Enel Americas
Annual Report 2001

Plain-text annual report

Table of contents Letter from the chairman of the Board Company identification Articles of incorporation and by-laws Historical overview Corporate purpose Identification of the company Ownership and control Dividend policy for the year 2002 Board of directors Organizational structure Management of Enersis Management of subsidiaries Distribution of human resources Activities Cultural activities Financial activities Businesses Corporate structure Subsidiaries: Generation Endesa - Chile Distribution Chilectra - Chile Río Maipo - Chile Edesur - Argentina Edelnor - Perú Cerj - Brazil Coelce - Brazil Codensa - Colombia Other businesses Synapsis Soluciones y Servicios IT CAM CAM (Ex Diprel) Inmobiliaria Manso de Velasco Liability statement Identification of other subsdiaries and related companies Consolidated financial statements of Enersis Individual financial statements of Enersis Financial statements of subsidiaries 2 6 6 6 7 7 8 10 12 15 16 17 18 21 21 22 25 30 32 34 38 40 42 44 46 48 50 52 54 56 58 60 62 64 65 69 197 243 10°(cid:31) 0°(cid:31) 10°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) COSTA RICA Barranquilla Maracaibo Caracas TRINIDAD & TOBAGO P A N A M A Medellín V E N E Z U E L A Georgetown Paramaribo C O L O M B I A Bogotá Cali Quito GUYANA SURINAM FRENCH GUIANA Cayenne Macapá B R A Z I L Guayaquil ECUADOR Manaus Belèm São Luis Fortaleza 10°(cid:31) 0°(cid:31) Recife Maceió 10°(cid:31) Salvador P E R Ú Lima P A C I F I C O C E A N Arica La Paz B O L I V I A Brasília 20°(cid:31) Tropic of Cancer Antofagasta P A R A G U A Y Asunción Belo Horizonte São Paulo Santos Rio de Janeiro A T L A N T I C O C E A N Pôrto Alegre CHILE Santiago Rosario URUGUAY Buenos Aires La Plata Montevideo Bahia Blanca A R G E N T I N A Punta Arenas 90°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) 30°(cid:31) 20°(cid:31) 500 1000 1500 2000 Miles 500 1000 1500 2000 2500 3000 Kilometers 30°(cid:31) 40°(cid:31) 50°(cid:31) 0 0 20°(cid:31) Tropic of Cancer 30°(cid:31) 40°(cid:31) 50°(cid:31) Letter from the Chairman of the Board Dear Shareholder: In a stunned world, the economic activity shrank even more and forced most of the countries to I am pleased to submit the 2001 Annual Report concentrate on the existing problems inside their on the management and operations of the own frontiers. Enersis Group for your consideration. The negative feelings that already were around Before starting the summary of the activity of the our industry, particularly after the energetic crisis Group that I am honored to preside, I deem it of California and Brazil, were reinforced when essential to refer to the global context in which international giants of the energy markets started our activity was developed. to collapse, like Enron, AES, and some others Towards the end of the year 2000 in late paradigms of the industry growth in the region which, in their own time, were considered second millennium, the expectations were quite as well. optimistic, and most of the analysts thought that 2001 would set the starting of reactivation, both In such particularly polluted environment, our in developed and emerging economies. Shortly Latin America watched how the signs of growth after, though, a series of macro-unbalances in started to weaken, even how the recession ghost Asia, the deepening of the Middle East crisis, started showing up, with its sequels of social and the permanent fall in the activity in the United political instability. States and the dramatic slow down of the Latin American economies made the hopes for better On the other hand, it is worth remembering days to become blurry. that between the Río Grande and Cape Horn there are 24 countries, with a different history This worrying context turned into anguish in and potential. This might partially explain why the moments following the execrable attacks on different situations of recession and instability the New York Twin Towers and the Pentagon in have been noticed in the region, with diverse Washington, where thousands of innocents lost degrees and depths. In average, though, the their lives among unforgettable scenes of pathetic region was once again considered a high-risk area pain. and the capital flows started their search for an exit door. In a close synthesis, this can be considered the solutions; other areas, usually warm, have had to social, political and economical scenario in mid of make use of collective and individual solutions which we have performed. of climatization, intensive in electric consumption. The former has made the per capita electric Nevertheless, the instability and slow down of energy consumption grow at higher rates than the economic activity taught us one of the great the variation in the product, a circumstance that lessons of 2001: that energy in all its forms, has contributed to the stability of industry flows. particularly electricity, has reinforced itself as one of the most important pillars to sustain the This positive antecedent, however, has been development of peoples. This is evidenced by establishing true challenges. As a way of example, the strict correlation between product growth and to count with a reliable energetic park enough increase in demand for energy, as noticed in the to face this sustained growth on demand. In the most diverse locations. region, as a result from the energetic unbalances, the process of electrical interconnection has In fact, the more people increase their purchasing become a real need. This, however, lies on power, the more they need higher sophisticated reliable and stable supplying markets. In this goods or products that demand intense use sense, it is worth mentioning that one of of energy, particularly electricity. the essential conditions for the operation and Climate variation in the projection of the regional interconnection is the planet has also reliability in supplies to customers located outside contributed to this the frontiers, without considering the internal structural change as difficulties of each country. well. Traditionally, humid regions have The Enersis Group, as the main actor in the seen a reduction in their regional energetic area, has chosen to face this rainfall, forcing them to messy business environment with the caution and look for alternative serenity that the circumstances demand. energetic One of the first decisions was to strengthen the financial situation of the company. It is worth mentioning the execution of two syndicated loans (one for Enersis, and the other for Endesa Chile) for a total amount of US$1,000 million, one of A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 / / 3 the most important transactions done in the last Another main task for 2001 was to concentrate years in the private sector of Latin America. in operational improvements. A demonstration of These credits and the higher financial flexibility the former can be found in the better operational that it meant for the Enersis Group are a true result of 37%, equivalent to US$ 299 million, demonstration of the trust that the Company a reduction by 10% of the S&A expenses with generates in the international capital markets. respect to 2000; increase in labor productivity, from 1,223 customers per employee in Dec. 2000 Another relevant financial operation done during to 1,379 customers per employee in Dec. 2001. 2001 was the successful issuing of bonds in UF It is worth recognizing, though, a low damage (Unidades de Fomento), done in the Chilean of the energy loss index, mainly related to market, with a total placement (between Enersis the Brazilian distribution companies, due to the and Endesa Chile) equal to US$326 million, as rationing applied by the authority to constrain part of the objective of giving better coverage to the effects of the drought suffered by that assets and liabilities in a single currency, in order country. to reduce the exposition to variations in the price of the dollar. In the commercial environment, it is worth mentioning the inclusion of 317,000 new Additionally, in the field of the main financial customers, the improvement in energy purchase, operations, it is worth remembering the the diversification in customers’ portfolio and the re-purchase of Yankee bonds done both by keeping of the quality service levels. Enersis and its subsidiary Endesa Chile. Both operations, registered within the framework of Regarding investments, these were addressed the debt restructuration policy in the Group, preferentially to maintain and reinforce the took advantage of the lower relevant interest operational assets in order to keep the service rates and represented a consolidated profit of liability levels. The investments reached a global approximately US$ 24 million. amount of US$ 716 million, 72% of which were destined to the distribution business, while Another concrete example of the better financial 28% was destined to generation, mainly in the situation is the growth by 24% of EBITDA, higher continuation of the works of Central Ralco in by US$ 337 million compared to the 2000 figure, southern Chile. which has increased another key indicator of solvency, the interest coverage, from 2,1 times It is also worth mentioning the sound investment (Dec. 2000) to 2,7 times (Dec. 2001). in the State of Ceará, in northern Brazil, where Enersis and its parent company Endesa will build Enersis employees will continue contributing their a combined cycle power station, with a capacity professionalism and enthusiasm to achieve the of 310 MW, to mainly supply the needs for power objectives we have all set upon ourselves. and energy required by our subsidiary Coelce. Dear Shareholders, 2001 is already past and we At the same time, it must be remembered shall rescue its lessons, but the entrepreneurial that, during 2002, the second line of electric mentality forces us to look ahead, hope for a interconnection of the CIEN project, transporting better future and fight to achieve it. That is energy between Argentina and Brazil, should our challenge, and we adhere to it with trust, start its operations. This supposes a quantitative determination, and bravery. and qualitative improvement of the Argentinean generation subsidiary companies’ flows. You can be certain that, once again, all the capabilities of the Enersis Group will be Due to the previously mentioned measures, addressed to keep the leadership in a region that, and in spite of the unfavorable environment instead of being considered as difficult, we prefer described at the beginning of this annual report, to think of it as a region plenty of opportunities. the Enersis Group was able to strengthen its key business fundamentals, which allow it to Kind regards, be alert to the best investment opportunities that may result in the region. Of course, the eventual investments shall be analyzed from a very selective perspective, so that they contribute in a certain way to create value for the investors, a central element to the company growth policy. Then, while some relevant actors of this sector are leaving the region, the Enersis Group is renewing its commitment to be the regional energetic leader. To fulfill these expectations, we count with a select human group, to which I dedicate my special appreciation for their great contribution and commitment with their work in a difficult 2001. I trust all of the Alfredo Llorente Chairman Enersis S.A. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 / / 5 Company identifi cation Articles of incorporation and by-laws the capital stock of Compañía Chilena Metropolitana de Distribución Eléctrica S.A. to the private sector The company was originally organized as Compañía began. This process was completed on August Chilena Metropolitana de Distribución Eléctrica S.A., 10, 1987. Through this process, private pension as recorded in public deed of June 19, 1981, funds (A.F.P.), the company’s workers, institutional executed before Patricio Zaldívar, Notary Public in investors and thousands of small investors became the city of Santiago and amended by notary deed of stockholders of the Company. July 13 the same year. The organizational structure was based upon The existence of the Company was authorized and operating activities or functions in which its by-laws were approved pursuant to resolution No 409-S of July 17, 1981, issued by the attainments were evaluated on a functional basis and profitability was limited by a tariff mechanism Superintendence of Securities and Insurance. The originating from the exclusive involvement of the abstract of such authorization and its approval Company in the business of electricity distribution. was recorded in the Official Commerce Register of Santiago, on page 13,099 No 7,269 of the year 1981, In 1987, the Board of Directors proposed a division of the different activities of the parent company. and published in the Official Gazette on July 23, Thus, four subsidiaries were formed that made it 1981. possible to manage them as business units with objectives of their own, thereby expanding the To date, the by-laws were subsequently amended. activities of the company to other non-regulated The existence of the company under the current businesses, though still related to the main scope name of Enersis S.A. dates back to August 1, 1988. of business. The latest of such amendment is acknowledged in public deed of May 26, 1999, executed before This proposal was approved by the Extraordinary Patricio Zaldívar. The abstract was recorded in the Shareholders’ Meeting held on November 25, 1987, Official Commerce Register of Santiago on page which established its new corporate purpose. 12,533, No 10,005 and published in the Official Gazette on June 8, 1999. Historical overview As a result, Compañía Chilena Metropolitana de Distribución Eléctrica S.A. became an investment company. On August 1, 1988, under resolution adopted by the Shareholders’ Meeting held on April On June 19, 1981, the Compañía Chilena de 12, 1988, the Company changed its corporate name Electricidad S.A. was restructured into a parent to Enersis S.A. company and three subsidiaries, one of which was Compañía Chilena Metropolitana de Distribución Furthermore, to the effects of providing enhanced Eléctrica S.A. customer service, as of June 1, 1989, it was approved the division of subsidiary Distribuidora In 1985, as a result of the privatization policy Chilectra Metropolitana S.A. into a successor enacted by the Government of Chile, the transfer of company that retained the corporate name, and a new company incorporated under the name of whatever nature and in any form or to the provision COMPANY IDENTIFICATION Compañía Eléctrica del Río Maipo S.A., that currently of public utilities, or which has energy as their main serves the electric energy distribution needs of the input. In order to comply with its main purpose, the rural and semi-urban areas of Chile’s Metropolitan Company will perform the following functions: Corporate name ENERSIS S.A. Type of company Public by held limited liability company Region. The Extraordinary Shareholders’ Meeting held on or liquidate companies of any nature, whose April 27, 1994 approved changing the corporate corporate purpose is similar or related to those a) Promote, organize, set up, modify, dissolve name of subsidiary Distribuidora Chilectra of the Company. Metropolitana S.A. to that of Chilectra S.A., effective as of June 1, 1994. Corporate purpose b) Propose to its subsidiary companies investment, financing and commercial policies as well as the accounting practices and principles which such companies shall abide by. The purpose of the company is to undertake both in Chile or abroad, the exploitation, development, c) Supervise and coordinate the management of its operation, distribution, transmission, transformation subsidiary companies. and/or sale of energy of whatever nature and in any form, directly or through other companies, d) Provide its subsidiary or related companies as well as the provision of engineering advisory with the needed financial resources to develop services, either in Chile or abroad, in matters their business activities, and in addition, furnish related to such purposes. Its purpose will further management services as well as financial, be to manage company investments in subsidiaries commercial, technical legal and auditing services or related companies whose scope of business is similar, related to or connected to energy of and, in general, any other services such as may appear necessary for a more adequate performance. In addition to its core business purpose and acting always within the bounds of the Investment and Financing Policy approved at the ordinary Shareholders’ General Meeting, the company may invest in: 1.- The acquisition, exploitation, construction, rental, management, marketing and disposal of any kind of real property, either directly or through subsidiary companies. 2.