2007
Annual Report
2007Annual Report Message from the President
Annual Report 2007
4
4
Message from the President Annual Report 2007
Eletrobrás finishes 2007 with great and renewed expectations. In another year of work, we
reaffirmed our commitment with the country’s development, taking part in the creation of a
new institutional model for the Brazilian energy industry, investing in conservation and eco-
nomy of resources and in alternative energy sources. With our minds and eyes in the future,
we build a present of significant achievements. As a whole, they provide us with the assurance
that we are living a single historic moment. Maybe one of the most important one, since the
creation of the company, in 1962.
As essential investments for the Brazilian economy growth, we emphasize the conclusion
of big generation and transmission works and the resume of structuring projects of the local
interconnected system and of the isolated system. Itaipu gained an additional 1400 MW po-
wer after the installation of the two last machines. Tucuruí plant is today one of the biggest
hydroelectric plant in the world in operation, with a total of 8370 MW capacity after the
conclusion of the second phase. In Candiota C, after 23 years of interruption, more than R$ 1
billion have been invested. In addition, it was granted authorization to resume the construc-
tion of Angra 3 Nuclear Power Plant, suspended for more than 20 years, and new enterprises
were created, such as the plants of Santo Antônio and Jirau, in Madeira river, with resources
of approximately R$ 20 billion.
These are some of the different actions that consolidate the basis of the future energy
sector in Brazil. But the future is also made with energy rationalization and conservation and
with the development of alternative sources. Accordingly, Eletrobrás played an important role
in the federal government programs. The program to Foster Alternative Sources of Electric Po-
wer (Proinfa) has implemented 144 enterprises, in a total of 3300 MW and private investments
of approximately R$ 10 billion. National Program for Electric Power Conservation (Procel) and
the National Program of Efficient Public Lighting (ReLuz) Foster actions aiming at energy
conservation and saving. And nearly 10 million Brazilian started to have electricity thanks to
the program called Luz para Todos, the biggest program of electric power services provided to
rural areas in the world.
We believe in a country that grows every day, propelled by currency stability, update and
modernization of its industrial facilities, by the good results in the trade balance and by the
special attention paid by the government of President Lula to strategic sectors. We believe in
the prime role of the energy in this scenario. And we believe, mainly, that it is with knowled-
ge, ideas and goals that we may build the future. To improve and strengthen them, Eletrobrás
has invested nearly R$ 43 million in training, improvement and expansion of Cepel’s labora-
tories and human resources. And it has implemented Unise, a corporate university, betting on
the improvement of the individual skills of its professionals and of the company itself.
And due to these facts, we hope for the best for the coming year. A certainty that may be
reinforced after the approval of Provisional Measure 396, currently being voted by the Federal
Senate. After being approved, it will cause changes in important aspects of Eletrobrás by-laws
and its operating structure, enabling us to fly higher. Always guided by the energy of our most
significant goals.
José Antonio Muniz
President of Eletrobrás
55
Index
Annual Report 2007
1. Introduction .................................................................................................... 8
1.1 Company’s Profile ......................................................................................... 9
1.2 Eletrobrás System .......................................................................................10
1.3 Global Scenario ..........................................................................................11
1.4 Brazilian Scenario .......................................................................................13
1.5 Electricity Market .......................................................................................16
1.6 Evolution of Operating Data of Affiliates .........................................................18
1.7 International Activities ................................................................................19
1.8 Strategic Planning ......................................................................................21
2. Corporate and Financial Analysis ..................................................................... 22
2.1 Economic and Financial Performance ..............................................................23
2.2 Financial Indicators .....................................................................................25
2.3 Capital Structure and Indebtedness ................................................................27
2.4 Stockholders’ Remuneration ..........................................................................28
2.5 Primary Result ............................................................................................29
2.6 Corporate Risk Analysis ................................................................................30
2.7. Past-Due Debt – Renegotiation ...................................................................31
2.8. Compulsory Loan .......................................................................................33
3. Investors Relations and Financial Market ........................................................ 34
3.1. Rating ......................................................................................................35
3.2. Stockholding Basis .....................................................................................37
3.3. Corporate Governance Indicators ..................................................................38
3.4. Analysis of Ibovespa and Eletrobrás Shares ....................................................39
3.5. American Depositary Receipt (Adr) Program ...................................................40
3.6. Latibex (Latin American Stock Market in Madrid Stock Exchnage): ......................41
3.7. Eletrobrás Share Portfolio ............................................................................42
3.8. Funds Generated in the International Market ..................................................44
3.9 Independent Auditors ..................................................................................45
4. Energy Sale ................................................................................................... 46
4.1 Itaipu ......................................................................................................47
4.2 Proinfa .....................................................................................................48
4.3 Frontier Interconnections .............................................................................49
5. Investments .................................................................................................. 50
5.1 Companies and Projects ...............................................................................51
5.2 In Generation .............................................................................................53
5.3 In Transmission ..........................................................................................54
5.4 In Isolated Systems.....................................................................................55
6
Index Annual Report 2007
5.5 Expansion of Electric Power Offer of the Eletrobrás System ................................56
5.6 New Enterprises and Partnerships ..................................................................59
5.7 Ordinary Resources .....................................................................................60
5.8 Growth Acceleration Program (PAC) ................................................................61
6. Cepel Research and Development Activities .................................................... 62
7. Technologic And Industrial Development Program (PDTI) ................................ 64
8. Sectorial Funds .............................................................................................. 66
8.1 Global Reversion Reserve (RGR) .....................................................................67
8.2 Energy Development Account – CDE ...............................................................68
8.3 Fuel Consumption Account (CCC) ...................................................................69
8.4 Luz para Todos (Electricity for Everyone) ........................................................70
8.5 ReLuz........................................................................................................71
8.6 Procel .......................................................................................................72
9. Corporate Management ................................................................................... 74
9.1 Corporate Communication ............................................................................75
9.2 Human Resources ........................................................................................77
9.3 Administrative Actions ................................................................................78
9.4 Auditing ..................................................................................................79
9.5 Ombudsman ...............................................................................................80
10. Social Responsibility ..................................................................................... 82
11. Federal Distribution Companies ..................................................................... 84
12. Environment .................................................................................................. 86
13. Social and Environmental Related Information ................................................. 90
Financial Statements 2007 ................................................................................... 94
Attachment ....................................................................................................... 203
Board of Executive Directors ............................................................................... 220
Independent Auditors Report ............................................................................. 222
7
1. Introduction
Annual Report 2007
Furnas – Overview of the Plant
Mascarenhas de Moraes
(Furnas Files)
8
1. Introduction Annual Report 2007
1.1 Company’s Profile
1.1 Company’s Profile
Centrais Elétricas Brasileiras S/A – Eletrobrás is a public mixed-capital company controlled
by the Federal Government, which holds 53.99% of common shares. It is the biggest holding
of the energy industry in Latin America, and its shares are negotiated in the São Paulo Stock
Exchange (Bovespa), in the Madrid Stock Exchange, in Spain, and in the over the counter
market in the USA (American Depositary Receipts – ADR level 1). Eletrobrás’ purpose, since
its creation in 1962, has been the conduction of studies, projects, construction, operation of
energy producing plants and electricity transmission and distribution lines.
The following energy generation, transmission and distribution companies are under Ele-
trobrás’ control: Chesf, Furnas, Eletronorte, Eletronuclear, Eletrosul and CGTEE. The holding
also controls Light Participações S.A. – Lightpar, in a joint system, Itaipu Binacional, pursuant
to the International Treaty signed between Brazil and Paraguay. Also, it operates in energy
distribution area by means of federal companies Eletroacre (Acre), Ceal (Alagoas), Ceam (Ama-
zonas), Cepisa (Piauí) and Ceron (Rondônia), in addition to the distributors Manaus Energia
and Boa Vista Energia S.A., fully subsidiaries of Eletronorte.
Eletrobrás system, which comprises the controlled companies, counts with a production
installed capacity of 39753 MW* _ 39.6% of the local total amount _, distributed among 30
hydroelectric plants, 15 thermoelectric plants and two nuclear power plant. Transmission lines
reach 56789 kilometers, representing 63% of the Brazilian system. Eletrobrás group works in
an integrated way, adopting policies and guidelines defined by Eletrobrás Board of Directors,
which are operated by the High Council of Eletrobrás (Consise), consisting of the presidents of
the holding and of the controlled companies. Research and Development activities consist of
the major attributions of the Electric Power Research Center (“Centro de Pesquisas de Energia
Elétrica - Cepel”), created 34 years ago, which is the greatest institution of this type in the
South hemisphere.
Eletrobrás is responsible for managing a portfolio of sectorial resources consisting of the
Global Reversion Reserve (RGR), Energy Development Account (CDE), Public Assets Use (UBP)
and Isolated System Fuel Consumption Account (CCC-Isol), which finances fossil fuels used in
Isolated Systems located, in the great majority, in the Northern region of the country.
RGR and CDE resources finance three federal government programs: Luz para Todos – uni-
versalization of electricity access; the National Program of Efficient Public Lighting (ReLuz),
and National Program for Electric Power Conservation (Procel). Such resources are also appli-
cable to the financing of energy generation and transmission works financing.
* Itaipu included (7.000 MW)
9
1.2 Eletrobrás System
1.2 Eletrobrás System
Annual Report 2007
Operation area and total participation of Eletrobas
in the capital of controlled companies – December/2007
Companies
Transmission Lines (km)
Installed capacity (MW)
Eletronorte/Manaus Energia
Chesf
Eletronuclear
Furnas
CGTEE
Eletrosul
Itaipu
TOTAL
10,448
18,468
---
19,278
---
9,145
---
57,339
9,782
10,615
2,007
9,782
490
---
7,000
39,753
10
Annual Report 2007
1.3 Global Scenario
1.3 Global Scenario
The expected growth in global economy for 2007 by the United Nations Organization is of
3.4%. The principal economies present moderate expansion rates, mainly in view of the US real
estate crisis which affected the financial markets worldwide in the last quarter of the year.
The United States grew 2.2% in 2007, against the 3.8% registered in 2006. This was the
lowest growth rate in the US economy in the past five years. The US commercial deficit de-
creased by 6.2%, compared to the prior year, mainly by virtue of the US dollar devaluate in
relation to other principal currencies. Despite the decreased in general deficit, there has been
an increase of 10.2% regarding the trade with China, reaching US$ 256.3 billion a year.
In Japan, against the analysts’ opinion, the economic growth exceeded the expected one.
In 2007, the second biggest economy of the world grew 2.1%, although the estimation was
of 1.5%. China, in its turn, obtained in 2007 the most significant economic growth of the
past 13 years, and reached the rate of 11.4%. This is the fifth consecutive year in which the
Chinese economy presented two-digit growth rate, confirming thus its position as the forth
biggest economy of the world, just behind the United States, Japan and Germany.
In Europe, preliminary data presented by Eurostat – European Union statistics agency –
indicted that the economic activity of the continent increased 2.9%. Also according to the
agency, unemployment rate reached 7.1%. By analyzing the principal European countries, we
may note that the German economy growth in 2007 was of 2.5%, less than the 2.9% regis-
tered in 2006, basically in view of the increase in exports and the expansion of investments.
As estimated, the French economy grew 1.9% in 2007, against the 2.2% of the prior year.
Spanish economy, on the other hand, grew 3.8%, one tenth less than in 2006.
Eletrobrás – Illustration by
Alexandre Wilson
11
Petroleum
In 2007, the petroleum barrel price increased 57.21% compared to 2006. A performance
similar to 2002, when the increase was of 57.26%. The strong demand for petroleum and
fuels worldwide (principally in the USA, China and India) and the geopolitical tensions in the
principal producing regions were the determining factors for the increase in commodity quo-
tations. The price of intermediary petroleum in Texas (WTI, light) amounted to approximately
US$ 100, an amount that had no longer been seen since 1983.
Latin America
GNP expansion in the region is expected by 5.6% in 2007, the same rate reached in 2006,
according to the Latin American and Caribbean Economic Committee (Cepal). Argentina, for
example, reached 8.6%, the fifth consecutive year with rates in excess of 8%. Also, following
the petroleum price rises, Venezuela maintained its expansion rhythm and grew 8.5% against
the 10.3% in 2006.
According to Cepal report, in 2007, many of the principal characteristics of the current
economic phase of the region identified in the past five years were maintained. Among the
most important ones are: the surplus in current account (although in lower level), the im-
provement in exchange terms, the primary fiscal surplus, the decreasing unemployment, the
increase in international reserves and reduction of the external debt.
The principal factors that contributed to the economic increase were: the increase in con-
sumption and in capital investments. Direct Foreign Investment in Latin America ended the
year with a balance of US$ 77 billion, an increase of 69% compared to 2006, with emphasis
on Brazil with US$ 34.6 billion, followed by Mexico with US$ 16 billion.
Annual Report 2007
12
Annual Report 2007
1.4 Brazilian Scenario
1.4 Brazilian Scenario
The Brazilian GDP growth is estimated by 5.4%, according to official sources. The Brazilian
industrial GDP increased 6% in 2007, according to IBGE, which is the best result since the
8.3% in 2004.
The Trade Balance ended 2007 with a balance of US$ 40,039 billion. The result was 13.8 %
less than the one registered in 2006, according to the Ministry of Development, Industry and
Foreign Trade which attributed this reduction to the valuation of the local currency compared
to US dollar and Euro.
In 2007, exports totaled US$ 160,683 billion, registering an increase of 16.6% in relation
to the prior year. Imports increased 32%, from US$ 91,351 billion, in 2006, to US$ 120,583
billion, in 2007. Basic products have registered the best exporting performance with US$
51,59 billion, in 2007, representing an increase of 28.08%; sales of semi-manufactured pro-
ducts increased 11.7%, reaching US$ 21,80 billion; and manufactured products, responsible
for 52.3% of the total exported by the country in 2007, increased 11.9%, from US$ 75,02
billion, in 2006, to US$ 83,94 billion, in 2007.
In the capital and financial account of the payments balance, the item portfolio invest-
ments (public securities, shares, etc.) registered an increase of US$ 47,9 billion against the
US$ 9,5 billion in 2006. Foreign investments in shares and fixed income securities significan-
tly increased of 1.530% compared to the 240% of 2006, reaching, respectively R$ 26,2 billion
and R$ 21,7 billion.
During 2007, the entry of direct foreign investments amounted to US$ 34,6 billion, which
represents an increase of 84,3% in relation to the prior year. According to Central Bank, this
result represented a new record, exceeding the previous one, established in 2000, when US$
32,7 billion in investments entered Brazil. However, in that year there was a significant entry
of funds due to privatizations. International reserves increased US$ 94,5 billion, accumulating
a record volume of US$ 180,3 billion, in 2007.
Eletronuclear – Generator
Rotor of the Nuclear
Plant Angra 2
(Eletronuclear Files)
13
Annual Report 2007
Monetary policy and inflationary goals
The monetary policy adopted by the federal government, through the Brazilian Central
Bank (Bacen), had, as a guideline, the inflationary control, using the goals system. For 2007,
the goal was established by 4.5% for the official index, the Wide Consumers Prices Index (“Ín-
dice de Preços ao Consumidor Amplo – IPCA”), and there may be deviations of 2% for more or
less, called upper and lower band, respectively. In view of the price behavior along the year,
the Monetary policy Committee (Copom) followed a policy of interest rate reduction in 2007.
The inflation measured by IPCA ended 2007 in 4.46%. With a weight of 21.44% in the
index, the food and beverages group was the major responsible for the increase of 10.79% in
12 months. Non-food products, with weight of 78.56%, increased 2.83% in the accumulated
of the year due to reduced variations in items such as fixed telephony (0.34%), electricity
(-6.16%), real estate (1.76%), and other.
The General Market Price Index (IGP-M) ended the year with an increase of 7.75% against
the 3.14% in 2006. The said index is much sensitive to exchange variations, since 60% of its
weigh refer to wholesale products, much more than those referenced in US dollar. Considering
the devaluation of the US currency against Real, we may note that the exchange was not a de-
termining factor for the noted increase. In a nutshell, (INCC – National Index of Construction
Cost) increased 4.6% (civil construction), and its participation of 10% in the formation of the
index; the IPC (consumer), which corresponds to 30%, registered an increase of 4.5%; and IPA
(wholesale), increased 9.9%, contributing to 60% of the said index.
Public Finances
The primary surplus fostering policy continued in 2007. The Need of Public Sector Fi-
nancing (“Necessidade de Financiamento do Setor Público – NFSP”), in the primary concept,
ended 2007 with -3.98% of the GDP, exceeding the goal of -3.8%. The federal government was
responsible for the greatest part of the tax effort, 4.11% of the GDP, followed by state gover-
nments (0.48%) and public companies (0.48%). Nominal rates decreased from 6.86% of the
GDP, in 2006, to 6.25%, in 2007, causing a reduction in nominal NFSP at the rate of 0.73%.
The federal public debt increased by 7.8% compared to 2006, reaching R$ 1.334 trillion.
Even though, it as below the goal estimated by the National Treasury which, due to the finan-
cial crises (subprime) of the second semester, interrupted the launching of new papers. The in-
crease of 12% of the DPMFi (internal debt) was responsible for the increase of the total public
debt of the federal government, from R$ 1,093.5 trillion, in 2006, to R$ 1,224.9 trillion, in
2007. The external debt ended 2007 in R$ 108,88 billion, with a decrease of 24.1% in relation
to 2006 (R$ 143.5 billion). Real valuation and the buyback program, in addition to the fact
that the contractual debt and bonds due date exceeded the new emissions and the contracts
were responsible for the reduction of this debt portion.
14
Annual Report 2007
The economic-political stabilization of the country has benefited the postponement of the
public debt payment. Federal government considered positive the management of the public
debt in 2007. In fact, the average maturity of papers was increased from 35 months in 2006,
to 39 months in 2007, which contributed to a reduction in refinancing risk. Also, we may note
the continuity of the reduction of Exchange indexed securities (12.7% and 8.2% for 2006 and
2007, respectively) and the Selic rate (33.4% in 2006 and 30.7% in 2007). Prefixed securities,
jointly with those remunerated by price indexes have consolidated as the principal financing
instruments of the federal government, from 51.8%, in 2006, to 59.2%, in 2007.
São Paulo Stock Exchange
Ibovespa index registered profitability of 43.65% in 2007, closing the year with 63.886
points. Market value of companies with shares listed at Bovespa reached R$ 2,477.6 billion in
December 2007, an increase of 60.4% in relation to the prior year. Companies that integrate
the Bovespa index portfolio and Brasil index (IbrX-100) are responsible for 71.2% and 75.9%,
respectively, of the total capitalization value. Sectors with activities of greater market value
in 2007 were: Financial institutions, with R$ 473,7 billion (19.1% of the total); Oil, Gas and
Biofuel, with R$ 437,2 billion (17,6%); Mining, with R$ 291,7 billion (11.8%); and Electrici-
ty, with R$ 182.0 billion (7.3%). This excellent performance was followed by the exceeding
historical maximum values and also by the greatest financial volume in the Stock Exchange
history.
Foreign capital increase was, once again, the biggest responsible for the index valuation,
comprising 34.5% of the total volume, below the 35.5% of 2006. Foreigners’ participation
in public share offers was significant, including IPOs (initial public share offers), of 75.8%.
Foreign funds flow to the Brazilian stock market amounted to R$ 45.2 billion, resulting in
R$ 49.4 billion in acquisitions made by foreigners in public share offers and deficit in direct
negotiation at Bovespa, which amounted to R$ 4,2 billion.
Bovespa ended 2007 with 64 initial public stock offers, an increase of 146%, which re-
presented a generation of R$ 55.5 billion against the R$ 30.4 billion of 2006. The factors res-
ponsible for the exception performance of the stock Exchange may be attributed to the high
international liquidity, the good performance of the productive sector, controlled inflation,
decreasing interest and credit expansion.
Another aspect that contributed to the boom of the Brazilian capital market was the
increase of 108% in the number of individual investors, from 219.634 accounts in 2006, to
456.557, in 2007. Stock Exchange reached a daily business average of 152.872 – an increase
of 74,7% in relation to 2006, while the total negotiated volume increased by 100,3%, rea-
ching R$ 1,2 trillion. Accordingly, the daily average raised to R$ 4,9 billion, 101.1% in excess
of the R$ 2,4 billion in 2006.
15
1.5 Electricity Market
1.5 Electricity Market
Annual Report 2007
Electricity supply market in 2007 totalled 367.278 GWh, representing an increase of 4.9%
in relation to the prior year (Table 1). Considering the market evolution per subsystems, it is
important to note performance of the Isolated and Northeast subsystem, of which increase
rates were of 6.1% and 6.3% respectively.
However, in relation to the spatial distribution of electricity consumption, Southeast /Mid-West
represented 59.3% of the Brazilian supply market, while Interconnected South, Northeast, North
subsystems and Isolated systems amounted to 17.4%, 14.2%, 7% and 2.1%, respectively.
By analyzing the market based on consumption class viewpoint, it is possible to identify
the characteristics of electricity consumption of each one of the subsystems. While in the
North and South the commercial class was the one that presented the highest increase rates
(8.1% and 8.4%, respectively), in Isolated Systems and in Northeast, the performance of the
industrial class was the most significant one (5.2% and 6.2%, respectively). In Southeast /
Mid West, the greatest increase was noted in Commercial and Residential classes (6.1% and
5.2% respectively) (Table 2).
Among the aspects that interfered during 2007 in the electricity market behavior in re-
sidential consumption class, we may highlight the expansion of credit offer, the decrease in
interest rate, stimulating the sales of electrical appliances, the good performance of civil
construction and the expressive increase in the quantity of new residential connections, ari-
sing from the program Luz para Todos. These aspects consisted of a favorable environment so
that the growth of this consumption class could exceed the total market growth.
On the other hand, the significant increase in the imported quantum in all use categories, mainly
in durable consumption goods (increase of 54.4% in the accumulated January-October 2007, compa-
red to the same period in the prior year), limited the increase of the consumption of the Industrial
class (domestic demand met by an increasing portion of goods externally manufactured).
In relation to Other Classes (a combination of public illumination, rural, public service, pu-
blic power and own consumption), it is important to note the increase in rural consumption,
mainly in view of the program Luz para Todos in the North and Northeaster and the greater
use of irrigation.
Supply Market* - Brazil 2003-2007 (GWh)
Class
2003
2004
2005
2006
2007
[Table 1]
Residential
Industrial
Commercial
Other Classes
Total
76,162
78,470
82,650
85,784
90,940
136,221
146,065
149,040
157,423
136,323
47,531
47,073
49,686
46,551
52,939
49,936
55,224
51,796
58,874
54,141
306,987
320,772
334,565
350,227
367,278
*Source: EPE - Captive Consumption + Free Consuption
16
Annual Report 2007
Furnas – Bateias Substation–
Preventive Maintenance
(Furnas/Clayton Duarte Files)
[Table 2]
Increase rates – Supply market (*)
Consumption and Subsystem Classes 2006/2007 (%)
Subsystem
Residential
Industrial
Commercial
Other
Total
Isolated Systems
Interconnected North
Interconnected Northeast
Southeast/Mid West
South
Brazil
5.6
9.7
7.4
5.2
6.9
6.0
*Source: EPE /Captive Consumption + Free Consumption
5.2
4.0
6.2
2.9
4.6
3.7
6.0
8.1
6.5
6.1
8.4
6.6
7.9
7.6
4.6
5.1
1.8
4.5
6.1
5.3
6.3
4.3
5.2
4.9
17
1.6 Evolution of Operating Data of Affiliates
1.6 Evolution of Operating Data Of Affiliates
Annual Report 2007
General information
Installed capacity (MW)*
Transmission lines (km)
Own generation (GWh)**
Energy sold (GWh)**
Employees*
Consolidated –Eletrobrás System
2003
35,398
55,512
207,842
233,615
21,685
2004
36,282
55,869
212,266
218,718
22,332
2005
37,056
56,443
218,955
221,087
23,076
2006
37,941
56,544
241,162
243,105
24,998
2007
39,735
56,789
233,112
239,998
26,177
*It includes 50% of Itaipu and the subsidiaries Eletronorte Manaus and Boa Vista Energia.
Cepel – High Voltage
Laboratory
(Cepel/Milton
Maurente Files)
18
Annual Report 2007
1.7 International Activities
1.7 International Activities
In line with the policy to consolidate and expand its operations in the international energy
sector, Eletrobrás participated, jointly with the Ministry of Foreign Affairs in understandings
with entities from Latin America countries, with the purpose of meeting the three technical
cooperation projects that should be signed in 2008.
Two of them resulted at the request of Instituto Costarriquense de Eletricidade (ICE) and
were sent to Furnas and Cepel, in view of the interest areas: maintenance of electric power
plants and certification of laboratories, respectively. The third, resulting from a request of the
Venezuelan CVG Edelca to Cepel, basically involves cooperation in technical and laboratorial
training.
In addition, the pursuit of business opportunity prospection of mutual interest in Africa
- Angola and Namibia, jointly with Furnas continued. Supporting the Ministry of Mines and
Energy, Eletrobrás also took part in negotiations related to inventory survey of area of the
Uruguai river, on the frontier of Brazil and Argentina. Such survey is also supported by the
International Treaty signed in 1982 between these both countries.
With the purpose of fostering regional integration, Eletrobrás holder of the Chairmanship
and the management of the Executive Secretariat of the Brazilian Committee of Energy Inte-
gration (Bracier) and Regional Committee (Cier), took part in two international meetings held
by the Committee, in Uruguay and in Colombia.
In 2007, Bracier concluded the project “Diagnosis of energy efficiency situation in South
America countries”, which purpose is to carry out a diagnosis of the energy efficiency situa-
tion and seeking subsidies so that the 10 member countries of South America may have the
opportunity to elaborate local incentive policies for the development of the matter. The re-
sults showed many needs, opportunities and great potential in this region, but also concluded
that the expertise developed in some countries, by means of their experience and competen-
ces, enables the provisioning of solutions to meet energy integration and sustainability in
the region.
Outside the regional scenario, in 2007 Eletrobrás took part in an agreement to provide
international consulting services to Três Gargantas plant, at the request of China Three Gorges
Project Corporation – CTGPC to Itaipu. It was also visited by foreign delegations from Costa
Rica, China, Equator, France, Russia, Poland, England, Korea, Zimbabwe, El Salvador, India and
Nigeria.
19
1.8 Strategic Planning
1.8 Strategic Planning
Annual Report 2007
Continuing the work developed in 2006, part of the Work Groups created for the develo-
pment of the Action Plans – indispensable for meeting the Strategic Goals – concluded their
works, resulting in Resolutions approved by the Board of Directors, as follows:
Corporate Strategy No. 2 – Investments/ New Businesses
•
•
•
: Establishment of Physical and Financial Goals Agreements of Eletrobrás
Action Plan1
with the federal government and with its affiliates and of Business and Social and Envi-
ronmental Responsibility Guidelines for the affiliates.
: Detailed studies for the elaboration of a proposal of the business types
Action Plan2
of Eletrobras’ potential interest. Development of a work process for regular prospection
of information in order to enable that the creation of business opportunity may have a
proactive nature in the company. Development of institutional and financing modeling
for each type of potential business, with the purpose of attracting new investments and
new investors.
Action Plan3
bras System and with its private partners:
o
: Proposal of the following guidelines for new partnership model at Eletro-
Eletrobrás, jointly with the affiliates, in partner-
Eletrobrás, of the participation of affiliates in all partnerships, pro-
’ participation by means of non-redeemable ordinary and preferred shares,
Coordination, by
viding synergy of the Eletrobras system’s results;
Direct corporate participation by
ships of the system;
Eletrobrás
enabling the continuation of the enterprise until the end of concession;
Limitation of the participation of
Eletrobrás System companies by 49% of the capital
stock, in case of partnership, preferably with participation of the holding Eletro-
brás;
Sedimentation of the category of strategic partner of
Eletrobrás system, and not only
as an affiliate, which will be selected based on criteria such as risk x return profile
and long-term view;
Creation of Investment Committees of the affiliates, with representation at
brás.
o
o
o
o
o
Eletro-
20
Annual Report 2007
Corporate Strategy No. 4 – Share portfolio
•
: Implementation of Share Portfolio Management Policy of Eletrobrás, with
Action Plan1
its own methodology structuring and adoption of qualitative and quantitative indica-
tors.
Corporate Strategy No. 10 – Company’s Image
: Structuring of an integrated communication policy involving Marketing,
Action Plan1
Social Responsibility and Environment.
Action Plan2
Action Plan3
: Definition of criteria for granting of sponsorships.
: Development of an endomarketing program for Eletrobrás.
Eletronuclear – Generator Pool
of the Nuclear Plant Angra 2
(Eletronuclear Files)
•
•
•
21
2. Corporate and Financial Analysis
Annual Report 2007
Transmission Towers
(Eletrobrás Files)
22
2. Corporate and Financial Analysis Annual Report 2007
2.1 Economic and Financial Performance
2.1 Economic and Financial Performance
Eletrobrás ended 2007 with profit of R$ 1,547,9 million, equivalent to R$ 1.37 per lot of
one thousand shares. In 2006, the company registered a profit of R$ 1,161.3 million, equiva-
lent to R$ 1.03 per lot of one thousand shares, registering an increase of 33%.
The performance of Real compared to other foreign currencies and the fact that Eletrobrás
holds a relevant share of its receivables (net of liabilities) – R$ 15,197.0 million (US$ 8,579.6
million) – indexed to external currencies, with emphasis on US dollar, created a loss scenario
for the company in 2007, which withheld its evolution.
Along the 12 months of 2007, Eletrobrás registered Exchange losses in the amount of
R$ 3,001.7 million. In the same period of the prior year, the company presented exchange
losses in the amount of R$ 1,599.3 million, arising out of its financing and loans portfolio. In
relation to the exchange variations arising out of internal price levels, in 2007, the company
presented a gain of R$ 529,2 million, 60% higher than the one noted in 2006, when gains
were registered in the amount of R$ 330,6 million.
Despite the strong reduction in income, caused by exchange matters, however, the influ-
ence of financial income resulting greatly from its financing and loans portfolio, enabled
Eletrobrás to register expressive net gain of R$ 3,741.7 million, as a result of its investment
program along many years and the low indebtedness level. In 2006, financing and loan port-
folio granted generated a net gain of R$ 3.499,4 million.
The income generated by the 21 companies in which Eletrobrás holds investments, which
were assessed by equity method, positively impacted the company’s revenue of the year, when
the company registered gains of R$ 1,883.3 million. This result was influenced by the surplus
noted in the Complementary Pension Plan Foundations, sponsored by the companies of Eletro-
brás system, in the amount of R$ 1,224.4 million, with emphasis to Fundação Real Grandeza,
which, alone, contributed to a surplus of R$ 1,138.0 million.
Electricity sale, despite the expressive revenue of approximately R$ 7.555,6 million, cor-
responding to the sale of the energy generated by Itaipu Binacional and by the Incentive
Program to Alternative Energy Sources (Proinfa), did not represent gains to the company,
pursuant to Law No.10.438/02.
In relation to the energy of Itaipu, Eletrobrás registered an equivalent to R$ 96 million,
resulting from the development of electricity sale activity, in the period from January to De-
cember 2007, corresponding to the surplus generated by the activity in the 12 months, to be
transferred to consumers in future years, via tariff. The accumulated and recoverable deficit,
arising out of electricity sale operations of Itaipu, at December 31, 2007 corresponds to R$
179,5 million and is not a risk for the company’s investors, in view of the activity modeling
established in the applicable law.
Proinfa, which grants Eletrobrás the right to sell the energy produced in the following 20
years, generated in 2007 a surplus of R$ 250,4 million, carried out within the limits of the
program, without impacting the stockholder’s profitability.
Eletrobrás has also sought new businesses in the electricity generation and transmis-
sion sectors in order to increment its share in the sector, increasing its resources generation
23
capacity, focusing on the expansion of its profitability and greater remuneration of its sto-
ckholders. The company is listed at the Corporate Sustainability Index of Bovespa (ISE), which
means that it is recognized in the market by its transparency and good corporate governance
practices. Today, it is listed under Bovespa’s Level 1– Corporate Governance Levels.
The concept of corporate sustainability is based on the triple bottom line principle, which
grants the same weigh to environmental, social and financial indicators. The principle assumes
that a project may be prejudiced by a big environmental liability or by labor practices not
acceptable worldwide. Due to this reason, big international financial institutions attribute
lower risk to companies that present such sustainability practices included in their business
strategies. And having the Sustainability Index means that such companies have lower costs
with international fund generation, either in the equity market or in the debt one. Big pension
funds have great interest in sustainable companies.
Accordingly, Eletrobrás has also adhered to the Global Covenant with a strategic position
along with the biggest companies of the world, aligned by UNO in relation to Corporate Social
Responsibility. Seeking a more sustainable and inclusive global economy, the Covenant esta-
blishes 10 universal principles, involving human rights, labor rights, environmental protection
and fighting corruption. The Global Covenant is related to big Socially Responsible Investment
movements which address the corporate sustainability concept in a worldwide level. Thus, Ele-
trobrás has worked seriously to show its investors its social-environmental actions, considered
to be politically correct. In addition to such measures, the Company is bound to obtain its
registration from Securities and Exchange Commission (SEC), of the United States, to comply
with Sarbanes-Oxley Law.
01/01/06 a 31/12/06
01/01/07 a 31/12/07
IGPM index variation
US$ variation
3.85%
-8.66%
7.75%
-17.15%
Annual Report 2007
24
Annual Report 2007
2.2 Financial Indicators
2.2 Financial Indicators
EBTIDA (R$ BILLION)
8,4
8,0
7,2
6,6
5,3
2003
2004
2005
2006
2007
45,0%
40,0%
35,0%
30,0%
25,0%
20,0%
15,0%
10,0%
2003
2004
2005
2006
2007
Operating margin (%)
EBTIDA margin (%)
Indebtedness (%)
1,80
1,60
1,40
1,20
1,00
0,80
0,60
25
2003
2004
2005
2006
2007
Current liquidity
General liquidity
Annual Report 2007
TOTAL REvENuE (RS BILLION)
22,6
23,4
22,5
22,6
27,6
2003
2004
2005
2006
2007
Cepel – Laboratory Tests
under Pollution
(Cepel/Milton Maurente Files)
26
Annual Report 2007
2.3 Capital Structure and Indebtedness
2.3 Capital Structure and Indebtedness
30.000.000
25.000.000
20.000.000
15.000.000
10.000.000
5.000.000
2003
2004
2005
2006
2007
Financings and loans payable
Financings and loans receivable
140.000.000
120.000.000
100.000.000
80.000.000
60.000.000
40.000.000
20.000.000
-
2003
2004
2005
2006
2007
Financings and loans payable
Other liabilities
Stockholders’ equity
27
2.4 Stockholders’ Remuneration
2.4 Stockholders´Remuneration
Annual Report 2007
DIvIDENDS - R$ MILLION
703
323
361
422
459
2003
2004
2005
2006
2007
Stockholders’ remuneration
Interest on its own capital
1.800.000
1.600.000
1.400.000
1.200.000
1.000.000
800.000
600.000
400.000
200.000
-
2003
2004
2005
2006
2007
Proposed dividends
Withheld dividends
28
Annual Report 2007
2.5 Primary Result
2.5 Primary Result
The primary result goal of Eletrobrás system, for 2007, was of R$ 1,380 million, according
to Decree No. 5.939, of October 19, 2006.
Years
2007
2006
2005
2004
2003
Result
Surplus
Surplus
Surplus
Surplus
Surplus
R$ million
2,789.0
2,137.2
2,864.8
1,650.5
1,211.0
Centro de Operações do Sistema
Eletrosul (Cose)
(Eletrosul/Anísio Borges Files)
29
2.6 Corporate Risk Analysis
2.6 Corporate Risk Analysis
Annual Report 2007
Since the creation of the Risks and Profitability Analysis Division Eletrobras has taken the
first steps to adopt practices and tools for a systematic treatment of risks. Accordingly, it aims
at meeting the fundamental premises of corporate governance and sustainability, improving
the company’s image for different stakeholders and adding value to its operations.
During 2007, two big projects started. The first one refers to the hedge program, with
derivative instruments to mitigate the exchange risk of Eletrobrás, based on studies extending
from May to July and meetings with financial institutions. In the second semester four Execu-
tive Committee’ Resolutions and three Board of Director’s Deliberations were approved on the
matter, defining the regulatory basis for the structuring of the operations. The beginning of
negotiations is estimated for the first quarter of 2008. The program will reduce, substantially,
the volatility in the company’s results, making them clearer and aligned with its operating
development.
The second project was the implementation of corporate risk management, firstly focused
on the Financial Directory. The purpose was developing an analysis methodology and qualita-
tive measuring, so as to consolidate the risk culture, passing through all decision making pro-
cesses in the company. Different strategic areas were mapped, with emphasis on the impact
of the activities on the volatility level of the estimated cash flow.
The process resulted in the contracting of Ernst & Young consulting, already responsible
for the adjustments to Sarbanes-Oxley Law. The consulting work will continue along the first
semester of 2008 and will provide the company with a risk integrated management model
that will enable it to identify, manage, and monitor the relevant exposures and opportunities
with focus on strategic objectives of Eletrobrás. This model will also enable the integration
of isolated practices existing in the company, such as the treatment of environmental, equity,
operating issue and IT risks.
30
Annual Report 2007
2.7. Past-Due Debt – Renegotiation
2.7. Past–Due Debt – Renegotiation
In the year of 2007, the main negotiations were made with affiliated and federal distribution
companies with the purpose of solving the past-due debt, issue and, thus enabling the continui-
ty of loans and financing receipt, as well as participation in energy auctions and authorized tariff
readjustments. It also aimed at reducing the frustrations with Eletrobrás’ revenue and a better
estimate of the entry of such receivables, with positive effects on its economic and financial
statements, in which R$ 7,398.2 million were negotiated, as demonstrated below:
Company
Ceal
Ceron
Ceam
Cepisa
Manaus Energia
Manaus Energia
Chesf
Chesf
Lightpar
Itaipu
Furnas
Eletronuclear
Eletronuclear
Renegotiated
R$ million
Conditions
44.0
55.0
37.0
73.2
68.0
61.2
52.8
38.0
15.3
2,965.2
105.3
74.5
156.5
Suspension of the principal from 01.01.2007 to 31.12.2007 of the agreements in force.
Suspension of the principal and incorporation of interest from 01.01.2007 to 30.12.2007
of the ECF-1861/99 agreement, with changes in the interest and administration rates.
Suspension of the principal and incorporation of the interest in the period from
01.01.2007 to 31.12.2007 of the agreements in force.
Suspension of the principal and incorporation of the interest in the period from 01.01.2007
to 31.12.2007 of the agreements in force, except for ECF-2582/06 agreement.
Suspension of the principal and incorporation of the interest in the period from 01.02.2007
to 31.12.2007 of the agreements in force, except for ECF-2301/03 and RES-0391/03 agree-
ments, which will have interest incorporation, and the ECR-0237/86 agreement.
Past due debt payable in installments related to the payment made by Eletrobrás, as
guarantor with El Paso.
Incorporation of administration fee between 01/01/07 and 30/11/07 and extension of
the amortization to other three installments for ECF-1197/95 agreement. Resolution
043/07.
Incorporation of administration fee between 01/01/07 and 30/11/07 and extension of
the amortization period for additional three installments for the ECF-1197/95 agreement.
Resolution 196/07.
Liquidation of the past due debt of the RES-734/99 agreement, in cash and by means of
accounting.
Removal of the US inflation from financing agreements and adjustment of the debt bal-
ances between Eletrobrás and the National Treasury.
Extension of the grace period of ECF-2614/2007 agreement, transferring the single
amortization to 30/01/2008.
Suspension of the enforceability of principal from transfer agreement installments with
maturity on 21/06/2007, transferring the payment to 21/12/2007.
Refinancing of the principal installments of transfer agreements with maturity on
21/12/2007.
Liquidation of the past-due amounts of RGR agreement. Transfer of the past-due and due
amounts of the agreements to the account called Advances for Future Capital Increase.
Refinancing of the past-due amounts of the Res-929/98 agreement.
Refinancing of the past-due amounts of the agreements financed with RO and suspension
of the payment of the principal from ECF-1714/98 agreement.
Eletronorte
3,577.2
CEEE
TOTAL
75.0
7,398.2
31
Annual Report 2007
Eletrobrás / Procel - Solar
Simulator- PUC/MG
(Eletrobrás Files)
32
Annual Report 2007
2.8. Compulsory Loan
2.8. Compulsory Loan
In order to meet the requests from the stockholders provided from capitalization of
compulsory loan credits, in 2007, Eletrobrás implemented in Banco Bradesco S.A. system,
13.016.222 preferred shares of “B” class. Eletrobrás sent the amount of R$ 15,713,762.78, re-
lated to interest of compulsory loan credits restatement, to concessionaires of electric power
distribution to be transferred to industrial consumers.
CGTEE – Candiota III
(CGTEE Files)
Cepel - Detail of insulators
(Cepel/Milton Maurente Files)
33
3. Investors Relations and
Financial Market
Annual Report 2007
Eletrobrás – Meeting of the
Capital Stock Management
Department
(Eletrobrás / Jorge Coelho
Files)
34
3. Investors Relations and Financial Market Annual Report 2007
3.1. Rating
3.1. Rating
Risk classification of Eletrobrás’ debt papers is directly related to the risk classification
obtained by the country, since the federal government is its majority stockholder. According
to the agency Standard & Poor’s, the sovereign rating, in the global level, ended the year with
BBB level for businesses in local currency and BB+ for foreign currency, reaching the invest-
ment grade for businesses in local currency. In reality, the effect of this classification may be
noted in the risk-country (difference between the interest rate paid by the Brazilian and US
treasury securities).
The highest amount reached occurred in November 26, (252 points), while the lowest,
137, was registered in June 18. The risk-country ended 2007 at 222 points, and the evolution
along 2007 is illustrated as follows:
EMBI + (2007)
s
t
n
i
o
P
280
260
240
220
200
180
160
140
120
35
Annual Report 2007
Eletrobrás bonds with maturity in 2015 ended the year with a BB+ rating for businesses in
foreign currency, according to Standard & Poor’s classification.
There has been a reduction in the yield of the debt papers issued by Eletrobrás, at 1.9%
along 2007. The highest value recorded occurred in August 23, 7.1%, while the lowest, 5.8%,
was noted in April 24.
YIELD OF BONDS WITh MATuRITY IN 2015
Jan - Dec 2007
)
%
(
7,30
7,10
6,90
6,70
6,50
6,30
6,10
5,90
5,70
5,50
Night view of Itaipu
(Itaipu Binacional
Files)
36
Annual Report 2007
3.2. Stockholding Basis
3.2. stockholding Basis
Stockholders
União
BNDESPAR
FND
FGP
Outros
TOTAL
Nº. of shares at 31/12/2006
261.923.621.935
66.878.975.753
22.810.749.898
20.000.000.000
193.135.858.339
564.749.250.925
*Nº. Of shares at 31/12/2007
523.847.243
133.757.950
45.621.589
40.000.000
386.271.720
1.129.498.502
(*) Shares were grouped at the ratio of 500/1 in August /07.
Number of stockholders – bookkeeping system:
Type
Common stockholders
Preferred stockholders
TOTAL
31/12/2006
31/12/2007
variation %
3.721
16.384
20.105
3.992
16.444
20.436
7.28
0.36
1.64
Number of non-resident stockholders:
Type
Common stockholders
Preferred stockholders
TOTAL
Number of resident stockholders:
Tipo
Common stockholders
Preferred stockholders
TOTAL
31/12/2006
264
257
521
31/12/2006
3.457
15.235
18.692
31/12/2007
288
283
571
31/12/2007
3.704
16.161
19.865
variation %
9,09
10,11
9,59
variação %
7.14
6.07
6.27
CAPITAL STRuCTuRE – DECEMBER 2007:
37
3.3. Corporate Governance Indicators
3.3. Corporate Governance Indicators
Annual Report 2007
Corporate Sustainability Index of Bovespa (ISE): Eletrobrás had its shares listed in the
said index in December 2007, being one of those companies that have the best corporate
sustainability practices based on the concept Triple Bottom Line. Currently, 43 shares issued
by 34 companies of 14 economy sectors are listed at ISE Bovespa.
Level 1 of Bovespa’s Corporate Governance: Eletrobrás continues working in order to
increase its transparency. In September 29, it had listed on level 1 of Bovespa’s corporate
governance. This adhesion is voluntary and the company, its controllers and administrators
undertake the commitment to follow the listing regulation standards of Bovespa. The principal
objectives are the improvement of information disclosure to the financial market (more trans-
parency) and shareholding scattering.
American Depositary Receipts (ADRs) Level 2: they are certificates issued by foreign
banks that correspond to Brazilian company’s shares, since they may not be sold abroad.
ADRs have three different levels of issuance, being level 3 the one that enables the launching
of new shares. Currently, ADRs sold by Eletrobrás are under level 1 and are sold in over-the-
counter market, that is, are not sold in stock exchange, and, accordingly, it is not possible to
generate funds from such papers. The objective is introducing the company to the investor,
preparing it for future funding. Eletrobrás has been concluding the adjustment of the financial
statements to US-GAAP standard, the adjustments of actuarial part, the legal standards for the
elaboration of Form 20-F, as well as the control mapping of Law Sarbanes Oxley Law (SOX),
with the purpose of moving to Level 2. Accordingly, its shares will start to be traded in stock
exchange, such as, the NYSE (New York Stock Exchange).
Eletronuclear – Control Room
of the Nuclear Plant Angra 2
(Eletronuclear Files)
38
Annual Report 2007
3.4. Analysis of Ibovespa and Eletrobrás Shares
3.4. Analysis of Ibovespa and Eletrobrás Shares
Between December 2006 and December 2007, Ibovespa valuation was of 43.65%, while
Common (Elet3) and preferred (Elet6) shares devalued by 6.32% and 4.18%, respectively.
ELET 3, ELET6 AND IBOvESPA (DEC 2006 = 100)
(2007)
x
e
d
n
I
-
r
e
b
m
u
N
150.00
140.00
130.00
120.00
110.00
100.00
90.00
80.00
Elet 3
Elet 6
Ibovespa
39
3.5. American Depositary Receipt (Adr) Program
3.5. American Depositary Receipt (Adr) Program
Annual Report 2007
ADR Level I: Eletrobrás shares sold in New York over-the counter market, both Common
(CAIFY) and preferred (CAIGY), were valued by 9.28% and 13.66%, respectively, in 2007.
While real valued, compared to US dollar, 17.15%, ordinary shares valued 9.28% and preferred
shares, 13.66%.
MONThLY PERCENTAGE vARIATION (2007)
20.00%
10.00%
0.00%
-10.00%
-20.00%
jan
feb mar
apr may
jun
jul
aug
sep
oct
nov
dec
Dólar
GAIGY
GAIFY
CAIGY —Eletrobrás preferred shares (Lot of 500 shares): The ADRs of Eletrobrás pre-
ferred shares presented the highest value on November 6, 2007, closing at US$ 15.30. The
minimum value of such shares recorded in the year occurred in March 5, when the quotation
reached US$ 9.65. In 2007, such paper closed the year quoted at US$ 12.90, with a valuation
of 13.66%, compared to the closing at December 2006, which amounted to US$ 11.35.
CAIFY — Eletrobrás Common shares (Lot of 500 shares): In 2007, the ADRs of Eletro-
bras Common shares recorded maximum quotation of US$ 15.85, in November 6. The minimum
value recorded was of US$ 9.90 in March 5. In 2007, this share ended the year quoted at US$
12.95, with a valuation of 9.28% in relation to 2006, when it closed the year quoted at US$
11.85.
40
Annual Report 2007
3.6 Latibex
(Latin American Stock Market in Madrid Stock Exchnage):
(Latin American Stock Market in Madrid Stock Exchnage):
3.6 Latibex
Euro was devalued against the Real, at -7.50%, in 2007. Ordinary shares (Xelto) valued in
the same period 1.66%, while preferred shares (Xeltb) valued 8.25%.
MONThLY PERCENTAGE vARIATION - 2007
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
jan
feb mar
apr may
Euro
jul
jun
Xelto
aug
Xeltb
sep
oct
nov
dec
Xeltb: Preferred shares of Latibex program closed, at the end of 2007, at € 9.05. In 2006,
such asset closed at € 8.36, which reflects a valuation of 8.25%. During 2007, the highest
quotation was reached in July 2, when it reached € 11.29. The lowest one was noted in August
16, which was € 7.24.
Xelto: Such asset, which represents the Common shares of Latibex program, in 2007 was
valued by 1.66%, since in 2006, it closed at € 9.06 and in 2007, closed at € 9.21. Along 2007,
the highest quotation was reached in June 21 (€ 11.30). The lowest was noted in August 17
(€ 6.50).
41
3.7. Eletrobrás Share Portfolio
3.7. Eletrobrás Share Portfolio
Annual Report 2007
Eletrobrás has shares of publicly trade companies of the electric power sector, including
companies of generation, transmission and distribution, in the amount of R$ 6,576.1 billion,
at December 31, 2007. Of this amount, R$ 4,626.1 billion were offered as guarantee of diffe-
rent law suits, great part of them involving claims against compulsory loans and obligations.
Company
Type
CTEEP - PN
CTEEP - ON
Cesp - ON
Cesp - PNA
CEB - PNA
CEB - PNB
AES Tietê - ON
AES Tietê - PN
Copel - ON
Celg - ON
Celpe - PNA
Celpe - PNB
Celpe - ON
Celpa - PNA
Celpa - PNB
Celpa - ON
CEEE D - ON
CEEE D - PNB
CEEE GT - ON
CEEE GT - PNB
Emae - PN
Cemat - ON
Cemat - PN
Coelce - PNA
Coelce - PNB
Cemar - PNA
Cemar - PNB
Cemar - ON
CGEEP - PN
Celesc - PNB
Celesc - ON
Total
PN
ON
ON
PNA
PNA
PNB
ON
PN
ON
ON
PNA
PNB
ON
PNA
PNB
ON
ON
PNB
ON
PNB
PN
ON
PN
PNA
PNB
PNA
PNB
ON
PN
PNB
ON
---
Quotation
– R$
38.70
35.36
35.30
33.01
41.97
39.39
79.00
66.50
29.50
26.20
29.00
29.23
24.59
16.50
14.61
14.89
7.49
16.00
5.70
5.70
12.34
10.00
9.30
21.50
21.69
0.00
0.28
0.15
39.00
42.50
53.78
---
Total value
– R$ million
1,800.5
217.8
1.3
220.0
8.2
4.2
3.0
500.5
45.2
0.6
33.0
0.2
0.5
2.0
15.7
307.7
918.9
56.1
699.3
20.0
177.9
21.1
383.2
85.3
33.2
0.0
17.0
810.2
17.2
176.1
0.2
6,576.1
Blocked value –
R$ million
1,543.8
130.8
0.0
212.0
8.2
4.2
1.0
474.2
0.0
0.0
23.8
0.0
0.0
1.4
15.7
0.0
799.6
56.1
608.6
20.0
177.9
9.4
383.2
85.3
33.2
0.0
0.0
0.0
10.8
26.9
0.0
4,626.1
42
Annual variation of Eletrobrás portfolio
R$ million at 31/12/2006
R$ million at 31.12.2007
4.731,5
6.576.1
% 2006-2007
138,98%
ELETROBRáS’ ShARES MARkET vALuE
Annual Report 2007
Stock portfolio graph
43
3.8. Funds Generated in the International Market
3.8. Funds Generated in the International Market
Annual Report 2007
After the negotiations started in prior years, in April 2007, financing agreements were
signed between Eletrobrás and the banks China Development Bank – CDB and BNP Paribas, in
the amount of US$ 430 million. The funds were intended to be used at CGTEE, by means of a
transfer agreement with Eletrobrás and applied in the construction project of Phase C of the
thermoelectric plant Candiota II.
