Energy | - | - | - | 57,199 | ||||
2003 Tariff Review (note 3) | (28,649) | (55,139) | (117,142) | (77,898) | ||||
Realization of 2003 Tariff Review (note 3) | 11,251 | 19,882 | - | - | ||||
PIS and COFINS - Generators Pass-Through (note 3) | 7,607 | 22,958 | - | - | ||||
Realization PIS and COFINS - Generators Pass-Through | ||||||||
(note 3) | (3,533) | (6,243) | - | - | ||||
2005 Tariff Increase -TUSD (note 3) | 1,486 | 4,009 | - | - | ||||
Realization of 2005 Tariff Increase -TUSD (note 3) | (1,160) | (2,816) | - | - | ||||
2005 Tariff Increase -RGR (note 3) | 1,960 | 1,960 | - | - | ||||
2005 Tariff Increase Purchase of electric energy from | ||||||||
Itaipu (nota 3) | 11,445 | 21,895 | - | - | ||||
ELECTRICITY SALES TO FINAL CONSUMERS | 2,492,844 | 7,265,683 | 2,171,107 | 6,513,348 | ||||
Furnas Centrais Elétricas S.A. | 75,282 | 223,439 | 63,727 | 189,845 | ||||
Other Concessionaires and Licensees | 25,099 | 77,075 | 10,823 | 31,809 | ||||
Current Electric Energy | 9,525 | 23,605 | 1,622 | 9,389 | ||||
ELECTRICITY SALES TO DISTRIBUTORS | 109,906 | 324,119 | 76,172 | 231,043 | ||||
Revenue due to Network Usage Charge | 127,558 | 333,921 | 60,388 | 150,133 | ||||
Low Income Consumer´s Subsidy (note 3) | 4,422 | 15,307 | 3,185 | 9,284 | ||||
Other Revenues and Incomes | 28,300 | 76,772 | 49,065 | 92,656 | ||||
OTHER OPERATING REVENUES | 160,280 | 426,000 | 112,638 | 252,073 | ||||
Total | 2,763,030 | 8,015,802 | 2,359,917 | 6,996,464 | ||||
Adjustment of Approved Value of Free Energy Basically refers to rectification of the amount of R$ 67,536 for the Free Energy transactions at the MAE (current CCEE) at the indirect subsidiary CPFL Piratininga, made by ANEEL in June of 2004. A similar value was reported in the Cost of Electric Energy (note 26).
39
Tariff Review In the third quarter of 2004, the amount of R$ 117,142 recorded by the indirect subsidiary CPFL Piratininga, corresponds to the adjustments made in order to reflect the effects caused by the change in the 2003 provisional tariff review, in accordance with Approved Resolution ANEEL, namely: (i) reversal of assets referring to the difference between 18.08% and 14.68%, amounting to R$ 53,042, (ii) establishing of a provision relating to the negative difference in the percentage of 14.68% to 10.51%, amounting to R$ 64,100 (see description of the adjustments recorded in 2005 in note 3).
Consolidated | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Revenue from Eletric Energy Operations - GWh (*) | ||||||||
Consumer class | ||||||||
Residential | 2,173 | 6,541 | 2,059 | 6,188 | ||||
Industrial | 4,333 | 12,719 | 4,625 | 13,192 | ||||
Commercial | 1,250 | 3,943 | 1,181 | 3,628 | ||||
Rural | 435 | 1,261 | 423 | 1,180 | ||||
Public Administration | 204 | 600 | 187 | 551 | ||||
Public Lighting | 275 | 823 | 270 | 801 | ||||
Public Service | 348 | 1,035 | 346 | 1,017 | ||||
Billed | 9,018 | 26,922 | 9,091 | 26,557 | ||||
Own Consumption | 6 | 17 | 4 | 16 | ||||
ELECTRICITY SALES TO FINAL CONSUMERS | 9,024 | 26,939 | 9,095 | 26,573 | ||||
Furnas Centrais Elétricas S.A. | 763 | 2,264 | 763 | 2,272 | ||||
Other Concessionaires and Licensees | 371 | 1,252 | 151 | 472 | ||||
Current Electric Energy | 365 | 743 | 102 | 439 | ||||
ELECTRICITY SALES TO DISTRIBUTORS | 1,499 | 4,259 | 1,016 | 3,183 | ||||
Total | 10,523 | 31,198 | 10,111 | 29,756 | ||||
Consolidated | ||||
September | September | |||
No. Of Consumers - Thousands (*) (**) | 30, 2005 | 30, 2004 | ||
Consumer class | ||||
Residential | 4,773 | 4,644 | ||
Industrial | 82 | 82 | ||
Commercial | 443 | 436 | ||
Rural | 233 | 229 | ||
Public Administration | 36 | 35 | ||
Public Lighting | 2 | 2 | ||
Public Service | 5 | 5 | ||
Total | 5,574 | 5,433 | ||
40
( 26 ) COST OF ELECTRIC ENERGY |
Consolidated | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Electricity Purchased for Resale | ||||||||
Itaipú Binacional | 207,590 | 657,012 | 239,488 | 724,136 | ||||
Furnas Centrais Elétricas S.A. | 67,228 | 184,553 | 97,702 | 289,945 | ||||
CESP - Cia Energética de São Paulo | 58,574 | 184,585 | 90,132 | 274,152 | ||||
Cia de Geração de Energia Elétrica do Tietê | 26,783 | 76,589 | 38,949 | 118,591 | ||||
Duke Energy Inter. Ger. Paranapanema S.A. | 40,716 | 131,234 | 52,909 | 158,111 | ||||
Tractebel Energia S.A. | 186,292 | 546,855 | 143,672 | 416,293 | ||||
Auction of Energy | 17,354 | 60,782 | - | - | ||||
Petrobrás | 125,291 | 373,753 | 53,899 | 156,052 | ||||
EMAE - Empresa Metropolitana de Águas e Energia | 3,422 | 11,030 | 6,155 | 19,625 | ||||
Cia Estadual Energia Elétrica - CEEE | 2,769 | 7,707 | 5,023 | 13,619 | ||||
AES Uruguaiana Ltda. | 27,828 | 76,355 | 18,179 | 59,155 | ||||
Co-Generators | 61,984 | 101,323 | 54,834 | 81,229 | ||||
Other | 42,337 | 131,935 | 40,883 | 113,021 | ||||
Subtotal | 868,168 | 2,543,713 | 841,825 | 2,423,929 | ||||
Deferral/Amortization - CVA | 34,943 | 54,266 | 34,665 | 73,704 | ||||
CCEAR surplus 3% Surplus | (8,183) | (8,183) | - | - | ||||
Adjustment of Approved Value of Free Energy (note 25) | - | - | - | 67,536 | ||||
PIS and COFINS - Generators Pass-Through (note 25) | 7,607 | 22,958 | - | - | ||||
Credit for PIS/COFINS - IBRACON Instruction nº 1/2004 | (82,279) | (240,617) | (80,101) | (210,167) | ||||
Subtotal | 820,256 | 2,372,137 | 796,389 | 2,355,002 | ||||
Electricity Network Usage Charge | ||||||||
Basic Network Charges | 151,354 | 393,281 | 140,129 | 360,550 | ||||
Charges for Transmission from Itaipu | 16,069 | 43,567 | 13,756 | 38,765 | ||||
Connection Charges | 9,817 | 39,184 | 23,527 | 60,723 | ||||
System Service Charges - ESS | 4,006 | 13,975 | 7,277 | 12,714 | ||||
Subtotal | 181,246 | 490,007 | 184,689 | 472,752 | ||||
Deferral/Amortization - CVA | 12,254 | 135,969 | 33,624 | 56,644 | ||||
Credit for PIS/COFINS - IBRACON Instruction nº 1/2004 | (17,985) | (56,716) | (22,015) | (44,796) | ||||
Subtotal | 175,515 | 569,260 | 196,298 | 484,600 | ||||
Total | 995,771 | 2,941,397 | 992,687 | 2,839,602 | ||||
41
Consolidated | ||||||||
2005 | 2004 | |||||||
Electricity Purchased for Resale - GWh (*) | 3. Quarter | Nine Months | 3. Quarter | Nine Months | ||||
Itaipú Binacional | 2,649 | 7,830 | 2,594 | 7,752 | ||||
Furnas Centrais Elétricas S.A. | 868 | 2,417 | 1,237 | 3,685 | ||||
CESP - Cia Energética de São Paulo | 726 | 2,814 | 1,312 | 3,933 | ||||
Cia de Geração de Energia Elétrica do Tietê | 308 | 913 | 492 | 1,550 | ||||
Duke Energy Inter. Ger. Paranapanema S.A. | 446 | 1,486 | 643 | 2,030 | ||||
Tractebel Energia S.A. | 2,168 | 6,402 | 1,778 | 5,068 | ||||
Auction of Energy | 343 | 1,080 | - | - | ||||
Petrobrás | 1,604 | 4,865 | 721 | 2,163 | ||||
EMAE - Empresa Metropolitana de Águas e Energia | 39 | 131 | 100 | 282 | ||||
Cia Estadual Energia Elétrica - CEEE | 39 | 115 | 84 | 232 | ||||
AES Uruguaiana Ltda. | 219 | 615 | 151 | 554 | ||||
Co-Generators | 562 | 947 | 560 | 828 | ||||
Other | 717 | 2,388 | 798 | 2,367 | ||||
Total | 10,688 | 32,003 | 10,470 | 30,444 | ||||
(*) Information not reviewed by the independent auditors
42
( 27 ) OPERATING EXPENSES |
Parent Company | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
General and Administrative Expenses | ||||||||
Personnel | 170 | 322 | 36 | 114 | ||||
Material | 13 | 24 | 6 | 63 | ||||
Outside Services | 795 | 3,217 | 1,984 | 6,682 | ||||
Leases and Rentals | 12 | 12 | 2 | 2 | ||||
Publicity and Advertising | 575 | 1,309 | 1,534 | 1,617 | ||||
Legal, Judicial and Indemnities | 6 | 165 | 229 | 254 | ||||
Trade Associations | 60 | 212 | 55 | 571 | ||||
Issue of Debentures | - | - | 2,683 | 8,048 | ||||
Other | 160 | 351 | 38 | 310 | ||||
Total | 1,791 | 5,612 | 6,567 | 17,661 | ||||
43
Consolidated | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Selling Expenses | ||||||||
Personnel | 9,602 | 26,772 | 7,690 | 22,783 | ||||
Material | 1,389 | 3,031 | 1,006 | 2,130 | ||||
Outside Services | 11,298 | 32,114 | 12,610 | 33,764 | ||||
Allowance for Doubtful Accounts | 11,063 | 36,594 | 27,735 | 51,836 | ||||
Depreciation and Amortization | 1,416 | 4,537 | 1,059 | 2,880 | ||||
Collection Tariff and Services | 11,094 | 31,869 | 9,009 | 26,915 | ||||
Other | 2,003 | 6,386 | 1,160 | 3,697 | ||||
Total | 47,865 | 141,303 | 60,269 | 144,005 | ||||
General and Administrative Expenses | ||||||||
Personnel | 18,117 | 53,246 | 16,331 | 52,075 | ||||
Employee Pension Plans | 222 | 702 | 3,268 | 4,544 | ||||
Material | 1,808 | 3,349 | 721 | 2,214 | ||||
Outside Services | 31,361 | 80,649 | 24,676 | 73,713 | ||||
Leases and Rentals | 1,339 | 4,160 | 983 | 4,001 | ||||
Depreciation and Amortization | 5,884 | 18,524 | 5,457 | 15,654 | ||||
Publicity and Advertising | 1,756 | 4,003 | 866 | 2,630 | ||||
Legal, Judicial and Indemnities | 3,550 | 13,204 | 7,244 | 13,772 | ||||
Donations, Contributions and Subsidies | 771 | 2,968 | 1,220 | 4,659 | ||||