- All types of financial assets, including shares, bonds, debentures, commerce paper, and in general all kinds of securities and equity contributions to companies. Río de Janeiro, Brazil Tax register number 94,271,000 - 3 Address Avda. Kennedy N° 5454 Vitacura, Santiago Telephone (56-2) 353 4400 Fax (56-2) 378 4768 P.O. Box 1557, Santiago Web site www.enersis.com E-mail comunicacion@e.enersis.cl Securities register number Nº 175 External Auditors Arthur Andersen - Langton Clarke Subscribed and paid in capital (ThCh$) 729.328.347 Chilean stock exchange ticker symbol ENERSIS New York stock exchange ticker symbol ENI Madrid stock exchange ticker symbol XENI ADR’s Program custodian bank Banco de Chile ADR’s Program depositary bank Citibank N.A. Latibex custodian bank Banco Santander Latibex depositary bank Santander Central Hispano Investment S.A National risk rating companies Feller Rate Fitch International risk rating companies Fitch Moody’s Standard & Poor’s A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 / / 7 Ownership and control Ownership structure The capital stock of the company is divided in 9,380,000,000 shares of the same and only one series with no par value. At December 31, 2001, a total of 8,291,020,100 shares of common stock were subscribed and paid in, with the following breakdown: Shareholders Endesa S.A. A.F.P Citibank N.A. Stockbrokers, Mutual Funds and Insurance Co´s Foreign Investment Funds Other Shareholders Total Controllers identifi cation Number of Shareholders 3 7 1 88 8 9,716 9,823 Number of shares 5,389,163,065 1,164,868,741 744,587,100 448,850,206 83,630,103 459,920,885 8,291,020,100 % 65.00% 14.05% 8.98% 5.41% 1.01% 5.55% 100.00% Pursuant to Title XV of Law No 18,045, the controller of the company, Endesa S.A. of Spain, has an ownership interest in Enersis of 65% that derives from the controlling stake it has in the ownership of Compañía de Inversiones Chispa Uno S.A. (21.5%) and Endesa Internacional S.A. (8.4%) plus the 35.1% direct interest in the ownership through Elesur S.A. List of twelve largest shareholders of the company At December 31, 2001, Enersis was owned by 9,823 shareholders. The twelve largest were: Name Elesur S.A. Compañía de Inversiones Chispa Uno S.A. Citibank N.A. (According Circ. 1,375 S.V.S.) Endesa Internacional S.A. A.F.P. Provida S.A. (Pension Fund Type 1) A.F.P. Habitat S.A. (Pension Fund Type 1) A.F.P. Cuprum S.A. (Pension Fund Type 1) A.F.P. Santa Maria S.A. (Pension Fund Type 1) A.F.P. Summa Bansander S.A. (Pension Fund Type 1) Cia. Seg. Vida Consorcio Nacional de Seguros S.A. Banchile Corredores de Bolsa S.A. The Chile Fund Inc. (Bea Adm. Fdos Inv.) Subtotal: 12 shareholders Others : 9,811 Shareholders Total : 9,823 Shareholders RUT 96,800,570-7 96,641,060-4 97,008,000-7 59,072,610-9 98,000,400-7 98,000,100-8 98,001,000-7 98,000,000-1 98,000,600-K 99,012,000-5 96,571,220-8 59,028,400-9 Number of Shares 2,914,325,536 1,780,246,340 744,587,100 694,591,189 354,857,654 246,829,975 213,592,328 156,254,454 129,094,720 48,752,062 43,915,204 33,745,009 7,360,791,571 930,228,529 8,291,020,100 % 35.1504% 21.4720% 8.9806% 8.3776% 4.2800% 2.9771% 2.5762% 1.8846% 1.5570% 0.5880% 0.5297% 0.4070% 88.7803% 11.2197% 100.000% Changes in ownership During 2001, the most important changes in the ownership of Enersis were: Name RUT Number of Shares 2000 97,008,000-7 1,050,933,600 171,798,610 98,001,000-7 Number of Shares 2001 744,587,100 213,592,328 Variation (29.15)% 24.33% Citibank N.A. (According Circ. 1,375 S.V.S.) A.F.P. Cuprum S.A. (Pension Fund Type 1) The Chile Fund Inc. (Bea adm. Investment Fund) The Chile Emerging Markets (Index Common Trust Fund) 59,056,230-0 Cia. Seg. Vida Consorcio Nacional de Seguros S.A. 99,012,000-5 96,571,220-8 Banchile Corredores de Bolsa S.A. 59,028,400-9 37,427,265 33,745,009 (9.84)% 34,366,184 12,629,998 15,736,474 14,865,078 48,752,062 43,915,204 (56.75)% 286.00% 179.07% Stock exchange trading During 2001, Enersis´ shares transactions made by directors and principal executives of the company, were as follows: Shareholders RUT Number of Shares Traded Transaction price Relation with the Company Inmobiliaria e Inversiones Los Robles Ltda. 78,312,910-8 4,932 $195.98 Company related with Andrés Salas Estrades, executive of Enersis. Santiago Stock Exchange, Chilean Electronic Stock Exchange and Valparaiso Stock Exchange The number of shares traded in the stock exchange where Enersis shares are traded, both in Chile, through the Santiago Stock Exchange, the Chilean Electronic Stock Exchange, and the Valparaíso Stock Exchange, and in the United States and Spain, through the New York Stock Exchange (NYSE), Latin American Stock Exchange of Madrid (Latibex) correspondingly, are detailed below. QUARTERLY STOCK EXCHANGE INFORMATION OF THE LAST THREE YEARS Santiago Stock Exchange 1st Quarter 1999 2nd Quarter 1999 3rd Quarter 1999 4th Quarter 1999 1st Quarter 2000 2nd Quarter 2000 3rd Quarter 2000 4th Quarter 2000 1st Quarter 2001 2nd Quarter 2001 3rd Quarter 2001 4th Quarter 2001 Units 137,995,213 1,718,475,400 147,166,710 144,932,714 190,988,277 110,101,006 88,658,193 198,483,727 217,618,425 292,388,256 226,195,786 393,051,599 Amount ($) 35,192,825,361 525,233,029,516 35,449,847,785 35,221,568,865 40,078,550,323 23,513,620,910 18,383,256,232 39,102,614,613 44,437,043,299 57,663,194,013 41,936,113,910 73,344,332,507 Average Price 254.35 210.14 238.43 239.46 216.22 213.51 209.79 200.73 205.94 197.59 185.74 183.26 During 2001, 1,129 million shares were traded, equivalent to Ch$217,381 million. The share price closed at year-end with at Ch$177. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 / / 9 Chile Electronic Stock Exchange 1st Quarter 1999 2nd Quarter 1999 3rd Quarter 1999 4th Quarter 1999 1st Quarter 2000 2nd Quarter 2000 3rd Quarter 2000 4th Quarter 2000 1st Quarter 2001 2nd Quarter 2001 3rd Quarter 2001 4th Quarter 2001 Units 70,762,422 86,176,190 46,885,302 47,937,017 73,157,401 61,091,600 50,955,676 72,312,976 83,608,430 158,055,600 109,886,421 169,896,292 Amount ($) 18,039,564,862 18,253,304,394 11,077,897,779 11,229,140,678 15,149,830,280 13,142,859,608 10,684,550,675 14,105,017,267 17,152,644,402 31,321,294,251 20,354,381,577 31,038,862,776 Average Price 254.93 211.81 236.28 234.08 207.17 213.97 207.78 195.78 205.77 197.13 186.42 182.94 In 2001, 521 million shares were traded, equivalent to Ch$99,867 million. The share price closed at year-end at Ch$180. Valparaíso Stock Exchange 1st Quarter 1999 2nd Quarter 1999 3rd Quarter 1999 4th Quarter 1999 1st Quarter 2000 2nd Quarter 2000 3rd Quarter 2000 4th Quarter 2000 1st Quarter 2001 2nd Quarter 2001 3rd Quarter 2001 4th Quarter 2001 Units 6,520,657 11,217,506 4,480,228 1,222,160 4,651,539 3,320,362 743,378 812,885 1,170,182 2,746,772 2,071,416 4,724,089 Amount ($) 1,686,163,410 2,454,206,061 1,096,735,736 301,453,662 966,141,613 694,944,396 155,761,788 164,792,985 241,026,099 532,712,377 389,093,093 856,465,194 Avarage Price 258.58 218.78 244.79 246.65 207.70 209.29 209.53 202.72 205.97 193.94 187.83 181.29 In 2001, 11 million shares were traded, equivalent to Ch$2,019 million. The share closed at year-end with a price of $178.1 NEW YORK STOCK EXCHANGE ( NYSE) Dividend policy for the year 2002 In the United States of America, 24 million ADR´s (1 All present members of the Board of Directors ADR = 50 shares), equivalent to US$ 363 million were unanimously agreed to submit to the Shareholders’ traded. The price of the ADR closed at US$ 13.3. Meeting, scheduled for April 11, 2002, the following LATIN AMERICAN STOCK EXCHANGE OF MADRID STOCK EXCHANGE (LATIBEX) Dividend Policy they expect to enforce during 2002: In the months of May, August and November of the year 2002, and in the month of February 2003, an The shares of Enersis started trading in the Latin interim dividend to be charged to the net income American Stock Exchange (Latibex) on December of the year 2002, amounting to 85% of the income 17, 2001. The contract unit for the company is 50 before amortization of negative goodwill from normal shares and its stock exchange ticker symbol is XENI. operations in the quarters ending in the months of The Santander Central Hispano Bolsa S.A. S.V.B. will March, June, September and December of such fi scal perform as the Company’s specialist intermediary. year. For purposes of the above calculation, the interim dividends for the year 2002 already distributed on In Latibex, 91 thousands titles were traded in such distribution date will be deducted from 85% of December (1 title = 50 shares), equivalent to 1 million the cumulative income before amortization of negative euros. The price of the share closed at 15.5 euros. goodwill. Dividends established in pursuance of this policy will 5.- Accounting recognition of positive and negative be applied to the income originated from normal goodwill associated with the investments. company operations, understanding as such the income before amortization of negative goodwill obtained by the The Board of Directors shall not distribute interim Company in the period 2002, without considering those dividends based on the income before amortization of resulting from the following events: negative goodwill that arise from the above events and the Ordinary Shareholders’ Meeting shall state their 1.- Accounting effects deriving from the valuation of view thereon when approving the final dividend. equity contributions made to subsidiary companies. 2.- Accounting effects deriving from the recognition of of the Company and, consequently, its fulfillment will the premium in equity placement by subsidiaries of be subject to the actual income before amortization of The foregoing is the intention of the Board of Directors their own stock. negative goodwill as well as to the results reflected in the projections that the Company makes from time to 3.- Profi ts arising, directly or indirectly, from participation time, or to the existence of given conditions. in related companies organized in Chile or abroad. As for the final dividend policy, it is the purpose of 4.- Profi ts generated by subsidiary companies organized the Board of Directors that such dividends are as a abroad or by subsidiary companies in which the minimum the interim dividends already distributed or participation of the Company, either directly or the minimum stated by the Chilean Law on Stock indirectly, is less than 60% of the capital stock of Companies, whichever of the two is higher. those companies, as well as profits deriving from the disposal of assets in such companies. The following table shows the dividends per share paid out over the last five years. Dividend Number 64 65 66 67 68 69 70 71 Dividend Type Interim Interim Interim Interim Definitive Interim Definitive Definitive Closing Date 22.05.97 22.08.97 21.11.97 20.02.98 07.05.98 20.11.98 11.05.99 19.04.01 Due Date 28.05.97 28.08.97 27.11.97 26.02.98 13.05.98 26.11.98 17.05.99 25.04.01 Ch$ per Share ($ at each year) 1.500000 2.000000 2.400000 0.800000 4.500000 1.600000 4.000000 1.806391 Accrued in 1997 1997 1997 1997 1997 1998 1998 2000 Distributable profi ts (ThCh$ at dec 2001) Sinthesis of shareholders’ comments and proposals Net income of the period 40,926,246 Less: higher amortization, investment value Net income before amortization of negative goodwill 46,069,614 (5,143,368) Percentage distributed as a dividend upon distributable net income before amortization of negative goodwill No comments were submitted to Enersis regarding businesses carried out from January 1st to December 31st, 2001, either from senior partners or group of shareholders that total 10% or more of the shares issued with voting right, pursuant to the provisions of Article 74 of Law No. 18,046 and the Articles 82 and 83 0% of the Regulation on Stock Companies. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 / / 1 1 Board of directors Alfredo Llorente Rafael Miranda Luis Rivera Enersis is managed by a Board of Directors made up DIRECTORS: by seven members who serve a three-year term and may be reelected. The Board of Directors elected in the Ordinary Shareholders’ Meeting on April 2, 2001, at December 31, 2001 was composed as follows: CHAIRMAN: Alfredo Llorente Tax register number: 48,062,400-9 Profession: Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Madrid VICECHAIRMAN: Rafael Miranda Tax register number: 48,070,966-7 Profession: Industrial Engineer Instituto Católico de Artes e Industrias (ICAI) de Madrid José Fesser Tax register number: 48,064,839-0 Profession: Lawyer Universidad de Sevilla Luis Rivera Tax register number: 48,071,010-K Profession: Road, Channels, and Ports Engineer Universidad Politécnica de Madrid Ernesto Silva Tax register number: 5,126,588-2 Profession: Commercial Engineer Pontificia Universidad Católica de Chile Hernán Somerville Tax register number: 4,132,185-7 Profession: Lawyer Universidad de Chile Eugenio Tironi Tax register number: 5,715,860-3 Profession: Sociologist Escuela de Altos Estudios en Ciencias Sociales, París, Francia SECRETARY OF THE BOARD OF DIRECTORS: Domingo Valdés Tax register number: 6,973,465-0 Profession: Lawyer Universidad de Chile José Fesser Ernesto Silva Hernán Somerville Eugenio Tironi Remuneration of the Board of Directors Pursuant to the provisions of article 33, Law No. 18,046 on Joint Stock Companies, the Ordinary Shareholders’ Meeting held on April 2, 2001, agreed upon the remuneration that corresponds to the Board of Directors for the accounting period 2001. Details on amounts paid to the Board of Directors of Enersis, and those who were Directors of this company and performed as subsidiary directors as well, are shown below: At December 31, 2000 Board of Directors Director Alfredo Llorente Ernesto Silva Rafael Miranda Luis Rivera Carlos Vicuña Jose Fesser Hernán Somerville Eugenio Tironi Enrique García Héctor López Leonidas Vial Total Enersis ThCh$ 51,369 25,684 34,246 22,830 10,556 25,684 25,684 7,565 - - - 203,618 Other subsidiaries ThCh$ 3,894 29,641 - - - - - - 14,195 18,780 56,316 122,826 Total ThCh$ 55,263 55,325 34,246 22,830 10.556 25,684 25,684 7,565 14,195 18,780 56,316 326,444 Board of Directors Enersis ThCh$ 49,323 24,601 35,183 24,006 - 24,597 24,601 24,599 - - - 206,910 At December 31, 2001 Board of Directors Committe of Enersis Other subsidiaries ThCh$ 2,340 2,332 - - - - 2,332 - - - - 7,004 ThCh$ - 8,539 - - - - - - - - - 8,539 Total ThCh$ 51,663 35,472 35,183 24,006 - 24,597 26,933 24,599 - - - 222,453 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 / / 1 3 Board of Directors’ expenses During 2001, the Board of Directors’ relevant expenses added up to $15 million , aproximately. committee and Domingo Valdés as the secretary of same committee. Activities of the committee during 2001 Committee of Directors Pursuant to the provisions of Article 50 bis of Law No. 19,705, Enersis has a Committee of Directors made up of three members, with the powers and duties provided in such article. At December 31, 2001, the Committee of Directors of Enersis was made up as follows: CHAIRMAN: Alfredo Llorente Tax register number: 48,062,400-9 Profession: Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Madrid MEMBERS: Ernesto Silva Tax register number: 5,126,588-2 Profession: Commercial Engineer Pontificia Universidad Católica de Chile Hernán Somerville Tax register number: 4,132,185-7 Profession: Lawyer Universidad de Chile SECRETARY OF THE COMMITTEE: Domingo Valdés Tax register number: 6,973,465-0 Profession: Lawyer Universidad de Chile In its first session of the period, on February 2, 2001, the Committee of Directors examined the External auditors’ report regarding the Balance Sheet and the Financial Statements corresponding to the accounting period 2000, and the examination of the External auditors’ report on bank draft and money brokerage, and the statement of account inspectors corresponding to the same period. In the aforementioned session and for the fiscal year 2001, the Committee of Directors proposed to the Board of Directors as follows: Arthur Andersen Langton Clarke as External auditors, Feller Rate and Fitch Chile as domestic risk rating private companies and Fitch, Moody’s and Standard & Poor’s as international risk rating private companies, proposals that were accepted by such Board. The Committee of Directors quarterly analyzed and approved the Individual and Consolidated Statements of the Company; examined the antecedents of the operations referred to by Articles 44 and 89 of Law 18,046 on Stock Companies; issued reports on such subject matters; and examined the remuneration systems and compensation plans for managers and main executive officers as well. As a conclusion, during the fiscal year 2001, Enersis’s Committee of Directors has properly dealt with the issues provided in Article 50 bis of Law 18,046 on Stock Companies. Committee income On January 29, 2001, the Board of Directors, in Ordinary Meeting No. 01/2001, unanimously agreed with attending members to conform the Committee During 2001, the Directors’ Committee income amounted to Ch$ 7 million approximately. of directors to the number of members provided in Committee expenses article 50 bis of Law No. 19,705, consequently reducing the members number of said Committee from four to three. As of said date, Enersis’s Committee of Directors was made up by the following members: Alfredo Llorente , Hernán Somerville and Ernesto Silva, appointing Alfredo Llorente as the chairman of such During 2001, the Committee of Directors did not make use of the budget for functioning expenses approved by the Ordinary Board of Shareholders held on April 2, 2001. Organizational structure CORPORATE COMMUNICATIONS OFFICER Fernando Nadal INSTITUTIONAL AFFAIRS DIRECTOR José Domínguez CHAIRMAN Alfredo Llorente CHIEF EXECUTIVE OFFICER Enrique García CORPORATE AUDITING OFFICER José Raventós CORPORATE AUDITING DIRECTTOR Rolf Heller GENERAL COUNSEL Domingo Valdés CORPORATE BUSINESS EXECUTIVE OFFICER Alberto López CHIEF DEVELOPMENT OFFICER Ignacio Blanco CHIEF REGULATION OFFICER Cristián Herrera* ADJUNCT CHIEF EXECUTIVE OFFICER Juan Domínguez CORPORATE PLANNING AND CONTROL OFFICER Rafael López* CHIEF FINANCIAL OFFICER Mauricio Balbontín CHIEF PLANNING OFFICER Juan Spöerer CHIEF INVESTMENTS AND RISK OFFICER Ricardo Alvial CHIEF CORPORATE ACCOUNTING OFFICER Fernando Isac CHIEF PROCUREMENT OFFICER Francisco Núñez CHIEF INFORMATION SYSTEMS OFFICER Cristóbal Sánchez (*) These executive offi cers were not in these positions at 12/31/01, but later on Rafael López substituted Martín Madrid, Cristián Herrera substituted José Kindelán, Alvaro Mondaca substituted Alfonso Brito and Víctor Badilla was promoted to a managerial position. (**) Gonzalo Martín left his position on January 1, 2002. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 / / 1 5 CORPORATE HUMAN RESOURCES OFFICER Luis de la Barra CHIEF STAFF BUSINESS OFFICER Víctor Badilla * CHIEF ORGANIZATION OFFICER Gonzalo Martín** CHIEF HUMAN RESOURCES OFFICER Alvaro Moncada* Management of Enersis INSTITUTIONAL AFFAIRS DIRECTOR: CHIEF EXECUTIVE OFFICER: Enrique García Tax register number: 14,704,156-K Profession: Civil Engineer (Infrastructure) Escuela Técnica Superior de ICCP de Madrid ADJUNT CHIEF EXECUTIVE OFFICER: Juan I. Domínguez Tax register number: 6,615,791-1 Profession: Commercial Engineer Universidad de Chile CORPORATE BUSINESS EXECUTIVE OFFICER: Alberto López Tax register number: 14,672,360-8 Profession: Industrial Engineer Universidad Politécnica de Madrid CORPORATE PLANNING AND CONTROL EXECUTIVE OFFICER: Rafael López Tax register number: 14,709,119-2 Profession: B.S. in Economic and Business Sciences Universidad de Málaga CORPORATE COMMUNICATIONS OFFICER: Fernando Nadal Tax register number: 14,683,859-6 Profession: Journalist and Lawyer Universidad Alcalá de Henares de Madrid CORPORATE AUDITING OFFICER: José Raventós Tax register number: 14,743,221-6 Profession: B.S. in Economic and Business Sciences Universidad de Sevilla CORPORATE HUMAN RESOURCES OFFICER: Luis de La Barra Tax register number: 7,045,333-9 Profession: Psychologist Pontificia Universidad Católica de Chile GENERAL COUNSEL: Domingo Valdés Tax register number: 6,973,465-0 Profession: Lawyer Universidad de Chile José Domínguez Tax register number: 6,372,293-6 Profession: Civil Engineer Pontificia Universidad Católica de Chile CORPORATE AUDITING DIRECTOR: Rolf Heller Tax register number: 5,541,080-1 Profession: Public Accountant and Auditor Pontificia Universidad Católica de Chile CHIEF FINANCIAL OFFICER: Mauricio Balbontín Tax register number: 9,148,940-6 Profession: Commercial Engineer Universidad de Chile CHIEF INVESTMENT AND RISK OFFICER: Ricardo Alvial Tax register number: 7,330,389-3 Profession: Public Administrator Universidad de Chile CHIEF CORPORATE ACCOUNTING OFFICER: Fernando Isac Tax register number: 48,075,561-8 Profession: Economist Universidad de Zaragoza CHIEF PROCUREMENT OFFICER: Francisco Núñez Tax register number: 14,733,340-4 Profession: Civil Engineer (Infrastructure) Universidad Politécnica de Madrid CHIEF INFORMATION SYSTEMS OFFICER: Cristóbal Sánchez Tax register number: 48,072,431-3 Profession: B.S. Information Systems Universidad Politécnica de Madrid CHIEF DEVELOPMENT OFFICER: Ignacio Blanco Tax register number: 14,677,073-8 Profession: Industrial Engineer and Economist Universidad Politécnica de Barcelona y Universidad de Zaragoza CHIEF REGULATION OFFICER: Cristián Herrera Tax register number: 10,545,763-4 Profession: Industrial Civil Engineer Pontificia Universidad Católica de Chile CHIEF STAFF BUSINESS OFFICER: Víctor Badilla Tax register number: 7,284,550-1 Profession: Psychologist B.S. in Psychology Pontificia Universidad Católica de Chile CHIEF ORGANIZATION OFFICER: Gonzalo Martín Tax register number: 14,714,812-7 Profession: B.Sc. in Chemical Sciences Universidad Complutense de Madrid Compensations Years-of-service compensations paid to Enersis’s managers in 2001 add up to Ch$65 million. This amount corresponds to managers who disassociated along the fiscal year 2001. Management of subsidiaries CHIEF EXECUTIVE OFFICER OF THE REGIONAL GENERATION BUSINESS: Héctor López Tax register number: 48,062,402-5 Profession: B.S. in Law and Economic Sciences ICADE de Madrid CHIEF HUMAN RESOURCES OFFICER: CHIEF EXECUTIVE OFFICER ENDESA CHILE: Alvaro Moncada Tax register number: 8,074,284-3 Profession: Commercial Engineer Universidad de Concepción CHIEF PLANNING OFFICER: Juan Spöerer Tax register number: 10,877,023-6 Profession: Commercial Engineer Pontificia Universidad Católica de Chile Remuneration of chief offi cers The total remuneration obtained by the aforementioned Enersis’s managers, during the year 2001, amounts to Ch$2,659 million. This amount Héctor López Tax register number: 48,062,402-5 Profession: B.S. in Law and Economic Sciences ICADE de Madrid CHIEF EXECUTIVE OFFICER OF THE REGIONAL DISTRIBUTION BUSINESS: Marcelo Silva Tax register number: 5,056,359-6 Profession: Commercial Engineer Universidad de Chile CHIEF EXECUTIVE OFFICER CHILECTRA: Julio Valenzuela Tax register number: 4,469,173-6 Profession: Electric Civil Engineer Pontificia Universidad Católica de Chile includes the remuneration of the existing officers at CHIEF EXECUTIVE OFFICER RÍO MAIPO: December 31, 2001, as well as those of the officers who disassociated along the period. Incentive plans Enersis has a yearly bonus plan for its executives for their goal achievement and individual contribution level to the company’s results. This plan includes a definition of bonus ranges in accordance with its executives’ hierarchical level. The bonuses that are occasionally given to the executives consist of a given number of monthly gross remunerations Alejandro Gómez Tax register number: 6,975,457-0 Profession: Civil Engineer Universidad de Chile CHIEF EXECUTIVE OFFICER EDESUR: José Rovira Tax register number: 38168242-H Profession: Electric Industrial Engineer Universidad Técnica Industrial de Barcelona A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 / / 1 7 CHIEF EXECUTIVE OFFICER EDELNOR: Emilio García Tax register number: 71249480-B Profession: Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Bilbao CHIEF EXECUTIVE OFFICER COELCE: Celestino Izquierdo Tax register number: 05872282-Z Profession: Industrial Engineer Universidad Politécnica de Madrid CHIEF EXECUTIVE OFFICER CERJ: Manuel Montero (*) Tax register number: 30785023-Y Profession: Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Madrid (*) He assumed this position on January 1, 2002, replacing Javier Villar. CHIEF EXECUTIVE OFFICER CODENSA: Marcelo Llévenes Tax register number: 9,085,706-1 Profession: Commercial Engineer Universidad de Chile Distribution of human resources CHIEF EXECUTIVE OFFICER SYNAPSIS SOLUCIONES Y SERVICIOS Y IT: Víctor Muñoz Tax register number: 7,479,024-0 Profession: Civil Engineer Universidad Federico Santa María de Valparaíso CHIEF EXECUTIVE OFFICER COMPAÑÍA AMERICANA DE MULTISERVICIOS UNO: Pantaleón Calvo Tax register number: 6,611,573-9 Profession: Civil Engineer Universidad de Chile CHIEF EXECUTIVE OFFICER COMPAÑÍA AMERICANA DE MULTISERVICIOS (FORMER DIPREL): Eduardo López Tax register number: 7,706,387-0 Profession: Commercial Engineer Universidad Católica de Valparaíso CHIEF EXECUTIVE OFFICER INMOBILIARIA MANSO DE VELASCO: Andrés Salas Tax register number: 6,002,870-2 Profession: Civil Engineer Universidad de Chile The distribution of human resources of Enersis and its subsidiaries and related companies, at December 31, 2001, was as follows: Company Enersis Endesa (1) Chilectra (2) Río Maipo Edesur Edelnor Cerj Codensa Coelce Synapsis (3) Cam Uno, former Cam (4) Cam, former Diprel (5) Inm. Manso de Velasco Total Top Executives 42 62 27 1 32 21 27 20 29 11 4 6 4 286 Professionals and Technicians 109 617 306 24 599 276 451 359 1,109 385 139 48 7 4,429 Administrative Staff 84 1,073 389 53 1,636 260 876 434 326 199 300 62 4 5,696 Total 235 1,752 722 78 2,267 557 1,354 813 1,464 595 443 116 15 10,411 (1) Includes: Endesa Chile - Ingendesa - Pangue - Pehuenche - Celta - San Isidro - Central Costanera - El Chocón - Edegel – Emgesa - Betania - Cachoeira - Infraestructura 2000 - Autop. Los Libertadores - Autop. El Sol - Túnel El Melón. (2) Includes: Empresa Eléctrica de Colina (3) Includes: Synapsis Chile - Synapsis Argentina - Synapsis Colombia - Synapsis Brazil - Synapsis Peru (4) Includes: Cam Chile - Cam Argentina - Cam Colombia - Cam Peru (5) Includes: Diprel Chile - Diprel Colombia - Diprel Peru One of the most relevant aspects in human resources results in a higher commitment with the present and matters carried out in 2001 is related with the inner future Group’s company project. re-structuring plan of Enersis’s subsidiaries, whose main objective was to improve the efficiency of the During the current year, a new evaluation system processes associated to the business support areas. for performance and incentives for all professional Regarding the Genesis Plan, promoted by the Group’s to the fulfillment of personal and company objectives. top management, both standard and cost objectives Besides, positions in the company were described and were reached in human resources as forecasted for evaluated according to the HAY methodology pursuant employees of the company was established, associated 2001. to the guidelines of the Group. These tools provided the background for the establishment of the company’s Another relevant fact of the year 2001 deals with the new salary policy for the middle and professional training plans carried out for workers (professional levels of the company, whose foundation is excellence and administrative), which aimed at consolidating in performance and results, and the competitive corporate values and the achievement of the Group’s market. strategic objectives, totaling 6,887 hours/man. Within the human resources strategic plan, it is worth program with the employees and their representatives mentioning the training of the region’s executive was established, which has resulted in a significant officers in an integration and development program increase in the quality of relations, reaching an Regarding work relations, a permanent communication in Spain, allowing them to share a wider and global outstanding level to date. vision of business as well as work on management skills which are essential to improve the management Summarily, the strategic Human Resources plan, based potential of this group. The training program is on the People Management Model, which started the only corporate activity that gathers executive two years ago, has continued. The establishment of officers from different countries, cultures, education the policies and guidelines of the Group in all the and business lines under the same umbrella, which companies of the Latin American region has continued parallelly to their advancement in the Holding. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 / / 1 9 Costanera Power Station, Argentina Saint Francis Shrine of Castro, Chile Activities Cultural activities Lorenzo Moya. This year the contest has included all the countries where the Group develops activities. An In the last years, Enersis not only has generated, accurate study of the works of the most representative transported and distributed electric power but it has artists of plastic arts of Argentina, Brazil, Colombia, also made a great effort to daily join to the cultural Chile and Peru was carried out. This way, 27 Latin development of the countries were it is present, mainly American artists participated and the winner was the in Chile. Chilean artist Arturo Duclós with his masterpiece “Ars Magna Lucis et Umbrae”. The second award was Stimulating reading and the fine arts, supporting drama granted to the Peruvian artist Bruno Zepilli and the performances, recovering the photographic patrimony third award was for the Brazilian artist Carlos Vergara. of Santiago, or increasing the architectural beauty of churches and shrines of the country is an addition to CHURCH AND SHRIN LIGHTING AGREEMENT the habitual work of the Enersis Group while rising The Enersis Group companies, jointly with Endesa- electric networks, building huge power generation España, have committed a total of US$ 3.7 million stations or delivering power to customers. in Chile, Colombia, and Peru. This amount is for the In 2001, the Enersis Group - managed by Endesa buildings belonging to the historical-artistic patrimony Spain - carried out uncountable cultural activities such of the Catholic Church in these three countries. lighting of cathedrals, churches, temples and other as: In Chile, the lighting of the churches of St. Anthony LATIN AMERICAN PAINTING CONTEST of Padua (in Putaendo), St. Anthony (El Almendral), “POWER AND LIFE” the Shrine of St. Francis (Castro), the Cathedral of San For a second consecutive year, Enersis called for artists Bernardo, the first stage of the Cathedral of Santiago to create. In the year 2000, the Power and Light and the Parish of Puerto Varas have already been Contest gathered 30 Chilean artists. The winner was finished. Five more temples will be concluded in 2002. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 / / 2 1 Exhibition of the Latin American Painting Contest at the Museum of Fine Arts. especially of Santiago. The material includes negative film in glass plates, more than 7,300 flexible negative films in acetate and nitrate in different sizes, and 10,000 more copies in paper. Also included are 49 corporate volumes, totaling 2,900 pages. BOOK FAIR For the tenth consecutive year Enersis sponsored the International Book Fair of Santiago. This uninterrupted support shows Enersis’ commitment with culture. On its last edition, this Fair was visited by more than 200,000 people. ENERGY INFORMATION CENTER An Energy Information Center is located in Enersis’ corporate building. In this place, teaching is developed in a didactical way to show how electricity is produced and how it is delivered to industrial facilities and houses. During 2001, this center was visited by 3,600 students of the Metropolitan Region. Finally, it is worth pointing out that there are a series of minor initiatives, as the donation of a library to the city of Cunco, the sponsoring (together with Metro de Santiago) of the literary contest “A Tale in A Hundred Words”, the support of the efforts of the Real Academia de la Lengua to include the new idioms of America, and the production of a compact disc called “The voices of my ancestors”, with the best Latin American folkloric music performed by “Los Huasos Quincheros”. Financial activities As of December 31, 2001 there is a 1.4 times indebtedness coefficient at a consolidated level. Changes in the indebtedness of the Company occurred during 2001 were essentially oriented to reschedule the existing debt to improve its conditions. Book Fair, Chile CHILECTRA’S PHOTOGRAPHIC ARCHIVE In a ceremony that took place on December, the Enersis group opened the photograph exhibition “Lights of Modernity” and presented a book with the same name at the National History Museum. Both initiatives are part of the project that aims to recover the photographic archive of Chilectra, which collects images of Santiago taken between 1920 and 1930. With these activities, not only the photographic archive of the company is recovered and revalued, but it also leads to a significant step in the construction of the historical patrimony of the country, and In this sense, during 2001, Enersis subscribed the Finally, on November 30 and December 3, two series following credits, directly and through its Agency in the of re-adjustable bonds in Unidades de Fomento (UF) Caiman Islands: totaling UF 6,500,000 (US$ 150 million approximately) January: Bank of Tokyo for US$ 50 million were successfully placed in the local market. The due March: Syndicated Loan for US$ 400 million date for these bonds ranges from 8 to 21 years and May: ABN AMRO for US$ 100 million June: BBVA Bank for US$ 150 million the basic rate is 5.5% over Unidades de Fomento for the B1 series and 5.75% over Unidades de Fomento July: Syndicated Loan for US$ 500 million for the B2 series. With the resources from these funding, pre-payments of the bilateral credits were made. These were taken within the framework defined by the so called Genesis Project in 1999, and the purchases of Chilectra, Río Maipo and the additional purchase of Cerj were rescheduled, all of them in December, 2000. As far as amendments to credit agreements, the credits with Elesur for US$ 1,566 million and the bilateral credits of the Genesis Project for US$ 424 million along the year were renewed. With the resources of the above mentioned bonds and under quite advantageous conditions, Enersis, through its subsidiary Enersis International, partially repurchased part of an international bonds issuing of Enersis Agency in Cayman Islands (Yankee Bonds) for a US$ 100 million nominal value, which was placed at a 7.4% annual rate and due date in 2016. Such operation yielded a US$ 8 million profit, which was acknowledged as out of non operating income. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 / / 2 3 Atacama Power Station, Chile Buenos Aires, Argentina Businesses Historical expansion Compañía Americana de Multiservicios Ltda. (Former Diprel), aimed at acting as a purchase agent, Enersis is the largest private electrical Group in Chile an importer and exporter, and also as a merchandiser and Latin America. Along its history, it has mainly and materials supplier for the subsidiary companies of focussed its business activity in the generation and Enersis and third parties. distribution of energy, but it has also participated in business related to its main activity. Enersis started its process of expansion to other countries in the continent by participating in various Within the above context, through its subsidiary privatization processes, thus developing a significant Empresa Nacional de Electricidad S.A. (Endesa presence in the electric sectors of Argentina, Peru, Chile), it has been materializing its investments in Colombia, and Brazil. the generation of electric energy in the country and abroad. In July of 1992, Edesur, a company that distributes electric energy to the city of Buenos Aires, Argentina, The electric energy distribution business has been was adjudicated to Distrilec Inversora S.A., a company performed jointly with its subsidiary Chilectra S.A., a in which Enersis participates. Afterwards, in December, company whose main aim is the distribution of electric 1995, Enersis purchased an additional 39% of that energy in the Metropolitan Region and abroad. It is company, becoming its controller since then. also the main shareholder in Compañía Eléctrica del Río Maipo S.A., which currently serves the needs for Between July 1994 and December 1995, Enersis, distribution and sale of electric energy in the areas through the company Inversiones Distrilima S.A. surrounding those served by Chilectra. purchased the 60% of the stock capital of the Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor. Additionally, Enersis owns a majority stake in: In that same year, it purchased Edechancay. Synapsis Soluciones y Servicios IT Ltda. (Former In 1996, Enersis entered into the Brazilian market for Synapsis S.A.), aimed at providing services and the first time, jointly purchasing with other partners equipment related to computing and data processing. and important part of the stock of the Companhia de Eletricidade do Rio de Janeiro (Cerj) which distributes Compañía Americana de Multiservicios Uno Ltda. electric energy in the city of Rio de Janeiro, Brazil. (Former CAM), whose areas of action are related to the commercial operations and networks for public In 1997, Enersis successfully participated through service companies, preferably in measuring systems a consortium in the process of capitalization and for utilities. subsequent control of Codensa S.A. ESP, a company that distributes electricity in the city of Bogotá and the Inmobiliaria Manso de Velasco Ltda., which is in district of Cundinamarca, Colombia. real estate development projects, and is committed to manage, lease, purchase and sale the real estate At the beginning