EMPRESA DO SISTEMA ELETROBRÁS
TO THE STOCKHOLDERS
The Administrative Board of FURNAS Centrais Elétricas S/A, in compliance with legal and statutory dispositions, brings to your appreciation the Financial Statements pertaining to the year of 1999, together with the reports of the Independent Auditors and of the Fiscal Board, as well as a brief description of the more important facts that occurred in that year.
EXPANSION PROGRAM
Generation
Meeting the determinations set by Resolutions Nº 02/99 and Nº 04/99 of the National Council for Privatization (CND) on April 26th, 1999, ELETRONORTE transferred to FURNAS the Manso Multiple Hydroelectric Facilities. With an installed power of 210MW in four generating units, this hydroelectric undertaking will add 92 average MW of assured power and the first machine is expected to start operating in December of 2000.
This undertaking – located on the Manso River, in the counties of Chapada dos Guimarães and Rosário do Oeste, in the state of Mato Grosso, and carried out in partnership with the PROMAN (Produtores Energéticos de Manso S.A.) consortium – combines electricity generation with the benefits of the irrigation projects and of the control of the frequent and heavy floods of the rivers in that area, mostly the Cuiabá river.
This is the second undertaking in partnership with a private company and once again FURNAS has proven the high competence and qualification of its technical staff in achieving a new record, meeting a very tight timetable to have the diversion tunnel closed and the consequent start of reservoir filling on November 30th, 1999.
Also as a consequence of that transference from ELETRONORTE set by the National Council for Privatization Resolutions above mentioned, FURNAS was granted the contract for purchasing the power generated at the Cuiabá Thermoelectric Plant - such contract authorization is held by Empresa Pantanal de Energia (EPE) – thus increasing FURNAS’ power availability. This contract for purchasing power in the coming 21 years foresees three operational stages: the first one, burning fuel oil, started in April, 1999, with 150MW of potency, and the last one, burning natural gas in a combined cycle, is expected to start operating in the middle of the year 2001. At that time, the Plant will reach its full capacity of 480MW.
With the aim of raising the power supply in the South, Southeast and Midwest Regions, FURNAS and GERASUL have signed a contract with Companhia de Interconexão Energética – CIEN – in order to purchase 1,000MW of power originated in Argentina and transmitted through a 500kV transmission system up to the Itá Substation, in Santa Catarina State. This binational interconnection (the second with a MERCOSUL country and we should point out that FURNAS plays an important role in both of them) is expected to start in May of 2000.
Still concerning generation projects, it is to point out the start of the construction of both the complementary spillway and the new cable gallery at the Mascarenhas de Morais HEP. These works will bring more safety to the Plant and their completion is foreseen for November, 2000
Transmission
As to transmission developments, the projects of the North/South Interconnection first stage were energized as well as the 750kV Foz – Ivaiporã III TL in January, 1999.
The North/South Transmission System – an extremely important undertaking as it is the first stage of the electro-energetic interconnection of the five Brazilian Regions – has represented to FURNAS more 760km of 500kV transmission lines and three new substations with 1050MVA of transforming capacity. The Foz – Ivaiporã TL, with more 331km in 750 kV, is the initial stretch of the Itaipu 3rd Circuit, in alternating current. Additional work related to Ivaiporã/Itaberá/Tijuco Preto III TL is in progress, and the bulkshunt energizing as far as Itaberá is foreseen to April, 1999.
In addition to raising the reliability level in all the Itaipu Transmission System, this undertaking will allow the imported power to flow through the Brazil/Argentina Interconnection above mentioned.
Despite all the company’s efforts, the scheduled construction of the Itaberá/Tijuco Preto III stretch has been undergoing delays on account of an embargo due to environmental issues.
Telecommunication
In February of 1999, FURNAS started participating in a new field of business, making – together with its sister-companies of the ELETROBRÁS System (CHESF/ELETRONORTE/ELETROSUL) – with Light Participações S.A. (LIGHTPAR), and the holding company’s intermediation, an agreement of joint utilization of the infrastructures associated to their respective electric power transmission systems and fiber optic cables there installed. This agreement encompasses a network of over 13,000km, covering almost all the Brazilian territory. This network will be made available to ELETRONET S.A., so that this company can provide means of transport for information signals as well as render other services pertaining to telecommunication.
ELETRONET’s shareholding capital was divided between LIGHTPAR (49%) and a strategic partner (51%) selected at an auction held at the Rio de Janeiro Stock Exchange. FURNAS and its sisters-companies signed with LIGHTPAR a contract of cession of right of use for the transmission infrastructure above mentioned during a term of 20 years. LIGHTPAR signed with ELETRONET a contract setting the right of access to the referred infrastructure in order to develop a National Network for Information Transport.
From this new business, FURNAS will be granted a remuneration formed by a fixed revenue, pertaining to the use of its facilities, and a variable revenue, from ELETRONET’s profits sharing.
The first section of such Network, comprising the infrastructure located in Rio de Janeiro, Belo Horizonte and São Paulo areas is expected to be implemented in September of 2000.
POWER MARKETING
FURNAS’ participation in the total of transported power in Brazil in 1999 was of 137,313GWh, distributed as follows: 28.65% of its own generation (39,343GWh), 71.35% of received power (97,970GWh) – of which power from the Itaipu Plant amounts to 84,302GWh – 53.03% of Brazilian power (44,704,5GWh) and 46.97% of Paraguay power ceded to Brazil (39,597,5GWh). On comparing to the previous years, FURNAS own generation (39,343GWh) increased 9.13%, while the total generation of FURNAS System, comprising its own generation and power received, increased 3.54%.
FURNAS’ plants total potency did not change, remaining of 9,080MW.
The thermal generation participation in the total of FURNAS’ own generation reached 6.68% in 1999 against 3.58% in 1998.
The simultaneous maximum power of the system total generation was of 18,565MWh/h at 7 o’clock PM on April 6th, 1999 – an increase of 0.23% over the maximum in 1998, which was of 18,520MWh/h.
Of the 137,313GWh produced by FURNAS System, 129,900GWh were supplied to the companies in the South (16,380GWh), Midwest (10,491GWh) and Southeast (103,029GWh) Regions.
The difference of 7,413GWh in production and supply corresponds to the amount of power consumed and to the losses in the FURNAS System.
Itaipu power (84,302GWh) delivered to the Brazilian System by FURNAS increased 1.4% over 1998 (83,141GWh).
CONSULTANTS AND SERVICES
Capanda Hydroelectric Plant – Angola
Supervision and management activities in Capanda HEP are in progress, according to the contracts signed with the Middle Kwanza Utilities Office – GAMEK – of the People Republic of Angola. Along 1999, the work in Capanda was paralyzed for security reasons and FURNAS reduced its Luanda team to the minimum possible.
A credit financing proposal in the total amount of US$ 147.8 million between the Bank of Brazil and the Angola Government was approved for the completion of the Capanda construction. From this amount, US$ 21.2 million are to be allocated to FURNAS.
Other Services
On account of FURNAS well-known capability in several fields of the electric power business, the company was hired by several public and private enterprises, both in Brazil and abroad. The following are noteworthy:
• Inspection of electric equipment manufacture for Serra da Mesa Energia S.A,
• Development of an energy optimization program, for CETREL, in Bahia;
• Testing and trying types of equipment and components, for ABB, GE and SCHNEIDER;
• Field geotechnical research and laboratory tests for the water supply project, in Luanda, Angola;
• Optimization and complementation of the São Gabriel da Cachoeira PCH basic project, for CISCEA, in Pará;
• Materials inspection for the 500kV RINCON/GARABI/ITÁ TL – Brazil/Argentina interconnection, for ABB;
• Transmission System Commissioning to support the Cana Brava AHE erection in Goiás, for Companhia Energética Mercosul;
• Energetic efficiency projects for several companies and services in the fields of technology of concrete and of soil mechanics, for electric power utilities and other enterprises;
• Advisory services on operation and maintenance for the second stage of the 500kV YACYRETÁ ST, in Argentina;
• Studies on reduced models, for Construtora Norberto Odebrecht;
• Stations operation and maintenance and hydrometeorologic data treatment, for ANEEL;
• Staff training on energized transmission systems, for Lineas de Transmission del Litoral, in Argentina, and for EDELNOR, in Chile.
ELECTRICITY MARKET IN THE BRAZILIAN CONTEXT
In 1999, the Brazilian economy had, generally speaking, a better performance than it was expected to, considering the situation at the beginning of the year, as a result of the changes in the economic policy. Doubtlessly, the paramount economic fact was the alteration in the exchange rate policy, which didn’t bring back high inflation. Against all the expected economic retraction, GNP increased 0.82%, a better performance than that in 1998, when Brazil suffered the consequences of the Asian and Russian crises.
The Brazilian electric power market was also affected by the changes in the economic policy, which hit more heavily the industrial segment, always more sensitive to the Government measures and the first to respond – either positively or negative – to macroeconomic actions. Thus, in 1999, the 2.3% expansion in the Brazilian electric power market was basically sustained by both residential and commercial segments.
FURNAS’ area of operation, due to its socio-economic characteristics – among which it is worth pointing out the concentration of around 69% of the GNP and 75% of all the country’s industrial production – and where almost 55% of the electricity consumers are located, reproduces, within some limits, the Brazilian electric power market behavior. Therefore, in 1999, the expansion of electricity consumption, in the regions where FURNAS operates, was around 1.6%, sustained by the non-industrial segment. The industrial electric power consumption dropped 0.2% in relation to the previous year.
Such results point to a much higher than the unit consumption/income elasticity – the ratio between the electric power consumption percentage variation and the GNP percentage variation – thus confirming a historic trend, which is characteristic of our country.
In the last months of 1999, there have been indications of industrial activity recovery as well as expectations as to the Brazilian economy behavior in the year 2000, pointing to a GNP growth, between 3% and 4%, chiefly sustained by industrial production raise. Under the circumstances, there is every prospect of a sound increase of electric power consumption in FURNAS’ area of operation.
TARIFF SCENARIO
Itaipu energy supply and power transport rates, which had last been readjusted in April of 1997, were broken down, taking as a reference the prices in force in June, 1999, based on ANEEL resolutions Nº 142/99 – establishing the permitted annual income, linked to electric power transmission facilities, and Nº 143/99 – defining generation sale rates.
Therefore, from such segregation on, FURNAS invoiced revenue started to be formed by:
- its own generation sale revenue;
- permitted annual income of transmission. Including Itaipu power transport revenue ;
- Itaipu received power revenue.
ANEEL’S resolution Nº 143/99 set differentiated rates for generation sale, per supplied facility, applicable to Power Sale Contracts and valid during the rule of the Initial Contracts. This resolution also set a tariff increase for generation companies, scaled in three installments, in force since June, 9th – the resolution publication date.
As tariffs were segregated and a 14% readjustment was granted, the generation sale rate went up to R$ 37.04/MWh at the end of 1999. So the permitted annual income of transmission will be R$ 541 million in the period from June, 1999 to May, 2000.
ENTREPRENEURIAL MANAGEMENT
Personnel
Proceeding with the Program for Staff Renewal, a Plan of Programmed Severance was initiated and 1,006 employees adhered to it. Severance dates were scheduled by the Administrative Board.
We should point out several projects developed in the areas of health and social education, aimed at preserving both the quality of ambience and the performance of our company.
Actions were initiated to elaborate a new Positions and Wages Plan, aimed at better adapting the Company’s work positions to the market reality.
Staff Training and Development
Activities in the area were chiefly centralized on the updating of those employees who will take management positions when Managers and Technicians who adhered to the Programmed Severance Plan quit the Company.
Along 1999, particular attention was also paid to the Plan for Basic Professional Capability - CRESCER – which provided both foreign languages and computer science training to our employees.
Another objective was to implement training programs aimed at strengthening professional competence and preparing managers and technicians to face the new business challenges.
The results achieved, broken down per program, are shown in the chart below:
Staff Development
Participation per Program
Privatization
Law Nº 9648, article 5, dated May 27th, 1998, authorized FURNAS’ societary restructuring by means of spin-off, merger, incorporation, capital downsizing operation or fully owned subsidiary companies institution. Such restructuring may result in three shareholding societies, two of which aimed at generation and the other at electric power transmission.
The National Council for Privatization issued Resolutions Nº 2, dated February 3rd, 1999, Nº 4, dated March 30th, 1999 and Nº 6, dated June 30th, 1999, establishing conditions for the partial spin-off of FURNAS.
FURNAS developed several actions in order to achieve that objective, chiefly preparing and supplying data and information on the Company to the Consortia of Consultants that assist BNDES, the agency in charge of the National Program for Privatization.