PERCEE | 194 | 1,562 | 2,020 | 9,495 | ||||
Issue of Debentures | - | - | 2,683 | 8,048 | ||||
Other | 3,777 | 10,332 | 1,432 | 9,002 | ||||
Total | 68,779 | 192,699 | 66,901 | 199,807 | ||||
Other Operating Expenses | ||||||||
Inspection Fee | 4,294 | 12,192 | 3,738 | 9,429 | ||||
Energy Efficiency Research | 5,495 | 17,109 | 4,759 | 10,240 | ||||
Total | 9,789 | 29,301 | 8,497 | 19,669 | ||||
Goodwill Amortization | 2,036 | 6,110 | 19,517 | 58,552 | ||||
Total Operating Expenses | 128,469 | 369,413 | 155,184 | 422,033 | ||||
44
( 28 ) FINANCIAL INCOME (EXPENSE) |
Parent Company | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Financial Income | ||||||||
Income from Temporary Cash Investments | 12,675 | 37,218 | 17,695 | 30,849 | ||||
Interest on Tax Credits | 1,658 | 4,446 | 615 | 1,355 | ||||
Interest on Intercompany Loans | 1,277 | 3,294 | 2,797 | 9,287 | ||||
Other | 1,054 | 2,057 | 1,818 | 2,452 | ||||
PIS and COFINS | - | (7,425) | (599) | (7,186) | ||||
Subtotal | 16,664 | 39,590 | 22,326 | 36,757 | ||||
Interest on Equity | - | 80,273 | - | 52,110 | ||||
Total | 16,664 | 119,863 | 22,326 | 88,867 | ||||
Financial Expense | ||||||||
Debt Charges | 39 | (3,546) | (42,537) | (119,013) | ||||
Banking Expenses | (1,096) | (3,436) | (1,585) | (5,497) | ||||
Monetary variations | (4,325) | (14,924) | 3,216 | (5,607) | ||||
Other | (36) | (96) | (427) | (642) | ||||
PIS and COFINS credit - Technical Interpretation IBRACON | ||||||||
No. 1/2004 | - | - | 597 | 6,168 | ||||
Subtotal | (5,418) | (22,002) | (40,736) | (124,591) | ||||
Goodwill Amortization | (13,954) | (40,829) | (18) | (54) | ||||
Interest on Equity | - | (76,920) | - | - | ||||
Total | (19,372) | (139,751) | (40,754) | (124,645) | ||||
Net financial expense | (2,708) | (19,888) | (18,428) | (35,778) | ||||
45
Consolidated | ||||||||
2005 | 2004 | |||||||
3. Quarter | Nine Months |
3. Quarter | Nine Months |
|||||
Financial Income | ||||||||
Income from Temporary Cash Investments | 25,988 | 91,881 | 23,879 | 53,667 | ||||
Late Payments Charges | 21,124 | 63,162 | 21,911 | 61,529 | ||||
Exchange and Monetary Variations | (5,538) | (18,305) | (12,584) | 8,117 | ||||
Interest on CVA and Parcel "A" | 38,233 | 110,753 | 38,067 | 96,556 | ||||
Discount | 3,526 | 7,964 | 1,915 | 5,015 | ||||
Interest from Extraordinary Tariff Adjustment | 27,173 | 82,492 | 28,856 | 88,667 | ||||
Interest on Intercompany Loans | - | - | 903 | 2,708 | ||||
Dividends Received from Non-Controlled Companies | 3,015 | 7,723 | 32 | 878 | ||||
Other | 10,384 | 31,121 | 9,257 | 21,758 | ||||
PIS and COFINS | - | (8,358) | (2,436) | (26,019) | ||||
Total | 123,905 | 368,433 | 109,800 | 312,876 | ||||
Financial Expense | ||||||||
Debt Charges | (137,065) | (424,852) | (177,685) | (504,211) | ||||
Banking Expenses | (15,294) | (43,780) | (15,318) | (43,679) | ||||
Monetary Variations | (5,860) | (85,585) | (41,467) | (202,233) | ||||
Amortization of Deferred Exchange Variation | - | - | (2,229) | (8,170) | ||||
Interest on Intercompany Loans | - | - | (296) | (966) | ||||
Other | (7,801) | (24,601) | (9,836) | (21,090) | ||||
PIS and COFINS credit - Technical Interpretation IBRACON No. 1/2004 | - | - | 5,513 | 37,572 | ||||
Subotal | (166,020) | (578,818) | (241,318) | (742,777) | ||||
Goodwill Amortization | (29,255) | (86,733) | (14,760) | (44,278) | ||||
Interest on Equity | - | (81,256) | - | (3,180) | ||||
Total | (195,275) | (746,807) | (256,078) | (790,235) | ||||
Net financial expense | (71,370) | (378,374) | (146,278) | (477,359) | ||||
46
( 29 ) FINANCIAL INSTRUMENTS |
29.1 CONSIDERATIONS ON RISKS
The businesses of the Company and its subsidiaries basically comprise the generation of electric energy, commercialization and sales of energy to final consumers, as public service utilities, the activities and tariffs of which are largely regulated by ANEEL.
The principal market risk factors that affect business are related basically to fluctuations in exchange rates and interest, credit, energy shortages, and prepayments of debts. The Company and its subsidiaries manage these risks in such a way as to minimize them through the compensation mechanism (CVA), contracting hedge/swap operations, adopting collection policies, obtaining guarantees and cutting off supplies to defaulting customers and monitoring contractual obligations.
29.2 VALUATION OF FINANCIAL INSTRUMENTS
The Company and its subsidiaries maintain operating and financial policies and strategies aimed at ensuring the liquidity, security and profitability of their assets. As a result, control and follow-up procedures are in place on the transactions and balances of financial instruments, for the purpose of monitoring the risks and current rates in relation to those practiced in the market rates.
As of September 30, 2005, the principal financial asset and liability instruments of the Company and its subsidiaries are as follows:
The carrying values of the loans and financing, debentures and derivatives, compared with the market borrowing rates as of September 30, 2005 and June 30, 2005, are as follows:
Parent Company | ||||||||
September 30, 2005 | June 30, 2005 | |||||||
Book Value | Fair Value | Book Value | Fair Value | |||||
Loans and Financing | - | - | 73,706 | 82,446 | ||||
Derivatives | 23,506 | 23,727 | 30,748 | 27,783 | ||||
Total | 23,506 | 23,727 | 104,454 | 110,229 | ||||
47
Consolidated | ||||||||
September 30, 2005 | June 30, 2005 | |||||||
Book Value | Fair Value | Book Value | Fair Value | |||||
Loans and Financing | 2,699,590 | 2,651,288 | 2,861,892 | 2,843,518 | ||||
Debentures | 1,948,855 | 1,920,323 | 1,923,035 | 1,930,303 | ||||
Derivatives | 75,090 | 73,476 | 100,117 | 95,416 | ||||
Total | 4,723,535 | 4,645,087 | 4,885,044 | 4,869,237 | ||||
( 30 ) RELEVANT FACTS |
a) Segregation of Shareholding
Pursuant to Law nº 10,848 of March 15, 2004, the subsidiary CPFL Paulista submitted to ANEEL the model for segregation of the shareholdings in the subsidiaries CPFL Piratininga and RGE, by transfer of the share control to CPFL Energia S.A., which involves a reduction in capital.
ANEEL, in an Executive Meeting held on September 5, 2005, agreed to the segregation and an extension of the term for implementation of the corporate structuring, as published in Authorizing Resolution nº 305.
The corporate segregation process should be introduced in stages, whereby transfer of the share control of CPFL Piratininga should take place by April 14, 2006, and the transfer of the control of RGE by March 14, 2007. These operations should be supported by Accounting Appraisal Reports, approved in accordance with corporate legislation, to be approved by ANEEL prior to the holding of the respective general meetings of the companies' shareholders.
Once the corporate restructuring process has been concluded, CPFL Energia will have direct control of CPFL Piratininga and RGE. CPFL Energia and its subsidiaries will inform their shareholders and the market in general as to the implementation of each stage of the process.
b) Repass Tariff Itaipu
ANEEL, through Approved Resolution nº 210 of October 3, 2005, authorized by Ministry of Finance Administrative Ordinance nº 338, of September 29, 2005, established the tariff adjustment for power from Itaipu Binacional at 12.10%, effective in the period from October 1 to December 31, 2006.
This change in price does not affect the distributors, in view of the mechanism for setting off changes in unmanageable costs, and this price variation should comprise part of the balance of the Recoverable Cost Variations Parcel "A" (CVA) and will be passed through to the electricity tariffs in the subsidiaries' next tariff adjustment.
48
( 31 ) SUBSEQUENT EVENT |
a) Commercial Operation of UHE Barra Grande Plant
On November 01, 2005, the first generating unit of the Barra Grande Hydroelectric Plant started operating. The other units are scheduled to start operations in January and April 2006.
b) Filling of Reservoir of Campos Novos Hydroelectric Plant
On October 3, 2005, FATMA (Environment Foundation of the State of Santa Catarina) issued the authorization to fill the Reservoir of the Campos Novos Hydroelectric Plant, through Official Letter Nº DICA-002610. On October 10, 2005, with a reduction in the flow of the river to neighboring tributaries of 1,000 m3/s, the sluice gates of the bypass tunnels were lowered, effectively starting the filling of the Reservoir.
c) Merger of Shares of CPFL Piratininga and CPFL Paulista
A General Meeting of Shareholders scheduled for November 22, 2005 will discuss the proposed corporate reorganization concerning the merger of the shares held by the minority shareholders of the subsidiary CPFL Piratininga by CPFL Paulista and, subsequently, the merger of the shares held by the minority shareholders of CPFL Paulista by the parent company CPFL Energia.