of 1998, Enersis participated in property of Enersis and its subsidiaries in Chile. the Brazilian market once again. This time, through A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 4 4 / / 2 5 a consortium, was awarded the control ownership The attainment of this objective is sustained by an of Companhia Energética de Ceará S.A., Coelce, a investment strategy, focused on increasing the value company that distributes electricity in Northern Brazil, of the subsidiaries and related companies, and the in the State of Ceará. purchasing of new companies. During 1999, Endesa España became the controlling A key factor of this strategy involves making stockholder of Enersis. Through a Tender Offer (OAA), investments that significantly call for the experience, in which it offered Ch$320 per share, the Spanish management skills and operating capabilities of Enersis multinational company bought 32% of Enersis, which and its subsidiaries. Such requirement makes it added to the 32% it had acquired in August 1997, necessary to invest in companies in which Enersis has increased Endesa Spain’s final stake in the ownership a final decision on their management and operation, of Enersis to 64%. The transaction, ended on April 7, and the power to approve or reject its investment 1999 involved an investment of US$ 1,450 million. projects. On May 11, 1999, Enersis acquired an additional 35% interest in the ownership of Endesa Chile, where it already held a 25% of the capital stock. Consequently, Enersis attained a 60% share in the ownership of the generation company and became its controlling shareholder, allowing Enersis to consolidate itself as the largest private electricity Group in Latin America. On the other hand, important operations were carried out during 2000 which may be summarized as follows: the Company’s equity increased by US$520 million. Furthermore, proceeds of US$1.4 billion were received as a result of the sale of our subsidiaries Transelec, Esval, Aguas Cordillera and some real estate investments, within the strategic scope provided for in the Genesis Project. Moreover, important investments were made along the year: US$364 million to increase the company’s stake in the capital stock of Chilectra; US$150 million in the purchasing of Edesur’s capital stock by 10%, in Argentina, which was owned by the company workers; US$132 million to increase the participation in the Another development factor is its exceptional team of professionals that actively interact with the subsidiaries, providing them with assistance in evaluating their investment projects and are permanently alert to new business opportunities in their respective business areas in the Latin American market. The above mentioned factors enable Enersis to make investments that contribute to the growth of profits, with an adequate weighting of risks deriving from its business activities. Investments and divestments CHILE As envisaged in the Genesis Project, the subsidiary Endesa Chile sold Infrastructure 2000 for UF 2,253,000, in April 2001. As well, also within the Genesis Project, Enersis obtained US$23 million for the disposal of single family land lots, industrial lots, and macrolots of the Brazilian company Cerj; and US$23 million to increase ENEA project. the participation of Enersis in Río Maipo by 15%. Growth and development In the purchase chapter, Enersis increased its participation in the subsidiaries Chilectra and Río Maipo. In Chilectra, the stake increased to 98.2%, Enersis’ main objective is to maximize the economic with a US$3 million investment, while in Río Maipo it value of its equity, through stable growth founded on increased to 98.7%, with a US$0.4 million investment. electric businesses rigorously evaluated and managed. BRAZIL At the same time, the feasibility of new generation Pursuant to the strategic objective of increasing the projects along the country in function of the demand presence in Brazil, particularly in the generation growth and the forecasts of the future bare prices will sector, Enersis jointly with Endesa España started the be analyzed. construction of the Fortaleza Thermoelectric Power Station in the state of Ceará. This 310 MW power Chilectra and Río Maipo will continue with their station and a foreseen investment of US$203 million investments in the distribution net to keep the good will supply the Coelce distributor as of 2004. In this quality standards they show and cover the demand manner, besides incrementing the participation in the growth foreseen for the next years. Brazilian generation market, Coelce’s electric supply is assured, in a market with one of the highest growth BRAZIL indexes in Brazil. Due to the presidential and state governors’ elections in late 2002, it is foreseen that the privatization Once the 0,7% belonging to minority shareholders processes in Brazil will be postponed. Nevertheless, a of the company was purchased on August 9, the monitoring of opportunities will be continued. For the 99.5% of Cachoeira Dourada became controlled definitive development of the opportunities that result through Endesa Chile and its controlled Lajas Holding. in Brazil, both the strategic importance of investments This operation meant a US$2 million disbursement and their profitability and risks will be taken into approximately. Arrangements are in progress to obtain account. the cancellation certificate of the limited liability stock company registry. ARGENTINA The merger of Central Buenos Aires and Central Costanera was approved in November, 2001, to reduce costs and improve management in these power stations. The merger of both entities will result in a It will also be studied the participation in thermoelectric generation projects sponsored by the Brazilian State within the thermoelectricity priority program, mainly in the same areas where the distribution concessions are located. The development of Fortaleza’s thermoelectric project more solid company, both in financial and commercial will continue and the 1,000 MW second terms, in which Central Costanera will get all the assets, liabilities, rights and obligations of Central Termoeléctrica de Buenos Aires. Prospects for the year 2002 CHILE The consolidation process and the efficiency improvement as set forth in the Genesis Project will continue along 2002. Chile’s most important project will be the Ralco hydroelectric power station, which is being developed by the Endesa Chile subsidiary. interconnection line between Brazil and Argentina will most probably be put in service. PERU The Peruvian State has expressed its intention of continuing with the disposal of its stakes in electric companies. The opportunities resulting from this fact will be analyzed. COLOMBIA It is expected that Codensa maintain its performance in the areas of loss decrease and quality service improvement, keeping customers’ orientation and profitability as the objectives of future management. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 6 6 / / 2 7 Investment and fi nancing policy of the year 2001 Enersis’ assets, a same or higher percentage as The Ordinary Board of Shareholders, held on April 2, 2001, approved the Investment and Financing Policy as such stipulated in the first paragraph of article 45 bis of Decree Law No 3,500. follows: (c) Controlling participation in investment areas 1. INVESTMENTS (a) Investment areas In order to control areas of investment and pursuant to what is defined in the corporate purpose of the company, actions as far as Enersis will make investments, pursuant to the possible will be taken into account as follows: provisions in its by-laws, in the following areas: (cid:127) Propose the Shareholders’ Meetings of the (cid:127) (cid:127) Equity contributions to its public subsidiaries. subsidiary and related companies, the Equity contributions for investment or creation of appointment of directors that correspond to subsidiary or related companies, whose scope of Enersis’ participation in the ownership of such business is similar, related or connected to energy companies, with appointees originating preferably in any of its forms or nature, or the provision from the Board of Directors of the senior of public services that have energy as their main management of both the Company or other input. subsidiary. (cid:127) Other investments in real property or in any other (cid:127) Propose the subsidiary companies the investment, kind of financial assets, negotiable commercial financial and commercial policies, as well as the instruments securities and equity contributions to accounting systems and criteria, which they are to companies. abide by. (cid:127) Supervise the management and operation of the (b) Maximum investment limits subsidiary and related companies. The maximum investment limits for each (cid:127) Maintain a permanent control of the borrowing investment area will be as follows: limits and the clean assets factor for accounting purposes, in a manner such that the investments i) Investments in its public subsidiaries, as needed or equity contributions made or to be made to enable such subsidiaries to attain their do not involve a variation that departs from corporate purpose and perform their function as the parameters defining the maximum investment concessionaires. limits. ii) Investment in other subsidiary companies, such as the total of the proportions of the fixed 2. FINANCING assets that correspond to the participation in (a) Maximum leverage level each one of these other subsidiary companies The maximum leverage level for Enersis will be should not exceed the proportion of fixed asset based on a ratio of total debt to equity plus that corresponds to the participation of the public minority interest equal to 1.75 of the consolidated subsidiaries in the parent company. balance sheet. Notwithstanding the above, such iii) Other investments, such that the clean assets ratio may increase up to 2.40 on a temporary factor for accounting purposes of Enersis, basis and until the total placement of the calculated on the basis of the individual balance capital increase approved at the Extraordinary sheet should not represent, as a proportion of Shareholder’ Meeting held on April 30, 1999. (b) Authority of management to agree with which has allowed Enersis to keep a company creditors on restrictions to dividend classification of “Investment Grade” beyond the distributions contingencies experienced by some countries of the Restrictions to dividend distributions may be region along last year. agreed with creditors solely provided that they are previously approved at a Shareholders’ Meeting The following table details the international risk rating (either Ordinary or Extraordinary). assigned to the Company at December, 2001: (c) Authority of management to agree with creditors the granting of collateral Management has the authority to agree with creditors on granting real and personal collateral within the frame of the provisions in compliance with the law and the Company’s by-laws. (d) Essential assets for the operation of the company The shares of common stock that represent Fitch Moody´s Debt in Local Currency Debt in Foreing Currency A A- - Baa1 Shares Bonds Fitch Feller Rate First Class Level 1 First Class Level 2 AA- AA+ Standard & Poor’s A A- equity contributions made by the Company to its The corporate strategy applied by the Group to contain subsidiaries Chilectra and Río Maipo are essential the inherent risks to an investment company in the assets for the operation of the company. electric industry, it has been to manage the company’s Risk factors assets with both prudence and responsibility. This policy can be observed during last year by the strengthening of cash, decrease of debts, improvement Enersis is an investment company whose assets are of the quality service index, and the concentration in properly diversified in five countries in the region, primary activities and continuous monitoring of the which provides it with a balanced corporate risk profile. economic and regulatory situation in each operating In the same manner, the financial flows of Enersis country. follow the same diversification with the additional A concrete measure within the global context of advantage that they correspond to generation, the Group’s risk proactive handling was the creation, distribution and other related business, which grants during 2001, of the Enersis Group Risk Committee, the company’s financial situation a higher stability. aimed at identifying the most diverse risks that could affect the company and propose on time the The above has been duly collected by domestic and contention measures needed. This Committee has international risk rating companies. Indeed, such elaborated a Group’s risk map and it is operating companies acknowledge that one of the strengths of under state-of-the-art techniques of Company Risk the Group lies on its adequate investment portfolio, Management. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 8 8 / / 2 9 Corporate structure A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 3 3 0 0 / / 3 1 Generation Generation T C 12,267 MW Installed capacity in Latin America n 10°(cid:31) 0°(cid:31) 10°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) COSTA RICA Barranquilla Maracaibo Caracas TRINIDAD & TOBAGO P A N A M A Medellín V E N E Z U E L A Georgetown Paramaribo GUYANA Bogotá Cali Quito C O L O M B I A Colombia Number of power plants 10 3,055 Power (MW) Mean annual generation (GWh) 10,106 SURINAM Guayaquil ECUADOR Manaus FRENCH GUIANA Cayenne Macapá Belèm 10°(cid:31) 0°(cid:31) São Luis Fortaleza Recife Maceió 10°(cid:31) Salvador B R A Z I L Lima P E R U Perú Number of power plants Power (MW) Mean annual generation (GWh) La Paz 8 997 4,176 B O L I V I A P A C I F I C O C E A N Arica 20°(cid:31) Tropic of Cancer Antofagasta CHILE P A R A G U A Y Asunción Brazil Brasília Number of power plants Power (MW) Mean annual generation(GWh) 1 658 2,256 Belo Horizonte São Paulo Santos Rio de Janeiro A R G E N T I N A Pôrto Alegre Argentina Number of power plants Power (MW) Mean annual generation (GWh) URUGUAY Rosario Buenos Aires A T L A N T I C O C E A N 4 3,622 9,948 La Plata Montevideo Santiago Chile 20 Number of power plants Bahia Blanca Power (MW) 3,935 Mean annual generation (GWh) 15,741 Punta Arenas 90°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) 30°(cid:31) 20°(cid:31) 500 1000 1500 2000 Miles 500 1000 1500 2000 2500 3000 Kilometers 30°(cid:31) 40°(cid:31) 50°(cid:31) 0 0 20°(cid:31) Tropic of Cancer 30°(cid:31) 40°(cid:31) 50°(cid:31) Endesa Chile Company ownership Operational activity Enersis, the main stockholder in Endesa Chile with The main activities carried out by Endesa Chile 60% of the property, has channeled investment and its subsidiaries are related to the generation in the area of electric generation through this and commercialization of electric energy and, company. Additionally, the other shareholders are: additionally, to the sales of consulting and engineering services in all specialties. Endesa Chile is the main electric energy generation company in Chile and one of the country’s largest company. In Chile it operates a total of 3,935 MW, representing 39% of the country’s installed capacity. Out of this figure, 73.7% is hydraulic energy, and the rest is thermal energy. Its annual generation added up to 15,741GWh, and its sales amounted to 18,673 GWh during the year. Endesa Chile participates in the Central Interconnected System (SIC), covering an area that serves approximately 93% of the national population, with an installed capacity of 3,753 MW, which represents approximately 57% of the SIC. Endesa also participates on the Northern Electric projects Interconnected System (SING), through its subsidiary Celta, Gasatacama, and Nopel companies, serving The most relevant electric projects along 2001 were: various mining companies and sales on the spot market. Celta’s installed capacity in this system is 182 CIEN, POWER INTERCONNECTION MW, which represents 5% of the SING. ARGENTINA - BRAZIL Endesa Chile has presence in Argentina, through This project consists in establishing an electric Central Costanera S.A., Hidroeléctrica El Chocón S.A., interconnection to market a firm power of 2,000 MW operating a total of 3,622 MW, which represents 16% between Argentina and Brazil. It is carried out by of the Argentinean Interconnected System’s total, an Compañía de Interconexión Energética (CIEN), a annual generation of 9.948 GWh and annual sales of company related to Endesa Chile, in which Endesa 12,988 GWh. España also participates as a partner. In Brazil, it participates through Centrais Elétricas It has a frequency converter station from 50 Hz to 60 Cachoeira Dourada S.A., operating a total of 658 MW, Hz called Garabí and expansions of the substations representing approximately 1% of the installed Rincón de Santa María and Itá. It also considered capacity in that country, an annual generation of the construction of two 487-km long lines, each 2,256 GWh and annual sales of 3,743 GWh. divided in a 1x500 kV and 134 kilometer one-circuit long section between the substation Rincón de Santa In Peru, the company participates through Edegel, María in Argentina and the converter station Garabí operating a total of 997 MW, representing 23 % in Brazil. The other is a 525 kV and 353 km one- of the Peruvian system, with an annual generation circuit long section, between the converter station of 4,176 GWh and annual sales amounting to Garabí and the substation Itá in Brazil. The estimated 4,239 GWh. investment in both lines of this project amounts to US$650 million approximately. Finally the company participates in Colombia, through Central Hidroeléctrica de Betania S.A. E.S.P. and the The first of these lines, with a firm power of power generation company Emgesa, operating a total of 1,000 MW, is in service since June 2000. During 3,035 MW, representing 23% of the installed capacity 2001, the transmitted energy reached 3,810 GWh. in Colombia, with an annual generation of 10,106 GWh and annual sales adding up to 14,591GWh. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Empresa Nacional de Electricidad S.A Type of company Limited Liability Stock Company Tax register number 91,081,000-6 Address Santa Rosa N°76 Santiago, Chile Telephone (56-2) 630 9000 Fax (56-2) 635 4720 P.O. Box 1392, Santiago Web site www.endesa.cl E-mail comunicacion@endesa.cl Securities register number N°114 External Auditors Deloitte & Touche Total number of shares 8,201,754,580 Subscribed and paid in capital (ThCh$) 1,009,510,570 Participation of Enersis (direct and indirect) 60.0% Corporate purpose Generation, transport and provision of electric energy, sale of consulting and engineering services within the country and abroad, and the construction and exploitation of infrastructure works. BOARD OF DIRECTORS Chairman Pablo Yrarrázaval Vice-Chairman Antonio Pareja DIRECTORS Jaime Bauzá Jesús Burillo José Hidalgo Pedro Larrea Andrés Regué Antonio Tuset Leonidas Vial OFFICERS Chief Executive Officer Héctor López Chief Communications Officer Rodolfo Nieto Legal Counsel Carlos Martín Chief Management and Finance Officer Mario Valcarce Human Resources Officer Juan Mundaca Planning and Control Officer Rafael López Energy Planning Officer Rafael Errázuriz Trading and Commercialization Officer José Venegas Production and Transport Officer Rafael Mateo Generation Chile Officer Claudio Iglesis A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 3 3 4 4 / / 3 5 The second line is being built. At December 31, At December 2001 the infrastructure works 2001, it shows an advance by 85%, it is estimated to including roads and access bridges and the electric be in service in the first semester of 2002. feeding line for the works were finished. The works for relocation of the public road, built by Endesa, Along 2001, the main works were the construction have a special importance since they allow access and mounting of the towers, wiring, expansion of to the communities of Chenqueco and the El Barco the substations Rincón de Santa María and Itá, civil farm. The diversion tunnel and the excavation of the works and mounting of the two 500 kV blocks in the dam foundations are also finished. converter station Garabí. RALCO CENTRAL RALCO – SIC JOINT This project includes the construction of a CIEN, Power Interconnection Argentina - Brazil The future Central Ralco project is located at transmission line of 2X220 kV and 140 km two- the Alto Biobío area, about 120 km southeast circuit line which will join the Ralco Power Station of Los Angeles and 30 km upstream from the and the Charrúa Substation, from which electricity Pangue power station. This power station, whose will be delivered to the Central Interconnected nominal power is 570 MW, shall annually contribute System. an average generation of 3,100 GWh to the Interconnected Central System (ICS). To materialize this project, a contract for the construction, financing, operation, maintenance At December, 2001, the physical progress of and transmission was bided and awarded to the works construction was 53%, matching the the Abengoa Chile S.A. company. This modality modified project schedule. Endesa Chile and its considers that Endesa Chile pays an annual toll for contracting companies have made their greatest 20 years, a term after which the transmission line efforts to recover the damaged works and the will become its property. The starting on service is fulfillment of the new work program. In mid August foreseen for the third or fourth quarter of 2003. 2001, the new Bío Bío river diversion was finished, an essential landmark of the project program. Ralco Power Plant Project, Chile FOTO Pangue Power Station Other businesses which operates on Ruta 5 Norte; la Sociedad Among other businesses, the Ingendesa company Concesionaria Autopista del Sol S.A. engaged in the may be pointed out. It participated in important design, construction, and operation of the Santiago investment projects in Chile and Latin America, - San Antonio highway construction, and a new 24 particularly in the areas of energy, infrastructure, km section in the urban area Santiago-Malloco; and mining, public works and telecommunications, Sociedad Concesionaria Autopista Los Libertadores, through services rendered to both companies comprising the expansion and improvement of the of the Group as well as to other non-related General San Martín highway. customers. Additionally, Endesa Chile manages the companies we committed the sale of Infratructure 2000 in Sociedad Concesionaria Túnel El Melón S.A. UF 2,253,000. Additionally, in line with the genesis project, A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 3 3 6 6 / / 3 7 Distribution Distribution Tr C 9.6 million customers in fi ve countries of South America 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) n 10°(cid:31) 0°(cid:31) 10°(cid:31) 20°(cid:31) Tropic of Cancer COSTA RICA Barranquilla Maracaibo Caracas TRINIDAD & TOBAGO P A N A M A Cali Quito Guayaquil ECUADOR Medellín V E N E Z U E L A Georgetown Paramaribo Bogotá CODENSA C O L O M B I A Concession area: 14,087 sq. km. in 96 munici- palities of the Cundinamarca, Tolima and Bogotá depart- ments. Physical energy sales in 2001: 8,673 GWh. Employees: 813 GUYANA SURINAM FRENCH GUIANA Cayenne Macapá Belèm Manaus P E R U EDELNOR Lima B R A Z I L Concession area: 2,440 sq. km. in 52 districts of the northern area of Metropoli- tan Lima, and 5 on the southern area. Physical sales of energy in 2001: P A C I F I C O C E A N 3,685 GWh. Employees: 557 La Paz Arica Antofagasta CHILE B O L I V I A P A R A G U A Y Asunción São Luis Fortaleza COELCE Recife Maceió Concession area: 146,817 sq. km. in the 184 municipalities of the Ceará state. Physical sales of energy Salvador in 2001: 5,352 GWh. Employees: 1,464. Brasília Belo Horizonte CERJ São Paulo Santos Rio de Janeiro Concession area: 31,741 sq. km in 66 municipalities of the Río de Janeiro state. Physical sales of energy in 2001: 6,739 GWh. A T L A N T I C O C E A N Employees: : 1,354 CHILECTRA Pôrto Alegre Concession area: 2,118 sq. km. in 33 municipalities of the Metropolitan Region. Physical sales of energy in 2001: 9,585 GWh. Employees: 722 Santiago RÍO MAIPO Concession area: 1,500 sq. km. in 11 municipalities of the Metropolitan Region. Physical sales of energy in 2001: 1,245 GWh. Employees: 78 A R G E N T I N A Rosario URUGUAY Buenos Aires EDESUR La Plata Montevideo Bahia Blanca Concession area: 3,309 sq. km. in two-thirds of Capital Federal and twelve partidos (counties) in the Buenos Aires province. Physical sales of energy in 2001: 12,909 GWh. Employees: 2,267 Punta Arenas 90°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) 30°(cid:31) 20°(cid:31) 500 1000 1500 2000 Miles 500 1000 1500 2000 2500 3000 Kilometers 30°(cid:31) 40°(cid:31) 50°(cid:31) 0 0 10°(cid:31) 0°(cid:31) 10°(cid:31) 20°(cid:31) Tropic of Cancer 30°(cid:31) 40°(cid:31) 50°(cid:31) Chilectra Company ownership Besides, Enersis has appointed Chilectra as its operator in the investments it conducts in the Between July 3 and December 26, 2001, Enersis distribution business area. opened a stock purchasing power for the total Chilectra’s shares and as a result from such SALES AND PURCHASES OF ENERGY operation Enersis purchased 0.2% of the shares, At December 31, 2001, the physical energy sales controlling 98.2% of the company shares at reached 9,585 GWh, representing a 5.5% increase December 31, 2001. Operating activity as compared to same period of 2000. Out of the total energy invoiced during the year 2001, 29.9% corresponds to residential sales, 28.1% to industrial sales, 21.2% to commercial sales and 20.8% to Chilectra is the largest electric energy distribution other areas. company in the country. It serves 33 boroughs of the Metropolitan Region over an area of 2,118 sq. km. It includes 555 km of various high-tension circuits. It also includes 51 substations and 116 power transformers with a capacity of 4,655 MVA. During the year 2001, Chilectra purchased energy from several generation companies in the country, among others, Endesa Chile (33.1%), AES Gener S.A. (35.2%), Pangue S.A. (13.1%), Colbún S.A. (11.6%), Puyehue S.A. (1.1%), ESSA an integral provider of residential electrical service COMPANY IDENTIFICATION (3.6%), and others (2.3%). and products. Work was done in the development TARIFF SETTING PROCESS of products, empowering its position, reinforcing the proactive feature that the company wishes to The electricity rates are set every four years and spread and deepening links with its customers, pursuant to the electric law (DFL N°1 of 1982 issued strengthening the various efforts done in the by the Ministry of Mining). The next tariff review will process of customers’orientation. take place in the year 2004. ENERGY LOSSES Within this perspective, the efforts were focussed in developing technological solutions to position During 2001, Chilectra continued with its efforts electric energy as the most convenient, clean, and to control losses. The investments in new projects safe energy in the market. Each new service and/or related to technical measures for controlling and product was introduced to the market through maintaining those already existing were kept, jointly different promotional supports. with prevention and corrective activities carried out on site. Chilectra launched in early 2001 a WAP application for Large Customers of the company. This is the first This set of measures made it possible to keep the time that an electric company in America (including energy loss index under relative constant values, in North America) and the main countries in Europe spite of the economic situation that the country is applies this technology, except for the Scandinavian currently experiencing, amounting to 5.4% at the countries, which have been the leaders of the end of the period. Commercial activity impressive development of wireless applications. This novel system allows Large Customers to connect directly to the company’s database and inquire about statements of account, data of The number of customers amounted to 1,288,996 the company and the person in charge of its at December 31, 2001, which represents a 2,1% account. Therefore, the telephone will become increase as compared to same period of 2000. a communication source for product and service quotations and also to verify the electric system During 2001, Chilectra advanced in its positioning as condition. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) Corporate name: Chilectra S.A. Type of company: Limited Liability Stock Company Tax register number: 96,524,320-8 Address: Santa Rosa N°76, Piso 8 Santiago, Chile Telephone: (56-2) 675 2000 Fax: (56-2) 675 2999 P.O. Box: 1557 Santiago Web site: www.chilectra.cl E-mail: rrpp@chilectra.cl Securities register number: N°321 External auditors: Arthur Andersen – Langton Clarke Total number of shares: 366,045,401 Subscribed and paid in capital (ThCh$): 273,902,671 Chilean Stock Exchange ticker symbol: Chilectra New York Stock Exchange ticker symbol CLRAY Participation of Enersis (direct and indirect): 98.2% Corporate purpose: Distribution, transmission, purchase and sale of hydraulic, thermal, or any other form of electric energy. BOARD OF DIRECTORS Chairman Jorge Rosenblut Vice-Chairman José Fernández DIRECTORS Enrique García (Enersis Chief Executive Officer) Juan Domínguez (Enersis Adjunct Chief Executive Officer) Álvaro Quiralte Hernán Errázuriz Pedro Buttazzoni OFFICERS Regional Distribution Chief Executive Officer Marcelo Silva Chief Executive Officer Julio Valenzuela Chief Communications Officer Guillermo Amunátegui Distribution Officer Rolando Hechenleitner Commercial Officer Juan Olavarría Sector Regulation Officer Guillermo Pérez del Río Legal Counsel Gonzalo Vial Commercial Processes Officer Fernando Urbina Technical Processes Officer José Martínez Planning and ControlOfficer Alfonso Prieto Economic Planning Officer Ana Gete-Alonso Human Resources Officer Carmen Urbina A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 0 0 / / 4 1 Río Maipo Company ownership From July 3 to December 26, 2001, Enersis opened to the market a stock purchasing power for the total shares of Río Maipo. As a result from such operation, Enersis purchased 0.3% of the ENERGY SALES AND PURCHASES At December 31, 2001, the physical sales of energy reached 1,245 GWh, representing a 5% increase as compared to same period last year. Out of this total, 38.8% corresponds to residential sales, 7.2% to the industrial sector, 43.6% to the commercial shares, controlling 98.7% of the company shares at sector and 10.4% to other sectors. December 31, 2001. Operating activity Río Maipo is the fourth largest electric energy distribution company in Chile. Its concession area comprises the boroughs of San José de Maipo, Puente Alto, La Pintana, El Bosque, San Bernardo, Calera de Tango, Isla de Maipo, Talagante, Peñaflor, Padre Hurtado and Curacaví, serving a population of about 1,500,000 people, in 11 boroughs over an area of 1,500 sq. km.. It currently owns 27 km of high-tension lines, a substation with 10 power transformers, with a total capacity of 81 MVA. Additionally in 2001, Río Maipo purchased energy to Chilectra and AES Gener. The peak demand occurred in March and it reached 236 MW. TARIFF SETTING PROCESS The electricity rates, in compliance with the current regulations (DFL N°1 of 1982 issued by the Ministry of Mining) are set every four years. The latest Tariff Setting Process occurred in year 2000, which ended with the issuance of Decree No 632 of the Ministry of Economy, Development and Reconstruction. ENERGY LOSSES Due to the economic crisis that affected the country in 2001, according to the Casen survey of the Ministry of Planning and Cooperation (Mideplan), seven out of the eleven boroughs that compose the concession area experienced a decrease in their income because of an increase in the unemployment rate. These factors contributed to a 6.4% energy loss level during the 2001 period. Commercial activity At December 31, 2000, the company’s customers regulation in effect, electricity supply, the company’s quality mainly in the following: customers’ service, totaled 293,597, which represented an increase of services and products. 2.4% as compared to same period last year. Out of that figure, 96.6% are residential customers, 2.1% Regarding its commercial offices, in 2001 Río Maipo are commercial customers and the remaining 1.3% implemented the Customers’ Service Management corresponds to industrial and other customers. (CSM) system in each of the locations where Río Maipo aims its commercial work at achieving facilitates management and follow-up of all excellence in service quality and service to commercial requirements, their execution times and residential and industrial customers. answers. it provides services to the public. This system To this effect and with the purpose of having It is important to mention the active participation a tool to improve customers’ service, in 2001 of the Emergency Service during the strong storm the company carried out three service quality that mainly affected large part of the central measurements to set customers’ satisfaction indexes zone of Chile in July, in which the Rio Maipo in all contact areas. (Maipo phone, Emergency facilities were seriously damaged. Notwithstanding Service, Commercial and Sales Offices, Serviceletter the above, such challenge was successfully faced and Municipalities). by the company’s personnel, who supported the development of the activities aimed at normalizing Likewise, in 2001 Río Maipo carried out 1,148 supplies from their action environment. hours/man training aimed at improving service FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Compañía Eléctrica del Río Maipo S.A. Type of company Limited Liability Stock Company Tax register number 96,557,330-5 Address Covadonga N°139, San Bernardo, Chile Telephone (56-2) 540 7000 Fax (56-2) 540 7007 P.O. Box 30, San Bernardo E-mail riomaipo@rmaipo.enersis.cl Securities register number N°345 External Auditors Arthur Andersen – Langton Clarke Total number of shares 360,613,552 Subscribed and paid in capital (ThCh$) 15,012,762 Chilean Stock Exchange ticker symbol: RIO MAIPO Participation of Enersis (direct and indirect) 98.7% Corporate purpose Exploite distribution and sales of electric, hydraulic, thermal or of any other form. BOARD OF DIRECTORS Chairman Alberto López (Enersis Corporate Business Executive Officer) DIRECTORS Pantaleón Calvo Mauricio Balbontín (Enersis Chief Financial Officer) Julio Valenzuela Jorge Claro Rolando Hechenleitner Fernando Urbina Chief Executive Officer Alejandro Gómez A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 2 2 / / 4 3 Edesur Company ownership In July 1992, as a result of an international public deed, 51% of the property of Edesur was granted to Distrilec Inversora S.A. In December 1995, the Enersis Group increased its direct and indirect participation in Edesur by purchasing the 39% that had remained the property of the Argentinean state, and so becoming the controlling Group with the highest stock participation. On May 31, 2000, Edesur completed the operation of redemption of Class “C” shares of the Participant Ownership Program, representing 10% of the corporate capital of the distribution company. Enersis Group because of said redemption appoints an additional Director in Edesur’s class ”B”. Operating activity energy losses developed in 2000 was not changed. COMPANY IDENTIFICATION At year-end, the annual mobile rate was 9.9%, which Corporate name Empresa Distribuidora Sur S.A. Edesur’s main purpose is the distribution and represents a decrease by 0.4 percentage points. This commercialization of electric energy in the southern achievement was possible because of the development area of Buenos Aires, comprising two thirds of the of all of the plans and projects aimed at controlling Federal Capital and twelve districts in the Province of energy losses. Buenos Aires, which represents a total concession area of 3,309 sq. km. Chilectra has been Edesur’s exclusive Commercial activity operator in accordance with the bidding condition since 1992. The total number of customers served by Edesur at December 31, 2001, amounted to 2,096,673. Out SALES AND PURCHASES OF ENERGY of this total, 86.3% are residential customers, 13.4% The year 2001 showed a growth by 2.1% in Edesur’s are general customers and the remaining 0.3% energy demand, in spite of the unfavorable economic corresponds to large customers. context, as noticed in the GDP’s standstill. The physical sales of energy during the period reached affected the country, Edesur evidenced its efforts to 12,909 