The financing started on June 5, 2006, after the signature of the Agreement for Improve-
ment of Cooperation in Construction Infrastructure Implementation Area, signed in Beijing,
between the Brazilian and Chinese governments, and corroborated by Legislative Decree No.
409. The Financing operation was approved by the Federal Senate, according to the terms of
Resolution No. 34, on August 3, 2006, which guaranteed the contract by Eletrobrás of finan-
cing with CDB and BNP Paribas banks.
The operation was carried out in two parts: Part I, in the amount of US$ 281 million, with
maturity of 15 years and Libor interest increased by 0.75% a.a.; and Part II, in the amount of
US$ 149 million, with maturity of 8 years and Libor interest increased by 1.30% a.a.
Along the year, negotiations were made to obtain loan from the German bank KfW, in the
amount of € 37.5 million, to be transferred to Eletrosul. Such funds will be used to build a
small power plant complex, named São Bernardo. Government authorizations are still pending
for the performance of such operations.
The year 2007 was marked by US financial market turbulence and the consequent credit
restriction in international financial markets, while capital market was reduced in the number
of issuances from emerging countries. In view of this scenario, Eletrobrás carried out no fund
generation during 2007.
In this year, negotiations were started to obtain the corresponding authorizations to con-
duct a fund raising program of US$ 600 million for the next year, with the purpose of financing
the projects listed in PAC and also the projects from companies of Eletrobrás system in gained
at the auctions.
44
Annual Report 2007
3.9 Independent Auditors
3.9 Independent Auditors
In compliance with CVM Instruction No. 381, of January 14, 2003, Eletrobrás informs that
it has retained the independent auditors’ services of the firm BDO Trevisan Auditores Inde-
pendentes, for a period of three years, counted from August 1, 2005, for the performance of
auditing of the holding’s financial statements and consolidated information of the Eletrobrás
System. Additionally, the Company has no other service agreement entered with the said com-
pany, unless the one related to auditing services.
The following table presents a list of the independent auditors of the companies of Eletro-
brás System which, individually, also provided independent auditing services during 2007:
Companies
CGTEE
Chesf
Eletronorte
Eletronuclear
Eletrosul
Furnas
Itaipu
Lightpar
Firms
Deloitte Touche Tohmatsu
Boucinhas & Campos + SOTECONTI
BDO Trevisan Auditores Independentes
HLB Audilink e CIA.
Horwath Tufani, Reis & Soares
HLB Audilink e CIA.
BDO Trevisan Auditores Independentes
Russell Bedford Brasil
Chesf Transmission Lines
(Chesf Files)
45
4. Energy Sale
Annual Report 2007
Itaipu – View of the
plant spillway
(Itaipu Binacional/
Caio Coronel Files)
46
4. Energy Sale Annual Report 2007
4.1 Itaipu
4.1 Itaipu
Law No. 10.438, of April 26, 2002, established that Eletrobrás would be the Energy Sales
Agent of Itaipu. In this case, the company, in 2007, transferred to the concessionaires of
the South, Southeast and Mid-West regions, 71,711,655 MWh of energy related to the con-
tracted power, which corresponded to revenue of approximately US$ 3,3 billion. The energy
supplied in excess of the one related to the contracted Power and acquired by Eletrobrás was
of 11,040,795 MWh, corresponding to a revenue, with the Electric Power Sale Chamber, in the
amount of R$ 210 million. The startup of the generating unit 18A added 700 MW to the plant,
increasing its total capacity to 14,000 MW.
Itaipu Binacional –
Turbine Axis of one
of the generator units
(Itaipu Binacional/
Caio Coronel Files)
47
4.2 Proinfa
4.2 Proinfa
Annual Report 2007
The Program for Incentive to Alternative Energy Sources (Proinfa) has the purpose of in-
creasing the participation in electric power produced by enterprises based on Aeolian sources,
Small Hydroelectric Power Plant (PCH) and Biomass, in the National Interconnected System
(SIN). Accordingly, Proinfa contributes to diversify the country’s energy matrix, by using lo-
cal energy resources and the creation of jobs, which enables it to be in line with the federal
government’s development programs.
As sale agent of energy and manager of Proinfa agreements, Eletrobrás certified, in 2007,
the commercial startup of ten enterprises, being one aeolian, six small hydroelectric power
plants (PCHs), and three bio-mass plants, adding 231.10 MW of power to the National Electric
System.
Total Proinfa enterprises operating up to 31/12/2007:
Sources
Small hydroelectric
Power plans (PCH)
Aeolian
Biomass
TOTAL
Enterprises in operation
Operated Power (MW)
6
1
3
10
136.00
10.20
84.90
231.10
Proinfa Energy Amounts and Costs – 2007
Eletrobrás elaborates, on a timely basis, the Annual Proinfa Plan (PAP), a document that
summarizes the energy amounts and costs of the program for each year and, in September,
it sends it to Aneel for approval. In September 2007, the amounts related to the period from
January to August were computed and informed, as well as the estimates for the subsequent
months until the end of the year. The chart below shows the amounts related to 2007 and in-
cluded in PAP-2008. The energy amounts and costs expressed in the table refer to the portion
of energy contracted from the enterprises.
Source
Biomass
Aeolian
Small hydroelectric
Power plants (PCH)
TOTAL
PAP
Nº. of enterprises
20
06
Energy (MWh) Annual cost (R$ million)
149,031.0
145,189.3
1,367,780
625,491
23
49
1,209,183
3,202,454
164,225.3
458,445.6
48
Annual Report 2007
4.3 Frontier Interconnections
4.3 Frontier Interconnections
Interconnection with uruguay through frequency converting station of Rivera:
Eletrobrás, through authorization granted by Aneel Resolution No. 043, of February 1,
2001, holds, on the Brazilian side, the exclusiveness of the right to use the facilities of the
Frequency Converting Station for energy import or export. The converting station, which
power is of 70 MW, interconnects Rivera, in Uruguay with the substation of Santana do Livra-
mento, located in Rio Grande do Sul, in Brazil.
During 2007, Eletrobrás, by means of an agreement with the state-owned company Admi-
nistración Nacional de Usinas y Transmisiones Eléctricas (UTE), assigned the right to use the
converting station facilities through refunding. The sale result of the converting station of
Rivera in CCEE, in 2007, was positive in the amount of R$ 6.5 million.
Interconnection with Argentina through frequency converting station of uruguaiana:
Eletrobrás, by means of Aneel resolution No. 266, of July 13, 2001, was authorized to im-
port and export electric power through the Frequency Converting Station of Uruguaiana, with
capacity of 50 MW, that interconnects Paso de Los Libres, in Argentina, with the substation
Uruguaiana 5, located in the State of Rio Grande do Sul, Brazil.
In 2007, meetings involving Eletrobrás were made with the purpose of settling the debt of
the Argentinean company Ebisa with Eletrosul and, thus, enabling the resume of interchanging
operations through the converting station.
Windmills of the plant
registered with Proinfa
(Eletrobrás/José Roberto
Pinto Almeida Files)
49
5. Investments
Annual Report 2007
Eletronorte –
Hydroelectric View
(Eletronorte Files)
50
5. Investments Annual Report 2007
5.1 Companies and Projects
5.1 Companies and Projects
Eletrobrás System budget in 2007 for investments amounted to R$ 3.1 billion in gene-
ration, transmission and distribution systems of electric Power, by the affiliates and federal
companies of distribution, corresponding to 56.8% of the annual limit approved in the amount
of R$ 5.5 billion, established by Law No. 11.625, of December 26, 2007.
Accomplished
in the year
(B)
Investment of Eletrobrás system in 2007 (In R$ million)
Approved limit
Law no.
11.625/07
(A)
130,015.7
1,200,000.0
504,579.2
802,642.9
720,000.0
507,471.7
560,243.2
30.0
20,600.0
8,113.6
822,539.4
307,586.4
524,603.2
572,919.2
298,464,9
142,763.4
4.6
18,043.6
Companies
Eletrobrás
Furnas
Eletronuclear
Chesf
Eletronorte
Eletrosul
CGTEE
Lightpar
Cepel
Total affiliated companies
Manaus
Boa Vista
Ceron
Eletroacre
Ceam
Cepisa
Ceal
Total federal distribution companies
Total
4,445,582.7
325,500.0
17,973.2
186,651.5
70,000.0
101,000.0
190,000.0
128,450.0
1,019,574.6
5,465,157.3
Nature of Investments
Approved by Law
nº. 11.625/07
2,695,038.4
59,530.2
9,895.3
63,387.5
67,112.8
49,902.3
70,418.8
88,993.0
409,239.8
3,104,278.2
Performance
Accumulated R$
million
1,284,272,7
1,287,926,1
331,847,3
20,211,3
18,043,6
161,977,2
2,541,598.8
1,872,063.7
582,048.1
104,538.7
20,600.0
344,308.0
5,465,157.3
3,104,278.2
Generation
Transmission
Distribution
Environmental Quality
Research
Infraestructure
Total
51
%
(B/A)
6.2
68.5
61.0
65.4
79.6
58.8
25.5
15.3
87.6
60.6
18.3
55.1
34.0
95.9
49.4
37.1
69.3
40.1
56.8
In %
49.0
68.6
58.0
74.2
87.6
47.1
56.8
Some companies presented low results in its investments due to the following factors:
holding Eletrobrás:
•
•
•
Delays in bidding processes for acquisition of computer, information and teleprocessing
assets. Postponed to 2008 the costs with maintenance and adjustment of facilities, fur-
niture, vehicles, machinery and equipment.
Agreements with affiliates and/or partners were not concluded for feasibility studies,
with the purpose of investing in electric power generation enterprises.
Lawsuits have prevented the conclusion of the Inventory Studies and Feasibility Projects
for Implementation of Generation and Transmission Systems in the Amazon Region.
Affiliates and Federal Companies of Distribution:
•
•
•
•
•
•
•
•
•
Delay in the signature of the agreement ECV - 205/2006 and in the bidding process for
construction and assembly of thermoelectric network (gas pipeline) to supply Indepen-
dent Electric Power Producers, in Manaus (AM).
Difficulties noted by the company in the bidding process.
Problems related to environmental issues.
Delays in construction, equipment delivery and service performance.
Non-payment to Eletrobrás, preventing the receipt of funds.
Luz para Todos, which represents part of the investment bud-
In relation to the program
get of federalized companies, factors such as: difficult access to certain places due to
rainfalls, embargo of certain works by environmental bodies, and difficulties in bidding
processes affected the meeting of the schedule.
Delay in the installation of work fields for the construction of plans and transmission
lines of the affiliates Furnas, Eletrosul and Chesf, caused by environmental licenses.
Delay of the construction of Angra 3 to 2008 - Eletronuclear.
Delay of the expansion of Candiota III Plant – CGTEE.
Annual Report 2007
52
Annual Report 2007
5.2 In Generation
5.2 In Generation
In 2007, the companies of Eletrobrás System worked, individually or in partnerships with
private companies, to carry out the following enterprises:
: Expansion of the plant continued, involving
Thermoelectric Power Plant of Santa Cruz
a unit of 200 MW in open cycle (Unit 6), with generation date postponed to February
2008.
: Works stated in February 2007 continued.
hydroelectric Power Plant of Retiro Baixo
Commercial startup of the first generating unit is estimated by April 2009. Focus on the
interest of 49% held by Furnas Centrais Elétricas S.A. in this enterprise.
: Works started in January 2007 continued.
hydroelectric Power Plant of Simplício
Commercial startup of the first generating unit is estimated by June 2010. Interest of
100% held by Furnas.
: Works started in May 2007 continued. Commer-
hydroelectric Power Plant of Baguari
cial startup of the first generating unit is estimated by September 2009. Focus on the
interest of 15% held by Furnas Centrais Elétricas S.A. in this enterprise.
: Authorization to resume the construction of the plant, through CNPE
uTN Angra 3
resolution no. 003 of June 25, 2007, in order to obtain the Installation License (IL) up
to April 2008, with the commercial startup of the generating unit of 1,350 MW in May
2014.
: Work started in May 2007. Commercial
hydroelectric Power Plant of Serra do Facão
startup of the first generating unit is estimated by October 2010. Interest of 49.5% held
by Furnas Centrais Elétricas S/A in this enterprise.
: Work started in September 2007. Commercial
hydroelectric Power Plant of Dardanelos
startup of the first generating unit is estimated by December 2010. Interest held by
Centrais Elétricas do Norte do Brasil S.A. (Eletronorte), with 24.5%, and by Companhia
Hidro Elétrica do São Francisco (Chesf), with 24.5%.
hydroelectric Power Plant of Itaipu
units (9A and 18A) are operating.
: Work started in January 2007. Commer-
hydroelectric Power Plant of Foz do Chapecó
cial startup of the first generating unit is estimated by August 2010. Interest of 40%
held by Furnas Centrais Elétricas S.A. in the enterprise.
: Work performed by contracted constructor, to be
hydroelectric Power Plant of Mauá
started in January 2008. Commercial startup of the first generating unit is estimated by
December 2010. Interest of 49% held by Centrais Elétricas do Sul do Brasil S.A. (Eletro-
sul) in the enterprise.
: Work started in November 2007.
hydroelectric Power Plant of Passo de São João
Commercial startup of the first generating unit is estimated by December 2009. Eletrosul
holds 100% of the interest.
Thermoelectric Power Plant of Candiota III (Pres. Médici – Phase C)
gress. Commercial startup of the first generating unit is estimated by December 2009.
: Expansions of the plant are concluded, and two
: Works in pro-
•
•
•
•
•
•
•
•
•
•
•
•
53
5.3 In Transmission
5.3 In Transmission
Annual Report 2007
In 2007, 68.8% of the funds invested were sued in transmission (R$ 1,287.8 million),
great part of it used in construction and expansion of substations. Among the actions are:
•
•
•
•
•
Expansion of Acre/Rondônia System
o
Continuity of the works at LTs 230 kV Ji-Paraná/Pimenta Bueno Circuit 1 and Pimenta
Bueno/Vilhena;
LT 138 kV Rio Branco/Epitaciolândia, LT 69 kV Rio Branco I/Sena Madureira
Circuit 1.
o
Expansion of South Transmission System
o
Conclusion of new substations Atlântida and Gravataí and expansion of substations
Campos Novos and Itajaí;
Construction of LT 230 kV Atlântida 2/Osório 2 – CD;
Construction of LT 230 kV Biguaçu/Palhoça – CD;
Construction of LT 230 kV J. Lacerda A - Blumenau/Biguaçu;
Continuity of the construction of LT 230 kV Desterro/Palhoça.
o
o
o
o
Expansion of Northeast Transmission System
o
Expansions of substations Cauípe, Cotegipe, Irecê, Piripiri, Barreiras, Santo Antônio
de Jesus, Picos and Juazeiro II;
Construction of LT 230 kV Milagres/Tauá.
o
Expansions and improvements in the transmission System of the North and Northeast
Regions, focusing on substations Marabá and São Luís.
Expansions in the Transmission Systems RJ, ES, SP, MG, GO, MT and DF.
It is important to note that the performance of the companies in the implementation of
transmission projects was strongly affected by the delay in the granting of licenses by the
environmental bodies, which caused a rescheduling of many enterprises to 2008, as follows: LT
230 kV Milagres/Coremas - C2;LT 345 kV Macaé/Campos – C3;LT 345 kV Tijuco Preto/Itapeti;LT
345 kV Itapeti/Northeast; LT 230 kV Ibicoara – Brumado;LT 230 kV Funil – Itapebi;LT 230 kV
Picos – Tauá, and LT 230 kV Paraíso - Açu.
54
Annual Report 2007
5.4 In Isolated Systems
5.4 In Isolated Systems
Eletrobrás, through the Operating Technical Group of the North Region (GTON), supports
the planning, operation and maintenance activities of nearly 300 Isolated Systems. The ac-
tions include the follow up of generation of the thermal plan and the fuel consumption, in
addition to the operation with affiliated concessionaires with the purpose of investing in
improvements in the services provided to the Northern Region.
The Companies of Eletrobrás System that operate in the region (Isolated System), invested
in 2007, R$ 304.7 million, as demonstrated in the chart below:
Projects
Generation
Transmission
Distribution
Environmental Quality
TOTAL
Isolated system (In R$ million)
Estimated
Accomplished
273.8
297.6
125.3
0.1
696.8
48.6
191.1
65.0
0.0
304.7
Ratio %
9.29
64.23
51.86
0.00
43.73
Eletrobrás – Program Luz para
Todos in Santa Cruz / Ceroc
(Eletrobrás Files)
55
5.5 Expansion of Electric Power
Offer of the Eletrobrás System
Annual Report 2007
Expansion studies in the energy sector are fundamental for Eletrobrás’ strategic planning
and may be used as a basis for decision making processes regarding investments, for granting
of financings or interest holding in generation enterprises.
In the Ten-Year Plan of Electric Power Expansion (PDEE) 2007-2016, elaborated by the Em-
presa de Pesquisa Energética (EPE), Eletrobrás System played an important role in the studies
of big hydroelectric projects, such as Belo Monte, Santo Antônio and Jirau, plants of Rio Teles
Pires, among others. As well as in the participation of studies in the nuclear plant Angra 3
and charcoal in the South of the country, which have demonstrated an increasing relevance of
those sources of energy and the importance that Eletrobrás System will certainly have in the
feasibility of enterprises of such nature.
As initial references for the analysis of the expansion of Eletrobrás System, the history of
its participation in the country over the past five years and the current installed capacity of
the country, per type of generation, are demonstrated as follows:
Evolution of Eletrobrás System Participation X Brasil
Brazil
Installed capacity (MW)*
Eletrobrás system
Installed capacity (MW)*
Installed capacity (% Brazil)
Plants in operation **
2003
83,807
35,398
42.2%
47
2004
90,679
36,282
40.0%
47
2005
92,866
37,056
39.9%
46
2006
96,295
2007
100,352
37,941
39.4%
46
39,735
39.6%
46
*Source: SFG Report of Aneel - 15/01/2008. Note: Eletrobras system’s installed capacity includes 50% of Itaipu plant.
56
5.5 Expansion of Electric PowerOffer of the Eletrobrás System Annual Report 2007
Brasil – Installed capacity /2007
Type
Hydroelectric plant - Hydroelectric Power Plant of**
Thermoelectric plant - Thermoelectric Power Plant of
Small hydroelectric plant - PCH
Hydroelectric generating plant - CGH
Thermonuclear plant - UTN
Aeolian-Electric Generating Plant - EOL
Photo-Voltaic Solar Generating Plant - SOL
TOTAL
Power (MW)*
74,937
21,229
1,820
112
2,007
247
0,02
100,353
*SOURCE: ANEEL – SFG – 15/01/2008/** WITH ITAIPU NACIONAL (7.000 MW)
%
74.7
21.2
1.8
0.1
2.0
0.2
0.0
100.0
The medium term reference scenario of PDEE presents a GDP growth rate of 4.2% a year
for the period between 2007 and 2016, which results in a growth rate of its own energy po-
wer of 5.0% a year of the National Interconnected System. With the purpose of meeting such
demand, it is estimated, on the offer side, an expansion of the installed capacity by 69%
(13 GW) in thermoelectric and 41% (32 GW) in hydroelectric plants for the same period. The
table below shows the planned plants that will benefit from direct investments of the System.
It is important to mention that the System expansion also occurs indirectly by means of in-
vestments in Specific Purpose Companies, involving 5.514 MW of installed capacity in plants
already licensed.
57
Annual Report 2007
Company
Eletrosul
Furnas
CGTEE
Eletrobrás System – Plants to be started up *
hydroelectric
Passo São João
Barra do Chapéu **
Itararé **
João Borges **
Pinheiro**
São Domingos***
Simplício
Batalha**
Presidente Médici (Candiota III)
Capacity (MW)
77
15
9
19
10
48
334
53
350
Estimated date
09/2009
11/2008
11/2008
12/2008
12/2008
No estimate
09/2009
06/2010
01/2010
* Source: Aneel site on 21/01/2008/** Delayed works. Source: SFG report of Aneel - 15/01/2008/*** Extremely delayed works.
Source: SFG report of Aneel - 15/01/2008.
The long-term reference scenario of the National Energy Plan (PNE) 2030, elaborated by
EPE, indicates a population growth of 53 million people, which means a total of 239 million
Brazilians in 2030. Considering this scenario, an average rate for economy growth of 4.1%
was adopted. Thus, PNE 2030 assumed favorable premises for the expansion of hydroelectric
energy offer, demonstrating a clear position in supporting the government in this type of
generation. In strategic terms, this would stimulate the Eletrobrás System participation in the
defense of the country’s natural vocation towards hydroelectricity.
Furnas – Transmission Line
Vitória / Ouro Preto 2
(Furnas / Alexandre
Guzanche Files)
58
Annual Report 2007
5.6 New Enterprises and Partnerships
5.6 New Enterprises and Partnerships
In 2007, the companies of Eletrobrás system took part in partnerships with private com-
panies in the following enterprises:
Principal participations in SPCs *
Company
Enterprises
Chesf
Eletronorte
Eletrosul
Furnas
Eletronorte
Hydroelectric Power Plant of Dardanelos
Hydroelectric Power Plant of Dardanelos
Hydroelectric Power Plant of Mauá
Hydroelectric Power Plant of Santo
Antônio**
Hydroelectric Power Plant of Peixe
Angical***
Hydroelectric Power Plant of Foz do
Chapecó
Hydroelectric Power Plant of Baguari
Hydroelectric Power Plant of Retiro
Baixo
Hydroelectric Power Plant of Serra do
Facão
LT Juba/Jauru - 402 km
Capacity
(MW)
261
---
361
3.150
Participation
%
24.5
24.5
49.0
Estimated
date
Jan/2011
Jan/2011
Jan/2011
39.0
Jan/2012
452
855
140
82
213
230 kV
40.0
40.0
15.0
49.0
49.0
45.0
---
Aug/2010
Sep/2009
Apr/2009
Oct/2010
---
* Specific Purpose Company (SPC) - Source: Banco de Dados de Geração – BIG of Aneel – 22/01/08/** Source: EPE/*** The only one
in operation.
59
5.7 Ordinary Resources
5.7 Ordinary Resources
Annual Report 2007
The resources used in 2007 in federal distribution companies, in affiliates and in corporate
interests were made as in the chart below, with emphasis on:
Those used in Eletronorte: for liquidation of the past-due amounts of RGR agreements,
transfer of past-due amounts and due amounts of RO agreements for Advances for Future Ca-
pital Increase and refinancing of past-due amounts of Res-929/98 agreement.
Those used in Furnas: short-term loans for investments in the implementation of UHEs
Simplício and Batalha and modernization of UHEs Furnas, Luiz Carlos Barreto, Mascarenhas de
Moraes, Porto Colômbia and Funil.
Those used in Eletronuclear: coverage of non-programmed shutdowns of Angra 1 Nuclear
Power Plant.
Those used in Ceam: long-term loans to cover operating deficit.
Investments
For future capital increase:
Eletronorte
Loans/Financings:
Federalized companies:
Ceam
Cepisa
Manaus Energia
Affiliates:
Eletronuclear
Eletronorte
Eletrosul
Furnas
Itaipu
Corporate interest
CEEE-GT
TOTAL
Economic
release *
R$ million
1,213,232.7
Financial
release
R$ million
---
Total
R$ million
1,213,232.7
---
---
62,170.0
177,538.6
1,980,178.5
83,730.4
99,802.1
17,609.2
247,458.9
12,000.0
---
---
---
18,638.1
300,197.9
21,917.0
247,458.9
12,000.0
62,170.0
177,538.6
1,980,178.5
102,368.5
400,000.0
39,526.2
35,832.1
---
3,670,093.6
600,211.9
35,832.1
4,270,305.5
*Economic release – It is the release without transfer of funds, which occurs through compensation between debits and credits.
60
Annual Report 2007
5.8 Growth Acceleration Program (PAC)
5.8 Growth Acceleration Program (PAC)
Financial Release (R$ thousand)
Company
Eletrobrás
Furnas
Eletronuclear
Chesf
Eletronorte
Eletrosul
CGTEE
Boa vista
Ceron
Eletroacre
Cepisa
Ceal
TOTAL
Estimated for 2007
9,450
955,015
50
54,207
570,717
332,610
413,237
5,770
83,205
45,695
110,087
80,064
2,660,107
Accomplished in 2007
173
745,083
0
80,875
746,864
160,751
88,615
710
49,568
53,844
31,630
61,918
2,020,032
Investments in generation:
Studies and inventories
They refer, mainly to the participation of the companies of Eletrobrás system in studies of in-
ventories and feasibility of uses of hydrographic basis for the construction of new generation enter-
prises. The following are the principal projects: Hydroelectric Power Plant of Belo Monte (11.181,3
MW); UHE of Jirau (3.300 MW); UHE of Mirador (80 MW); UHE of Maranhão Baixo (125 MW); UHE
of Buriti Queimado (320 MW); UHE of Água Limpa (142 MW); UHE of Castelhano (64 MW); UHE of
Estreito Parnaíba (56 MW); UHE of Uruçuí (134 MW); UHE of Ribeiro Gonçalves (113 MW); UHE of
Cachoeira (63 MW); UHE of Pedra Branca (320 MW); UHE of Riacho Seco (240 MW); UHE of Novo
Acordo (160 MW); UHE of Jurema (46 MW); UHE of Cachoeirão (64 MW); UHE of Toricoejo (76 MW);
UHE of Torixoréu (408 MW); UHE of Marabá (2.160 MW); UHE of Tabajara (350 MW).
Works under concession contracts
UHE of Batalha (53,6 MW), UHE of Simplício (305,7 MW), UHE of Passo São João (71,1
MW), UTE of Candiota III – Phase C (350 MW), Angra 3 Nuclear Power Plan (1.350 MW).
As a relevant fact in 2007, there was an auction for concession of UHE of Santo Antônio
3.150 MW, on December 10, 2007, of which winner was the consortium Madeira Energia, of
which leader was Furnas Centrais Elétricas S.A., with interest of 39%, consisting of the Fundo
Amazônia Energia (Banco Banif and Santander with 20%), Odebrecht Investimentos (17,6%),
Construtora Andrade Gutierrez (12,4%), Companhia Energética de Minas Gerais – Cemig (10%)
and by Construtora Norberto Odebrecht (1%). Works may start in 2008.
UHE (Hydroelectric
Power Plant)
UTE (Thermoelectric
Power Plant)
61
6. Cepel Research
and Development Activities
Annual Report 2007
Cepel - Laboratório de Alta
Corrente, in Adrianópolis
(Cepel/Milton Maurente Files)
62
6. Cepel Research and Development Activities Annual Report 2007
The beneficiaries of the activities performed by Centro de Pesquisas de Energia Elétrica
(Cepel) are not only in the Eletrobrás system. Among them, there are the Ministries of Mines
and Energy, of the Environment and Science and Technology, sectorial entities such as EPE,
ONS, CCEE and Aneel, in addition to concessionaires and manufacturers.
Cepel has developed studies and research that generate technology for transmission, ena-
bling, for example, the increase in capacity, reduction of passage rates and better outline for
line installation; equipment monitoring and diagnosis, with the purpose of optimizing invest-
ments and safety in operations; conservation and efficient use of energy; and metallurgy and
material such as superconductors. It also provides technical support to important government
programs and projects, such as Luz para Todos, Proinfa, Procel and ReLuz, cooperating also
with the elaboration of Energy Expansion Plans.
With a complex of 30 laboratories – 20 of which located in its head Office at Cidade Uni-
versitária, in Rio de Janeiro, and ten others, at Cepel Unit located in Adrianópolis, in the mu-
nicipality of Nova Iguaçu (RJ) -, Cepel carries out surveys for conduction of research projects,
type exams, investigation analysis and compliance for certification. Many of these laboratories
are pioneers in Brazil and others do not have similar ones in the South America.
In a partnership with Eletrobrás and Procel, the Center has equipped its energy efficiency
laboratories, adjusting them to work in the granting of Procel label, in addition to providing
technical information for certification of equipment as part of the Brazilian Labeling Program
of Inmetro. During the years, the exams and technologic services carried out by Cepel have
contributed for the improvement of the quality of electric equipment in the Brazilian industry
and the technologic development of the sector, providing more reliability to the transmission
and distribution systems and generating savings for electric power consumption.
Cepel, in 2007, developed 102 corporate projects of R&D for the companies of Eletrobrás
system, such as: Monitoring and Diagnosis of Equipment and Facilities (16); Conservation
and Efficient Energy Use (13); Transmission Technology (10); Network Planning; Operation
and Analysis (9); Scada/EMS - Sage Technologies (8); Metallurgy and Material (7); Distribu-
ted Generation (7); Operation Planning (5); Generation Expansion Planning (4); Environment
(4); Stochastic Hydrology and Hydrous Resources (3); Electric Measures and Loss Combat (3);
Renewable Energies (3); Computer Techniques and Methodologies (3); Transmission System
Expansion Planning (2); Local Automation and Disturbances Analysis (2); Financial Analysis of
Projects and Tariffs (1); Reliability (1); Energy Quality (1). Eletrobrás chairs Cepel’s Board of
Directors, assuring the necessary strategic guidelines for the Research Center operation.
As guarantee for the financing of the Center’s research projects, Eletrobrás and its affiliates
(Chesf, Eletronorte, Eletrosul and Furnas), provided, through annual contribution, funds for
the budget of the year in the amount of R$ 109,9 million, with actual increase of 3,4%, com-
pared to 2006. Other funds, provided from technologic projects and services of the Center con-
tributed with other R$ 22,3 million, totalizing R$ 132,2 million, directly invested in 2007.
63
7. Technologic And Industrial
Development Program (PDTI)
Annual Report 2007
(Eletrobrás Files)
64
7. Technologic And Industrial Development Program (PDTI) Annual Report 2007
Research and Development – R&D
Eletrobrás, in addition to the inversions and legal contributions, uses 0.5% of its capital
stock, annually, in the Technologic Development Fund (FDT), being great part of it (from 60%
to 70%) used in the Centro de Pesquisas de Energia Elétrica (Cepel). Also, its affiliated compa-
nies’ contract in the Center the so-called Institutional Projects, basically intended for R&D.
From 2000 to 2007, Eletrobrás system invested R$ 1.276,5 million, of which R$ 288,2
million only in 2007, in an estimated amount of R$ 353,5 million for 2008. Additionally, in
2007, R$ 50 million were collected to the Ministry of Science and Technology (MCT) and R$
19,2 million to the Ministry of Mines and Energy (MME/EPE).
Federal distribution companies contracted R$ 25 million in Research and Development
in the period 2006-2007. The developed projects and studies with technologic innovation
principally aimed at: avoiding electric power waste; reduction of operating costs; increase of
reliability and safety of systems and facilities and development of alternative energy sources.
Such measures carried out in Eletrobrás system are coordinated by the Research and Develop-
ment Corporate Integration Committee (Cicop), related to the High Council of the Eletrobrás
system (Consise) and coordinated by the Technology Director of Eletrobrás.
National Industry Improvement and Supply and Logistics Policy Programs
In the logistics area, in 2007, the principal activities below were developed:
•
Maintenance of the Material Classification of Eletrobrás system, responsible for stan-
dardizing the material descriptions used in generation, transmission and distribution of
electric power.
Maintenance of Centro de Catalogação do Setor Elétrico (Cecase), responsible for registe-
ring material, equipment and services orders of the public sector used in electric power
generation, transmission and distribution.
Logistic support to the purchase planning policies of Eletrobrás system, with the purpo-
se of sectorial programming of the acquisitions of goods and services with suppliers.
•
•
Rules and Quality:
The principal activities in the quality area were the development of improvements in the
Quality Management System (SGQ), with the purpose of maintaining the certification granted
by BRTÜV, certifying entity registered by Inmetro, and the implementation in another area of
the company. In relation to the project NBR 19000, on suppliers training, an assessment was
made on the failures in the equipment provided to the affiliates, which enabled the develop-
ment of quality auditing program in suppliers of bypass keys.
In Technical Rules area, specific demands of the sector were met, as well as the elaboration,
in the Associação Brasileira de Normas Técnicas (ABNT), by a secretary group of Eletrobrás, of
Brazilian Rules for Aeolian Generation Turbines, based on IEC international rules. Also in relation
to standardization, activities related to coordination were developed and performed by Eletrobrás,
of Subcommittee of the Technical Committee TC 176- Quality, of the International Organization for
Standardization (ISO), including the attendance in an international meeting held in Cairo.
65
8. Sectorial Funds
Annual Report 2007
Eletrobrás – Program Luz para
Todos in Rio Grande do Norte
(Eletrobrás Files)
66
8. Sectorial Funds Annual Report 2007
8.1 Global Reversion Reserve (RGR)
8.1 Global Reversion Reserve (RGR)
As manager of the funds generated from RGR, as per the legislation in force, Eletrobrás
invested in the financial year of 2007, the amount of R$ 847,5 million. The movement related
to the receipt and withdrawals of such funds is represented as follows:
Generation and use in 2007:
Movement
Receipts:
Collection of installments
Other
Withdrawals:
Financings
Other
Region
North
Northeast
Mid-West
South
Southeast
TOTAL
Credit lines
Program
Luz Para Todos
Reluz / Conservation
Generation
Transmission
Distribution
Modernization of thermal plants
TOTAL
Financing granted - R$
million
89,838.1
266,074.0
130,025.1
64,004.0
297,521.1
847,462.3
Financing granted
R$ million
491,980.1
33,522.0
38,174.0
245,164.1
26,797.1
11,825.0
847,462.3
R$ million
1,845.2
472.1
847.5
47.0
%
10.6
31.4
15.3
7.6
35.1
100.0
%
58.1
4.0
4.5
28.8
3.2
1.4
100.0
67
8.2 Energy Development Account – CDE
8.2 Energy Development Account – CDE
Annual Report 2007
To compensate electric power concessionaires for the reduction in the revenue provided
from consumer services of Low Income Residential Subclass, an economic subvention was
created at first with funds from RGR, and then, in 2004, from CDE. In 2007, the amount of
R$ 3,366 million was granted from that source, being R$ 1,030 million for Low Income class,
serving 51 electric power distribution concessionaires, and R$ 1,417 million for the program
“Luz Para Todos”, as per the movement shown in the table below:
Receipts and uses in 2007:
Movement
Receipts: CDE+uBP+ Aneel Penalties
Collection of installments
Other
uses:
Subvention Luz para Todos
Subvention – Low Income
Other
In R$ million
2,537.1
161.1
1,416.8
1,030.3
655.4
Eletrobrás finances and installs
Production Community Centers
(CCP) for the generation of
income in communities served
by the program Luz para Todos
(Eletrobrás / Jorge
Coelho Files)
With a budget provided by the Ministry of Mines and Energy (MME) in the amount of R$ 503
million, Eletrobrás transferred the amounts to the generating agents owners of the thermal
electric plants that take part in the Energy Development Account (CDE), that use mineral coal
from local origin.
Eletrobrás – Program Reluz –
Lighting of Cruz
Vermelha Square – RJ
(Eletrobrás/Ivson Alves Files)
68
Annual Report 2007
8.3 Fuel Consumption Account (CCC)
8.3 Fuel Consumption Account (CCC)
The Isolated Systems Fuel Consumption Account (CCC-Isol) is a fund managed by Eletrobrás
which aims at covering part of the expenses with acquisition of fuel used in electric power
generation of thermal electric plants not integrated to the National Interconnected System
(SIN). Great part of such plants is located in the Northern region of Brazil.
CCC-Isol includes the payments for enterprises with sub-rogation of the Account’s benefits,
covering great part of the costs in measures for current or future savings, as the replacement
of petroleum by-products with other electric power generation sources.
The coverage of costs is made through expenses refunding. The income that supports this
coverage is provided from monthly collections made by the electric power distribution and
transmission companies in the country.
In 2007, the Annual Fuel Plan estimated an annual quota of R$ 2,871 billion to cover ex-
penses of R$ 3,352 billion. The difference between the income and expense of R$ 481 million
will be covered by a positive balance from the prior year. From said expenses, 96% were used
to cover fuels and 4% for transfers to entrepreneurs subject to sub-rogation. The generation
indicated by the Operating Technical Group of the North Region (GTON) to be met in 2007 was
of 8.736.149 MWh, with consumption of 717 thousand tons of fuel oil, 224 thousand tons of
PGE oil, 831 million liters of diesel oil and 537 million liters of light PTE oil.
69
8.4 Luz para Todos (Electricity for Everyone)
8.4 Luz para Todos (Electricity for Everyone)
Annual Report 2007
In the period from 2004 to 2007, more than 7 million people were benefited in the Brazi-
lian rural areas with electricity, by means of 1,435,935 connections of the program. Of this
amount, 397,877 connections were made only in 2007. During the year, R$ 1.91 billion were
released, being R$ 1.42 billion originated from the Energy Development Account (CDE) and
R$ 0.49 billion from the Global Reserve Account (RGR).
The Project Management System of the program Luz para Todos (Electricity for Everyone)
registered 76.493 projects in a total of, since 2004, 192,821 proposals registered including:
connections in the rural areas of 5,055 Brazilian municipalities; the construction of 246,596km
electric networks of high and low tension; implementation of 2,551,329 posts; installation of
389,149 transformers; and installation of 1,943 photo-voltaic systems.
In relation to the goals undertaken for 2007, 88.4% of the global goal of 450,000 con-
nections was achieved, considering the commitments made by the providers with Eletrobrás
and the state governments. Up to December 31, 1,058,874 connections were recorded, corres-
ponding to 68.8 % of the total connections contracted between the providers and Eletrobrás.
Until the same date, the amount disbursed to those providers was R$ 4.80 billion (funds from
the Energy Development Account (CDE) and from the Global Reversion Reserve (RGR), from a
total funds contracted of R$ 7.03 billion, that is, 68.2 % of the total contracted funds.
The following table presents the amounts of the contracted and released funds up to De-
cember 31, 2007, distributed per region.
Region
North
Northeast
Mid-West
Southeast
South
Brazil
Region
Mid-West
North
Northeast
South
Southeast
Total
Accumulated amounts up to 31.12.2007 (R$ million)
Contracted funds
Released funds
CDE
1,056.9
3,022.3
381.3
488.1
262.5
RGR
119.1
521.1
312.2
731.2
140.0
CDE+RGR
1,176.0
3,543.4
693.5
1,219.3
402.5
CDE
795.4
1,953.4
260.3
395.3
161.2
RGR
92.6
354.5
219.1
473.2
93.4
5,211.1
1,823.6
7,034.7
3,565.6
1,232.8
CDE+RGR
888.0
2,307.9
479.4
868.5
254.6
4,798.4
Nº. of contracted connections up to 31.12.2007
between the providers and Eletrobrás
112,442
213,100
824,903
97,552
290,563
1,538,560
70
The Reluz Program benefits
cities all over the country
(Eletrobrás Files)
Annual Report 2007
8.5 ReLuz
8.5 ReLuz
The National Program of Efficient Public Illumination – (Reluz) benefited 131 munici-
palities in 2007, improving the efficiency of more than 166 thousand public illumination
points and caused energy saving of approximately 66.7 thousand MWh/year and a reduction
in demand of nearly 15.2 thousand kW. Also, nearly 1,065 new efficient points were installed.
The total investment in 2007 amounted to R$ 50.2 million, and Eletrobrás financed R$ 37.6
million, originated from RGR.
The allocation of the invested funds and the effective results, per region, as shown as
follows:
Region
Funds – R$ million
No. of points
Demand reduction (kW)
Mid-West
---
---
---
North
0.4
425
---*
Northeast
1.0
5,387
644
South
---
---
---
Southeast
48.8
162,239
14,594
TOTAL
50.2
168,051
15,238
*Quantity of points related to the implementation of the expansion of efficient public illumination and accordingly, with no demand
reduction.
71
Annual Report 2007
8.6 Procel
8.6 Procel
The National Program of Electric Energy Conservation (Procel) is a Federal Government
program coordinated by the Ministry of Mines and Energy - MME, intended to stimulate the
efficient use of electric energy in the country and to avoid its waste. In this program, Eletro-
brás plays the role of Executive Secretariat, and is responsible for the planning and execution
of the Program’s actions, providing technical and financial support.
The benefits generated by Procel may be recorded both for the saved energy and for the
investments avoided in the expansion of the sector, which are reversed into benefits to the
population.
In 2007, Procel, with investments of nearly R$ 52.6 million, including funds from the
Global Reversion Reserve (RGR), developed projects that contributed to a energy saving which
was preliminarily estimated in the amount of 3 thousand GWh. These results may be compared
to the electric energy consumption of nearly 1.7 million of homes in one-year period, repre-
senting a postponed investment for the electric sector of nearly R$ 2.35 billion, which may be
allocated to priority government programs in other areas.
The chart below shows the energy saving estimated in the period from 2001 to 2007.
LEGEND: PROCEL – SAvED ENERGY – GWh/YEAR
Procel Award contemplates
academic papers and
practical solutions aimed
at energy saving
(Eletrobrás /
Jorge Coelho Files)
3500
3000
2500
2000
1500
1000
2001
2002
2003
2004
2005
2006
2007
Created in 1993, Procel label for Energy Saving has the purpose of informing consumers,
on an annual basis, on more efficient electrical appliances and equipment in their categories.
The granting of said label is a joint work performed by Eletrobrás/Procel and the Brazilian
Labeling Program (Inmetro/PBE).
Among the actions developed for Procel Label in 2007, emphasis is given to its granting to
2,341 models, distributed in 21 categories of equipment and electrical appliances, represen-
ting an increase of 49% in relation to 2006. 2007 was also the first year in which Procel Label
was granted to TV sets in stand-by, a category that included 38 equipments.
72
Annual Report 2007
Procel operates nationwide through sectorial programs in public building areas, environ-
mental sanitation, municipal energy management, industry and buildings. The results from
2003 to 2007 are expressive: 718 big and medium industries are participants; 4,200 trained
technicians in industry and 446 in sanitation; 120 water and sewage companies participating;
249 municipalities with implemented energy management; 37 laboratories installed with 210
scholarships distributed, in addition to 25 hospital units operating with more energy effi-
ciency.
73
9. Corporate Management
Annual Report 2007
Engineer Henrique Mello, one
of the beacons of technical
excellence in the company,
lends his name to the
auditorium at the Corporate
University of the Eletrobrás
System (Unise), opened in
2007.
(Eletrobrás / Jorge Coelho
Files)
74
9. Corporate Management Annual Report 2007
9.1 Corporate Communication
9.1 Corporate Communication
Press and Internal Communication
Eletrobrás launched in 2007 the second Image Report in the press. In one-year period, the
average readers exposed to the company’s name REACHED 44 million, based on data provided
by Instituto Verificador de Circulação (IVC). The index of favorable exposure (ratio between
favorable exposure and total exposures measured in centimeters per column) reached the
average of 70.94% in 2007.
The clipping – follow up of issues disclosed in the press – gathered 15,283 issues that di-
rectly mentioned the name of Eletrobrás in 2007. Of this total, 2,828 issues were in the press
(newspapers and magazines), 943 issues on news sites, 626 on the radio and 46 on TV.
In relation to Internal Communication, press produced and disclosed in 2007 electronic
news Notícias da Eletrobrás, Eletrobrás Magazine and Newspaper, in addition to the production
and edition of Rádio Eletrobrás programs.
Publicity
In December 2007, Eletrobrás and Agência 3 signed a publicity service agreement. Ac-
cordingly, the first institutional publicity campaign started to be developed, to be disclosed
in 2008. The principal objective is disclosing Eletrobrás system and its participation in the
country’s development, as well as the importance of energy to people’s lives.
Sponsorships
According to the Eletrobrás strategic planning objectives, a sponsorship policy was appro-
ved by the Directors, considering the opportunity of fostering and disclosing the company’s
transparent image. The policy criteria established by Eletrobrás include institutional and ma-
rket interests, as a mixed-capital company, with the federal government’s purposes, by empha-
sizing the valuation of culture, sports and technical production of the electric power sector.
Eletrobrás sponsors projects in the following segments:
•
•
•
projects included in the Law for Cultural Incentive by the Ministry of Culture.
Culture –
– projects that do not depend on tax benefits, provided that
Sports and para-sports
they are aligned with policies provided by the Ministry of Sports, and in compliance with
the technical and administrative criteria and selection defined by the company.
projects developed by actions related to the promo-
Social-environmental projects –
tion and recovery of the threatened environment and species and fostering of sustai-
nable development, with the purpose of obtaining improvements in life conditions of
individuals and communities.
75
•
– projects focusing on Eletrobrás interest areas, provided that they
Other segments
meet the technical and administrative criteria of evaluation and selection defined by
the company.
In the cultural area, in 2007, Eletrobrás sponsored Teatro Municipal do Rio de Janeiro for
a ballet performance called The Nutcracker, by Tchaikovsky. In sports, the company sponsored
the Brazilian male and female basketball teams, in addition to the Project Cuidando do Pre-
sente com a Energia Necessária para ter Futuro (Taking care of the present with the necessary
energy to have future), which consisted of preparation of Brazilian basketball players, male
and female, on wheelchairs to take part in para-Pan-American games Rio 2007.
Annual Report 2007
In the cultural area, in
2007, Eletrobrás sponsored
the Nutbreaker Ballet, by
Tchaikovsky, at Theatro
Municipal.
(Eletrobrás / Jorge Coelho
Files)
76
Annual Report 2007
9.2 Human Resources
9.2 Human Resources
Provided from public examinations carried out during 2005, in 2007, Eletrobrás integrated
124 new employees. For other vacancies and to create a reserve list, the company elaborated
another public examination for many positions for graduation and high-schooling level. The
first employees will be called in 2008, continuing the selective process.
In 2007, as in the prior year, the following programs were carried out: Evaluation and
Development Programs, Diet Reeducation, Ergonomic, Attention to Smoking, Women’s Health,
Heart Health, Medicine, Trip and Energy & Movement, as well as the vaccination of its em-
ployees against the flue (521 vaccines), against tetanus (160 vaccines) against hepatitis B
(100 vaccines) and against hepatitis C (28 vaccines).
Eletrobrás holding, in compliance with the guidelines of the Young Apprentice Program,
signed a Technical Cooperation Agreement with the Ministry of Labor and Jobs and Senai,
to contract 42 you ng people in compliance with the Young Apprentice Law. Eletrobrás was
awarded with the prize “Empresa Parceira do Programa Primeiro Emprego” (Partner Company
of the First Job Program) recognizing its actions to meet the demands for job opportunities
in the market.
Training and Development
In 2007, 406 events were held to train the company’s technicians and managers, in addi-
tion to participation in its principal business. From a total of 3951 participant employees,
3739 attended short-term training courses (curses, seminaries, congresses, lectures), 212
took part in long-term training courses (MBA, master, doctor degrees), 150 of the Foreign
Language Program.
The total investments in these training and development programs amounted to R$ 4,648.0
thousand and expense refunding for employees who attended graduation courses amounted
to R$ 153.1 thousand. For better integration and improvement of its employees, Eletrobrás
invested in 20 technical visits to the electric power sector facilities, last year, resulting in
effective participation of 387 employees.
To stimulate continuous learning and knowledge retention of the employees, the Corporate
University of Eletrobrás System – Unise was expanded, with the implementation of TV Ele-
trobrás, Unise Channel and the Auditorium Henrique Mello that enable the development and
transmission of educational and informative contents, in addition to disclosing events and
achievements of Eletrobrás System.
77
9.3 Administrative Actions
9.3 Administrative Actions
Annual Report 2007
Among the principal activities developed in 2007 are: the creation of the Bidding and
Agreements Area and of the Physical and Fiscal Receipt Area; development of the Project
Escola de Contratações da Eletrobrás (Eletrobrás Contracting School); consolidation of the
use of electronic auction for bidding processes; Meeting of Eletrobrás Managers; Workshop on
Bidding and Agreements; Partial Outsourcing of the Fleet; and implementation of Automatic
management system and Follow-up of Fleet Fuel Supply, with reduction of 51.43% of the ex-
penses with fuel and 16.67% in the operating costs of the fleet in Rio de Janeiro, compared
to 2006.
In 2007, bidding process in the following areas were concluded: 13 contracts by invitation
letter, in the amount of R$ 612.4 thousand; 23 auctions, being 10 in person, in a total of R$
2.7 million and 13 electronic auctions in a total of R$ 1.1 million, in addition to price com-
parison bidding process in the amount of R$ 58 thousand.
Also, in 2007, it was created Eletrobrás Corporate Website with the modernization and
better access facility to the company’s information on the Internet. The Data Center was
reorganized with the purpose of increasing the security level of information technology faci-
lities. Help-desk was outsourced to improve the quality of users’ service. It also adopted free
software platform Linux in Adabas environment to reduce costs.
Corporate University of the Eletrobrás
System (Unise) promotes partnerships
with several areas of the comapny for the
qualification of employees.
(Eletrobrás / Jorge Coelho Files)
78
Annual Report 2007
9.4 Auditing
9.4 Auditing
Among the actions proposed by the Internal Auditing Plan are audits in all corporate
administrative segments, management audit of federal distribution companies (Ceal, Cepisa,
Eletroacre, Ceron and Ceam), and general audit in Lightpar and general audit in Fundação
Eletrobrás de Seguridade Social – Eletros.
To meet the requirements under Section 404 of Sabanes-Oxley law, Internal Audit was
responsible for mapping and evaluation-identification and mitigation of risks in internal con-
trols, in entity level, and of administrative, financial and budget processes of the companies
of Eletrobrás System, of which principal focus was the testing of control effectiveness.
Internal Audit area was also responsible for coordinating the Permanent Commission of
Ethics of Eletrobrás (CEE) and leverage of the procedures with the other internal audits of the
companies of Eletrobrás System.
(Eletrobrás /
Jorge Coelho Files)
79
9.5 Ombudsman
9.5 Ombudsman
Annual Report 2007
Ombudsman was created in May 2005, with the purpose of establishing a permanent, agile,
and efficient communication channel between high management of Eletrobrás, its employees
and the society in general. Many activities were performed in 2007, such as: Internal Semi-
nars of Ombudsman Management and Meeting of Ombudsmen of the Companies of Eletrobrás
System.
There was also the Gender Channel, in a partnership with the Social Responsibility Area,
which purpose was receiving confidential comments, suggestions and/or complaints related
to matters involving equal rights among sexes, as well as moral and sexual harassments, and
a channel to receive complaints and information on possible irregularities on accounting en-
tries, among others. In 2007, Ombudsman received 2444 requests, 72% of the demands were
solved.
The Ombudsman areas of Eletrobrás
System are integrated with the purpose
of ensuring the best service to internal
and external clients of its companies.
(Eletrobrás / Jorge Coelho Files)
80
Annual Report 2007
81
10. Social Responsibility
Annual Report 2007
Eletrobrás supports projects for
the development and improvement
of quality of life in Quilombola
communities.
(Eletrobrás / Jorge Coelho Files)
82
10. Social Responsibility Annual Report 2007
Eletrobrás Corporate Social Responsibility is inserted in the company’s management and is
based on a set of values that guide its mission, vision, leadership model, management policies
and mainly the Code of Ethics. The company’s responsibilities with its public and communities
where it operates are included in RS Guidelines of Eletrobrás.
In June 2006, Eletrobrás joined a group of nearly one thousand companies in many coun-
tries and affirmed its adhesion to the principles of the Global Covenant. The commitment has
the purpose of causing international corporate community leaderships to support the United
Nations in fostering fundamental values in the environment, human and labor rights areas.
By confirming its commitment with gender and citizenship issues, Eletrobrás was certified
by the Pro-Equity of Gender Label (2006/2007), by the Special Secretariat of Women’s Policies
(SPM), of the Presidency of the Republic, in view of the practices adopted in establishing
equal opportunities between men and women in the company. Among such actions, which are
implemented in partnership with different areas of the company and monitored by the Perma-
nent Committee for Gender Issues, a significant one was the creation of a Gender Channel, in
a partnership with the Ombudsman (PRO), which is a confidential communication channel at
the disposal of all employees for comments and/or complaints on issues related to moral and
sexual harassment, discrimination of any nature, in addition to inclusion of spouses of the
same sex in benefits granted by the company.