This reorganization will involve the transfer of all the common and preferred shares of the non-controlling shareholders of the subsidiary CPFL Piratininga to the equity of CPFL Paulista, resulting in a capital increase in CPFL Paulista of R$ 55,407,328.41, through the issue of 58,745,376 common shares and 168,047,235 class A preferred shares, all book entry shares and without par value; and the subsequent transfer of all the shares of the non-controlling shareholders of CPFL Paulista to the equity of CPFL Energia, resulting in an increase of capital in CPFL Energia of R$ 468,201,127.47, through the issue of 18,862,417 book entry common shares without par value.
The current shareholders of the subsidiary CPFL Piratininga will receive: (i) 1 (one) common share of CPFL Paulista for every 6.053721422 common shares of CPFL Piratininga; and (ii) 1 (one) class A preferred share of CPFL Paulista for every 6.053721422 preferred shares of CPFL Piratininga.
Subsequently, the shareholders of CPFL Paulista, including new shareholders resulting from the merger of the shares of the subsidiary CPFL Piratininga, will receive 1 (one) common share of CPFL Energia for every 101.600724349 common or preferred class A, B or C shares held by them in CPFL Paulista.
The exchange conditions of exchange established above were based on market price reports, using the cash flow method discounted to present values of the three companies, as prepared by an independent, specialized financial institution.
d) Energy Purchase and Sale Auction (information not examined by the Independent Accountants)
The subsidiaries CPFL Paulista and CPFL Piratininga, as public electricity distribution service concessionaires, participated on October 11, 2005 in the 3rd and 4th electric energy auctions as purchasers of energy and acquired energy under contracts for supply period of 3 years starting in 2006 and 8 years starting in 2009. The table below shows the accumulated amounts of energy and the average purchase price of the contracts for the years 2005 to 2009, also including the purchases already made in the December 2004 and April 2005 auctions:
49
CPFL Paulista | ||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||
Amount purchased at auction (average MW) | 112.761 | 313.561 | 335.546 | 457.450 | 588.090 | |||||
Average price ( R$/MWh) (*) | 57.51 | 63.58 | 64.38 | 69.50 | 75.97 | |||||
Average of Initial Contracts in January 2005 (R$/MWh) | 75.26 | - | - | - | - | |||||
CPFL Piratininga | ||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||
Amount purchased at auction (average MW) | 59.348 | 125.560 | 125.560 | 162.808 | 219.142 | |||||
Average price ( R$/MWh) (*) | 57.51 | 62.37 | 62.37 | 67.28 | 75.51 | |||||
Average of Initial Contracts in January 2005 (R$/MWh) | 87.81 | - | - | - | - |
(*)The base date of the prices is the date on which each of the auctions were held.
The subsidiary RGE did not participate in these auctions for the acquisition of electric energy
The companies providing energy in the auctions are: CDSA, CEB, CEEE, CELPA, CEMIG GERAÇÃO, CESP, CGTEE, CHESF, COPEL GERAÇÃO, DUKE PARANAPANEMA, ELETRONORTE, EMAE, ENERGEST, FURNAS, LIGHT, TRACTEBEL and TRACTEBEL COMERCIALIZADORA.
50
( 32 ) CASH FLOW |
Parent company | Consolidated | |||||||
September | September | September | September | |||||
30, 2005 | 30, 2004 | 30, 2005 | 30, 2004 | |||||
OPERATING CASH FLOW | ||||||||
Income for the period | 640,561 | 118,835 | 640,561 | 118,835 | ||||
ADJUSTMENTS TO RECONCILE INCOME (LOSS) TO CASH | ||||||||
DERIVED FROM OPERATIONS | ||||||||
Non-controlling shareholders' interest | - | - | 31,107 | 8,336 | ||||
Remuneration of Regulatory Rationing Assets | - | - | (138,926) | (130,408) | ||||
Tariff Review - 2003 | - | - | 35,257 | 77,898 | ||||
Tariff Adjustment - 2005 | - | - | (40,382) | - | ||||
Low Income Consumers Subsidy | - | - | (15,307) | (9,284) | ||||
Depreciation and amortization | 40,829 | 54 | 318,111 | 306,228 | ||||
Provision for contingencies | - | - | 52,152 | 26,078 | ||||
Interest and monetary restatement | (7,200) | (10,733) | (29,144) | 91,022 | ||||
Unrealized losses (gains) on derivative instruments | 3,394 | 13,884 | (12,662) | 14,640 | ||||
Cost of Pension Plan | - | - | 94,552 | 172,522 | ||||
Equity gain (loss) | (673,658) | (224,588) | - | - | ||||
(Gains) losses on changes in participation in subsidiaries | - | 205 | - | (1,053) | ||||
Loss (gain) on the write-off of permanent assets | - | - | 2,379 | 6,890 | ||||
Tax Credits assets and liabilities | - | - | 24,678 | (71,022) | ||||
Other | 44 | - | (304) | 2,846 | ||||
DECREASE (INCREASE) IN OPERATING ASSETS | ||||||||
- Consumers, concessionaires and licensees | - | - | 93,023 | 88,429 | ||||
- Dividends received | 571,759 | 250,582 | - | - | ||||
- Other receivables | 115 | - | 30,835 | 26,919 | ||||
- Recoverable Taxes | 17,539 | (6,357) | (199,813) | (36,356) | ||||
- Financial Investment | (106,234) | (116,805) | 33,945 | (249,692) | ||||
- Inventories | - | - | (1,498) | 178 | ||||
- Deferred cost variations | - | - | 69,686 | (28,848) | ||||
- Judicial deposits | - | - | (66,846) | (22,672) | ||||
- Other operating assets | (202) | 8,715 | (15,100) | 20,582 | ||||
INCREASE (DECREASE) IN OPERATING LIABILITIES | ||||||||
- Suppliers | (5,670) | (28) | (46,974) | 47,755 | ||||
- Taxes and social contributions | (15,702) | (216) | 193,118 | 77,410 | ||||
- Payroll | 3 | - | (108) | 132 | ||||
- Deferred gain variations | - | - | 66,077 | 8,558 | ||||
- Other liabilities with private pension entity | - | - | (86,216) | (76,441) | ||||
- Interest on debts | (3,556) | (63,856) | (29,007) | (37,265) | ||||
- Loan and financing - Incorporated Interest | - | - | 72,943 | 108,284 | ||||
- Regulatory charges | - | - | 8,050 | 32,431 | ||||
- Related Party | - | 58 | - | - | ||||
- Other liabilities | 2 | 9 | 15,111 | 19,985 | ||||
CASH FLOW PROVIDED BY (USED IN) OPERATIONS | 462,024 | (30,241) | 1,099,298 | 592,917 | ||||
INVESTING ACTIVITIES | ||||||||
- Acquisitions of equity interests | (2,828) | - | (1,866) | - | ||||
- Acquisitions of fixed assets | (87) | - | (420,932) | (436,249) | ||||
- Special obligations | - | - | 13,680 | 27,521 | ||||
- Additions to deferred charges | - | - | (5,203) | (9,751) | ||||
- Proceeds from sale of fixed assets | - | - | 8,504 | 7,094 | ||||
- Operational Loan Contract with Subsidiary and Associated Company | - | 164,453 | - | - | ||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (2,915) | 164,453 | (405,817) | (411,385) | ||||
FINANCING ACTIVITIES | ||||||||
- Loan and financing obtained | - | 328,150 | 678,308 | 1,113,412 | ||||
- Payments of loans, financing and debentures | - | - | (998,941) | (763,299) | ||||
- Dividends paid | (527,928) | (100,000) | (555,974) | (10,105) | ||||
- Deferred Charges | - | (1,084) | - | (1,084) | ||||
- Capital Increase | - | - | - | (100,000) | ||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (527,928) | 227,066 | (876,607) | 238,924 | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (68,819) | 361,278 | (183,126) | 420,456 | ||||
OPENING BALANCE OF CASH AND CASH EQUIVALENTS | 102,119 | 81,338 | 499,838 | 374,612 | ||||
Net cash increase due to changes in participation in subsidiaries | - | - | 180 | - | ||||
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS | 33,300 | 442,616 | 316,892 | 795,068 | ||||
SUPPLEMENTARY INFORMATION | ||||||||
- Taxes paid | - | - | 289,431 | 179,020 | ||||
- Interest paid | 3,985 | 179,896 | 366,452 | 522,858 | ||||
3,985 | 179,896 | 655,883 | 701,878 | |||||
CASH AND CASH EQUIVALENTS | December, 2003 | September, 2004 | December, 2004 | September, 2005 | ||||
PARENT COMPANY | ||||||||
Balance according to Corporation Law | 81,338 | 571,541 | 186,385 | 94,214 | ||||
Reclassification - FAS 95 (1) | - | (128,925) | (84,266) | (60,914) | ||||
Adjusted balance | 81,338 | 442,616 | 102,119 | 33,300 | ||||
CONSOLIDATED | ||||||||
Balance according to Corporation Law | 374,612 | 947,761 | 817,724 | 471,247 | ||||
Reclassification - FAS 95 (1) | - | (152,693) | (317,886) | (154,355) | ||||
Adjusted balance | 374,612 | 795,068 | 499,838 | 316,892 | ||||
1) Adjustment made to cash and cash equivalents to adjust the Cash Flow Statement to the criteria established by FAS 95 Statements of Cash Flow. In accordance with this criterion, short-term cash investments that although having immediate liquidity, have maturity dates exceeding 90 days with anticipated redemption subject to their market value are subject to reclassification to the Financial Investments line.
51
Analysis of Results CPFL Energia Individual
CPFL Energia, as a holding company, does not have any own cash flow. Therefore, in order to manage its investments, it depends directly on the results of the operations of its subsidiaries, the receipt of dividends, funds from shareholders and funds raised in the financial market.
There was an upturn in results in the quarter in relation to the equivalent period of the prior year, principally as a result of a reduction in operating expenses, improvements in financial income (expense) and equity gains, as follows:
Financial income (expense):
The net financial result in the 3rd quarter of 2005 was an expense of R$ 2,708 thousand, R$ 15,720 thousand lower compared to the expense of R$ 18,428 thousand returned in the equivalent period of 2004.
The improvement noted in the financial result is largely due to liquidation of the indebtedness for payment of the debentures in October 2004 and liquidation of the loan from IFC by conversion of the debt into shares in the Company that took place in 2005. This effect was also partially off set by the increase in the expense of amortization of goodwill arising from the application of the concepts of CVM Instruction nº 319 by the subsidiary CPFL Paulista.