GWh, representing an increase by 2.5%. The adapt itself to the needs of its customers when it peak power was recorded during February and added became the first public service company that accepted Within the framework of the economic crisis that up to 2,582 MW. 100% payment of invoices in provincial bonds, called “Patacones”, from employees and retired people in the TARIFF SETTING PROCESS province of Buenos Aires. The 2001 December mean tariff variation compared to December 2000 experienced a decrease by 9%, as a Likewise, within the framework of the economic result from the variation in the wholesaler price and decisions made that restricted the availability of energy loss decrease. cash for customers, the demand for alternative mechanisms of payment was properly channeled In 2002, after the first ten years of privatization, the through exponential growth of payments with credit first review of the Distribution Added Value (VAD) shall cards, automatic credit and through Internet. be carried out, as set forth in the concession contract, which will result in a new tariff regime for Edesur to be Finally, Edesur was granted the Mail Industry Award in in effect as of September 2002. the category Public Services that is annually delivered by Teleperformance, a leader company in remote ENERGY LOSSES service and Contact Center services. During year 2001, the estimates methodology for FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) Type of company Stock Company Address San José N°140, Buenos Aires, Argentina Telephone (54-11) 4370 3700 Fax (54-11) 4381 0708 Web site www.edesur.com.ar E-mail servicio@edesur.com.ar External auditors Arthur Andersen - Pistrelli Díaz y Asociados Total number of shares 898,585,028 Subscribed and paid in capital (ThCh$) 623,352,693 Participation of Enersis (direct and indirect) 65.1% Corporate purpose Distribution and commercialization of electric energy and associated operations. BOARD OF DIRECTORS Chairman Rafael Fernández Vice-Chairman José Hidalgo DIRECTORS Alberto López (Enersis Corporate Business Executive Officer) Marcelo Silva Pablo Ferrero Juan Cassagne Rafael Arias Jorge Volpe Alfredo Mac Laughlin DEPUTY DIRECTORS Domingo Valdés (Enersis General Counsel) Alan Arntsen Horacio Babino Pedro Aramburu Jorge Casagrande Manuel Benites Pablo Casado Mariano Grondona Pablo Lepiane OFFICERS Chief Executive Officer José Rovira Management and Finance Officer Juan Verbistky Human Resources Officer Héctor Ruíz Commercial Officer Sandro Rollan Service Officer Daniel Giovanelli Distribution Officer Daniel Colombo Planning and Control Officer Juan Garade Legal Affairs Officer Alvaro Herrero A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 4 4 / / 4 5 Edelnor Company ownership At December 31, 2001, almost all of the Edelnor investors were domestic investors. Operating activity Edelnor is the concession holding company of the public electricity service for the north part of Metropolitan Lima and the Constitutional Province of Callao, as well as for the provinces of Huaura, Huaral, Barranca and Oyón. It serves 52 districts on an exclusive basis and shares another 5 districts with the distribution company for the south part. The concession area awarded to Edelnor extends over an area of 2,440 sq.km., 1,838 sq.km. of which correspond to the northern part of Lima and Callao. SALES AND PURCHASES OF ENERGY ENERGY LOSSES The physical sales of energy in the period reached One of the actions made in this concept, was the 3,685 GWh, which represents an increase by 2.8% development of a mechanism to calculate energy as compared to 2000. Out of the total energy sold, losses in an automatic way in each substation. 37.8% corresponds to residential sales, 28.7% to industrial sales, 16.7% to commercial sales and The energy losses indicator decreased from 9.9% to 16.8% to sales to other sectors. In the year 2001, the 8.9% this year due to the fact that accurate massive peak demand amounted to 665 MW. inspections were made under the concept of critical During the year 2001, Edelnor, purchased energy from five generation companies; Electroperú Commercial activity (51.5%), Edegel (28.4%), Eepsa (8.7%) Egenor feeders. (8.5%) and Cahua (2.8%). The remaining 0.1% In 2001, Edelnor’s customers amounted to 867,251, corresponds to self-generation of the isolated which represented an increase by 1,8% compared systems, which supply the rural areas of the Norte to 2000. During the fiscal year, commercial activities Chico zone. TARIFF SETTING PROCESS were transferred to the Synapsis and CAM Peru management. This transfer included transferring about 260 people, out of which 63 were part of The distribution tariffs remain in force for four year Edelnor’s payment roll. periods and may be adjusted during this period by means of updating formulas set by the Comisión de Tarifas Eléctricas – CTE (Electric Tariff Commission –ETC)The last tariff setting for distribution entered into force on November 1, 1997 and concluded on October 31, 2001. Later on, the Tariff Regulation Adjunct Management (TRAM) selected Edelnor as a model company to carry out the study of Distribution Added Value (DAV) in the Typical Sector 1, corresponding to the Metropolitan Lima area. The results of the studies for establishing the DAV, showed that their effect on the tariff in force represents a decrease by 2.7% due to the efficiency achieved. In addition, eleven new free customers entered with a total contracted power of 18 MW, which represented an annual invoicing of US$2,987 million. Such contracts last for a 5 to 15 year term. Likewise, an aggressive commercial collection management plan was developed. The relation with clients was in some cases direct, in others focussed, according to the aging of their debts. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Empresa de Distribución Eléctrica de Lima Norte S.A.A. Type of company Limited Liability Stock Company Address Jr. Teniente César López Nº201, Urb. Maranga, San Miguel, Lima, Perú Telephone (51-1) 561 2001 Fax (51-1) 561 0451 Web site www.edelnor.com.pe E-mail enlinea@edelnor.com.pe External auditors Medina, Zaldívar y Asociados - Arthur Andersen Total number of shares 1,131,891,016 Subscribed and paid in capital (ThCh$) 226,782,528 Participation of Enersis (direct and indirect) 32.7% Corporate purpose Engage in activities pertaining to the delivery of distribution, transmission, and generation of electric energy services. BOARD OF DIRECTORS Chairman Reynaldo Llosa Vice- Chairman José Hidalgo DIRECTORS Emilio García Alberto López (Enersis Corporate Business Executive Officer) Ricardo Giesecke José Esclava César Gutiérrez DEPUTY DIRECTORS Fernando Font Marie Antonio Sabater Fernando Urbina Marciano Izquierdo Ricardo Trovarelli Juan Cayo Ernesto Gonzales OFFICERS Chief Executive Officer Emilio Garcia Technical Officer José Martinez Commercialization Officer Enrique Demarini Communication Officer Carlos Lozada Planning and Control Officer Francisco de Campos Legal Counsel Luis Salem Management and Finance Officer Agustín Moliner Human Resources Officer Carlos Ureta A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 6 6 / / 4 7 Cerj Company ownership Operating activity The ownership structure of Companhia de Cerj distributes electric energy in most of the Eletricidade do Rio de Janeiro, Cerj, is detailed State of Rio Janeiro, Brazil, serving a population below: of 4.1 million inhabitants, comprising 66 municipal districts distributed over an area of 31,741 sq. km. SALES AND PURCHASES OF ENERGY Physical energy sales in the period amounted to 6,739 GWh. Out of the total energy sold in the year 2001, 33.0% corresponded to residential sales, 31.0% to the industrial sector, 18.0% to the commercial sector and 18.0% to other sectors. In addition, peak demand for the year totaled 1,303 MW. During the year 2001, Cerj, bought electric energy mainly from the generating companies Furnas (71.0%), Itaipu (27.0%) and the remainder was self- generated. TARIFF SETTING PROCESS Commercial activity Cerj’s distribution tariffs are adjusted as set forth in concession agreement entered into in November The total number of Cerj’s customers during the 1996. In December of each year, ANEEL (National year 2001 amounted to 1,691,230 representing a 7.0% Electric Energy Agency) reviews management and increase with respect to 2000. Out of this total, non-management costs, in addition to the variation 89.4% is residential customers, and the remainder of the IGP-M index for the period, determining the 10.6% distributed in industrial customers, commercial adjustment value to be applied. The last adjustment, customers, and others. applied on December, 2001. Cerj’s tariffs will be reviewed by ANEEL in primarily focused in developing projects to guide December 2003, based upon the cost structure clients in respect the rationing of energy and quality and efficiency achieved procedure that is conducted of service. The commercial activity of Cerj during 2001, was every four years. ENERGY LOSSES In this respect, to attend the resolution of the Energy Crisis Committee, Cerj made several modifications in Cerj has been implementing loss control investment the billing systems, for the definitions of savings goals projects to reduce this index. Nevertheless, during for each client, new calculation of rates for energy. this period, the energy losses accumulated in the 12-month period interrupted its decreasing Also, Cerj gave a 800 number for a much centralized tendency, reaching a 22.7% annual index. attention to clients, for commercial and emergency calls within all the concession area. It must be noted that, among the causes for this unfavorable evolution, as of the year Finally, it is worth mentioning that all agencies that 2000, the methodology by which this index was were not in the commercial system, were connected calculated was changed by disregarding energy to the main computer grid. Also two attention centers from Consumption Not Recorded (CNR), in were reshaped. We developed a new project to control the energy invoiced, and by incorporating energy the past due clients, because of this the un paid debt estimates on meters for carrying out the periodical did not increase. energy balance. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name CERJ-Companhia de Eletricidade do Rio de Janeiro Type of company Stock Company Address Praça Leoni Ramos, N01 – São Domingos, Niterói, Río de Janeiro, Brasil Telephone (55-21) 2613 7000 Fax (55-21) 2613 7153 Web site www.cerj.com.br E-mail cerj@cerj.com.br External auditors Arthur Andersen S/C Total number of shares 1,704,025,408,820 Subscribed and paid in capital (ThCh$) 156,896,132 Participation of Enersis (direct and indirect) 58.2% Corporate purpose Generation, transmission, distribution and commercialization of electric energy. BOARD OF DIRECTORS Chairman Eduardo Bernini Vice - Chairman Emilio López DIRECTORS Juan Madrigal Antonio Gomes de Costa Enrique García (Enersis Chief Executive Officer) Ignacio Blanco (Enersis Chief Development Officer) Fernando Nadal (Enersis Corporate Communication Director) Luis Barcelos José Martínez DEPUTY DIRECTORS Francisco Arias Luis Goncalves Fernando das Neves OFFICERS Chief Executive Officer Javier Villar Coordination and Organization Director Javier Arias Regulation and Market Director José Moreno Administrative and Financial Director Julio Moratalla Technical Director Fernando Neves Human Resources Director Claudio Mendes Commercial Director Mario de Carvalho A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 4 4 8 8 / / 4 9 Coelce Company ownership Since April, 1998, Coelce has been operated by the consortium Distriluz Energía Eléctrica S.A., made up of Endesa España, Enersis, Chilectra and Cerj. In September of same year, the group increased its stake in the company by 6% through the purchase of the shares of investments clubs, formed by the workers when the company was privatized. In September 1999, Distriluz Energía Eléctrica S.A. was dissolved and a new controlling company, Investluz S.A., was created, taking over the former company. Operating activity Coelce’s main aim is the distribution and commercialization of electric energy in the state of Ceará, which represents a total concession area of 146,817 sq. km in 184 municipalities. Sales and purchases of energy Customer Projects, implementation of inspections out COMPANY IDENTIFICATION Energy sales within the period amounted to 5,352 energy losses accumulated in the 12 month period of normal hours and other specific measures, the GWh, representing a decrease by 9.2% compared to reached a13% index. same period 2000, given the electric energy rationing that started in June 2001. Out of the total energy sold COMMERCIAL ACTIVITY in the year 2001, 32.2% corresponded to residential The total number of Coelce’s customers during 2001 sales, 30.1% to the industrial sector, 18.0% to the amounted to 1,916,522 representing a 6.7% increase commercial sector, and 19.7% to other sectors. Peak with respect to December 2000. demand for the year added up to 1,065 MW in January, which represents a decrease by 4.1% compared to Along the year, Coelce increased its customer’s service 2000. offices to 43, added to 17 offices, 145 Points of Service -88% of them computerized with off-line system- and During the year 2001, Coelce bought almost all five mobile centers, to make the company be closer the energy from the generating company Compañía to customers. Eléctrica de Sao Francisco, Chesf (99.0%) TARIFF SETTING PROCESS On the other hand, and due to the energy-rationing plan imposed by the Brazilian government, an Coelce’s distribution tariffs are regulated by the Aneel energy consumer simulator was implemented in Concession Contract dated 01/98 and are adjusted the company’s website, to offer the customer every April for the review of non-management cost an opportunity to go on a virtual visit into a increases. The last adjustment, applied on April 22, house equipped with various appliances and their 2001, included a 15.0% increase plus. There, the corresponding average energy consumption. company coordinated the date adjustment with Chesf. Due to the rationing, started in June 2001, the On April 22, 2003, Aneel will review Coelce’s costs in company received 171,476 request forms regarding order to carry out the first tariff review, which will be the energy consumption goal and sent 166,819 letters subsequently applied every four years. to the customers, out of which 90,098 processes ENERGY LOSSES were admitted (54%) and 76,721 rejected (46%). The payment of invoices was eased by the increase in Coelce has been implementing loss control investment payment centers, which ranged from 681 (in January projects in order to reduce this index. During the year 2001) to 705 (in December 2001), showing an increase 2001, through the Standardization Project and Large by 4.1%. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) Corporate name Companhia Energética do Ceará Type of company Limited Liability Stock Company Address Av. Barão de Studart N°2917, Aldeota, Barrio Dionísio Torres, Fortaleza, Ceará, Brazil CEP 60.127-900 Telephone (55-85) 216 1100 Fax (55-85) 216 1410 Web site www.coelce.com.br E-mail investor@coelce.com.br External auditors Arthur Andersen Total number of shares 155,710,600,088 Subscribed and paid in capital (ThCH$) 245,083,722 Participation of Enersis (direct and indirect) 26.6% Corporate purpose Explore the distribution and sales of electric, thermal and hydraulic energy or in any other form. BOARD OF DIRECTORS Chairman Manuel Montero Directors Mauricio Balbontín (Enersis Chief Financial Officer) Ignacio Blanco (Enersis Chief Development Officer) Antonio Cunha Laércio do Amaral Emilio López José Martínez Jorge Frota Manuel das Neves Fernando Nadal (Enersis Chief Corporate Communication Officer) DEPUTY DIRECTORS Antonio Vianna Rogerio Themudo Antonio Pires Antonio Gouveira Isabel Pinto Francisco Arias Luis GonÇalves Priscila Sartori Juárez Ferreira OFFICERS Chief Executive Officer Celestino Izquierdo Institutional Project Officer José Nunes Commercial Officer Josep Pujols Management and Human Resources Officer José Barreto Administrative and Financial Officer Antonio Alves Planning and Control Officer Juan Harrison Distribution Officer José Távora A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 5 5 0 0 / / 5 1 Codensa Company ownership On September 15, 1997, Empresa de Energía de Bogotá S.A. E.S.P., capitalized 48.5% of its ownership, which was acquired by the consortium Luz de Bogotá, made up of the companies Enersis, Chilectra and Endesa Desarrollo. Subsequently, on October 23, Codensa S.A. E.S.P. was organized. Operating activity Codensa renders energy commercialization services in a 14,087 sq. km. area, including Bogotá and the Cundinamarca department. SALES AND PURCHASES OF ENERGY Physical energy sales during the period amounted to 8,673 GWh. Out of the total energy sold in the year 2001, 83.0% of it was sold on the regulated market, 11.7% on the non-regulated market, and 4.4% to public lightning. The energy purchases were 6,895 GWh. A 96.9% was Commercial activity purchased to service the regulated market and 3.0% to service the non-regulated market. At year-end 2001, Codensa rendered energy TARIFF SETTING PROCESS commercialization services to 1,850,489 customers. With respect to 2000, it constituted an increase by The service rendering unit cost grew by 4.4% with 2.7% of customers served by Codensa. respect to last year, that is to say, 3.3% lower than inflation, ending in December in $165.6/KWh. This In March, all non-regulated customers were transferred behavior was basically due to the cost decrease in from Codensa to Emgesa, totaling 256 customers with purchases of energy and to the change in methodology an average monthly consumption of 66 GWh. for the payment of restrictions (a higher cost of required energy under the operating restrictions of the The loss analysis per geographical segmentation was transmission net) in the Energy Wholesale Market. carried out, noticing that more than 70% of the Additionally, the updating method of the Unit Cost Based upon this result the loss control actions were losses were located out of the urban area of Bogota. was modified in September. Before, a change in the reoriented. UC was applied when it presented a +/- 3% variation, but now it is applied when the variation in any of its “Codensa Hogar” was launched and started on. Its aim components is higher than 3%. was to improve customers’ faithfulness, offering at the The new period will begin in 2003. offered are the life battery, virtual shopping, home same time basic services for our users. The products Energy losses service and appliance´s funding. To start with the Agreement of the Endesa Group At year-end 2001, the company recorded a 11.8% index and the Colombian Episcopate for church lighting, the for energy losses, higher than the 10.4% reported Primate Cathedral of Bogota lighting was inaugurated. for the year 2000; nevertheless, the re-calculation of the previous year loss, resulting from the impact of the overestimation of energy in meters, amounted to 11.7%, with a 0.15% index increase, showing a loss stabilization path. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Codensa S.A. E.S.P. Type of company Domicile Public Utility Service Company Address Carrera 13ª A N° 93-66 Bogotá, Colombia Telephone (571) 601 6060 Fax (571) 601 5917 Web site www.codensa.com.co E-mail servicio@codensa.com.co External auditors Arthur Andersen y Cía Limitada Total number of shares 187,193,274 Subscribed and paid in capital (ThCh$) 1,006,941,300 Participation of Enersis (direct and indirect) 22.9% Corporate purpose Distribution and sales of electric energy and performance of similar kind, complementary, and related activities. BOARD OF DIRECTORS Chairman Andrés Regué DIRECTORS Francisco García Fernando Urbina José Martinez José Vargas Israel Fainboim Rafael Villarreal DEPUTY DIRECTORS Marcelo Llévenes Lucía Piedrahíta José Inostroza Roberto Ospina Henry Navarro Silvia Escobar Carmenza Saldías OFFICERS Chief Executive Officer Marcelo Llévenes Regulation Officer Felipe Acosta Secretary General Alvaro Camacho Communication Officer Emilia Sarracino Distribution Officer José Inostroza Commercial Officer Rogelio Toro Chief Financial Officer Lucia Piedrahíta Human Resources Officer Alvaro Bolaños Planning and Control Officer Roberto Ospina A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 5 5 2 2 / / 5 3 Others businesses Others businesses T C Coverage is extended in Latin America 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) COSTA RICA Barranquilla Maracaibo Caracas TRINIDAD & TOBAGO V E N E Z U E L A Georgetown Paramaribo GUYANA SURINAM FRENCH GUIANA Cayenne 10°(cid:31) 0°(cid:31) 10°(cid:31) s P A N A M A Panama CAM (Former-Diprel) Medellín Cali Quito Bogotá C O L O M B I A Colombia Synapsis CAM CAM (Former-Diprel) Guayaquil ECUADOR Manaus Lima P E R U Perú Synapsis CAM P A C I F I C O C E A N Arica La Paz B O L I V I A 10°(cid:31) 0°(cid:31) Macapá Belèm São Luis Fortaleza B R A Z I L Recife Maceió 10°(cid:31) Brazil Synapsis CAM Brasília Salvador 20°(cid:31) Tropic of Cancer Antofagasta CHILE P A R A G U A Y Asunción Belo Horizonte São Paulo Santos Rio de Janeiro A T L A N T I C O C E A N Pôrto Alegre 30°(cid:31) 40°(cid:31) 50°(cid:31) 0 0 A R G E N T I N A Rosario URUGUAY Buenos Aires Montevideo La Plata Argentina Synapsis CAM CAM (Former-Diprel) Bahia Blanca Santiago Chile Synapsis CAM CAM (Former Diprel) Inmobiliaria Manso de Velasco Punta Arenas 90°(cid:31) 80°(cid:31) 70°(cid:31) 60°(cid:31) 50°(cid:31) 40°(cid:31) 30°(cid:31) 20°(cid:31) 500 1000 1500 2000 Miles 500 1000 1500 2000 2500 3000 Kilometers 20°(cid:31) Tropic of Cancer 30°(cid:31) 40°(cid:31) 50°(cid:31) Synapsis Soluciones y Servicios IT Company ownership Synapsis is 100% property of Enersis. This During 2001 the guidelines given by the Genesis Project of the Enersis Group continued, same as new contracts achieved with inner and outer is the Group’s professional service company in customers among which it is worth pointing information technologies. Operating activity out the outsourcing of information service, telecommunications and control systems, in Brazil; the establishment of the SIE2000A financing system in the companies of the Enersis Group in Brazil, Its strength lies in its thirteen year experience Colombia, and Peru; and the Service Contracts from providing integral solutions addressed to satisfy Call Center to Smartcom Chile, Edelnor Peru, and customers’ needs, based upon the contribution Coelce in Brazil. to information systems, telecommunications and telecontrol. During the fiscal year, the corporate project tasks were continued, including the Intranet of Synapsis’s services are addressed to large the Enersis Group, the Convergence Project CDP, companies and institutions in various economic the corporate backbone, and the new Synergi@ sectors, both in the domestic and the international Commercial 4i system established in Chilectra and market, covering practically any need from a Río Maipo. It is worth mentioning also the starting technological point of view. on of the Human Resources Project for the Enersis Group (based upon Meta4) aimed at making the companies’ remuneration process homologue. In Brazil, the establishment of the Technical Systems in Coelce continued and the Unification Project of the Commercial Systems Coelce/Cerj project ended. In Edesur, Argentina, the company was awarded the Establishment Project of the Distribution Technical System (SDE) and the inspection project in its two phases. In Chile, Synapsis was awarded the Folder Control Project of the Instituto de Normalización Previsonal- System (Meta4) in the companies Aguas Cordillera INP (Social Security Standardization Institute) and and Los Dominicos. also developed its Web site. The latter included an important application that allows the return The Elecktra Noreste Company of Panama, hired and payment of the social security contributions Synapsis services for the renewal and updating of more than 500,000 employers, via Internet. It of its Commercial Management Systems. The also continued with the services of other contracts Commercial Management System establishment that Synapsis entered with such Government´s project successfully ended after a seven-month institution. period. In Aguas Andina, the potable water and sewage In Peru, besides the award of the Call Center system company of Santiago de Chile, a Unified Services to Edelnor, it was awarded the Control Commercial System was established in a very short Center services, SCADA, the Matucana Central and time, whose project included new functionality to the Remote Terminal Units of Hydraulic and Thermal the Synergi@ solution that operated such company. Plants, and the outsourcing of Net Management, Agua Cordillera’s database was also incorporated to Microinformation Systems Support and Applications this system. Another project that was developed in at the Edegel company. 2001 was the establishment of the Remuneration FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Synapsis Soluciones y Servicios IT Ltda. Type of company Limited Liability Stock Company Tax register number 96.529.420-1 Address Catedral N° 1284, Piso 10 Santiago, Chile Telephone (56–2) 632 1240 Fax (56–2) 696 5999 Web site www.synapsis.cl E-mail synapsis@synapsis.enersis.cl External auditors Arthur Andersen - Langton Clarke Subscribed and paid in capital (ThCh$) 3,943,580 Participation of Enersis (direct and indirect) 100% Corporate purpose Supply and sell services and equipment related to computers and data processing for public utility companies and others, both domestic and foreign. AGENTS Cristóbal Sánchez (Enersis Chief Information Systems Officer) Francisco Núñez (Enersis Chief Procurement Officer) OFFICERS Chief Executive Officer Víctor Muñoz Adjunct Chief Executive Officer Manuel Marín Management and H. Resources Executive Officer Rodrigo Morelli Generation and Distribution Systems Executive Officer Roberto Carvajal Internal Management Executive Officer Claudio Escudero Control Systems Executive Officer Juan Urbina Projects and Quality Executive Officer Gustavo Pardo Synapsis Chile Executive Officer María Letelier Commercial Systems and Telephoning Executive Officer Luis Campos New Business Executive Officer Manuel de Andrés Infrastructure Executive Officer Guillermo Toro A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 5 5 6 6 / / 5 7 CAM Corporate name change in the international environment, its subsidiaries of Argentina, Colombia, Peru and the newly subsidiary The Compañía Americana de Multiservicios created in Brazil, have made it possible for Cam Uno Ltda. (CAM) is 100% owned by Enersis, to consolidate its presence in the area of integral and continues the engineering and electric service service associated to measurement for electric activity that was previously performed by distribution companies. Inmobiliaria Manso de Velasco. The year 2001 represented for CAM the As a relevant fact it must be informed that in the consolidation of the new electronic technology Extraordinary Shareholders’ Meeting held on August in measurement. This year, Codensa of Colombia 23, 2001, it was agreed to change the Compañía was supplied with the first 100,000 monophasic Americana de Multiservicios S.A. into a limited electronic meters which guarantee higher accuracy liability stock company, changing its corporate name and exactitude and 20,000 units were sold into Compañía Americana de Multiservicios Uno to Chilectra for the first time. Auditing for Limitada. Operating activity measurement quality certification to Edelnor, Codensa and Cerj continued. On the other hand, great advances in the CAM has been consolidating its presence in the development of measurement concentrators for market with works for different utility service buildings were carried out and the companies that have positioned it in a top level commercialization of the first 2,000 electronic in the domestic environment. On the other hand, meters for residential hour multi-tariff for Chilectra was started. Likewise, 90% of large customers of this company with remote measurement was achieved, a technology also applied in Codensa and Edelnor. During this fiscal year, CAM also consolidated its participation in the areas of telecommunications, infrastructure and integral services to utilities. In this environment, the company continued with the net maintenance and operation service, electricity projects and urbanization constructions, construction contractors management, loss and dullness control, cut and reconnection services, technical and commercial inspections, measurement equipment readings, invoice and bill delivery, and associated to the measurement laboratory. In the commercialization of non-traditional products, Argentina, it is worth mentioning the ISO 9002 and among others. These services were rendered both ISO 14001 Quality Certification granted after the for the Group’s companies and others. auditing made by a certification body upon the Quality Management Systems implemented in the Finally, in the regional market, the subsidiary CAM distribution companies Edenor and Edesur. Brazil started its operations with main office in Río de Janeiro and a branch in Fortaleza. CAM It is noticed that 2001 was the year of Safety Colombia consolidated its operation and special for CAM, and after six operation months without mention deserves its free customer management accidents it was granted an award. This achievement in remote measurement, concentrated in the was possible once the commitments undertaken by generation company Emgesa. The subsidiary in Peru all the members of the company were fulfilled, became in charge of the measurement systems aimed at carrying out work in a safe environment integral management associated to Edelnor’s large and with a 100% attendance to risk prevention customers, and continues rendering services training by the personnel FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Compañía Americana de Multiservicios Uno Ltda. Type of company Limited Liability Stock Company Tax register number 96,530,650-1 Address Tarapacá N°934, Santiago, Chile Telephone (56–2) 632 5000 Fax (56–2) 639 7608 E-mail camsa@cam.enersis.cl External auditors Arthur Andersen - Langton Clarke Subscribed and paid in capital (ThCh$) 1,031,693 Participation of Enersis (direct and indirect) 100% Corporate purpose Perform professional and technical services for the management of warehouses, control execution, measure and gauge, start-up and maintenance of systems, machinery and apparatus, maintenance of distribution and transmission networks. AGENT Francisco Núñez (Enersis Chief Procurement Officer) Cristobal Sánchez (Enersis Chief Information Systems Officer) OFFICERS Chief Executive Officer Pantaleón Calvo Networks Executive Officer Andreas Gebhardt Engineering Services Executive Officer Jorge Salinas Public Lighting and Nets Maintenance Executive Officer Omar Aramayo A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 5 5 8 8 / / 5 9 CAM (Former Diprel) Corporate name change It is worth mentioning that the business developed with some of the most strategic suppliers for our As a relevant fact it must be informed that in the activity, such as the agreements on alliances to Extraordinary Shareholders’ Meeting held on August board new market niches. 23, 2001, it was agreed to change the Distribuidora de Productos Eléctricos S.A. into a limited liability We might also highlight the participation in the stock company, changing its corporate name into main massive projects of public lighting, both Compañía Americana de Multiservicios Limitada, through Chilectra as well as directly in municipalities and in addition, it was agreed to enhance its outside their area of concession, as it happened in corporate purpose. Operating activity the city of Copiapó, in the III Region of the country. Regarding new businesses, the sale of non- traditional products, such as air conditioning During 2001, Diprel experienced an increase by 77% systems, heat pumps, heat accumulators, electric in its results in comparison with the previous year, thermos and induction boilers, artifacts and essentially explained by an aggressive commercial systems that promote and increase the electrical plan addressed to the non-regulated customer consumption, has been successful both in the market, with an income increase by 96%. Metropolitan Region as in the rest of the country. In the international field and with non-related customers, important businesses were agreed in Argentina, with electric distributors from the north of the country, as well as in Panama and Colombia. Regarding Human Resources, a process of collective negotiation was carried out with the workers’ union for term 2002-2005. This meant an increase in economic and social benefits of the current collective contract, in a framework of austerity, participation, and commitment with the objectives set by the Genesis Project. On the other hand, the merging process between Diprel and Compañía Americana de Multiservicios S.A. started last October, which aims to offer integral solutions to third customers. The necessity, which implied the decrease of 16% of structural redesign of both companies became a the workers’ roll. They received the socio-economic support specified in the retirement plan set forth by Enersis for the companies of the Group. FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) COMPANY IDENTIFICATION Corporate name Compañía Americana de Multiservicios Ltda. Type of company Limited Liability Stock Company Tax register number 96,543.670-7 Address Bulnes N°1238, Santiago, Chile Telephone (56-2) 688 4502 Fax (56-2) 681 2219 Web site www.diprel.com E-mail info@diprel.enersis.cl External auditors Arthur Andersen -Langton Clarke Subscribed and paid in capital (ThCh$) 1,540,344 Participation of Enersis (direct and indirect) 100% Corporate purpose Purchase, sales, imports and distribution of products related with electricity. AGENT Francisco Núñez (Enersis Chief Procurement Officer) Cristobal Sánchez Chief Information Systems Officer OFFICERS Chief Executive Officer Eduardo López Commercial Executive Officer José Peña Corporate Contracts Executive Officer Antonio Barreda Logistics Executive Officer Raúl Puentes Diprel Peru Chief Executive Officer Mario Albornoz A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 0 0 / / 6 1 Inmobiliaria Manso de Velasco Real estate projects highway under concession Costanera Norte, whose road has been planned from western Santiago, close The year 2001 was marked by important events to ENEA. happening abroad (terrorist strikes and Argentine crisis), deepening the economic crisis already affecting It is currently in its Phase I, corresponding to the country and also its depressed real estate sector. the concept of Industrial and Business Park, Notwithstanding this fact, it is worth mentioning that notwithstanding the sales of other areas for housing the results of Inmobiliaria Manso de Velasco during and commercial purpose. The project has innovative 2001 amounted to $5,433 million, which was achieved facilities, and green areas were implemented according mainly through two important projects, namely, ENEA to the master plan, which offer better equipment and and Santuario del Valle. service areas to the lots and users. ENEA In the 2001 fiscal year balance, ENEA obtained The project corresponds to a real estate development important advancements in commercial terms and in a 1,000 ha. area , strategically located in western in the development of its urbanization works. ENEA Santiago, borough of Pudahuel, in the vicinity of the sold more than 30 ha.. of land, with an associated International Airport of the Chilean capital city. The income higher than $6,012 million. This exceptional remarkable project road relationship and connectivity result, considering the depressed real estate market has been complemented by future works in the vial and the low sales observed in similar projects of the link of Av. Américo Vespucio, Av. San Pablo and the competition, was reached by creating specific projects out of the industrial environment, both inside and 2001. The accumulated area of macrolots sold until this COMPANY IDENTIFICATION outside the urbanized areas. date reaches 162,6% ha., amount which represents a These initiatives were evaluated and offered to various addressed to development by third parties. investors and, finally, a hotel, a service station, housing lots and a graveyard joined the project. Regarding residential single-family lots, accumulated 93% of the land whose