In relation to the society in general, Eletrobrás social responsibility may be noted in
investments, supports and partnerships, with priority given to educational areas and pro-
fessional trainings of youngsters and adults; generation of jobs and income and assistance
to communities affected by the company’s projects. In 2007, the Social Responsibility De-
partment (DAS) developed and applied jointly with the Organization Department (DAO), the
Covenant Rule for the Social Responsibility Project (EAE-04), creating and establishing criteria
for analysis and selection of projects that may be subject to the company’s sponsorship, which
offers transparency in the social investment process.
It is important to emphasize that in 2007 the partnership with the Universalization Pro-
gram Management Department (DEP) was improved for a joint effort in the program of energy
productive use, a complementary Project to the program Luz para Todos (Electricity for Everyo-
ne), enabling the creation of new Production Community Centers (CCPs), with the purpose of
fostering the economic and social development of the areas serviced by the rural electricity
installation program of the federal government.
83
11. Federal Distribution
Companies
Annual Report 2007
PICTURE: (Light Poles
and Transformers)
Eletroacre and Boa Vista
Energia were considered
as the companies with
the best performance
in the control of losses.
(Eletrobrás /Jorge Coelho Files)
84
11. Federal Distribution Companies Annual Report 2007
Results of the Federal Distribution Companies:
The companies continue to be monitored by the Corporate Management Follow-up Sys-
tem (Siage). In 2007, notwithstanding the efforts made by Ceal, Cepisa, Ceron and Manaus
Energia, those companies could not reach the electric power loss levels recognized by Aneel,
and the goals established with Eletrobrás. In the case of Ceam, although it presents a des-
cending curve of losses of electric power, it failed to reach the goal established by Eletrobrás.
Eletroacre and Boa Vista Energia, which could reach the levels recognized by Aneel, are the
companies with the best performance in fighting electric power losses.
In relation to non-payments, Eletroacre was the only company to meet the goal establi-
shed by Eletrobrás for billing x revenue in 2007.
Works for the process of corporate restructuring of Companhia Energética do Amazonas
(Ceam) and of Manaus Energia S.A., for integration of the electric power distribution activities of
the two concessionaires in the State of Amazonas, were performed and are under conclusion.
In 2007, Eletrobrás continued with the studies to change the corporate governance model
adopted for the federal distribution companies, with the purpose of solving their financial-
economic problems, as established by the Law that authorized Eletrobrás’ participation in such
companies and that included them in the National Privatization Program (PND).
Year
Total consumers
Consumers per employee
Municipalities and places
Connections made - Urban
Connections made - Rural
Technical/commercial losses (MWh)
Market/MWh
Required energy
Acquired energy
Energy sold
Own generation
PIEs generation
Operating
Plants in operation
Substations
Distribution grids (km)
EBTIDA
Ceal
Ceam
Cepisa
Ceron
Eletroacre
Boa Vista Energia
Manaus Energia
2003
2,376,727
4,091
564
264,751
28,171
4,184,498
2004
2,465,889
4,009
568
252,423
30,393
4,536,466
2005
2,574,481
3,893
571
270,821
44,165
4,911,157
2006
2,724,847
3,767
575
272,817
55,055
5,295,800
2007
2,868,792
3,594
579
300,403
50,803
5,890,317
12,920,541
13,049,676
8,734,020
2,390,790
3,027,938
13,750,228
13,995,821
9,151,253
2,284,871
3,513,281
14,812,196
15,012,012
9,885,817
2,634,849
3,655,726
15,677,112
15,829,582
10,363,848
2,583,651
4,071,591
16,868,794
16,907,959
10,976,100
2,459,186
4,818,924
136
225
86,125
15.20
(76.70)
(33.30)
0.60
(3.50)
(70.40)
(58.60)
137
227
88,010
51.53
(71.18)
(41.18)
19.97
0.92
(24.06)
(48.10)
133
232
92,059
84.81
(67.57)
(25.91)
10.18
25.87
(19.57)
73.06
139
235
105,396
42.28
(190.84)
4.40
15.25
18.93
(11.12)
(134.05)
144
249
113,562
48.55
(348.77)
22.82
15.07
23.46
(13.75)
(408.22)
85
12. Environment
Annual Report 2007
Eletronuclear Files
86
12. Environemnt Annual Report 2007
The environmental dimension is inserted in corporate and government activities performed
by Eletrobrás as support to the decision-making processes. The Environmental Policy of Ele-
trobrás System, created in 2006, establishes that the social-environmental issues should be
addressed in relation to the electric power enterprise of the companies that integrate them.
The fundamental premises of its formulation are based on public policies guidelines related
to the environment, hydro resources and social welfare as well as international agreements in
which Brazil is a party, such as the Climate Convention, Agenda 21, and Kyoto Protocol, and
the holding’s experience as issuer and manager of principles of social-environmental qualifi-
cation of its activities.
Accordingly, the companies of Eletrobrás System seek continuous internalization of the
environmental dimension and its improvement, both in the execution of their own projects
and in partnerships or in supporting to third parties.
Environmental management actions are related to the company’s activities. In 2007, an
important one was the environmental licensing of the Hydroelectric Unit of Belo Monte, the
implementation of Proinfa, the management of isolated systems, financing operations of the
system companies, generation of external funds and relationship with capital markets.
By granting loans to projects, Eletrobrás carries out a previous environmental analysis of
the same and follows up their execution in relation to environmental issues. In 2007, it coor-
dinated the technical analysis of the environmental management project financed for Itaipu
Binacional. The project had the purpose of expanding the environmental management princi-
ples adopted in the Brazilian margin to the Paraguayan margin of the reservoir, assuring the
compliance with minimum protection standards for well-springs, as required by the Brazilian
and Paraguayan laws.
In government project and programs management, Eletrobrás is the legal responsible for
the environmental licensing of the Hydroelectric Unit of Belo Monte and coordinates the
execution of environmental impact studies of the enterprise. In 2007, the revision and com-
pletion works of the environmental studies interrupted by judicial decision were resumed. The
environmental licensing process of the enterprise before Ibama was resumed and the Referen-
ce Term was issued for the elaboration of the Environmental Impact Study.
Eletrobrás, as manager of energy purchase and sale agreements signed for Proinfa, also
performs, on a permanent nature, environmental monitoring activities of the 144 enterprises
of the program, comprising the checking of conformity with the licensing processes and im-
plementation of the environmental programs.
In relation to the Isolated Systems Operation Program management, it carried out identifi-
cation and analysis of the principal environmental issues related to the thermal Power plants
and their neighborhood, by means of technical visits.
In relation to studies on critical environmental matters, in partnership with universities
and research centers, the following projects continued: Strategic Environmental Analysis for
Generation Expansion Planning and Incorporation of the Environmental Dimension to the
87
Annual Report 2007
Transmission Planning, under development at Cepel; the Use of Microalgae in the Management
of Emissions in Thermal Power Plants and Charcoal Plants under development at FURG. Arran-
gements with the Ministry of Science and Technology were made to estimate the contribution
of hydroelectric reservoirs for elaboration of the National Inventory of Greenhouse Effects.
Also, a project was contracted with Cepel to support a corporate environmental mana-
gement system. The Project IGS – Social-environmental indicators for the Corporate Sustai-
nability Management of Eletrobrás system has the purposes of establishing a set of social-
environmental performance indicators and implementing a database of related information,
as a support for the evaluation and communication of improvement in social-environmental
performance of the system’s Companies.
Additionally, Eletrobrás has developed, jointly with the system’s companies, activities in
the environmental area that may enable a coherent action, continuously improved, adjusted
to the legislation in force and to the guidelines mutually agreed. Such actions aim at assuring
the compliance with the Environmental Policy principles of Eletrobrás System and imple-
menting a work agenda involving mutual interest issues, defined in a specific forum of the
Environmental area of the companies of the system, the Environment Sub-committee (SCMA),
coordinated by Eletrobrás. SCMA is organically related to the Operation, Planning, Engineering
and Environment Committee (Copem) which, in its turn, is related to the Higher Committee
of Eletrobrás system (Consise).
SCMA operates as a technical and institutional space that provides greater interaction
among the companies and defines the common guidelines for the treatment of social-environ-
mental issues and the performance of procedures related to the necessary inter-institutional
relationships. In 2007, SCMA activities included the inspection of the Report on Technical
Aspects in the Development of Water-species in Reservoirs, of great importance for the ad-
justment of this activity with the electric power generation, and the Inventory of Greenhouse
Effects of Eletrobrás System – year base 2005, which will be updated and improved on an
annual basis. Also, it maintained the follow up of Bills which are interesting to the sector, to
safeguard and guide parliament advisors of the companies and to the MME. SCMA has a docu-
ment services at Eletrobrás website and a channel dedicated to the environment demands at
the address scma.secretariaexecutiva@eletrobras.com.
In the System Sustainability Committee, Eletrobrás has coordinated integrated and syste-
matic actions that include the diagnosis of the environmental management of the companies
and implementation of improvements with the purpose of meeting its strategic objectives.
88
Annual Report 2007
Furnas – Detail of the planting
of native seedlings in the
garden at Marimbondo Plant
(Furnas Files)
Environmental Protection
Strip, from Itaipu Reservoir
(Itaipu Binacional/Caio
Coronel Files)
89
13. Social and Environmental
Related Information
Annual Report 2007
Eletrobrás Social Responsibility
Department team also promotes
actions of appreciation of
employees, such as the Celebration
of the International Women’s Day
(Eletrobrás / Jorge Coelho Files)
90
13. Social and Environmental Related Information Annual Report 2007
I -huMAN RESOuRCES
1.1 -Remuneration
Gross Payroll
- Employees
- Directors
Ratio between the highest and lowest remuneration:
- Employees
- Directors
1.2 -Benefits Granted
Social costs
Meals
Transportation
Private pension plan
Health
Safety and labor medicine
Education / Nursery or Nursery Assistance
Culture
Professional training and development
Profit sharing or results
TOTAL
1.3 -Composição do corpo funcional
N° of employees by the end of the year
N° of hired employees
N° of fired employees
N°. of trainees at the end of the year
N° of handicapped employees at the end of the year
N° of outsourced service providers at the end of the
year
N° of employees per sex
- Male
- Female
N° of employees per age:
- Under 18 years old
- From 18 to 35 years old
- From 36 to 60 years old
- Over 60 years old
N° of employees per educational background:
- Illiterate
- Fundamental schooling
- High schooling
- Technical degree
- Graduation degree
- Post-graduation degree
Percentage of employees in top positions, per sex:
- Male
- Female
hOLDING
CONSOLIDATED
2007
2006
2007
2006
86,869
85,232
1,637
41,971
40,283
1,688
2,156,580
2,141,200
15,380
1,829,833
1,814,096
15,737
16,05
1,00
14,07
1,00
-
-
-
-
27,663
7,850
525
10,331
10,988
2,106
684
-
3,729
18,000
81,876
494,939
551,791
24,671
123,268
127,708
5,760
13,839
13,278
562
175,696
175,828
11,933
160.744
184,048
7,351
14,214
14,239
1383
15,471
22,187
487
2,060
3,075
-
49,145
54,464
2,602
17,000
204,502
224,013
71,749 1,370,631 1,253,878
934
25
67
272
4
-
638
296
-
224
678
32
-
22
177
0
402
333
0.76
0.24
975
138
68
258
4
20,351
1,667
415
2,104
368
19,098
1,279
580
2,030
350
-
1,878
2,081
671
304
-
243
703
29
-
26
189
0
440
320
0.76
0.24
16,591
3,760
-
4,573
15,049
729
-
2,334
3,331
6,060
6,347
2,279
15,637
3,461
-
3,846
14,772
480
21
2,269
2,941
6,511
5,216
2,140
-
-
-
-
91
Annual Report 2007
1.4 - Labor contingencies and liabilities
Number of labor suits filed against the entity
Number of labor suits judged, with favorable decision
Number of labor suits judged, with unfavorable deci-
sion
Total amount indemnities and penalties paid as
decided by the judges
II - INTERACTION BETWEEN ThE COMPANY AND ThE
EXTERNAL ENvIRONMENT
2.1 - Relationship with the Community
Total investments with:
- Education
- Culture
- Health and infra-structure
- Sports and leisure
- Meals
- Labor and income generation
- Reallocation of families
Other
Total investments
Taxes (less social costs)
Financial compensation due to the use of hydrous
resources
Total - Relationship with the community
2.2 Interaction with Suppliers
Social liability criteria used to select its suppliers
III - INTERACTION WITh ThE ENvIRONMENT
- Investments and costs with maintenance of operating processes
to improve the environment;
- Investments and costs with preservation and/or recovery of
degraded environments;
- Investments and costs with environmental education to
employees, outsourced personnel, autonomous workers and
managers of the entity;
- Investments and costs with environmental education
to community;
- Investments and costs with other environmental projects;
- Number of environmental, administrative and law suits filed
against the company;
- Total penalties and indemnities related to environmental issues,
determined administratively and/or by judges;
- Environmental liabilities and contingencies
Total interaction with the environment
hOLDING
CONSOLIDATED
2007
2006
2007
2006
341
50
25
531
140
69
2,680
716
3,629
689
395
682
16,314
2,379
43,873
33,820
286
19,752
623
6,695
-
831
413
235
28,832
1,131,336
17,010
2,602
39,000
27,334
34,946
-
10,654
6,769
3,967
-
3,372
738
113,896
-
3,106
-
225,951
37.443
938,054 2,554,314
14,632
63,522
44,222
9,896
3,284
4,009
149,456
3,626
292,647
2,034,421
28,832
-
509,902
512,566
37.443 3,292,831 2,836,970
-
-
-
-
-
-
-
-
-
-
-
93,577
81,338
22,429
19,925
141
154
5,235
215,635
3,446
91,335
12
9
337,017
43
190,241
Iv - OThER INFORMATION
Net income
Operating income
9,439
1,401
7,0286 15,768,577 14,260,322
896,848
1.471 1,961,327
92
Financial Statements 2007
Eletronuclear – View of Central
Nuclear Almirante Álvaro Alberto
(Eletronuclear Files)
Financial Statements 2007 Annual Report 2007
95
Index
Annual Report 2007
BALANCE SHEETS – ASSETS ................................................................................98
BALANCE SHEETS – LIABILITIES ........................................................................ 100
STATEMENT OF OPERATIONS .............................................................................. 102
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY ............................................ 104
STATEMENT OF CHANGES IN FINANCIAL POSITION ................................................ 106
STATEMENT OF CASH FLOWS ............................................................................. 108
STATEMENT OF ADDED VALUE ........................................................................... 112
NOTE 1 – OPERATIONS ..................................................................................... 114
NOTE 2 – PUBLIC SERVICE CONCESSIONS ............................................................ 115
NOTE 3 – CORPORATE GOVERNANCE .................................................................... 116
NOTE 4 – RELATIONSHIP WITH INDEPENDENT AUDITORS ........................................ 116
NOTE 5 – PRESENTATION OF THE FINANCIAL STATEMENTS ...................................... 117
NOTE 6 – SUMMARY OF MAIN ACCOUNTING PRACTICES ......................................... 118
NOTE 7 – CONSOLIDATION PROCEDURES ............................................................. 123
NOTE 8 – CASH AND CASH EQUIVALENTS ............................................................. 127
NOTE 9 – CONSUMERS AND RESELLERS OF ELECTRICITY .......................................... 127
NOTE 10 – LOANS AND FINANCING GRANTED ....................................................... 129
NOTE 11 – RETURN ON INVESTMENTS ................................................................ 132
NOTE 12 – RESCHEDULED RECEIVABLES ............................................................... 133
NOTE 13 – MARKETABLE SECURITIES .................................................................. 137
NOTE 14 – TAX CREDITS AND DEFERRED TAX CREDITS ........................................... 140
NOTE 15 – REGULATORY ASSETS ........................................................................ 142
NOTE 16 – STUDIES AND PROJECTS .................................................................... 145
NOTE 17 – NUCLEAR FUEL INVENTORIES .............................................................. 146
NOTE 18 – ADVANCES FOR INCREASE IN PARENT COMPANY’S OWNERSHIP INTEREST .... 147
NOTE 19 – INVESTMENTS ................................................................................. 148
NOTE 20 – PROPERTY, PLANT AND EQUIPMENT ..................................................... 154
NOTE 21 – INTANGIBLE ASSETS ......................................................................... 156
NOTE 22 – LOANS AND FINANCING OBTAINED ...................................................... 156
NOTE 23 – RECEIVABLES INVESTMENT FUND ........................................................ 158
NOTE 24 – TRADE ACCOUNTS PAYABLE ................................................................ 159
NOTE 25 – REGULATORY FEES ............................................................................ 160
NOTE 26 – TAXES AND SOCIAL CONTRIBUTIONS .................................................... 160
NOTE 27 – ADVANCES FROM CONSUMERS ............................................................. 163
NOTE 28 – COMPULSORY LOAN .......................................................................... 165
NOTE 29 – STOCKHOLDERS’ COMPENSATION .......................................................... 166
NOTE 30 – PAYABLES TO THE BRAZILIAN FEDERAL TREASURY .................................. 168
NOTE 31 – COMPLEMENTARY PENSION FUNDS ....................................................... 168
NOTE 32 – CONTINGENT LIABILITIES .................................................................. 173
96
Index Annual Report 2007
NOTE 33 – OBLIGATIONS ASSUMED FOR THE RELEASE OF ASSETS ............................. 180
NOTE 34 – STOCKHOLDERS’ EQUITY .................................................................... 182
NOTE 35 – OPERATIONS WITH ELECTRICITY .......................................................... 185
NOTE 36 – DEDUCTIONS TO THE OPERATIONS WITH ELECTRICITY ............................. 185
NOTE 37 – OPERATING REVENUE – OWNERSHIP INTEREST ...................................... 186
NOTE 38 – PERSONNEL, MATERIAL AND SERVICES ................................................. 186
NOTE 39 – ENERGY PURCHASED FOR RESALE ........................................................ 187
NOTE 40 – OPERATING PROVISIONS .................................................................... 187
NOTE 41 – FINANCIAL INCOME (EXPENSES) ......................................................... 188
NOTE 42 – PROFIT SHARING ............................................................................ 188
NOTE 43 – BUSINESS SEGMENTS ........................................................................ 189
NOTE 44 – INSURANCE ..................................................................................... 189
NOTE 45 – AUCTIONS OF ELECTRICITY AND TRANSMISSION LINES ............................ 190
NOTE 46 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT ................................ 191
NOTE 47 – COMPENSATION OF EMPLOYEES AND MANAGEMENT ................................ 194
NOTE 48 – DISCRETIONARY RESIGNATION PROGRAM .............................................. 194
NOTE 49 – MANAGEMENT OF FEDERAL GOVERNMENTAL FUNDS ................................. 195
NOTE 50 – INFORMATION ON RELEVANT FACT ....................................................... 197
NOTE 51 – SUBSEQUENT EVENTS ....................................................................... 198
Attachment I – CONSUMERS AND RESELLERS ...................................................... 204
Attachment II – LOANS AND FINANCING GRANTED .............................................. 206
Attachment III – INVESTMENT IN CONSOLIDATED COMPANIES .............................. 208
Attachment IV – PROPERTY, PLANT AND EQUIPMENT - 2007 .................................. 210
Attachment IV-A – PROPERTY, PLANT AND EQUIPMENT - 2006 ............................... 212
Attachment V – LOANS AND FINANCING OBTAINED .............................................. 214
Attachment VI – INCOME (LOSS) PER SEGMENT .................................................... 216
Attachment VII – SUMMARIZED FINANCIAL STATEMENTS OF CONTROLLED COMPANIES 218
Attachment VIII – INITIALS USED IN THE FINANCIAL STATEMENTS .......................... 220
Board of Executive Directors ............................................................................ 222
Independent Auditors Report ........................................................................... 224
Decision of Board of Directors .......................................................................... 231
Opinion ........................................................................................................ 233
97
CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRáS
BALANCE ShEETS FOR ThE YEARS ENDED
DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
ASSETS
CURRENT
Cash and cash equivalents
Consumers and resellers
Loans and financing
Fuel Consumption Account - CCC
Return on investments
Securities
Rescheduled receivables
Deferred tax credits
Rights to reimbursement
Sundry receivables
Storeroom
Prepaid expenses
Other
NONCURRENT
LONG-TERM ASSETS
Loans and financing
Rescheduled receivables
Marketable securities
Nuclear fuel inventories
Studies and projects
Consumers and resellers
Deferred tax credits
Pledges and restricted deposits
Fuel Consumption Account - CCC
Rights to reimbursement
Other
Advances for increase in parent
company’s ownership interest
INVESTMENTS
PROPERTY, PLANT AND EQUIPMENT
INTANGIBLE ASSETS
DEFERRED CHARGES
TOTAL ASSETS
Note
C O M P A N Y
C O N S O L I D A T E D
2007
2006
Reclassified
2007
2006
Reclassified
5.585.519
1.349.259
3.034.328
549.467
635.357
-
112.803
1.773.215
179.460
290.840
2.519
21
74.002
2.877.879
1.180.392
5.985.076
860.023
543.731
-
106.935
1.213.421
275.468
2.278
2.427
-
65.632
8.094.907
3.622.343
1.506.511
541.087
152.468
-
526.275
2.443.072
179.460
427.358
603.177
66.728
446.573
5.459.139
3.994.924
1.414.788
833.555
174.455
-
352.158
1.842.337
275.468
128.224
519.816
46.299
374.279
13.586.790
13.113.262
18.609.959
15.415.442
33.488.103
203.959
1.491.900
31.334.465
3.022.767
1.411.661
292.579
292.330
-
-
1.351.862
177.336
500.512
590.025
66.426
-
-
-
790.359
140.034
474.052
46.527
13.405.369
1.920.766
1.495.242
657.188
312.122
26.178
397.113
500.512
590.025
287.840
13.052.790
4.735.269
1.414.136
594.169
308.011
589.223
367.179
474.052
-
376.636
2.515.443
1.959.457
38.162.702
37.512.195
22.107.798
23.870.922
18
1.824.255
700.085
4.027
80.383
39.986.957
38.212.280
22.111.825
23.951.305
43.062.138
42.304.993
28.807
55.558
5.891
30.822
57.410
1.242
43.152.394
96.726.141
42.394.467
93.720.009
5.183.898
74.157.189
469.810
45.995
79.856.892
120.578.676
4.565.745
77.695.285
412.538
45.136
82.718.704
122.085.451
8
9
10
11
12
14
10
12
13
17
16
14
19
20
21
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements
Annual Report 2007
Note
C O M P A N Y
C O N S O L I D A T E D
2007
2006
Reclassified
2007
2006
Reclassified
8
9
10
11
12
14
10
12
13
17
16
14
5.585.519
1.349.259
3.034.328
549.467
635.357
-
112.803
1.773.215
179.460
290.840
2.519
21
74.002
13.586.790
33.488.103
203.959
1.491.900
-
292.579
-
1.351.862
177.336
500.512
590.025
66.426
38.162.702
2.877.879
1.180.392
5.985.076
860.023
543.731
-
106.935
1.213.421
275.468
2.278
2.427
-
65.632
13.113.262
31.334.465
3.022.767
1.411.661
-
292.330
-
790.359
140.034
474.052
-
46.527
37.512.195
8.094.907
3.622.343
1.506.511
541.087
152.468
-
526.275
2.443.072
179.460
427.358
603.177
66.728
446.573
18.609.959
13.405.369
1.920.766
1.495.242
657.188
312.122
26.178
2.515.443
397.113
500.512
590.025
287.840
22.107.798
5.459.139
3.994.924
1.414.788
833.555
174.455
-
352.158
1.842.337
275.468
128.224
519.816
46.299
374.279
15.415.442
13.052.790
4.735.269
1.414.136
594.169
308.011
589.223
1.959.457
367.179
474.052
-
376.636
23.870.922
18
1.824.255
700.085
4.027
80.383
39.986.957
38.212.280
22.111.825
23.951.305
19
20
21
43.062.138
28.807
55.558
5.891
43.152.394
96.726.141
42.304.993
30.822
57.410
1.242
42.394.467
93.720.009
5.183.898
74.157.189
469.810
45.995
79.856.892
120.578.676
4.565.745
77.695.285
412.538
45.136
82.718.704
122.085.451
ASSETS
CURRENT
Cash and cash equivalents
Consumers and resellers
Loans and financing
Fuel Consumption Account - CCC
Return on investments
Securities
Rescheduled receivables
Deferred tax credits
Rights to reimbursement
Sundry receivables
Storeroom
Prepaid expenses
Other
NONCURRENT
LONG-TERM ASSETS
Loans and financing
Rescheduled receivables
Marketable securities
Nuclear fuel inventories
Studies and projects
Consumers and resellers
Deferred tax credits
Pledges and restricted deposits
Fuel Consumption Account - CCC
Rights to reimbursement
Other
Advances for increase in parent
company’s ownership interest
INVESTMENTS
PROPERTY, PLANT AND EQUIPMENT
INTANGIBLE ASSETS
DEFERRED CHARGES
TOTAL ASSETS
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements
99
CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRáS
BALANCE ShEETS FOR ThE YEARS ENDED
DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
LIABILITIES AND STOCkhOLDERS’ EQuITY
2007
Note #
2006
Reclassified
2007
2006
Reclassified
C O M P A N Y
C O N S O L I D A T E D
CURRENT
Loans and financing
Compulsory loan
Trade accounts payable
Advances from consumers
Taxes and social contributions
Fuel Consumption Account - CCC
Stockholders’ compensation
Payables to the Brazilian Federal Treasury
Estimated obligations
Reimbursement obligations
Complementary pension plans
Provisions for contingencies
Research and development
Fees as per regulations
Other
NONCURRENT
Loans and financing
Payables to the Brazilian Federal Treasury
Trade accounts payable
Global Reversion Reserve Quota - RGR
Compulsory loan
Taxes and social contributions
Obligations assumed for the release of assets
Advances from consumers
Fuel Consumption Account - CCC
Provisions for contingencies
Complementary pension plans
Reimbursement liabilities
Other
STOCKHOLDERS’ EQUITY
Capital stock
Capital reserves
Revaluation surplus
Revenue reserves
Advances for future capital increase
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
22
28
24
27
26
29
30
31
32
25
22
30
28
26
33
27
32
31
34
139.430
96.709
1.269.365
202.250
1.092.560
515.418
881.002
58.150
78.274
444.225
169.968
111.106
1.159.921
102.387
918.483
836.878
566.043
51.123
7.282
193.811
1.576.872
726.989
2.007.461
459.808
6.769.011
202.375
6.171.300
23.870
647.844
500.512
1.214.528
474.052
1.298.389
-
-
-
-
-
-
-
-
-
0
-
-
-
-
-
-
-
-
-
1.429.199
96.709
2.291.929
237.441
1.823.838
515.418
902.915
58.150
426.267
444.225
183.512
1.029.109
343.010
514.897
706.088
726.989
-
6.769.011
202.375
1.625.530
451.017
1.056.761
1.143.258
2.042.787
798.623
875.777
0
553.669
1.990.178
111.106
1.976.903
134.909
1.448.655
836.878
590.756
51.123
294.877
193.810
338.355
893.299
287.460
591.290
455.724
459.808
268.332
6.171.300
23.870
2.150.748
356.604
942.330
1.036.531
2.147.921
1.992.061
342.996
-
97.372
33.648
4.811.031
273.208
4.390.210
11.002.707
10.195.323
12.981.322
17.819.926
85.810
68.291
11.951.874
11.494.011
29.227.119
33.809.799
24.235.829
25.907.304
208.109
25.800.369
76.151.611
3.811.625
79.963.236
96.726.141
24.235.829
25.907.304
230.538
24.054.259
74.427.930
3.407.858
77.835.788
93.720.009
24.235.829
25.907.304
208.109
25.800.369
76.151.611
3.811.625
79.963.236
24.235.829
25.907.304
230.538
24.054.259
74.427.930
3.407.858
77.835.788
120.578.676
122.085.451
Provision for stockholders’ deficit in investees
875.777
342.996
INTEREST OF NON-CONTROLLING STOCKHOLDERS
-
-
385.614
244.541
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
Annual Report 2007
C O M P A N Y
C O N S O L I D A T E D
LIABILITIES AND STOCkhOLDERS’ EQuITY
2007
Note #
2006
Reclassified
2007
2006
Reclassified
CURRENT
Loans and financing
Compulsory loan
Trade accounts payable
Advances from consumers
Taxes and social contributions
Fuel Consumption Account - CCC
Stockholders’ compensation
Payables to the Brazilian Federal Treasury
Estimated obligations
Reimbursement obligations
Complementary pension plans
Provisions for contingencies
Research and development
Fees as per regulations
Other
NONCURRENT
Loans and financing
Payables to the Brazilian Federal Treasury
Trade accounts payable
Global Reversion Reserve Quota - RGR
Compulsory loan
Taxes and social contributions
Obligations assumed for the release of assets
Advances from consumers
Fuel Consumption Account - CCC
Provisions for contingencies
Complementary pension plans
Provision for stockholders’ deficit in investees
Reimbursement liabilities
Other
INTEREST OF NON-CONTROLLING STOCKHOLDERS
STOCKHOLDERS’ EQUITY
Capital stock
Capital reserves
Revaluation surplus
Revenue reserves
Advances for future capital increase
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
22
28
24
27
26
29
30
31
32
25
22
30
28
26
33
27
32
31
34
139.430
96.709
1.269.365
202.250
1.092.560
515.418
881.002
58.150
78.274
444.225
-
-
-
-
33.648
4.811.031
1.576.872
726.989
-
6.769.011
202.375
-
-
-
500.512
1.214.528
-
875.777
0
85.810
11.951.874
169.968
111.106
1.159.921
102.387
918.483
836.878
566.043
51.123
7.282
193.811
-
-
-
-
273.208
4.390.210
2.007.461
459.808
-
6.171.300
23.870
647.844
-
-
474.052
1.298.389
-
342.996
-
68.291
11.494.011
1.429.199
96.709
2.291.929
237.441
1.823.838
515.418
902.915
58.150
426.267
444.225
183.512
1.029.109
343.010
514.897
706.088
11.002.707
12.981.322
726.989
-
6.769.011
202.375
1.625.530
451.017
1.056.761
1.143.258
2.042.787
798.623
875.777
0
553.669
29.227.119
1.990.178
111.106
1.976.903
134.909
1.448.655
836.878
590.756
51.123
294.877
193.810
338.355
893.299
287.460
591.290
455.724
10.195.323
17.819.926
459.808
268.332
6.171.300
23.870
2.150.748
356.604
942.330
1.036.531
2.147.921
1.992.061
342.996
-
97.372
33.809.799
-
-
385.614
244.541
24.235.829
25.907.304
208.109
25.800.369
76.151.611
3.811.625
79.963.236
96.726.141
24.235.829
25.907.304
230.538
24.054.259
74.427.930
3.407.858
77.835.788
93.720.009
24.235.829
25.907.304
208.109
25.800.369
76.151.611
3.811.625
79.963.236
120.578.676
24.235.829
25.907.304
230.538
24.054.259
74.427.930
3.407.858
77.835.788
122.085.451
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
101
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
STATEMENT OF OPERATIONS FOR ThE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
OPERATING REvENuES
Electricity sale and transmission
Electric power Grant-in-Aid
Interest on bills paid in arrears on electric power
(-) Sectorial charges
(-) State VAT (ICMS)
Ownership interests
Gains on reduction in liabilities
Other revenues
OPERATING EXPENSES
Personnel, material and services
Energy purchased for resale
Fuel for electricity production
PASEP and COFINS (taxes on sales)
Electricity network use
Financial compensation of water resources
Depreciation and amortization
Operating provisions
Losses with assets
ITAIPU’s income (loss) to be offset
Donations and contributions
Other
COMPANY
Note
2007
2006
Reclassified
35
36
36
37
15
38
39
40
15
7.555.634
-
-
-
-
1.883.289
-
-
9.438.923
318.370
7.152.195
-
86.947
-
-
7.016
586.483
-
-
-
126.400
356.336
8.633.747
6.297.277
-
-
-
-
988.561
-
-
7.285.838
287.024
6.256.845
-
62.925
-
-
5.947
114.934
-
-
-
140.743
182.588
7.051.006
OPERATING INCOME (LOSS) BEFORE FINANCIAL INCOME (EXPENSES)
805.176
234.832
548.079
2.712.786
1.497.734
3.260.865
4.571.928
FINANCIAL INCOME (EXPENSES)
OPERATING INCOME
NON-OPERATING INCOME (LOSS)
INCOME (LOSS) BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES, EMPLOYEES’ AND MANAGEMENT
PROFIT SHARING AND MINORITY INTEREST
Income tax
Social contribution tax on net income
INCOME (LOSS) BEFORE OWNERSHIP INTERESTS
Profit sharing
Minority interest
NET INCOME (LOSS) FOR THE YEAR / PERIOD
EARNINGS (LOSS) PER SHARE, NET
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
41
595.844
1.235.774
1.744.426
(2.671.095)
(1.058.606)
(926.669)
(2.706.039)
1.401.020
1.470.606
-
-
1.401.020
1.470.606
146.976
17.861
(210.603)
(81.685)
1.565.857
1.178.318
42
(18.000)
-
(17.000)
-
1.547.857
1.161.318
R$1,37
R$1,03
CONSOLIDATED
Quarters
4Q07
to 3Q07
4Q06
2007
6.610.382
17.096.219
5.700.192
23.706.601
21.011.354
-
-
(312.134)
(128.645)
303.717
300.136
27.209
6.800.665
1.277.465
1.805.545
160.106
314.007
222.352
655.476
481.346
(84.273)
-
599.822
319.968
55.501
445.271
0
-
-
(802.342)
(310.065)
449.575
74.434
16.507.821
3.077.802
4.320.087
320.428
611.307
729.247
439.758
1.552.570
1.364.949
-
374.120
143.489
861.278
6.252.586
13.795.035
-
-
-
(252.750)
85.599
(41.196)
431.621
5.923.466
1.170.609
1.479.321
41.921
348.301
146.924
323.626
507.644
(73.345)
-
102.288
45.115
333.328
4.425.732
2006
Reclassified
-
-
-
(1.292.529)
(465.555)
361.667
431.621
20.046.558
3.977.700
4.895.225
442.724
750.756
891.337
1.152.447
2.006.805
957.613
-
(390.916)
196.904
594.035
15.474.630
-
-
(1.114.476)
(438.710)
753.292
300.136
101.643
23.308.486
4.355.267
6.125.632
480.534
925.314
951.599
1.095.234
2.033.916
1.280.676
599.822
694.088
198.990
1.306.549
20.047.621
2.292.505
41.691
439.128
2.334.196
1.865.889
(18.032)
(18.847)
5.819
(36.879)
(17.964)
2.274.473
22.844
444.947
2.297.317
1.847.925
(354.303)
(116.972)
(59.006)
(55.020)
8.473
7.032
(413.309)
(171.992)
(411.620)
(151.373)
1.803.198
(91.182)
460.452
1.712.016
1.284.932
(159.926)
(4.098)
-
(135)
(138.469)
13.869
(159.926)
(4.233)
(138.468)
14.854
1.639.174
(91.317)
335.852
1.547.857
1.161.318
R$1,45
(R$0,08)
R$0,30
R$1,37
R$1,03
Annual Report 2007
CONSOLIDATED
Quarters
4Q07
to 3Q07
4Q06
2007
6.610.382
-
-
(312.134)
(128.645)
303.717
300.136
27.209
6.800.665
1.277.465
1.805.545
160.106
314.007
222.352
655.476
481.346
(84.273)
-
599.822
319.968
55.501
445.271
6.252.586
17.096.219
0
-
(802.342)
(310.065)
449.575
-
74.434
16.507.821
3.077.802
4.320.087
320.428
611.307
729.247
439.758
1.552.570
1.364.949
-
374.120
143.489
861.278
13.795.035
5.700.192
-
-
(252.750)
85.599
(41.196)
-
431.621
5.923.466
1.170.609
1.479.321
41.921
348.301
146.924
323.626
507.644
(73.345)
-
102.288
45.115
333.328
4.425.732
23.706.601
-
-
(1.114.476)
(438.710)
753.292
300.136
101.643
23.308.486
4.355.267
6.125.632
480.534
925.314
951.599
1.095.234
2.033.916
1.280.676
599.822
694.088
198.990
1.306.549
20.047.621
2006
Reclassified
21.011.354
-
-
(1.292.529)
(465.555)
361.667
-
431.621
20.046.558
3.977.700
4.895.225
442.724
750.756
891.337
1.152.447
2.006.805
957.613
-
(390.916)
196.904
594.035
15.474.630
OPERATING INCOME (LOSS) BEFORE FINANCIAL INCOME (EXPENSES)
548.079
2.712.786
1.497.734
3.260.865
4.571.928
41
595.844
1.235.774
1.744.426
(2.671.095)
(1.058.606)
(926.669)
(2.706.039)
2.292.505
41.691
439.128
2.334.196
1.865.889
(18.032)
(18.847)
5.819
(36.879)
(17.964)
2.274.473
22.844
444.947
2.297.317
1.847.925
(354.303)
(116.972)
(59.006)
(55.020)
8.473
7.032
(413.309)
(171.992)
(411.620)
(151.373)
1.803.198
(91.182)
460.452
1.712.016
1.284.932
(159.926)
(4.098)
-
(135)
(138.469)
13.869
(159.926)
(4.233)
(138.468)
14.854
1.639.174
(91.317)
335.852
1.547.857
1.161.318
R$1,45
(R$0,08)
R$0,30
R$1,37
R$1,03
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
103
OPERATING REvENuES
Electricity sale and transmission
Electric power Grant-in-Aid
Interest on bills paid in arrears on electric power
(-) Sectorial charges
(-) State VAT (ICMS)
Ownership interests
Gains on reduction in liabilities
Other revenues
OPERATING EXPENSES
Personnel, material and services
Energy purchased for resale
Fuel for electricity production
PASEP and COFINS (taxes on sales)
Electricity network use
Financial compensation of water resources
Depreciation and amortization
Operating provisions
Losses with assets
ITAIPU’s income (loss) to be offset
Donations and contributions
Other
FINANCIAL INCOME (EXPENSES)
OPERATING INCOME
NON-OPERATING INCOME (LOSS)
PROFIT SHARING AND MINORITY INTEREST
Income tax
Social contribution tax on net income
INCOME (LOSS) BEFORE OWNERSHIP INTERESTS
Profit sharing
Minority interest
NET INCOME (LOSS) FOR THE YEAR / PERIOD
EARNINGS (LOSS) PER SHARE, NET
INCOME (LOSS) BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES, EMPLOYEES’ AND MANAGEMENT
COMPANY
Note
2007
2006
Reclassified
7.555.634
6.297.277
35
36
36
37
15
38
39
40
15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.883.289
988.561
9.438.923
7.285.838
318.370
7.152.195
287.024
6.256.845
86.947
62.925
7.016
586.483
5.947
114.934
126.400
356.336
8.633.747
140.743
182.588
7.051.006
805.176
234.832
1.401.020
1.470.606
-
-
1.401.020
1.470.606
146.976
17.861
(210.603)
(81.685)
1.565.857
1.178.318
42
(18.000)
-
(17.000)
-
1.547.857
1.161.318
R$1,37
R$1,03
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
STATEMENT OF ChANGES IN STOCkhOLDERS’ EQuITY
FOR ThE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
SuBSCRIBED
AND PAID
CAPITAL
STOCK
CAPITAL
RESERVES
REvALuATION
RESERVE
REVENUE RESERVES
LEGAL
RESERVE
STATuTORY
RESERVE
RETAINED
EARNINGS
ACCuMuLATED
EARNINGS
DIvIDENDS
NOT
DISTRIBUTED
ADvANCES
FOR FuTuRE
CAPITAL
INCREASE
T O T A L
STOCkhOLDERS'
EQUITY
As of December 31, 2005
24.235.829
25.907.304
247.855
1.595.578
14.318.074
6.448.973
2.961.277
75.714.889
Financial charges – Decree 2.673/98
Realization of revaluation surplus
Net income
Application of income:
Recognition of reserves
Stockholders’ compensation
-
-
-
-
-
-
-
-
-
-
-
(17.317)
-
-
-
As of December 31, 2006
24.235.829
25.907.304
230.538
1.653.644
14.910.346
7.421.521
68.748
3.407.858
77.835.788
Capital increase A.G.E as of April 28, 2005
Reevaluation – associated companies
Financial charges – Decree 2.673/98
Realization of revaluation surplus
Net income
Application of income:
Recognition of reserves
Stockholders’ compensation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(22.429)
-
-
-
As of December 31, 2007
24.235.829
25.907.304
208.109
1.731.038
15.699.751
8.300.832
68.748
-
3.811.625
79.963.236
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
972.548
446.581
1.419.129
58.066
592.272
68.748
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77.394
789.405
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17.317
1.161.317
(719.086)
(459.548)
-
-
-
-
-
22.429
1.547.857
(866.799)
(703.487)
-
-
-
-
-
-
-
-
-
-
-
-
-
1.161.317
(459.548)
1.547.857
(703.487)
879.311
403.767
1.283.078
Annual Report 2007
SuBSCRIBED
AND PAID
CAPITAL
STOCK
CAPITAL
RESERVES
REvALuATION
RESERVE
REVENUE RESERVES
LEGAL
RESERVE
STATuTORY
RESERVE
DIvIDENDS
NOT
DISTRIBUTED
RETAINED
EARNINGS
ACCuMuLATED
EARNINGS
ADvANCES
FOR FuTuRE
CAPITAL
INCREASE
T O T A L
STOCkhOLDERS'
EQUITY
As of December 31, 2005
24.235.829
25.907.304
247.855
1.595.578
14.318.074
6.448.973
-
-
-
-
-
-
972.548
-
-
-
-
-
-
58.066
-
592.272
-
-
-
68.748
-
-
2.961.277
75.714.889
-
17.317
1.161.317
(719.086)
(459.548)
446.581
-
-
1.419.129
-
1.161.317
-
-
-
(459.548)
As of December 31, 2006
24.235.829
25.907.304
230.538
1.653.644
14.910.346
7.421.521
68.748
-
3.407.858
77.835.788
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
24.235.829
25.907.304
208.109
1.731.038
15.699.751
8.300.832
68.748
-
3.811.625
79.963.236
105
-
-
-
-
-
-
-
-
77.394
-
789.405
-
-
879.311
-
-
-
-
-
-
-
-
-
-
-
-
22.429
1.547.857
(866.799)
(703.487)
-
403.767
-
-
-
1.283.078
1.547.857
-
-
-
(703.487)
Financial charges – Decree 2.673/98
Realization of revaluation surplus
Net income
Application of income:
Recognition of reserves
Stockholders’ compensation
Capital increase A.G.E as of April 28, 2005
Reevaluation – associated companies
Financial charges – Decree 2.673/98
Realization of revaluation surplus
Net income
Application of income:
Recognition of reserves
Stockholders’ compensation
As of December 31, 2007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17.317)
(22.429)
-
-
-
-
-
-
-
-
-
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
STATEMENT OF ChANGES IN FINANCIAL POSITION FOR ThE YEARS ENDED
DECEMBER 31 2007 AND 2006
(In thousands of Brazilian reais)
SOURCE OF FUNDS
From operations - net income
Noncash items:
Depreciation and amortization
Long-term monetary variation, net
Adjustment to investments:
Regulatory assets
Long-term provisions
Minority interest
Financial charges on stockholders’ equity
ITAIPU’s income (loss) to be offset
Other
From stockholders
From third parties
Financing obtained
Global Reversion Reserve Quota and Compulsory Loan
Amounts transferred from current to noncurrent liabilities
Amounts transferred from noncurrent to current assets
Realization and disposal of investment
TOTAL SOURCE OF FUNDS
APPLICATION OF FUNDS
Acquisition of rights, property, plant and equipment and deferred expenses
Loans and financing granted
On interest in electric Power companies
Interests held in other companies
Amounts transferred from noncurrent to current
Stockholders’ compensation
Amounts transferred from current to noncurrent assets
Statement of changes in working capital:
Other
TOTAL APPLICATION OF FUNDS
Changes in working capital
Current assets:
At beginning of year
At end of year
Change
Current liabilities:
At beginning of year
At end of year
Change
Changes in working capital
C O M P A N Y
C O N S O L I D A T E D
12/31/2007
12/31/2006
12/31/2007
12/31/2006
1.547.857
1.161.318
1.547.857
1.161.318
7.016
2.536.733
(1.455.947)
(287.746)
(938.109)
5.947
529.148
(575.696)
(663.429)
1.283.075
1.419.127
416.887
3.109.766
433.880
2.310.295
-
-
-
-
-
-
-
-
-
875.571
28.010
3.309.303
742.787
4.955.671
8.065.437
8.013
3.413.978
-
1.213.233
772.109
703.486
1.850.465
51.449
8.012.733
1.105.965
149.742
2.666.759
607.051
4.529.517
6.839.812
17.877
1.007.681
-
21.235
911.634
459.548
2.227.931
23.171
4.669.077
2.033.916
3.066.185
(306.002)
(287.746)
(412.433)
4.233
1.283.075
(694.088)
121.636
6.356.633
-
904.022
875.571
57.136
3.980.084
901.515
6.718.328
13.074.961
3.194.193
1.295.055
-
-
2.411.657
753.010
2.206.848
827.065
2.006.805
1.870.503
(73.467)
-
337.200
(14.854)
1.419.131
(390.917)
178.290
6.494.009
-
648.794
1.105.965
270.459
2.481.870
687.507
5.194.595
11.688.604
3.153.722
1.380.006
-
64.333
3.198.336
555.622
1.608.900
275.549
10.687.828
10.236.468
52.704
2.170.735
2.387.133
1.452.136
13.113.262
13.586.788
473.526
10.236.414
13.113.264
2.876.850
15.415.442
18.609.959
3.194.517
12.697.332
15.415.441
2.718.109
4.390.209
4.811.030
420.821
52.704
3.684.093
4.390.209
706.116
2.170.734
10.195.323
11.002.707
807.384
2.387.133
8.929.351
10.195.324
1.265.973
1.452.136
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
SOURCE OF FUNDS
From operations - net income
Noncash items:
Depreciation and amortization
Long-term monetary variation, net
Adjustment to investments:
Regulatory assets
Long-term provisions
Minority interest
Financial charges on stockholders’ equity
ITAIPU’s income (loss) to be offset
Other
From stockholders
From third parties
Financing obtained
Global Reversion Reserve Quota and Compulsory Loan
Amounts transferred from current to noncurrent liabilities
Amounts transferred from noncurrent to current assets
Realization and disposal of investment
TOTAL SOURCE OF FUNDS
APPLICATION OF FUNDS
Acquisition of rights, property, plant and equipment and deferred expenses
Loans and financing granted
On interest in electric Power companies
Interests held in other companies
Amounts transferred from noncurrent to current
Stockholders’ compensation
Amounts transferred from current to noncurrent assets
Other
TOTAL APPLICATION OF FUNDS
Annual Report 2007
C O M P A N Y
C O N S O L I D A T E D
12/31/2007
12/31/2006
12/31/2007
12/31/2006
1.547.857
1.161.318
1.547.857
1.161.318
7.016
2.536.733
(1.455.947)
(287.746)
(938.109)
-
1.283.075
-
416.887
3.109.766
-
-
875.571
28.010
3.309.303
742.787
4.955.671
8.065.437
8.013
3.413.978
-
1.213.233
772.109
703.486
1.850.465
51.449
8.012.733
5.947
529.148
(575.696)
-
(663.429)
-
1.419.127
-
433.880
2.310.295
-
-
1.105.965
149.742
2.666.759
607.051
4.529.517
6.839.812
17.877
1.007.681
-
21.235
911.634
459.548
2.227.931
23.171
4.669.077
2.033.916
3.066.185
(306.002)
(287.746)
(412.433)
4.233
1.283.075
(694.088)
121.636
6.356.633
-
904.022
875.571
57.136
3.980.084
901.515
6.718.328
13.074.961
3.194.193
1.295.055
-
-
2.411.657
753.010
2.206.848
827.065
10.687.828
2.006.805
1.870.503
(73.467)
-
337.200
(14.854)
1.419.131
(390.917)
178.290
6.494.009
-
648.794
1.105.965
270.459
2.481.870
687.507
5.194.595
11.688.604
3.153.722
1.380.006
-
64.333
3.198.336
555.622
1.608.900
275.549
10.236.468
Changes in working capital
52.704
2.170.735
2.387.133
1.452.136
Statement of changes in working capital:
Current assets:
At beginning of year
At end of year
Change
Current liabilities:
At beginning of year
At end of year
Change
Changes in working capital
13.113.262
13.586.788
473.526
10.236.414
13.113.264
2.876.850
15.415.442
18.609.959
3.194.517
12.697.332
15.415.441
2.718.109
4.390.209
4.811.030
420.821
52.704
3.684.093
4.390.209
706.116
2.170.734
10.195.323
11.002.707
807.384
2.387.133
8.929.351
10.195.324
1.265.973
1.452.136
The accompanying notes and attachments I, II, III, IV, V, VI, VII and VIII are integral part of these financial statements.
107
CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRáS
ADDITIONAL INFORMATION TO ThE FINANCIAL STATEMENTS
STATEMENT OF CASh FLOWS FOR ThE YEARS ENDED
DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
OPERATING ACTIVITIES
Net income for the year
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization
Long-term monetary variation, net
Adjustment to investments
Regulatory assets
Long-term provisions
Minority interest
Financial charges on stockholders’ equity
ITAIPU’s income (loss) to be offset
Other
Subtotal
(Increase) decrease in operating assets
Consumers and resellers
Loans and financing - principal amount
Loans and financing - charges
Fuel Consumption Account - CCC
Return on investments
Marketable securities
Rescheduled receivables
Tax credits
Rights to reimbursement
Sundry receivables
Storeroom
Prepaid expenses
Other
Loans and financing
Loans and financing - charges
Compulsory loan
Trade accounts payable
Taxes and social contributions
Fuel Consumption Account - CCC
Stockholders’ compensation
Estimated obligations
Reimbursement obligations
Advances from consumers
Complementary pension plans
Provisions for contingencies
Research and development
Fees as per regulations
Other
Funds provided by (used in)
operating activities
Payables to the Brazilian Federal Treasury:
COMPANY
CONSOLIDATED
12/31/2007
12/31/2006
12/31/2007
12/31/2006
1.547.857
1.161.318
1.547.857
1.161.318
7.016
2.536.733
(1.455.947)
(287.746)
(938.109)
-
-
1.283.075
1.419.127
416.887
3.109.766
433.880
2.310.295
5.947
529.148
(575.696)
(663.429)
-
-
-
184.724
(616.416)
(944.339)
(681.082)
154.518
237.010
(35.100)
19.847
188.481
(212)
79
-
(28.841)
(2.046)
(55.168)
(236.518)
(150.961)
693.834
93.926
4.884
(26.439)
-
-
-
-
-
-
2.033.916
3.066.185
(306.002)
(287.746)
(412.433)
4.233
1.283.075
(694.088)
121.636
6.356.633
372.582
(106.616)
14.892
292.468
21.987
-
(174.117)
(600.735)
96.008
(299.134)
(83.361)
(20.429)
(72.294)
(558.748)
(578.539)
17.559
(14.397)
315.026
375.183
(321.460)
312.159
7.027
131.390
250.415
102.532
(154.843)
135.810
55.550
(76.393)
250.364
807.382
2.006.805
1.870.503
(73.467)
-
337.200
(14.854)
1.419.131
(390.917)
178.290
6.494.009
127.507
(251.283)
(293.667)
(670.728)
(103.664)
237.349
43.257
(377.712)
188.481
264.379
(70.251)
9.975
13.359
(882.998)
390.445
(51.382)
(55.168)
(275.988)
(159.487)
693.834
87.234
4.884
72.405
-
74.729
(52.643)
27.151
-
32.321
283.829
1.072.163
(168.865)
183.695
2.767.053
310.556
(91.626)
-
(5.868)
(559.794)
96.008
(288.562)
(92)
-
(26.902)
(3.636)
(14.397)
109.444
174.077
(321.460)
314.505
7.027
70.992
250.415
99.863
-
-
-
-
(239.106)
420.822
219.635
512.306
5.764.702
1.456.157
6.605.267
6.683.174
tobe continued...