REAL GRANDEZA – Fundação de Previdência e Assistência Social
Within the scope of the actions for the societary restructuring above mentioned, FURNAS, in the capacity of Sponsor/Instituter, and REAL GRANDEZA carried out the implementation of a proposal for the economic financial and actuarial regulation of this social welfare plan.
Such proposal, with the purpose of achieving abiding stability for REAL GRANDEZA, foresees the institution of two new Welfare Plans. The first one, a Prepaid Benefits Plan, in which are recognized the benefits already granted to the Assisted Participants as well as the proportional benefits for the Active Participants. The second one is a Defined Contribution Plan only for Current Active Participants, who would have a complementary remuneration on retiring, as well as for the Company’s new employees.
This Welfare Plan Structure is considered to be more adequate to the current profile of labor/employment relations.
FURNAS Landmarks and Capacitation
The Company and its staff’s competence and qualification have been recognized in several opportunities, being noteworthy:
• Performance – Brazil Award 1999, as the greatest company in the Public Utility Sector in the state of Rio de Janeiro and in Brazil, granted by the Rio de Janeiro Commercial Association and the Brazilian Confederation of Commercial Associations;
• Oswaldo Checchia Human Being Award, granted by the Brazilian Human Resources Association (ABRH) to the “Energizing Talents” Project, which enhances the individual’s valorization process and his self-esteem and productivity improvement;
• 1999 Rio Quality Award – Bronze Award, granted by the Rio Quality Program of the State of Rio de Janeiro Government;
• Honorable Mention – PROCEL / ELETROBRÁS Award, Energy Companies Award;
• Environment CNI Award, in the State of Rio de Janeiro, granted by the “Fighting Electric Power Waste – Keep an Eye in the Future” FURNAS Award.
Also noteworthy are the following Certificates in the Quality System:
• Foz do Iguaçu Substation – ISO 14001 Certificate – recognized by RVA Raad Voor Accreditatie, in the Netherlands – for the SGA implementation (Environmental Management System). So, in 1999, FURNAS was the first company in the world electric sector to have completed the continuous current conversors SGA. Such accomplishment came in the wake of the Ibiúna Substation Certificate, also in accordance with ISO 14001 requirements, in 1998 when FURNAS was the first company in Latin America and the third in the world to be granted such distinction;
• Transmission Undertakings Superintendence – ISO 9002 Certificate, approved by Det Norske Veritas – DNV – recognized by INMETRO and by RVA (Raad Voor Accreditatie);
• Industrial Inspection and Assessment Division – ISO 9002 Certificate, recognized by INMETRO in Brazil and by National Accreditation of Certification Bodies, in Great Britain;
In 1999, FURNAS also obtained the seventh Patent Register granted by the National Industrial Property Institute (INPI) to a project developed by a technician of our company.
ECONOMIC – FINANCIAL MANAGEMENT
Initial Contracts
Complying to law Nº 9648, dated May 27th, 1998, to Decree Nº 2655, dated July 2nd, 1998, and to ANEEL Resolutions Nº 244, dated July 30th, 1998 and Nº 141, dated June 9th, 1999, FURNAS has been signing Initial Contracts for Power Purchase and Sale with the concessionaires supplied, valid until 2005, a transition period to the free commerce of electric power.
Still complying with the new regulation of the electric sector, FURNAS signed with the National Operator of the Electric System (ONS) a Contract of Transmission Services Rendering by which the Transmission Lines of the Company’s Basic Net were made available.
Investments
In 1999, FURNAS’ investments amounted to R$ 1,036 million, of which R$ 562 million from own resources and R$ 474 million from third-party resources. We should point out investments in the following projects:
- Manso Hydroelectric Output, R$ 409 million
- Itaipu Transmission System, R$ 334 million
- São Félix Transmission System, R$ 106 million
Investments (R$ millions)
|Activity |1997 |1998 |1999 |
|Generation |358 |99 |459 |
|Trasmission |249 |673 |514 |
|Others |36 |42 |63 |
| | | | |
|Total |643 |814 |1,036 |
Operating Income
In 1999, net operating revenue amounted to R$ 5,742 million, a 37% increase over that in 1998, when it reached R$ 4,199 million. Basically, such result reflects the impact of the exchange rate devaluation on the income of Itaipu Power Repassing, whose tariff is in dollars. It also reflects tariff adjustments occurred in 1999, as mentioned above.
Operating Expenses
In 1999, operating expenses amounted to R$ 4,504 million, 24% over those occurred in 1998, which were of R$ 3,639 million. Such operating expenses increase, as a net result, was due to:
- expense increase on buying Itaipu electric power;
- provision for tax contingencies and
- reversal of provision for Bresser Plan.
Operating Income
The operating income prior to reversal of interest on own capital was of R$ 554 million, 10% over that in 1998, which amounted to R$ 502 million.
Taxes Collecting
In 1999, FURNAS collected the amount of R$ 223 million in taxes and federal contribution in compliance with legal dispositions.
Profit in 1999
Since 1996, FURNAS has been having positive and increasing net profits due to:
- the Country’s monetary stability;
- adequate management steps and
- a more realistic tariff policy.
In 1999, as a consequence of the exchange rate policy – with a sharp valorization of the main foreign currencies as to Real – there was a substantial growth of the indebtedness (R$ 234 million) with rebate in the Company’s profit.
Also in 1999, FURNAS acknowledged as a loss the amount of R$ 72.8 million, as a result of the cancellation of a credit related to the Angra I Nuclear Plant decommissioning fund, as stated on the spin-off protocol signed with ELETRONUCLEAR in 1997. Despite those negative factors, the effects of which terminate this year, FURNAS obtained a net profit of R$ 334 million, which raises the Company’s profit to R$ 1,483 in the period from 1996 to 1999.
Stockholders’ Remuneration
Stockholders’ remuneration on sharing profits totaled R$ 101 million in 1999, and, in the period from 1996 to 1999, it amounted to R$ 896 million in dividends and interests on own capital, corresponding to an average distribution of 60.4% of the earned profits.
SOCIAL BALANCE
In what concerns investments in civil actions development and environmental protection, in 1999, notwithstanding its entrepreneurial logic, FURNAS carried out the permanent actions it had been taking in previous years.
Citizenship
Diverse undertakings aimed at lessening social segregation and fighting hunger and poverty were articulated by FURNAS, in partnership with programs as: Public Agencies Committee Against Hunger and for Life (COEP), the Community Solidarity Program, the Committee for Civil Action, the Government, as well as organizations and associations in the vicinity of FURNAS’ facilities.
The main undertakings were:
• energy conservation;
• qualifying youngsters in professional courses;
• qualifying professionals to care for the elderly:
• transferring land for community vegetable gardens;
• training the handicapped for the work market;
• sponsoring schools and public hospitals;
• supporting programs on environmental and artistic education and
• cession of unused facilities and materials for community activities.
Environment
In accordance with the Company’s policies, in 1999, a number of studies, programs and actions were
developed as to transmission systems planning, construction and operation; hydroelectric and thermoelectric generation undertakings, in addition to strategic actions turned to environmental issues.
It is also worth mentioning that the Environmental License for Manso Multiple Hydroelectric Facilities was obtained eight months ahead of the date set to the beginning of the reservoir filling, so that the timetable foreseen was successfully met due to the commitment of FURNAS’ teams to carry out the planned environmental actions.
The environmental actions scheduled for Serra da Mesa, Corumbá, Furnas and Funil Hydroelectric Plants were also carried out.
In what concerns transmission, the Environmental Licenses for the operation of the 345kV Itumbiara/Brasilia Sul TL and 500kV Serra da Mesa/Samambaia TL were renewed as well as was obtained the Environmental License for the 750kV Ivaiporã/Itaberá III and Itaberá/Tijuco Preto III TL’s installation.
As a consequence of a lawsuit filed against FURNAS by the General Attorney, the Environmental License for the Itaberá/Tijuco Preto III was suspended when the works had already started. Now FURNAS seeks to restore the license granted by IBAMA.
In compliance with its Environmental Policy, the Company carries out, in its operation area, standing actions as to:
- fauna and flora preservation:
- climatic and seismologic monitoring;
- archeologic patrimony preservation;
- water quality control and population monitoring;
- solution finding for the Indian Issue;
- Public Health monitoring and improvement.
In the Social Balance, we try to show, in figures, the efforts made and the results achieved along the years.
|SOCIAL BALANCE |1999 |1998 |
|1 – CALCULATION BASIS |R$ Thousands |R$ Thousands |
|1.1 - Gross Invoicing |5,887,139 |4,303,656 |
|1.2 - Operating Profit | 553,678 | 502,113 |
|1.3 - Gross Payroll | 315,849 | 357,420 |
| |Value |% |% |Value |% |% |
|2- Labor Indicators |R$ Thousands |On |On Operating |R$ |On |On Operating |
| | |Payroll |Profit |Thousands |Payroll |Profit |
|2.1- Food |11,895 |3.77 |2.15 |11,770 |3.29 |2.34 |
|2.2- Obligatory Social Benefits|91,822 |29.07 |16.58 |98,342 |27.51 |19.59 |
|2.3- Private Welfare Plan |36,593 |11.59 |6.61 |66,161 |18.51 |13.18 |
|2.4- Health |25,239 |7.99 |4.56 |27,564 |7.71 |5.49 |
|2.5- Education |4,609 |1.46 |0.83 |5,478 |1.53 |1.09 |
|2.6- Employees’ Profit Sharing |16,508 |5.23 |2.98 |14,150 |3.96 |2.82 |
|Participation | | | | | | |
|2.7- Other Benefits |5,187 |1.64 |0.94 |4,845 |1.36 |0.96 |
|Total |191,853 |60.75 |34.65 |228,310 |63.87 |45.47 |
| |Value |% |% |Value |% |% |
|3- Social Indicators |R$ Thousands |On |On Operating |R$ |On |On Operating |
| | |Payroll |Profit |Thousands |Payroll |Profit |
|3.1- Taxes (Excluding Social |223,750 |3.80 |40.41 |229,541 |5.33 |45.72 |
|Benefits) | | | | | | |
|3.2 – Investment in Environment|25,214 |0.43 |4.55 |10,425 |0.24 |2.07 |
|3.3 – Compensation for Hydric |39,633 |0.67 |7.16 |39,103 |0.91 |7.79 |
|Resources Utilization | | | | | | |
|Total |288,597 |4.90 |52.12 |279,069 |6.48 |55.58 |
|4- Number of Employees |4,138 |4,513 |
The added value statement is shown below:
| | | |
|ADDED VALUE STATEMENT |31.12.99 |31.12.98 |
| |R$ Thousands |R$ Thousands |
|1 – ADDED VALUE GENERATION |
|Power and Services Sales Revenue |5,887,139 |4,303,656 |
|Non–operating Income |3,736 |9,864 |
|To be deducted: |
|Input |
| Purchased Power Cost |(3,968,058) |(2,563,517) |
| Materials |(20,975) |(17,575) |
| Third-Party Services |(113,104) |(97,575) |
| Fuel for Power Generation |(33,903) |(17,757) |
| Other Operating Costs |(118,662) |(95,754) |
| Other Non-operating Costs |(88,623) |(31,623) |
|2 – GROSS ADDED VALUE |1,547,550 |1,489,862 |
|Reintegration Quota |(461,911) |(467,047) |
|Constitution / Reversal of Provisions |72,115 |(183,051) |
|3 – GENERATED NET ADDED VALUE |1,157,754 |839,764 |
|Financial Incomes (Transfers) |269,274 |134,118 |
|4 – ADDED VALUE TO BE DISTRIBUTED |1,427,028 |973,882 |
|5 – ADDED VALUE DISTRIBUTION |
|Labor Remuneration |231,212 |251,987 |
|Governments (Taxes and Contributions) |200,159 |64,713 |
|Financial Charges and Monetary Variation |582,241 |137,109 |
|Employees’ Profit Sharing Participation |17,736 |12,922 |
|Interest on Own Capital / Dividends |101,279 |400,000 |
|Others |61,670 |53,727 |
|Retained Earnings |232,731 |53,424 |
|Total |1,427,028 |973,882 |
FURNAS IN FIGURES
|DATA |1999 |1998 |% |INDICATORS |1999 |1998 |% |
|Operating Data |Economic Financial |
|Operating Plants |11 |11 |0.0 |Operating Income (R$ millions) |553.7 |502.1 |+10.3 |
| Hydraulic |9 |9 |0.0 |Net Operating Income | | | |
| | | | |(R$ millions) |5,742.4 |4,199.2 |+36.7 |
| Thermal |2 |2 |0.0 |Investments (R$ millions) |1,036.2 |814.0 |+27.3 |
| Installed Capacity (MW)|9,080 |9,080 |0.0 |Costs |
|Transmission Lines |17,189 |16,092 |+6.8 |Total Personnel Cost / Total | | | |
| | | | |Structural Cost |5.9 |8.0 |-25.4 |
| 750 kV |2,114 |1,783 |+18.6 |Total Personnel Cost / Own Revenue |13.2 |16.7 |-20.6 |
| 600 kV |1,612 |1,612 |0.0 |Performance |
| 500 kV |3,637 |2,877 |+26.4 |Rentability | |
| 345 kV |5,800 |5,800 |0.0 |Reversal of own Capital in Service |4.0% |5.1% |-1.1 |
| Less than 345 kV |4,026 |4,020 |+0.1 | Gross Operating Margin |21.6% |13.3% |+0.3 |
|Substations (Including | | | | Net Operating Margin |9.6% |12.0% |-2.4 |
|Plants Substations) |40 |37 |+8.1% | | | | |
|Transforming Capacity |80,408 |78,716 |+2.1% |Capital Structure | |
|Fiber Optics (km) |1.668 |112 |+1,389.3 |Indebtedness (Loans and Financing / | | | |
| | | | |Equity) |13.1% |8.4% |+4.4 |
|Technical Losses |5.57 |6.04% |-0.5 |Debit (Loans and Financing / Permanent| | | |
| | | | |Assets) |10.5% |7.6% |+2.9 |
|Efficiency and Productivity Losses |Profit |
|Sold Power (GWh) / Number | | | |Net Profit / Total Sales Revenue |5.7% |10.5% |-4.8 |
|of Employees |29.8 |25.8 |+15.5 | | | | |
|Net Operating Revenue / | | | |Operating Profit Prior to Financial | | | |
|Personal Expenses |24.8 |16.7 |+49.0 |Revenues and Expenses / Total Sales | | | |
| | | | |Revenue |21.0% |13.0% |+8.0 |
ACKNOWLEDGMENTS
At the end of 1999, confident of having achieved our goals, we would like to thank our stockholders for their trust in the current Administration; the members of our Administrative and Fiscal Boards and our Directors for their unfailing collaboration as to our decisions; our employees for their devotion and competence, thus contributing decisively to the results achieved, our partners, clients and suppliers for their understanding in difficult moments. We want to express our gratitude to the President of the Republic, His Excellency Fernando Henrique Cardoso, His Excellency Rodolpho Tourinho Neto, Minister of Mines and Energy and to His Excellency Firmino Ferreira Sampaio Neto, President of ELETROBRÁS, for their support and collaboration.