Gains from Equity Interests:
The equity gains are related to the performance of the subsidiaries, as follows:
2005 | 2004 | |||||||
Subsidiaries | 3. Quarter | Nine Months | 3. Quarter | Nine Months | ||||
CPFL Paulista | 180,613 | 475,795 | (19,503) | 98,097 | ||||
CPFL Geração | 31,821 | 85,454 | 13,746 | 50,468 | ||||
CPFL Brasil | 34,200 | 112,325 | 24,761 | 76,023 | ||||
CPFL Piratininga | 62 | 84 | - | - | ||||
Total | 246,696 | 673,658 | 19,004 | 224,588 | ||||
52
06.01 - CONSOLIDATED BALANCE SHEET - ASSETS (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 09/30/2005 | 4 - 06/30/2005 |
1 | Total assets | 12,798,195 | 12,893,333 |
1.01 | Current assets | 3,292,504 | 3,353,130 |
1.01.01 | Cash and banks | 471,247 | 705,219 |
1.01.02 | Credits | 2,692,165 | 2,509,513 |
1.01.02.01 | Consumers, concessionaires and licensees | 1,758,742 | 1,712,083 |
1.01.02.02 | Other receivables | 59,853 | 61,369 |
1.01.02.03 | Financial Investments | 21,814 | 19,451 |
1.01.02.04 | Recoverable taxes | 348,430 | 290,135 |
1.01.02.05 | (-) Allowance for doubtful accounts | (43,956) | (53,459) |
1.01.02.06 | Deferred costs variations | 501,525 | 431,998 |
1.01.02.07 | Prepaid expenses | 45,757 | 47,936 |
1.01.03 | Inventories | 9,073 | 8,245 |
1.01.04 | Other | 120,019 | 130,153 |
1.01.04.01 | Derivative contracts | 1,125 | 0 |
1.01.04.02 | Other | 118,894 | 130,153 |
1.02 | Noncurrent assets | 2,612,280 | 2,700,351 |
1.02.01 | Credits | 2,470,993 | 2,563,786 |
1.02.01.01 | Consumers, concessionaires and licensees | 446,320 | 496,374 |
1.02.01.02 | Other receivables | 83,039 | 99,445 |
1.02.01.03 | Escrow deposits | 212,242 | 188,375 |
1.02.01.04 | Financial Investments | 108,622 | 110,059 |
1.02.01.05 | Recoverable taxes | 73,150 | 65,281 |
1.02.01.06 | Deferred tax credits | 985,598 | 1,017,109 |
1.02.01.07 | Deferred costs variations | 539,591 | 567,108 |
1.02.01.08 | Prepaid expenses | 22,431 | 20,035 |
1.02.02 | Related parties | 0 | 0 |
1.02.02.01 | Associated companies | 0 | 0 |
1.02.02.02 | Subsidiaries | 0 | 0 |
1.02.02.03 | Other related parties | 0 | 0 |
1.02.03 | Other | 141,287 | 136,565 |
1.02.03.01 | Derivative contracts | 569 | 0 |
1.02.03.02 | Other | 140,718 | 136,565 |
1.03 | Permanent assets | 6,893,411 | 6,839,852 |
1.03.01 | Investments | 2,789,633 | 2,824,587 |
1.03.01.01 | Associated companies | 0 | 0 |
1.03.01.02 | Investments in subsidiaries | 1,987,289 | 2,016,542 |
1.03.01.02.01 | Goodwill or negative goodwill | 1,987,289 | 2,016,542 |
1.03.01.03 | Other investments | 802,344 | 808,045 |
1.03.01.03.01 | Leased assets | 772,095 | 777,795 |
1.03.01.03.02 | Other | 30,249 | 30,250 |
1.03.02 | Property, plant and equipment | 4,061,101 | 3,973,532 |
1.03.02.01 | Property, plant and equipment | 4,685,552 | 4,586,959 |
1.03.02.02 | (-) Special obligation linked to the concession | (624,451) | (613,427) |
1.03.03 | Deferred charges | 42,677 | 41,733 |
53
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 09/30/2005 | 4 - 06/30/2005 |
2 | Total liabilities and shareholders' equity | 12,798,195 | 12,893,333 |
2.01 | Current liabilities | 3,247,544 | 3,430,386 |
2.01.01 | Loans and financing | 843,546 | 852,383 |
2.01.01.01 | Interest on debts | 52,763 | 47,406 |
2.01.01.02 | Loans and financing | 790,783 | 804,977 |
2.01.02 | Debentures | 343,513 | 309,739 |
2.01.02.01 | Interest on debentures | 74,553 | 41,795 |
2.01.02.02 | Debentures | 268,960 | 267,944 |
2.01.03 | Suppliers | 678,778 | 652,827 |
2.01.04 | Taxes and social contributions payable | 626,396 | 523,742 |
2.01.05 | Dividends and interest on equity | 10,157 | 413,765 |
2.01.06 | Reserves | 5,069 | 7,627 |
2.01.06.01 | Profit sharing | 5,069 | 7,627 |
2.01.07 | Related parties | 0 | 0 |
2.01.08 | Other | 740,085 | 670,303 |
2.01.08.01 | Payroll | 3,684 | 3,377 |
2.01.08.02 | Employee pension plans | 90,391 | 95,080 |
2.01.08.03 | Regulatory charges | 69,554 | 67,739 |
2.01.08.04 | Accrued liabilities | 40,289 | 32,661 |
2.01.08.05 | Deferred gains variations | 250,158 | 194,797 |
2.01.08.06 | Derivative contracts | 46,912 | 65,034 |
2.01.08.07 | Other | 239,097 | 211,615 |
2.02 | Long-term liabilities | 4,914,402 | 5,151,126 |
2.02.01 | Loans and financings | 1,856,044 | 2,009,509 |
2.02.02 | Debentures | 1,605,342 | 1,613,296 |
2.02.03 | Reserves | 355,687 | 343,439 |
2.02.03.01 | Reserve for contingencies | 355,687 | 343,439 |
2.02.04 | Related parties | 0 | 0 |
2.02.05 | Other | 1,097,329 | 1,184,882 |
2.02.05.01 | Suppliers | 167,979 | 219,340 |
2.02.05.02 | Employee pension plans | 817,978 | 805,827 |
2.02.05.03 | Taxes and social contributions payable | 41,104 | 64,097 |
2.02.05.04 | Derivative contracts | 29,872 | 35,083 |
2.02.05.05 | Deferred gains variations | 11,664 | 14,360 |
2.02.05.06 | Other | 28,732 | 46,175 |
2.03 | Deferred income | 0 | 0 |
2.04 | Non-controlling shareholders interest | 115,750 | 104,954 |
54
06.02 - CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 09/30/2005 | 4 - 06/30/2005 |
2.05 | Shareholders equity | 4,520,499 | 4,206,867 |
2.05.01 | Capital | 4,266,589 | 4,192,921 |
2.05.02 | Capital reserves | 0 | 0 |
2.05.03 | Revaluation reserves | 0 | 0 |
2.05.03.01 | Own assets | 0 | 0 |
2.05.03.02 | Subsidiary/associated companies | 0 | 0 |
2.05.04 | Profit reserves | 13,946 | 13,946 |
2.05.04.01 | Legal | 13,946 | 13,946 |
2.05.04.02 | Statutory | 0 | 0 |
2.05.04.03 | For contingencies | 0 | 0 |
2.05.04.04 | Unrealized profits | 0 | 0 |
2.05.04.05 | Profit retention | 0 | 0 |
2.05.04.06 | Special reserve for undistributed dividends | 0 | 0 |
2.05.04.07 | Other profit reserves | 0 | 0 |
2.05.05 | Retained earnings | 239,964 | 0 |
55
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 | 4 - 01/01/2005 to 09/30/2005 | 5 - 07/01/2004 to 09/30/2004 | 6 - 01/01/2004 to 09/30/2004 |
3.01 | Operating revenues | 2,763,030 | 8,015,802 | 2,359,917 | 6,996,464 |
3.02 | Deductions from operating revenues | (806,607) | (2,337,062) | (732,647) | (2,088,988) |
3.02.01 | ICMS | (490,618) | (1,406,355) | (422,299) | (1,198,416) |
3.02.02 | PIS | (45,779) | (127,493) | (37,913) | (111,629) |
3.02.03 | COFINS | (210,075) | (581,757) | (171,225) | (468,047) |
3.02.04 | ISS | (253) | (577) | (192) | (431) |
3.02.05 | Global Reserve Reversal | (10,541) | (31,176) | (10,733) | (33,896) |
3.02.06 | Emergency charges (ECE/EAEE) | (49,341) | (189,704) | (90,285) | (276,569) |
3.03 | Net operating revenues | 1,956,423 | 5,678,740 | 1,627,270 | 4,907,476 |
3.04 | Cost of sales and/or services | (1,347,385) | (3,944,103) | (1,295,644) | (3,706,217) |
3.04.01 | Cost of electric energy | (995,771) | (2,941,397) | (992,687) | (2,839,602) |
3.04.02 | Payroll | (53,007) | (151,931) | (48,008) | (145,337) |
3.04.03 | Employee pension plans | (22,187) | (66,525) | (50,428) | (137,440) |
3.04.04 | Material | (9,249) | (26,054) | (7,699) | (20,907) |
3.04.05 | Outsourced services | (20,824) | (68,230) | (21,490) | (57,691) |
3.04.06 | Depreciation and amortization | (68,068) | (202,207) | (64,128) | (184,864) |
3.04.07 | Fuel consumption account - CCC | (105,104) | (278,752) | (58,211) | (180,622) |
3.04.08 | Energy development account - CDE | (68,849) | (194,476) | (49,260) | (129,280) |
3.04.09 | Other | (1,361) | (8,001) | (2,452) | (4,984) |
3.04.10 | Services provided by third parties | (2,965) | (6,530) | (1,281) | (5,490) |
3.05 | Gross operating income | 609,038 | 1,734,637 | 331,626 | 1,201,259 |
3.06 | Operating Expenses/Income | (199,839) | (747,787) | (301,462) | (899,392) |
3.06.01 | Selling | (47,865) | (141,303) | (60,269) | (144,005) |
3.06.02 | General and administrative | (68,779) | (192,699) | (66,901) | (199,807) |
56
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 | 4 - 01/01/2005 to 09/30/2005 | 5 - 07/01/2004 to 09/30/2004 | 6 - 01/01/2004 to 09/30/2004 |
3.06.03 | Financial | (71,370) | (378,374) | (146,278) | (477,359) |
3.06.03.01 | Financial income | 123,905 | 368,433 | 109,800 | 312,876 |
3.06.03.02 | Financial expenses | (195,275) | (746,807) | (256,078) | (790,235) |
3.06.03.02.01 | Interest on Equity | 0 | (81,256) | 0 | (3,180) |
3.06.03.02.02 | Amortization of investment goodwill | (29,255) | (86,733) | (14,760) | (44,278) |
3.06.03.02.03 | Other financial expenses | (166,020) | (578,818) | (241,318) | (742,777) |
3.06.04 | Other operating income | 0 | 0 | 0 | 0 |
3.06.05 | Other operating expense | (11,825) | (35,411) | (28,014) | (78,221) |
3.06.05.01 | Merged Goodwill | (2,036) | (6,110) | (19,517) | (58,552) |
3.06.05.02 | Other | (9,789) | (29,301) | (8,497) | (19,669) |
3.06.06 | Equity in subsidiaries | 0 | 0 | 0 | 0 |
3.07 | Income (loss) from operations | 409,199 | 986,850 | 30,164 | 301,867 |
3.08 | Nonoperating income (expense) | 464 | (1,733) | (3,822) | (8,568) |
3.08.01 | Income | 4,406 | 7,934 | 1,723 | 4,739 |
3.08.02 | Expenses | (3,942) | (9,667) | (5,545) | (13,307) |
3.09 | Income before taxes on income and minority interest | 409,663 | 985,117 | 26,342 | 293,299 |