Increase (decrease) in operating liabilities
(8.391)
126.047
2.234.114
(1.366.443)
OPERATING ACTIVITIES
Net income for the year
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization
Long-term monetary variation, net
Adjustment to investments
Regulatory assets
Long-term provisions
Minority interest
Financial charges on stockholders’ equity
ITAIPU’s income (loss) to be offset
Other
Subtotal
(Increase) decrease in operating assets
Consumers and resellers
Loans and financing - principal amount
Loans and financing - charges
Fuel Consumption Account - CCC
Return on investments
Marketable securities
Rescheduled receivables
Tax credits
Rights to reimbursement
Sundry receivables
Storeroom
Prepaid expenses
Other
Increase (decrease) in operating liabilities
Loans and financing
Loans and financing - charges
Compulsory loan
Trade accounts payable
Taxes and social contributions
Fuel Consumption Account - CCC
Stockholders’ compensation
Payables to the Brazilian Federal Treasury:
Estimated obligations
Reimbursement obligations
Advances from consumers
Complementary pension plans
Provisions for contingencies
Research and development
Fees as per regulations
Other
Funds provided by (used in)
operating activities
Annual Report 2007
COMPANY
CONSOLIDATED
12/31/2007
12/31/2006
12/31/2007
12/31/2006
1.547.857
1.161.318
1.547.857
1.161.318
7.016
2.536.733
(1.455.947)
(287.746)
(938.109)
-
1.283.075
-
416.887
3.109.766
(168.865)
183.695
2.767.053
310.556
(91.626)
-
(5.868)
(559.794)
96.008
(288.562)
(92)
-
(8.391)
2.234.114
(26.902)
(3.636)
(14.397)
109.444
174.077
(321.460)
314.505
7.027
70.992
250.415
99.863
-
-
-
-
(239.106)
420.822
5.947
529.148
(575.696)
-
(663.429)
-
1.419.127
-
433.880
2.310.295
184.724
(616.416)
(944.339)
(681.082)
154.518
237.010
(35.100)
19.847
188.481
(212)
79
-
126.047
(1.366.443)
(28.841)
(2.046)
(55.168)
(236.518)
(150.961)
693.834
93.926
4.884
(26.439)
-
-
-
-
-
-
219.635
512.306
2.033.916
3.066.185
(306.002)
(287.746)
(412.433)
4.233
1.283.075
(694.088)
121.636
6.356.633
372.582
(106.616)
14.892
292.468
21.987
-
(174.117)
(600.735)
96.008
(299.134)
(83.361)
(20.429)
(72.294)
(558.748)
(578.539)
17.559
(14.397)
315.026
375.183
(321.460)
312.159
7.027
131.390
250.415
102.532
(154.843)
135.810
55.550
(76.393)
250.364
807.382
2.006.805
1.870.503
(73.467)
-
337.200
(14.854)
1.419.131
(390.917)
178.290
6.494.009
127.507
(251.283)
(293.667)
(670.728)
(103.664)
237.349
43.257
(377.712)
188.481
264.379
(70.251)
9.975
13.359
(882.998)
390.445
(51.382)
(55.168)
(275.988)
(159.487)
693.834
87.234
4.884
72.405
-
74.729
(52.643)
27.151
-
32.321
283.829
1.072.163
5.764.702
1.456.157
6.605.267
6.683.174
tobe continued...
109
CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRáS
ADDITIONAL INFORMATION TO ThE FINANCIAL STATEMENTS
STATEMENT OF CASh FLOWS FOR ThE YEARS ENDED
DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
FINANCING ACTIVITIES
Recursos recebidos de acionistas e partes relacionadas
Long-term loans and financing obtained
Long-term financing reclassified as current
Stockholders’ compensation
Loans and financing granted - disbursements
Loans and financing granted - receipts
Refinancing obtained (current liabilities reclassified as noncurrent)
Compulsory loan and RGR
Other
Funds provided by (used in)
financing activities
INVESTMENT ACTIVITIES
Acquisition of property, plant and equipment
Investments
Funds provided by (used in)
investments
COMPANY
CONSOLIDATED
12/31/2007
12/31/2006
12/31/2007
12/31/2006
...Continued
-
-
(772.109)
(703.486)
(3.413.978)
3.309.303
28.010
-
-
-
-
904.022
648.794
(911.634)
(459.548)
(1.007.681)
2.666.759
149.742
(2.411.657)
(753.010)
(1.295.055)
3.980.084
57.136
(3.198.336)
(555.622)
(1.380.006)
2.481.870
270.459
875.571
16.640
1.105.965
(23.171)
875.571
(827.065)
1.105.965
(275.548)
(2.510.514)
(707.499)
(1.676.822)
(2.511.324)
(8.013)
(538.535)
(17.877)
585.816
(3.194.193)
(3.153.722)
901.515
623.175
(546.548)
567.939
(2.292.678)
(2.530.547)
Refinancing granted (current assets reclassified as long-term)
(1.850.465)
(2.227.931)
(2.206.848)
(1.608.900)
Increase (decrease) in cash and cash equivalents
2.707.640
1.316.597
2.635.767
1.641.302
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2.877.879
5.585.519
2.707.640
1.561.282
2.877.879
1.316.597
5.459.139
8.094.907
2.635.768
3.817.837
5.459.139
1.641.302
Annual Report 2007
FINANCING ACTIVITIES
Recursos recebidos de acionistas e partes relacionadas
Long-term loans and financing obtained
Long-term financing reclassified as current
Stockholders’ compensation
Loans and financing granted - disbursements
Loans and financing granted - receipts
Refinancing obtained (current liabilities reclassified as noncurrent)
Refinancing granted (current assets reclassified as long-term)
Compulsory loan and RGR
Other
Funds provided by (used in)
financing activities
INVESTMENT ACTIVITIES
Acquisition of property, plant and equipment
Investments
Funds provided by (used in)
investments
COMPANY
CONSOLIDATED
12/31/2007
12/31/2006
12/31/2007
12/31/2006
...Continued
-
-
(772.109)
(703.486)
(3.413.978)
3.309.303
28.010
(1.850.465)
875.571
16.640
-
-
(911.634)
(459.548)
(1.007.681)
2.666.759
149.742
(2.227.931)
1.105.965
(23.171)
-
904.022
(2.411.657)
(753.010)
(1.295.055)
3.980.084
57.136
(2.206.848)
875.571
(827.065)
-
648.794
(3.198.336)
(555.622)
(1.380.006)
2.481.870
270.459
(1.608.900)
1.105.965
(275.548)
(2.510.514)
(707.499)
(1.676.822)
(2.511.324)
(8.013)
(538.535)
(17.877)
585.816
(3.194.193)
901.515
(3.153.722)
623.175
(546.548)
567.939
(2.292.678)
(2.530.547)
Increase (decrease) in cash and cash equivalents
2.707.640
1.316.597
2.635.767
1.641.302
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2.877.879
5.585.519
2.707.640
1.561.282
2.877.879
1.316.597
5.459.139
8.094.907
2.635.768
3.817.837
5.459.139
1.641.302
111
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
ADDITIONAL INFORMATION TO ThE FINANCIAL STATEMENTS
STATEMENT OF ADDED vALuE FOR ThE YEARS ENDED
DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais)
1 - REVENUE (EXPENSES)
Sales of goods, products, and services
Non-operating revenues (expenses)
Não operacionais
2 - INPUTS ACQUIRED FROM THIRD PARTIES
Materials, services and others
Sectorial charges
Energy purchased for resale
Fuel for electricity production
3 - GROSS ADDED VALUE
4 - DEDUCTIONS
Operating provisions
Depreciation, amortization and depletion
5 - NET ADDED VALUE PRODUCED BY THE COMPANY
(730.739)
-12,13%
6.757.868
57,19%
(501.696)
-9,58%
9.137.790
75,94%
6 - ADDED VALUE RECEIVED THROUGH TRANSFERENCE
Ownership interests
Financial income
7 - TOTAL ADDED VALUE TO DISTRIBUTE
DISTRIBUTION OF ADDED VALUE
PERSONNEL
. Personnel, charges and management fees
. Profit sharing of employees
. Retirement and pension plans
TAXES
. Taxes and contributions
FINANCIAL CHARGES AND RENT
STOCKHOLDERS
. Dividends and interest on equity capital
. Interest of non-controlling stockholders
. Retained earnings
-
-
-
-
2007
Distribution
Distribution
2006
Distribution
Distribution
COMPANY
%
CONSOLIDATED
%
COMPANY
%
CONSOLIDATED
%
7.555.634
125,47%
24.108.380
6.297.277
120,28%
21.442.976
7.555.634
0,00%
0,00%
125,47%
-
(36.879)
24.071.501
-
7.450
6.304.727
0,00%
0,14%
120,42%
-
(25.414)
21.417.562
(540.680)
-8,98%
(428.697)
-8,19%
(7.152.195)
-118,77%
(6.256.845)
-119,51%
(7.692.875)
-127,75%
(13.878.789)
-117,44%
(6.685.542)
-127,69%
-
-
-
-
(3.106.617)
(910.266)
(4.895.225)
(442.724)
(9.354.832)
(6.158.147)
(1.114.476)
(6.125.632)
(480.534)
-
-
(137.240)
-2,28%
10.192.713
86,25%
(380.815)
-7,27%
12.062.729
100,25%
(586.483)
(7.016)
(593.499)
-9,74%
-0,12%
-9,86%
(1.400.928)
(2.033.916)
(3.434.844)
-11,85%
-17,21%
-29,07%
(114.934)
(5.947)
(120.881)
-2,20%
-0,11%
-2,31%
(918.134)
(2.006.805)
(2.924.939)
-7,63%
-16,68%
-24,31%
178,20%
0,00%
-0,21%
177,99%
-25,82%
-7,56%
-40,68%
-3,68%
-77,74%
204,01%
0,00%
-0,31%
203,70%
-52,11%
-9,43%
-51,84%
-4,07%
1.883.289
4.869.301
6.752.590
31,27%
80,86%
112,13%
753.292
4.306.208
5.059.500
6,37%
36,44%
42,81%
988.561
4.748.760
5.737.321
18,88%
90,70%
109,58%
361.667
2.533.469
2.895.136
3,01%
21,05%
24,06%
6.021.851
100,00%
11.817.368
100,00%
5.235.625
100,00%
12.032.927
100,00%
248.352
18.000
12.073
278.425
4,12%
0,30%
0,20%
4,62%
2.702.995
159.925
224.388
3.087.309
22,87%
1,35%
1,90%
26,13%
177.175
17.000
11.933
206.108
3,38%
0,32%
0,23%
3,94%
2.249.671
138.468
312.211
2.700.350
18,70%
1,15%
2,59%
22,44%
(77.890)
-1,29%
1.949.325
16,50%
511.459
9,77%
1.779.304
14,79%
4.273.459
70,97%
5.232.878
44,28%
3.512.987
67,10%
6.391.956
53,12%
703.486
844.371
1.547.857
11,68%
0,00%
14,02%
25,70%
703.486
(64.233)
908.603
1.547.856
5,95%
-0,54%
7,69%
13,10%
459.548
-
701.769
1.161.317
8,78%
0,00%
13,40%
22,18%
459.548
14.854
686.915
1.161.317
3,82%
0,12%
5,71%
9,65%
6.021.851
100,00%
11.817.368
100,00%
5.235.625
100,00%
12.032.927
100,00%
Annual Report 2007
COMPANY
Distribution
%
CONSOLIDATED
Distribution
%
COMPANY
Distribution
%
CONSOLIDATED
Distribution
%
2007
2006
7.555.634
-
-
7.555.634
(540.680)
-
(7.152.195)
-
(7.692.875)
125,47%
0,00%
0,00%
125,47%
-8,98%
-
-118,77%
-
-127,75%
24.108.380
-
(36.879)
24.071.501
(6.158.147)
(1.114.476)
(6.125.632)
(480.534)
(13.878.789)
204,01%
0,00%
-0,31%
203,70%
-52,11%
-9,43%
-51,84%
-4,07%
-117,44%
6.297.277
-
7.450
6.304.727
(428.697)
-
(6.256.845)
-
(6.685.542)
120,28%
0,00%
0,14%
120,42%
-8,19%
-
-119,51%
-
-127,69%
21.442.976
-
(25.414)
21.417.562
(3.106.617)
(910.266)
(4.895.225)
(442.724)
(9.354.832)
178,20%
0,00%
-0,21%
177,99%
-25,82%
-7,56%
-40,68%
-3,68%
-77,74%
(137.240)
-2,28%
10.192.713
86,25%
(380.815)
-7,27%
12.062.729
100,25%
(586.483)
(7.016)
(593.499)
-9,74%
-0,12%
-9,86%
(1.400.928)
(2.033.916)
(3.434.844)
-11,85%
-17,21%
-29,07%
(114.934)
(5.947)
(120.881)
-2,20%
-0,11%
-2,31%
(918.134)
(2.006.805)
(2.924.939)
-7,63%
-16,68%
-24,31%
5 - NET ADDED VALUE PRODUCED BY THE COMPANY
(730.739)
-12,13%
6.757.868
57,19%
(501.696)
-9,58%
9.137.790
75,94%
1.883.289
4.869.301
6.752.590
31,27%
80,86%
112,13%
753.292
4.306.208
5.059.500
6,37%
36,44%
42,81%
988.561
4.748.760
5.737.321
18,88%
90,70%
109,58%
361.667
2.533.469
2.895.136
3,01%
21,05%
24,06%
6.021.851
100,00%
11.817.368
100,00%
5.235.625
100,00%
12.032.927
100,00%
248.352
18.000
12.073
278.425
4,12%
0,30%
0,20%
4,62%
2.702.995
159.925
224.388
3.087.309
22,87%
1,35%
1,90%
26,13%
177.175
17.000
11.933
206.108
3,38%
0,32%
0,23%
3,94%
2.249.671
138.468
312.211
2.700.350
18,70%
1,15%
2,59%
22,44%
(77.890)
-1,29%
1.949.325
16,50%
511.459
9,77%
1.779.304
14,79%
4.273.459
70,97%
5.232.878
44,28%
3.512.987
67,10%
6.391.956
53,12%
703.486
844.371
1.547.857
11,68%
0,00%
14,02%
25,70%
703.486
(64.233)
908.603
1.547.856
5,95%
-0,54%
7,69%
13,10%
459.548
-
701.769
1.161.317
8,78%
0,00%
13,40%
22,18%
459.548
14.854
686.915
1.161.317
3,82%
0,12%
5,71%
9,65%
6.021.851
100,00%
11.817.368
100,00%
5.235.625
100,00%
12.032.927
100,00%
113
1 - REVENUE (EXPENSES)
Sales of goods, products, and services
Non-operating revenues (expenses)
Não operacionais
2 - INPUTS ACQUIRED FROM THIRD PARTIES
Materials, services and others
Sectorial charges
Energy purchased for resale
Fuel for electricity production
3 - GROSS ADDED VALUE
4 - DEDUCTIONS
Operating provisions
Depreciation, amortization and depletion
6 - ADDED VALUE RECEIVED THROUGH TRANSFERENCE
Ownership interests
Financial income
7 - TOTAL ADDED VALUE TO DISTRIBUTE
DISTRIBUTION OF ADDED VALUE
PERSONNEL
. Personnel, charges and management fees
. Profit sharing of employees
. Retirement and pension plans
TAXES
. Taxes and contributions
FINANCIAL CHARGES AND RENT
STOCKHOLDERS
. Dividends and interest on equity capital
. Interest of non-controlling stockholders
. Retained earnings
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
(A PUBLIC COMPANY) CNPJ (TIN) 00.001.180/0001-26
Annual Report 2007
NOTES TO ThE FINANCIAL STATEMENTS
FOR ThE YEARS ENDED DECEMBER 31, 2007 AND 2006
(INDIVIDUAL AND CONSOLIDATED)
NOTE 1 – OPERATIONS
Eletrobrás is a public company headquartered in Brasília – DF, at Setor Comercial Norte, Quadra
4, Bloco B, 100, sala 203 – Asa Norte, with stocks listed at the stocks exchanges of São Paulo,
Brazil, and Madrid, Spain. It has as business purpose to execute studies, projects, construction, and
operation of electricity generating plants, transmission lines and energy distribution, as well as the
execution of commercial transactions associated with those activities. It also has as purpose to
cooperate with the Ministry of Mining and Energy in the formulation of the Brazilian power sector
policies; and grant financing, and offer guarantees in Brazil and overseas; acquire debentures from
the companies that work in the electric power public service and that are under its stock control;
grant financing and give guarantees in Brazil or abroad in favor of technical-scientific research
entities; promote and support research in the electric power sector associated with the activities
of generation, transmission and distribution of electricity, as well as the performance of studies
about the use of hydrographical basins for multiple purposes; contribute in the formation of the
necessary technical personnel to the Brazilian electric sector, as well as the preparation of quali-
fied workers through specific courses, in addition to assistance to Brazilian schools or granting of
scholarships overseas and agreements with entities that cooperate in the formation of specialized
technical personnel; cooperate at technical and administrative levels with the companies where it
holds interests and with agencies of the Ministry of Mining and Energy.
The Company is responsible for the management of federal government funds, represented
by the Global Reversal Reserve Quota (RGR), the Electric Development Account (CDE), the Use
of Public Assets (UBP), and the Fuel Consumption Account (CCC). They finance the following
programs of the Federal Government: Universalization of the Access to Electricity (“Luz para
Todos”), National Program for Efficient Public Lighting (Reluz), Incentive Program for Alterna-
tive Sources of Electricity (Proinfa), National Program for Energy Conservation (Procel) and the
acquisition of fossil fuels used in the isolated systems of electricity generation.
The Company is the manager of Proinfa, a Federal program that aims to diversify the Bra-
zilian energetic matrix and seek regional solutions by renewable energy sources based on the
economic use of available input and applicable technology. Eletrobrás is entitled to purchase
the power produced though it until 2026.
Eletrobrás is the major stockholder of the companies Furnas Centrais Elétricas S.A. (Fur-
nas), Centrais Elétricas do Norte do Brasil S.A. (Eletronorte), Companhia Hidro Elétrica do São
Francisco (Chesf), Eletrosul Centrais Elétricas S.A., Eletrobrás Termonuclear S.A. (Eletronucle-
ar) and of Companhia de Geração Térmica de Energia Elétrica (CGTEE). The main function of
those controlled companies is the generation, transmission, and distribution of electricity.
Eletrobrás is also the controlling company of Light Participações S.A. (Lightpar) and, is a
jointly-owner of Itaipu Binacional, under the terms of the International Treaty signed by the
Governments of Brazil and Paraguay.
The Company is an indirect-owner of the companies Manaus Energia S.A. and Boa Vista
Energia S.A., which are wholly-owned subsidiaries of Eletronorte and that generate and distri-
bute electricity in the States of Amazonas and Roraima.
114
Annual Report 2007
The Company is also the agent responsible for the commercialization of the electric power
generated by Itaipu Binacional and through Proinfa.
NOTE 2 – PuBLIC SERvICE CONCESSIONS
Eletrobrás, through its controlled companies, holds various public service electricity con-
cessions, whose details, installed capacity, and maturities are listed below (See notes 20 and
Attachment IV):
I – Electricity Generation
IN OPERATION
UHE Furnas
UHE Estreito
UHE Marimbondo
UHE Itumbiara
UHE Serra da Mesa
UHE Luiz Gonzaga
UHE Xingó
UHE Sobradinho
UHE Tucuruí
UHE Complexo Paulo Afonso
UTE Santa Cruz
Other generation concessions
IN CONSTRuCTION
UHE Simplício
UHE Baguari
UHE Batalha
RIVER NAME
Grande
Grande
Grande
Paranaíba
Tocantins
São Francisco
São Francisco
São Francisco
Tocantins
São Francisco
-
-
Paraíba do Sul
Doce
São Marcos
CAPACITY IN
MW
MATURITY
1,216
1,050
1,440
2,082
1,275
1,479
3,162
1,050
8,370
3,879
766
2,552
306
140
53
28,820
07/2015
07/2015
03/2017
02/2020
05/2011
10/2015
10/2015
02/2022
07/2024
10/2015
07/2015
Até 2035
08/2041
08/2041
08/2041
The total installed capacity of the plants of Eletrobrás, including Itaipu Binacional and
Eletronuclear, is about 38,000 MW. The electricity generation considers the following
assumptions
a)
existence of periods, along the day and during the year, where there are higher or
lower demands of power in the system, for which the plant or generation system
was dimensioned;
115
Annual Report 2007
b)
existence of periods where machines are removed from operation for execution of
preventive or corrective maintenance, and
the water availability of the river where it is located.
c)
The production of electricity of the plants is a responsibility of the Energy Operation
Planning and Scheduling area (Planejamento e Programação da Operação Eletroener-
gética), with planning and details that range from annual levels to daily schedules. It
is currently prepared by the Electric Power National Operator (ONS), which defines the
amounts and origin of the necessary generation to meet the Brazilian demand in an
optimized manner, based on the water availability in the hydrographical basins and
machines in operation, as well as the cost of generation and feasibility of transmission
of that power through the interlinked system.
II – Electric Power Transmission
The transmission capacity of Eletrobrás is as follows:
LINES IN kM
SuBSTATIONS
MATuRITY
Furnas
Eletronorte
Chesf
Eletrosul
Other
19,278
9,840
18,468
9,145
655
57,386
46
55
83
36
-
220
07/2015
07/2015
06/2037
07/2015
07/2015
NOTE 3 – CORPORATE GOvERNANCE
In September 2006, the Company went through a restructuring process to comply with
the practices of Corporate Governance level I of Bovespa (São Paulo Stock Exchange). Conse-
quently, the Company that had shares listed in the Ibovespa index, is now also listed in the
Corporate Governance Index - IGC and Business Sustainability Index - ISE.
NOTE 4 - RELATIONShIP WITh INDEPENDENT AuDITORS
In compliance with the provisions of the Instruction 381 of the Brazilian Securities and
Exchange Commission of January 14, 2003, Eletrobrás informs that it uses the independent au-
diting services of the firm BDO Trevisan Auditores Independentes. The said firm was engaged for
a three-year period, counted upon August 1, 2005, for execution of audit services of individual
and consolidated financial statements of Eletrobrás, and the Company does not have any other
service agreements with the mentioned firm that not the financial statement audit services.
116
Annual Report 2007
The independent auditors rendering individual audit services to the controlled companies
of Eletrobrás are the following:
Controlled Companies
Independent Auditor
CGTEE
Chesf
Eletronorte
Eletronuclear
Eletrosul
Furnas
Itaipu
Lightpar
Manaus
Boa Vista
Deloitte Touche Tohmatsu
Boucinhas & Campos + SOTECONTI
BDO Trevisan
HLB Audilink e CIA
Horwath Tufani, Reis & Soares
HLB Audilink e CIA
BDO Trevisan
Russell Bedford Brasil
HLB Audilink e CIA
HLB Audilink e CIA
NOTE 5 - PRESENTATION OF ThE FINANCIAL STATEMENTS
The individual and consolidated financial statements of the Company are presented in accordan-
ce with the accounting practices adopted in Brazil, and in consonance with the provisions of the
Corporate Law, number 6,404/76, and regulations and complementary instructions of the Brazilian
Securities and Exchange Commission (CVM), together with specific regulations of the Brazilian Elec-
tric Power Agency - Aneel, and have been examined by independent auditors.
With the objective of supplying additional information, the following statements are also
presented:
a) Statement of Cash Flows, prepared in accordance with the Accounting Standard and
Procedure NPC 20 issued by Ibracon;
b) Statement of Added Value, in accordance with the Decision of Federal Accounting Coun-
cil CFC 1.010, of January 21, 2005, and
c) A statement of disclosures about segments of an enterprise, according to the Inter-
national Accounting Standard SFAS-131 issued by the Financial Accounting Standards
Board.
For a better understanding, we list in Attachment VIII the main acronyms used in these
notes to the financial statements.
117
Annual Report 2007
NOTE 6 - SuMMARY OF MAIN ACCOuNTING PRACTICES
The following accounting practices have been adopted in the preparation of the individual
and consolidated financial statements:
I - GENERAL
A) CASH AND CASH EQUIVALENTS
Stated at cost, they are represented by short-term financial investments, plus yield
obtained until the closing date of the financial statements and do not exceed market
value (See note 8);
B) CONSUMERS ARE RESELLERS
The balance of consumers and resellers (See Attachment I) is composed of recei-
vables from the electricity sold to final consumers and concessionaires, including
those stemming from the power traded at the Electricity Commercialization Cham-
ber - CCEE, besides billed and unbilled supply, recorded under the accrual basis.
They also include fines on late payment on the part of consumers, and concession
and permission holders;
C) LOANS AND FINANCING GRANTED
Granted loans and financing and the respective charges recognized until the ba-
lance sheet date are adjusted according to the monetary and exchange variation
indexes established in the contracts (See Attachment II);
D) ALLOWANCE FOR DOUBTFUL ACCOUNTS
Provisions are recognized at amounts considered sufficient by the Company’s mana-
gement to cover possible losses in the realization of receivables (See notes 9, 10,
13 and 15 and Attachments I and II);
E) FUEL CONSUMPTION ACCOUNT (CCC)
Under the terms of Law 8,631 of March 04, 1993, Eletrobrás manages the amounts
paid by holders of public electric power service concessions to be credited against
the Fuel Consumption Account (CCC), corresponding to the annual share of ex-
penditure with fuels for electricity generation. The amounts recorded in current
assets, with a corresponding entry to current liabilities, correspond to the funds
available kept in a blocked bank account and to the shares unsettled by concession
holders;
F) PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are demonstrated at cost, adjusted for inflation
until December 31, 1995, in accordance with the Brazilian accounting practices.
Depreciation is calculated under the straight-line method;
G) INVESTMENTS
Interests held in controlled companies and jointly-owned subsidiaries (See At-
118
Annual Report 2007
tachment III), as well as other investments in related parties with stockholding
corresponding to or exceeding 20% of the total capital of investees are valued
under the equity method, in compliance with the terms of the Brazilian Corporate
Law and Instruction CVM 247/96. The balancing entry of the adjustment stemming
from that valuation is computed in income (loss). Other investments are valuated
at acquisition cost (See note 19);
H) FINANCINGS AND LOANS OBTAINED
Obtained loans and financing and the corresponding charges recognized until the
balance sheet date are adjusted according to indexes established in the contracts
and are demonstrated in Attachment V;
I) GLOBAL REVERSION RESERVE QUOTA - RGR
Drafts made by Eletrobrás in the account of RGR (See note 49) for concession of
loans and financing to the concession holders are recorded as liabilities. Interest
of 5% per annum is applied on such drafts, starting from the enactment of Law
8,631 in March 04, 1993;
J) COMPULSORY LOAN
It is recorded at principal amount, plus monetary variation, based on the IPCA-E
index and interest of 6% per year (See note 28);
L) INCOME TAX AND SOCIAL CONTRIBUTION TAX ON NET INCOME
Corporate Income Tax - IRPJ is calculated under the annual taxable income, at the
rate of 15% and surtax of 10% on taxable income, as defined by the prevailing tax
law. Social Contribution Tax on Net Income - CSLL is calculated at the rate of 9%
on adjusted income under the terms of the applicable law.
In compliance with CVM Decision 273 of August 20, 1998, and CVM Instruction
371, of June 27, 2002, deferred tax assets and liabilities, calculated on temporary
differences, and tax losses carryforwards are recorded in current and noncurrent
assets and noncurrent liabilities (See notes 14 and 26);
M) BENEFITS GRANTED TO EMPLOYEES
Actuarial obligations related to pension, retirement, and medical assistance plans
are accrued for according to procedures established by CVM Decision 371/2000.
That is based on actuarial calculations prepared by independent actuaries in con-
formity with the projected credit unit method, net of the assured assets of the
plan, and costs referring to the increase at present value of the obligation, resul-
ting from the service provided by the employee, which are recognized along the
time of service of employees.
The projected credit unit method considers each time of service based on a benefit
119
Annual Report 2007
unit, measured in the computation of the final obligation. Assumptions are also
used, such as the estimated evolution of medical assistance costs, biometrics, and
economic statistics, as well as historical information of incurred expenses and
contributions of employees (See note 31);
N) OTHER RIGHTS AND OBLIGATIONS
Other assets are recorded at their actual cost values, adjusted when applicable
by provisions to reflect their actual realizable values. They also include earnings
and possible monetary and exchange variations incurred; liabilities are recorded at
their known and estimated worth, plus monetary or exchange variations incurred.
O) DETERMINATION OF RESULT OF OPERATIONS
Revenue and expenses are determined under the accrual basis.
II – SPECIFIC PRACTICES OF THE ELECTRIC SECTOR
A) PROPERTY, PLANT AND EQUIPMENT IN USE
Property, plant, and equipment are demonstrated at acquisition or construction
cost, adjusted for inflation until December 31, 1995, in accordance with the ac-
counting practices adopted in Brazil.
Depreciation is calculated under the straight-line method. Annual depreciation
rates are estimated in conformity with Instruction Aneel 44, as of March 17, 1999
(See note 20 and Attachments IV and IVa.);
B) PROPERTY, PLANT AND EQUIPMENT IN CONSTRUCTION
In accordance with the Accounting Manual for Electricity Utilities, interest and
other financial charges (monetary and exchange variation), related to loans obtai-
ned with third parties applied in constructions in progress, are recorded as part of
construction costs.
General management fees are recognized in property, plant, and equipment in construc-
tion. The recognition of direct costs with personnel and third party services is allowed
based on the criteria established by the Regulating Agency (See note 20 and Attach-
ments IV and IVa);
C) CONCESSION-LINKED OBLIGATIONS
Obligations are recorded with a corresponding entry to the contributions received
from the Federal Government and consumers, exclusively for investment in the
electricity distribution grid. Obligation are recorded as reducers of property, plant
and equipment, and at the end of concession, offset against the corresponding
assets, including those acquired with the contributions received from the Gover-
120
Annual Report 2007
nment and from consumers. Public service concession periods are established by
Aneel (See note 20 and Attachments IV and IVa);
D) STOREROOM
Storeroom materials, classified as current assets, are recorded at the average acqui-
sition cost. Those destined to the construction of property, plant, and equipment
are classified in noncurrent assets, at acquisition cost. Recognized amounts do not
exceed replacement costs or realizable values;
E) AMOUNTS STEMMING FROM THE GENERAL ELECTRIC SECTOR AGREEMENT
In accordance with the provisions of Aneel Decision 72 of February 7, 2002, the
amounts referring to the Extraordinary Tariff Adjustment (RTE) are presented in
the account “Consumers and resellers,” as defined in Decision 91 of the Electricity
Crisis Management Chamber - GCE, of December 21, 2001 and Law 10,438, of April
26, 2002 (See note 15);
F) OBLIGATIONS ASSUMED FOR THE RELEASE OF ASSETS
As established in the Accounting Manual for Electricity Utilities of Aneel, a provi-
sion is recognized along the useful economic lives of thermonuclear plants with
the purpose of recognizing the costs to be incurred with their technical-operatio-
nal deactivation to the respective accrual period, at the end of their useful lives.
The amounts recognized to the result of operations are based on annual quotas
established in American dollars at the ratio of 1/40th of estimated expenditures,
immediately recorded and translated according to the exchange rate of the end
of the accrual month. Liabilities referring to the decommissioning of plants are
adjusted according to the American dollar variation (See note 33);
G) STOCKS OF NUCLEAR FUEL
The uranium concentrate in stock, the corresponding services and the available
nuclear fuel elements inside the reactor and in the so-called pool destined to the
elements used, are recorded at acquisition cost.
The consumption of the nuclear fuel elements is recognized to income (loss) of the
year as they are used in the generation of power (See note 17), and
H) SCHEDULED STOPS
The costs incurred before and during scheduled stops are initially recorded in Cur-
rent assets. After operations are resumed at the plant, the costs are taken to the
result of operations in monthly quotas, until the beginning of the next scheduled
stop.
121
III - SPECIFIC ACCOUNTING PRACTICES OF ITAIPU BINACIONAL
In accounting for its operations, Itaipu Binacional follows accounting practices ge-
nerally accepted in Brazil and Paraguay, with due regard for specific provisions of the
International Treaty signed by the Brazilian and the Paraguayan governments on April
26, 1973, which regulates Itaipu Binacional. Below, the main provisions departing from
accounting practices applicable in Brazil:
a)
b)
c)
Depreciation of facilities is not recorded, as the revenue is calculated based on
charges on liabilities, not being included in the ”Cost of Electricity Service”, accor-
ding to Attachment C to the Brazil-Paraguay International Treaty;
Retained earnings are not part of the Stockholders’ Equity, being appropriated to
“Results to be Offset” and reclassified to property, plant and equipment, and
In determining the return on equity capital, the realized profits are not taken into
consideration, but shown as operating expenses under “Income.”
IV - CHANGES IN ACCOUNTING PRACTICES
On December 28, 2007, Law No. 11,638/07 was enacted, which amended certain pro-
visions of the Brazilian Corporate Law (No. 6,404/76), aiming to coordinate the ac-
counting practices adopted in Brazil with International Financial Reporting Standards
- IFRS.
The main changes brought by the mentioned Law, which came into effect starting on
January 1, 2008, are commented in note 51 and, thus, do not produce effects on these
financial statements.
Annual Report 2007
122
Annual Report 2007
NOTE 7 – CONSOLIDATION PROCEDuRES
I - The Consolidated Financial statements have been prepared in accordance with
the standards established by Instruction CVM 247 of March 27, 1996, and in-
clude the figures of Eletrobrás and the ones of the following controlled compa-
nies:
ELETROBRáS’S INTERESTS
2007 and 2006
Direct
Indirect
Furnas
Chesf
Eletrosul
Eletronorte
Eletronuclear
Itaipu Binacional (*)
CGTEE
Litghtpar
Manaus Energia (**)
Boa Vista Energia (**)
99.54%
99.45%
99.71%
98.66%
99.80%
50.00%
99.94%
81.61%
-
-
-
-
-
-
-
-
-
-
100%
100%
(*) – Under joint control with ANDE (Paraguay) - (**) – Indirect interest through Eletronorte
II - The Balance Sheets and the Statements of Operations for the years ended De-
cember 31, 2007 and 2006 of consolidated companies are summarized in Atta-
chment VII.
III - We presented below the main consolidation practices adopted:
a)
b)
c)
d)
elimination of the investors’ investments in the investees, with a corresponding
entry to its interests in the respective stockholders’ equities;
elimination of intercompany balances receivable and payable;
elimination of intercompany revenues and expenses, and
separate identification of the interests held by other stockholders in the equity and
in results of the consolidated investees.
In view of the non-existence of unrealized income in intercompany operations, the net
income and shareholders’ equity of the controlling company is the same as the one
consolidated.
123
IV - Consolidation procedures of the controlling company in relation to Itaipu Bina-
cional
a)
b)
c)
d)
The financial statements of Itaipu Binacional have been prepared in U.S. dollars
and translated into reais at the exchange rate published by the Central Bank of
Brazil on December 31, 2007 - US$ 1.00 : R$ 1.7713 (US$ 1.00 : R$ 2.1380 as of
December 31, 2006);
The income to offset of Itaipu Binacional was adjusted in the consolidated proper-
ty, plant and equipment;
The compensation on equity capital paid by Itaipu Binacional was recorded as
income of the controlling company and eliminated in the consolidation, and
All income generated by Itaipu Binacional in the account “Income to offset of
Itaipu Binacional.” was eliminated in the consolidation.
For analytical purposes, a summary of the consolidated balance sheet and statement
of operations excluding the effects of Itaipu Binacional’s proportional consolidation is
presented below. It is intended to show the influence of Itaipu Binacional’s financial
statements in the consolidated financial statements of Eletrobrás. Given its specifici-
ties, this information should by no means be construed as representing the consolida-
ted financial statements of Eletrobrás.
Annual Report 2007
124
Annual Report 2007
R$ thousand
CONSOLIDATED BALANCE SHEET
(for informative purposes only)
2007
EXCLuDING
ITAIPu
INCLuDING
ITAIPu
3,583,564
1,529,363
13,398,228
18,511,155
20,656,088
8,592,882
29,248,970
5,272,463
57,105,933
62,378,396
3,622,343
1,506,511
13,481,105
18,609,959
13,405,369
8,706,456
22,111,825
5,183,898
74,672,994
79,856,892
ASSETS
Current
Consumers and resellers
Loans and financing
Other
Noncurrent
Long-term assets
Loans and financing
Other
Investments
Property, plant and equipment, deferred
charges, and intangible assets
Total assets
110,138,521
120,578,676
Liabilities and stockholders’ equity
Current
Loans and financing
Trade accounts payable
Other
Noncurrent
Loans and financing
Other
753,886
2,853,120
6,842,368
10,449,374
3,761,572
15,578,725
19,340,297
1,429,199
2,291,929
7,281,579
11,002,707
12,981,322
16,245,797
29,227,119
Stockholders’ interest – ANDE
385,614
385,614
Stockholders’ equity
Total liabilities and stockholders’ equity
79,963,236
80,348,850
110,138,521
79,963,236
80,348,850
120,578,676
125
Annual Report 2007
Operating revenues
Electricity sale and transmission
Deductions
Other
Operating expenses
Energy purchased for resale
Depreciation and amortization
Itaipu’s income to be offset
Other
R$ thousand
STATEMENT OF OPERATIONS
(for informative purposes only)
2007
EXCLuDING
ITAIPu
INCLuDING
ITAIPu
23,542,027
(1,553,186)
401,780
22,390,621
23,706,601
(1,553,186)
401,779
22,555,194
(9,144,679)
(2,033,916)
-
(9,950,100)
(21,128,695)
(6,125,632)
(2,033,916)
(694,088)
(11,193,985)
(20,047,621)
Operating income before financial
Income
1,261,926
2,507,573
Financial income (expenses)
336,123
(926,669)
Income from participating interests held
734,957
753,292
Operating income
2,333,006
2,334,196
Non-operating income (loss)
Income before Corporate Income Tax (IRPJ)
and Social Contribution Tax (CSLL)
CSLL and IRPJ
Income before interests held
Profit sharing
Minority interest
Net income
Earnings per share
(35,689)
2,297,317
(36,879)
2,297,317
(585,301)
(585,301)
1,712,016
(159,926)
(4,233)
1,712,016
(159,926)
(4,233)
1,547,857
1,547,857
R$ 1,37
R$ 1,37
126
Annual Report 2007
NOTE 8 - CASh AND CASh EQuIvALENTS
Cash and cash equivalents are held at Banco do Brasil S.A., under the terms of specific
legislation (Decree Law no. 1,290 of December 3, 1973) applying to mixed-capital companies
under federal control, and amendments arising from the Brazilian Central Bank Resolution no.
2.917 of December 19, 2001, which determined new investment mechanisms for companies
integrating indirect Federal Administration.
Readily realizable short-term investments are part of off-the-market investment funds, the re-
turn on which is calculated based on the Average Selic Rate (Central Bank Overnight rate).
Total cash and cash equivalents as of December 31, 2007 is demonstrated below:
Cash in hand and in banks
Financial investments
R$ thousand
COMPANY
2007
32,374
5,553,145
5,585,519
2006
791
2,877,088
2,877,879
CONSOLIDADO
2007
238,828
7,856,079
8,094,907
2006
91,749
5,367,390
5,459,139
NOTE 9 - CONSuMERS AND RESELLERS OF ELECTRICITY
I - The receivables relating to consumers and resellers are detailed in Attachment I
to these notes and include the regulatory assets described in item I of note 15.
II - Sale of the electricity generated by Itaipu Binacional
Under Law 10,438 of April 26, 2002, Eletrobrás is responsible for the sale in Brazil of
the electricity produced by Itaipu Binacional.
In the year 2007, the equivalent to 82,753 GWh was distributed, with the tariff for
electricity supplied (purchase) by Itaipu at US$ 22.20/kW and the tariff for energy
transfer (sale) at US$ 23.75/kW.
The results of the Itaipu Binacional’s electricity sales, under the terms of Decree 4,550, of
December 27, 2002, observing the amendments introduced by Decree 6.265, of November
22, 2007, will be appropriated as follows (See item II, of note 15):
a)
b)
if positive, to the Residential and Rural consumers of the National Interconnected
Power System using up to 350 kWh, through apportionment ratably to the indivi-
dual consumption and credit of bonuses in the electricity bills.
if negative, it is included by Aneel in the calculation of the contracted power tariff
in the year subsequent to the result formation.
127
Annual Report 2007
In the year 2007, the activity was positive by R$ 96,009 thousand, and the respec-
tive obligations were included in the account “Rights to Reimbursement.”
III – PROINFA
Sales within the scope of Proinfa generated a positive net income in 2007 of R$250,414
thousand, not producing effects on Eletrobrás’s net income for the year. The net ba-
lance of the activity is presented in current liabilities and corresponds to R$444,225
thousand (R$ 193,810 thousand on December 31, 2006), and is included under the
caption “Refund Obligations.”
IV – Electricity Commercialization Chamber - CCEE
The amounts relating to operations performed in CCEE’s sphere of action are recorded
based on the information given by CCEE itself.
As a result of those operations in 2007, a net credit of R$ 106,830 thousand was ge-
nerated for Eletrobrás and its controlled companies.
Controlled company Furnas recorded R$ 293,560 thousand of credits relating to dis-
tribution of energy by the former MAE in the period between September 2000 and
September 2002. The respective financial settlements have been suspended due to
preliminary orders granted in the course of legal actions filed by electricity distribu-
tion concessionaires against Aneel and MAE, presently CCEE. Due to the uncertainty of
realization, the Company keeps an Allowance for Doubtful Accounts, corresponding to
the full amount of credit taken in the last quarter of 2007.
In accordance with the rules established by the Market Agreement, the resolution of those
disputes would imply a new recording, and the attendant settlement between the parties
would occur without CCEE’s intervention. To this end, negotiations were initiated with the
participation of Aneel, CCEE and the agents involved, in order to solve judicial disputes con-
nected with the accounting process and liquidation, and enable negotiation of a solution for
those actions. (See note 12 item c).
V – Allowance for doubtful accounts
The Company set up and maintains an allowance for doubtful accounts in accordance with
rules established by Aneel, based on an analysis of the overdue receivables and past ex-
perience with losses, at an amount deemed sufficient to cover possible losses on any such
accounts. The balance as of December 31, 2007 corresponded to R$ 1,241,317 thousand
(R$ 978,517 thousand on December 31, 2006), and had the following composition:
128
Annual Report 2007
RTE (Free Energy – loss of revenue and Portion A)
Consumers and resellers
Companhia de Eletricidade do Amapá (CEA)
Other
Short-term energy – CCEE
R$ thousand
CONSOLIDATED
2007
309,732
2006
351,988
413,302
224,723
638,025
293,560
1,241,317
298,285
328,244
626,529
-
978,517
The balance of allowance for doubtful accounts - RTE refers to the provisions set up to
cover possible losses in the realization of assets recognized referring to loss of reve-
nue, ‘Portion A’ and ‘Free Energy’ (See note 15).
For taxation purposes, the excess of provision recorded, taking into account the provi-
sions of Law 9,430/1996 is added to the Taxable Income for IRPJ - Corporate Income Tax
- calculation purposes, and to the CSLL – Social Contribution Tax, too.
NOTE 10 - LOANS AND FINANCING GRANTED
Loans and financing receivable refer to Eletrobrás’ own resources, sectorial resources, ex-
ternal funds from development international agencies, financial institutions, and the issuance
of bonds in the international financial market (See Attachment II).
All loans and financing are supported by contracts signed with sector companies. Most of
these amounts are expected to be amortized in monthly installments over an average 10-year
period, at an average of 8.99% p.a. interest rate, weighted by the debt balance.
Loans and financing granted under foreign-currency-restatement clauses represent nearly
46% of the total loan portfolio, whereas those based on indexes representing domestic price
levels account for 27% of the portfolio.
I - Annual Adjustment Factor applied to the Contracts with Itaipu Binacional
As disclosed in the explanatory note about subsequent events on the Financial Sta-
tements for the year ended December 31, 2006, as well as in the significant notice
published on January 19, 2007 by officials from the Ministries of Foreign Relations and
the economic and energy area of Brazil and Paraguay, the Brazilian government made a
commitment to take all necessary measures on an urgent basis, to suppress the annual
adjustment factor applied to the financing contracts entered into between Itaipu Bina-
cional and Eletrobrás, based on US Industrial Goods and Consumer Price rates.
129
Annual Report 2007
The elimination of the annual adjustment factor, in effect starting in the year 2007,
was made through mechanisms regulated by Law 6,265 of November 22, 2007, which
preserve the flow of funds to Eletrobrás under the terms of Law 11,480, of May 30,
2007, and which authorized the renegotiation of credits of Eletrobrás, and the ones of
the Federal Government with Itaipu Binacional.
Those measures affect the financing contracts granted to Itaipu, whose balance as of
December 31, 2007 totaled R$ 14,671,171 thousand. The amounts referring to the
annual adjustment factor already recognized were preserved and incorporated to the
debit balances of the contracts between Eletrobrás and Itaipu Binacional.
Therefore, starting in 2007, the so-called annual adjustment factor no longer is appli-
cable on financing receivable from Itaipu Binacional (See Item II of note 15).
II - Eletronorte’s Debt Restructuring
With the purpose of reestablishing economic and financial balance and obtaining
terms compatible with Eletronorte’s payment capacity, Eletrobrás’ Board of Directors,
according to explanatory note about subsequent events on the Financial Statements
for the year ended December 31, 2006, approved the settlement of that controlled
company’s debt by converting part of the Eletronorte’s loans and financing debts into
capital.
Accordingly, the restructuring of Eletronorte’s financing contracts, corresponding to
R$ 7,621,909 thousand, include the following terms:
a)
b)
c)
d)
Settlement in kind of R$ 601,510 thousand related to overdue contracts granted
using RGR funds and foreign currency onlendings;
Resumption, by the controlled company, of the flow of payments starting in 2007,
with a grace period of one year for principal installments for contracts granted
using RGR funds, and with no grace period for foreign currency onlendings;
Conversion of part of the outstanding balance of overdue and falling due fi-
nancing contracts, granted using Eletrobrás own resources, into an advance for
future increase in capital, at an amount of R$ 1,213,233 thousand, and
Refinancing of past due installments, corresponding to R$ 1,950,476 thousand,
with a grace period of one year to start repaying the principal. The other finan-
cial terms originally agreed remain the same, such as maturity and charges.
Loans and financing granted by Eletrobrás, including interest, commissions, and
rates, are detailed in Attachment II, and already consider that negotiation.
130
Annual Report 2007
III – Receivables of AES-Eletropaulo – Lawsuit
In 1989, Eletrobrás filed a collection action against Eletropaulo, aiming to receive
credits from financing not settled at the respective maturities, according to criteria
and conditions established in the contract clauses.
A decision was rendered in April 1999, whereby Eletropaulo was condemned to pay
the unsettled financed amount. Subsequently, a final and unappealable decision was
rendered, meaning that Eletropaulo did not file any appeal against the lower court
decision. Therefore, an action for the execution of the sentence establishing payment
was filed by Eletrobrás at the 5th Civil Court of Rio de Janeiro.
However, in January 1998, there was a partial spin-off of the assets of Eletropaulo,
giving rise to three different companies - Empresa Metropolitana de Águas e Energia
S.A. (Emae), Empresa Paulista de Transmissão de Energia S.A. (EPTE ) and Empresa
Brasileira de Energia S.A. (EBE). Eletropaulo - Eletricidade de São Paulo S.A., had its
name changed to Eletropaulo Metropolitana Eletricidade de São Paulo S.A.
Eletropaulo challenged the legitimacy of the Partial Spin-off Agreement, which was
dismissed and the continuation of the execution ordered. In December 2003, Eletro-
paulo filed an interlocutory appeal, requesting the suspension of effects against the
decision determining the execution. It was granted due to the understanding that
Eletropaulo would not be legitimate to bear the execution, but CTEEP – Companhia
de Transmissão de Energia Elétrica Paulista (the former EPTE), due to the effects of
the mentioned partial spin-off agreement.
Extraordinary and Special appeals were filed by Eletrobrás discussing the decision
about the appeal of Eletropaulo, being granted in the sense that the execution
should continue and that the defense of Eletropaulo should be challenged through
motion to stay collection filed by the debtor and not through a plea of lack of ju-
risdiction. Eletropaulo filed a motion for clarification of judgment, a special appeal
according to specific court regulations and finally a request for resolution of conflict
in decision. A final decision was rendered in November 2007, denying all the Appeals
of Eletropaulo. After exhausting all possibility of success before the Superior Court of
Justice - STJ, Eletropaulo presented an extraordinary appeal to the Supreme Federal
Court - STF, which is about to be examined by one of the panel of judges.
In view of that scenario, the management of Eletrobrás will go ahead with the exe-
cution and, supported by the opinion of its legal advisors, considers the realization
of the credit as practically certain.
131
As of December 31, 2007, such credits corresponded to a book value of R$ 372,748
thousand, considering the original clauses of the contract with Eletropaulo, which
adjusted according to the indexes practiced by the justice, reach the amount of
R$1,329,545 thousand.
The Company’s management, in a conservative posture, did not record the adjustment
portion based on criteria different from those agreed upon in the contracts, opting
to wait for the execution.
IV – Allowance for Doubtful Account
The Company conservatively maintains a provision for doubtful accounts referring to
the principal and debt service of several delinquent other companies in the amount
of R$ 80,630 thousand (R$ 51,629 thousand on December 31, 2006).
These allowances are deemed sufficient by the Company’s management to cover pos-
sible losses on any such accounts, based on analyses of the portfolio.
NOTE 11 - RETuRN ON INvESTMENTS
This refers to dividends and interest on equity capital, net from Withholding Income Tax,
arising from investments of permanent nature held by Eletrobrás and breakdowns as follows:
Annual Report 2007
132
Annual Report 2007
Furnas
Chesf
Itaipu Binacional
Eletrosul
Eletronuclear
Cemar
CTEEP
Other
R$ thousand
COMPANY
CONSOLIDATED
2007
164,121
238,680
10,628
46,842
27,893
57,990
33,295
55,908
2006
92,160
198,249
17,615
62,956
7,103
56,281
81,097
28,270
2007
2006
-
-
-
-
-
-
-
-
-
-
57,990
33,295
61,183
56,281
81,097
37,077
635,357
543,731
152,468
174,455
NOTE 12 – RESChEDuLED RECEIvABLES
CURRENT
CEB
Celg
AES-SUL
Cemat
Rollover of States’ debts
Other
NONCURRENT
Assignment of receivables of
Itaipu
Celg
CEB
Rollover of States’ debts
Other
R$ thousand
COMPANY
2007
2006
CONSOLIDATED
2007
2006
54,347
48,217
10,227
-
-
12
112,803
45,289
48,499
12,288
844
-
15
106,935
91,834
72,392
10,227
25,034
188,867
137,921
526,275
71,479
64,513
12,288
28,864
155,127
19,887
352,158
-
2,679,043
-
2,679,043
175,636
-
-
28,323
203,959
316,762
257,899
53,790
-
32,035
3,022,767
3,129,702
476,199
181,341
965,006
298,220
1,920,766
2,447,041
592,032
256,975
939,621
267,598
4,735,269
5,087,427
133
Annual Report 2007
The rescheduled receivables are formalized through agreements stipulating repayment of
accumulated debt in installments and interest rates and monetary restatement, as well as the
term for amortization of the principal and charges. The Company deems all these receivables
recoverable, the following being worth mentioning:
a) Receivables arising from Electricity passed on to CEB
Eletrobrás has receivables from CEB arising from sale by Furnas of electricity generated
by Itaipu Binacional, which have been subrogated since January 2003. In that year,
these receivables were rescheduled due to default on the part of Distrito Federal-based
CEB in the amount of R$ 163,892 thousand. Through the rescheduling, among other
things, the repayment of overdue debt by the end of 2008 (i.e., in 60 months’ time) is
stipulated, with SELIC-rate based restatement and collaterals, through direct transfer
to Eletrobrás by the financial institution working for CEB of 4% of the latter’s gross
monthly sales.