Luiz Carlos Santos
President
(A free translation of the original opinion in Portuguese
expressed on financial statements prepared in accordance with
accounting principles prescribed by Brazilian Corporate Law)
FURNAS - Centrais
Elétricas S.A.
Financial Statements at
December 31, 1999 and 1998
and Report of Independent Accountants
Abreviations used:
OGM - Ordinary General Meeting
EGM - Extraordinary General Meeting
CRC - Compensation account to compensate for shortfall in minimum
operating income
DNAEE - Departamento Nacional de Águas e Energia Elétrica
(National Department of Water and Electricity)
COFINS - Tax for Social Security Financing
PIS - Employee's profit participation program
PASEP - Public Service Employee Savings Program
DOU - Official Daily Government Newspaper
IPC - Consumer Price Index
BTNF - Daily Federal Treasury Bonds
INSS - National Institute of Social Securities
FGTS - Government Severance Indemnity Fund for Employes
MP - Provisional Measure
IGPM - General Price Index
(A free translation of the original opinion in Portuguese
expressed on financial statements prepared in accordance with
accounting principles prescribed by Brazilian Corporate Law)
Report of Independent Accountants
March 1, 2000
To the Board of Directors and Stockholders
FURNAS - Centrais Elétricas S.A.
1 We have audited the accompanying balance sheets of FURNAS - Centrais Elétricas S.A. as of December 31, 1999 and 1998 and the related statements of income, of changes in stockholders' equity and changes in financial position for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements.
2 We conducted our audits in accordance with approved Brazilian auditing standards which require that we perform the audits to obtain reasonable assurance about whether the financial statements are fairly presented in all material respects. Accordingly, our work included, among other procedures (a) planning our audits taking into consideration the significance of balances, the volume of transactions and the accounting and internal control systems of the company, (b) examining, on a test basis, evidence and records supporting the amounts and disclosures in the financial statements and (c) assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
3 As described in Note 23, the conclusion in 1998 and the updating in 1999 of the actuarial evaluation of the insufficiency of the Real Grandeza - Fundação de Previdência e Assistência Social reserves, resulted in the establishment of a provision of R$ 999.770 thousand, which was only recognized in 1999 directly in the net stockholders' equity. As a consequence of this procedure, the net stockholders' equity at December 31, 1998 is overstated, and the long-term liabilities understated, by the same amount.
4. In our opinion, except for the effects in 1998 of the matter mentioned in the previous paragraph, the financial statements referred to in paragraph 1 present fairly, in all material respects, the financial position of FURNAS - Centrais Elétricas S.A. at December 31, 1999 and 1998, and the results of operations, the changes in stockholders' equity and the changes in its financial position for the years then ended, in conformity with accounting principles prescribed by Brazilian Corporate Law.
PricewaterhouseCoopers Luiz Márcio Malzone
Auditores Independentes Partner
CRC-SP-160-S-RJ Contador CRC-RJ-31.376-7
ELETROBRÁS GROUP COMPANY
CNPJ nº 23.274.194/0001-19
BALANCE SHEET AT DECEMBER 31
(in thousands of reais)
| | 1 9 9 9 | 1 9 9 8 |
|ASSETS | | |
| | | |
|CURRENT ASSETS | | |
| | | |
| |Cash and banks |10.373 |8.727 |
| |Open market investments |219.026 |205.466 |
| |Resellers |979.281 |692.513 |
| |Loans and financing | 11.207 |116.738 |
| |Refinancing of credits – Energy |32.401 |14.381 |
| |Credits linked to thermonuclear spin-off | - |329.726 |
| |Sundry receivables |80.665 |57.048 |
| |Stores |37.518 |33.456 |
| |Tax credits |261.440 |287.791 |
| |Prepaid expenses |3.012 |2.953 |
| |Escrow and linked deposits |16.345 |14.705 |
| |Others |74.187 |24.593 |
| | |1.725.455 |1.788.097 |
| | | | |
|LONG-TERM RECEIVABLES | | |
| | | |
| |Concessions to bid |143.052 |143.052 |
| |Loans and financing |152.990 |1.799 |
| |Refinancing of credits – Energy |263.849 |178.074 |
| |Government securities |49.883 |45.550 |
| |Escrow and linked deposits |7.409 |3.289 |
| |Others |702 |589 |
| | |617.885 |372.353 |
| | | | |
|PERMANENT | | |
| | | |
| |Investments |14.566 |12.226 |
| | | | |
| |Property, plant and equipment |11.854.347 |11.262.487 |
| | | | |
| |Deferred charges |7.830 |10.462 |
| | | | |
| | |11.876.743 |11.285.175 |
| | | | |
| | | | |
| | TOTAL ASSETS |14.220.083 |13.445.625 |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ nº 23.274.194/0001-19
BALANCE SHEET AT DECEMBER 31
(in thousands of reais)
(continued)
| | 1 9 9 9 | 1 9 9 8 |
|LIABILITIES | | |
| | | |
|CURRENT LIABILITIES | | |
| | | |
| |Suppliers |926.611 |573.458 |
| |Financial charges |11.543 |6.292 |
| |Taxes and social contribution |76.352 |57.148 |
| |Loans and financing |150.980 |125.034 |
| |Estimated liabilities |28.474 |29.895 |
| |Provision for contingencies |831.622 |841.800 |
| |Sundry creditors – ELETRONORTE - APM Manso |248.245 | - |
| |Interest on capital | - |317.223 |
| |Proposed dividends |1.279 |27.000 |
| |Profit sharing |16.508 |14.051 |
| |Others |73.342 |106.042 |
| | |2.364.956 |2.097.943 |
|LONG-TERM LIABILITIES | | |
| | | |
| |Suppliers |7.367 |9.954 |
| |Loans and financing |1.080.520 |726.024 |
| |Taxes and social contribution |207.632 |262.527 |
| |Fundação Real Grandeza - Provision |949.019 | - |
| |Others |19.115 |4 |
| | |2.263.653 |998.509 |
| | | | |
| |Special obligations |112.540 |103.200 |
| | | | |
| | |2.376.193 |1.101.709 |
|STOCKHOLDERS' EQUITY | | |
| | | |
| |Capital |1.257.785 |1.257.785 |
| |Capital reserves |5.267.475 |5.267.475 |
| |Revenue reserves |782.120 |793.431 |
| |Retained earnings |2.140.400 |2.896.128 |
| | | | |
| | |9.447.780 |10.214.819 |
| | | | |
| |Advances for capital increase |31.154 |31.154 |
| | | | |
| | |9.478.934 |10.245.973 |
| | | | |
| | TOTAL LIABILITIES |14.220.083 |13.445.625 |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ nº 23.274.194/0001-19
STATEMENT OF INCOME FOR THE
YEARS ENDED DECEMBER 31
(in thousands of reais)
| |1 9 9 9 | 1 9 9 8 |
| | | |
| | | |
|OPERATING REVENUE | | |
| | | |
| |Electric power sales | 6.192 | 7.262 |
| |Electric power supply | 5.324.666 | 3.866.082 |
| |Use of power network | 540.931 | - |
| |Electric power relay | - | 412.468 |
| |Other revenues | 15.350 | 17.844 |
| | | | |
| | | 5.887.139 | 4.303.656 |
| | | | |
| Deductions from operating revenue | | |
| | | |
| |Taxes and contributions on revenue | 83.114 | 50.705 |
| |Quota for global reversal reserve | 61.670 | 53.727 |
| | | | |
| | | 144.784 | 104.432 |
| | | | |
|Net operating revenue | 5.742.355 | 4.199.224 |
| | | |
|OPERATING EXPENSES | | |
| | | |
| |Personnel | 231.212 | 251.987 |
| |Materials | 20.975 | 17.575 |
| |Third party services | 113.104 | 97.432 |
| |Fuel for generation of electric power | 33.903 | 17.757 |
| |Financial cost of use of hydro resources | 39.633 | 39.103 |
| |Electric power purchased for resale | 3.968.058 | 2. 563.517 |
| |Charge for inspection of electric power services | 12.334 | 10.741 |
| |Provision for fiscal contingencies | 352.612 | - |
| |Provision for contingencies | 71.730 | 128.301 |
| |Reversal of provisions for contingencies | (799.097) | - |
| |Reversal of provisions - Fundação Real Grandeza | (69.087) | - |
| |Depreciation and amortization | 461.911 | 467.047 |
| |Other expenses | 66.695 | 45.910 |
| | | | |
| | | 4.503.983 | 3.639.370 |
| | | | |
| |Operating profit | 1.238.372 | 559.854 |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ nº 23.274.194/0001-19
STATEMENT OF INCOME FOR THE
YEARS ENDED DECEMBER 31
(In thousands of reais)
(Continued)
| |1 9 9 9 | 1 9 9 8 |
| FINANCIAL REVENUE (EXPENSE) | | |
| | | |
| |Financial investments | 65.975 | 74.175|
| |Financial expenses |(77.092) | (65.364) |
| |Monetary variation plus interest arrears – electric power sold | 137.409 | 28.065 |
| |Monetary variation plus interest arrears – electric power purchased |(159.720) |(26.738) |
| |Monetary variation plus interest – refinancing of energy credits | 65.890 | 31.878|
| |Monetary and exchange variation on loans and financing |(313.454) |(51.522) |
| |Monetary variation on contingencies |(33.110) |(54.750) |
| |Discount on government securities |(10.446) | |
| | | |(477) |
| |Provision for interest and fines on fiscal contingencies |(338.617) |- |
| |Others |(21.529) | |
| | | |6.992 |
| | | | |
| | |(684.694) |(57.741) |
| | | |
| Operating income before interest on capital | 553.678 | 502.113 |
| | | |
| Interest on capital |(100.000) |(373.000) |
| | | |
| Operating income | 453.678 | 129.113 |
| | | |
|NON-OPERATING REVENUE | 3.736 | 9.864|
| | | |
|NON-OPERATING EXPENSE |(88.623) |(31.623) |
| | | | |
| |Non-operating loss |(84.887) |(21.759) |
| | | | |
|INCOME BEFORE SOCIAL CONTRIBUTION, INCOME TAX AND PROFIT SHARING | | |
| |368.791 |107.354 |
| | | | |
| |Social contribution |(4.257) |(4.898) |
| | | | |
| |Income tax |(112.788) |(9.110) |
| | | | |
| |Profit sharing |(17.736) |(12.922) |
| | | | |
|PROFIT BEFORE REVERSAL OF INTEREST ON CAPITAL | 234.010 | 80.424 |
| | | |
| Reversal of interest on capital | 100.000 | 373.000 |
| | | |
|NET INCOME FOR THE YEAR | 334.010 | 453.424 |
| | | |
|EARNINGS PER THOUSAND SHARES - R$ | 5,14| |
| | |6,98 |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
FURNAS CENTRAIS ELÉTRICAS S.A.