3.10 | Income tax and social contribution | (132,285) | (325,646) | (73,450) | (201,375) |
3.10.01 | Social contribution | (33,984) | (87,103) | (19,123) | (54,008) |
3.10.02 | Income tax | (98,301) | (238,543) | (54,327) | (147,367) |
3.11 | Deferred income tax and social contribution | (18,517) | (44,639) | 47,633 | 56,464 |
3.11.01 | Deferred Social contribution | (5,484) | (10,262) | 12,466 | 16,128 |
3.11.02 | Deferred Income tax | (13,033) | (34,377) | 35,167 | 40,336 |
3.12 | Statutory profit sharing/contributions | (18,897) | (55,527) | (6,516) | (32,733) |
3.12.01 | Profit sharing | (10,797) | (31,107) | 1,617 | (8,336) |
3.12.02 | Contributions | (8,100) | (24,420) | (8,133) | (24,397) |
3.12.02.01 | Extraordinary item net of tax effects | (8,100) | (24,420) | (8,133) | (24,397) |
3.13 | Reversal of interest on equity | 0 | 81,256 | 0 | 3,180 |
57
07.01 - CONSOLIDATED INCOME STATEMENT (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 | 4 - 01/01/2005 to 09/30/2005 | 5 - 07/01/2004 to 09/30/2004 | 6 - 01/01/2004 to 09/30/2004 |
3.14 | Non-controlling shareholder's interest | 0 | 0 | 0 | 0 |
3.15 | Net income (loss) for the period | 239,964 | 640,561 | (5,991) | 118,835 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 460,894,312 | 460,894,312 | 411,869,796 | 411,869,796 | |
EARNINGS PER SHARE | 0.52065 | 1.38982 | 0.28853 | ||
LOSSES PER SHARE | (0.01455) |
58
08.01 COMMENTS ON CONSOLIDATED PERFORMANCE OF THE QUARTER
Analysis of Results CPFL Energia Consolidated
3. Quarter | Nine Months | |||||||||||
Information (Consolidated - R$ thousands) | ||||||||||||
2005 | 2004 | Variation | 2005 | 2004 | Variation | |||||||
GROSS REVENUE | 2,763,030 | 2,359,917 | 17.1% | 8,015,802 | 6,996,464 | 14.6% | ||||||
Electricity sales to final consumers | 2,492,844 | 2,171,107 | 14.8% | 7,265,683 | 6,513,348 | 11.6% | ||||||
Electricity sales to distributors | 109,906 | 76,172 | 44.3% | 324,119 | 231,043 | 40.3% | ||||||
Other operating revenues | 160,280 | 112,638 | 42.3% | 426,000 | 252,073 | 69.0% | ||||||
DEDUCTION FROM OPERATING REVENUE | (806,607) | (732,647) | 10.1% | (2,337,062) | (2,088,988) | 11.9% | ||||||
NET OPERATING REVENUE | 1,956,423 | 1,627,270 | 20.2% | 5,678,740 | 4,907,476 | 15.7% | ||||||
ENERGY COST | (995,771) | (992,687) | 0.3% | (2,941,397) | (2,839,602) | 3.6% | ||||||
Electricity Purchased for resale | (820,256) | (796,389) | 3.0% | (2,372,137) | (2,355,002) | 0.7% | ||||||
Electricity Network Usage Charges | (175,515) | (196,298) | -10.6% | (569,260) | (484,600) | 17.5% | ||||||
OPERATING COST/EXPENSE | (480,083) | (458,141) | 4.8% | (1,372,119) | (1,288,648) | 6.5% | ||||||
Personnel | (81,321) | (72,236) | 12.6% | (233,124) | (220,983) | 5.5% | ||||||
Employee Pension Plan | (22,409) | (53,696) | -58.3% | (67,227) | (141,984) | -52.7% | ||||||
Material | (14,087) | (9,886) | 42.5% | (35,696) | (28,362) | 25.9% | ||||||
Outsourced Services | (64,130) | (59,390) | 8.0% | (182,816) | (166,758) | 9.6% | ||||||
Depreciation and Amortization | (75,460) | (70,644) | 6.8% | (225,542) | (203,398) | 10.9% | ||||||
Merged Goodwill Amortization | (2,036) | (19,517) | -89.6% | (6,110) | (58,552) | -89.6% | ||||||
Fuel consumption account - CCC | (105,104) | (58,211) | 80.6% | (278,752) | (180,622) | 54.3% | ||||||
Energy development account - CDE | (68,849) | (49,260) | 39.8% | (194,476) | (129,280) | 50.4% | ||||||
Other | (46,687) | (65,301) | -28.5% | (148,376) | (158,709) | -6.5% | ||||||
INCOME FROM ELECTRIC UTILITY SERVICES | 480,569 | 176,442 | 172.4% | 1,365,224 | 779,226 | 75.2% | ||||||
FINANCIAL INCOME (EXPENSE) | (71,370) | (146,278) | -51.2% | (378,374) | (477,359) | -20.7% | ||||||
Expense, Net of Income | (71,370) | (146,278) | -51.2% | (297,118) | (474,179) | -37.3% | ||||||
Interest on equity | - | - | - | (81,256) | (3,180) | 2455.2% | ||||||
OPERATING INCOME | 409,199 | 30,164 | - | 986,850 | 301,867 | 226.9% | ||||||
NON-OPERATING INCOME (EXPENSE) | 464 | (3,822) | - | (1,733) | (8,568) | -79.8% | ||||||
Income | 4,406 | 1,723 | 155.7% | 7,934 | 4,739 | 67.4% | ||||||
Expenses | (3,942) | (5,545) | -28.9% | (9,667) | (13,307) | -27.4% | ||||||
INCOME BEFORE TAXES | 409,663 | 26,342 | 1455.2% | 985,117 | 293,299 | 235.9% | ||||||
Social Contribution | (39,468) | (6,657) | 492.9% | (97,365) | (37,880) | 157.0% | ||||||
Income Tax | (111,334) | (19,160) | 481.1% | (272,920) | (107,031) | 155.0% | ||||||
INCOME BEFORE EXTRAORDINARY ITEMS | ||||||||||||
MINORITY INTEREST AND REVERSALS | 258,861 | 525 | 49206.9% | 614,832 | 148,388 | 314.3% | ||||||
Extraordinary Item net of taxes | (8,100) | (8,133) | -0.4% | (24,420) | (24,397) | 0.1% | ||||||
Minority interest | (10,797) | 1,617 | - | (31,107) | (8,336) | 273.2% | ||||||
Reversal of interest on equity | - | - | - | 81,256 | 3,180 | 2455.2% | ||||||
NET INCOME FOR THE PERIOD | 239,964 | (5,991) | -4105.4% | 640,561 | 118,835 | 439.0% | ||||||
EBITDA | 570,141 | 318,094 | 79.2% | 1,631,263 | 1,166,256 | 39.9% | ||||||
Gross revenue
The gross operating revenue in the quarter was R$ 2,763,030 thousand, a growth of 17.1% compared to the gross income for the same period of the previous year.
The main factors that contributed to this growth were:
59
Quantity of Energy Sold
In the third quarter, there was a growth of 4.1% in the total quantity of energy sold compared to the same quarter of the previous year, the highlight being in the residential and commercial classes, and an increase in the amount of electricity sold to the other concessionaires and licensees.
The growth of 5.5% in the residential and 5.8% in the commercial classes was due to the improvement in economic conditions, reflected in the increase in employment offered, in income and in growth in the industrial production of Brazil, as well as the higher temperatures in the quarter, which also contributed to the increase in consumption.
The increase noted in the quantity of energy sold to distributors was largely due to the energetic action of CPFL Brasil, the company that commercializes electricity.
In relation to the industrial class, there was a decrease of 6.3% in the amount of energy sold due to the migration of free consumers. The effects of this migration are being reduced by the significant number retained by the subsidiary CPFL Brasil, and by the revenue obtained through the Network Usage Charge (TUSD). As these consumers are still connected to the distribution system of the concessionaire in their region, they are billed for use of the distribution network. The total amount billed in the quarter, as revenue from the availability of the electricity network was R$ 127,558 thousand, a growth of R$ 67,170 thousand compared to the amounts billed in the same period of 2004.
Cost of the Electricity Service
In the third quarter of 2005, the costs of the electricity service were R$ 995,771 thousand, an increase of only 0.3% compared to same period of the previous year.
The maintenance of the costs for the Electricity Service is due to the effect of the reduction of costs for charges for the use of the transmission and distribution system, offset against the increase in the costs of energy purchased due to the increase in the amount of energy acquired and the increase in the generation costs.
Operating Expenses
The manageable operating expenses, comprising costs of personnel, materials, outsourced services and others, amounted to R$ 206,225 thousand in the third quarter of 2005, there being no significant change in comparison with the expense for the same period of the previous year, amounting to R$ 206,813 thousand.
The amortization of merged goodwill totaled R$ 2,036 thousand in the quarter, a reduction of R$ 17,481 thousand compared with the amortization in the same period of previous year. This reduction was due to application of the concept of CVM Instruction nº. 349/2001 as from December 2004, with the registration of the amortization of the merged goodwill related to the acquisition of CPFL Paulista and CPFL Piratininga under financial expense. The current balance of amortization refers to the merged goodwill of RGE.
60
Expenses with the Employee Pension Plan (Fundação CESP) recorded in the quarter in the amount of R$ 22,409 thousand, is a decrease of 58.3% compared to the amount recorded in the same period of the previous year. The decrease is due to the review of the actuarial premises related to the biometric mortality table and the expected rate of return on the plan's assets, taken into consideration in the actuarial calculation.
The other changes between the quarters ended September 30, 2005 and 2004 are due to expense for CCC and CDE, which jointly totaled R$ 173,953 thousand, an increase of 61.9%, explained by the adjustments in contributions and principally by the amortization in 2005 of the CVA deferred in 2004. It should be noted that the variations in these costs are fully covered by the electricity tariffs.