The amount receivable as of December 31, 2007 was R$ 54,347 thousand (R$ 99,079
thousand on December 31, 2006).
Furnas also rescheduled receivables from CEB, in the amount of R$ 191,129 thousand,
referring to its own energy, payable in 144 monthly installments beginning in August
2003, each installment corresponding to 3% of its gross sales, with the possibility of
automatic extension to the date of the final payment. The unpaid balance as of De-
cember 31, 2207 in the amount of R$ 218,828 thousand (R$ 210,373 on December 31,
2006) is subject to restatement based on the variation of IGP-M, plus interest of 1%
p.m. Part of these credit rights in the amount of R$ 162,000 thousand was assigned to
the FIDC – Credit Rights Investment Fund – Furnas II (See note 23).
b) Receivables arising from Electricity passed on to CEB
CEB II - Through a private Instrument for Acknowledgment of Debt executed on June
1, 2006 between Furnas and CEB Distribuição, it was greed a new period for payment
of the invoices falling due in the months of June to October 2006, whose payments
should be originally made on the 5th, 15th and 25th days of the respective months.
Those invoices were linked to the acquisition of electricity as determined by Contracts
CCEAR’s 279 and 662/2004. The debt will be settled according to the following con-
ditions:
1) Estimated amortization period of 24 months;
2) Adjustment of debit balance by the application of the average annual Selic rate on
a pro rat basis, plus interest of 1.8% p.a.;
3) Until the settlement of the total debt, the parties agreed that the amounts that
134
Annual Report 2007
Furnas may have to pay to CEB Distribuição could be used to offset the debt until
the debit balance limit;
4) The default in any other commitment undertaken with Furnas exceeding a period of
10 days during the term of the instrument, will imply in the immediate collection
of the overdue portions, regardless of previous communication.
5) Overdue amounts (monetarily restated according to the variation of the IPCA index
of the month preceding the default) should be added of the following:
1.a) fine of 2%, and
1.b) interest on late payment of 1% per month, on a pro rata basis.
c) Receivables from electricity passed on to Celg
In 2003, Eletrobrás rescheduled with Celg the receivables arising from Itaipu Binacional’s
pass-on of energy to Celg and subrogated by Furnas to Eletrobrás, in the amount of R$
392,021 thousand. The terms of the rescheduling establish the realization of those recei-
vables by direct transfer by the financial institution who collects Celg’s bills, of 3.34% of
the latter’s gross monthly sales. The period for the payment is 216 months from January
2004 on and with the debt balance subject to restatement based on the U.S. dollar va-
riation against the real.
The amount receivable as of December 31, 2007 corresponded to R$ 223,853 thousand
(R$ 306,398 thousand on December 31, 2006), from which R$ 175,636 thousand was
recorded under noncurrent assets (R$ 257,899 thousand on December 31, 2006).
In a similar way, in December 2003 the controlled company Furnas rescheduled R$
378,938 thousand, referring to own energy credits, payable in 216 months and subject to
monthly restatement based on the IGP-M variation and bearing interest at 1% p.m. The
monthly payment corresponds to 2.56% of Celg’s gross sales, with guarantee supported
by a blocked bank account. The debt balance as of December 31, 2007, was R$ 324,738
thousand (R$ 350,147 thousand on December 31, 2006). Part of these credit rights in
the amount of R$ 258,000 thousand was assigned to the FIDC – Credit Rights Investment
Fund – Furnas II (See note 23).
d) Receivables arising from sale in the CCEE’s sphere of action
In August 2005, the controlled company Furnas rescheduled Cemig’s debt, in the
amount of R$62,308 thousand, relating to free energy sold in the CCEE’s sphere of
action in the period from September 2000 through September 2002, corresponding to
the Emergency Power Saving Program period. The rescheduled receivable amounts to R$
72,083 thousand, and will be repaid in 50 monthly installments restated based on the
Selic rate plus interest at 1% p.a.
135
Annual Report 2007
e) Rollover of States’ debts
In accordance with the Public Sector Financial Recovery Program implemented by Law
No 8,727/93, Furnas entered into a receivables assignment agreement with the Federal
Government in order to refinance Celg’s power purchase debt existing at that time, which
have been paid in 240 monthly installments since April 1994. Receivables are restated
by the IGP-M at 11% p.a., and amounted to R$ 527,027 thousand as of December 31,
2007, (R$ 506,623 thousand on December 31, 2006), from which R$ 438,455 thousand
was recognized under noncurrent assets (R$ 432,617 thousand on December 31, 2006).
Part of these credit rights corresponding to R$ 228,000 thousand was assigned to the
FIDC – Credit Rights Investment Fund – Furnas II (See note 23).
Also, the controlled company Eletrosul had receivables amounting to R$626,846 thou-
sand as of December 31, 2007 (R$ 588,125 thousand on December 31, 2006), against
the Federal Government, which are restated by the IGP-M, bearing interest of 12.68%
p.a., arising from the assumption of the controlled company’s rights against the state-
controlled electricity concessionaires, which have been realized since April 1994, in 240
monthly installments.
In accordance with the legislation in force, should any receivable balance still remain
after the 20-year period has elapsed, the repayment may be extended for another 10
years.
Such hypothesis is foreseen, since the Federal Government only passes on the resources
actually received from the States, which are legally limited to the commitment of the
revenues.
f) Assignment of receivables – FEDERAL TREASURY
In 1998, Eletrobrás assigned to the Federal Government, part of its receivables from
Itaipu Binacional, in the equivalent to US$ 10,756,524 thousand, or 65.47% of the total
receivables from that jointly-controlled company, with the attendant settlement of debts
in the same amount.
As a consequence, a direct payment flow was set between Itaipu Binacional and the Fe-
deral Treasury, in a compatible manner with maturities of medium- and long-term debts
– “DMLP”, incurred by the Federal Government in that year. Given the need to adjust the
said payment flow, the installments paid by Itaipu Binacional to the Federal Government
do not actually keep the proportion to the receivables assigned. As a consequence, the
Federal Government must receive, up to 2007, monthly amounts greater than their share
in the receivables assigned. This condition will be reversed after 2008, when due to the
repayment of a substantial part of said “DMLP”, the Federal Government will be then en-
titled to smaller amounts than the 65.47%, in favor of Eletrobrás. Starting in 2016, the
proportion will reach an equal balance.
136
Annual Report 2007
Consequently, Eletrobrás records the difference between receivables appropriated under
the accrual basis and those actually received as noncurrent assets at the amount of R$
2,965,275 thousand on December 31, 2007 (or US$ 1,674,068 thousand).
As a result of the renegotiation of the receivables of Eletrobrás with Itaipu Binacional,
executed under the provisions of Law 11,480 of May 30, 2007, such rights were incorpo-
rated to the debit balances of financing contracts with Itaipu Binacional, respecting the
payment flow projected. Amounts paid until then, recorded in the account “Rescheduled
receivables” were transferred to the account Loans and Financing in Current and Noncur-
rent Assets.
The details about loans and financing granted by Eletrobrás, presented in Attachment II,
already contemplate the effects of the addition of those receivables.
NOTE 13 – MARkETABLE SECuRITIES
NONCURRENT
CFT-E1
NTN-P
Partnership results
Temporary investments
Founders’ shares
Other
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
194,405
126,395
313,145
202,228
652,575
3,152
164,707
117,533
298,206
175,308
652,575
3,332
194,405
129,737
313,145
202,228
652,575
3,152
164,707
119,979
298,206
175,308
652,575
3,361
1,491,900
1,411,661
1,495,242
1,414,136
a)
b)
CFT-E1 – These non-interest bearing government securities are subject to the Ge-
neral Market Price Index (IGP-M) variation and mature in August 2012. Eletrobrás
maintains a valuation allowance set up in previous years and adjusted based on
discounts applied in Capital Market corresponding to R$ 91,761 thousand as of
December 31, 2007 (R$ 100,949 thousand on December 31, 2006), and shown as
a reduction of the corresponding asset. It is the Company’s intention to redeem
the securities at maturity.
NTN-P – These securities, received in payment during the investees’ privatization
process, by the disposal of corporate investments according to the National Priva-
tization Program (PND). They are remunerated based on the TR – Reference Rate
137
Annual Report 2007
c)
d)
published by the Central Bank of Brazil, bearing interest at 6% p.a. on the restated
value as of the redemption date as from February 2012. It is the Company’s inten-
tion to redeem the securities at maturity.
Others - Refer to investment certificates of governmental grants destined for pro-
jects executed by the controlled companies Chesf and Eletronorte, called Finor/
Finam. The Company keeps a provision for losses, set up based on the market value,
corresponding to R$ 284,414 thousand (R$ 284,233 thousand on December 31,
2006) and shown as a reduction of the corresponding asset.
Partnership Results – These refer to the revenues receivable on investments, under
a partnership scheme (See note 19), with an average remuneration equivalent to
the IGP-M variation plus interest varying from 12% to 13% p.a. on the capital
contributed, as follows:
R$ thousand
COMPANY AND CONSOLIDATED
2007
60,839
48,181
50,459
122,131
31,535
313,145
2006
80,477
40,829
49,379
97,009
30,512
298,206
EATE
Tangará
Elejor
Itiquira
Other
e)
Temporary Investments - the Company owns ordinary shares of state energy con-
cessionaires previously owned by several Brazilian states, which were acquired as
a result of the PND.
Those shares, which are included in the PND, are evaluated based on the book value
of the above companies’ equity, in order to identify and measure possible losses on
realization, and considering that they have no actual market value.
The balance as of December 31, 2007, represented by advances for future capital
increase, is shown net of R$ 3,109,103 thousand (R$ 3,066,709 thousand on De-
cember 31, 2006) mostly corresponding to prior years’ accumulated provisions for
losses, as shown below:
138
Annual Report 2007
Ceal
Investment value
R$ thousand
COMPANY AND CONSOLIDATED
2007
604,169
2006
581,044
(-) Provision for losses
(482,494)
(499,615)
Cepisa
Investment value
121,675
857,680
81,429
837,629
(-) Provision for losses
(857,680)
(837,629)
Ceron
Investment value
(-) Provision for losses
Eletroacre
Investment value
(-) Provision for losses
Ceam
Investment value
-
986,818
(986,818)
-
165,514
(84,961)
80,553
697,150
-
985,024
(955,059)
29,965
161,403
(97,490)
63,913
676,916
(-) Provision for losses
(697,150)
(676,916)
-
-
TOTAL
Investment value
3,311,331
3,242,016
(-) Provision for losses
(3,109,103)
(3,066,709)
202,228
175,307
The companies Ceam, Cepisa, and Ceron present stockholders’ deficit in the amounts
of R$ 657,508 thousand, R$ 177,819 thousand, and R$ 40,450 thousand, respec-
tively. Eletrobrás has set up a provision to cover such deficit corresponding to R$
875,777 thousand (R$ 342,996 thousand on December 31, 2006), considering the
financial recovery commitments made under the PND.
f)
Founders’ Shares – These arise from restructuring of investment in Investco S.A.,
with annual earnings in the equivalent to 10% of said companies’ profits, payable
together with dividends and redeemable by October 2032 through conversion in
preferred shares of capital stock in the companies and values listed below:
139
Annual Report 2007
Paulista Lajeado
Rede Lajeado
EDP Lajeado
CEB Lajeado
R$ thousand
COMPANY AND CONSOLIDATED
2007
49,975
266,798
184,577
151,225
652,575
2006
49,975
266,798
184,577
151,225
652,575
NOTE 14 - TAX CREDITS AND DEFERRED TAX CREDITS
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
TAX CREDITS
CURRENT ASSETS
Withholding Income Tax (IRRF)
Prepaid IRPJ and CSLL
Tax loss carryforwards
Temporary IRPJ/CSLL differences
Pasep/Cofins (sales taxes)
to be offset
Recoverable ICMS
Other
1,386,390
383,218
-
-
585,969
615,852
-
-
1,442,669
396,286
19,423
407,585
765,807
695,676
-
-
3,607
11,600
45,672
257,652
-
-
1,773,215
-
-
1,213,421
63,544
67,893
2,443,072
9,121
114,081
1,842,337
Of the above tax credits, R$ 763,721 thousand corresponding to IRPJ payables and R$
280,669 thousand corresponding to CSLL (See note 26), will be offset upon filing of the
Company’s Income Tax Return (DIPJ/2008).
140
Annual Report 2007
TAX CREDITS
NONCURRENT
Recoverable ICMS
Deferred tax credits:
Tax loss carryforwards
Provision for interest
on equity capital
Temporary differences
Provision for contingencies
Allowance for doubtful
accounts
Provision for reduction
to market value
Other
R$ thousand
COMPANY
2007
2006
CONSOLIDATED
2007
2006
-
-
-
-
939,193
961,679
50,895
87,495
239,185
156,246
239,185
156,246
-
457,407
-
457,407
83,549
469,115
-
457,407
67,155
45,744
69,527
45,744
127,899
130,962
130,049
130,962
460,216
1,351,862
1,351,862
-
790,359
790,359
533,930
1,576,250
2,515,443
119,924
997,778
1,959,457
Deferred tax credits refer to temporary differences in IRPJ and CSLL tax bases, and will be
used as these differences are realized.
Considering the Company’s profitability record and the expected taxable income genera-
tion in next years, the recognition of those assets depends on the realization of the recorded
deferred tax credits, identified with analyses of future trends, and based on technical studies
about internal assumptions, economic, commercial, and tax future scenarios.
Given the nature of tax credits, their realization is expected for the next five to eight ye-
ars, when triggered by the taxable events.
Unconstitutionality of PIS/Pasep and Cofins - The Supreme Court declared unconstitutional
the section 1, art. 3 of Law 9,718/98, which expanded the PIS/Pasep and Cofins tax bases,
and renewed the billing concept so it now encompasses all revenues earned by legal entities,
regardless of the type of activity carried out and the accounting classification adopted. That
provision had no legal supporting basis, which is why it was subsequently amended.
141
Annual Report 2007
Based on the CTN, Brazilian Tributary Code, the Eletrobrás System’s companies filed an
appeal claiming for recognition of the right to, and actual reimbursement of the amount paid
in excess, because the expansion of PIS/Pasep and Cofins tax bases is unconstitutional. To the
date of completion of these financial statements, the claims had not been judged.
The Eletrobrás System’s companies hold potential PIS/Pasep and Cofins credits waiting
for a decision, and therefore, not recognized on these Financial Statements, given that the
decision on the unconstitutionality of the matter only benefits the companies whose appeals
have already been judged.
NOTE 15 - REGuLATORY ASSETS
I - General Agreement for the Electricity Sector
In 2001, the Brazilian electricity sector was subjected to an Emergency Electricity Con-
sumption Reduction Program, with the Federal Government forming the Electricity Cri-
sis Management Chamber to manage demand adjustment programs, coordinate actions
to increase energy supply, and implement emergency measures during the rationing
period which lasted from June 1, 2001 to February 28, 2002.
Under Law 10,438/2002, which put into practice the legal instruments for implementa-
tion of the General Electric Sector Agreement due to the Reduction Program, Aneel was
authorized to implement the RTE – Extraordinary Tariff Adjustment, with the objective
of standing up to the financial impact on the Brazilian Interconnected Electric System,
then under the effect of the said program.
In that scenario, electricity generating companies recognized credits related to ‘free
energy’, revenue loss and ‘Portion A’, realizable under the terms of the General Agree-
ment for the Electricity Sector, through Extraordinary Tariff Adjustment (RTE) and col-
lected from final consumers, with variable maturities defined by Aneel for the different
distributors.
In compliance with Circular Letter Aneel 2.409, of December 14, 2007, the Company
recognized losses stemming from ‘free energy’ not billed by distributors within the
period established in the regulations, corresponding to R$ 599,822 thousand. That is
recorded in the account “Losses in the recovery of assets” in the group of operating
expenses, which was fully accrued for until the fourth quarter of 2007.
The corresponding obligations of the same type were written-off, at an amount of R$
300,136 thousand, and recorded in the account “Gains on reduction in liabilities” in
the group of operating revenues, also fully accrued for. The net effect of the loss with
the ‘free energy’ was R$ 299,686 thousand.
142
Annual Report 2007
Existing provisions were reversed, not producing effects on result of operations in
2007.
The net residual amounts deriving from the General Electric Sector Agreement which
were recorded as regulatory assets can be seen under “Consumers and Resellers” (See
Attachment I) as follows:
RTE – Portion A, Free Energy and loss or revenue
Balance as of December 31, 2006
(-) Losses
(-) Realized amount
Realizable balance as of December 31, 2007
Allowance for Doubtful Accounts
Balance as of December 31, 2006
(+) Reversal
(-) Recognition
Balance as of December 31, 2007
R$ thousand
CONSOLIDATED
1,113,667
(299,686)
(287,279)
526,702
(351,988)
299,686
(257,430)
(309,732)
216,970
Under the terms of the mentioned Circular Letter Aneel 2.409/2007, the realizable ba-
lance corresponding to ‘free energy’, net of losses already recognized, is R$ 526,702
thousand (R$1,413,803 thousand on December 31, 2006) and will receive the same
treatment in case it is not realized within the established periods, whose maturities will
occur mostly until the year 2009.
In accordance with the terms of the same Circular Letter of Aneel, and supported by
studies the management prepared, the Company has set up an allowance for doubtful
accounts of R$257,430 thousand in the fourth quarter of 2007. Therefore, the total
allowance amounts to R$ 309,732 thousand (R$ 351,988 thousand on December 31,
2006), deemed sufficient to cover possible losses that may occur until the end of the
realization period.
The controlled company Furnas has assigned to the Credit Rights Investment Fund (FIDC)
– Furnas I an amount of R$ 126,000 thousand (See note 23) related to RTE.
143
Annual Report 2007
II – Receivables from the commercialization of electricity generated at Itaipu Bina-
cional
As of May 30, 2007, Law 11,480 was enacted, which authorized Eletrobrás to negotiate
the elimination of the adjustment factor from the financing contracts entered into with
Itaipu Binacional and the assignment of credits with the National Treasury starting in
2007.
Article 1 of the mentioned Law establishes that it is assured to Eletrobrás to keep the
full flow or amounts received associated with the elimination of the adjustment factor
from the financing contracts.
Besides, Decree 6.265 of November 22, 2007 was also passed, with the objective of
regulating the commercialization of electricity of Itaipu Binacional, defining the di-
fferent rate to be applied to the energy transfer tariff, creating a regulatory asset,
corresponding to an annual factor taken from financing to be annually included in the
tariff for transfer of energy starting in 2008.
Article 6 of the mentioned Law authorized Eletrobrás to include the difference refer-
ring to the elimination of the annual adjustment factor to the energy transfer tariff
of power from Itaipu Binacional, whose values should be annually defined through an
Interministry ordinance of the Finance Ministry and Ministry of Mining and Energy.
The energy transfer tariff in effect in 2008 includes an amount of R$ 65,196 thou-
sand, (or US$36,807 thousand), and was approved by Interministry ordinance MME/
MF 318/2007.
In relation to that, in 2007, the Company recognized a regulatory asset presented under
the caption “Rights to reimbursement” in Noncurrent assets, arising from the commer-
cialization of the electricity of Itaipu Binacional at an amount of R$ 590,025 thousand,
(US$ 333,103 thousand), established by Interministry ordinance MME/MF 318/2007 of
December 17, 2007. From that amount, R$ 302,279 thousand, (US$ 170,654 thousand),
will be transferred to the National Treasury until 2023. Such amounts will be realized by
means of inclusion to the energy transfer tariff, to be implemented until 2023.
Therefore, the loss of financial revenue of Eletrobrás caused by the elimination of the
adjustment factor from financing contracts executed with Itaipu Binacional was offset
by its addition to the energy transfer tariff, not generating losses to the Company.
The method for determination of the regulatory asset was defined by Interministry
ordinance MME/MF 313/2007 of December 11, 2007
144
Annual Report 2007
NOTE 16 - STuDIES AND PROJECTS
These mainly refer to costs incurred by the Company on feasibility studies focusing the use
of hydrographical basins and transmission lines, for construction of new hydroelectric plants
and transmission systems.
Among these, the study of Rio Uruguay basin’s use, conducted in accordance with the
Argentina-Brazil International Treaty for implementation of the Garabi Plant, is worth mentio-
ning. The costs incurred thereon until December 31, 2007, at the amount of R$ 30,921 thou-
sand (R$ 30,921 thousand - December 31, 2006), are deemed recoverable by the Company’s
management.
Studies and projects also comprise costs incurred from several other studies and projects
aiming the use of hydrographical resources, specially the ones for the rivers Madeira and
Xingu. According to Article 45 of Law no. 8,987/95, the transfer will be indemnified by the
Grantor Federal Government with resources obtained on the bid for concessions to exploit
these resources.
We show below the amount of studies and projects costs, including those referring to the
concessions to be bid for, net of the adjustment to reflect its probable realizable value:
PROJECTS
Inventory of Rio Uruguai basin
Inventory of Rio Madeira basin
Inventory of Baixo Araguaia – Tocantins basin
Inventory of Rio Xingu basin
Inventory of Rio Tapajós basin
Inventory of Trombetas – Erepecuru basin
Inventory of Médio Tocantins basin
UHE Barra do Peixe
UHE Belo Monte
UHE Cachoeira Porteira
UHE Serra Quebrada
UHE Ji-Paraná
Other studies
TOTAL - PARENT COMPANY
Foz do Rio Bezerra – feasibility study
Other studies
R$ thousand
2007
30,921
26,500
7,000
40,000
7,000
7,500
20,078
9,374
52,256
17,521
27,163
10,667
36,599
292,579
2006
30,921
26,500
7,000
40,000
7,000
7,500
20,078
9,374
52,256
17,521
27,163
10,667
36,350
292,330
14,086
5,457
14,086
1,595
TOTAL - CONSOLIDATED
312,122
308,011
145
Annual Report 2007
NOTE 17 – NuCLEAR FuEL INvENTORIES
The nuclear fuel used in Angra 1 and Angra 2 plants comprises elements produced with
metal alloys and uranium.
In this initial stage, the uranium concentrate, and the services required for its production
are classified as long-term assets, and recorded under Nuclear Fuel Inventories. After the
production process is finished, the portion to be consumed during the following 12 months is
classified as current assets.
The monthly amortization in operational expenses is done proportionally, taking into ac-
count the energy actually generated monthly, in comparison to the total energy calculated
for each fuel element. Periodically, inventories and assessments of the nuclear fuel elements,
which have been through the process of generation of electricity and are stored at the spent
fuel pool, are performed.
Nuclear fuel inventories, as of December 31, 2007, destined to the operation of UTNs An-
gra 1 and Angra 2 were as follows:
CURRENT
Stockroom
Nuclear fuel inventories
NONCURRENT
Nuclear fuel inventories
Uranium concentrate
Ready elements
Storeroom material
Services in progress - nuclear fuel
R$ thousand
CONSOLIDATED
2007
2006
42,990
243,325
286,315
47,018
217,684
264,702
71,301
77,442
194,633
101,808
242,615
226,992
148,639
657,188
943,503
187,927
594,169
858,871
146
NOTE 18 - ADvANCES FOR INCREASE IN PARENT COMPANY’S OWNERShIP
INTEREST
Eletrobrás records the amounts referring to advances for future capital increase of the
following invested companies under Noncurrent assets:
Controlled companies:
Furnas
Chesf
Eletrosul
Lightpar
Eletronorte
Eletronuclear
R$ thousand
COMPANY
2007
2006
CONSOLIDATED
2007
2006
31,154
294,397
94,576
62,285
1,337,552
264
1,820,228
31,154
294,397
114,599
62,285
117,030
236
619,701
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other investments
4,027
80,384
4,027
80,383
1,824,255
700,085
4,027
80,383
As a result of Eletronorte’s debt rescheduling (See note 10), part of its debt, corresponding
to R$ 1,213,233 thousand was converted into advance for future capital increase, already
considered in the above balance.
Annual Report 2007
147
Annual Report 2007
NOTE 19 - INvESTMENTS
Equity in earnings (loss)
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
a) Controlled companies (Attachment III)
39,344,716
38,672,726
-
-
b) Significant affiliated companies
CEEE-D (a) (b)
CEEE-GT (a) (b)
Emae (a) (b)
Cemat
CTEEP (a)
Cemar (a)
Celpa
Rede Lajeado
CEB Lajeado
EDP Lajeado (a)
Paulista Lajeado(a)
Acquisition cost
Cesp
Celesc
AES Tietê
Coelce
CDSA
Saelpa
Other investments
18,951
105,234
252,219
455,384
3,156
74,348
294,127
363,157
18,951
105,234
252,219
455,384
3,156
74,348
294,127
363,157
1,393,534
1,321,554
1,393,534
1,321,554
169,790
379,584
218,445
61,233
102,957
23,380
154,261
438,695
212,599
60,513
101,738
23,380
169,790
379,584
218,445
61,233
102,957
23,380
154,261
438,695
212,599
60,513
101,738
23,380
3,180,711
3,047,528
3,180,711
3,047,528
269,680
28,242
23,047
15,329
11,801
11,272
177,340
536,711
269,680
28,242
23,047
15,329
11,801
11,272
225,368
584,739
269,680
28,242
23,047
15,329
11,801
11,272
1,643,816
2,003,187
269,680
28,242
23,047
15,329
11,801
11,272
1,158,846
1,518,217
43,062,138
42,304,993
5,183,898
4,565,745
148
Annual Report 2007
a)
b)
Financial statements audited by other independent auditors.
Report of independent auditors related to the Financial Statements not available
until the closing date of these Financial Statements.
In evaluating investments in controlled and affiliated companies, the stockholders’ equity
amounts as of December 31, 2007. The position of November 2007 was considered for affilia-
ted companies CEEE-D and CEEE-GT.
In accordance with statements for the year ended December 31, 2006, the National Priva-
tization Council approved the corporate restructuring of Ceam and Manaus Energia through the
taking over of Ceam by Manaus Energia. Eletrobrás is in charge of carrying out the restructu-
ring not yet concluded until the closing of these financial statements.
Several lawsuits against Eletrobrás are under way, at different stages of completion (See
note 32), in guarantee of which the following assets were given, representing 5.30% of the
total amount of proceedings:
Ownership interest
CTEEP
Emae
Cesp
AES Tietê
Coelce
Duke
Cemat
CEB
Celpa
Celpe
Celesc
CEEE-D
CEEE-GT
Other investments
R$ thousand
Ownership
interest
1,393,534
252,219
269,680
23,047
15,329
3,344
455,384
3,528
379,584
4,689
28,242
18,951
105,234
2,952,765
40,109,373
43,062,138
Percentage of
blockade
82.61%
100.00%
95.82%
94.43%
100.00%
62.48%
97.30%
100.00%
5.31%
70.32%
15.24%
87.39%
87.39%
-
5.30%
R$ thousand
Blocked invest-
ment amount
1,151,198
252,219
258,407
21,763
15,329
2,089
443,089
3,528
20,156
3,297
4,304
16,561
91,964
2,283,904
-
2,283,904
Over the last few years Eletrobrás entered into partnerships in projects with private inves-
tors in which Eletrobrás acts as minority stockholder, owning preferred shares. These enterpri-
ses’ objective is to operate in the electricity generation and transmission areas. The invested
amounts are classified as Noncurrent assets - Investments.
149
Annual Report 2007
Likewise, considering the needs of investment of the Electric Sector and in accordance
with the Federal Government’s intention to obtain new resources under the conditions esta-
blished by Law 10,438/2002, the Eletrobrás’ controlled companies participate as minority sto-
ckholders in companies formed to exploit the electricity service concessions. These operations
are classified as Acquisition Cost – Others.
Guascor
Itiquira
EPTE
Eate
Tangara
Elejor
Enerpeixe
STN
Transleste
Transirapé
Artemis
SC Energia
Transudeste
Centroeste de Minas
Chapecoense
RS Energia
Uirapuru
Etau
Intesa
Amazônia - Eate
Energética Águas da
Pedra
Serra do Facão
Other
R$ thousand
COMPANY
2006
3,300
41,339
8,781
48,782
24,822
65,068
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CONSOLIDATED
2007
3,300
41,339
5,066
28,016
21,738
44,606
350,763
97,020
11,896
5,474
64,976
69,005
7,500
6,440
230,000
73,492
19,600
11,713
73,500
21,300
2006
3,300
41,339
8,781
48,782
24,822
65,068
350,763
97,020
11,896
5,474
64,976
51,352
7,500
6,440
-
18,060
19,600
13,198
63,700
21,300
2007
3,300
41,339
5,066
28,016
21,738
44,606
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,240
-
-
-
144,065
-
-
192,092
95,743
48,897
1,405,624
-
5,218
928,589
a) Enerpeixe - Refers to the 40% interest of Furnas in the capital stock of Enerpeixe S.A,
which has as purpose the construction and operation of UHE Peixe Angical, located by the
river Tocantins, whose generation capacity is 452 MW. It started operations in May 2006.
b) Empresa Sistema de Transmissão Nordeste S.A (STN) was formed by Chesf and Alusa
150
Annual Report 2007
- Cia. Técnica de Engenharia Elétrica for exploitation of a 546 km, 500 kV transmission line
concession in the region between Teresina (State of Piauí) Sobral and Fortaleza (State of Ce-
ará), with projected annual revenue of R$ 77,900 thousand. Alusa holds 51% and Chesf 49%
of the capital stock of STN. The enterprise was concluded in December 2005 and commercial
operations began in January 2006. Chesf has agreements in relation to this jointly enterprise
with STN for operation and maintenance of the transmission line, and earned in the year a
revenue from services corresponding to R$ 1,775 thousand.
c) Transleste - a company incorporated in 2003 with the objective of implanting and ex-
ploiting for a period of 30 years a transmission line connecting Montes Claros and Irapé (both
in the State of Minas Gerais), with a voltage of 345 kV, and 150 km of extension. The interest
of the controlled company Furnas in that company corresponds to 24% of capital stock.
d) Transirapé - A company incorporated in 2004, with the purpose of constructing, ope-
rating, and maintaining the facilities of the electricity transmission line between Irapé and
Araçuaí (both in the State of Minas Gerais), with a voltage of 230 kV and 65 km of extension.
The interest that Furnas holds in that company corresponds to 24.5% of capital.
e) Artemis Transmissora of Energia S.A. is a company whose objective is the exploitation of
525 kV transmission lines, connecting Salto Santiago and Ivaiporã and Ivaiporã and Cascavel
D’Oeste, where the controlled company Eletrosul holds 46.5% of the shares. Operations began
in October 2005.
f) SC Energia - Empresa Transmissora de Energia Elétrica de Santa Catarina S.A., is a com-
pany whose objective is the exploitation of a 375 Km, 525 kV transmission line, connecting
Campos Novos with Blumenau (both in the State of Santa Catarina). Eletrosul holds 49% par-
ticipating interests in its capital stock. Operations began in September 2006 (See note 51).
g) Transudeste - a company incorporated in 2004, with the purpose of implanting and
exploiting for a period of 30 years the transmission line connecting Itutinga with Juiz de Fora
(both in the State of Minas Gerais), with a voltage of 345 kV, and 140 km of extension. The
interest that Furnas holds in that company corresponds to 25% of capital.
h) Centroeste de Minas - company incorporated in 2004 with the objective of implanting
and exploiting for a period of 30 years the transmission line connecting Furnas and Pimenta
(both in the State of Minas Gerais), with a voltage of 345 kV, and 75 km of extension. The
interest that Furnas holds in that company corresponds to 49% of capital.
i) Chapecoense Geração S.A. - it has as objective to build and exploit UHE Foz do Chapecó,
located by river Uruguai. Furnas holds interest of 49.9% in the capital of the company that
will manage the plant, with capacity of 885 MW, which will be operated by the consortium
composed of CPFL, with 51%, Chapecoense, with 40%, and CEEE with 9% interest. Furnas
will be responsible for the performance of engineering activities. The work started in January
2007, and the beginning of operations of the first machine is projected to 2010.
j) RS Energia - Empresa de Transmissão de Energia do Rio Grande do Sul. Eletrosul has 49%
interest in the shares representing the capital of RS Energia, while the companies Schahin
151
Annual Report 2007
Engenharia Ltda. hold 41% and Engevix Engenharia S.A. 10%., respectively. The Company was
incorporated in 2005, for construction, operation and maintenance of the 525 kV transmission
line connecting Campos Novos (State of Santa Catarina) and Nova Santa Rita (State of Rio
Grande do Sul), with concession period of 30 years. The enterprise has a 273 km transmission
line, 570 towers, and an estimated investment of approximately R$183,000 thousand, whose
construction is projected to finished in 2008 (See note 51).
l) Uirapuru Transmissora de Energia S.A. - Eletrosul holds 49% of shares of Uirapuru, and
the company Cymi Holding S.A. holds the remaining 51%. Uirapuru was incorporated in 2004,
for the construction, operation and maintenance of the 525 kV transmission line connecting
Ivaiporã and Londrina (both in the State of Paraná), with a concession granted for 30 years.
The enterprise has a 120 km transmission line, 265 towers, and an approximate investment of
R$ 107,000 thousand. It was concluded in 2006.
m) Etau – Empresa Transmissora do Alto Uruguai S.A. - Eletrosul holds 27.4% of the shares
of the capital stock of Etau, and the companies Alcoa Alumínio S.A., Camargo Corrêa Cimentos
S.A., DME Energética Ltda., and Companhia Estadual de Energia Elétrica – CEEE hold 42%,
10.6%, 10% and 10% respectively. Etau was incorporated for the construction, operation
and maintenance of the 230 kV Transmission line connecting Campos Novos and Barra Grande
(both in the State of Santa Catarina), and Lagoa Vermelha and Santa Marta (both in the State
of Rio Grande do Sul), with a concession granted for 30 years. The enterprise comprises a 187
km transmission line, 411 towers, and investments of around R$ 116,000 thousand, which was
concluded in 2005.
n) Intesa - Integração Transmissora de Energia S.A. – Company incorporated for construc-
tion, implantation, operation, and maintenance of a 500 kV Transmission line connecting
Colina and Serra da Mesa 2, 3rd circuit, with a concession granted for 30 years. The capital
of Intesa is distributed as follow: Chesf holds 12%, Fundo de Investimentos em Participações
Brasil Energia – FIP, holds 48%, Eletronorte, holds 37% and Engevix Engenharia S.A. 3%. The
beginning of operations is projected to 2008.
o) Amazônia Eletronorte Transmissora de Energia S.A. – company incorporated for the
construction, operation and maintenance of 2 transmission lines with capacity of 230 KV,
connecting Coxipó and Cuiabá (both in the State of Mato Grosso), with an extension of 25 km
and from Cuiabá to Rondonópolis (also in the State of Mato Grosso) with an extension of 168
km. It started is operations in September 2005. Eletronorte holds 49% of the capital stock of
AETE.
p) Energética Águas da Pedra S.A. - Investments amounting to R$ 31,800 thousand, where
Chesf has 24.5% interest, together with Eletronorte that holds 24.5% and Neoenergia S.A.
51%. The mentioned company had as origin the Aripuanã Consortium, for contracting of
energy from new enterprises, with subsequent grant of a concession within the Regulated
152
Annual Report 2007
Contracting Environment, for implantation of UHE Dardanelos, with a projected investment of
R$ 760,800 thousand. The Plant will be implanted by river Aripuanã, located in the northern
region of the State of Mato Grosso, with an assured capacity of 261 MW, and total energy of
154.9 average MW. The first machines are scheduled to start operations in 2011, and 147 ave-
rage MW were sold for the period 2011 to 2041, within the 30 years-concession period.
q) Serra do Facão - Consórcio de Empresas Associadas Serra do Facão (Gefac), was incorpo-
rated with the objective of constructing and operating UHE Serra do Facão, with an installed
capacity of 210 MW, located by the river São Marcos, in the municipalities of Catalão and
Divinópolis, both in the state of Minas Gerais. The stockholding of Furnas in the mentioned
consortium is 49%. The work started in March 2007 and the beginning of operations of the
first machine is projected to May 2010.
r) UHE Santo Antonio - On December 10, 2007, Consórcio Mesa S.A., incorporated by
Furnas (39%), Odebrecht Investimentos (17.6%), Andrade Gutierrez Participações (12.4%),
Cemig (10%), Fundos de Investimentos e Participações da Amazônia (20%) and Construtora
Norberto Odebrecht (1%), was the winner in an auction held by Aneel of the concession to
build and operate the construction project of UHE Santo Antônio, by the river Madeira, in the
State of Rondônia.
s) Eletronet – The controlled companies Furnas, Chesf, Eletrosul, and Eletronorte started
operating the transmission of information signals, using part of their electricity transmission
infrastructure, with intermediation of the controlled company Lightpar, in a joint venture
with private companies, where it holds minority interest in the capital stock of Eletronet, a
company formed specifically for rendering feasible the business of providing transmission for
information signals and telecommunication services.
Since September 2002 Lightpar assumed the management of Eletronet, due to default on
part of capital contribution on the part of the majority stockholder AES Bandeirante Empreen-
dimentos Ltda. in contributing with the value of monetary restatement referring to the fourth
portion of capital stock.
The administrative council of Eletronet, during an extraordinary meeting held on March
18, 2003 and concluded on March 27, 2003, decided to declare it bankrupted, as all possible
other measures to reach a final solution had been exhausted. During the same meeting, an
extraordinary meeting of stockholders was called for discussion of the matter.
The declaration of bankruptcy was approved in the extraordinary meeting at Eletronet,
held on April 24, 2003, which authorized the managers to take all applicable legal measures.
On May 16, 2003, Eletronet, represented by its managing partners, requested the filing
of the its statement of bankruptcy with the Judiciary, together with a preliminary request to
continue in business. The 5th Business Bankruptcy Court declared the bankruptcy under the
requested manner. In that condition, Eletronet continued its operations under the manage-
153
Annual Report 2007
ment of the Judiciary, and still has appeals filed with the Superior Court of Justice pending
judgment.
As of June 2007, Lightpar along with Bankrupt Eletronet was notified by Chesf, Eletro-
norte, Eletrosul, and Furnas, called assignor companies, about the termination of the contract
granting right of access and use of cables and infrastructure signed with Lightpar in June 1999
and its respective amendments. The referred contract allows the transfer to Eletronet, as well
as the reimbursement of Lightpar of 50% of the cost incurred by the latter in the management
of the communication structure. We point out, however, that such termination does not can-
cel the rights of receiving the credits corresponding to the due reimbursements payable and
collectible until December 31, 2006.
Based on contract clauses, the assignor companies claim the following out of the court:
a) to regain possession of the assets comprising the implemented infrastructure for the
rendering of telecommunications services;
b) the right to claim the optical cables; and
c) determining the maintenance of the essential services to the national integrated elec-
tricity transmission system, as well as the continuance of the services rendered by
Eletronet employees.
On the same date, the assignor companies filed an injunction at the 5th Business Lower
Court of Rio de Janeiro about the issue mentioned above, which was granted, on January 14,
2008, and which still waits for the deposit in the checking account of Eletronet’s bankrupt
estate of the amount of R$ 380,000 thousand, determined according to the report drawn up
by an expert.
In view of that decision, the assignor companies and LT Bandeirantes Empreendimentos
Ltda (partner of Lightpar in Eletronet) and the bankrupt estate of Eletronet S.A. filed Inter-
locutory appeal against interim decision. Neither an interim relief nor a stay of proceedings
was granted in any of the cases.
NOTE 20 – PROPERTY, PLANT AND EQuIPMENT
The value of property, plant and equipment items, detailed in Attachment IV and IVa, is
rectified taking into account obligations arising from the Public Electricity Service concession,
which comprise amounts received from the Federal, State and the Municipal Governments
and the consumers, as well as donations not committed to return to the donor. Settlement
is due for the end of the respective concession. Property, plant and equipment breakdown as
follows:
154
Participating interests of the Federal Government
Amortization
Consumers’ contributions
Donations and grants for investment
Other
CONSOLIDATED
R$ thousand
2007
406,688
81,998
27,826
71,147
36,452
624,111
2006
400,569
102,267
30,496
23,096
102,620
659,048
a) Federal Government’s Interest – this refers to resources received for use in priority
electricity generation and transmission work.
b) Amortization and reversals – these pertain to the “Amortization Reserves” set up until
1971, under the Federal Decree no. 41.019/57, which were used for expanding the
Public Electricity Service until that year.
c) Consumers’ contributions – these refer to resources received to enable conducting the
necessary enterprises for meeting unforeseen electricity demand.
d) Donations and subventions for investments purposes – this refers to the accounting of
subventions and plain donations, that is, not conditioned in any return to the donator,
received by the concessionary. Both are destined to investments in the Public Electri-
city Service.
According to Decree 41.019, of February 26, 1957, assets and facilities used in generation,
transmission, distribution, and commercialization are linked to these activities, and accor-
dingly, cannot be removed, disposed of, assigned or hypothecated without the Regulating
Agency’s prior and express authorization.
Annual Report 2007
155
Annual Report 2007
NOTE 21 - INTANGIBLE ASSETS
DESCRIPTION
COMPANY
CONSOLIDATED
2007
2006
2007
2006
R$ thousand
GENERATION
In service
(-) Reintegration
in progress
TRANSMISSION
In service
(-) Reintegration
in progress
ADMINISTRATION
In service
(-) Reintegration
in progress
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55,558
61,114
(5,556)
-
57,410
61,114
(3,704)
-
54,856
17,871
(4,224)
41,209
283,110
241,758
(2,436)
43,788
125,639
163,113
(53,595)
16,121
30,561
5,519
(186)
25,228
265,728
225,758
(1,959)
41,929
98,126
84,293
(18,671)
32,504
Other
-
-
6,205
18,123
55,558
57,410
469,810
412,538
NOTE 22 - LOANS AND FINANCING OBTAINED
The breakdown of loans and financing obtained, including charges, whose funds are assigned
to the investment program of Eletrobrás System, is presented in Attachment V (See note 46).
I - Fund raising in foreign market
a)
Fund raising in progress – The Company’s Board of Directors, on a meeting held on
July 31, 2007, has decided to authorize the raising of funds in the international
market, amounting to up to US$ 600,000 thousand, to back the investments pro-
jected for 2008.
The fund raising program will be made by means of financial operations to be
performed in pursuance with market conditions and the lowest possible cost for
Eletrobrás.
156
Annual Report 2007
b)
It has the purpose of financing the investments in Eletrobrás System, mainly in the
areas of generation and transmission of electricity.
Funds already raised - Until the closing date of these Financial Statements, the
funds contracted in 2007 by Eletrobrás with the financial institutions China Deve-
lopment Bank and BNP Paribás, corresponding to US$ 430,000 thousand, had not
been used. Those funds are destined to the financing of UTE Candiota II, Phase C,
whose execution is under the responsibility of controlled company CGTEE, under
the following conditions:
•
it is executed under the Bilateral Agreement Brazil-China, under the Decision of
the Federal Senate number 34;
amortization in 16 years, in half-yearly installments;
4 years of grace period, and
annual interest based on the Libor rate
•
•
•
II - Funds raised in the domestic market
Other financing operations being contracted:
a)
b)
with BNDES, corresponding to R$ 1,034,410 thousand and R$ 183,330 thousand,
destined for the financing of projects in the controlled companies Furnas and Ele-
trosul, respectively, under the following (projected) conditions:
•
amortization in 16 years, in half-yearly installments;
•
2 years of grace period;
•
monthly interest based on the Long-Term Interest Rate (TJLP) + 1.91% p.a.
with Banco da Amazônia - BASA, at the amount of R$ 193,330 thousand, that is
destined for financing projects in the controlled company Furnas, under the follo-
wing (projected) conditions:
•
•
•
amortization in 16 years, in half-yearly installments;
2 years of grace period, and
monthly interest based on the Long-Term Interest Rate (TJLP) + 1.91% p.a.
157
Annual Report 2007
NOTE 23 - RECEIvABLES INvESTMENT FuND
The controlled company Furnas performed receivables assignment transactions in the year
2005 in order to raise funds for its investment program. The main assignment conditions are
as follows:
a) FIDC Furnas I
1.
2.
3.
4.
5.
6.
7.
Set up by its administrator, Banco Santander Brasil.
The assignment to Fundo Furnas I was formalized through a Private Instrument
of Receivables and Other Assets Assignment and Acquisition signed in September
2004.
The discount rate is 1.38% p.a.
The assignment flow is restated based on the annual Selic rate set by Central Bank
of Brazil (Bacen) for the period from the assignment date to the last business day
before the payment date.
The controlled company Furnas remained as the collection agent.
The assignment was performed under Furnas’ co-obligation to pay for the Receiva-
bles, as provided under the Brazilian Civil Code.
Assigned receivables:
RECEIvABLES ASSIGNED
RTE
Financing - Cemat
Energy - Proman
Total assigned
REALIZATION PERIOD
01/2007 a 01/2008
10/2004 a 03/2009
10/2004 a 12/2006
R$ thousand
AMOuNT ASSIGNED
126,000
164,000
52,000
342,000
b) FIDC Furnas II
1.
2.
3.
4.
5.
Jointly set up by Banco Santander Brasil and Bradesco, BB Banco de Investimento,
Itaú BBA and Votorantim, under administration of BEM Distribuidora de Títulos e
Valores Mobiliários Ltda.
The assignment to Fundo Furnas II was formalized through a Private Instrument of
Receivables and Other Assets Assignment and Acquisition signed in May 2005.
The discount rate is 1.80% p.a.
The assignment flow is restated based on the annual Selic rate set by Central Bank
of Brazil (Bacen) for the period from the assignment date to the last business day
before the payment date.
The controlled company Furnas remained as the collection agent.
158
Annual Report 2007
6.
7.
The assignment was performed under Furnas’ co-obligation to pay for the Receiva-
bles, as provided under the Brazilian Civil Code.
Assigned receivables:
RECEIvABLES ASSIGNED
REALIZATION PERIOD
Créditos – Lei 8.727/93
Refinanciamento energia CEB
Refinanciamento energia CELG
Contratos diversos (*)
Total cedido
06/2005 a 05/2010
06/2005 a 05/2010
06/2005 a 05/2010
06/2005 a 02/2008
R$ thousand
AMOuNT
ASSIGNED
228,000
162,000
258,000
255,050
903,050
(*) Refer to Eletronorte and Eletronuclear corresponding to the amounts of R$89,100 thousand and R$ 165,950 thousand respectively.
The consolidated statements, under CVM Instruction no. 408/2004 and taken into ac-
count the characteristics of the funds, consider the receivables as an integral part of
assets, recorded under the original captions, and the FIDC’s assets amount reflected as
long-term and short-term financing and loans (See Attachment V), whose total balance
as of December 31 was R$583,715 thousand (R$1.020.605 thousand on December 31,
2006 ). See Attachment V.
NOTE 24 – TRADE ACCOuNTS PAYABLE
Includes, mainly, the energy purchased from Itaipu Binacional (See note 9), which breaks
down as follows:
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
CURRENT
Goods, material and services
51,805
83,754
1,068,073
989,076
Electricity network use
-
-
91,771
86,105
Energy purchased for resale
1,188,771
1,062,641
1,014,607
850,457
Short-term energy – CCEE
28,789
13,526
117,478
51,265
1,269,365
1,159,921
2,291,929
1,976,903
159
Annual Report 2007
NOTE 25 – REGuLATORY FEES
CURRENT LIABILITIES
Global Reversion Reserve Quota - RGR
CCC/CDE
Financial compensation of water resources
Inspection feed - Aneel
Proinfa
NOTE 26 – TAXES AND SOCIAL CONTRIBuTIONS
R$ thousand
CONSOLIDATED
2007
2006
71,166
29,384
382,438
4,217
27,692
514,897
70,943
54,223
431,500
2,945
31,679
591,290
Income tax
Current liabilities
Noncurrent liabilities
Contribuição Social
Current liabilities
Noncurrent liabilities
Pasep and Cofins (taxes on sales)
Current liabilities
Noncurrent liabilities
ICMS (State VAT)
Current liabilities
Noncurrent liabilities
PAES (Tax Debt Refinancing Program)
Current liabilities
Noncurrent liabilities
Other
Current liabilities
Noncurrent liabilities
TOTAL
Current liabilities
Noncurrent liabilities
R$ thousand
COMPANY
2007
2006
CONSOLIDATED
2007
2006
763,721
-
627,745
497,827
1,014,943
381,949
742,411
679,539
280,669
-
258,316
150,017
318,900
138,756
282,496
216,688
28,234
-
27,357
-
136,368
-
102,933
15,958
-
-
-
-
-
-
-
-
38,167
40,982
26,900
64,590
109,761
1,016,133
113,220
1,163,523
19,936
1,092,560
1,092,560
-
5,065
-
1,566,327
918,483
647,844
205,699
47,710
3,449,368
1,823,838
1,625,530
180,695
10,450
3,599,403
1,448,655
2,150,748
160
Annual Report 2007
Obligations referring to Corporate Income Tax (IRPJ) and Social Contribution Tax on Net
Income (CSLL) regarding the year 2007, amounting to R$ 1,044,390 thousand, will be fully
offset with existing tax credits (See note 14).
a) Reconciliation of income and social contribution tax expense
The reconciliation of IRPJ and CSLL amounts recorded as expenses in the years 2007
and 2006 o those calculated at nominal rates can be thus shown:
COMPANY
2007
2006
IRPJ
CSLL
IRPJ
CSLL
Income (loss) before IRPJ and CSLL
1,401,020
1,401,020
1,470,606
1,470,606
Total IRPJ and CSLL calculated at the
rates of 25% and 9%, respectively
350,255
126,092
367,652
132,355
Effects of add-back (deductions):
Revenue from dividends
(200,971)
(72,349)
(49,162)
(17,698)
Equity in loss
(211,343)
(76,083)
(41,203)
(14,833)
Interest on equity capital
(175,872)
(63,314)
(114,887)
(41,359)
Losses with investments
Other add-backs (deductions)
143,794
(52,839)
51,766
16,027
133,164
47,939
(84,960)
(24,719)
Total IRPJ and CSLL expenses
(146,976)
(17,861)
210,603
81,685
b) Tax debt refinancing program - PAES
In July 2004, Furnas opted for the Special Tax debt refinancing program (PAES), refi-
nancing the amount of R$968,789 thousand referring to Pasep, Cofins, ITR, IRPJ and
CSLL.. The amount to be paid to Federal Revenue Service (SRF) represents 1.5% of
monthly sales, payable in up to 180 months and with the debit balance restated based
on the Long-term Interest Rate (TJLP).
161
Annual Report 2007
The debt payable under PAES as of December 31, 2007 is as follows:
Consolidated debt in 2003, included in PAES
Monetary restatement up to Dec 31, 2005
Payments made up to Dec 31, 2005
PAES balance as of December 31, 2005
Monetary restatement in 2006
Payments made in 2006
PAES balance as of December 31, 2006
Monetary restatement in 2007
Payments made in 2007
PAES balance as of December 31, 2007
R$ thousand
968,789
248,654
(207,585)
1,009,858
79,356
(88,438)
1,000,776
60,848
(197,625)
863,999
The present value of the debt, to be settled at a monthly rate of 1.5% of gross revenue,
limited to the remaining amount of installments, is R$ 756,975 thousand. The follo-
wing assumptions were used in the estimation:
1.
the revenue was projected based on the amount billed until December 2007, ad-
justed by the annual average inflation rate, calculated at 4.5%.
the present debt value was obtained by discounting the flow of payments adjus-
ted by the Long-Term Interest Rate (TJLP) of 6% p.a. and discounted at the rate
of 11% p.a. Those rates are compatible with the ones of the described economic
scenario.