ELETROBRÁS GROUP COMPANY
CNPJ Nº. 23.274.194/0001-19
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands of reais)
| | |CAPITAL |REVENUE |RETAINED | | | |
| | | | | | |ADVANCES | |
| |CAPITAL | | | |SUBTOTAL |FOR CAPITAL | |
| | |RESERVES | RESERVES |EARNINGS | | |TOTAL |
| | | | | | |INCREASE | |
| | | | | | | | |
|BALANCES AT DECEMBER 31, 1997 | 1.257.785 | 5.156.511 | 802.925 | 2.833.210 | 10.050.431 | 31.154 | 10.081.585 |
| Remuneration of assets and rights | | | | | | | |
|acquired using own resources |- |110.964 |- |- |110.964 |- |110.964 |
| Reversal of unrealized earnings reserve |- |- |(32.168) | 32.168|- |- |- |
| Net income for the year |- |- |- | 453.424 | 453.424 |- | 453.424 |
| Interest on capital – EGM of 09/30/98 |- |- |- |(300.000) |(300.000) |- |(300.000) |
| Allocation of income proposed to OGM | | | | | | | |
| Constitution of reserves |- |- | 22.674|(22.674) |- |- |- |
| Interest on capital |- |- |- |(73.000) |(73.000) | |(73.000) |
| Dividends |- |- |- |(27.000) |(27.000) |- |(27.000) |
| | | | | | | | |
| | | | | | | | |
|BALANCES AT DECEMBER 31, 1998 | 1.257.785 | 5.267.475 | 793.431| 2.896.128| 10.214.819 | 31.154 | 10.245.973|
| Technical deficit - Fundação Real Grandeza |- |- |- |(999.770) |(999.770) |- |(999.770) |
| Reversal of unrealized income reserve |- |- |(28.011) | |- |- |- |
| | | | |28.011 | | | |
| Net income for the year |- |- |- | 334.010| 334.010 |- | 334.010 |
| Appropriation of income proposed to the OGM | | | | | | | |
|Constitution of reserve | | |16.700 |(16.700) | | |- |
| Interest on capital – EGM of 12.20.99 |- |- |- |(100.000) |(100.000) |- |(100.000) |
| Dividends |- |- |- |(1.279) |(1.279) |- |(1.279) |
| | | | | | | | |
|BALANCES AT DECEMBER 31, 1999 | 1.257.785 | 5.267.475 | 782.120 | | 9.447.780 | 31.154 | 9.478.934 |
| | | | |2.140.400 | | | |
| | | | | | | | |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ n( 23.274.194/0001 -19
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED DECEMBER 31
(in thousands of reais)
| |1999 |1998 |
| | | |
|FINANCIAL RESOURCES WERE PROVIDED BY: | | |
| |Operations | | |
| | Net income for the year | 334.010 | 453.424 |
| | | | |
| |Expenses (revenue) not affecting net working capital | | |
| | Depreciation and amortization | 461.911 | 467.047 |
| | Long-term monetary and exchange variation | 231.132 | 39.759 |
| | Fixed assets disposed of / written off – losses | 2.184 | 23.510 |
| | Discount on government securities | 10.446 | 477 |
| | Reversal of provisions – Fundação Real Grandeza | (69.087) | - |
| | Others | 3.569 | 6.977 |
| | | 974.165 | 991.194 |
| | | | |
| |Third parties | | |
| | New long-term financing | 627.618 | 96.461 |
| | Long-term assets reclassified current - energy | 35.901 | 17.986 |
| | Special obligations – transfer of APM Manso | 9.150 | - |
| | Long-term receivables reclassified as current - loans | 11.207 | - |
| | Long-term receivables reclassified as current - concessions | - | 13.717 |
| | Fixed assets disposed of / written off | 35.282 | 31.865 |
| | Others | 45.850 | 8.869 |
| | TOTAL FUNDS PROVIDED | 1.739.173 | 1.160.092 |
| | | | |
|FINANCIAL RESOURCES WERE USED FOR: | | |
| | Acquisition of property, plant and equipment | 1.061.731 | 824.993 |
| | Refinancing of credits - energy | 82.136 | 21.750 |
| | Dividends | 1.279 | 27.000 |
| | Interest on capital | 100.000 | 373.000 |
| | Long-term liabilities reclassified as current | 413.964 | 156.383 |
| | Long-term liabilities reclassified as current – Eurobonds | 161.010 |- |
| | Financial charges and inflationary effects | 12.645 | 8.100 |
| | Refinancing of credits | 161.634 | |
| | Others | 74.429 | 20.335 |
| | TOTAL FUNDS USED | 2.068.828 | 1.431.561 |
| | | | |
| |DECREASE IN NET WORKING CAPITAL |(329.655) | (271.469) |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ n( 23.274.194/0001 -19
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED DECEMBER 31
(in thousands of reais)
STATEMENT OF CHANGES IN NET WORKING CAPITAL
(continued)
| |1999 |1998 |
| | | |
| | | | |
| |Current assets | | |
| | At the beginning of the year | 1.788.097 | 1.675.383 |
| | At the end of the year | 1.725.455 | 1.788.097 |
| | | (62.642) | 112.714 |
| | | | |
| |Current liabilities | | |
| | At the beginning of the year | 2.097.943 | 1.713.760 |
| | At the end of the year | 2.364.956 | 2.097.943 |
| | | 267.013 | 384.183 |
| | | | |
| |DECREASE IN NET WORKING CAPITAL | (329.655) | (271.469) |
The accompanying notes and attachments 1 and 2 are an integral part of these financial statements.
ELETROBRÁS GROUP COMPANY
CNPJ n( 23.274.194/0001 -19
ATTACHMENT 1
STATEMENT OF INCOME SEGREGATED BY ACTIVITY
FOR THE YEAR DECEMBER 31, 1999
(in thousands of reais)
| |GENERATION |TRANSMISSION |TOTAL |
|OPERATING INCOME | | | |
| | | | |
| |Electric power sales | 6.192 |- | 6.192 |
| |Electric power supply |5.324.666 |- |5.324.666 |
| |Use of electricity network |- | 540.931 | 540.931 |
| |Other revenues | 8.191 | 7.159 | 15.350 |
| | | | | |
| | |5.339.049 | 548.090 |5.887.139 |
| | | | | |
| Deductions from operating revenue | | | |
| | | | |
| |Taxes and contributions on revenue | 65.273 | 17.841 | 83.114 |
| |Quota for global reversal reserve | 48.147 | 13.523 | 61.670 |
| | | | | |
| | | 113.420 | 31.364 | 144.784 |
| | | | | |
| Net operating income |5.225.629 | 516.726 |5.742.355 |
| | | | |
|OPERATING EXPENSE | | | |
| | | | |
| |Personnel | 110.549 | 120.663 | 231.212 |
| |Materials | 10.806 | 10.169 | 20.975 |
| |Third party services | 54.301 | 58.803 | 113.104 |
| |Fuel for generation of electric power | 33.903 |- | 33.903 |
| |Financial cost of use of hydro resources | 39.633 |- | 39.633 |
| |Electric power purchased for resale | 3.968.058 |- | 3.968.058 |
| |Charge for inspection of electric power services | 9.243 | 3.091 | 12.334 |
| |Provision for fiscal contingencies | 352.612 |- | 352.612 |
| |Provision for contingencies | 55.531 | 16.199 | 71.730 |
| |Reversal of provisions for contingencies | (361.991) |(437.106) |(799.097) |
| |Reversal of provisions – Fundação Real Grandeza | (33.708) |(35.379) |(69.087) |
| |Depreciation and amortization | 173.747 | 288.164 | 461.911 |
| |Other expenses | 34.324 | 32.371 | 66.695 |
| | | | | |
| | | 4.447.008 | 56.975 |4.503.983 |
| | | | | |
| |Operating profit | 778.621 | 459.751 |1.238.372 |
ELETROBRÁS GROUP COMPANY
CNPJ n( 23.274.194/0001 -19
(Continued)
| |GENERATION |TRANSMISSION |TOTAL |
| FINANCIAL REVENUE (EXPENSE) | | | |
| | | | |
| |Financial investments | 61.342| 4.633| 65.975 |
| |Financial expenses |(34.525) |(42.567) |(77.092) |
| |Monetary variation plus interest arrears charges - | | | |
| | electric power sold | 134.832| 2.577| 137.409 |
| |Monetary variation plus interest arrears charges - | | | |
| | electric power purchased |(159.720) |- |(159.720) |
| |Monetary variation plus interest - refinancing of energy credits |31.825 | 34.065 | 65.890 |
| |Monetary and exchange variation on loans and financing |(60.922) |(252.532) |(313.454) |
| |Monetary variation on contingencies |(15.663) |(17.447) |(33.110) |
| |Discount on government securities |(5.045) |(5.401) |(10.446) |
| |Provision for interest and fines on fiscal contingencies |(338.617) | - |(338.617) |
| |Others |(22.094) | |(21.529) |
| | | |565 | |
| | |(408.587) |(276.107) |(684.694) |
| Operating incone before interest on capital | 370.034 | 183.644 | 553.678 |
|Operating income before interest on capital | | | |
| | | | |
| Interest on capital |(72.246) |(27.754) |(100.000) |
| | | | |
|Operating income | 297.788 | 155.890 | 453.678 |
| | | | |
|NON-OPERATING REVENUE | | | 3.736 |
| |3.080 |656 | |
| | | | |
|NON-OPERATING EXPENSE |(46.967) | (41.656) |(88.623) |
| | | | | |
| |Non-operating loss |(43.887) | |(84.887) |
| | | |(41.000) | |
| | | | | |
|INCOME BEFORE SOCIAL CONTRIBUTION, | | | |
| |253.901 |114.890 |368.791 |
| | INCOME TAX AND PROFIT SHARING | 253.901| 114.890 | 368.791 |
| | | | | |
| |Social contribution | 14.877| |(4.257) |
| | | |(19.134) | |
| | | | | |
| |Income tax |(88.723) | | (112.788) |
| | | |(24.065) | |
| | | | | |
| |Profit sharing |(8.077) |(9.659) |(17.736) |
| | | | | |
|INCOME BEFORE REVERSAL OF INTEREST ON CAPITAL | 171.978 | 62.032| 234.010 |
| | | | |
| Reversal of interest on capital | 72.246| 27.754| 100.000 |
| | | | |
|NET INCOME FOR THE YEAR | 244.224 | 89.786| 334.010 |
| | | | |
|EARNINGS PER THOUSAND SHARES - R$ |3,76 |1,38 |5,14 |
NOTE:
The effects on net income for the year, for each activity, are as follows:
a) Generation - positive effects caused by the reversal of provisions for labor contingencies – “Plano Bresser” and a decrease in the deficit of the Fundação Real Grandeza private pension fund and negative effects due to the exchange variations on loans and financing and by the constitution of tax contingencies for PASEP and COFINS contributions in relation to electric power purchased from Itaipu;
b)Transmission - positive effects caused by the reversal of provisions for labor contingencies – “Plano Bresser” and a decrease in the deficit of the Fundação Real Grandeza private pension fund and negative effects due to the exchange variations on loans and financing.
FURNAS CENTRAIS ELÉTRICAS S.A.