Financial income (expense)
The net financial expense in the quarter was R$ 71,370 thousand, which is 51.2% lower than the expense in 2004. The decrease in the financial expenses is a result of the reduction in indebtedness, change in the debt profile, and improvement in some macro economic indexes (especially the Market Price Index - IGP-M).
Net income and EBITDA
Based on the above factors, the income determined in the quarter, after the effects of income tax and social contribution was R$ 239,964 thousand, an increase of R$ 245,955 thousand compared to the loss of some R$ 5,991 thousand in the same period of 2004. For the nine-month period ended September 30, 2005 and 2004, the net income determined was R$ 640,561 thousand and R$ 118,835 thousand, respectively.
The consolidated EBITDA (Net Income for the Quarter, excluding the effects of the employee pension plan, depreciation, amortization, financial expense, social contribution, income tax and extraordinary items) for the third quarter of 2005 was R$ 570,141 thousand, 79.2% higher than the EBITDA determined in the same period of 2004.
61
09.01 HOLDINGS IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES
1 - ITEM | 2 - NAME OF SUBSIDIARY/ASSOCIATED COMPANY | 3 - CNPJ (Federal Tax ID) | 4 - CLASSIFICATION | 5 - PARTICIPATION IN CAPITAL OF INVESTEE - % | 6 - SHAREHOLDERS' EQUITY - % |
7 - TYPE OF COMPANY | 8 - NUMBER OF SHARES HELD IN CURRENT QUARTER (in units) |
9 - NUMBER OF SHARES HELD IN PREVIOUS QUARTER (in units) |
01 | COMPANHIA PAULISTA DE FORÇA E LUZ | 33.050.196/0001-88 | PUBLIC SUBSIDIARY | 94.94 | 42.09 |
COMMERCIAL, INDUSTRIAL AND OTHER | 31,903,722,885 | 31,903,722,885 |
02 | CPFL GERAÇÃO DE ENERGIA S.A. | 03.953.509/0001-47 | PUBLIC SUBSIDIARY | 100.00 | 23.81 |
COMMERCIAL, INDUSTRIAL AND OTHER | 205,487,713,670 | 205,487,715,772 |
03 | CPFL COMERCIALIZAÇÃO BRASIL LTDA | 04.973.790/0001-42 | CLOSED SUBSIDIARY | 100.00 | 0.77 |
COMMERCIAL, INDUSTRIAL AND OTHER | 455,996 | 455,996 |
04 | COMPANHIA PIRATININGA DE FORÇA E LUZ | 04.172.213/0001-51 | PUBLIC SUBSIDIARY | 0.13 | 0.02 |
COMMERCIAL, INDUSTRIAL AND OTHER | 70,800,000 | 70,800,000 |
62
15.01 INVESTMENTS
(Not reviewed by independent auditors)
Our principal capital expenditure in the last years have been for the maintenance and upgrading of our distribution network and generation projects. The following table sets forth our capital expenditure for the nine months of 2005, as well as the three years ended December 31, 2004, 2003 and 2002. The table does not include the costs of acquiring BAESA, Foz do Chapecó and ENERCAN in 2002.
In million of R$ | ||||||||
Year Ended December 31, | ||||||||
Nine Months | 2004 | 2003 | 2002 | |||||
Distribution | ||||||||
CPFL Paulista | 129 | 131 | 125 | 121 | ||||
CPFL Piratininga | 59 | 64 | 64 | 44 | ||||
RGE | 57 | 66 | 45 | 53 | ||||
Total distribution | 245 | 261 | 234 | 218 | ||||
Generation | 174 | 343 | 331 | 294 | ||||
Commercialization | ||||||||
CPFL Brasil | 2 | 2 | 0 | 0 | ||||
Total | 421 | 606 | 565 | 512 | ||||
We plan to make capital expenditures totaling approximately R$ 723 million in 2005 and approximately R$ 681 million in 2006. Of total budgeted capital expenditure over this period, R$ 627 million is for distribution and R$ 777 million is for generation.
63
16.01 OTHER IMPORTANT INFORMATION ON THE COMPANY
Adittional information New Market
Position of the shareholders of CPFL Energia S/A with more than 5% of the shares holding voting rights, as of September 30, 2005:
Shareholders | Common | Partic - % | ||
Shares | ||||
VBC Energia S.A. | 173,533,244 | 37.65% | ||
521 Participações S.A. | 149,230,369 | 32.38% | ||
Bonaire Participações S.A. | 60,713,509 | 13.17% | ||
BNDES Participações S.A. | 23,005,251 | 4.99% | ||
Treasury Shares | 1 | 0.00% | ||
Other shareholders | 54,411,939 | 11.81% | ||
Total | 460,894,313 | 100.00% | ||
Quantity and characteristic of securities held by the Controlling Shareholders, Executive Officers, Board of Directors and Fiscal Committee, as of September 30, 2005 and 2004:
September 30, 2005 | September 30, 2004 | |||
Shareholders | Common Shares |
% | Common Shares |
% |
Controlling Shareholders | 383,477,122 | 83.20% | 397,785,268 | 96.58% |
Executive Officers | 45,078 | 0.01% | - | 0.00% |
Board of Directors | 21 | 0.00% | 21 | 0.00% |
Fiscal Committee | - | 0.00% | - | 0.00% |
Treasury Shares | 1 | 0.00% | - | 0.00% |
Other Shareholders | 77,372,091 | 16.79% | 14,084,507 | 3.42% |
Total | 460,894,313 | 100.00% | 411,869,796 | 100.00% |
Composition of Market shares (Free Float), as of September 30, 2005 and 2004:
September 30, 2005 | September 30, 2004 | |||
Shareholders | Common Shares |
% | Common Shares |
% |
Executive Officers | 45,078 | 0.01% | - | 0.00% |
Other Shareholders | 77,372,091 | 16.79% | 14,084,507 | 3.42% |
Total | 77,417,169 | 16.80% | 14,084,507 | 3.42% |
64
Equity position of Company shareholders with more than 5% of the voting capital, to individual level:
Shareholders composition of VBC Energia S/A with more than 5% of common shares (voting right), up to the individuals level, as of September 30, 2005.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(a) | VBC Participações S/A | 3,123,551 | 100.00% | 141,061 | 100.00% | 3,264,612 | 100.00% |
Other Shareholders | 7 | 0.00% | 0 | 0.00% | 7 | 0.00% | |
Total | 3,123,558 | 100.00% | 141,061 | 100.00% | 3,264,619 | 100.00% |
(a) VBC Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(b) | Votorantim Energia Ltda. | 3,166,839,246 | 33.34% | 0 | 0.00% | 3,166,839,246 | 33.34% |
(c) | Bradesplan Participações S/A | 3,166,839,246 | 33.33% | 0 | 0.00% | 3,166,839,246 | 33.33% |
(d) | Camargo Corrêa Energia S/A | 3,166,839,246 | 33.33% | 0 | 0.00% | 3,166,839,246 | 33.33% |
Other Shareholders | 7 | 0.00% | 0 | 0.00% | 7 | 0.00% | |
Total | 9,500,517,745 | 100.00% | 0 | 0.00% | 9,500,517,745 | 100.00% |
(b) Votorantim Energia Ltda
Shareholders | Quotas | % | |
(e) | Votorantim Participações S/A | 515,467,904 | 63.87% |
(f) | Cia Brasileira de Alumínio | 225,393,870 | 27.93% |
(g) | Cia Luz e Força Santa Cruz | 66,201,356 | 8.20% |
Total | 807,063,130 | 100.00% |
(c) Bradesplan Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(h) | Bradespar S/A | 1,774,477,319 | 100.00% | 0 | 0.00% | 1,774,477,319 | 100.00% |
Other Shareholders | 6 | 0.00% | 0 | 0.00% | 6 | 0.00% | |
Total | 1,774,477,325 | 100.00% | 0 | 0.00% | 1,774,477,325 | 100.00% |
(d) Camargo Corrêa Energia S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(i) | Camargo Corrêa S/A | 518,860 | 100.00% | 518,852 | 100.00% | 1,037,712 | 100.00% |
Other Shareholders | 0 | 0.00% | 8 | 0.00% | 8 | 0.00% | |
Total | 518,860 | 100.00% | 518,860 | 100.00% | 1,037,720 | 100.00% |
65
(e) Votorantim Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(j) | Hejoassu Administração S/A | 5,227,057,494 | 98.56% | 0.00% | 5,227,057,494 | 98.56% | |
Other Shareholders | 76,106,492 | 1.44% | 0.00% | 76,106,492 | 1.44% | ||
Total | 5,303,163,986 | 100.00% | 0 | 0.00% | 5,303,163,986 | 100.00% |
(f) Cia Brasileira de Alumínio
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(e) | Votorantim Participações S/A | 711,334,410 | 99.74% | 0 | 0.00% | 711,334,410 | 99.74% |
Other Shareholders | 1,874,557 | 0.26% | 0 | 0.00% | 1,874,557 | 0.26% | |
Total | 713,208,967 | 100.00% | 0 | 0.00% | 713,208,967 | 100.00% |
(g) Cia Luz e Força Santa Cruz
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(f) | Cia Brasileira de Alumínio | 473,174,855 | 99.99% | 38,101,909 | 100.00% | 511,276,764 | 99.99% |
Other Shareholders | 39,243 | 0.01% | 0 | 0.00% | 39,243 | 0.01% | |
Total | 473,214,098 | 100.00% | 38,101,909 | 100.00% | 511,316,007 | 100.00% |
(h) Bradespar S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(l) | Cidade de Deus Cia Cial de Participações | 11,220,806 | 36.59% | 75,240 | 0.13% | 11,296,046 | 12.92% |