2.
In the same way, in 2003 Eletronorte joined the PAES, in order to regularize debts
with the Federal Revenue and INSS. This debt balance, as of December 31, 2007 is as
follows:
Consolidated debt in 2003, included in PAES
Monetary restatement up to Dec 31, 2005
Payments made up to Dec 31, 2005
PAES balance as of December 31, 2005
Monetary restatement in 2006
Payments made in 2006
PAES balance as of December 31, 2006
Monetary restatement in 2007
Payments made in 2007
PAES balance as of December 31, 2007
R$ thousand
94,486
5,992
(8,859)
91,619
5,059
(62,251)
34,427
1,571
(4,191)
31,807
162
Annual Report 2007
Also in the same way, in August 2003, due to unfavorable decisions arising from the
lawsuit involving Pasep and Cofins on revenue from Itaipu’s energy sales, judged by
the 4th. Region Federal Regional Court, Eletrosul opted for paying this liability under
the PAES through an installment plan, whose balance, as of December 31, 2007 was R$
230,088 thousand (R$ 241,539 thousand on December 31, 2006).
The debt payable under PAES as of December 31, 2007 is as follows:
Consolidated debt in 2003, included in PAES
Monetary restatement up to Dec 31, 2005
Payments made up to Dec 31, 2005
PAES balance as of December 31, 2005
Monetary restatement in 2006
Payments made in 2006
PAES balance as of December 31, 2006
Monetary restatement in 2007
Payments made in 2007
PAES balance as of December 31, 2007
NOTE 27 – ADvANCES FROM CONSuMERS
R$ thousand
241,809
42,589
(36,637)
247,761
16,369
(22,591)
241,539
11,254
(22,705)
230,088
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
-
202,250
202,250
-
102,387
102,387
35,191
202,250
237,441
32,522
102,387
134,909
-
202,250
-
102,387
1,056,761
1,294,202
942,330
1,077,239
CURRENT
Albrás
Proinfa
NONCURRENT
Albrás
I - Albrás
In 2004, the controlled company Eletronorte was the outbidder in the electricity auc-
tion organized by Albrás for the sale of electricity to be supplied for a 20-year, equi-
valent to 750 MW on average per month until December 2006 and 800 MW on average
163
Annual Report 2007
per month from January 2007 to December 2024. Albrás set a parameter for agreeing
on a minimum price compatible with the UHE Tucuruí’s balanced tariff, plus a premium
calculated based on the aluminum price in London’s commodities exchange.
Under these conditions, Albrás made an energy purchase pre-offer, with a view to redu-
cing the base price. The prepayment for this offer is constituted by energy credits for
amortization over the supply period, in fixed monthly installments in medium MW, at
the tariff ruling on the month of sale.
The schedule for prepayment is as follows
Year
2004
2005
2006
2007
Total
Contracted disbursements
Disbursements made
R$ thousand
300,000
500,000
250,000
150,000
1,200,000
300,000
500,000
250,000
150,000
1,200,000
The corresponding liability presented the following position as of December 31, 2007:
Year
2004
2005
2006
2007
Total
Amounts received
300,000
500,000
250,000
150,000
1,200,000
R$ thousand
Payments made
(15,968)
(29,201)
(29,979)
(32,900)
(108,048)
Balance
284,032
470,799
220,021
117,100
1,091,952
II - Proinfa
Established by Law 10,438/2002 and its amendments, Proinfa’s purpose is the diversifi-
cation of the Brazilian energetic matrix and the search for regional solutions based on
renewable electricity sources, available input and the applicable technology, given the
increased participation in electricity production from those sources.
The program guarantees to Eletrobrás the purchase of the energy to be produced for a
period of 20 years from 2006. This energy will be transferred to distribution conces-
sionaires, free consumers and self-producers, excluding low-income consumers, in the
proportion of its use.
Distribution and transmission concessionaries pay Eletrobrás the annual value of the
costing quota corresponding to the participation of captive and free consumers and
164
Annual Report 2007
self-producers connected to its electricity facilities in twelfth parts, in the month prior
to the month when energy consumption is properly recognized.
In addition to the regular payments of the current year quotas to Proinfa generators,
distribution and transmission concessionaires advanced the payment of one twelfth of
the annual quota, considering the total contracting of all projects carried out under
Proinfa.
Accordingly, as of December 31, 2007, the Company had an amount of R$ 202,250
thousand (R$ 102,387 thousand on December 31, 2006), which will be demanded as
Proinfa develops and the corresponding electric power is supplied.
NOTE 28 – COMPuLSORY LOAN
The Compulsory Loan, instituted by Law 4,156/62 to fund the expansion of the Brazilian
electricity sector, was extinguished by Law 7,181 of December 20, 1983, which established
the end of the collection term for December 31, 1993.
In the first phase of that compulsory loan, ended with enactment of Law 1,512/76, that
levying reached several classes of energy consumers and taxpayers’ credits were represented
by Bearer Bonds that Eletrobrás issued.
In a second moment, after the enactment of the cited Law, the compulsory loan started being
paid only by industries with monthly consumption exceeding 2,000 kWh and taxpayers’ credits
no longer were represented by bearer bonds, which Eletrobrás simply started recognizing.
The remaining credits of the Compulsory Loan, after the third conversion into capital, in
April 2005, of the credits constituted from 1988 to 2004, are recorded as current and non-
current liabilities maturing as from 2008 and continue to be remunerated at 6% p.a. plus
monetary restatement based on the Extended Consumer Price Index (IPCA-E) variation. These
funds amounted to R$ 299,084 thousand as of December 31, 2007, (R$ 134,976 thousand
on December 31, 2006), of which R$ 202,375 thousand is recorded as noncurrent (R$ 23,870
thousand on December 31, 2006).
The Bearer Bonds issued in the first phase of the compulsory loan, as decided by the
Brazilian Securities and Exchange Commission (CVM), should not be confused with debentu-
res. Besides, as provided by article 4, paragraph 11 of Law 4,156/62 and article 1 of Decree
20.910/32, they are unenforceable, a condition confirmed by Notice 344 of the Superior Court
of Justice (STJ), which established that those bonds cannot be used as guarantee of execu-
tions for not having liquidity and not being debentures.
Therefore, the balance of the Compulsory Loan refers solely to the 1988 – 1994 period
residual credits held by industrial consumers with consumption above 2,000 kWh, that is, the
second phase of that compulsory loan, as well as to the unclaimed interest related to those
credits, as follows:
165
Annual Report 2007
Credits received
Interest payable
R$ thousand
COMPANY
2007
202,375
96,709
299,087
2006
23,870
111,106
134,976
NOTE 29 - STOCkhOLDERS’ COMPENSATION
Under the Company’s by-laws, stockholders are entitled to a minimum compulsory dividend
of 25% of net income, adjusted in accordance with the Brazilian corporate law, respecting the
minimum remuneration of 8% of capital stock for the preferred class “A” shares and 6% for
preferred class “B” shares.
The table below demonstrates the adjusted net income and the value of the mandatory mi-
nimum dividend, under the terms of Law 6,404/76, as well as, the total value of compensation
proposed to stockholders, to be approved in a general ordinary meeting:
Net income
Legal reserve
Adjusted net income
Mandatory minimum dividend - 25%
Compensation proposed to stockholders
Common shares
Class “A” preferred shares
Class “B” preferred shares
R$ thousand
COMPANY
2007
2006
1,547,857
1,161,318
(77,393)
(58,066)
1,470,464
1,103,252
367,616
275,813
363,416
119,479
297
339,773
703,486
297
339,773
459,549
166
Annual Report 2007
Proposed compensation per share in reais
Common shares - 1.87% of capital (2006 – 0.61%)
Class “A” preferred shares - 9.41% of capital (2006 – 9.41%)
Class “B” preferred shares - 7.06% of capital (2006 – 7.06%)
2007
2006(*)
0.40
2.02
1.51
0.13
2.02
1.51
(*) Considers a reverse split of shares
Therefore, Eletrobrás recorded an amount of R$ 703,486 thousand as compensation to
stockholders and interest on equity capital referring to the year 2007, which was added to the
minimum obligatory dividend in accordance with the statutory provisions.
Under prevailing tax legislation, withholding income tax is levied at the rate of 15% on
the remuneration proposed to stockholders as interest on equity capital.
Stockholders’ compensation for the year 2007 corresponds to 47.84% of adjusted net
income under the terms of Law 6,404/76 (2006 – 41.65%) and will be restated based on the
Selic rate, established by the Brazilian Central Bank, according to the terms of Decree 2.673 of
July 16, 1998 that regulates the payment on the part of federal state companies of dividends
or interest on equity capital.
The adjustment is applicable for the period starting on January 01, 2008 to the date where
it is started the payment of the compensation. Such date will be decided during a general
ordinary meet, where the financial statements will be analyzed and the proposed destination
for income of the year established. There will be the levying of Withholding Income Tax at the
rate of 20% on the portion referring to the monetary restatement according to SElic.
In compliance with CVM Decision 207/96, and to meet tax standards, Eletrobrás accoun-
ted for that interest against financial expenses, taking them to a specific account, opting to
not present them in the statement of operations to not produce an effect on the income of
the year, but only the effects recognized in the accounts of social contribution and income
taxes.
Under the decision of the 47th ordinary general meeting, held on April 30, 2007, the pay-
ment of the compensation to stockholders related to the year 2006, in the form of dividends,
started on June 15, 2007 for the stockholders registered as of May 2, 2007, paid as follows
(before the reverse split of shares):
Type /Class
Common shares
Class “A” preferred shares
Class “B” preferred
shares
In reais / per thousand shares
Gross value
as of Dec. 31, 2006
0.33824150
3.43314543
Adjusted gross value
as of Jun 15, 2007
0.27872570
4.26370961
2.57485907
3.19778221
167
Annual Report 2007
The balance of compensation to stockholders demonstrated in current liabilities contains
a portion of R$ 177,516 thousand (R$ 106,494 thousand on December 31, 2006) regarding
unclaimed compensation of the years 2004, 2005 and 2006.
According to the terms of the Company’s by-laws, the period for payment of the unclaimed
compensation referring to the year 2003 and preceding years is expired.
NOTE 30 - PAYABLES TO ThE BRAZILIAN FEDERAL TREASuRY
Acquisition of interests in CEEE-GT and
CEEE-D
Rights to Reimbursement (See note 15)
Other
R$ thousand
COMPANY AND CONSOLIDATED
CuRRENT
2007
2006
NONCuRRENT
2007
2006
50,439
41,660
386,888
405,855
-
7,711
58,150
-
9,463
51,123
302,279
37,822
726,989
-
53,953
459,808
NOTE 31 – COMPLEMENTARY PENSION FuNDS
I – PARENT COMPANY
Eletrobrás sponsors Eletros, a pension plan fund with its own equity segregated from
that of the sponsor. The objective of Eletros is to manage a pension plan for supple-
menting the retirement and pension benefits of the sponsor’s employees who enroll.
Eletros manages two benefit plans sponsored by Eletrobrás, detailed as follows:
1.
Defined benefit plan
It supplements the actual average salary of recent working years in relation to the
pension provided by the Brazilian social security system, and it finished the last
three years with a technical surplus. This plan is closed for new participants since
April 01, 2006. As of December 31, 2007, that such plan had 480 active partici-
pants, 1,186 retired ones, and 261 pensioners. Eletros calculates the mathematical
reserves of this plan using a capitalization actuarial system, which is reviewed
annually.
Eletrobrás makes monthly contributions jointly to participants, which are charged
as administrative expenses. These amounted to R$ 10,331 thousand as of Decem-
ber 31, 2007 (R$ 11,933 thousand on December 31, 2006).
168
Annual Report 2007
The contribution rates are as follows:
4,08% - up to half the maximum Social Security contribution;
8,16% - from half the maximum to the maximum Social Security contribution;
17,13% - from the maximum to three times as much the maximum social secu-
rity contribution, and
24,48% - more than three times the maximum Social Security contribution, for
participants subjected to previous regulations.
In accordance with the technical pronouncement issued by Ibracon – Brazilian
Institute of Independent Auditors and approved by CVM Resolution No. 371, of
December 13, 2000, which establishes the method to be adopted by the sponsors
in accounting for the benefits granted to employees, the management of Eletro-
brás performs, on an annual basis, an actuarial revaluation of the benefit plan it
sponsors and the required actuarial liability coverage, for which the Company is
responsible, identified in the report prepared by an independent actuary based on
the projected credit unit.
The actuarial valuation executed as of December 31, 2007 demonstrated that the fair
value of benefit plans exceeds the present value of actuarial obligations, as follows:
Fair value of the assets of the plans
(-) Present value of actuarial obligation
Obligations with guarantee of minimum income
Net assets
R$ thousand
COMPANY
2007
1,590,535
(1,493,373)
97,162
(33,565)
63,597
2006
1,402,208
(1,348,077)
54,131
(33,195)
20,936
Eletrobrás assures to pensioners of defined benefit plans of Eletros a minimum
income of 90% of the initial adjusted global income (INSS + Eletros).
Estimation of the expected cost for the defined benefit plan.
Cost of current services
Interest cost
Return on investments
Contributions expected from employees
Estimated cost for 2008
169
R$ thousand
COMPANY
5,647
122,600
(160,972)
(2,696)
(35,421)
Annual Report 2007
Actuarial calculations involve projections of future actuarial assumptions, such
as salaries, interest rates (nominal and effective), inflation, mortality, disability,
and others. Actuarial results obtained from those assumptions cannot be analyzed
without the previous knowledge of the scenario used in the evaluation.
The economic actuarial assumptions used were established considering the long-
term period projected for their maturity, and, thus, should be analyzed under that
perspective. As a consequence, in the short-term period, they may be not neces-
sarily realizable.
For purposes of the actuarial revaluation made pursuant to CVM Decision No.
371/00, the following assumptions were used:
a) ECONOMIC HYPOTHESES
Discount rate
Expected yield rate of assets
Salary increase rate
Vested benefits adjustment index
Benefit’s capacity factor
b) DEMOGRAPHIC HYPOTHESES
Turnover rate
Mortality table
Disability table
9.72% (inflation + 5.5% p.a. of real inter-
est)
10.76% p.a. (inflation + 6.5% p.a. of real
interest)
7% p.a. (inflation + 2.86% p.a. of real
increase)
4% p.a. (only inflation)
0.98
No turnover
AT-2000
LIGHT-WEAK
Mortality table of disabled people
AT-83
2 – Defined contribution pension plan
In 2006, participants of Eletros’ defined benefit plan started to be migrated to a new
defined contribution pension plan sponsored by Eletrobrás. Part of those participants
that have already migrated to the new plan opted to maintain their entitlement to a
defined benefit partially or totally. The process mentioned here will continue until June
28, 2008.
170
Annual Report 2007
As of December 31, 2007, the plan had 142 active participants and 11 retired ones.
The contribution rates for the defined contribution plan are as follows:
4,5% -
15% -
up to 10 Plan Adjustable Units – URP
for amounts higher than 10 Plan Adjustable Units - URP
II – CONSOLIDATED
Besides Eletros, which is sponsored by Eletrobrás, the controlled companies of Eletro-
brás sponsor their own pension funds organized in a similar way, with the objective of
supplementing their employees’ retirement and pension benefits through benefit and
contribution plans. Below, a list of these funds:
Sponsor
Furnas
Chesf
Eletrosul
Eletronorte, Manaus and Boa Vista
Eletronuclear
Itaipu
CGTEE
Pension fund
Real Grandeza
Fachesf
Elos
Previnorte
Nucleos and Real Grandeza
Fibra (Brazil) and CAJA (Paraguay)
Eletroceee
Contributions, which are charged to administrative expenses totaled R$ 222,646 thou-
sand as of December 31, 2007 (R$ 310,864 thousand on December 31, 2006 ).
In accordance with the plan’s regulations and Ibracon’s technical pronouncement ap-
proved by CVM Deliberation no. 371/2000, the companies perform an actuarial evalu-
ation of their obligations arising from supplementary benefits granted to employees,
the need for coverage of which is reflected in the financial statements corresponding
to R$ 982,135 thousand, thus divided: R$183,512 thousand under the current liability
portion (R$ 338,355 thousand on December 31, 2006) and R$ 798,623 thousand as the
noncurrent portion (R$1,992,061 thousand on December 31, 2006), under the caption
Supplementary pension plans.
In the year 2007, in accordance with the conditions established by decision CVM
371/2000, the results of the actuarial evaluations of the Complementary Pension Plans
of Eletrobrás presented a surplus of R$ 1,224,384 thousand, recorded as a reducer of
actuarial obligations, as follows:
171
Annual Report 2007
Balance as of Dec. 31, 2006
(-) actuarial adjustments – CVM 371/2000
(-) realization of debt contracts
Balance as of Dec. 31, 2007
R$ thousand
CONSOLIDATED
2,330,417
(1,224,384)
(123,898)
982,135
The surplus in the defined benefit plans reduces the risk of a possible future actuarial
liability for the Company.
172
Annual Report 2007
NOTE 32 - CONTINGENT LIABILITIES
At the closing date of the financial statements, the Company had the following provisions
for contingencies:
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
-
-
-
-
-
-
-
-
-
-
-
-
377,155
331,311
13,575
4,615
677,599
620,487
118,241
47,249
(157,461)
(110,363)
1,029,109
893,299
17,072
17,072
304,711
247,807
-
-
127,384
157,548
1,328,244
1,328,244
1,872,640
1,868,764
CURRENT
Labor
Tax
Civil
Other
(-) Escrow deposits
NONCURRENT
Labor
Tax
Civil
(-) Escrow deposits
(130,788)
(46,927)
(261,948)
(126,198)
1,214,528
1,298,389
2,042,787
2,147,921
1,214,528
1,298,389
3,071,896
3,041,220
There are several lawsuits, mainly labor and civil suits, at different trial stages against Ele-
trobrás and its controlled companies. According to resolution 489 from October 03, 2005, of
the Brazilian Securities Commission (CVM), the Company’s management adopts the procedure
of classifying the lawsuits against the Company according to the risk of loss, based on the
opinion of its legal counselors, as follows:
•
•
•
For lawsuits for which an unfavorable outcome is considered as probable, provisions are
set up;
For lawsuits for which an unfavorable outcome is considered as possible, the related
information is disclosed in Notes to the financial statements, and
For lawsuits for which an unfavorable outcome is considered as remote, only the in-
formation deemed relevant by management is disclosed in the Notes to the financial
statements.
Accordingly, provisions for the contingencies mentioned above have been set up. Accor-
ding to the Company’s management and its legal counselors, those provisions, net of escrow
173
Annual Report 2007
deposits, are deemed sufficient to cover for losses from lawsuits of different nature. In the
year, they developed as follows:
R$ thousand
COMPANY
CONSOLIDATED
1,298,389
-
-
-
-
(83,861)
-
1,214,528
3,041,220
335,829
(165,407)
(25,629)
19,886
(139,824)
5,821
3,071,896
Balance as of Dec. 31, 2006
Provisions set up
Reversal of provisions
Payments
Monetary restatement
Escrow deposits
Escrow deposits survey
Balance as of Dec. 31, 2007
I - Lawsuits against the Company
1.
Civil lawsuits
1.a) Parent Company:
a)
The Company’s provision for civil contingencies, in the amount of R$ 1,328,244
thousand (R$ 1,328,244 thousand on December 31, 2006), refers to Compul-
sory Loan-related lawsuits, taken on behalf of Eletrobrás starting in 1978, with
monetary restatement criteria different from those established in the specific
Law.
Those actions should not be confused with those filed claiming the redemption
of the currently unenforceable Bearer Bonds issued in association with the
compulsory loan.
The proceedings accrued for challenged the calculation system of monetary
restatement determined in the law that governs the compulsory loan, used
for adjustment of the credits taken starting in 1978. Those credits have been
fully paid by Eletrobrás through conversions into shares as defined in the 72nd,
82nd, and 142nd extraordinary meetings of Eletrobrás.
There are 3,181 lawsuits under way at different stages, aiming at recognition
of the right to receive full monetary restatement on the amounts paid as com-
pulsory loan. Supported by their legal counselors’ opinion, Eletrobrás mana-
gement estimated at eight to ten years, the average term for a final lawsuit
settlement.
Under this criterion, Eletrobrás management, based on its legal counselors’
174
Annual Report 2007
opinion, evaluates that the risk of loss on the Compulsory Loan-related law-
suits as possible.
However, due to the substantial amounts involved, management, on a conser-
vative basis and taking into account lower-court unfavorable decisions and the
lack of judgment by the Higher Court of Justice on the merits of the cause,
adopts the practice of setting up a provision for contingencies, which was made
in prior years, to cover possible losses on unfavorable legal decisions.
In this scenario, therefore, the Company’s management, due to the importance
of the issue, decided to carefully consider matters affecting the company’s
assets, in case something changes the course of the trials. Through this, the
Company fulfills its duty to best protect the users of the Financial Statements,
mainly regarding the assessment of its liabilities, and, consequently, of its
stockholders’ equity, trying to avoid extremely optimist analyses in making
decisions based on account information.
Thus, the accumulated amount provisioned, corresponding to R$ 1,328,244
thousand, despite the classification of possible risk, is considered sufficient by
the Company’s management and it is in conformity with the different stages
of the lawsuits and their natures. It is not possible, at the current stage and
circumstances, to get to a conclusion about the outcome of the proceedings,
that may reach an approximate amount of R$3,000,000 thousand.
Eletrobrás is the defendant in an action filed by Associação Brasileira dos Con-
sumidores de Água e Energia Elétrica – Assobraee, in judgment at the 17th
Federal Court in Brasília, where it is claimed the use of the market value of
Eletrobrás’ shares as the issuance price of the stocks used for payment of com-
pulsory loan credits, made through the book value. An amount of R$2,397,003
thousand was attributed to the action, which is classified as a remote loss
according to the legal advisors.
Eletrobrás is also a party to other lawsuits whose purpose is the redemption of
the Bearer Bonds issued by the Company regarding the compulsory loan collec-
ted between 1964 and 1976. Pursuant to the provisions of article 4, paragraph
11 of Law 4,156/62 and article 1 of Decree 20.910/32, the said obligations are
unenforceable.
The Company’s management, supported by its legal counselors, considers that
the possibility of an unfavorable outcome on these ongoing lawsuits for Ele-
trobrás is remote, considering that jurisprudence on the issue is unanimous
on the statute of limitations period for the right to claim redemption of the
obligations (See note 28).
b)
c)
175
Annual Report 2007
1.b) Controlled companies:
a)
b)
c)
d)
Indemnity actions filed against Chesf by the Consortium formed by CBPO/Cons-
tran/Mendes Júnior claiming for condemnation of the Company and payment of
an additional financial compensation, due to the delayed payment of invoices
under the Xingó Hydroelectric Power Plant construction contract. One of these
actions filed in June 1999, referred to invoices issued as from April 1990, and
the other, filed on May 2000, referred to invoices issued until then. The plain-
tiffs’ general claims under these actions were restricted to the existence of an
alleged right to financial compensation, the determination of the respective
amounts being postponed to the end of the action. Currently, with the actions
completed, the sentence is about to be given, and the risk involved is consi-
dered as possible.
Public civil actions against the controlled company Chesf involving R$100,000
thousand, claiming for financial compensation for alleged environmental da-
mage to fishermen resulting from the construction of the Xingó Hydroelectric
Power Plant. According to the opinion of Company’s legal counselors, the risk
of an unfavorable outcome is possible, but the loss amount is not known. No
provision has been set up for that suit.
The controlled company Chesf also faces actions involving remote risk of loss
in the legal counselors’ opinion. Worth mentioning is a collection action filed
by the company Mendes Júnior, engaged for the UHE Itaparica construction,
claiming for indemnification of alleged financial losses caused by the delayed
payment of invoices on the part of the Chesf. Said collection action is based on
the Declaratory Action found valid for the purposes of declaring the existence
of a Mendes Júnior’s credit against Chesf, thus ensuring financial refunding.
The controlled company Chesf has filed a civil lawsuit claiming for partial annulment
of an amendment to the Xingó Hydroelectric Power Plant construction contract (Fac-
tor K – Analytical price correction), signed with the Consortium formed by Companhia
Brasileira de Projetos e Obras - CBPO, Constran S.A. - Construções e Comércio and
Mendes Júnior Engenharia S.A., and reimbursement of approximately R$ 350,000
thousand. The lawsuit filed by the Company was considered groundless and the coun-
terclaim filed by the defendant was deemed groundful by the 12th Civil Court of the
Judicial District of Recife – State of Pernambuco. the special appeal and the bill of
review brought by the Company awaited decision, and the related expert work had
already been completed and the court records completed for the Judge’s examination.
Based on their legal counselors’ opinion, the Management recorded under “Noncur-
rent Liabilities” a provision of R$ 330,537 thousand for possible losses on that suit.
176
Annual Report 2007
Under this action, to be entitled to some sort of financial refunding, and in
compliance with the decisions of the Pernambuco Court of Justice and the
Superior Court, Mendes Júnior was required to prove that it raised funds spe-
cifically for financing the UHE Itaparica works, because Chesf delayed to pay
some invoices, and that the fund raising expenses were higher than the total
additional payments made by Chesf
As determined by the Pernambuco 12th Federal Court, an accounting expert
work is under way, with the expert appointed by the Court, stating in reply
to Chesf’s question that “based on an analysis of Mendes Junior’s accounting
records, it is impossible to confirm that in the periods of delayed invoice pay-
ment, it actually raised funds in the money market, specifically for funding the
Itaparica works”.
After delivering the expert appraisal report, the expert was questioned by the
parties, their questions having not been analyzed by the Pernambuco 12th
Federal Court. The court records have already been sent to the Federal Public
Prosecution Service, the members of which declared that they are preparing
their opinion on the action for subsequent presentation to the Court.
Given the annulment of all actions taken at the State Court of Justice, and the
strict instructions of the Federal Judge concerning the need for a new expert
work, requiring thorough identification of own or externally-raised funds for
actual investment in Itaparica works, it is impossible to estimate the amount
involved in this litigation, not even on a tentative basis. Also, it should be
taken into consideration that thus far, it has not been proved the existence
of credit in favor of the plaintiff. According to the opinion of the Company’s
legal advisors, such proceeding is rated as a remote possibility of loss for the
Company.
2.
Labor Lawsuits
2.a) Parent Company
There are no individually significant labor contingencies involving the Company,
and the mentioned actions have been rated by the Company’s legal counselors as
possible losses. Still, the Company maintains a provision of R$ 17,072 thousand,
totally set up in previous years, to cover possible losses on ongoing suits.
2.b) Controlled companies
a)
Several labor actions have been filed against Furnas, for which provisions have
been set up, the most relevant referring to the change in the base date of rise
in the compensation of Company’s engineers, involving R$ 71,500 thousand
177
Annual Report 2007
(R$64,686 thousand on December 31, 2006), of which R$ 5,674 thousand re-
fers to employees transferred to Eletronuclear, due to the 1997 split. Also, the
risk premium granted to the electricity sector’s employees subject to risk of
electricity damage is a matter of concern, since in the Superior Labor Court’s
opinion the increase should be calculated at a full rate, rather than on a pro-
portionate basis as Furnas had been doing. The coverage for possible losses on
these actions is estimated at R$ 58,156 thousand.
b)
The controlled company Furnas has accrued for an amount of R$ 38,921 thou-
sand for complementation to the retirement pensions for equivalence with the
earnings of active employees.
c)
d)
The jointly-owned company Itaipu Binacional has recorded long-term provi-
sions for several legal, civil and labor actions involving R$ 160,770 thousand
(R$ 188,755 thousand on December 31, 2006) and R$ 208,759 thousand (R$
176,569 thousand on December 31, 2006), respectively.
Several civil, tax and labor suits have been filed against the controlled company
Eletronorte. The company’s management evaluated the risks of contingency
arising from these suits and, based on its legal counselors opinion, set up
provisions totaling R$ 866,239 thousand, (R$ 793,819 thousand on December
31, 2006), thus divided: civil suits - R$ 667,006 thousand (R$ 604,718 thou-
sand on December 31, 2006), labor suits - R$194,889 thousand (R$ 167,123
thousand on December 31, 2006) and others - R$ 4,344 thousand (R$ 21,978
thousand on December 31, 2006), net of respective escrow deposits, all dee-
med sufficient to cover possible losses on lawsuits, which unfavorable outcome
risk is considered as probable.
II - Tax contingencies
1.
Parent Company
In 2003 the Federal Revenue Service issued a notice against Eletrobrás assessing
Cofins’ deficiencies in the amount of R$ 281,702 thousand, which restated through
December 31, 2007 totals the amount of R$ 514,219 thousand.
The notice is about the deduction from that tax basis of the revenues earned from
financing transactions for the acquisition of property, plant, and equipment per-
formed with Itaipu Binacional.
The Company’s management and legal counselors do not agree with this notice of defi-
ciency, supported by the International Treaty signed between the governments of Brazil
and Paraguay and subsequent related legislation, including Federal Revenue Service regu-
lations on transactions conducted with and by Itaipu Binacional, including tax issues.
178
Annual Report 2007
Eletrobrás challenged the notice of deficiency and did not obtain a favorable deci-
sion at the first administrative level, which confirmed the debt under discussion.
An appeal was filed, which awaits decision by the Board of Tax Appeals, where the
case is under review.
Based on the opinion of its legal counselors, the Company’s management expects
to obtain a favorable decision on the case, whose likelihood of unfavorable outco-
me is considered remote, and for this reason no provision for contingencies was
set up.
2.
Controlled companies
a) In May 2001, the controlled company Furnas received a notice issued by the
Federal Revenue Service assessing deficiencies in social security contribution Fin-
social, Cofins and Pasep (tax on sales), at the restated amount as of December 31,
2007 of R$ 1,098,900 thousand (R$ 1,068,958 thousand on December 31, 2006),
due to deductions from related tax bases, especially of the revenues from the pass-
on and transmission of Itaipu’s electricity for a ten-year period. These deficiencies
are in addition to others assessed in 1999 for an inspection period of five fiscal
years, in the amount of R$ 615,089 thousand, which were included in a tax debt
refinancing program (Refis) in March 2000 and transferred in July 2003 to the
Special Tax debt refinancing program (PAES), under amortization.
FURNAS’ management challenged the notice of deficiency claiming the tax pro-
cedure was incomplete and followed not in accordance with legal provisions, the
inspection was performed more than once and for a period outside the statute of
limitations period. In 2004, the Board of Tax Appeals granted the appeal filed by
Furnas for the assessment of Finsocial deficiency. In 2005, a decision favorable to
Furnas was rendered on the assessment of Pasep deficiency, due to the fact that
the inspection exceeded the statute of limitations period established in five years.
Regarding the assessment of Cofins deficiency, the appeal filed by Furnas has not
yet been judged to date.
The controlled company’s management, based on the opinion of its legal counse-
lors, understands that tax actions exceed legal limits, and there is the possibility
of a favorable outcome to Furnas. For this reason, no provisions for contingencies
were set up.
179
Annual Report 2007
NOTE 33 – OBLIGATIONS ASSuMED FOR ThE RELEASE OF ASSETS
The decommissioning of nuclear plants comprises a program of activities demanded by
National Nuclear Safety Authority (Brazilian Commission of Nuclear Energy - Cnen) that allows
to safely discontinue those nuclear facilities, with minimum impact to the environment. In
the case of Brazilian thermonuclear plants (Angra 1 and Angra 2), the option chosen was the
decommissioning program known as “SAFSTOR,” that comprises the plant dismantlement after
a period of confinement of 15 years (quarantine).
The calculation of the liabilities arising from the decommissioning program is based on
prevailing Brazilian and International laws and regulations, the technology currently available
to carry out such activities, and the costs specific to the place where the plants are located.
According to article 16 of Law 10,308/2001, Eletronuclear is legally responsible for the
initial deposits of waste arising from the activities of the decommissioning program of Angra
1 and Angra 2 and, accordingly, it bears the costs of such obligation. Under the provisions
of Law 10,308/2001, CNEN is responsible for and bears the costs of implementing the inter-
mediate and final deposits of waste. Therefore, such costs are not included in the calculation
of the liabilities resulting from Angra plants’ write-off, though the costs for the storage of
the waste are. Article 18 of the mentioned Law establishes that intermediate and final waste
storage services will have their respective costs reimbursed to Cnen by the depositing parties,
according to a table approved by the Deliberation Commission of Cnen to be in force starting
on the first business day following the publication in the federal official gazette.
With Angra 2 becoming operative, new studies on decommissioning costs were performed,
taking as a reference estimates made in specific studies applicable to a set of 17 US plants and
10 European, Canadian and Japanese plants which are at different decommissioning stages, as
well as criteria set by the US NRC – Nuclear Regulatory Commission. These criteria were used
in studies of plants similar to the Brazilian ones, including a specific study conducted at the
Krisko plant, which is considered as Angra’s 1 twin sister.
Angra’s 1 and Angra’s 2 deactivation cost is estimated in US$ 197,816 and US$240,000, and
the end of the plants’ useful life forecast for December 2014 and August 2030, respectively.
Recently, the Company’s management reviewed and adjusted the values, besides defining
parameters and regulations for setting up the necessary financial reserves to cover the decom-
missioning of the plants. Therefore, the adjusted costs are US$ 307,000 thousand and US$
426,000 thousand for Angra 1and Angra 2, respectively and the economic useful lives of the
plants were adjusted to 40 years.
As a result of that revaluation, total obligation changed from US$ 437,816 thousand to
US$733,000 thousand, in complementation of the already recognized obligation of R$123,252
thousand, or US$ 69,583 thousand.
The balance as of December 31, 2007 of the liabilities corresponding to the decommissio-
ning of Angra I and II is R$ 451,017 thousand (R$ 356,604 thousand - December 31, 2006),
as follows:
180
Annual Report 2007
Recorded liabilities
uS$
thousandl
312.678
138.339
451.017
uS$
thousandl
176,225
78,100
254,325
Angra 1
Angra 2
CONSOLIDATED
unrecorded liabilities
uS$
thousandl
130,775
347,900
478,675
uS$
thousandl
231.111
616.235
847.346
Total
uS$
thousandl
307,000
426,000
733,000
uS$
thousandl
543.789
754.574
1.298.363
The amounts presented in liabilities for decommissioning of nuclear plants were estimated
and will be reviewed during the useful lives of the facilities, considering advances in techno-
logy and in the way of recognizing the accumulated costs to be incurred with the technical-
operational deactivation.
Currently, there is no current specific legislation in Brazil dealing with the decommissio-
ning of thermonuclear plants and, accordingly, the conditions for the decommissioning, the
procedures to be implemented, amounts to be spent, and the measures to be taken in case
such amounts are insufficient or in excess, are not established.
Eletronuclear manages Low, Medium, and High radioactivity waste. Low Activity Waste
comprises disposable materials used in the operation and maintenance of the nuclear plants.
Medium Activity Waste is the water purification resin and filters of the process. The High Ac-
tivity Waste is the fuel used.
Accordingly, Eletronuclear has already built a Waste Management Center - CGR for the
storage of low and medium activity wastes, located at the Central Almirante Álvaro Alberto in
Angra dos Reis, in the State of Rio de Janeiro.
For high activity waste, Eletronuclear has already built and operates 2 (two) initial depo-
sits (spent fuel pool), inside the respective plants of Angra 1 and Angra 2. There is also the
project of another storage pool for spent fuel elements, located outside the plants, which will
increase the storage capacity of the Nuclear Center and allow it to store all the fuel used by
Angra 1 and Angra 2 reactors, throughout the useful life of those units.
Decommissioning costs include services referring to the removal, transportation, and final
disposal of low and medium activity waste generated during the decommissioning program.
They also include the removal and transportation of the fuel elements used to be stored where
established by Cnen. These costs, however, do not include the services of intermediate and
final storage of those fuel elements.
These two costs are not considered because there are no procedures, technical regulations,
and specific legislation for the long-term storage of used fuel elements. Besides, that used
fuel might be recycled in the future through reprocessing techniques, as currently made in
countries such as France and Japan. That might generate enough funds to pay for the costs of
the final storage of the resulting high activity waste.
Given the specific characteristics of operation and maintenance of nuclear plants, whene-
181
Annual Report 2007
ver changes happen in the estimated value of deactivation cost caused by new studies and
advances in technology, decommissioning values should be adjusted to the new reality.
NOTE 34 – STOCkhOLDERS’ EQuITY
I - Capital stock
The Company’s capital stock amounts to R$ 24,235,829 thousand and its shares have
no nominal value. Preferred shares are non-voting and non-convertible to common, but
take priority in capital reimbursement and dividend distribution at the rates of 8% p.a.
for class “A” shares (subscribed prior to June 23, 1969) and 6% for class “B” shares
(subscribed as from June 24, 1969), calculated ratably to the capital corresponding to
each class of share.
According to notice given on July 16, 2007 to Stockholders, the 147th Extraordinary
General Meeting of the Company, which took place on that date, approved the reverse
split of the totality of the shares comprising the Company’s capital stock according to
article of Law no. 6,404/76 at the rate of 500 shares per each share of the same type.
Capital stock was then represented by 1,129,498,502 book-entry shares with no par
value, and the Company’s capital stock remained the same, which, as of December 31,
2007, was distributed according to major shareholders and types of shares as follows:
NuMBER OF ShARES
ORDINáRIAS
PREFERRED ShARES
TOTAL CAPITAL
QuANTITY
%
Class A
Class B
%
QuANTITY
%
STOCkhOLD-
ERS
Brazilian
Federal
Government
488,656,241
53.99
BNDESPAR
133,757,950
14.78
F N D
45,621,589
5.04
FGP
40,000,000
4.42
-
-
-
-
35,191,002
15.69
523,847,243
46.38
-
-
-
-
-
-
133,757,950
11.84
45,621,589
4.04
40,000,000
3.54
Other
196,987,747
21.77
146,920
189,137,053
84.31
386,271,720
34.20
905,023,527 100.00
146,920
224,328,055 100.00
1,129,498,502 100.00
Of the total 386,271,719 shares held by minority stockholders, 247,205,522 shares or
64% are owned by non-resident investors, 140,058,203 of which are common shares,
182
Annual Report 2007
27 preferred class “A” shares, and 107,147,292 are preferred class “B” shares.
Of the shares owned by investors domiciled abroad, 82,507,374 common shares and
27,740,069 preferred class “B” shares are under custody, to support the ADR – Ameri-
can Depositary Receipts - level I Program.
Eletrobrás’ shares, through ADR level I, are negotiated at the rate of 1 ADR for each
500 hundred shares, and in Latin America’s Stock Market they are negotiated in Euros
(Latibex) at the same rate of 500 shares.
As of December 31, 2007, the book value per thousand shares was R$ 70.79 (R$68.91
on December 31, 2006, considering the reverse split of shares).
Starting August 20, 2007, the shares representing the Company’s capital stock have
been traded exclusively splitted and with nominal value per share in Brazilian reais.
II - Capital Reserves
Compensation for insufficient remuneration - CRC
Goodwill on issuance of shares
Special- Decree law 54,936/1964
Monetary restatement of opening balance – 1978
Monetary restatement of compulsory loan – 1987
Donations and subventions - Finor, Finam and others
R$ thousand
COMPANY AND CONSOLIDATED
2007
18,961,102
3,243,272
387,419
309,655
2,708,432
297,424
2006
18,961,102
3,243,272
387,419
309,655
2,708,432
297,424
25,907,304
25,907,304
The CRC capital reserve corresponds to Eletrobrás’ percent interest in any shortfalls in
the return on investments in its controlled companies (Compensation account - CRC),
accounted for upon the settlement of obligation of the Federal Treasury, in accordance
with the former guaranteed return system prevailing in the Electricity Sector up to
1993.
III - Revenue Reserves and Retained earnings
Under the Company’s by-laws, 50% of net income should be appropriated to the invest-
ment reserve and 1% to the reserve for studies and projects. Investments and Studies
and Projects are limited, respectively, to 75% and 2% of the capital stock:
183
Annual Report 2007
Legal (art.193 – Law 6,404/76)
Statutory (article 194 – Law 6,404/76):
Studies and projects
Investments
Other
Retained earnings (article 196 – Law 6,404/76)
Special (article 202 – Law 6,404/76):
Dividends not distributed
R$ thousand
COMPANY AND CONSOLIDATED
2007
1,731,038
2006
1,653,644
255,899
15,432,771
11,081
68,748
240,422
14,658,843
11,081
68,748
8,300,832
25,800,369
7,421,521
24,054,259
IV – Revaluation surplus
These comprise the reserves of the relevant affiliates Celpa and Cemat, evaluated on
the equity method, which revaluated its property, plant, and equipment items.
V - Advances for future capital increase
The advances of resources received from the controlling stockholder are classified under
“Stockholders’ Equity” in accordance with the Brazilian Federal Treasury Accounting
Coordination Department’s regulations (Execution Standard no. 20/1990). These ad-
vances were granted for the following purposes:
Acquisition of interest in the company CEEE
Acquisition of interest in the company CGTEE
Banabuí–Fortaleza transmission line
UHE Xingó
Transmission lines in the State of Bahia
Federal Electrification Fund - Law 5,073/66
R$ thousand
COMPANY AND
CONSOLIDATED
2007
1,742,265
1,673,938
57,670
162,034
25,365
150,353
3,811,625
2006
1,571,393
1,482,931
51,561
144,869
22,677
134,427
3,407,858
184
NOTE 35 – OPERATIONS WITh ELECTRICITY
Power sold to final consumers
Power sold to concessionaires
Transference of Energy from Itaipu
Transmission
Commercialization at CCEE – short-term energy
Late payment charges on energy sold
Other
R$ thousand
CONSOLIDATED
2007
7,091,009
8,384,910
3,781,161
3,380,463
1,066,798
2,260
-
23,706,601
2006
7,901,155
5,608,078
2,860,190
3,669,373
945,944
21,030
5,584
21,011,354
NOTE 36 – DEDuCTIONS TO ThE OPERATIONS WITh ELECTRICITY
RGR
CCC
CDE
Proinfa
P&D
ICMS (State VAT)
R$ thousand
CONSOLIDADO
2007
454,519
373,055
67,434
57,975
161,493
1,114,476
438,710
1,553,186
2006
418,870
394,462
62,489
37,242
379,466
1,292,529
465,555
1,758,084
Annual Report 2007
185
Annual Report 2007
NOTE 37 – OPERATING REvENuES - OWNERShIP INTEREST
R$ thousand
COMPANY
CONSOLIDATED
2007
2006
2007
2006
Investments in controlled companies
Equity in earnings (loss)
1,149,525
175,852
Interest on equity capital
Yield on Itaipu capital
Significant affiliated companies
-
423,184
-
-
-
-
39,325
42,623
1,188,850
641,662
39,325
39,325
42,623
42,623
Equity in earnings (loss)
411,725
111,119
411,725
111,119
411,725
111,119
411,725
111,119
Other investments
Interest on equity capital
126,878
17,095
126,878
15,260
Dividends
88,004
139,626
88,004
139,626
Return on investments in partnerships
67,832
79,062
87,360
53,039
282,714
235,780
302,242
207,925
1,883,289
988,561
753,292
361,667
In 2007, from the income of participating interests held, corresponding to an amount
of R$1,883,289 thousand, a portion of R$ 913,818 thousand (R$ 682,887 thousand on
December 31, 2006), was realized upon the receiving of dividends and interest on equi-
ty capital amounting to R$ 803,882 thousand and R$ 109,936 thousand, respectively
(R$196,649 thousand and R$ 486,238 thousand on December 31, 2006).
NOTE 38 – PERSONNEL, MATERIAL, AND SERvICES
Personnel
Materials
Services
R$ thousand
COMPANY
2007
260,425
2,284
55,661
318,370
2006
189,108
2,871
95,045
287,024
CONSOLIDATED
2007
2,927,383
197,874
1,230,010
4,355,267
2006
2,561,881
241,616
1,174,203
3,977,700
186
Annual Report 2007
NOTE 39 – ENERGY PuRChASED FOR RESALE
Supply of electricity
Energy from Itaipu
Commercialization at CCEE – short-term energy
Other
NOTE 40 – OPERATING PROvISIONS
R$ thousand
CONSOLIDATED
2007
1,672,567
3,320,526
1,108,673
23,866
6,125,632
2006
1,441,455
2,856,722
595,427
1,621
4,895,225
Contingencies
Allowance for doubtful accounts - con-
sumers and resellers
Allowance for doubtful accounts - RTE
Allowance for doubtful accounts - CCEE
Allowance for Doubtful Accounts -
loans and financing
ICMS credits
Provision for release of assets
Temporary investments
Stockholders’ deficit
Loss in realization
Other
R$ thousand
COMPANY
2007
-
2006
(3,127)
-
-
-
-
-
-
CONSOLIDATED
2007
160,446
2006
158,017
6,408
213,872
(42,256)
351,988
293,560
-
62,977
(365,874)
62,977
(359,999)
-
-
-
-
127,709
171,736
73,447
39,840
532,781
288,415
532,781
288,415
42,394
244,242
42,394
244,242
(51,669)
(48,722)
(75,079)
(51,480)
586,483
114,934
1,280,676
957,613
187
Annual Report 2007
NOTE 41 – FINANCIAL INCOME (EXPENSES)
Financial income (expenses)
Revenues from interest, commission
and fees
Debt charges
Charges on stockholders’ funds
Revenues from financial investments
Other revenues (expenses)
Outras receitas (despesas)
Monetary and exchange restatements
Monetary restatements, net
Exchange restatement, net
R$ thousand
COMPANY
CONSOLIDATED
12/31/2007 12/31/2006
12/31/2007 12/31/2006
4,188,934
3,937,621
2,090,688
1,709,150
(447,237)
(438,203)
(1,389,793)
(1,347,442)
(1,353,792)
537,453
142,913
3,068,272
(1,475,447)
340,012
140,522
2,504,505
(1,370,808)
867,825
1,347,696
1,545,608
(1,526,524)
692,473
131,847
(340,496)
529,245
(3,001,673)
(2,472,428)
595,844
330,606
(1,599,337)
(1,268,731)
1,235,774
92,184
(2,564,462)
(2,472,278)
(926,669)
(954,741)
(1,410,802)
(2,365,543)
(2,706,039)
NOTE 42 – PROFIT ShARING
Eletrobrás, and its controlled companies, adopt a profit sharing program applicable to all
employees that has as objective to promote quality and better productivity levels and global
results of the Company.
The program is based on collective bargaining agreements with employees and unions,
under the terms of the prevailing federal law, and is carried out through previous negotiation
of goals and commitments.
In 2007, Eletrobrás accrued for an amount of R$ 18,000 thousand (R$ 17,000 thousand
on December 31, 2006) and R$ 159,926 thousand in the consolidated (R$ 138,468 thousand
on December 31, 2006), referring to profit sharing of employees and management, observing
Resolution 10, of May 30, 1995, of the Council for the Coordination and Control of Government
Controlled companies - CCE.
The payment of profit sharing will be discussed during an ordinary general meeting of
stockholders, who will analyze the Financial Statements.
188
Annual Report 2007
NOTE 43 – BuSINESS SEGMENTS
The information about operations per business segment of Eletrobrás is presented in At-
tachment VI. It follows the management model, based on internal standards for evaluation of
segment performance and decision-making about investments.
The disclosure criteria are in accordance with what is provided by Aneel and recommenda-
tions of the Brazilian Securities and Exchange Commission (CVM) and are supported by pro-
nouncement SFAS 131 - Disclosures about Segments of an Enterprise and Related Information,
contemplating the following business areas:
GENERATION - construction and operation of hydroelectric, thermal and thermonuclear
plants and other sources with the purpose of producing electricity to be supplied mainly in
Brazil;
TRANSMISSION - construction and operation of transmission lines, aiming the transfer of
electricity between production centers and consumers.
COMMERCIALIZATION - intermediation in electricity purchase and sale operations.
DISTRIBuTION – construction and operation of electricity distribution systems in urban
centers destined for final consumers.
ADMINISTRATION - corporate bodies whose costs cannot be attributed to other areas, in
particular those linked to financial management, interest holding and central management.
The information per business segment was prepared under the assumption of acknow-
ledgment of items under actual control and management of areas totally identified with that
operational segment.
NOTE 44 – INSuRANCE
Main property, plant and equipment in use at Eletrobrás are insured in accordance with
a coverage policy, taking into account the nature and degree of risk, at amounts considered
sufficient to cover possible significant losses. Insurance composition is as follows:
R$ thousand
COMPANY AND CONSOLIDATED
RISk
Named perils
Aircraft perils
Various
Amount Insured
17,660,464
16,578
635,574
18,312,616
Premium
57,238
459
2,781
60,478
Named perils - coverage for losses and material damages stemming from fire, lightning,
explosion of any kind and electric damages in the facilities.
Aircraft perils - coverage for losses incurred, refund of expenses and civil liability associa-
ted with accidents with aircrafts.
189
Annual Report 2007
Various risks - coverage for portable equipment, local and international transportation,
and others.
NOTE 45 – AuCTION OF ELECTRICITY AND TRANSMISSION LINES
I – Existing Energy
Along 2007, the controlled company Eletronorte took part and was the outbidder in
various auctions for sale of electricity to final consumers and resellers within the
Free Contracting Environment (ACL). It negotiated very short-term contracts of 400.5
MW on average, in relation to an average availability of 610.08 MW, representing a
performance of 65.65%. Total accumulated revenues in the year reached R$ 267,750
thousand, which represents 12.54% of the annual target of R$ 237,000 thousand, not
considering the values accounted for and settled in relation to CCEE.
II – New energy
The Company, through the energy auctions held by Aneel for new enterprises, in com-
pliance with the rules established by Law 10,848 of March 15, 2004 and regulated by
Decree 5.163, of July 30, 2004, obtained authorization to build and operate the follo-
wing described power plants and sell within the Regulated Contraction Environment
(ACR) the respective energy that will be generated:
a)
b)
UHE Santo Antonio - On December 10, 2007, Consórcio Mesa S.A., composed of
the companies Furnas (39%), Odebrecht Investimentos (17.6%), Andrade Gutierrez
Participações (12.4%), Cemig (10%), Fundos de Investimentos e Participações da
Amazônia (20%) and Construtora Norberto Odebrecht (1%), was the outbidder
in an auction organized by Aneel regarding the concession to build and operate
the construction project of UHE Santo Antônio by the river Madeira in the State
of Rondônia, with projected investments of R$ 12,200,000 thousand. The work is
scheduled to start in December 2008, and the first and second generation units
scheduled to begin operations in December 2012 and the last unit in June 2016.
UHE São Domingos - a plant with installed capacity of 48MW, and sale of 36MW on
average, at the price of R$ 128.73 MWh, for supply of energy in the period between
January 2012 and December 2041.
III – Transmission lines
a)
b)
Consórcio Jauru, led by Eletronorte, was the outbidder in the auction 004/2007
held by Aneel, Lot “C”, aiming the granting of an electricity transmission public
service concession, with allowed annual revenue of R$ 14,946 thousand.
Still in the auction of Aneel 004/2007, Eletronorte was the individual outbidder of
Lot “G” for construction and operation of the following enterprises:
190
Annual Report 2007
b.1) A transmission line between São Luis II and São Luis III, with 230 kV of vol-
tage, and 36 Km of extension;
b.2) Substation São Luis III, 230/69 kV, and allowed annual revenue of R$ 2,122
thousand.
c)
Transmission line Presidente Médici/Santa Cruz (State of Rio Grande do Sul), 230
kV of voltage, and 233 Km of extension. That transmission line will receive R$
52,700 thousand in investments and should be concluded in 2009.
NOTE 46 – FINANCIAL INSTRuMENTS AND RISk MANAGEMENT
I – Management of funds
Most of the financial investments of Eletrobrás are long-term loans and financing, in
addition to the interests held in public service concessionaires, detailed in notes 10
and 19 and in attachments II and III.