ELETROBRÁS GROUP COMPANY
CNPJ Nº. 23.274.194/0001-19
BALANCES AND TRANSACTIONS WITH RELATED PARTIES
(in thousands of reais)
ATTACHMENT 2
| |In thousands of reais | | |
|BALANCES: |1999 | |1998 |
| |ELETROBRÁS |CHESF |ELETROSUL |ELETRONORTE |ELETRONUCLEAR |ITAIPU |TOTAL |TOTAL |
|Consumers and resellers | | 470| | | | | | |
| | | |4.075 |1.779 | | |6.324 |18.214 |
|Suppliers | | (1.231) |(3) |(16.513) |(23.152) |(761.324) |(802.223) |(478.434) |
|Loans and financing granted | | | | | | | | |
| | | | | |156.899 | |156.899 |116.738 |
|Loans and financing raised |(1.065.822) | | | | | |(1.065.822) |(391.744) |
|Accounts receivable | | | | | | | | |
| |9.764 | | |2.941 |1.755 |298 |14.758 |336.003 |
|Accounts payable |(643) |(6) |(1) |(248.245) |(882) | |(249.793) |(352.911) |
| | | | | | |(16) | | |
|Net balance |(1.056.701) |(767) | |(260.038) | |(761.042) |(1.939.857) |(752.134) |
| | | |4.071 | |134.620 | | | |
| | | | | | | | | |
| |In thousands of reais | | |
|TRANSACTIONS: |1999 | |1998 |
| |ELETROBRÁS |CHESF |ELETROSUL |ELETRONORTE |ELETRONUCLEAR |ITAIPU |TOTAL |TOTAL |
| | | (1.231) |(3) |(131.635) |(278.032) |(3.318.228) |(3.729.129) |(2.275.163) |
|Purchase of electric power | | 2.461 | | | | | | |
| | | | |28.604 | | |31.065 |91.723 |
|Revenue from use of Electricity network | | | | | | | | |
| | | |50.674 |6.628 | | |57.302 |79.646 |
|Financial revenue | | | | | | | | |
| |11.208 | |2.259 |44 | | |13.511 |3.741 |
|Financial expense |(48.659) | | | | |(10.913) |(59.572) |(31.554) |
|Net balance |(37.451) | 1.230 | |(96.359) |(278.032) |(3.329.141) |(3.686.823) |(2.131.607) |
| | | |52.930 | | | | | |
| | | | | | | | | |
(A free translation of the original notes in
Portuguese to financial statements prepared
in accordance with accounting principles
prescribed by Brazilian Corporate Law)
ELETROBRÁS GROUP COMPANY
CNPJ nº 23.274.194/0001-19
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 1999 AND 1998
NOTE 1 - OPERATIONS
FURNAS - Centrais Elétricas S.A. is a mixed economy closed capital company, subsidiary of Centrais Elétricas Brasileiras S.A. - ELETROBRÁS, The Company’s main activity is the generation and transmission of electric power, and it operates in the Federal District and the states of São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Goiás and part of Tocantins.
The Company’s activities include 9 operational hydroelectric power plants, with an installed capacity of 8.450 MW, 1 hydroelectric plant under construction ( APM – Manso ) with a capacity of 210 MW, transferred from Centrais Elétricas do Norte do Brasil S.A. – ELETRONORTE (see note 12) and 2 operational thermoelectric power plants with a capacity of 630 MW, providing a total capacity of 9.290 MWAs.
In accordance with the terms of the contract to share the hydroelectric output of Serra da Mesa, originally signed with Companhia Energética Nacional, which transferred its rights to Serra da Mesa Energia S.A., 657 MW (51.54%) of the total installed capacity of 1.275 MW are assigned to that company, and the remaining 618 MW (48.46%) are maintained by FURNAS, which continues to hold the concession rights.
Under the terms of the contract between ELETRONORTE and PROMAN – Produtores Energéticos de Manso S.A. for the constitution of the Consortium for the conclusion and operation / exploitation of the hydroelectric output of Manso, in which FURNAS succeeded ELETRONORTE, of the total installed capacity of 210 MW, 147 MW (70%) are assigned to FURNAS and 63 MW (30%) to PROMAN.
Electric power is transmitted by a system comprising 30 sub-stations and approximately 15.577 Km of lines carrying 138 KV to 750 KV alternating current and 1.612 Km of 600 KV direct current, supplying the concessionaire distributors in the Company’s area of operations.
In addition to generating electric power in its own power plants, the Company distributes approximately 98.027 GWh (1998 - 96.567 GWh) of electric power purchased from third parties, of which 86.09% (1998- 86.10%) is generated by Itaipu Binacional.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Although, FURNAS is not subject to the regulations of the Brazilian Securities Commission (CVM), as it is a closed capital corporation, the financial statements were prepared in accordance with those regulations and in accordance with Brazilian corporate legislation, following the policy adopted by the parent company Centrais Elétricas Brasileiras S.A. - ELETROBRÁS, which is a public corporation.
The significant accounting policies adopted are as follows:
a) Current Assets and long-term receivables
• Investments in short-term fixed income funds are stated at cost plus accrued income to the
balance sheet date. These investments are made in the Banco do Brasil S.A., in accordance with
legal requirements;
• Stored materials are stated at average acquisition cost, not exceeding market value;
• Indexed assets are restated to the balance sheet date.
b) Permanent assets
• Stated at acquisition or construction cost, restated up to December 31, 1995. Depreciation of property, plant and equipment is calculated using the straight-line method and charged partly to income for the year, and partly to work in progress, proportionately to the use of assets;
• Construction in Progress includes financial charges on third-party financing, and interest on the Company’s own capital used, calculated up to 1998, in accordance with the specific criteria applicable to the sector.
c) Current and long-term liabilities
• These are stated at known or estimated amounts including, where applicable, the related charges and monetary variations.
d) Stockholders’ equity
• Unrealized earnings appropriated to the reserve are reversed to retained earnings, at a minimum, in proportion to the disposal/write-off, depreciation and amortization of permanent assets;
• This group also includes resources for capital increase from the parent company, ELETROBRÁS, providing they are irreversible.
e) Income
Income for the year is determined on the accrual basis.
As from January 1, 1998, in compliance with Agência Nacional de Energia Elétrica - ANEEL Resolution No. 1, the Company writes up the accounts in accordance with the new Chart of Accounts of the Public Electrical Power Service, segregating costs and revenues according to the production or transmission activity involved, and by business unit.
In Resolution nº 142, of June 9, 1999, the Agência Nacional de Energia Elétrica - ANEEL, established the amounts of annual income permitted for the period June 9, 1999 to May 31, 2000, for electric power transmission concession holders linked to the basic network and to the connection installations, defined by Resolution nº 66, of April 20, 1999.
In Resolution nº 143, of June 9, 1999, ANEEL also established generation sales tariffs, thereby segregating the Company’s revenues and tariffs.
Under the new scenario, short-term energy sales are defined in the sphere of the Mercado Atacadista de Energy - MAE (Wholesale Energy Market). The regulation of this market is in the process of approval by ANEEL.
NOTE 3 - ACCOUNTS RECEIVABLE - ENERGY SOLD
a) Consumers and resellers
| | | |In thousands of reais | | |
| | | | CURRENT | | |
| | | |1999 | |1998 |
| | |DUE |COMING DUE |TOTAL |TOTAL |
| | | | | | |
|Eletric power sold |50.216 |929.065 |979.281 | 692.513 |
Of the balance due at December 31, 1999, the amount of R$ 45.881 thousand was received in January 2000; the difference of R$ 4.335 thousand is still outstanding and refers to credits owed by CELG.
b) Refinancing of Credits - Energy
|In thousands of reais |
|1999 |1998 |
|CURRENT |LONG | | |
|DUE |COMING DUE |TOTAL |TERM |TOTAL |TOTAL |
| | | | | | |
|- |32.401 |32.401 |263.849 |296.250 |192.455 |
The balance refers to the renegotiation of energy credits owed by CELG, with maturities up to 2014, annual interest of 11% and monetary restatement at the General Market Price Index - IGPM rate.
NOTE 4 – LOANS AND FINANCING GRANTED
|In thousands of reais |
| |1999 |1998 |
| | |LONG | | |
| COMPANIES |CURRENT |TERM |TOTAL |TOTAL |
| | | | | |
|ELETROBRÁS | - | - | - | 116.738 |
|SERRA DA MESA | - | 7.298 |7.298 | 1.799 |
|ELETRONUCLEAR |11.207 |145.692 |156.899 | | |- |
|TOTAL |11.207 |152.990 |164.197 |118.537 |
The financial terms of the loans are as follows:
ELETROBRÁS – The debit balance of R$ 116.738 thousand was fully offset against amounts owed to the company by means of a settlement of accounts with the parent company.
ELETRONUCLEAR – Interest of 10% p.a. and management fee of 2% p.a., capitalized and calculated on a pro-rata basis on the balances due, adjusted at the IGPM rate and amortized on a six-monthly basis in 14 installments, the first of which matures in December 2000.
SERRA DA MESA – Under contract nº 12.291, the Company is granting to Serra da Mesa, as a loan over a ten-year period, the amount of R$ 1,35/MWh, base December 1997. The first installment was granted in June 1998, calculated on own power contracted. The loan is subject to tariff adjustments in accordance with the IGPM variation and interest of 10% p.a., capitalized monthly on a pro-rata basis, with maturities as from the eleventh year of the plant’s commercial operations. The remainder will be paid in 24 equal monthly consecutive payments, in local currency, the first installment falling due in the month immediately subsequent to the last month of the established period of the debt.
NOTE 5 – CREDITS RELATING TO SPIN-OFF OF THE THERMONUCLEAR SYSTEM
Receivables from ELETRONUCLEAR of R$ 225.558 thousand, recorded in Current assets in 1998 and established in 1997, at the time of the thermonuclear spin-off, were renegotiated in the light of article 31 of Provisional Measure nº 1985-22, of December 10, 1999, which recognized a portion of the nuclear excess of Angra 1 and Angra 2. Other credits amounting to R$ 4.157 thousand were also renegotiated, resulting in a total of R$ 229.715 thousand.
a) The effects of the negotiation between the two companies are as follows:
• Granting of long-term financing of R$ 156.899 thousand, to cover a portion of the FURNAS credits for nuclear excess (R$ 152.742 thousand) and other credits (R$ 4.157 thousand), under the terms and conditions mentioned in note 4.
• Write-off and recognition as a loss of the amount of R$ 72.816 thousand, due to the partial recognition of the nuclear excess costs of Angra 1 and Angra 2 by the National Treasury and in accordance with item 1.3 of the Spin-off Protocol signed by FURNAS and ELETRONUCLEAR, which assures FURNAS the cancellation of its liabilitiy in respect of the Decommissioning Fund for the Angra 1 plant.
b) The credits of R$ 129.669 thousand (1998 - R$ 104.168 thousand) corresponding to the investments made by FURNAS in Angra 2 between May and July 1997, while the effects of the thermonuclear spin-off were suspended under a legal decision, were liquidated through a settlement of accounts with ELETROBRÁS, resulting in a reduction of FURNAS’s liability to the Parent Company (see note 11).
NOTE 6 – TAX CREDITS
In accordance with Brazilian Securities Commission - CVM Resolution nº 273 of August 20, 1998, the Company has recorded tax credits of R$ 261.440 thousand (1998 – R$ 287.791 thousand), which comprise temporary differences for the reduction against future taxable income, as follows:
|Temporary additions |In thousands of reais |
| |1999 |1998 |
|Labor and civil contingencies |140.393 |841.800 |
|Tax contingencies |691.229 |- |
|Discount on government securities – ELET’S |40.813 |30.367 |
| |872.435 |872.167 |
| | | |
| Tax credits | | |
| | | |
| . Income tax |182.921 |218.018 |
| . Social contribution |78.519 |69.773 |
| |261.440 |287.791 |
NOTE 7 - CONCESSIONS TO BID
Under a Decree dated April 12, 1995, and in accordance with Law nº 8.987, of February 13, 1995, the Federal Government cancelled the public service concessions for exploitation of water resources, due to the fact that the corresponding construction was considered not to have been started or to have been suspended.