Fundação Bradesco | 4,544,826 | 14.82% | 724,746 | 1.28% | 5,269,572 | 6.03% | |
(m) | Gespar Participações Ltda | 3,310,216 | 10.79% | 0 | 0.00% | 3,310,216 | 3.79% |
(n) | NCF Participações S/A | 4,286,878 | 13.98% | 0 | 0.00% | 4,286,878 | 4.90% |
Other Shareholders | 7,303,400 | 23.82% | 55,956,238 | 98.59% | 63,259,638 | 72.36% | |
Total | 30,666,126 | 100.00% | 56,756,224 | 100.00% | 87,422,350 | 100.00% |
(i) Camargo Corrêa S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(o) | Participações Morro Vermelho S/A | 48,938 | 99.98% | 93,099 | 100.00% | 142,037 | 99.99% |
Other Shareholders | 8 | 0.02% | 1 | 0.00% | 9 | 0.01% | |
Total | 48,946 | 100.00% | 93,100 | 100.00% | 142,046 | 100.00% |
66
(j) Hejoassu Administração S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Espólio de José Ermírio de Moraes Filho | 400,000 | 25.00% | 0 | 0.00% | 400,000 | 25.00% | |
(p) | AEM Participações S/A | 400,000 | 25.00% | 0 | 0.00% | 400,000 | 25.00% |
(q) | ERMAN Participações S/A | 400,000 | 25.00% | 0 | 0.00% | 400,000 | 25.00% |
(r) | MRC Participações S/A | 400,000 | 25.00% | 0 | 0.00% | 400,000 | 25.00% |
Total | 1,600,000 | 100.00% | 0 | 0.00% | 1,600,000 | 100.00% |
(l) Cidade de Deus Cia Cial de Participações
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
(t) | Nova Cidade de Deus Participações S/A | 2,333,056,605 | 44.43% | 0 | 0.00% | 2,333,056,605 | 44.43% |
Fundação Bradesco | 1,724,997,712 | 32.85% | 0 | 0.00% | 1,724,997,712 | 32.85% | |
Lia Maria Aguiar | 417,744,408 | 7.96% | 0 | 0.00% | 417,744,408 | 7.96% | |
Lina Maria Aguiar | 442,193,236 | 8.42% | 0 | 0.00% | 442,193,236 | 8.42% | |
Other Shareholders | 332,631,968 | 6.34% | 0 | 0.00% | 332,631,968 | 6.34% | |
Total | 5,250,623,929 | 100.00% | 0 | 0.00% | 5,250,623,929 | 100.00% |
(m) Gespar Participações Ltda
Shareholders | Quotas | % |
Jampur Trading International Soc Unipessoal Ltda ( 1 ) | 195,895,531 | 99.98% |
Espirito Santo Investimentos S/A | 32,000 | 0.02% |
Total | 195,927,531 | 100.00% |
(n) NCF Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Fundação Bradesco | 14,331,333 | 25.10% | 50,828,750 | 100.00% | 65,160,083 | 60.38% | |
(l) | Cidade de Deus Cia Cial de Participações | 41,979,583 | 73.54% | 0 | 0.00% | 41,979,583 | 38.90% |
(t) | Nova Cidade de Deus Participações S/A | 777,000 | 1.36% | 0 | 0.00% | 777,000 | 0.72% |
Total | 57,087,916 | 100.00% | 50,828,750 | 100.00% | 107,916,666 | 100.00% |
67
(o) Participações Morro Vermelho S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
Rosana Camargo Arruda Botelho | 4,882,646 | 33.34% | 0 | 0.00% | 4,882,646 | 33.34% |
Renata Camargo Nascimento | 4,882,646 | 33.33% | 0 | 0.00% | 4,882,646 | 33.33% |
Regina Camargo Pires Oliveira Dias | 4,882,644 | 33.33% | 0 | 0.00% | 4,882,644 | 33.33% |
Other Shareholders | 191 | 0.00% | 0 | 0.00% | 191 | 0.00% |
Total | 14,648,127 | 100.00% | 0 | 0.00% | 14,648,127 | 100.00% |
(p) AEM Participações S/A
Shareholders | Common Shares |
% | Preferred Shares | % | TOTAL | % | |
Antonio Ermírio de Moraes (although having donated his shares to his direct descendants, the shareholder still detains the voting rights at AEM Participações S.A, corresponding to the totality of his common shares, during his lifetime) | 684,729,100 | 100.00% | 0 | 0.00% | 684,729,100 | 100.00% | |
(s) | JEMF Participações S/A | 300 | 33.34% | 300 | 0.00% | ||
(q) | ERMAN Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
(r) | MRC Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
Total | 684,729,100 | 100.00% | 900 | 100.00% | 684,730,000 | 100.00% |
(q) ERMAN Participações S/A
Shareholders | Common Shares |
% | Preferred Shares | % | TOTAL | % | |
Ermírio Pereira de Moraes (although having donated his shares to his direct descendants, the shareholder still detains the voting rights at ERMAN Participações S.A, corresponding to the totality of his common shares, during his lifetime) | 684,729,100 | 100.00% | 0 | 0.00% | 684,729,100 | 100.00% | |
(s) | JEMF Participações S/A | 300 | 33.34% | 300 | 0.00% | ||
(p) | AEM Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
(r) | MRC Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
Total | 684,729,100 | 100.00% | 900 | 100.00% | 684,730,000 | 100.00% |
68
(r) MRC Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Maria Helena Moraes Scripilliti (although having donated her shares to her direct descendants, the shareholder still detains the voting rights at MRC Participações S.A, corresponding to the totality of her common shares, during her lifetime) | 684,729,100 | 100.00% | 0 | 0.00% | 684,729,100 | 100.00% | |
(s) | JEMF Participações S/A | 300 | 33.34% | 300 | 0.00% | ||
(q) | ERMAN Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
(p) | AEM Participações S/A | 300 | 33.33% | 300 | 0.00% | ||
Total | 684,729,100 | 100.00% | 900 | 100.00% | 684,730,000 | 100.00% |
(s) JEMF Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
José Ermírio de Moraes Neto | 3,500 | 33.34% | 0 | 0.00% | 3,500 | 33.30% |
José Roberto Ermírio Moraes | 3,500 | 33.33% | 0 | 0.00% | 3,500 | 33.30% |
Neide Helena de Moraes | 3,500 | 33.33% | 0 | 0.00% | 3,500 | 33.30% |
AEM Participações S/A | 0 | 0.00% | 4 | 33.34% | 4 | 0.04% |
ERMAN Participações S/A | 0 | 0.00% | 4 | 33.33% | 4 | 0.03% |
MRC Participações S/A | 0 | 0.00% | 4 | 33.33% | 4 | 0.03% |
Total | 10,500 | 100.00% | 12 | 100.00% | 10,512 | 100.00% |
(t) Nova Cidade de Deus Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % | |
Fundação Bradesco | 91,340,406 | 46.30% | 209,037,114 | 98.35% | 300,377,520 | 73.29% | |
(u) | Elo Participações S/A | 105,932,096 | 53.70% | 0 | 0.00% | 105,932,096 | 25.85% |
Caixa Beneficiente Fun.do Bradesco | 0 | 0.00% | 3,511,005 | 1.65% | 3,511,005 | 0.86% | |
Total | 197,272,502 | 100.00% | 212,548,119 | 100.00% | 409,820,621 | 100.00% |
(u) Elo Participações S/A
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
Lázaro de Mello Brandão | 6,769,981 | 5.63% | 0 | 0.00% | 6,769,981 | 3.68% |
Other Shareholders | 113,556,200 | 94.37% | 63,696,077 | 100.00% | 177,252,277 | 96.32% |
Total | 120,326,181 | 100.00% | 63,696,077 | 100.00% | 184,022,258 | 100.00% |
69
Shareholders composition of 521 Participações S/A with more than 5% of common shares (voting right), up to the individuals level, as of September 30, 2005.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
Fundo de Investimento Financeiro BB Renda Fixa IV | 377,593 | 15.70% | 0 | 0.00% | 377,593 | 15.70% |
Fundo Mutuo de Investimento em Ações BB - Carteira Livre I | 2,027,402 | 84.30% | 0 | 0.00% | 2,027,402 | 84.30% |
Other Shareholders | 5 | 0.00% | 0 | 0.00% | 5 | 0.00% |
Total | 2,405,000 | 100.00% | 0 | 0.00% | 2,405,000 | 100.00% |
Shareholders composition of Bonaire Participações S/A with more than 5% of common shares (voting right), up to the individuals level, as of September 30, 2005.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
Energia Fundo de Investimento em Participações |
66,728,872 | 100.00% | 0 | 0.00% | 66,728,872 | 100.00% |
Other Shareholders | 6 | 0.00% | 0 | 0.00% | 6 | 0.00% |
Total | 66,728,878 | 100.00% | 0 | 0.00% | 66,728,878 | 100.00% |
Shareholders composition of BNDES Participações S/A with more than 5% of common shares (voting right), up to the individuals level, as of September 30, 2005.
Shareholders | Common Shares |
% | Preferred Shares |
% | TOTAL | % |
Banco Nacional de Desenv.Econômico e Social ( 2 ) |
1 | 100.00% | 0 | 0.00% | 1 | 100.00% |
Total | 1 | 100.00% | 0 | 0.00% | 1 | 100.00% |
( 1 ) Foreign capital company.
( 2 ) State agency Brazilian Federal.
70
17.01 REPORT ON SPECIAL REVIEW-UNQUALIFIED
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT ACCOUNTANTS REVIEW REPORT
To the Shareholders and Management of
CPFL Energia S.A.