II - Financial Instruments
Loans and financing granted are linked with financing in the domestic electric sector,
where the most important operations are those with Itaipu Binacional and with the
controlled companies Eletronorte and Chesf, restated according to an average rate of
8.99% p.a. (8.83 % p.a. on December 31, 2006).
Financing is restricted to electricity public concessionaires and, therefore, defines the
market rate (or cost of opportunity of the Company’s capital), taking into account the
risk premium compatible with the activities of the sector. In case it is not possible to
find other alternatives that not the own electric sector, the fair value of those loans
corresponds to their book value.
Loans and financing obtained with financial institutions are recorded in long-term ac-
counts, in particular those obtained overseas and Federal Government Funds, such as
the Global Reversion Reserve Quota (RGR)
The funds raised are composed of contracted financing with international multilateral
agencies - BID, BIRD, CAF - and it is not practicable to discount them at a rate diffe-
rent from the one established in the Brazilian debt agreement. Other loans are obtained
at international rates, which makes book value approximate fair value.
The Compulsory Loan, abolished by Law 7,181 of December 20, 1993, had December
31, 1993 as limit period for payment. Now Eletrobrás manages the residual value of the
compulsory loan collected, adjusting it according to the IPCA-E index and adding to it
interest of 6% p.a., with a defined redemption period. Given the restrictions of those
investments, the book balances are presented at fair value.
191
Annual Report 2007
Eletrobrás ended the year with 12 contracts recorded in liabilities, among which loans,
financing and bonuses, that total R$ 1,716,302 thousand (R$ 2,177,429 thousand on
December 31, 2006), as demonstrated below:
Currency
US dollar
Yen
Euro
Total
Corresponding value in
uS$ thousand
%
620,127
207,069
141,755
968,951
64.00
21.37
14.63
100.00
Corre-
sponding
value in R$
thousand
1,098,431
366,781
251,090
1,716,302
At the end of the year, the Company had executed 846 contracts in relations to loans and
financing granted, corresponding to R$ 36,522,430 thousand (R$ 37,319,541 thousand on
December 31, 2006), as follows:
Currency
US dollar
IGP-M
Real
Yen
Euro
Total
III - Risks
Corresponding value in
uS$ thousand
%
8,894,873
5,480,114
5,590,876
225,010
428,125
20,618,998
43.14
26.58
27.12
1.09
2.08
100.00
Corre-
sponding
value in R$
thousand
15,755,489
9,706,925
9,903,118
398,561
758,337
36,522,430
a)
Regulatory Risk
The Company, through its controlled companies, holds concessions for exploitation
of electricity generation and transmission services, whose maturities under the
terms of the current law are demonstrated in note 2. In case those concessions are
not renewed or are renewed at higher costs for the Company, the current levels of
profitability and activity might be changed.
b)
Exchange Risk
A significant part of the Company’s assets and of result of operations is affected by
192
Annual Report 2007
the exchange variation risk, in special the changes in the American dollar rate. As
of December 31, 2007, the Company had credits stemming from financing granted
in foreign currency at the amount of R$ 16,912,387 thousand, (US$ 9,548,007
thousand).
By comparing the receivable in foreign currency with the debt of the Company, we
observe a coverage of approximately 9.8 times.
At the date of closing of these statements, Eletrobrás had not contracted any
financial operations with the purpose of protecting the Company against the risk
of exchange rate flotation. Nevertheless, the balance of receivables in foreign
currency and the flow of its realization are sufficient for the Company to fulfill its
obligations.
c)
Credit Risk
Eletrobrás, through its controlled companies, is engaged in the markets of genera-
tion and transmission of electricity, supported by contracts executed in a regulated
contracting environment. Through bilateral contracts entered into with electricity
distributors, the Company aimed to minimize its credit risks through collateral
mechanisms involving receivables from customers.
In transactions with industrial customers called ‘free consumers’, the credit risk is
minimized through previous analysis of business conditions.
d)
Price Risk
Until 2004, the prices of energy from the generation activity were set by Aneel.
Starting in auction 001/2004 organized by that Regulating Agency, the generating
plants began selling their electricity to a larger number of consumers, at prices
defined by the market.
The activity of transmission has prices defined by Aneel through the so-called
Allowed Annual Revenue (RAP), deemed sufficient to cover operating costs and
maintain the economic-financial balance of the concession.
e)
Market Risk
A significant part of the electricity generated by the companies that Eletrobrás
controls is sold through Contracts of Commercialization in a Regulated Contract
Environment – (CCEAR’s), executed in view of the participation of its controlled
companies in energy auctions held by Aneel.
IV – Management of investments
Eletrobrás performs the functions of a holding, investing in participating interests
in six electricity generating and transmission companies - Furnas, Chesf, Eletronorte,
193
Annual Report 2007
Eletronuclear, Eletrosul and CGTEE, whose shares are not traded at stocks exchan-
ges.
Besides those majority interests, Eletrobrás holds 50% of the capital of Itaipu
Binacional, where it is the jointly owner with the Paraguayan company ANDE and
the stock control of Lightpar. The Company also has a temporary investment in the
following federal energy distribution companies - Eletroacre, Ceam, Ceron, Ceal
and Cepisa, which were acquired as a result of the National Privatization Program
(PND).
In addition, Eletrobrás holds significant minority interests in other eleven concession
holders.
As of December 31, 2007, Eletrobrás also had non-material investments, valued at cost,
corresponding to R$ 536,710 thousand, of which R$ 378,320 thousand refers to public
companies - energy public service concessionaires. Although those shares can be ne-
gotiated at stock exchanges, their reduced volume of business do not characterize the
existence of an active market, as defined by Instruction CVM 235/96, and their prices
do not necessarily represent the values that would be obtained in a negotiation with
a higher number of shares, demonstrating, therefore, the non-existence of reasonable
conditions to establish market prices for those assets, and allow an appropriate com-
parison with book values.
NOTE 47 – COMPENSATION OF EMPLOYEES AND MANAGEMENT
The lowest and highest compensation paid to employees, taking as basis the month of De-
cember 2007, were R$ 1,571.79 and R$ 26,798.58 (including transfer additional) respectively,
in accordance with the salary policy of Eletrobrás. The highest fees attributed to a manager,
taking as basis the month of December 2007, corresponded to R$27,013.12.
NOTE 48 – DISCRETIONARY RESIGNATION PROGRAM
Eletrobrás implanted a Discretionary Resignation Program (PDVE), aiming a restructuring
of its staff, open to all employees that fulfill the following conditions:
a)
b)
Participants of the Defined Benefit Plan of Fundação Eletrobrás de Seguridade Social
(Eletros) who were retired by the Federal Social Security Institute (INSS) and meet
the requirements to obtain the complementary retirement benefit within twenty-four
months after joining the PDVE;
Participants of the Defined Contribution Plan of Eletros who satisfy the requirements to
obtain the complementary retirement benefit within twenty-four months after joining
the PDVE, and
194
Annual Report 2007
c)
Non-participants of Eletros – who were retired by the Federal Social Security Institute
(INSS) or that are in conditions to obtain retirement within twenty-four months after
joining the PDVE, even if in a proportional manner, under the General Social Security
Regime.
After the end of the employment period with Eletrobrás, the Company no longer is respon-
sible for any contributions to the Public Social Security or private pension plan.
The incentive to the employee in relation to PDVE is made through payment of a com-
plementary compensation, per year of service, plus the termination amounts payable for an
unjustified dismissal, in accordance with the following criteria:
a)
b)
fifty percent of a monthly compensation per complete year of work, limited to twenty-
four years and to the amount corresponding to twelve times the highest salary of the
Company;
medical assistance during twelve months counted upon the dismissal date.
The period to join PDVE ended on December 31, 2007, with the inclusion of 311 employe-
es. 30 employees were dismissed in December 2007.
The remaining dismissals will carried out in the following manner:
a)
b)
35 employees with dismissals scheduled to 2008;
246 employees with dismissals scheduled to 2009.
The Company had accrued for an amount of R$ 66,500 thousand under the caption
“Estimated obligations” at the reference date of December 31, 2007 to cover the expenses
with the implantation of PDVE, realizable until December 2009 as employees are dismis-
sed.
NOTE 49 – MANAGEMENT OF FEDERAL GOvERNMENT FuNDS
Eletrobrás is responsible for managing the Global reversion reserve quota (RGR), a fund
created with a view to covering expenses incurred by the Federal Government with the pay-
ment of indemnities referring to the reversal of public electricity concessions. RGR funds are
invested in the Brazilian electricity sector financing, improvement of the service and financing
the programs Procel, Reluz, Luz para Todos, and the Incentive Program for Alternative Sources
of Electricity - Proinfa.
The Global reversion reserve quota is funded by contributions from the concession holders
of the public electricity service, which provide a quota for the reversal and expropriation of
electricity services equivalent to up to 2.5% of the amount invested by concession and per-
mission holders, limited to 3% of gross annual revenues. The value of the quota is computed
as part of the service cost of those entities (See note 6.i).
The concessionaires deposit their annual quotas for the Global reversion reserve in twelve
equal parts, up to the last business day of each month, in a bank account created for this
195
Annual Report 2007
specific purpose. Eletrobrás manages the account in compliance with Law No. 5,655/71 and
subsequent amendments.
Accordingly, the RGR funds are used in specific investment projects, as follows:
I – Financing provided to the concession and permission holders as well as to rural electri-
fication cooperatives with a view to expanding electricity distribution services (especially in
rural and low-income areas) and to developing an energy saving program;
II – Investments in installations for power generation using renewable energy (wind, so-
lar, biomass) as well as small hydroelectric power plants and thermoelectric power plants in
association with small hydroelectric power plants;
III – Specific investment projects for studies involving inventory and feasibility of poten-
tial water resources;
IV – Investments in the implementation of power generators up to 5,000 kW, intended
exclusively for public services in communities using an isolated electricity system;
V – Incentive Program for Alternative Sources of Electricity – Proinfa, created by Law No.
10,438 of April 26, 2002 and reviewed by Law No. 10,762 of November 11, 2003, the objective
of which is to diversify the Brazilian energetic matrix and seek regional solutions through the
use of renewable energy sources based on the economic use of available input and applicable
technology. The goal is to increase the share of electricity produced through those sources by
implementing 3,300 MW of capacity;
VI – For the National Program for Efficient Public Lighting (Reluz) that aims at rendering
efficient 5 million points of public lighting and installing one million more in Brazil. The pro-
gram expects to cover up to 96% of the potential of energy saving of the national network of
public lighting, currently consisting of 13 points of public lighting;
VII – For the National Program for Energy Conservation (Procel), a federal government
program implemented in December 1985 aimed at energy saving both in production and con-
sumption, helping to improve the quality of products and services, reducing the environmental
impact and encouraging job creation;
VIII – For the Universalization of the Access to Electricity - Luz para Todos program, of the
Ministry of Mining and Energy;
IX – for the Ribeirinhas project, carried out in regions where communities are largely
scattered and to which access is difficult due to the type of soil and the rainy season. Its
basic assumption is the use of renewable natural resources existing in several places where
electricity cannot be supplied by extending the transmission network.
The Reserve is remunerated at 5% p.a., according to the funds used. The funds withdrawn
as of December 31, 2007, to invest in the projects described above totaled R$ 6,769,011
thousand (R$ 6,171,300 thousand on December 31, 2006), recorded in the account of Global
reversion reserve quota - RGR, in current and noncurrent liabilities. In 2007, the drafts to
RGR, corresponded to R$ 847,462 thousand and the sums added to the fund amounted to R$
517,575 thousand.
196
Annual Report 2007
Additionally, under the managerial responsibility of Eletrobrás is the Conta de Desenvolvi-
mento Energético – CDE (Energetic Development Account), a federal fund aimed at promoting
energy development from alternative sources in the areas assisted by the interlinked system,
and financing the universalization of the public electric power service. The Fund is valid for
25 years, starting in 2004, and arises from payments for the use of public assets and fines
charged by ANEEL to concessionaires, permit-holders and other entities authorized to explore
the electricity service, whose financial operations do not affect the Company’s financial sta-
tements.
NOTE 50 – INFORMATION ON RELEvANT FACT
I – Guarantees given by CGTEE
In order to investigate the facts on the supposed guarantees given to Bank KfW Banken-
gruppe amounting to R$ 408,766 thousand (EUR 156,700 thousand), which would have
been issued on behalf of CGTEE in favor of private companies, the controlled company’s
management started an investigation whose final report was approved by the Board of
Directors at the meeting held on August 06, 2007.
Among the conclusions of the Investigation, we highlight
a)
b)
the assumed guarantees were constituted in violation to the Brazilian law and of
statutory standards of CGTEE, involving strong indications of forgery of documents
and signatures; and
CGTEE does not have, and has never had, any business or contract relationships
with the benefited companies.
The Investigation Report was sent to pertinent authorities and institutions - Fede-
ral Public Prosecution Office, Federal Police, Federal Audit Count, General Accounting
Office, Ministry of Mining and Energy, Aneel, Commission of Mining and Energy of the
House of Representatives.
On June 22, 2007, CGTEE had already notified the Federal Police about the non-exis-
tence of supposed guarantees given.
In order to protect CGTEE and the public interest, the controlled company hired the
law firm Pinheiro Neto Advogados and notified the Bank KfW out-of court on July
18, 2007, about the non-existence of those supposed guarantees given on that
company’s behalf, filing a Declaratory Action of Document Falsification together with
a Request for Submission of Documents with the Central Court of the District of Por-
to Alegre on September 10, 2007. In time, other legal measures applicable will be
evaluated.
The Company’s management does not expect to incur losses on account of this issue.
197
Annual Report 2007
II – Bearer Bonds issued by Eletrobrás
The Bearer bonds issued because of the compulsory loan do not constitute securities,
are not negotiable at Stock Exchanges, do not have quotation and are unenforceable.
Therefore, the management of Eletrobrás clarifies that the Company does not have
outstanding debentures (See note 28).
The issuance of those bonds was associated with a legal obligation and not with a business
decision of Eletrobrás. In a similar way, the bondholders did not follow an action of will,
but a legal obligation under the provision of Law 4,156/62. Therefore, the provisions of Law
6,404/76 are not applicable to those bonds or of ones addresses by Law 6,385/76.
The Brazilian Securities and Exchange Commission (CVM), in the decision rendered to
the administrative proceeding CVM RJ 2005/7230, filed by the holders of the mentio-
ned bonds, stated that “the obligations issued by Eletrobrás in association with Law
4,156/62 cannot be considered securities.”
CVM understood that there are no irregularities in the procedures Eletrobrás adop-
ted in its financial statements in relation to the mentioned obligations or in the
disclosure of the existing lawsuits claiming the redemption of those bonds (See
note 30).
Besides, the non-enforceability of the Bearer Bonds was reinforced by a recent decision
of the Superior Court of Justice corroborating the understanding that those notes are
not debentures and should not be used to guarantee executions.
NOTE 51 – SuBSEQuENT EvENTS
I – Conversion of Compulsory Loans into SharesOn January 24, 2008, the Company’s
management council decided about the 4th conversion of the compulsory loan
into nominative class B preferred shares representing the capital stock of Ele-
trobrás, comprising all existing credits as of December 31, 2007, corresponding
to R$ 202,375 thousand, taken after the 3rd conversion approved in the extra-
ordinary meet of April 28, 2005.
The issuance price of the stocks will take as basis the book value per share
of Eletrobrás as of December 31, 2007, corresponding to R$ 70.79, under the
terms of article 4 of Law 7181/83.
Residual values not resulting in entire shares will be paid in kind, as establishes
article 10 of Decree 81.668/78, plus the amounts received in the year referring
198
Annual Report 2007
to the preference in subscribing the shares of other stockholders, as establishes
the instruction of CVM.
The period for exercising the subscription right by the other stockholders will
be set in accordance with article 171, paragraph 2 of Law 6.404/76, as well
as the period for the delivery of the shares arising from the conversion. Those
periods will 30 and 60 days, respectively, counted upon the extraordinary me-
eting date. In addition, article 6 of Eletrobrás’ by-laws will be amended, which
addresses the composition of the Capital Stock and Shares.
II – Acquisition of interests in companies
As disclosed in a Notice to the Market dated February 22, 2008, the management
council of the controlled company Eletrosul decided during a meeting on February
20, 2008, to exercise Eletrosul’s right to purchase the 51% interests in the capital of
the companies Empresa de Transmissão de Energia de Santa Catarina S.A. (SC Energia)
and Empresa de Transmissão de Energia do Rio Grande do Sul (RS Energia), owned by
Schahin Engenharia S.A. and Engevix Engenharia S.A.
The enterprise totals 620 km of transmission lines, from which 360 km refers to SC
Energia, connecting Campos Novos to Blumenau (both in the State of Santa Catarina)
and 260 km to RS Energia, to be concluded in 2008, connecting Campos Novos (State
of Santa Catarina) to Nova Santa Rita (State of Rio Grande do Sul).
Those new transmission lines represent about 6.8% of the current extension of the lines
of that controlled company, which totaled 9,145 km as of December 31, 2007.
III - Amendments to Law 6,404/76 that regulates joint stock companies
On December 28, 2007, the President of the Republic of Brazil enacted Law 11,638.
It promoted amendments to and abolished certain provisions of Law 6,404/76, with
the intention of coordinating the Brazilian accounting practices with the Internatio-
nal Financial Reporting Standards (IFRS) for preparation and presentation of financial
statements.
We present below the main accounting changes or new requirements introduced to the
Brazilian corporate law:
1.
Financial Statements
The Statement of Changes in Financial Position will be not longer used. Instead,
it was introduced the Statement of Cash Flows and the Statement of Added Value
for public companies.
199
Annual Report 2007
2.
Bookkeeping
The law previously determined that provisions of the tax law or special regulations
should be recognized in subsidiary books. As a result of the changes, those records
can be made in subsidiary books or in the main accounting books, provided that in
the last case, the respective accounting records to prepare the financial statements
are made.
Public companies should observe the standards established by CVM and Internatio-
nal Financial Reporting Standards (IFRS). Private companies can or not follow the
standards issued by CVM for public companies. Adjustment entries made exclusively
to coordinate the accounting standards with the statements and the numbers de-
termined in them cannot be the basis of taxation nor have any tax effects.
3.
Balance Sheet
Permanent assets were divided into investments, property, plant and equipment,
intangible assets and deferred charges, separating tangible and intangible assets.
The structure of stockholders’ equity was changed, and the revaluation surplus and
retained earnings eliminated. Shares held in treasury start taking part of stockhol-
ders’ equity, and instead of a the account ‘revaluation surplus’, now ‘adjustments
to equity valuation’ should be used.
The existing balances in those reserves should be held until their realization or
reversed until the accounting year where the law comes into effect.
4.
Assets
a)
Rights that have as object physical assets destined to the maintenance of the
activities of the company or used for that purpose should be recognized un-
der property, plant, and equipment, including those stemming from operations
where the benefits, risks, and control of those assets are transferred to the
Company.
Valuation of Investment in Affiliates and Controlled Companies
Investments in affiliated companies, where the Company has significant in-
fluence or holds 20% interest or more of voting capital, as well as the ones in
controlled companies and in other companies that take part of a same group or
are under a common control, should be valued under the equity method.
b)
The requirements of the new law are applicable to financial statements for the
years ended after January 01, 2008. Thus, at this moment is not possible to
determine the effects of the mentioned new regulations on the income (loss)
and stockholders’ equity of Eletrobrás.
200
Annual Report 2007
c)
Pre-operating expenses and restructuring expenditure leading to an increase in the
income (loss) of more than one fiscal year and which are not reducers of costs or
additions to the efficiency of operations, should be classified as deferred assets.
d)
The rights referring to non-physical assets for the maintenance of activities of
the company or used for that purchase should be classified as intangible assets,
including goodwill obtained.
5.
Criteria for valuation of assets
I - Financial instruments, including derivatives and receivables, classified in cur-
rent assets or long-term assets should be valuated:
a)
at market value or equivalent value, when they refer to investments desti-
ned to trading or available for sale; and
b)
at acquisition cost or issuance value, restated according to legal or contract
provisions, and other investments, rights and receivables adjusted to the
probable realizable value, when that is lower;
II - at the cost incurred in acquisition, less the balance of the respective amorti-
zation account in intangible assets;
III – Assets from long-term operations will be adjusted at present value, and others
adjusted if the value is material.
6.
7.
8.
9.
Criteria for valuation of Liabilities
Obligations, charges, and risks classified in the long-term liabilities will be adjus-
ted at present value, and other liabilities adjusted when the value is material.
Stockholders’ equity
The premium received in the issuance of debentures was excluded from the caption
stockholders’ equity, as well as donations and subventions for investment.
Statement of Operations
The statement of operations will include the portion referring to debentures, and
profit sharing of employees and management, even the ones in the form of finan-
cial instruments, and from institutions or assistance or pension funds of employe-
es, not characterized as expense.
Reserves and Retention of Income
A tax incentive reserve was created. Donations and government grants for invest-
ment will take part of income (loss) for the year, and as proposed by the manage-
ment, a general meeting will decide the destine for the portion of net income from
those incentives to form the mentioned reserve.
201
10.
Limit for the income reserve
The balance of reserves for contingencies, tax incentives and of income realizable
can from now on exceed the amount of capital stock.
José Antonio Muniz Lopes
President
Astrogildo Fraguglia Quental
Finance Director and Director of Relations
with Investors
ubirajara Rocha Meira
Director of Special Projects and Technical and Industrial
Development
valter Luiz Cardeal de Souza
Engineering Director
Miguel Colasuonno
Administration Director
João vicente Amato Torres
Accountant
CRC-RJ-057.991/O-S-DF
Annual Report 2007
202
Annual Report 2007
Attachment
Furnas – Chemical
Analysis Laboratory in
Goiânia – Fusion Machine
(Furnas/Waimer Carvalho Files)
203
Attachment CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
CONSuMERS AND RESELLERS AS OF DECEMBER 31
(In thousands of Brazilian reais)
Aes Eletropaulo
Aes Sul
Aes Tietê
Ampla
Ande
EBE
CEA
CEB
CEEE-D
CEEE-Gt
Celesc
Celg
Celpa
Celpe
Cemar
Cemig
Ceron
Cepisa
Cesp
Coelce
Coelba
Copel
CPFL
Elektro
Enersul
Escelsa
Light
Piratininga
RGE
Commercialization at CCEE
Regulatory assets
Electricity network use
PROINFA
Consumers
Other
(-) Allowance for doubtful accounts
COMPANY
Current
2007
FALLING DuE
OvERDuE uP TO
90 DAYS
MORE ThAN 90
DAYS
TOTAL
200.238
33.336
-
28.399
-
65.661
-
13.169
29.507
-
50.824
26.169
-
-
-
196.914
-
-
-
-
-
74.090
91.718
49.982
11.738
28.834
134.829
62.310
24.304
-
-
-
76.439
-
5.218
-
1.203.679
-
-
-
-
-
-
-
-
-
-
-
33.700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.145
-
-
-
37.845
-
-
-
-
-
-
-
-
-
-
-
93.706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.426
-
5.603
-
107.735
200.238
33.336
-
28.399
-
65.661
-
13.169
29.507
-
50.824
153.575
-
-
-
196.914
-
-
-
-
-
74.090
91.718
49.982
11.738
28.834
134.829
62.310
24.304
-
-
-
89.010
-
10.821
-
1.349.259
2006
TOTAL
194.261
32.392
-
36.781
-
63.757
-
14.930
36.827
56.405
29.033
-
-
-
191.100
-
-
-
-
-
71.874
89.044
48.504
11.385
27.988
130.889
60.534
23.630
-
-
-
51.622
-
9.436
-
1.180.392
CONSOLIDATED
CuRRENT
2007
FALLING DuE
OvERDuE uP TO
MORE ThAN 90
90 DAYS
DAYS
TOTAL
LONG-TERM
2007
2006
2006
TOTAL
290.496
52.031
690
66.548
38.779
90.474
9.973
31.004
43.993
3.432
59.016
60.378
38.484
47.465
24.511
279.535
21.835
19.186
2.267
30.794
65.096
160.921
118.581
99.840
18.473
49.075
218.058
1.208
30.373
89.887
446.644
124.169
76.439
286.806
226.028
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
290.496
52.031
690
66.548
38.779
90.474
423.275
41.205
43.993
3.432
59.016
187.784
38.513
47.465
24.511
279.535
21.835
19.186
2.267
30.794
65.096
160.921
118.581
99.840
18.473
49.075
218.111
1.208
30.373
383.448
448.361
134.620
89.010
708.018
507.073
27.395
385.907
10.201
33.700
93.706
29
53
293.561
1.012
9.792
8.426
346.609
271.223
705
659
4.145
74.603
9.822
283.032
37.441
14.272
59.560
-
80.602
307.911
27.549
25.314
16.787
63.866
50.009
52.193
45.130
42.330
271.914
23.091
130.281
-
25.848
57.833
112.563
107.370
77.442
13.406
42.142
208.420
60.534
34.820
378.313
571.743
90.925
51.622
630.005
628.203
3.222.489
151.029
248.825
3.622.343
-
(1.171.694)
(1.171.694)
(627.547)
3.994.924
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78.341
842.060
17.460
(69.623)
26.178
98.133
(350.970)
589.223
Aes Eletropaulo
Aes Sul
Aes Tietê
Ampla
Ande
EBE
CEA
CEB
CEEE-D
CEEE-Gt
Celesc
Celg
Celpa
Celpe
Cemar
Cemig
Ceron
Cepisa
Cesp
Coelce
Coelba
Copel
CPFL
Elektro
Enersul
Escelsa
Light
Piratininga
RGE
Commercialization at CCEE
Regulatory assets
Electricity network use
PROINFA
Consumers
Other
(-) Allowance for doubtful accounts
COMPANY
Current
2007
FALLING DuE
OvERDuE uP TO
MORE ThAN 90
90 DAYS
DAYS
TOTAL
2006
TOTAL
200.238
33.336
194.261
32.392
28.399
36.781
65.661
63.757
13.169
29.507
50.824
153.575
14.930
36.827
56.405
29.033
196.914
191.100
74.090
91.718
49.982
11.738
28.834
134.829
62.310
24.304
71.874
89.044
48.504
11.385
27.988
130.889
60.534
23.630
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33.700
93.706
200.238
33.336
28.399
65.661
13.169
29.507
50.824
26.169
196.914
74.090
91.718
49.982
11.738
28.834
134.829
62.310
24.304
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76.439
4.145
8.426
89.010
51.622
1.203.679
37.845
107.735
1.349.259
1.180.392
5.603
-
10.821
-
9.436
-
Annual Report 2007
Attachment I
CONSOLIDATED
CuRRENT
2007
FALLING DuE
OvERDuE uP TO
90 DAYS
MORE ThAN 90
DAYS
TOTAL
290.496
52.031
690
66.548
38.779
90.474
9.973
31.004
43.993
3.432
59.016
60.378
38.484
47.465
24.511
279.535
21.835
19.186
2.267
30.794
65.096
160.921
118.581
99.840
18.473
49.075
218.058
1.208
30.373
89.887
446.644
124.169
76.439
286.806
226.028
-
3.222.489
-
-
-
-
-
-
27.395
-
-
-
-
33.700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
705
659
4.145
74.603
9.822
-
151.029
-
-
-
-
-
-
385.907
10.201
-
-
-
93.706
29
-
-
-
-
-
-
-
-
-
-
-
-
-
53
-
-
293.561
1.012
9.792
8.426
346.609
271.223
(1.171.694)
248.825
290.496
52.031
690
66.548
38.779
90.474
423.275
41.205
43.993
3.432
59.016
187.784
38.513
47.465
24.511
279.535
21.835
19.186
2.267
30.794
65.096
160.921
118.581
99.840
18.473
49.075
218.111
1.208
30.373
383.448
448.361
134.620
89.010
708.018
507.073
(1.171.694)
3.622.343
2006
TOTAL
283.032
37.441
14.272
59.560
-
80.602
307.911
27.549
25.314
16.787
63.866
50.009
52.193
45.130
42.330
271.914
23.091
130.281
-
25.848
57.833
112.563
107.370
77.442
13.406
42.142
208.420
60.534
34.820
378.313
571.743
90.925
51.622
630.005
628.203
(627.547)
3.994.924
LONG-TERM
2007
2006
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78.341
-
-
-
17.460
(69.623)
26.178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
842.060
-
-
-
98.133
(350.970)
589.223
205
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
LOANS AND FINANCING GRANTED AS OF DECEMBER 31
(In thousands of Brazilian reais)
2007
2006
COMPANY
CuRRENT
ChARGES
PRINCIPAL AMOuNT
NON
CuRRENT
ChARGES
PRINCIPAL AMOuNT
NON
2007
CONSOLIDATED
CuRRENT
ChARGES
PRINCIPAL AMOuNT
NON
CuRRENT
ChARGES
2006
PRINCIPAL
AMOuNT
NON
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
AvERAGE RATE
vALuE
CuRRENT
CuRRENT
AvERAGE RATE
vALuE
CIRCuLANTE
CuRRENT
CONTROLLED COMPANIES
AND JOINTLY-CON-
TROLLED
COMPANY
Furnas
Chesf
Eletrosul
Eletronorte
Eletronuclear
Lightpar
Itaipu
OTHER
Cepisa
Ceron
Cemig
Copel
CEEE
Duke
Aes Tietê
Aes Eletropaulo
Tractbel
Celpe
Cemar
Cesp
Other
(-) Allowance for
doubtful accounts
8,86%
11,68%
7,54%
15,63%
12,35%
12,00%
7,07%
10,71%
11,44%
6,76%
8,39%
9,33%
10,00%
10,00%
9,85%
12,00%
6,02%
6,07%
9,32%
-
4.779
43.047
261
117.671
6.023
-
-
171.781
406
1.264
2.353
2.130
1.174
3.966
5.062
262.048
1.005
679
924
1.185
67.154
460.606
420.273
2.676
319.986
179.138
3.259
46.191
1.432.129
530.877
3.747.908
183.629
6.253.973
2.263.506
-
14.624.980
27.604.873
65.258
21.773
58.020
35.855
90.383
144.026
183.766
120.904
31.909
16.295
8.157
24.106
361.246
278.848
354.518
355.958
271.965
54.436
865.083
1.104.299
8.917
68.559
82.851
284.790
245.098
1.907.908
6,41%
11,74%
6,87%
12,03%
13,21%
12,00%
6,97%
11,10%
15,38%
6,76%
8,33%
9,33%
10,00%
10,00%
9,57%
12,00%
6,04%
7,97%
9,44%
-
7.043
52.271
133
2.855.216
6.136
6.808
-
2.927.607
446
20.227
1.858
2.263
2.290
4.303
5.492
249.689
1.808
563
1.140
1.294
54.599
103.852
414.560
83.086
852.408
178.257
11.047
16.261
1.659.471
617.797
4.131.249
55.337
4.360.464
2.064.798
-
14.594.746
25.824.391
41.932
46.629
47.772
44.387
66.411
122.822
156.709
117.733
87.437
12.802
1.768
26.316
330.937
248.916
296.896
237.238
267.499
104.198
940.574
1.200.652
23.977
93.402
94.945
307.973
254.418
1.439.386
-
(38.785)
(41.845)
-
(24.180)
(27.449)
-
(38.785)
(41.845)
(24.180)
(27.449)
-
310.565
1.119.853
5.883.230
321.792
1.076.206
5.510.074
310.577
1.172.838
6.092.879
325.469
1.081.188
5.755.417
-
-
-
-
-
-
7,07%
10,71%
11,44%
6,76%
8,39%
9,33%
10,00%
10,00%
9,85%
12,00%
6,02%
6,07%
9,32%
-
-
-
-
-
-
-
-
-
-
406
1.264
2.353
5.062
1.174
3.966
5.062
262.048
1.005
679
924
1.185
64.234
-
-
-
-
-
-
-
-
-
-
-
-
23.096
23.096
7.312.490
7.312.490
65.258
21.773
58.020
183.766
90.383
144.026
183.766
120.904
31.909
16.295
8.157
24.106
278.848
354.518
284.790
1.104.299
54.436
865.083
1.104.299
8.917
68.559
82.851
284.790
245.098
-
-
-
-
-
-
6,97%
11,10%
15,38%
6,76%
8,33%
9,33%
10,00%
10,00%
9,57%
12,00%
6,04%
7,97%
9,44%
-
-
-
-
-
-
-
-
-
-
446
20.227
1.858
2.263
2.290
4.303
5.492
249.689
1.808
563
1.140
1.294
58.276
-
-
-
-
-
-
-
-
-
-
-
-
8.131
8.131
7.297.373
7.297.373
41.932
46.629
47.772
44.387
66.411
122.822
156.709
117.733
87.437
12.802
1.768
26.316
248.916
296.896
237.238
267.499
104.198
940.574
1.200.652
23.977
93.402
94.945
307.973
254.418
266.320
1.356.391
335.919
1.684.729
T O T A L
482.346
2.551.982
33.488.103
3.249.399
2.735.677
31.334.465
310.577
1.195.934
13.405.369
325.469
1.089.319
13.052.790
The long-term portions granted out of ordinary and sectorial funds, including re-lending, are payable in variable installments, as
shown below:
COMPANY
CONSOLIDATED
2009
3.334.182
1.334.681
2010
3.354.348
1.342.754
2011
3.182.315
1.273.888
2012
3.131.991
1.253.744
2013
3.051.026
1.221.333
After 2013
17.434.241
6.978.969
TOTAL
33.488.103
13.405.369
2007
2006
COMPANY
CuRRENT
ChARGES
AvERAGE
RATE
PRINCIPAL AMOuNT
NON
CuRRENT
ChARGES
AvERAGE
RATE
PRINCIPAL AMOuNT
NON
CONTROLLED COMPANIES
AND JOINTLY-CON-
TROLLED
COMPANY
Furnas
Chesf
Eletrosul
Eletronorte
Eletronuclear
Lightpar
Itaipu
OTHER
Cepisa
Ceron
Cemig
Copel
CEEE
Duke
Tractbel
Celpe
Cemar
Cesp
Other
Aes Tietê
Aes Eletropaulo
(-) Allowance for
doubtful accounts
171.781
1.432.129
27.604.873
2.927.607
1.659.471
25.824.391
8,86%
11,68%
7,54%
15,63%
12,35%
12,00%
7,07%
10,71%
11,44%
6,76%
8,39%
9,33%
10,00%
10,00%
9,85%
12,00%
6,02%
6,07%
9,32%
-
-
4.779
43.047
261
117.671
6.023
-
-
406
1.264
2.353
2.130
1.174
3.966
5.062
262.048
1.005
679
924
1.185
67.154
460.606
420.273
2.676
319.986
179.138
3.259
530.877
3.747.908
183.629
6.253.973
2.263.506
-
46.191
14.624.980
65.258
21.773
58.020
35.855
90.383
144.026
183.766
120.904
31.909
16.295
8.157
24.106
278.848
354.518
355.958
271.965
54.436
865.083
1.104.299
8.917
68.559
82.851
284.790
245.098
7.043
52.271
133
2.855.216
6.136
6.808
-
446
20.227
1.858
2.263
2.290
4.303
5.492
249.689
1.808
563
1.140
1.294
6,41%
11,74%
6,87%
12,03%
13,21%
12,00%
6,97%
11,10%
15,38%
6,76%
8,33%
9,33%
10,00%
10,00%
9,57%
12,00%
6,04%
7,97%
9,44%
-
-
103.852
414.560
83.086
852.408
178.257
11.047
16.261
617.797
4.131.249
55.337
4.360.464
2.064.798
-
14.594.746
41.932
46.629
47.772
44.387
66.411
122.822
156.709
117.733
87.437
12.802
1.768
26.316
248.916
296.896
237.238
267.499
104.198
940.574
1.200.652
23.977
93.402
94.945
307.973
254.418
361.246
1.907.908
54.599
330.937
1.439.386
vALuE
CuRRENT
CuRRENT
vALuE
CuRRENT
CuRRENT
AvERAGE RATE
vALuE
CuRRENT
CuRRENT
AvERAGE RATE
vALuE
CIRCuLANTE
CuRRENT
2007
CONSOLIDATED
CuRRENT
ChARGES
PRINCIPAL AMOuNT
NON
CuRRENT
ChARGES
2006
PRINCIPAL
AMOuNT
NON
Annual Report 2007
Attachment II
-
-
-
-
-
-
7,07%
10,71%
11,44%
6,76%
8,39%
9,33%
10,00%
10,00%
9,85%
12,00%
6,02%
6,07%
9,32%
-
-
-
-
-
-
-
-
-
406
1.264
2.353
5.062
1.174
3.966
5.062
262.048
1.005
679
924
1.185
64.234
-
-
-
-
-
-
23.096
23.096
65.258
21.773
58.020
183.766
90.383
144.026
183.766
120.904
31.909
16.295
8.157
24.106
266.320
-
-
-
-
-
-
7.312.490
7.312.490
278.848
354.518
284.790
1.104.299
54.436
865.083
1.104.299
8.917
68.559
82.851
284.790
245.098
1.356.391
-
-
-
-
-
-
6,97%
11,10%
15,38%
6,76%
8,33%
9,33%
10,00%
10,00%
9,57%
12,00%
6,04%
7,97%
9,44%
-
-
-
-
-
-
-
-
-
446
20.227
1.858
2.263
2.290
4.303
5.492
249.689
1.808
563
1.140
1.294
58.276
-
-
-
-
-
-
8.131
8.131
41.932
46.629
47.772
44.387
66.411
122.822
156.709
117.733
87.437
12.802
1.768
26.316
335.919
-
-
-
-
-
-
7.297.373
7.297.373
248.916
296.896
237.238
267.499
104.198
940.574
1.200.652
23.977
93.402
94.945
307.973
254.418
1.684.729
(38.785)
(41.845)
(24.180)
(27.449)
-
-
(38.785)
(41.845)
-
(24.180)
(27.449)
-
310.565
1.119.853
5.883.230
321.792
1.076.206
5.510.074
310.577
1.172.838
6.092.879
325.469
1.081.188
5.755.417
T O T A L
482.346
2.551.982
33.488.103
3.249.399
2.735.677
31.334.465
310.577
1.195.934
13.405.369
325.469
1.089.319
13.052.790
207
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
INvESTMENTS IN CONSOLIDATED COMPANIES AS OF DECEMBER 31
(In thousands of Brazilian reais)
COMPANIES’ DATA
FuRNAS (b)
ChESF
ELETROSuL
ELETRONORTE
ELETRONuCLEAR
LIGhTPAR
CGTEE
ITAIPu (c)
TOTAL
Capital stock
3.194.000
1.696.306
279.072
2.843.235
3.295.768
113.790
868.721
177.130
Stockholders’ equity (a)
13.400.554
11.571.608
2.109.175
7.283.436
4.455.313
55.769
642.208
177.130
2007
2007
2006
Net income (loss) for the year
ELETROBRÁS’S INTERESTS
Number of shares – thousand share lot
Common shares
Preferred shares
% of interest
Subscribed and paid-in capital
Voting
CHANGES IN INVESTMENTS:
Balances at beginning of year
Equity accounting – income (loss) for
the year
Dividends
Interest on equity capital
Balances at end of year
676.524
652.630
196.940
(542.315)
117.668
16.097
(69.149)
50.618.949
14.088.233
99,54
99,82
40.478
1.002
99,45
100,00
42.582.421
-
68.736.323
-
9.611.945
2.687.056
99,71
99,71
98,66
98,66
99,80
99,92
12.692.991
11.097.604
1.953.343
7.720.886
4.357.407
796.567
649.040
196.556
(535.047)
(164.121)
(238.680)
(46.841)
-
117.335
(27.893)
13.325.437
11.507.964
2.103.058
7.185.839
4.446.849
45.181
641.823
88.565
39.344.716
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,00
50,00
106.900
38.672.726
38.503.522
(18.335)
1.149.525
599.035
-
(477.535)
(6.647)
(423.184)
38.672.726
8.480.196
1.126.273
-
81,61
81,61
32.665
12.516
-
-
99,94
99,94
710.930
(69.107)
-
COMPANIES’ DATA
FuRNAS (b)
ChESF
ELETROSuL
ELETRONORTE
ELETRONuCLEAR
LIGhTPAR
CGTEE
ITAIPu (c)
TOTAL
2007
2007
2006
Annual Report 2007
Attachment III
Capital stock
3.194.000
1.696.306
279.072
2.843.235
3.295.768
113.790
868.721
177.130
Stockholders’ equity (a)
13.400.554
11.571.608
2.109.175
7.283.436
4.455.313
55.769
642.208
177.130
676.524
652.630
196.940
(542.315)
117.668
16.097
(69.149)
8.480.196
-
1.126.273
-
-
-
-
Net income (loss) for the year
ELETROBRÁS’S INTERESTS
Number of shares – thousand share lot
Common shares
Preferred shares
% of interest
Subscribed and paid-in capital
Voting
CHANGES IN INVESTMENTS:
Balances at beginning of year
Equity accounting – income (loss) for
the year
Dividends
Interest on equity capital
Balances at end of year
50.618.949
14.088.233
99,54
99,82
40.478
1.002
99,45
100,00
42.582.421
68.736.323
-
99,71
99,71
-
98,66
98,66
12.692.991
11.097.604
1.953.343
7.720.886
4.357.407
796.567
649.040
196.556
(535.047)
(164.121)
(238.680)
(46.841)
-
9.611.945
2.687.056
99,80
99,92
117.335
(27.893)
81,61
81,61
32.665
12.516
-
99,94
99,94
50,00
50,00
710.930
(69.107)
-
106.900
38.672.726
38.503.522
(18.335)
1.149.525
599.035
-
(477.535)
(6.647)
(423.184)
38.672.726
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13.325.437
11.507.964
2.103.058
7.185.839
4.446.849
45.181
641.823
88.565
39.344.716
(a) Exclude Advances for Future Capital Raise
(b) Adjusted Shareholder’s Equity
(c) The participation of Eletrobrás, in accordance to the Law 72.707/73 is fixed and equals
to US$ 50,000 thousand
The analysis of the Financial Statements of Furnas, Eletrosul, Chesf, Eletronuclear, Lightpar
and CGTEE were performed by other independent auditors.
The analysis of Financial Statements of the controlled company Eletronorte and the joint-
control Itaipu Binacional were performed by the same independent auditors of the con-
troller.
209
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
PROPERTY, PLANT AND EQuIPMENT
(In thousands of Brazilian reais)
COMPANY
Dez-07
ELETROBRAS
CONTROLLED AND JOINT-CONTROLLED
Dez-07
COMPANY AND SuBSIDIARIES TOGEThER
Dez-07
FuRNAS
ChESF
ELETRONORTE
ELETRONuCLEAR
ELETROSuL
ITAIPu
CGTEE
LIGhTPAR
Generation
In service
Accumulated depreciation
In progress
Transmission
In service
Accumulated depreciation
In progress
Distribution/Commercialization
In service
Accumulated depreciation
In progress
Administration
In service
Accumulated depreciation
In progress
Concession-linked obligations
(-) Amortization and reversals
(-) Consumers’ contributions
(-) Federal Government’s participation
(-) Donations and grants for investment
(-) Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53.704
(24.897)
28.807
-
28.807
28.807
-
-
-
-
-
-
7.657.039
(2.879.918)
4.777.121
1.973.816
6.750.937
12.180.452
(5.981.580)
6.198.872
1.252.690
7.451.562
1.480
(502)
978
39
1.017
195.521
(83.559)
111.962
20.535
132.497
14.336.013
(81.998)
-
(28.539)
(2.003)
-
(112.540)
17.143.404
(6.593.464)
10.549.940
169.207
10.719.147
6.936.848
(3.135.709)
3.801.139
1.175.238
4.976.377
-
-
-
-
-
895.235
(441.070)
454.165
131.056
585.221
16.280.745
-
(3.344)
(108.052)
(43.865)
(380)
(155.641)
19.762.511
(7.698.655)
12.063.856
580.437
12.644.293
6.036.619
(1.860.924)
4.175.695
2.294.264
6.469.959
5.990.161
(2.716.878)
3.273.283
567.970
3.841.253
1.054.108
(478.420)
575.688
291.518
867.206
319.186
(185.563)
133.623
72.177
205.800
17.558.552
-
(24.482)
(266.480)
(18.260)
(36.072)
(345.294)
-
-
-
-
-
-
-
-
-
-
13.137
(7.255)
5.882
4.170
10.052
6.480.011
-
-
(3.617)
(204)
-
(3.821)
-
-
-
93.768
93.768
2.914.876
(1.279.948)
1.634.928
280.638
1.915.566
-
-
-
-
-
44.586
(12.171)
32.415
1.986
34.401
2.043.735
-
-
-
-
(6.815)
(6.815)
15.132.699
1.880.963
-
(1.576.832)
304.131
176.578
480.709
15.132.699
207.234
15.339.933
1.090.279
1.090.279
1.090.279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
746.544
746.544
390.305
1.136.849
17.567.061
8.418
(2.793)
5.625
-
5.625
486.334
171
(129)
42
-
42
42
CONSOLIDATED
Dec-07
TOTAL
67.613.235
(20.609.793)
47.003.442
5.495.304
52.498.746
29.112.616
(13.114.115)
15.998.501
3.276.536
19.275.037
1.055.588
(478.922)
576.666
291.557
868.223
2.276.502
(757.437)
1.519.065
620.229
2.139.294
74.781.300
(81.998)
(27.826)
(406.688)
(71.147)
(36.452)
(624.111)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
* In 2006, Intangible Assets were separated from the total balance of Property, plant and equipment
14.223.473
28.807
16.125.104
17.213.258
6.476.190
2.036.920
17.567.061
486.334
42
74.157.189
Annual average depreciation rate (%)
Generation
Transmission
Distribution/Commercialization
Administration
0,00%
0,00%
0,00%
7,95%
2,20%
3,00%
5,70%
9,30%
2,41%
2,97%
0,00%
6,57%
2,56%
2,76%
3,00%
15,00%
3,30%
0,00%
0,00%
10,00%
0,00%
3,19%
0,00%
7,51%
0,00%
0,00%
0,00%
0,00%
6,12%
0,00%
0,00%
12,50%
0,00%
0,00%
0,00%
0,00%
COMPANY
Dez-07
CONTROLLED AND JOINT-CONTROLLED
Dez-07
COMPANY AND SuBSIDIARIES TOGEThER
Dez-07
ELETROBRAS
FuRNAS
ChESF
ELETRONORTE
ELETRONuCLEAR
ELETROSuL
ITAIPu
CGTEE
LIGhTPAR
-
-
-
93.768
93.768
15.132.699
-
15.132.699
207.234
15.339.933
1.880.963
(1.576.832)
304.131
176.578
480.709
2.914.876
(1.279.948)
1.634.928
280.638
1.915.566
1.090.279
-
1.090.279
-
1.090.279
-
-
-
-
-
44.586
(12.171)
32.415
1.986
34.401
2.043.735
-
-
-
(6.815)
-
(6.815)
-
-
-
-
-
746.544
-
746.544
390.305
1.136.849
17.567.061
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.418
(2.793)
5.625
-
5.625
486.334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
171
(129)
42
-
42
42
-
-
-
-
-
-
Annual Report 2007
Attachment Iv
CONSOLIDATED
Dec-07
TOTAL
67.613.235
(20.609.793)
47.003.442
5.495.304
52.498.746
29.112.616
(13.114.115)
15.998.501
3.276.536
19.275.037
1.055.588
(478.922)
576.666
291.557
868.223
2.276.502
(757.437)
1.519.065
620.229
2.139.294
74.781.300
(81.998)
(27.826)
(406.688)
(71.147)
(36.452)
(624.111)
* In 2006, Intangible Assets were separated from the total balance of Property, plant and equipment
28.807
14.223.473
16.125.104
17.213.258
6.476.190
2.036.920
17.567.061
486.334
42
74.157.189
0,00%
0,00%
0,00%
7,95%
2,20%
3,00%
5,70%
9,30%
2,41%
2,97%
0,00%
6,57%
2,56%
2,76%
3,00%
15,00%
3,30%
0,00%
0,00%
10,00%
0,00%
3,19%
0,00%
7,51%
0,00%
0,00%
0,00%
0,00%
6,12%
0,00%
0,00%
12,50%
0,00%
0,00%
0,00%
0,00%
211
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53.704
(24.897)
28.807
-
28.807
28.807
7.657.039
(2.879.918)
4.777.121
1.973.816
6.750.937
12.180.452
(5.981.580)
6.198.872
1.252.690
7.451.562
1.480
(502)
978
39
1.017
195.521
(83.559)
111.962
20.535
132.497
(81.998)
(28.539)
(2.003)
-
-
(112.540)
17.143.404
(6.593.464)
10.549.940
169.207
10.719.147
6.936.848
(3.135.709)
3.801.139
1.175.238
4.976.377
-
-
-
-
-
895.235
(441.070)
454.165
131.056
585.221
-
(3.344)
(108.052)
(43.865)
(380)
(155.641)
19.762.511
(7.698.655)
12.063.856
580.437
12.644.293
5.990.161
(2.716.878)
3.273.283
567.970
3.841.253
1.054.108
(478.420)
575.688
291.518
867.206
319.186
(185.563)
133.623
72.177
205.800
-
(24.482)
(266.480)
(18.260)
(36.072)
(345.294)
6.036.619
(1.860.924)
4.175.695
2.294.264
6.469.959
-
-
-
-
-
-
-
-
-
-
13.137
(7.255)
5.882
4.170
10.052
-
-
-
(3.617)
(204)
(3.821)
14.336.013
16.280.745
17.558.552
6.480.011
Accumulated depreciation
Generation
In service
In progress
Transmission
In service
In progress
Accumulated depreciation
Distribution/Commercialization
In service
Accumulated depreciation
In progress
Administration
In service
In progress
Accumulated depreciation
Concession-linked obligations
(-) Amortization and reversals
(-) Consumers’ contributions
(-) Federal Government’s participation
(-) Donations and grants for investment
(-) Other
TOTAL
Annual average depreciation rate (%)
Generation
Transmission
Distribution/Commercialization
Administration
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
PROPERTY, PLANT AND EQuIPMENT
(In thousands of Brazilian reais)
Generation
In service
Accumulated depreciation
In construction
Transmission
In service
Accumulated depreciation
In construction
Distribution/Commercialization
In service
Accumulated depreciation
In construction
Administration
In service
Accumulated depreciation
In construction
COMPANY
Dec-06
ELETROBRAS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50.710
(19.888)
30.822
-
30.822
CONTROLLED AND JOINT-CONTROLLED
Dec-06
FuRNAS
ChESF
ELETRONORTE
ELETRONuCLEAR
ELETROSuL
ITAIPu
CGTEE
LIGhTPAR
COMPANY AND SuBSIDIARIES TOGEThER
Dec-06
CONSOLIDATED
Dec-06
TOTAL
7.645.283
(2.701.018)
4.944.265
1.570.447
6.514.712
11.777.672
(5.660.212)
6.117.460
1.394.882
7.512.342
1.361
(428)
933
113
1.046
174.194
(74.991)
99.203
30.539
129.742
16.919.707
(6.243.636)
10.676.071
225.602
10.901.673
6.566.634
(2.954.095)
3.612.539
1.318.712
4.931.251
-
-
-
-
-
803.293
(416.182)
387.111
173.689
560.800
15.261.051
(7.341.091)
7.919.960
4.496.633
12.416.593
5.754.556
(2.541.411)
3.213.145
545.168
3.758.313
1.004.272
(427.073)
577.199
242.114
819.313
307.080
(169.443)
137.637
53.780
191.417
6.020.507
(1.683.564)
4.336.943
1.999.010
6.335.953
-
-
-
-
-
-
-
-
-
-
27.827
(18.000)
9.827
4.245
14.072
30.822
14.157.842
16.393.724
17.185.636
6.350.025
1.852.804
21.969.408
414.023
78.354.334
Concession-linked obligations
(-) Amortization and reversals
(-) Consumers’ contributions
(-) Federal Government’s participation
(-) Donations and grants for investment
(-) Other
-
-
-
-
-
-
(81.998)
-
(28.539)
(2.003)
-
(112.540)
(20.269)
(6.048)
(108.052)
(20.839)
-
(155.208)
-
(24.448)
(263.978)
-
(55.077)
(343.503)
-
-
-
-
(47.543)
(47.543)
1.867.236
(1.532.705)
334.531
73.474
408.005
19.038.648
19.038.648
245.729
19.284.377
1.314.584
1.314.584
1.314.584
896.299
896.299
474.148
1.370.447
5.969
(2.119)
3.850
2.168
6.018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
-
50
-
50
50
-
-
-
-
-
-
66.752.432
(19.502.014)
47.250.418
8.642.879
55.893.297
28.133.606
(12.371.684)
15.761.922
3.540.607
19.302.529
1.005.633
(427.501)
578.132
242.227
820.359
2.307.190
(710.157)
1.597.033
741.116
2.338.149
(102.267)
(30.496)
(400.569)
(23.096)
(102.620)
(659.048)
-
-
-
31.984
31.984
2.720.160
(1.215.966)
1.504.194
281.845
1.786.039
-
-
-
-
-
41.768
(9.534)
32.234
2.547
34.781
-
-
-
-
(254)
(254)
0,00%
3,19%
0,00%
7,51%
Annual average depreciation rate (%)
Generation
Transmission
Distribution/Commercialization
Administration
0,00%
0,00%
0,00%
7,95%
2,20%
3,00%
9,00%
5,60%
2,47%
3,07%
0,00%
5,10%
3,02%
2,93%
2,78%
18,26%
3,30%
0,00%
0,00%
10,00%
0,00%
0,00%
0,00%
0,00%
6,17%
0,00%
0,00%
12,50%
0,00%
0,00%
0,00%
0,00%
TOTAL
* In 2006, Intangible Assets were separated from the total balance of Property, plant and equipment
16.842.133
6.302.482
1.852.550
21.969.408
414.023
50
77.695.286
16.238.516
14.045.302
30.822
COMPANY
Dec-06
CONTROLLED AND JOINT-CONTROLLED
Dec-06
COMPANY AND SuBSIDIARIES TOGEThER
Dec-06
ELETROBRAS
FuRNAS
ChESF
ELETRONORTE
ELETRONuCLEAR
ELETROSuL
ITAIPu
CGTEE
LIGhTPAR
-
-
-
31.984
31.984
2.720.160
(1.215.966)
1.504.194
281.845
1.786.039
-
-
-
-
-
41.768
(9.534)
32.234
2.547
34.781
19.038.648
19.038.648
245.729
19.284.377
1.314.584
-
1.314.584
-
1.314.584
-
-
-
-
-
1.867.236
(1.532.705)
334.531
73.474
408.005
-
-
-
-
-
-
-
-
-
-
896.299
896.299
474.148
1.370.447
5.969
(2.119)
3.850
2.168
6.018
30.822
14.157.842
16.393.724
17.185.636
6.350.025
1.852.804
21.969.408
414.023
-
-
-
(254)
-
(254)
-
-
-
-
-
-
-
-
-
-
-
-
Annual Report 2007
Attachment Iv-A
CONSOLIDATED
Dec-06
TOTAL
66.752.432
(19.502.014)
47.250.418
8.642.879
55.893.297
28.133.606
(12.371.684)
15.761.922
3.540.607
19.302.529
1.005.633
(427.501)
578.132
242.227
820.359
2.307.190
(710.157)
1.597.033
741.116
2.338.149
78.354.334
(102.267)
(30.496)
(400.569)
(23.096)
(102.620)
(659.048)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
-
50
-
50
50
-
-
-
-
-
-
* In 2006, Intangible Assets were separated from the total balance of Property, plant and equipment
30.822
14.045.302
16.238.516
16.842.133
6.302.482
1.852.550
21.969.408
414.023
50
77.695.286
0,00%
0,00%
0,00%
7,95%
2,20%
3,00%
9,00%
5,60%
2,47%
3,07%
0,00%
5,10%
3,02%
2,93%
2,78%
18,26%
3,30%
0,00%
0,00%
10,00%
0,00%
3,19%
0,00%
7,51%
0,00%
0,00%
0,00%
0,00%
6,17%
0,00%
0,00%
12,50%
0,00%
0,00%
0,00%
0,00%
213
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50.710
(19.888)
30.822
-
30.822
7.645.283
(2.701.018)
4.944.265
1.570.447
6.514.712
11.777.672
(5.660.212)
6.117.460
1.394.882
7.512.342
1.361
(428)
933
113
1.046
174.194
(74.991)
99.203
30.539
129.742
(81.998)
(28.539)
(2.003)
-
-
16.919.707
(6.243.636)
10.676.071
225.602
10.901.673
6.566.634
(2.954.095)
3.612.539
1.318.712
4.931.251
-
-
-
-
-
803.293
(416.182)
387.111
173.689
560.800
(20.269)
(6.048)
(108.052)
(20.839)
-
(112.540)
(155.208)
15.261.051
(7.341.091)
7.919.960
4.496.633
12.416.593
5.754.556
(2.541.411)
3.213.145
545.168
3.758.313
1.004.272
(427.073)
577.199
242.114
819.313
307.080
(169.443)
137.637
53.780
191.417
-
-
(24.448)
(263.978)
(55.077)
(343.503)
6.020.507
(1.683.564)
4.336.943
1.999.010
6.335.953
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27.827
(18.000)
9.827
4.245
14.072
(47.543)
(47.543)
Generation
In service
Accumulated depreciation
In construction
Transmission
In service
In construction
Accumulated depreciation
Distribution/Commercialization
In service
Accumulated depreciation
In construction
Administration
In service
In construction
Accumulated depreciation
Concession-linked obligations
(-) Amortization and reversals
(-) Consumers’ contributions
(-) Federal Government’s participation
(-) Donations and grants for investment
(-) Other
TOTAL
Annual average depreciation rate (%)
Generation
Transmission
Distribution/Commercialization
Administration
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRáS
LOANS AND FINANCING OBTAINED AS OF DECEMBER 31
(In thousands of Brazilian reais)
IN FOREIGN CURRENCY
Financial Institutions
Inter-American Development Bank - IDB
Corporación Andino de Fomento - CAF
Kreditanstalt fur Wiederaufbau - KFW
AMFORP & BEPCO
Dresdner Bank
Eximbank
Other
Bonus
Bonus - Dresdner Bank
Other
National Treasury - Itaipu
IN LOCAL CURRENCY
Receivables Investment Fund (FIDC)
Other
2007
2006
CONSOLIDATED
ChARGES
CuRRENT
PRINCIPAL AMOuNT
NON
ChARGES
CuRRENT
PRINCIPAL AMOuNT
NON
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
ChARGES
CuRRENT
AvERAGE
RATE
CONSOLIDATED
2007
PRINCIPAL AMOuNT
NON
ChARGES
CuRRENT
AvERAGE
RATE
2006
PRINCIPAL AMOuNT
NON
vALuE
CuRRENT
CuRRENT
vALuE
CuRRENT
CuRRENT
5,62%
8,06%
5,73%
6,50%
6,25%
2,15%
7,75%
4.578
1.934
199
-
266
1.721
366
9.064
4.052
4.052
-
-
32.957
6.959
24.773
296
24.772
34.767
1.790
126.314
-
-
-
-
313.091
184.089
100.540
303
100.539
330.291
16.629
1.045.482
531.390
531.390
-
-
6,97%
7,94%
5,73%
6,50%
6,25%
2,15%
5,15%
7,75%
6.860
1.913
259
-
345
2.136
347
11.860
4.892
4.892
-
-
49.074
8.399
26.783
607
26.783
39.410
2.160
153.216
-
-
-
-
417.687
238.998
135.793
1.218
135.792
413.807
22.766
1.366.061
641.400
641.400
-
-
5,62%
8,06%
5,73%
6,50%
6,25%
2,15%
7,75%
4.578
1.934
479
-
382
1.721
558
9.652
4.052
4.052
6.202
6.202
32.957
6.959
47.610
296
35.859
34.767
14.858
313.091
184.089
123.378
303
111.625
330.291
34.699
-
-
531.390
531.390
667.338
667.338
9.179.553
9.179.553
6,97%
7,94%
5,73%
6,50%
6,25%
2,15%
7,75%
6.860
1.913
259
-
345
2.136
1.332
12.845
4.892
4.892
8.242
8.242
49.074
8.399
26.783
607
26.783
39.410
56.347
417.687
238.998
185.174
1.218
159.765
413.807
57.006
-
-
641.400
641.400
546.469
546.469
13.751.786
13.751.786
173.306
1.097.476
207.403
1.473.655
13.116
126.314
1.576.872
16.752
153.216
2.007.461
19.906
840.644
10.808.419
25.979
753.872
15.866.841
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32.162
32.162
306.419
230.068
536.487
277.296
1.895.607
2.172.903
-
8.530
8.530
534.272
667.525
1.201.797
486.333
1.466.752
1.953.085
13.116
126.314
1.576.872 -
16.752
153.216
2.007.461
52.068
1.377.131
12.981.322
34.509
1.955.669
17.819.926
a) The debt is guaranteed by the Federal Government and/or Eletrobrás.