The amounts approved by the conceding power for studies and projects, construction in progress and interest expense on constructions in progress will be reimbursed by the Federal Government, with funds from these new bids, in accordance with Law No. 8.987/95. These costs are recorded as long-term receivables. The cancelled concessions and related accumulated costs are shown below:
|PROJECT |In thousands of reais |
| |1999 |1998 |
|Simplício |50.868 |50.868 |
|Sapucaia/Anta |50.706 |50.706 |
|Itaocara |20.373 |20.373 |
|Foz do Bezerra (viability) |14.086 |14.086 |
|Peixe (viability) |7.019 |7.019 |
| | | |
|TOTAL |143.052 |143.052 |
NOTE 8 - PROPERTY, PLANT AND EQUIPMENT
| |Average |In thousands of reais |
| |Annual | | |
| |Depreciation |1999 |1998 |
| |rate (%) | | |
|In operation | | | |
| | | | |
|.Generation |2,4 | 6.939.639 | 6.863.550 |
|.Transmission |3,6 | 8.741.247 | 7.618.370 |
|.Administration |7,7 | 109.568 | 110.827 |
| | | | |
| | | 15.790.454 | 14.592.747 |
|Accumulated depreciation and | | | |
| amortization | | | |
| | | | |
|. Generation | |(1.691.117) |(1.537.636) |
|. Transmission | |(3.487.948) |(3.196.528) |
|. Administration | | (47.271) | (41.276) |
| | | | |
| | |(5.226.336) |(4.775.440) |
|In progress | | | |
| | | | |
|. Generation | | 533.649 | 81.813 |
|. Transmission | | 699.268 | 1.314.166 |
|. Administration | | 57.312 | 49.201 |
| | | | |
| | | 1.290.229 | 1.445.180 |
| | | | |
| | | 11.854.347 | 11.262.487 |
In accordance with the provisions of General Instructions No. 35 and 36 of the Chart of Accounts of the Public Electric Power Service, interest and other financial charges and inflationary effects relating to financing obtained from third parties actually applied in constructions in progress are recorded in this subgroup as cost. Interest on own capital used to finance the constructions in progress, as established in the specific legislation applicable to the Public Electric Power Service, was also recorded in construction in progress up to December 31, 1998.
As from January 1, 1998, in accordance with National Agency for Electric Energy - ANEEL Decision nº 2, of December 24, 1997, the Company calculates and accounts for depreciation, applying the rates fixed for each asset or installation, based on the accounting balances recorded in the respective Registration Units – UC, in compliance with the instructions provided in DNAEE Ordnance No. 815, of November 30, 1994.
In accordance with National Agency for Electric Energy - ANEEL Resolution nº 44, of March 17, 1999, the Company changed the annual depreciation rates established by ANEEL Resolution nº 002, of December 24, 1997.
In compliance with National Privatization Council – CND Resolution nº 2, of February 3, 1999, as amended by Resolution nº 4, of March 30, 1999, and National Agency for Electric Energy - ANEEL Instruction nº 235/99, assets with a book value of R$ 313.295 thousand were transferred from ELETRONORTE to FURNAS. Of this amount, R$ 292.206 thousand was recorded in Fixed Assets and R$ 21.089 thousand in Current Assets and Liabilities (see note 12), in relation to the multiple use of Manso.
NOTE 9 - CONCESSIONS AND AUTHORIZATIONS
In accordance with articles 63 and 64 of Decree No. 41.019 of February 26, 1957, assets and installations used in the production, transmission and distribution of electric power are tied to the provision of the services and may not be withdrawn, sold, transferred or given in mortgage without the prior and express authorization of the Conceding Power.
The Company has the following concessions and authorizations from the regulatory organ of the Public Electric Power Service, terminating on the following dates:
| | | | | |
|HYDROELECTRIC PLANTS |DECREE GRANTING | | |EXTENSION OF TERM |
| |THE CONCESSION | | | |
| |Nº |DATE |TERMINATION |DATE |
|Furnas |41.899 |26.07.1957 |26.07.1987 |26.07.2037 |
|Estreito |1.187-A |18.06.1962 |26.06.1992 |08.07.2016 |
|Marimbondo |60.288 |03.03.1967 |08.03.1997 |08.03.2017 |
|Porto Colômbia |63.133 |20.08.1968 |17.03.1997 |17.03.2017 |
|Funil |60.350 |10.03.1967 |10.03.1997 |14.03.2017 |
|Itumbiara |66.272 |26.02.1970 |27.02.2020 | |
|Mascarenhas de Moraes |73.056 |31.10.1973 |01.11.2003 | |
|Corumbá |90.583 |29.11.1984 |30.11.2014 |30.05.2034 |
|Manso |79.321 |01.03.1977 |01.03.2007 | |
|Serra da Mesa |85.983 |06.05.1981 |08.05.2011 |08.05.2046 |
| | | | | |
| | | | | |
|THERMOELECTRIC PLANTS |AUTHORIZING | | |EXTENSION OF TERM |
| |DECREE OR | | | |
| |ORDNANCE | | | |
| |Nº |DATE |TERMINATION |DATE |
|Santa Cruz |60.350 |10.03.1967 |14.03.1997 |14.03.2017 |
|São Gonçalo and Roberto da Silveira |MME 931 |14.07.1997 |Indefinite |28.07.2037 |
NOTE 10 - SUPPLIERS
| | |In thousands of reais |
| | |1999 |1998 |
| | |CURRENT |LONG-TERM |TOTAL |TOTAL |
| | | | | | |
| |Electric power purchased |886.019 | - |886.019 |512.085 |
| |Electric power deferred - Itaipu |7.366 |7.367 |14.733 |14.931 |
| |Suppliers of materials and services | 33.226 | | | |- | 33.226 | 56.396 |
| | |926.611 | 7.367 |933.978 |583.412 |
| | | | | | |
Electric power purchased refers principally to that supplied by Itaipu Binacional and passed on to the concessionaire distributors.
NOTE 11 - LOANS AND FINANCING
The main details of foreign currency loans and financing are as follows:
| |In thousands of reais |
| |1999 |1998 |
| | | PRINCIPAL | | | PRINCIPAL | |
| |CHARGES |CURRENT |L.TERM |TOTAL |CHARGES |CURREN. |L.TERM |TOTAL |
|FOREIGN CURRENCY | | | | | | | | |
| ELETROBRÁS |7.659 |32.902 |582.441 |623.002 |3.858 |22.344 |130.538 |156.740 |
| FINANANCIAL INST. |804 |33.982 |63.881 |98.667 |2.366 |43.928 |330.571 |376.865 |
| SUPPLIERS |_____ | 1.071 |_______ | 1.071 |_______ | 2.072 | 836 | 2.908 |
| | 8.463 | 67.955 | 646.322 | 722.740 | 6.224 | 68.344 |461.945 |536.513 |
| | | | | | | | | |
|LOCAL CURRENCY | | | | | | | | |
| ELETROBRÁS |2.001 |43.732 |397.087 |442.820 |58 |29.846 |205.100 |235.004 |
| FINANANCIAL INST. |9 |317 |689 |1.015 |10 |512 |1.089 |1.611 |
| SUPPLIERS |939 |24.971 |36.422 |62.332 | |16.249 |45.874 |62.123 |
| OTHERS | 131 | 14.005 |_______ | 14.136 |_______ | 10.083 | 12.016 | 22.099 |
| | 3.080 | 83.025 | 434.198 | 520.303 | 68 | 56.690 |264.079 |320.837 |
| | | | | | | | | |
|TOTAL |11.543 |150.980 |1.080.520 |1.243.043 |6.292 |125.034 |726.024 |857.350 |
The total debt is guaranteed by the Federal Government and/or by ELETROBRÁS.
The variations in the main currencies and indexes used in permanent asset financing during the year were as follows:
|US$ |48,01% |
|DM |26,74% |
|FF |28,04% |
|Sw.Fr |28,36% |
|Yen |62,54% |
|Can$ |57,61% |
|IGPM |20,10% |
The breakdown of the total debt in foreign currency, by type of currency, is as follows:
| | |1999 |1998 |
| | |In thousands |In thousands | |In thousands |In thousands | |
| CURRENCY |of $ |of R$ |% |of $ |of R$ |% |
| | | | | | | | |
| |US$ |137.444 |245.888 |34,1 |357.779 |432.448 |80,6 |
| |Yen |24.400.373 |426.006 |58,9 |3.239.688 |34.797 |6,5 |
| |DM |40.439 |37.359 |5,2 |53.045 |38.666 |7,2 |
| |Sw.Fr |11.037 |12.415 |1,7 |21.878 |19.172 |3,6 |
| |Can$ |- |- |- |788 |618 |0,1 |
| |FF |- |- |- |18.886 |4.063 |0,7 |
| |Other |- | 1.072 | 0,1 |- | 6.749 |1,3 |
| | | | | | | | |
| | | |722.740 |100,0 | |536.513 |100,0 |
Changes in the profile of foreign currency debt were due to the contracting of repass financing from ELETROBRAS (EXIMBANK JAPAN) in Yen and the liquidation of the foreign debt (Club of Paris, Idu/Bea bonds and interest on bonds) in U.S. dollars, with the intermediation of the parent company.
The principal of long-term loans and financing, R$ 1.080.520 thousand (1998 - R$ 726.024 thousand), equivalent to US$ 603.980 thousand (1998 - US$ 600.665 thousand) has the following maturities:
| | |US$ thousand |R$ thousand |
| | | | |
| |2001 |64.883 |116.076 |
| |2002 |96.533 |172.697 |
| |2003 |80.748 |144.458 |
| |2004 |75.189 |134.513 |
| |2005 |76.428 |136.730 |
| |After 2005 |210.199 |376.046 |
| | |603.980 |1.080.520 |
Loans and financing are subject to fixed interest rates of 3.0% to 12.0% p.a., for local currency, (1998 – 3.0% a 12.0% p.a.) and variable rates of 7.0 % to 9.35 % p.a., for foreign currency (1998 – 4.0625 % to 9.35% p.a.).
In accordance with Resolution nº 194/99, of March 25, 1999, Centrais Elétricas Brasileira S.A. - ELETROBRÁS replaced FURNAS as the principal debtor in respect of securities issued by FURNAS on the international market through a US$ 90 million bond launch in May 1997, coordinated by J.P Morgan Securities LTD, with annual interest of 9%, maturing in 2005 and guaranteed by Centrais Elétricas Brasileiras S.A. – ELETROBRÁS. The obligation to ELETROBRÁS, equivalent to R$ 161.010 thousand, was offset against amounts receivable from ELETRONUCLEAR and the parent company.
Contracts relating to the renegotiation of the foreign debt of R$ 256.818 thousand with the National Treasury were transferred to ELETROBRÁS under Contract of Confession and Settlement of Debt nº 440/TN between the Federal Government and ELETROBRÁS, with the intermediation of FURNAS, ELETRONUCLEAR and the Caixa Econômica Federal, offset against amounts receivable from the Parent company.
The settlement of accounts generated a balance payable to ELETROBRÁS of R$ 119.153 thousand, financed in 14 installments maturing on a six-monthly basis, the first of which is due in July 2000. This contract is adjusted at the IGPM rate and is subject to interest of 10% p.a. and a management fee of 2% p.a., capitalized and calculated on a pro-rata basis (see notes 4 and 5 ), as shown below:
| A. Balances of Contracts and Financing due |In thousands of reais |
| | |
| Bonds - US$ 90 million |161.010 |
| Foreign debt - Club of Paris, | |
| Idu/Bea bonds and Interest on bonds - National Treasury |256.818 |
| |417.828 |
| | |
| B. Furnas Credit Balances with ELETROBRÁS | |
| | |
| ECF 1905 – ELETRONORTE and Eletronuclear Debts |131.544 |
| Funds raised by Furnas, on behalf of Eletronuclear, between May and July 1997, in relation to | |
|investments in Angra 2 |129.669 |
| Withdrawals relating to costs incurred by Furnas in the North-South Connection | |
| |37.462 |
| |298.675 |
| | |
| C. Balance in favor of Eletrobrás (A-B) |119.153 |
NOTE 12- OTHER LIABILITIES – ELETRONORTE - APM MANSO
In accordance with National Privatization Council – CND Resolution nº 2, of February 3, 1999, as amended by Resolution nº 4, of March 30, 1999 and National Agency for Electircal Eneragy – ANNEL Instruction nº 235/99, the Manso Hydroelectric Plant, owned by Centrais Elétricas do Norte do Brasil S.A. – ELETRONORTE, was transferred to FURNAS. The payment terms agreed upon by the parties was as follows:
( Credit to ELETRONORTE of the final installment of R$ 245.765 thousand on the securitization of securities arising from the Compensation Account – CRC, at the par value, as proposed by the Ministry of Mines and Energy through Advice nº 208/MME, of September 30, 1999, to the Ministry of Finance, which is still under analysis prior to release of the securities.
( Credit of R$ 2.480 thousand to ELETRONORTE for supplementary expenditure on the APM – Manso Project, after the transfer to FURNAS.
• Assumption of debts by ELETRONORTE, classified in liabilities as Loans and Financing – ELETROBRÁS (R$ 58.380 thousand) and Obligations tied to the concession – Federal Government Participation – Ministry of the Environment (R$ 9.150 thousand).