São Paulo - SP
1. |
We have performed a special review of the accompanying interim financial statements of CPFL Energia S.A. and subsidiaries (Company and Consolidated), consisting of the balance sheets as of September 30, 2005, and the related statements of operations
for the quarter and nine-month period then ended and the performance report, all expressed in Brazilian reais and prepared in accordance with Brazilian accounting practices under the responsibility of the Companys management. |
2. |
The interim financial statements for the quarter and nine-month period ended September 30, 2005 and the balance sheet as of June 30, 2005 of the subsidiary Rio Grande Energia S.A. RGE were reviewed by other independent auditors whose review
reports thereon, dated October 25, 2005 and July 26, 2005, respectively, did not contain qualifications. Those auditors also issued a review report, dated October 21, 2004, on the interim financial statements as of September 30, 2004, containing a
qualification with respect to the deferral of exchange losses. Our reviews, insofar as they relate to (a) total assets of this subsidiary as of September 30, 2005 and June 30, 2005, which represent 9.9% of the consolidated total assets, (b) result
for the periods ended September 30, 2005 and 2004, which represent 4.3% and 6.8%, respectively, of the consolidated total balances; and (c) the investment recorded under the equity method in the individual interim financial statements of its parent
company Companhia Paulista de Força e Luz, with effect on the investment balance of that company recorded by the Company, are based solely on the review reports of those independent auditors. |
3. |
We conducted our review in accordance with specific standards established by the Brazilian Institute of Independent Auditors (IBRACON), together with the Federal Accounting Council, which consisted principally of: (a) inquiries of and discussions
with persons responsible for the accounting, financial and operating areas as to the criteria adopted in preparing the interim financial statements, and (b) review of the information and subsequent events that had or might have had material effects
on the financial position and results of operations of the Company and its subsidiaries. |
4. |
Based on our special review and on the reports of the other independent auditors, we are not aware of any material modifications that should be made to the interim financial statements referred to in paragraph 1 for them to be in conformity with
Brazilian accounting practices and standards established by the Brazilian Securities Commission (CVM), specifically applicable to the preparation of mandatory interim financial statements. |
5. |
As discussed in Note 3 - item (b) to the interim financial statements, the status of the tariff revisions and adjustments of CPFL Paulista (subsidiary) is as follows: (i) the National Electric Energy Agency (ANEEL) changed, on April 6, 2005, the
percentage related to the periodic tariff revision of 2003 for CPFL Paulista, considering this the definitive adjustment. CPFL Paulista recognized the amount of R$ 22,398 thousand, in long-term assets, related to the difference between the
regulatory depreciation rate of 4.64% p.a., used by ANEEL to calculate the quota de reintegração (regulatory depreciation accounting depreciation), and the percentage of 4.85%, calculated by CPFL Paulista based on
the information provided to ANEEL. Considering this situation, which will require additional discussions between CPFL Paulista and ANEEL, CPFL Paulistas periodic tariff revision of April 2003 continues to be provisional as it relates to the
regulatory depreciation rate used, and accordingly, it is still subject to changes. |
6. |
We had previously reviewed the balance sheets as of June 30, 2005 (Company and Consolidated), presented for comparative purposes, and our review report thereon, dated July 26, 2005, contained emphasis of matter paragraphs related to: (i) the matter
mentioned in paragraph 5 above, (ii) the 2003 periodic tariff revision and the 2004 tariff adjustment of the subsidiary Companhia Piratininga de Força e Luz, which were pending approval by ANEEL on that date, and were approved in October
2005, as described in Note 3 to the interim financial statements, and, (iii) the change in the percentage of amortization of goodwill on acquisition of investments and the merger of subsidiary on June 30, 2004 retroactively to January 1, 2004, as
described in Notes 14.2 and 15 to the interim financial statements. The statements of operations (Company and Consolidated) for the quarter and nine-month period ended September 30, 2004, presented for comparative purposes, were reviewed by us and
our review report thereon, dated October 28, 2004, contained emphasis of matter paragraphs related to: (i) the 2003 periodic tariff revision and the 2004 tariff adjustment of CPFL Paulista and the subsidiary Companhia Piratininga de Força e Luz, which were pending approval by ANEEL on that date, and were definitely approved in a subsequent period, as described in Note 3 to the interim financial statements, (ii) the change in the percentage of amortization of goodwill on acquisition of investments and the merger of subsidiary on June 30, 2004 retroactively to January 1, 2004, as described in Notes 14.2 and 15 to the interim financial statements and, (iii) transactions within the Wholesale Energy Market (MAE), whose amounts may be subject to change due to lawsuits then pending. This matter and its current status are discussed in Note 5 to the interim financial statements. |
7. |
The accompanying interim financial statements have been translated into English for the convenience of readers outside Brazil. |
São Paulo - Brazil
October 25, 2005
DELOITTE TOUCHE TOHMATSU | José Carlos Amadi | |
Auditores Independentes | Engagement Partner |
18.02 COMMENTS ON PERFORMANCE OF SUBSIDIARIES
The subsidiary Companhia Paulista de Força e Luz (CPFL Paulista) is a public company and its Comments on the performance of this quarter (the Company and Consolidated) is attached in the Interim Financial Statements as of September 30, 2005, filed at CVM (Brazilian Securities Commission).
The subsidiary CPFL Geração de Energia S.A., is a public company and its Comments on the performance of this quarter (the Company and Consolidated) is attached in the Interim Financial Statements as of September 30, 2005, filed at CVM (Brazilian Securities Commission).
The subsidiary Companhia Piratininga de Força e Luz, is a public company and its Comments on the performance of this quarter is attached in the Interim Financial Statements as of September 30, 2005, filed at CVM (Brazilian Securities Commission).
73
CPFL COMERCIALIZAÇÃO BRASIL S/A
18.02 INCOME STATEMENT OF SUBSIDIARY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 | 4 - 01/01/2005 to 09/30/2005 | 5 - 07/01/2004 to 09/30/2004 | 5 - 07/01/2004 to 09/30/2004 |
3.01 | Operating revenues | 372,529 | 1,012,612 | 257,139 | 649,280 |
3.02 | Deductions from operating revenues | (51,384) | (136,995) | (32,348) | (77,455) |
3.02.01 | ICMS | (17,019) | (43,398) | (8,504) | (19,995) |
3.02.02 | PIS | (6,110) | (16,661) | (4,242) | (10,713) |
3.02.03 | COFINS | (28,140) | (76,742) | (19,542) | (46,607) |
3.02.04 | ISS | (115) | (194) | (60) | (140) |
3.03 | Net operating revenues | 321,145 | 875,617 | 224,791 | 571,825 |
3.04 | Cost of sales and/or services | (269,701) | (703,630) | (185,179) | (452,939) |
3.04.01 | Cost of electric energy | (265,279) | (693,310) | (181,171) | (444,563) |
3.04.02 | Material | (737) | (1,348) | (520) | (704) |
3.04.03 | Outsourced services | (3,685) | (8,972) | (3,441) | (7,513) |
3.04.04 | Other | 0 | 0 | (47) | (159) |
3.05 | Gross operating income | 51,444 | 171,987 | 39,612 | 118,886 |
3.06 | Operating Expenses/Income | (113) | (2,489) | (2,048) | (3,649) |
3.06.01 | Selling | (2,250) | (8,240) | (2,094) | (5,150) |
3.06.02 | General and administrative | (15) | (37) | 0 | 0 |
3.06.03 | Financial | 2,152 | 5,788 | 46 | 1,501 |
3.06.03.01 | Financial income | 3,816 | 10,402 | 1,233 | 5,473 |
3.06.03.02 | Financial expenses | (1,664) | (4,614) | (1,187) | (3,972) |
3.06.04 | Other operating income | 0 | 0 | 0 | 0 |
3.06.05 | Other operating expense | 0 | 0 | 0 | 0 |
3.06.06 | Equity in subsidiaries | 0 | 0 | 0 | 0 |
CPFL COMERCIALIZAÇÃO BRASIL S/A
18.02 INCOME STATEMENT OF SUBSIDIARY (in thousands of Brazilian reais R$)
1 Code | 2 Description | 3 - 07/01/2005 to 09/30/2005 | 4 - 01/01/2005 to 09/30/2005 | 5 - 07/01/2004 to 09/30/2004 | 5 - 07/01/2004 to 09/30/2004 |
3.07 | Income from operations | 51,331 | 169,498 | 37,564 | 115,237 |
3.08 | Nonoperating income (expense) | 0 | 0 | 0 | 0 |
3.08.01 | Income | 0 | 0 | 0 | 0 |
3.08.02 | Expenses | 0 | 0 | 0 | 0 |
3.09 | Income before taxes on income and minority interest | 51,331 | 169,498 | 37,564 | 115,237 |
3.10 | Income tax and social contribution | (17,131) | (57,173) | (12,803) | (39,214) |
3.10.01 | Social contribution | (4,549) | (15,152) | (3,390) | (10,384) |
3.10.02 | Income tax | (12,582) | (42,021) | (9,413) | (28,830) |
3.11 | Deferred income tax and social contribution | 0 | 0 | 0 | 0 |
3.12 | Statutory profit sharing/contributions | 0 | 0 | 0 | 0 |
3.12.01 | Profit sharing | 0 | 0 | 0 | 0 |
3.12.02 | Contributions | 0 | 0 | 0 | 0 |
3.13 | Reversal of interest on equity | 0 | 0 | 0 | 0 |
3.15 | Net income (loss) for the period | 34,200 | 112,325 | 24,761 | 76,023 |
SHARES OUTSTANDING EX-TREASURY STOCK (in units) | 455,996 | 455,996 | 300,000 | 300,000 | |
EARNINGS PER SHARE | 75.00066 | 246.32892 | 82.53667 | 253.41000 | |
LOSS PER SHARE |
18.02 COMMENTS ON PERFORMANCE OF SUBSIDIARIES
CPFL Comercialização Brasil S.A.
Gross revenue
Gross revenue for the third quarter of 2005 was R$ 372,529 thousand, an increase of 44.9% in relation to the same period of 2004, largely due to the operating growth in the sale of energy to free customers and other concessionaires and licensees, the highlight being the operational startup of the new subsidiary Clion as from June 2005.
In the third quarter of 2005, 4,118 GWh were commercialized, compared with 3,128 GWh in the same period of previous year.
Net Income
The net income determined for the nine-month period ended September 30, 2005 was R$ 112,325 thousand, an increase of R$ 36,302 thousand compared to the same period of 2004, a direct result of the growth in its operations.
76
SUMMARY
Group | Table | Description | Page |
01 | 01 | IDENTIFICATION | 1 |
01 | 02 | HEAD OFFICE | 1 |
01 | 03 | INVESTOR RELATIONS OFFICER (Company Mailing Address) | 1 |
01 | 04 | ITR REFERENCE AND AUDITOR INFORMATION | 1 |
01 | 05 | CAPITAL STOCK | 2 |
01 | 06 | COMPANY PROFILE | 2 |
01 | 07 | COMPANIES NOT INCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS | 2 |
01 | 08 | CASH DIVIDENDS | 2 |
01 | 09 | SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR | 3 |
01 | 10 | INVESTOR RELATIONS OFFICER | 3 |
02 | 01 | BALANCE SHEET - ASSETS | 4 |
02 | 02 | BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY | 5 |
03 | 01 | INCOME STATEMENT | 6 |
04 | 01 | NOTES TO THE INTERIM FINANCE STATEMENTS | 8 |
05 | 01 | COMMENTS ON PERFORMANCE OF THE QUARTER | 52 |
06 | 01 | CONSOLIDATED BALANCE SHEET - ASSETS | 53 |
06 | 02 | CONSOLIDATED BALANCE SHEET - LIABILITIES & SHAREHOLDERS' EQUITY | 54 |
07 | 01 | CONSOLIDATED INCOME STATEMENT | 56 |
08 | 01 | COMMENTS ON CONSOLIDATED PERFORMANCE OF THE QUARTER | 59 |
09 | 01 | HOLDINGS IN SUBSIDIARIES AND/OR ASSOCIATED COMPANIES | 62 |
15 | 01 | INVESTMENTS | 63 |
16 | 01 | OTHER IMPORTANT INFORMATION ON THE COMPANY | 64 |
17 | 01 | REPORT ON SPECIAL REVIEW-UNQUALIFIED | 71 |
COMPANHIA PAULISTA DE FORÇA E LUZ - CPFL | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 73 |
CPFL GERAÇÃO DE ENERGIA S.A. | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 73 |
COMPANHIA PIRATININGA DE FORÇA E LUZ | |||
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES | 73 |
CPFL COMERCIALIZAÇÃO BRASIL LTDA | |||
18 | 02 | INCOME STATEMENT OF SUBSIDIARIES | 74 |
18 | 02 | COMMENTS ON PERFORMANCE OF SUBSIDIARIES/AFFILIATED COMPANY | 76 |
CPFL ENERGIA S.A.
| ||
|
By: /S/
JOSÉ ANTONIO DE ALMEIDA FILIPPO
| |
Name: José Antonio de Almeida Filippo
Title: 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.