b) The total debt in foreign currency, including charges, amounts to R$ 1,716,302 thousand (Company), corresponding to US$ 968,951 thousand, and R$
11,668,969 thousand (Consolidated), corresponding to US$ 6,587,799 thousand. The percentage distribution by currency is as follows:
COMPANY
CONSOLIDATED
US$
64%
91%
EURO
15%
5%
YEN
21%
4%
c) Loans and financing incurred interest at the average rate of 7,03% p.a. in 2007 and 6.83% p.a. in 2006.
d) The long-term portion of loans and financing denominated in thousands of US Dollars matures as follows:
COMPANY
CONSOLIDATED
2009
64.174
397.481
2010
106.441
444.844
2011
106.441
501.932
2012
106.441
633.921
2013
93.384
467.046
After 2013
413.353
4.883.473
TOTAL
890.234
7.328.697
Annual Report 2007
Attachment v
ChARGES
CuRRENT
AvERAGE
RATE
CONSOLIDATED
2007
PRINCIPAL AMOuNT
NON
ChARGES
CuRRENT
AvERAGE
RATE
2006
PRINCIPAL AMOuNT
NON
vALuE
CuRRENT
CuRRENT
vALuE
CuRRENT
CuRRENT
2007
2006
CONSOLIDATED
ChARGES
CuRRENT
PRINCIPAL AMOuNT
NON
ChARGES
CuRRENT
PRINCIPAL AMOuNT
NON
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
AvERAGE
RATE
vALuE
CuRRENT
CuRRENT
5,62%
8,06%
5,73%
6,50%
6,25%
2,15%
7,75%
4.578
1.934
479
-
382
1.721
558
9.652
4.052
4.052
6.202
6.202
32.957
6.959
47.610
296
35.859
34.767
14.858
173.306
313.091
184.089
123.378
303
111.625
330.291
34.699
1.097.476
-
-
531.390
531.390
667.338
667.338
9.179.553
9.179.553
6,97%
7,94%
5,73%
6,50%
6,25%
2,15%
7,75%
6.860
1.913
259
-
345
2.136
1.332
12.845
4.892
4.892
8.242
8.242
49.074
8.399
26.783
607
26.783
39.410
56.347
207.403
417.687
238.998
185.174
1.218
159.765
413.807
57.006
1.473.655
-
-
641.400
641.400
546.469
546.469
13.751.786
13.751.786
13.116
126.314
1.576.872
16.752
153.216
2.007.461
19.906
840.644
10.808.419
25.979
753.872
15.866.841
13.116
126.314
1.576.872 -
16.752
153.216
2.007.461
52.068
1.377.131
12.981.322
34.509
1.955.669
17.819.926
-
32.162
32.162
306.419
230.068
536.487
277.296
1.895.607
2.172.903
-
8.530
8.530
534.272
667.525
1.201.797
486.333
1.466.752
1.953.085
IN FOREIGN CURRENCY
Financial Institutions
Inter-American Development Bank - IDB
Corporación Andino de Fomento - CAF
Kreditanstalt fur Wiederaufbau - KFW
AMFORP & BEPCO
Dresdner Bank
Eximbank
Other
Bonus - Dresdner Bank
Bonus
Other
National Treasury - Itaipu
IN LOCAL CURRENCY
Receivables Investment Fund (FIDC)
Other
5,62%
8,06%
5,73%
6,50%
6,25%
2,15%
7,75%
4.578
1.934
199
-
266
1.721
366
9.064
4.052
4.052
-
-
-
-
-
32.957
6.959
24.773
296
24.772
34.767
1.790
313.091
184.089
100.540
303
100.539
330.291
16.629
6,97%
7,94%
5,73%
6,50%
6,25%
2,15%
5,15%
6.860
1.913
259
-
345
2.136
347
49.074
8.399
26.783
607
26.783
39.410
2.160
126.314
1.045.482
11.860
153.216
1.366.061
531.390
531.390
7,75%
4.892
4.892
417.687
238.998
135.793
1.218
135.792
413.807
22.766
641.400
641.400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
a) The debt is guaranteed by the Federal Government and/or Eletrobrás.
b) The total debt in foreign currency, including charges, amounts to R$ 1,716,302 thousand (Company), corresponding to US$ 968,951 thousand, and R$
11,668,969 thousand (Consolidated), corresponding to US$ 6,587,799 thousand. The percentage distribution by currency is as follows:
COMPANY
CONSOLIDATED
US$
64%
91%
EURO
15%
5%
YEN
21%
4%
c) Loans and financing incurred interest at the average rate of 7,03% p.a. in 2007 and 6.83% p.a. in 2006.
d) The long-term portion of loans and financing denominated in thousands of US Dollars matures as follows:
COMPANY
CONSOLIDATED
2009
64.174
397.481
2010
106.441
444.844
2011
106.441
501.932
2012
106.441
633.921
2013
After 2013
413.353
TOTAL
890.234
4.883.473
7.328.697
93.384
467.046
215
CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRáS
INCOME (LOSS) PER SEGMENT AS OF DECEMBER 31, 2007
(In thousands of Brazilian reais)
INCOME (LOSS) PER SEGMENT
GENERATION
CONSOLIDATED
TRANSMISSION
DISTRIBuTION
ADMINISTRATION
TOTAL
ITEMS
ELIMINATED
OPERATING REVENUES
OPERATING EXPENSES
TOTAL OPERATING REVENUES (EXPENSES)
FINANCIAL INCOME (EXPENSES)
13.277.440
3.791.948
(7.809.716)
(2.995.315)
5.467.724
(2.363.490)
796.633
593.741
OPERATING INCOME(LOSSES)
3.104.234
1.390.374
NON-OPERATING INCOME (LOSSES)
(12.324)
(23.564)
INCOME (LOSSES) BEFORE INCOME AND SOCIAL CONTRI-
BUTION TAX AND OWNERSHIP INTERESTS
3.091.910
1.366.810
Social contribution tax
Income tax
INCOME (LOSS) BEFORE OWNERSHIP INTERESTS
Profit sharing
Minority interest
(201.276)
(575.814)
2.314.820
(42.137)
-
(105.641)
(309.535)
951.634
(98.695)
-
2.893.331
-
(4.699.472)
-
(1.806.141)
-
195.782
-
(1.610.359)
-
(485)
-
-
(1.610.844)
-
117.386
326.081
-
(1.167.377)
-
(1.095)
-
9.458.012
(6.112.245)
23.308.486
(8.742.570)
4.199.452
(20.047.621)
715.442
(1.912.793)
3.260.865
596.453
50.845
(926.669)
1.311.895
(1.861.948)
2.334.196
(506)
(36.879)
1.311.389
(1.861.948)
2.297.317
-
-
-
(4.232)
(171.991)
(413.310)
(159.927)
(4.232)
-
-
-
-
-
-
-
-
-
-
-
17.540
145.958
(18.000)
1.474.887
(1.861.948)
1.712.016
NET INCOME (LOSS) FOR THE YEAR
2.272.683
852.939
(1.168.472)
1.456.887
(1.866.180)
1.547.857
INCOME (LOSS) PER SEGMENT
GENERATION
DISTRIBuTION
CONSOLIDATED
TRANSMISSION
ADMINISTRATION
ITEMS
ELIMINATED
TOTAL
OPERATING REVENUES
OPERATING EXPENSES
13.277.440
3.791.948
2.893.331
(7.809.716)
(2.995.315)
(4.699.472)
TOTAL OPERATING REVENUES (EXPENSES)
5.467.724
796.633
(1.806.141)
FINANCIAL INCOME (EXPENSES)
(2.363.490)
593.741
195.782
OPERATING INCOME(LOSSES)
3.104.234
1.390.374
(1.610.359)
NON-OPERATING INCOME (LOSSES)
(12.324)
(23.564)
(485)
INCOME (LOSSES) BEFORE INCOME AND SOCIAL CONTRI-
BUTION TAX AND OWNERSHIP INTERESTS
3.091.910
1.366.810
(1.610.844)
Social contribution tax
Income tax
(201.276)
(575.814)
(105.641)
(309.535)
INCOME (LOSS) BEFORE OWNERSHIP INTERESTS
2.314.820
951.634
(1.167.377)
Profit sharing
Minority interest
(42.137)
-
(98.695)
-
-
-
-
-
-
-
-
-
-
-
-
117.386
326.081
(1.095)
9.458.012
-
(8.742.570)
-
715.442
-
596.453
-
1.311.895
-
(506)
-
-
1.311.389
-
17.540
145.958
-
1.474.887
-
(18.000)
-
(6.112.245)
23.308.486
4.199.452
(20.047.621)
(1.912.793)
3.260.865
50.845
(926.669)
(1.861.948)
2.334.196
-
(36.879)
(1.861.948)
2.297.317
-
-
(171.991)
(413.310)
(1.861.948)
1.712.016
(4.232)
(159.927)
(4.232)
NET INCOME (LOSS) FOR THE YEAR
2.272.683
852.939
(1.168.472)
1.456.887
(1.866.180)
1.547.857
Annual Report 2007
Attachment vI
217
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. ELETROBRáS
SuMMARIZED FINANCIAL STATEMENTS OF CONTROLLED COMPANIES AS OF DECEMBER 31
(In thousands of Brazilian reais)
BALANCE SHEET
2007
BALANCE SHEET
2006
ATIvO
PASSIvO
ATIvO
Current
Noncurrent
TOTAL
Current
Noncurrent
Stockhold-
ers’ Equity
TOTAL
Current
Noncurrent
TOTAL
Current
Noncurrent
PASSIvO
Stockholders’
Equity
TOTAL
COMPANY AND SUBSIDIARIES TOGETHER
FURNAS
CHESF
ELETROSUL
ELETRONORTE
MANAUS
BOA VISTA
ELETRONUCLEAR
CGTEE
LIGHTPAR
ITAIPU
COMPANY AND SUBSIDIARIES TOGETHER
FURNAS
CHESF
ELETROSUL
ELETRONORTE
MANAUS
BOA VISTA
ELETRONUCLEAR
CGTEE
LIGHTPAR
ITAIPU
Other
Property, plant and
equipment, deferred
charges, and intangible
assets
1.870.702
1.789.042
488.855
2.143.497
274.121
53.909
729.988
184.785
97.209
1.530.658
2.266.530 14.426.075 18.563.307
415.335 16.263.627 18.468.004
3.401.232
2.038.700
873.677
1.308.261 17.274.411 20.726.169
2.469.358
1.590.753
85.105
186.007
7.894.648
6.485.044
723.775
527.777
190.901
42
4.437.118 31.047.697 37.015.473
604.484
46.993
679.616
11.213
93.650
2.618.257
1.769.686
420.269
2.513.896
613.890
40.589
526.944
74.988
72.846
2.513.342 13.431.708 18.563.307
4.832.314 11.866.004 18.468.004
2.203.751
3.401.232
8.617.406 20.726.169
2.469.358
612.396
186.007
100.264
7.894.648
4.455.577
723.775
642.208
118.054
190.901
177.130 37.015.473
777.212
9.594.867
1.243.072
45.154
2.912.127
6.579
1
2.378.875 34.459.468
Property, plant and
Other
equipment, deferred charges,
and intangible assets
2.405.707
1.287.923
478.001
2.046.913
14.239.713
18.692.333
594.785
805.407
16.356.602
18.239.310
1.854.624
3.138.032
2.549.482
1.647.877
449.888
3.222.366
12.920.485
18.692.333
5.138.059
11.453.374
18.239.310
634.543
2.053.601
3.138.032
2.544.950
1.563.303
16.901.557
21.009.810
5.703.061
7.363.967
7.942.782
21.009.810
294.718
50.454
708.007
321.111
93.934
481.533
35.485
622.719
13.746
93.650
1.623.924
2.400.175
101.310
187.249
6.302.482
7.633.208
439.051
51
773.908
187.635
402.380
33.548
560.783
52.082
85.323
844.114
44.545
1.153.681
2.400.175
109.156
187.249
2.706.629
4.365.796
7.633.208
10.469
1
711.357
102.311
213.800
773.908
187.635
45.741.339
1.373.819
428.703
43.938.816
45.741.338
2.640.411
42.887.128
STATEMENT OF OPERATIONS
2007
STATEMENT OF OPERATIONS
2006
Net operat-
ing
Operating
Service
Revenue
Expenses
Revenue
Financial
Income
(loss)
Operating
Income
(loss)
Non-oper-
ating
Income
(loss)
Income Tax
and
Soc. Con-
trib. Tax
Income
(loss)
for the Year
Net operating
Operating
Service
Financial
Operating
ating
and
Income (loss)
Revenue
Expenses
Revenue
Income (loss)
Income (loss) Income (loss)
for the Year
Non-oper-
Income Tax
Soc. Contrib.
Tax
549.145
5.105.173 (5.202.370)
3.980.753 (2.506.177)
(338.301)
4.624.070 (4.426.515)
812.406 (1.293.406)
(127.098)
108.652
1.271.697 (1.099.028)
(219.864)
(3.475)
5.967.576 (2.312.945)
131.122
19.089
(97.197)
1.474.576
210.844
197.555
(481.000)
(18.446)
172.669
(88.742)
15.614
1.055.733
(486.608)
101.744
(688.650)
(63.702)
9.371
(53.282)
19.358
609
3.654.631 (2.330.870)
958.536
987.968
312.588
(491.095)
(544.702)
(9.075)
119.387
(69.384)
16.223
1.323.761
(5.319)
(6.125)
(16.508)
(7.466)
267
183
(507)
235
-
(2.171)
(276.693)
(329.213)
(99.140)
(43.754)
-
-
(1.212)
-
(126)
-
676.524
652.630
196.940
(542.315)
(544.435)
(8.892)
117.668
(69.149)
16.097
1.321.590
5.219.183
(4.525.632)
693.551
3.265.709
(2.119.261)
1.146.448
539.268
(320.497)
3.743.587
(3.611.127)
218.771
132.460
886.469
(1.095.893)
(209.424)
85.572
1.204.488
156.928
3.832
(101.941)
(922.604)
(196.218)
(897)
(16.369)
281.884
(39.290)
2.935
(296.892)
(802.786)
(5.882)
(454.258)
(37.919)
5.581
(251.520)
43.924
439
396.659
343.662
212.889
(321.798)
(247.343)
(10.788)
30.364
4.634
3.374
96.218
234.152
64.355
(10.230)
(2.165)
1
(506)
(837)
-
(128.673)
(120.464)
(67.789)
(17.054)
-
-
(1.811)
(2.581)
(571)
364.204
457.350
209.455
(349.082)
(249.508)
(10.787)
28.047
1.216
2.803
6.107.603
(2.408.842)
3.698.761
(4.478.555)
(779.794)
(2.038)
-
(781.832)
BALANCE SHEET
2007
ATIvO
Other
Property, plant and
equipment, deferred
charges, and intangible
assets
PASSIvO
Stockhold-
ers’ Equity
TOTAL
1.870.702
2.266.530 14.426.075 18.563.307
2.618.257
2.513.342 13.431.708 18.563.307
1.789.042
415.335 16.263.627 18.468.004
1.769.686
4.832.314 11.866.004 18.468.004
488.855
873.677
2.038.700
3.401.232
420.269
777.212
2.203.751
3.401.232
2.143.497
1.308.261 17.274.411 20.726.169
2.513.896
9.594.867
8.617.406 20.726.169
274.121
53.909
729.988
184.785
97.209
604.484
1.590.753
2.469.358
613.890
1.243.072
612.396
2.469.358
46.993
85.105
186.007
40.589
45.154
100.264
186.007
679.616
6.485.044
7.894.648
526.944
2.912.127
4.455.577
7.894.648
11.213
93.650
527.777
42
723.775
190.901
74.988
72.846
6.579
1
642.208
118.054
723.775
190.901
1.530.658
4.437.118 31.047.697 37.015.473
2.378.875 34.459.468
177.130 37.015.473
STATEMENT OF OPERATIONS
2007
Net operat-
Non-oper-
Income Tax
Income
Revenue
Expenses
Revenue
Income
(loss)
Income
(loss)
Soc. Con-
trib. Tax
for the Year
ating
Income
(loss)
5.105.173 (5.202.370)
(97.197)
1.055.733
3.980.753 (2.506.177)
1.474.576
(486.608)
549.145
(338.301)
210.844
101.744
4.624.070 (4.426.515)
197.555
(688.650)
812.406 (1.293.406)
(481.000)
(63.702)
108.652
(127.098)
(18.446)
9.371
1.271.697 (1.099.028)
172.669
(53.282)
131.122
(219.864)
(88.742)
19.089
(3.475)
15.614
19.358
609
958.536
987.968
312.588
(491.095)
(544.702)
(9.075)
119.387
(69.384)
16.223
(5.319)
(6.125)
(16.508)
(7.466)
(276.693)
(329.213)
(99.140)
(43.754)
(507)
(1.212)
267
183
235
-
-
-
-
(126)
676.524
652.630
196.940
(542.315)
(544.435)
(8.892)
117.668
(69.149)
16.097
5.967.576 (2.312.945)
3.654.631 (2.330.870)
1.323.761
(2.171)
-
1.321.590
COMPANY AND SUBSIDIARIES TOGETHER
FURNAS
CHESF
ELETROSUL
ELETRONORTE
MANAUS
BOA VISTA
ELETRONUCLEAR
CGTEE
LIGHTPAR
ITAIPU
FURNAS
CHESF
ELETROSUL
ELETRONORTE
MANAUS
BOA VISTA
ELETRONUCLEAR
CGTEE
LIGHTPAR
ITAIPU
COMPANY AND SUBSIDIARIES TOGETHER
Annual Report 2007
Attachment vII
Current
Noncurrent
TOTAL
Current
Noncurrent
Current
Noncurrent
TOTAL
Current
Noncurrent
Stockholders’
Equity
TOTAL
BALANCE SHEET
2006
ATIvO
PASSIvO
Other
Property, plant and
equipment, deferred charges,
and intangible assets
2.405.707
1.287.923
478.001
2.544.950
294.718
50.454
708.007
321.111
93.934
1.373.819
2.046.913
594.785
805.407
1.563.303
481.533
35.485
622.719
13.746
93.650
428.703
14.239.713
16.356.602
1.854.624
16.901.557
1.623.924
101.310
6.302.482
439.051
51
43.938.816
18.692.333
18.239.310
3.138.032
21.009.810
2.400.175
187.249
7.633.208
773.908
187.635
45.741.338
2.549.482
1.647.877
449.888
5.703.061
402.380
33.548
560.783
52.082
85.323
2.640.411
3.222.366
5.138.059
634.543
7.363.967
844.114
44.545
2.706.629
10.469
1
42.887.128
12.920.485
11.453.374
2.053.601
7.942.782
1.153.681
109.156
4.365.796
711.357
102.311
213.800
18.692.333
18.239.310
3.138.032
21.009.810
2.400.175
187.249
7.633.208
773.908
187.635
45.741.339
STATEMENT OF OPERATIONS
2006
ing
Operating
Service
Financial
Operating
and
(loss)
Net operating
Operating
Service
Financial
Operating
Non-oper-
ating
Revenue
Expenses
Revenue
Income (loss)
Income (loss) Income (loss)
Income Tax
and
Soc. Contrib.
Tax
Income (loss)
for the Year
5.219.183
3.265.709
539.268
3.743.587
886.469
85.572
1.204.488
156.928
3.832
6.107.603
(4.525.632)
(2.119.261)
(320.497)
(3.611.127)
(1.095.893)
(101.941)
(922.604)
(196.218)
(897)
(2.408.842)
693.551
1.146.448
218.771
132.460
(209.424)
(16.369)
281.884
(39.290)
2.935
3.698.761
(296.892)
(802.786)
(5.882)
(454.258)
(37.919)
5.581
(251.520)
43.924
439
(4.478.555)
396.659
343.662
212.889
(321.798)
(247.343)
(10.788)
30.364
4.634
3.374
(779.794)
96.218
234.152
64.355
(10.230)
(2.165)
1
(506)
(837)
-
(2.038)
(128.673)
(120.464)
(67.789)
(17.054)
-
-
(1.811)
(2.581)
(571)
-
364.204
457.350
209.455
(349.082)
(249.508)
(10.787)
28.047
1.216
2.803
(781.832)
219
Initials used in the Financial Statements
Annual Report 2007
ALBRÁS
AES BANDEIRANTE
AES ELETROPAULO
AES SUL
AES TIETÊ
AMPLA
ANDE
ANEEL
ARTEMIS
BNDESPAR
CAIUÁ
CAJA
CCEE
CDSA
CEA
CEAL
CEAM
CEB
CEB Lajeado
CEEE - D
CEEE - GT
CELESC
CELG
CELPA
CELPE
CELTINS
CEMAR
CEMAT
CEMIG
CENTRO-OESTE DE MINAS
CEPISA
CERON
CESP
COELBA
COELCE
CJGE
COPEL
CPFL
CTEEP
DUKE
EATE
EBE
Alumínio Brasileiro S.A.
AES Bandeirante Empreendimentos Ltda.
AES Eletropaulo Metropolitana de Eletricidade de São Paulo S.A.
AES Sul Distribuidora Gaúcha de Energia S.A.
AES Tietê S.A.
Ampla Energia e Serviços S.A.
Administración Nacional de Electricidad
Brazilian Electricity Regulatory Agency
Artemis Transmissora de Energia S.A.
BNDES Participações S.A.
Caja Paraguaya de Judicaciones y Pensiones del Personal de Itaipu Binacional
Câmara de Comercialização de Energia Elétrica
Centrais Elétricas Cachoeira Dourada S.A.
Companhia de Eletricidade do Amapá
Companhia Energética de Alagoas
Companhia Energética do Amazonas
Companhia Energética de Brasília
CEB Lajeado S.A.
Companhia Estadual de Distribuição de Energia Elétrica
Companhia Estadual de Geração e Transmissão de Energia Elétrica
Centrais Elétricas de Santa Catarina S.A.
Centrais Elétricas de Goiás S.A.
Centrais Elétricas do Pará S.A.
Companhia Energética de Pernambuco
Companhia Energética do Maranhão
Centrais Elétricas Matogrossenses S.A.
Centrais Elétricas de Minas Gerais S.A.
Companhia de Transmissão Centro-Oeste de Minas
Companhia Energética do Piauí
Centrais Elétricas de Rondônia S.A.
Companhia Energética de São Paulo
Chapecoense Geração S.A.
Comissão Nacional de Energia Nuclear
Companhia Energética do Ceará
Companhia Paranaense de Energia
Companhia Paulista de Força e Luz
Companhia de Transmissão de Energia Elétrica Paulista
Duke Energy International, Geração Paranapanema S.A.
Empresa Amazonense de Transmissão de Energia S.A.
Empresa Bandeirante de Energia S.A.
EDP – Lajeado Energia S.A.
Centrais Elétricas do Rio Jordão S.A.
220
Annual Report 2007
Attachment vIII
EDP Lajeado
ELEJOR
ELEKTRO
ELOS
ELETROS
ELETROACRE
ELETROCEEE
ELETRONET
EMAE
ENERPEIXE
ENERSUL
ETEP
ETAU
ESCELSA
FACHESF
FGP
FIBRA
FND
GRALHA AZUL
GUASCOR
IBRACON
INB
INVESTCO
ITIQUIRA
LIGHT
MAE
NUCLEOS
NUCLEP
PAULISTA LAJEADO
PIRATININGA
PREVINORTE
REAL GRANDEZA
REDE LAJEADO
RGE
RS ENERGIA
SC ENERGIA
STN
TANGARÁ
TRACTBEL
TRANSIRAPÉ
TRANSLESTE
TRANSUDESTE
UIRAPURU
Elektro Eletricidade e Serviços S.A.
Fundação ELETROSUL de Previdência e Assistência Social
Fundação ELETROBRÁS de Seguridade Social
Companhia de Eletricidade do Acre
Fundação CEEE de Seguridade Social
Eletronet S.A.
Empresa Metropolitana de Águas e Energia S.A.
Enerpeixe S.A.
Empresa Energética do Mato Grosso do Sul
Empresa Paraense de Transmissão de Energia S.A.
Empresa de Transmissão do Alto Uruguai S.A.
Espírito Santo Centrais Elétricas S.A.
Fundação CHESF de Assistência e Seguridade Social
Fundo Garantidor das Parcerias Público Privadas
Fundação ITAIPU-BR de Previdência e Assistência Social
Fundo Nacional de Desenvolvimento
Guascor do Brasil Ltda.
Instituto dos Auditores Independentes do Brasil
Integração Transmissora de Energia S.A.
Investco S.A.
Itiquira Energética S.A.
Light Serviços de Eletricidade S.A.
Wholesale Electricity Market
Nucleos Instituto de Seguridade Social
Nuclebrás Equipamentos Pesados S.A.
Paulista Lajeado Energia S.A.
Companhia Piratininga de Força e Luz
Previnorte – Fundação de Previdência Complementar
Real Grandeza – Fundação de Previdência e Assistência Social
Rede Lajeado Energia S.A.
Rio Grande Energia Elétrica S.A.
Empresa de Transmissão de Energia do Rio Grande do Sul
Empresa de Transmissão de Energia de Santa Catarina S.A.
Sistema de Transmissão Nordeste S.A.
Tangará Energia S.A.
Tractbel Energia S.A.
Companhia Transirapé de Transmissão
Companhia Transleste de Transmissão
Companhia Transudeste de Transmissão
Uirapuru Transmissora de Energia S.A.
Companhia Transleste de Transmissão
Companhia Transudeste de Transmissão
Uirapuru Transmissora de Energia S.A.
221
Board of Executive Directors
Annual Report 2007
Eletronorte - Trasmission
Network – Tramoeste
(Eletronorte Files)
222
Board of Executive Directors Annual Report 2007
Eletrobrás’ Executive Board (EEB) is elected by the Board of Directors and is comprised of
five members: the president, who must be a member of the Board, and four officers. The EEB
works in compliance with the provisions set forth in the company’s By-Laws, and the guideli-
nes of the Board of Directors.
In December 2007, EEB was constituted as follows:
Valter Luiz Cardeal de Souza President on Duty
Aracilba Alves da Rocha Administration Officer
Luiz Augusto Pereira de Andrade Figueira Finance and Investors’ Relations
Valter Luiz Cardeal de Souza Engineering Officer
Officer (Acting)
João Ruy Castelo Branco de Castro Special Projects and Technological and
Industrial Development Officer
BOARD OF DIRECTORS
President
Nelson José Hubner Moreira Minister of Mines and Energy (Acting)
Directors
Ronaldo Schuck Secretary of Power Energy of the Ministry of Mines
and Energy
Miriam Aparecida Belchior Articulation and Monitoring Sub-Head – (SAM) –
Head of Staff
Luiz Soares Dulci State Minister Head of General Administrative Of-
fice of the Presidency of the Republic
Arlindo Magno de Oliveira Retired from Banco do Brasil
Victor Branco de Holanda Strategic Management Officer MF/SE
Wagner Bittencourt de Oliveira Infrastructure Area Officer/ Basic Inputs Area Of-
ficer - BNDES
AuDIT COMMITTEE
Title holders
Haílton Madureira de Almeida Representative to the Federative Union/Treasury
Francisco Ivaldo Frota Federative Union Comptroller/MME
Edison Freitas de Oliveira Federative Union Comptroller/MME
Carlos César Meirelles Vieira Holder of Preferred Share
Alternates
Marcelo Kalume Reis Representative to the Federative Union/Treasury
Danilo de Jesus Vieira Furtado Federative Union Controlling Shareholder/MME
Jairez Elói de Sousa Paulista Federative Union Controlling Shareholder/MME
Elson Espedito Panoeiro Holder of Preferred Shares
223
Independent Auditors Report
Annual Report 2007
Cepel – View of the High
Voltage Laboratory 2
(Cepel/Milton Maurente Files)
224
Parecer Auditores Idependentes Annual Report 2007
To the Management and Shareholders
Centrais Elétricas Brasileiras S.A. - Eletrobrás
1.
2.
3.
4.
5.
We have examined the balance sheet of Centrais Elétricas Brasileiras S.A. – Ele-
trobrás – individual and consolidated, dated December 31, 2007 and the related
statements of income, of changes in stockholders’ equity and of changes in finan-
cial position for the year then ended, all prepared under the responsibility of the
management. Our responsibility is to express an opinion on these financial state-
ments. As mentioned in Note 19, the investments in certain controlled companies
and parent companies as of December 31, 2007 were evaluated on the equity me-
thod based on financial statements examined by other independent auditors. Our
opinion thereon, insofar as it relates to these investments and the revenue arising
therefrom, in the amounts of R$ 33,759,973 thousand and R$ 2,010,440 thousand,
respectively, is solely based on that other independent auditor’s opinion.
Apart from what was mentioned on paragraph 3, our audit was conducted in accor-
dance with Brazilian auditing standards and comprised: a) work planning taking
into consideration the Company’s relevant balances, volume of transactions and ac-
counting and internal control systems; b) examination, on a test basis, of evidence
and records supporting the amounts and disclosures in the financial statements;
and c) evaluation of the most significant accounting practices used, and estimates
made by management as well as the presentation of the financial statements taken
as a whole.
So far, it was not presented the opinion of the independent auditors related to the
financial statements of the year ended in December 31, 2007 of the relevant parent
companies (NOTE 19) which investments were evaluated on the equity method.
As a result, it was not possible, by means of additional procedures of auditing, to
evaluate the compliance of these investments, as well as the equity in earnings
income produced by them in the amount of R$ 376,404 thousand and R$ 4,774
thousand, respectively.
In our opinion, based on our examinations and the other independent auditors’
opinions, apart from the effects that may arise from the omitted procedures of
auditing mentioned on paragraph 3, the financial statements referred to in para-
graph 1 present fairly, in all material respects, the financial position of Centrais
Elétricas Brasileiras S,A. – Eletrobrás as of December 31, 2007, and the result of its
operations, the changes in stockholders’ equity and the sources and applications
of its resources correspondent to the year ended at that time, in accordance with
accounting practices adopted in Brazil.
We have examined the supplementary financial statements comprising the state-
ments of cash flow and value-added, both individual and consolidated, presented
for additional analysis purposes, though not required as part of the statutory finan-
cial statements. This supplementary information statements were submitted to the
same auditing procedures applied to the financial statements and, in our opinion,
225
Annual Report 2007
6.
7.
8.
9.
are fairly presented in all material aspects, in relation to the financial statements
referred in the first paragraph, taken as a whole.
As mentioned in NOTE 32, the company registered in the “non-current liability” the
amount of R$ 1,328,544 thousand related to provisions for civil contingencies for
claim by some corporations on the right to receive the monetary correction in full
on the amounts of Compulsory Loan collected to the advantage of Eletrobrás. Ba-
sed on the opinion of its legal assistants who reveal uncertainty on the possibility
of loss of the correspondent law suits (in 2003 the possibility of loss was classified
as possibility of failure in the defense of the lawsuits in process), at the beginning
of the care, in view of the confirmation of the unfavourable decisions in first pro-
secution and of the inexistency of judgment in superior courts, the Management of
the company maintained registered the provision for contingencies, mainly consti-
tuted in previous years as a way of making a stand against fortuitous losses resul-
ted from unfavourable judicial decisions. As a controversy issue, it is not possible
at the current circumstances to come to any conclusion about the outcome of the
issue as well as the fortuitous impacts on the financial statements.
The company, aiming at the certification at U.S. – Security and Exchange Commis-
sion – SEC, has been working in the process of development of its internal controls
and its corporative governance to be in accordance with the Sarbanes Oxley Law
(Section 404) and, consequently, to reduce the possibility of risks and frauds in its
business in all its levels.
The financial statements of Furnas – Centrais Elétricas S.A. for the year ended
December 31, 2007, were examined by other independent auditors, whose opinion
dated February 21, 2008 emphasized the balance of value added tax (ICMS) of
R$ 44,067 thousand, registered by Furnas in the current asset, resulting from the
Agreement of Commitment and Financial Cooperation between Eletronorte – Cen-
trais Elétricas do Norte do Brasil S.A. and the Departamento de Estradas e Rodagem
do Estado do Mato Grosso for work, implantation and pavement with asphalt of the
road that accesses the “Aproveitamento Múltiplo de Manso”. All the work done was
transferred to the Company in 1999 by the Resolution of Conselho Nacional de De-
sestatização nº 02/1999, complemented by Resolution nº 04/1999. In June 13th,
2007 the “Termo da Ação de Conclusão Fiscal” in which is written that “The Gover-
nment of Estado do Mato Grosso will reimburse Furnas for the value correspondent
to the percentage of its participation”, enlightening that “After the conclusion of
the service orders related to all companies, it will be possible to verify the value
to be given back to Furnas, if the case”. Therefore, the liquidation of this credit
still depends on the procedures resulted from actions of Finance Department of the
State of Mato Grosso in relation to the definition of the value as well as the date
of its execution.
We examined the financial statements of Centrais Elétricas do Norte do Brasil S.A.
– Eletronorte, for the year ended December 31, 2007 and we issued unqualified
opinion, dated February 20, 2008, emphasizing the following: a) insufficiency of
working capital and operational losses retained in the last years, in the subsidiary
226
Annual Report 2007
227
Manaus Energia S.A., depending on the amount of resources from its controller
shareholder to guarantee that the operations go on. b) continuity in the business
of the subsidiary Boa Vista S.A.; and c) Eletronorte sponsors, with its subsidiaries
Manaus Energia S.A. and Boa Vista Energia S.A., the private social security entity
called “Previnorte – Foundation of Complementary Private Social Security”. The
mathematical/actuarial reserves were prepared by the independent actuary of the
Foundation, based on the biometric table AT-49, with an amendment for 2 (two)
years for the projection of the longevity of the participants and assisted people.
Previnorte is promoting, gradually, the implementation of the table AT-83, as re-
quested by the Resolution CGPC nº 18, as of March 28, 2006, which final term
for the adoption of this table ends on December 31, 2008. Therefore, taking into
account the current stage of this process as well a the due date for the adoption of
the said table, fortuitous adjustments can be identified within the future financial
statements resulting from the application of the NPC nº 26 from IBRACON – Insti-
tute of Independent Auditors of Brazil.
The financial statements of Companhia de Eletricidade do Acre – Eletroacre, for
the year ended December 31, 2007 were examined by other independent auditors,
whose unqualified opinion dated February 15, 2008 emphasized that the financial
statements were prepared counting on the continuity in the business of the com-
pany. Nevertheless, despite the income reached in the last two years, the company
has been having accumulated losses through the years, supported by the controller
shareholder, with resources bound for capital increase. Therefore, for the deve-
lopment and continuity of the operations, the company has been implementing
measures aiming at the economic-financial viability of the enterprise.
The financial statements of CTEEP – Companhia de Transmissão de Energia Elétrica
Paulista, for the year ended December 31, 2007 were examined by other indepen-
dent auditors, whose unqualified opinion of January 30, 2008 emphasized the fact
that, in accordance with de decision of 49th Jurisdiction of Work of São Paulo,
from September 2005 on, the Foundation CESP began to issue the payroll of the
supplementary pension plan’s beneficiaries ruled by Law 4,819/58, using funds
onlended by the Company in the way it had been done until December 2003.
In Janeuary 2006 the State of São Paulo Office of the General Attorney had the
understanding that the State Government’s responsibility was restricted to the
constitutional limits of the State determined for the payment of the retirement
benefits. Since then, the Government of State began to stop some of the funds
onlended to the Company. The Management of the Company, supported by its legal
advisors, understands that the responsibility by the payments of benefits related
to the issue is responsibility of the Government of State. As a result, no obligation
whatsoever has been recorded in connection therewith.
We examined the financial statements for the year ended December 31, 2006, pre-
sented for comparative purposes, and we issued unqualified opinion dated March
26, 2007 containing similar emphasis to those described in paragraphs 5, 6, 7, 8c,
9, 10 and 11, besides the following:
10.
11.
12.
Annual Report 2007
a)
b)
c)
d)
The financial statements of Furnas – Centrais Elétricas S.A. for the year ended De-
cember 31, 2006, were examined by other independent auditors, whose opinion
dated March, 2007, emphasized that the amount of R$ 293,560 thousand from
energy sale transactions performed within the Electric Energy Commercialization
Chamber – CCEE (formerly Wholesale Energy Market – MAE) sphere of activity in
the period from September 2000 to September 2002, are still on the effect of
temporary restricting judicial orders filed by companies of the electric sector in
order to interrupt the payment. In 2007, due to the uncertainty of the financial
accomplishment of the values to receive, Furnas constituted provisions for allo-
wance for doubtful accounts, considering the integrality of these values.
The financial statements of Eletrosul Centrais Elétricas S.A. for the year ended
in December 31, 2006 were examined by other independent auditors, whose un-
qualified opinion, dated February 14, 2007 emphasized the non homologation
of the tariff review applicable to the tariffs from July 1, 2005. This homologa-
tion occurred on July 02, 2007 promoting a reduction of the Annual Permitted
Income – RAP of 1.36%, representing an adjustment of R$ 23,632 thousand
which will be deduced from the monthly billings in 24 installments of R$ 985
thousand from July, 2007 on.
The financial statements of Eletrobrás Termonuclear S.A. – Eletronuclear for the
year ended December 31, 2006 were examined by other independent auditors,
whose unqualified opinion, dated February 09, 2007 emphasized the inclusion
of Angra 3 Project in the Program of Investments of the Federal Government,
thus enabling operation expansion and recovery of resources already used in
the current fixed assets. In 2007, National Council of Energetic Politics - CNPE
by the Resolution nº 3/2007, dated July 25,2007, determined that Eletrobrás
and Eletronuclear led the retake of the construction of Angra 3 nuclear plant
considering the beginning of commercial operation in 2013.
The financial statements of Companhia Estadual de Distribuição de Energia Elé-
trica CEEE-D, for the year ended December 31, 2006 were examined by other
independent auditors, whose unqualified opinion, dated February 26,2007, em-
phasized the following aspects: a) In March 2, 2005, the Local Finance Depart-
ment informed us that despite the group work has not been finished the electric
energy account conciliation, which compounds part of the installment plan of
debts of energy in the amount of R$ 49,885 thousand, the group work has alrea-
dy informed the existence of unconformities. Therefore, before stating anything,
it is a good strategy to wait for the work conclusion; and b) the company has
been registering in long term asset the amount of R$ 15,889 thousand referring
to the receivable reimbursement of the Revision of the Extraordinary Tariff and
R$ 13,207 thousand referring to the Charges on the Service of System and in the
long term liabilities the amount of R$40,607 thousand, relating to the transac-
tions performed in the sphere of activity of Chamber of Electric Energy Commer-
cialization – CCEE in prior years.
228
Annual Report 2007
e)
f)
g)
h)
The financial statements of Companhia Estadual de Geração e Transmissão de
Energia Elétrica – CEEE-GT for the year ended December 31, 2006 were exami-
ned by other independent auditors, whose unqualified opinion dated of Februa-
ry 26, 2007 emphasized that the company registered in long term asset values
receivable in the amount of R$ 52,108 thousand, referring to the receivable
reimbursement from Review of the Extraordinary Tariff, and R$ 73,058 thou-
sand of payables recorded as long term liabilities referring to prior years’ energy
purchase and sale transactions performed in the CCEE’s sphere of activity.
The financial statements of CTEEP - Companhia de Transmissão de Energia Elé-
trica Paulista for the year ended December 31, 2006 were examined by other
independent auditors, whose unqualified opinion dated February 1, 2007 em-
phasized the adjustments of the Annual Permitted Income – RAP based on the
variations of the Market Price Index – IGP-M for tariff cycles of July 2005 to
June 2006 and from July 2006 to June 2007. In June 26, 2007, the first perio-
dical tariff review was approved, reducing the Annual Permitted Income – RAP
in 26.15%. The result of this reposition went into effect retroactively to July
1st, 2005.
The financial statements of Empresa Metropolitana de Águas e Energia S.A. –
EMAE for the year ended December 31, 2006 were examined by other indepen-
dent auditors, whose unqualified opinion, dated of March 09, 2007 emphasized
that the company is evaluating the economic and financial impact of changes
in the new sectoral model and the recent experience with energy auctions on
its businesses. In the Management’s opinion, besides the measures already
taken to reduce costs and increase revenues, ultimately enhancing profitability
and investments in the company’s generation complex, further measures cur-
rently under discussion with the Grantor will be required.
The financial statements of Centrais Elétricas de Rondônia S.A. – Ceron, for the
year ended December 31, 2006 were examined by the independent auditors,
whose unqualified opinion, dated of February 27, 2007emphasized that the
financial statements were prepared taking into account the continuity of the
company business. Nevertheless, the company has borne losses over the years,
and accordingly has taken measures for attaining economic and financial ba-
lance, ultimately being able to continue in business. In December 31, 2007,
Eletrobrás registered provision for insufficiency of assets over liabilities in pro-
portion to active participation in Ceron.
Rio de Janeiro, March 14, 2008
Luiz Carlos de Carvalho
Partner-Accountan
CRC 1SP197193/O-6 “S” RJ
BDO Trevisan Auditores Independentes
CRC2SP013439/O-5“S”
229
Decisão do Conselho de Administração
Annual Report 2007
230
Annual Report 2007
Decision of Board of Directors
DECISION OF BOARD OF DIRECTORS
The Board of Directors making use of its statutory attribution and in
agreement with terms as established by joint stock company legislation has
examined the Financial Statements as well as the opinion issued by Indepen-
dent Auditors and the Opinion of Fiscal Council all related to the fiscal year
ended as of December 31, 2007 and, deeming them fair and in order, decides
to submit the issue to the deliberation of the General Ordinary Meeting of the
company’s shareholders.
Brasília, March 19, 2008
231
Parecer
Annual Report 2007
232
Annual Report 2007
Opinion
OPINION
The Fiscal Council of Centrais Elétricas Brasileiras S.A.- Eletrobrás, within
its legal and statutory attributions, took notice of the Administration Report
and examined the Financial Statements referring to the year ended December
31, 2007, made up of Balance Sheet, Statements of Income, Changes in
the Shareholders’ Equity, Sources and Applications of Funds, Cash Flow and
Incremental Cash Flow, the Accompanying Notes to the Financial Statements
and its Enclosures, besides the Independent Auditors’ Opinion as well as
informed completely on the proposal relating to the destination of the results
of the year.
Considering the follow-up work that the Fiscal Council performed in respect
to the company throughout the year, based on the analysis of the documen-
tation presented, the information provided by the Accountant Department
– DFC and the Opinion of BDO Auditores Independentes, that states that the
Financial Statements fairly represent, in all its relevant aspects the sheet and
financial position of Centrais Elétricas Brasileiras S.A on December 31, 2007,
the Fiscal Council of Eletrobrás, emphasizing the understandings as stated in
the paragraphs nº 6, 7, 8, 9, 10 and 11 of the independent auditors’ opinion,
understands that the referred to Financial Statements are in condition to be
submitted to the deliberation of the Shareholders General Ordinary Meeting
of the Company.
It is clear that the proposal of the Management of Eletrobrás in relation
to the destination of the result of 2007 is supported by the current legal and
societary dispositions.
Brasília, March 19, 2008
233