NOTE 13 - OBLIGATIONS TIED TO THE CONCESSION
| |In thousands of reais |
| | |1999 |1998 |
| |Amortization |81.998 |81.998 |
| |Federal Government Participation |28.539 |19.389 |
| |Others | 2.003| 1.813 |
| | |112.540 |103.200 |
The Amortization balance refers to the "Reserves for Amortization" established up to 1971, in accordance with Federal Decree nº 41.019/57 and invested, until that date, in the expansion of the public electric power service.
Due to their nature, these accounts do not represent actual financial obligations, and accordingly should not be included as liabilities or purposes of determination of financial and economic indicators.
NOTE 14 – TAXES AND SOCIAL CONTRIBUTIONS
a) Income tax
Corporate income tax, as determined by Law No. 9.249/95, amended by Laws No. 9.430/96 and 9.532/97, is calculated based on annual taxable income.
In 1999, the Company established a provision of R$ 108.975 thousand for income tax, reversed the provision of R$ 31.284 thousand for deferred income tax and reversed tax credits of R$ 35.097 thousand on contingencies and discounts on securities.
b) Social contribution
Social contribution on net income is based on net income adjusted in accordance with Law nº 9.249/95, as amended by Laws 9.430/96 and 9.532/97, and by Provisional Measure nº 1.991-12, of 14.December, 1999.
In 1999 the Company provided a social contribution allowance of R$ 13.003 thousand and established tax credits of R$ 8.746 thousand on contingencies and discounts on securities.
The reconciliation of the taxes determined in accordance with nominal rates and the amount recorded as expense in 1999, and reversal of deferred income tax and tax credits calculated on temporary additions to the calculation bases for income tax and social contribution, are shown below:
| |In thousands of reais |
| | | |Social |
| | |Income tax |contribution |
| |Income before income tax and social contribution | 368.791 | 368.791 |
| |Total income tax and social contribution at | | |
| | 25% and 12%, respectively | 92.198 | 44.255 |
| |Effects of temporary and permanent additions | 225.349 | 92.831 |
| |Effect of eliminations | (208.572) | (124.083) |
| |Total income tax and social contribution expense | 108.975 | 13.003 |
| |Reversal of deferred income tax | (31.284) | - |
| |Tax credits | 35.097 | (8.746) |
| | | | |
| |Net effect on income | 112.788 | 4.257 |
c) Inflationary gains
The credit balance resulting from the complementary restatement of the difference between IPC and the BTNF rates - Law No. 8.200/91 amounted to R$ 765.839 thousand at December 31, 1999. A provision of R$ 191.438 thousand for deferred income tax was established for the future realization of this balance.
d) Taxes and contributions payable:
| |In thousands of reais |
| | |1999 |1998 |
| | |CURRENT |L. TERM |CURRENT |L. TERM |
| | | | | | |
| | . Income tax |16.742 |- |- |- |
| | | | | | |
| | Social contribution on net income – payment | | | | |
| | . in installments |10.507 |25.732 |8.996 |31.027 |
| | | | | | |
| | . Income tax – payment in installments |5.551 |21.742 |4.735 |23.279 |
| | | | | | |
| | . Income tax withheld at source – Interest on capital |- |- |10.917 |- |
| | | | | | |
| | . Provision for deferred income tax |31.284 |160.154 |22.865 |205.739 |
| | | | | | |
| | . COFINS |5.674 |- |2.772 |- |
| | | | | | |
| | . PASEP |1.331 |- |1.053 |- |
| | | | | | |
| | . INSS |3.912 |- |4.111 |- |
| | | | | | |
| | . FGTS |763 |- |1.036 |- |
| | | | | | |
| | . Other |588 |4 |663 |2.482 |
| | | | | | |
| | |76.352 |207.632 |57.148 |262.527 |
NOTE 15 – EXCHANGE VARIATIONS
The Company recorded in income for the year the exchange variations arising from the devaluation of the Real against the U.S. dollar in 1999, as shown below:
| |In thousands of reais |
| | |1st Quarter |
| |Year of 1999 |of 1999 |
| | | |
| Financial income | | |
| Exchange variation | 121.236 | 92.366 |
| | | |
| Financial expense | | |
| Exchange variation | (448.566) |(350.659) |
| | | |
| Income tax and social contribution – tax effects | 121.112 | 95.568 |
| | | |
| Net result of exchange variations |(206.218) |(162.725) |
NOTE 16 - STOCKHOLDERS’ EQUITY
Capital comprises shares without nominal value, distributed as shown below:
| |Number of shares |
| |(in thousands) |
| | |1999 |1998 |
| |Common |50.710.649 |50.710.649 |
| |Preferred |14.293.398 |14.293.398 |
| | |65.004.047 |65.004.047 |
The common shares are nominative and carry voting rights.
The preferred shares are nominative, carry no voting rights, are not convertible into common shares and have the following priorities or advantages:
( priority in the return of capital, without the right to a premium;
( the right to vote in discussions at Extraordinary General Meetings relating to changes in the by-laws;
( the by-laws assure stockholders a minimum annual dividend of 25% of net income for the year, adjusted in accordance with Brazilian Corporate Law. Of the total dividends, a minimum priority and cumulative dividend of 10% of capital is assigned to preferred shares and the remainder to common shares, up to 12% of the capital represented by common shares. Any remaining dividend is equally divided between common and preferred shares.
Breakdown of capital reserves, revenue reserves and retained earnings:
| |In thousands of reais |
| | |1999 |1998 |
| |Capital reserves | | |
| |. Restatement of property, plant and equipment | 102.885 | 102.885 |
| |. Remuneration of construction in progress | | |
| | – own capital | 2.181.449 | 2.181.449 |
| |. Investment subsidies – CRC | 2.982.389 | 2.982.389 |
| |. Others | 752 | 752 |
| | | 5.267.475 | 5.267.475 |
| |Revenue reserves | | |
| |. Legal | 146.912 | 132.818 |
| |. Unrealized earnings | 624.271 | 649.676 |
| |. Other | 10.937 | 10.937 |
| | | 782.120 | 793.431 |
| |Retained earnings | | |
| |. Supplementary restatement - Law 8.200/91 | 1.164.399 | 1.164.399 |
| |. Transfer of special restatement - balance | 1.669.669 | 1.669.669 |
| |. Insufficiency of reserves – Fundação Real Grandeza | (999.770) | - |
| |. Remaining balances | 306.102 | 62.060 |
| | | 2.140.400 | 2.896.128 |
NOTE 17 – STATEMENT OF INCOME SEGREGATED BY ACTIVITY
In accordance with National Agency for Electrical Energy - ANEEL Circular nº 990/1999 – DR/ANEEL, of December 29, 1999, the Company has segregated 1999 revenues into income from generation and transmission, as shown in Attachment 1 to the financial statements.
NOTE 18 – REMUNERATION OF STOCKHOLDERS
In accordance with Law nº 6.404/76 and the Company’s by-laws, the minimum dividend is 25% of the adjusted net income. On the recommendation of the controlling stockholder (ELETROBRÁS), an interim dividend of R$ 100.000 thousand was distributed in the form of interest on capital, approved at the Extraordinary General Meeting - EGM held on December 20, 1999, as well as supplementary remuneration to stockholders of R$ 1.279 thousand in the form of dividends, to be submitted to the Ordinary General Meeting - OGM.
| | |In thousands of reais |
| | | |
| | Net income for the year | 334.010 |
| | | |
| | Legal reserve | (16.700) |
| | | |
| | Reversal of unrealized earnings reserve | 28.011 |
| | | |
| | Adjusted net income | 345.321 |
| | | |
| | Minimum obligatory dividend (25%) | 86.330 |
| | | |
| | Remuneration of stockholders | |
| | | |
| | Interest on capital (attributable to dividends - | |
| | CVM Decision 207/96, Laws nº 9.249/95 and 9.430/96) | 100.000 |
| | | |
| | Withholding tax on interest | (14.949) |
| | | |
| | Dividends proposed to the OGM | 1.279 |
| | | |
| | Net remuneration to be paid to stockholders | 86.330 |
| | | |
| | Remuneration per thousand preferred shares | R$ 1,93 |
| | | |
| | Remuneration per thousand common shares | R$ 1,45 |
| | | |
NOTE 19 – PROFIT PARTICIPATION
In accordance with Provisional Measure nº 1.982-65, of December 10, 1999, and Resolution nº 10, of May 30, 1995, of the Council for the Coordination and Control of State Companies - CCE, the Company established a provision for payment of Profit Participation of R$ 16.508 thousand for 1999, to be submitted for the approval of the General Meeting, and adjusted the 1998 provision by R$ 1.228 thousand.
NOTE 20 - ELECTRIC POWER SUPPLIES
| | |ELECTRIC POWER |
| | |1999 |1998 |
| | |MWh |R$ thousand |MWh |R$ thousand |
| |Supply |123.670.221 | 5.324.666 |116.429.123 | 3.866.082 |
| |Industrial supply |131.025 | 6.192 |188.169 | 7.262 |
| |(-) ICMS |- | (1.548) |- | (1.815) |
| | |123.801.246 | 5.329.310 |116.617.292 | 3.871.529 |
NOTE 21 - FINANCIAL CHARGES AND INFLATIONARY EFFECTS
In accordance with article 2 of DNAEE Ordnance nº 526, of November 22, 1995, and CVM Decision nº 193, of July 11, 1996, the financial charges and inflationary effects of loans and financing of property, plant and equipment were recognized as follows:
| | |In thousands of reais |
| | |1999 |1998 |
| | Financial charges | | |
| | Results of operations |77.092 |65.364 |
| | Construction in progress |12.330 | 8.136 |
| | Total |89.422 |73.500 |
| | | | |
| | Inflationary effects | | |
| | Results of operations |313.454 |51.522 |
| | Construction in progress | 19.673 | 2.870 |
| | Total |333.127 |54.392 |
| | | | |
NOTE 22 - REMUNERATION OF DIRECTORS AND EMPLOYEES
At December 31, 1999, the highest and the lowest remuneration paid to employees was R$ 10.220 and R$ 570, respectively, in accordance with the FURNAS salaries policy. These amounts include salaries, bonuses, commission and additional payments. The highest fee paid to directors, at December 1999, was R$ 12.335.
NOTE 23 – CLOSED PRIVATE PENSION FUND
FURNAS is a sponsor of Real Grandeza - Fundação de Previdência and Assistência Social, a non-profit legal entity whose objective is to complement the benefits of the government-sponsored social welfare systems. As a sponsor, the Company contributes the same amount as the participating employees, plus the following: a percentage of 5,09% of the total payroll, on a permanent basis; 1,60% of the total monthly payroll, on a temporary basis, up to 2013, to cover the original appropriation and that resulting from the inclusion of additional contributions in the actual contribution salary required by Decree Law No. 1.971/82; and another additional contribution of 0,60% on the total monthly payroll, on a temporary basis, up to 2012, to cover the appropriation resulting from changes in the criteria for application of the new age and contribution limits.
The total contribution to Real Grandeza appropriated in the year to complement the welfare benefit was R$ 26.746 thousand (1998 - R$ 30.511 thousand).
In accordance with Real Grandeza Regulation 001.C, item 2.1, a further amount of R$ 1.154 thousand (1998 – R$ 29.041 thousand) was appropriated to constitute a portion of the mathematical reserves for coverage of additional benefits granted to female employees after 25 years of service, as well as half of the actuarial downpayment for participants who joined the plan after the age of 35.
In 1999, R$ 6.293 thousand (1998 - R$ 6.583 thousand) was appropriated to cover administrative expenses, in accordance with Law No. 8.020/90.
Real Grandeza adopts a capitalization actuarial system.
In 1998, the sponsor and Real Grandeza concluded the studies conducted in order to evaluate the financial situation of the benefit plans, and the extent of certain of the entity’s statutory provisions, with the assistance of actuaries and the legal and technical advice of welfare plan specialists. These studies resulted in a proposal for the permanent regulation of the Foundation and the creation of new social welfare plans, namely a capitalized plan funded by the transfer of resources from the current plan and by the sponsors, and a defined contributions plan, to which the participants migrate on an individual basis.
This proposal was submitted, in December 1998, to the Secretariat for Coordination and Control of State Companies – SEST, which in turn submitted it to the Secretariat for Supplementary Social Welfare – SPC, to the National Bank for Social and Economic Development – BNDES (in the capacity of manager of the National Privatization Program – PND, in which FURNAS is included) and to the Ministry of Mines and Energy.
The proposal for regulation includes the provision by the sponsors of R$ 874.011 thousand (as of July 31, 1998), an amount considered by the studies to be sufficient for the actuarial regulation of the new benefit plans, of which R$ 712.731 thousand is to be provided by FURNAS, as a sponsor.
The resources to be provided by FURNAS are divided into two installments. The first, of R$ 487.613 thousand (as of July 31, 1998), refers to the commitments established in the by-laws and in the regulations of the current benefit plan of the sponsor, whose responsibility for the provision of resources is not affected by the introduction of new plans; these commitments refer to: a) years of service prior to enrollment in the Real Grandeza plan; b) incorporation in salaries of profit participation – DL 1971/82; and, c) removal of the age limit and ceiling for benefits for participants who joined between the dates of publication of the Decrees establishing the plans and the corresponding change in the regulations. The second installment, of R$ 225.118 thousand (as of July 31, 1998), refers to the additions to the mathematical reserves for capitalization of the proposed new benefit plans. In 1999, FURNAS and Real Grandeza negotiated the terms of the provision of resources and two documents were prepared, signature of which is awaiting the approval of the government authorities. The first document is an Instrument of Recognition and Consolidation of Debts, Obligation to Pay and Other Covenants in respect of the installment of R$ 487.613 thousand, and the second is an Instrument of Recognition of Indebtedness, Obligation to Pay and Other Covenants in respect of the installment of R$ 225.118 thousand.
While the Company awaits authorization to implement the proposal for the permanent regulation of Real Grandeza, and in view of the responsibility of the directors of the sponsor in relation to the obligation, under the statutes and the regulations, to provide the resources, the Directors of the Company authorized monthly advances, as from October 1999, in accordance with the amounts of the installments agreed upon in the Instrument of Recognition and Consolidation of Debts, Obligation to Pay and Other Covenants.
After the close of the year, on February 8, 2000, the Company was advised of the approval, by the Secretariat for Supplementary Social Welfare, of the above-mentioned proposal for permanent regulation, and preparation of the new regulations and the migration process for participants is in the final stages.
Based on the benefit plan currently in force, the table below shows the Mathematical Reserves and the Stockholders’ Equity of Fundação Real Grandeza in accordance with the actuarial appraisal carried out by the official actuary of Real Grandeza at December 31, 1999, based on the number of employees sponsored by FURNAS and by the other sponsor.
| |In thousands of reais |
|Mathematical Reserves | |
| Benefits granted | 1.468.862 |
| Benefits payable | 1.029.041 |
|Reserves to be amortized | (26.348 ) |
|Total | 2.471.555 |
| | |
|Stockholders’ equity | 1.375.855 |
|Insufficiency of Reserves | (1.095.700 ) |
In view of this appraisal, the insufficiency of reserves attributed to the sponsor FURNAS at December 31, 1999 is R$ 949.019 thousand, fully provided for in the 1999 financial statements, with an effect of R$ 999.770 thousand recorded directly in stockholders’ equity, corresponding to the amount for prior years.
NOTE 24 - CONTINGENCIES
|In thousands of reais |
| |1999 |1998 |
| | | |
| | | |
| | | |
|Contingencies | | |
| |Amount provided | |Amount provided | |
| | | | | |
| | | | |Judicial |
| | | | |Deposits |
| | | | | | | |
| | |Accumu- |Judicial Deposits | |Accumu- | |
| |In 1999 |lated | |In 1998 |lated | |
|Labor suits | | | | | | |
|“Plano Bresser” | | | | | | |
| - Provision | 60.162 |- |- |117.670 |731.505 |- |
| - Reversal |(791.667) |- |- |- |- |- |
| Engineers | 2.936 |55.231 |- |25.381 |52.295 |- |
| Danger | 12.400 |9.490 |- |- |- |- |
| Supplementary retirement | | | | | | |
|payments |(7.430) |28.330 |9.654 |40.000 |40.000 |6.277 |
| Others |- |18.000 |4.488 |- |18.000 |3.327 |
| | | | | | | |
|Civil suits | 29.342 |29.342 |9.612 |- |- |8.390 |
| | | | | | | |
|Tax suits | 691.229 |691.229 |- |- |- |- |
| | | | | | | |
|Total | (3.028) |831.622 |23.754 |183.051 |841.800 |17.994 |
a) “Plano Bresser”
Lawsuits were filed against the Company by individuals and employees’ unions, claiming reimbursement of salary losses under the “Plano Bresser”. Based on the opinion of legal counsel, which considers that there is no chance that these cases will be lost, and on the decision of the plenary session of the Federal Supreme Court, which dismissed the claim in the judgment on RE 144756-7/DF, the provision of R$ 791.667 thousand recorded in the accounts for this contingency was reversed.
b) Engineers salary claims
The Rio de Janeiro Engineers’ Trade Union filed labor suits claiming the refund of salary differences relating to changes in the base-date of the engineers’ salary adjustments. These claims, currently at the settlement stage, are estimated and recorded in the accounts at R$ 55.231 thousand (1998 - R$ 52.295 thousand), including R$ 4.656 thousand relating to employees transferred to ELETRONUCLEAR.
c) Tax contingencies
In 1999, as a result of the inspection by the Internal Revenue Service of PASEP and COFINS contributions, the Company was assessed, due to the exclusion from the calculation base of amounts for the repass of electric power from Itaipu. A provisions of R$ 691.229 thousand was established for tax contingencies in respect of these assessments. A motion to deny these assessments was filed, and the result of the judgment in the administrative sphere was unfavorable to the Company. Accordingly, the Company is studying the possibility of enrolling in the Tax Recovery Program – REFIS, in accordance with Provisional Measure nº 2.004-5, of February 11, 2000.
d) Other suits
A provision of R$ 85.162 thousand (1998 - R$ 58.000 thousand) is maintained for coverage of other civil and labor suits brought against the Company, in relation to cases in progress.
NOTE 25 - RELATED PARTIES
In compliance with National Agency for Electrical Energy - ANEEL Circular nº 990/1999 – DR/ANEEL, of December 29, 1999, the Company sets forth, in attachment 2 to the financial statements, the balances and transactions with related parties.
NOTE 26 - FINANCIAL INSTRUMENTS
Given the Company's particular characteristics both within its sphere of action and in the electricity sector in general, the market value of loan agreements with the parent company - Centrais Elétricas Brasileiras S.A. - ELETROBRÁS for funding its expansion projects was deemed significant for disclosure purposes.
All loans and financing raised from ELETROBRÁS bear interest at 10% p.a. ELETROBRÁS is restricted by its statutes to granting loans only to "municipal, state and federal concessionaires of public electricity services under its control". Accordingly, it determines the market rate (the opportunity cost of the Company's capital) taking into account the risk attached to the activities of the sector (10% p.a.). Due to the special circumstances involved in the financing of expansion projects, the market value of these loans is equal to their recorded value.
The Company also has CRC balances of R$ 562.605 thousand recorded in the off-balance sheet system (compensation account). Under pertinent legislation, should the Company wish to use these amounts, it must previously reduce the balances by 25% (Law No. 8.631/93, article 7, paragraph 5, as amended by Law No. 8.724/93) before the remainder can be securitized with the approval of the Ministry of Finance. Government securities in the form of ELETs, restated to December 31, 1999, are also recorded in Long Term Receivables, at a net value with discount of 45% of R$ 49.883 thousand (1998 – R$ 45.550 thousand).
On May 6, 1997, the Company issued foreign bonds, entering the Eurobond market for the first time, with a public offer of US$ 90 million destined for its investment program. The operation was guaranteed by ELETROBRÁS. In accordance with Resolution nº 194, of March 25, 1999, ELETROBRÁS replaced FURNAS as principal debtor in respect of the securities issued (see note 11).
The Company is not involved in operations with futures contracts, swaps and other financial derivatives.
NOTE 27 - INFORMATION SYSTEMS AND “ON_BOARD” TECHNOLOGY – YEAR 2000 (unaudited)
The Company’s systems did not suffer any interruption or adverse effects at the turn of the year, or in the recording of its transactions after December 31, 1999. The transition to the year 2000 occurred normally and according to plan.
NOTE 28 - PRIVATIZATION PROCESS
On May 3, 1995, under the Decree nº 1.481, amended by Decree nº 1.503, of May 25, 1995, the Federal Government included the Company, together with other companies in the ELETROBRÁS System, in the National Privatization Program - PND, established by Law nº 8.031, of April 12, 1990.
Article 5, Paragraph 3, of Law n° 9.648/98 authorized the restructuring of FURNAS with a view to privatization, through spin-off, amalgamation, incorporation, decrease of capital, or the constitution of fully-owned subsidiaries, to be authorized by the National Privatization Council – CND. The Company is awaiting the decisions of that body in order to implement the restructuring process to be defined.
LUIZ CARLOS SANTOS
Director - President
PAULO ROBERTO RIBEIRO PINTO CELSO FERREIRA
Director Director
DIMAS FABIANO TOLEDO HEITOR HERBERTO SALES
Director Director
PAULO ROBERTO QUEIROZ DE ALBUQUERQUE
Superintendent of Accounts
and Control
CRC - RJ 023.013/O-1 - Contador
CPF - 265.630.887-91
JOSÉ LUIZ OLIVEIRA DE AGUIAR
Head of the Accounts Department
CRC - RJ 026.157/O-5 - Contador
CPF - 330.737.757-49
FISCAL BOARD REPORT
We, the undersigned, members of FURNAS Centrais Elétricas S/A Fiscal Board, present at the Administrative Board Meeting held on this date, aided by the Society’s Accountant, Mr. José Luiz Oliveira de Aguiar and by the Accountancy and Control Superintendent, Mr. Paulo Roberto Queiroz de Albuquerque, have analyzed the Financial Statements pertaining to the fiscal year ending on December 31st, 1999, which include the Balance sheets, the Statement of Income, the statement of Profits, the statement of Changes in stockholders’ Equity; the statement of Changes in Financial Position; the Notes to the Financial Statements as well as the proposal regarding the destination of the Profits in the year and the Auditor’s Report which, in the 3rd paragraph, makes the following provision “as is written in Note 2 of the financial statements, the completion in 1998 and the updating in 1999 of studies and actuarial evaluation on the deficiency of funds of Real Grandeza Fundação de Previdência e Assistência Social, which resulted, for FURNAS, in a provision of R$ 999,770 thousand, which was only recognized in 1999, in the Equity. As a consequence of such procedure, on December 31st, 1999, the stockholders’ Equity is increased and the liabilities in the long term decreased by the same amount.” After careful analysis, which agreed with the information given by the FURNAS’ Law Consultant, and after complying with the formal and legal proceedings to elaborate the final report, we recommend, in accordance with law Nº 6404, article 192 of December 15th, 1976, that the Administration Board submit to the stockholders’ Meeting the said report for its approval.
Rio de Janeiro, march 15, 2000
Carlos Alberto de Carvalho Afonso Jorge Khalil Miski
Member of the Fiscal Council Member of the Fiscal Council
Jorge Trinkenreich José Luiz Oliveira de Aguiar
Member of the Fiscal Council Accountant CRC-RJ nº 026.157/O - 5
-----------------------
(A free translation of the original in Portuguese
prepared in accordance with accounting principles
prescribed by Brazilian Corporate Law)
(A free translation of the original in Portuguese
prepared in accordance with accounting principles
prescribed by Brazilian Corporate Law)
(A free translation of the original in
Portuguese prepared in accordance with
accounting principles prescribed by
Brazilian Corporate Law)
(A free translation of the original in
Portuguese prepared in accordance
with accounting principles prescribed
by Brazilian Corporate Law)
(A free translation of the original in
Portuguese prepared in accordance
with accounting principles prescribed
by Brazilian Corporate Law)
(A free translation of the original in
Portuguese prepared in accordance
with accounting principles prescribed
by Brazilian Corporate Law)
In the last two years, FURNAS completed two hydroelectric plants – representing more 1.650 MW – and now taking part in the effort to bring more 1.690 MW into the Brasilian Electric System.
[pic]
Net Operating Income & Operating Expense
Along the four years, FURNAS invested R$ 3,3 billion in the expansion of the Brasilian Electric System, of which R$ 2,4 billion (72%) from its own resources.
R$ millions
milhões
milhões
hões
milhões
Performance indicator
Service Result prior to Depreciation and Amortization
(EBITDA)
[pic]
R$ / Employee
Investiment in Training
[pic]
Program Participation
Technical 821
Administrative 2,618
Computer 3,435
Quality 496
Total 7,370
FURNAS operates the widest transmission system in continuous current in the world, being the first company to be certified in ISSO 14001 Environmental Management System.
Investment in the System Expansion
[pic]
[pic]
Net Profit Evoluiton
Amount Paid on Taxes
From 1996 to 1999, FURNAS had na accrued amount of profits of R$ 1,5 billion, of which over 60% were distributed to the stckholders.
[pic]
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