commercialization has been sales amounted to 487 lots, a figure that represents Inserted in the project, it is the partnership Aguas 88% of the total available lots in the project. Santiago Poniente, which renders the sanitary services associated to the real estate development of the ENEA TAPIHUE project. Due to important sales achieved by the project, the company started sanitary infrastructure Tapihue project includes properties corresponding to works, which will serve more than 1,400 customers in lands associated to the farms Tapihue , Amancay (lot the short term. B) and La Petaca. Such properties, as a whole, involve an area of 7,302 ha. in the borough of Til-Til, province Aguas Santiago Poniente is therefore in a phase of of Chacabuco, Metropolitan region, and are classified increasing its economic value, as it is certain that these as CUDA (Conditioned Urban Development Area), per clients associated to the ENEA development will need the Santiago Metropolitan Urban Development Plan. the services of the company. SANTUARIO DEL VALLE Property lease During 2001, the Santuario del Valle project devoted to In its real estate business, Manso de Velasco manages the sale of single-family residential lots and macrolots, a total of 43,473 m2 built corresponding to buildings, with reported sales for $7,651 million. stores and offices, which generated accumulated income amounting to $1,926 million during the year Considering the depressed real estate market that 2001. affected the period, especially in the sale of single- family sites addressed to the high segment of It is worth pointing out that during the year 2001 the population, it was possible to create and sell period, the property disinvestment process continued, condominium projects for the housing development of resulting from the restructuring and new strategic third parties, whose lands were also addressed to high definition of Enersis. The sales of important properties income segments. Its demand, although diminished, was achieved, yielding US$1,439 million. kept it in reasonable levels. The sales of land for this kind of project represented 79% of total sales of FINANCIAL INFORMATION (Thousand Ch$ as of December 2001) Corporate name Inmobiliaria Manso de Velasco Ltda. Type of company Limited Liability Stock Company Tax register number 96,909,280-8 Address Avda. Kennedy N°5454, Piso 5 Vitacura, Santiago Telephone (56–2) 378 4700 Fax (56–2) 378 4702 E-mail rch@mvelasco.enersis.cl External auditors Arthur Andersen - Langton Clarke Subscribed and paid in capital (ThCh$) 5,848,651 Participation of Enersis (direct and indirect) 100% Corporate purpose Purchase, sell, parcel, subdivide, market and commercially operate at any title, of all types of real property, either on its own behalf or on behalf of others. AGENT Alberto López (Enersis Chief Business Executive Officer) OFFICERS Chief Executive Officer Andrés Salas Legal Counselor Alfonso Salgado Real Estate Development Executive Officer Gustavo Cardemil Project ENEA Executive Officer Bernardo Küpfer MANSO DE VELASCO A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 2 2 / / 6 3 Liability statement The undersigned Directors of Enersis and its Chairman who have put their hand and executed this statement herein are liable under oath of the truth of all the information delivered in the current Annual Report, under the provisions of the general regulation No. 30 of the Superintendence of Securities and Insurance. CHAIRMAN: Alfredo Llorente Profession: Industrial Engineer Tax registry number: 48,062,400-9 VICECHAIRMAN: Rafael Miranda Profession: Industrial Engineer Tax registry number: 48,070,966-7 DIRECTOR: José Fesser Profession: Lawyer Tax registry number: 48,064,839-0 DIRECTOR: Luis Rivera Profession: Roads, Channels and Ports Engineer Tax registry number: 48,071,010-K DIRECTOR: Ernesto Silva Profession: Commercial Engineer Tax registry number: 5,126,588-2 DIRECTOR: Hernán Somerville Profession: Lawyer Tax registry number: 4,132,185-7 DIRECTOR: Eugenio Tironi Profession: Sociologist Tax registry number: 5,715,860-3 CHIEF EXECUTIVE OFFICER: Enrique García Profession: Civil Engineer (Infrastructure) Tax registry number: 14,704,156-K Identifi cation of other subsidiaries and related companies Distrilec Inversora S.A. Enersis de Argentina S.A. Enersis Energía de Colombia S.A. E.S.P. Corporate name Distrilec Inversora S.A. Type of company Stock Company Address San José Nº 140 (1076) Buenos Aires - Argentina Telephone (54-11) 4370 3700 Fax (54-11) 4381 0708 Corporate name Enersis de Argentina S.A. Type of company Foreign Stock Company Address Suipacha N 1111 Piso 18, Buenos Aires, Argentina Telephone (54-1) 315 9959 Fax (54-1) 311 2317 External auditors Arthur Andersen/Pistrelli Díaz y Asoc. External auditors Arthur Andersen/Pistrelli Díaz y Asociados Subscribed and paid in capital (ThCh$) 332,309,610 Subscribed and paid in capital (ThCh$) 77,937 Participation of Enersis (direct and indirect) 51.5% Participation of Enersis (direct and indirect) 100% (in liquidation) Corporate name Enersis Energía de Colombia S.A. E.S.P. Type of company Foreign Stock Company Address Carrera 13A Nº 93-66, Piso 2, Bogotá, Colombia Telephone (57-1) 601 5790 Fax (57-1) 601 5799 External auditors Arthur Andersen Subscribed and paid in capital (ThCh$) 102,147 Participation of Enersis (direct and indirect) 100% Corporate purpose Participate on its own behalf or associated with third parties in the cooperation for sales of stock packages of Edesur and Edenor. Corporate purpose Mainly financial, able to carry out all types of financial and investment activities. Corporate purpose Purchase of electric energy and its sale to final users, either regulated or non-regulated. BOARD OF DIRECTORS Chairman José Hidalgo Vice-Chairman Rafael Fernández Directors Marcelo Silva Alberto López (Enersis Corp. Business Director) Alan Arntsen Mariano Grondona Horacio Babino Luis Sas Jorge Casagrande Daniel Maggi Deputy Directors Domingo Valdés (Enersis Legal Counsel) Luis Barry Pablo Casado Pedro Aramburu Manuel Benites Antonello Tramonti Jorge Barros Pablo Ferrero Carlos Álvarez Nicolás Carusoni LIQUIDATORS Main liquidator Alvaro Pérez Deputy liquidator Fernando Foix BOARD OF DIRECTORS Chairman Enrique García (Enersis Chief Executive Officer) Vice-chairman Juan Domínguez (Enersis Adjunct Chief Executive Officer) Directors Domingo Valdés (Enersis Legal Councel) Mariano Grondona Alan Arntsen Betina Di Croce María Justo Deputy Directors Martín Madrid (Enersis Corp. Chief Planning Officer) Fernando Nadal (Enersis Corp.Communication Officer) Manuel Benites Alberto López (Enersis Corp. Business Director) A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 4 4 / / 6 5 Enersis International Empresa Eléctrica de Panamá S.A. Interocean Developments Inc. Corporate name Enersis International Type of company Foreign Stock Company Address P.O. BOX 309, Ugland House, South Church St, Grand Cayman, Cayman Islands Telephone (345) 949 8066 Fax (345) 949 8080 External auditors Arthur Andersen Corporate name Empresa Eléctrica de Panamá S.A. Corporate name Interocean Developments Inc. Type of company Foreign Stock Company Type of company Foreign Limited Company Address Av. Samuel Lewis and Calle Nº 53, Edificio Omega, Mezzanine, Panamá, República de Panamá Address Av. Samuel Lewis and Calle Nº53, Edificio Omega, Mezzanine, Panamá, República de Panamá Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Subscribed and paid in capital (ThCh$) 192,744,152 Subscribed and paid in capital (ThCh$) 135,410,504 Subscribed and paid in capital (ThCh$) 127,281,537 Participation of Enersis (direct and indirect)1 100% Participation of Enersis (direct and indirect) 100% Participation of Enersis (direct and indirect) 100% Corporate purpose Any legal activity related with energy or fuel. Corporate purpose Any legal activity related with energy or fuel. Corporate purpose Any legal activity related with energy or fuel. BOARD OF DIRECTORS Chairman Juan Domínguez (Enersis Adjunct Chief Executive Officer) BOARD OF DIRECTORS Chairman Juan Domínguez (Enersis Adjunct Chief Executive Officer) BOARD OF DIRECTORS Chairman Juan Domínguez (Enersis Adjunct Chief Executive Officer) Vice-Chairman and Secretary José Palomo Directors Carlos Arrieta Leopoldo López Máximo de la Peña (Enersis Tax Counselor) Secretary José Palomo Directors Carlos Arrieta Máximo de la Peña (Enersis Tax Counselor) Secretary José Palomo Directors Carlos Arrieta Máximo de la Peña (Enersis Tax Counselor) Investluz S.A. Corporate name Investluz S.A. Type of company Foreign Stock Company Inversiones Distrilima S.A. Luz de Bogotá S.A. Corporate name Inversiones Distrilima S.A. Type of company Foreign Stock Company Corporate name Luz de Bogotá S.A. Type of company Stock Company Address Av. Barao de Studart N°2917, Dionísio Torres Fortaleza, Ceará, Brazil Address Tnte. César López Rojas Nº 201, Urbanización Maranga, San Miguel, Lima, Perú Address Carrera 13 A Nº 93-66, Piso 6, Bogotá, Colombia Telephone (5585) 216 1123 Fax (5585) 216 1423 External auditors Arthur Andersen Telephone (51-1) 561 1604 Fax (51-1) 452 3007 External auditors Arthur Andersen Telephone (571) 601 5402 Fax (571) 601 5905 External auditors Arthur Andersen Subscribed and paid in capital (ThCh$) 560,512,266 Subscribed and paid in capital (ThCh$) 121,467,134 Subscribed and paid in capital (ThCh$) 1 200,905,942 Participation of Enersis (direct and indirect) 47% Participation of Enersis (direct and indirect) 54.5% Participation of Enersis (direct and indirect) 44.7% Corporate purpose Participation in the capital of Coelce and in other partnerships in Brazil and abroad as a partner. Corporate purpose Carrying out investments in other partnerships especially in those related with distribution and generation of electric energy. Corporate purpose Any legal activity related with energy or fuel or with public utility services. REPRESENTATIVES Chairman Manuel Montero BOARD OF DIRECTORS Chairman Andrés Regué Directors Francisco García Fernando Urbina José Martinez Deputy Directors Marcelo Llévenes Lucía Piedrahíta José Inostroza Roberto Ospina BOARD OF DIRECTORS Chairman José Kindelán (Enersis Chief Regulation Officer) Directors José Hidalgo Alberto López (Enersis Corp. Business Director) Fernando Urbina Emilio García José Chueca Reynaldo Llosa Deputy Directors José Álvarez-García Narciso López de Cervantes Marciano Izquierdo Walter Piazza Fernando Font Antonio Sabater A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 6 6 / / 6 7 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 6 6 8 8 / / 6 9 Enersis S.A. and Subsidiaries Audited Consolidated Financial Statements For the years then ended December 31, 2000 and 2001 INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS Accounts Inspector’s Report Report of Independent Accountants Consolidated Balance Sheets as of December 31, 2000 and 2001 Consolidated Statements of Income for the years ended December 31, 2000 and 2001 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2000 and 2001 Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 2001 Notes to the Consolidated Financial Statements Enersis S.A. and Subsidiaries Relevant Facts Consolidated Management Analysis 70 71 72 74 75 76 78 180 186 Application of Constant Chilean Pesos The consolidated fi nancial statements included herein have been restated for general price-level changes and expressed in constant Chilean pesos of December 31, 2001 purchasing power. Accounts Inspector’s Report Pursuant to the provisions in law No. 18,046 on Limited Liability Stock Companies and in compliance with the mandate granted by the Ordinary Shareholders’ Meeting held on April 02, 2001, we have examined the Consolidated Financial Statements of Enersis S.A. for period between January 1 and December 31, 2001. Our assignment was focused on verifying, on a selecyive basis, the coincidence of the fi gures presented in the Financial Statements with the offi cial records of the Company and its subsidiaries and to such and end we compared the fi gures presented in the ledger with the grouping and classifi caton worksheets. To subsequently ascertain if these amounts which are the balances of accounts of the same nature match with those included in the Financial Statements, a revision which entailed no objections. Marcela Araya Accounts Inspector Marco Acevedo Accounts Inspector Santiago, February 26, 2002 Report of Independent Accountants (Translation of a report originally issued in Spanish – See Note 2 to the consolidated fi nancial statements) To the Shareholders of Enersis S.A.: We have audited the accompanying consolidated balance sheets of Enersis S.A. and Subsidiaries (the “Company”) as of December 31, 2000 and 2001, and the related consolidated statements of income, shareholders’ equity and cash fl ows for the years then ended. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audits. We did not audit the fi nancial statements of the subsidiary Endesa – Chile S.A., which statements refl ect total assets and total revenues of 30 percent and 18 percent in 2000, and 30 percent and 23 percent in 2001, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the fi nancial statements referred to above present fairly, in all material respects, the fi nancial position of Enersis S.A. and Subsidiaries as of December 31, 2000 and 2001, and the results of its operations and its cash fl ows for the years then ended in conformity with generally accepted accounting principles in Chile. As described in Notes 5 and 33 to these fi nancial statements, the Company’s subsidiaries in Brazil (Companhia de Electricidad do Rio de Janeiro and Companhia Energética do Ceará) have recognized in operating revenues ThCh$ 94,486,197 related to regulated assets, in accordance with the regulations for such entities in Brazil. Similarly, amounts corresponding to unregulated energy contracted by generators and which will be transferred to the distribution companies is still pending from the Brazilian regulators and therefore has not been recorded in these fi nancial statements. As described in Notes 23 and 33 to these fi nancial statements, the Company has valued investments in Argentina in accordance with Technical Bulletin Nº 64 issued by the Chilean Association of Accountants. On a consolidated basis, these investments refl ect total assets of 14 percent, total revenues of 27 percent, and total operating income of 21 percent, of the related consolidated totals. Due to the unstable political and economic situation in Argentina and considering the effects of the Public Emergency Law, the Company’s subsidiaries and equity method investments, are exposed to conditions which could affect the valuation of their assets, liabilities and equity and generate uncertainty as to their ability to pay obligations and continue operations. These fi nancial statements have been prepared assuming that the Company’s Argentine subsidiaries and equity method investments will continue as a going concern and do not refl ect the effects or eventual adjustments that may result from the resolution of these uncertainties. Cristián Bastián E. Santiago (Chile) February 26, 2002 ARTHUR ANDERSEN – LANGTON CLARKE A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 7 7 0 0 / / 7 1 Audited Consolidated Balance Sheets Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001 and thousands of US dollars) Assets Current assets: Cash Time deposits Marketable securities Accounts receivable, net Notes receivable, net Other accounts receivable, net Amounts due from related companies Inventories Income taxes recoverable Deferred income taxes Prepaid expenses Other current assets 2000 ThCh$ As of December 31, 2001 ThCh$ 2001 ThUS$ 27,255,582 77,376,402 11,952,705 474,887,215 9,507,985 60,224,647 19,499,217 73,136,451 69,488,255 29,669,579 9,466,878 134,183,417 36,552,229 172,925,470 197,157 534,222,322 11,668,161 63,966,838 17,494,736 75,169,004 55,835,050 23,458,350 13,564,628 123,535,175 55,823 264,093 301 815,867 17,820 97,691 26,718 114,799 85,272 35,826 20,716 188,663 Total current assets 996,648,333 1,128,589,120 1,723,589 Property, plant and equipment, net 8,684,284,279 9,344,708,408 14,271,306 Other assets: Investments in related companies Investments in other companies Long-term receivables Goodwill, net Negative goodwill, net Amounts due from related companies Intangibles Accumulated amortization Other assets Total other assets Total assets 153,335,178 131,266,459 46,112,705 1,303,289,960 (195,797,288) 143,935,368 58,365,570 (14,433,888) 105,958,142 162,570,882 145,204,851 98,935,497 1,277,127,438 (172,624,494) 165,696,885 69,608,816 (24,415,601) 192,752,871 248,279 221,758 1,950,439 (263,633) 151,095 253,053 106,307 (37,288) 294,374 1,732,032,206 1,914,857,145 2,924,384 11,412,964,818 12,388,154,673 18,919,279 The accompanying notes are an integral part of these consolidated fi nancial statements. Liabilities and Shareholders’ equity Current liabilities: Short-term debt due to banks and fi nancial institutions Current portion of long-term debt due to banks and fi nancial institutions Promissory notes Current portion of bonds payable Current portion of long-term notes payable Dividends payable Accounts payable Short-term notes payable Miscellaneous payables Amounts payable to related companies Accrued expenses Withholdings Income taxes payable Deferred income 2000 ThCh$ As of December 31, 2001 ThCh$ 2001 ThUS$ 476,274,742 292,242,781 446,315 210,166,385 16,635,381 90,659,808 29,285,626 5,741,741 248,240,493 14,270,216 30,856,634 32,044,865 71,421,590 65,579,479 115,542,094 10,674,974 408,657,469 53,039,076 61,017,788 31,215,082 6,804,807 251,412,913 44,105,893 46,219,728 30,214,222 77,592,552 52,386,012 75,032,060 10,985,014 624,105 81,002 93,187 47,672 10,392 383,960 67,359 70,587 46,143 118,500 80,004 114,590 16,776 Total current liabilities 1,583,569,157 1,591,556,680 2,430,637 Long-term liabilities: Due to banks and fi nancial institutions Bonds payable Long-term notes payables Accounts payable Amounts payable to related companies Accrued expenses Deferred income taxes Other long-term liabilities 1,643,588,297 1,925,426,454 228,486,812 28,126,666 1,050,737,624 122,772,387 19,990,376 53,485,493 1,896,800,333 2,225,321,561 227,152,092 33,734,901 972,531,222 227,562,076 35,009,674 44,376,320 2,896,807 3,398,527 346,908 51,520 1,485,257 347,534 53,467 67,773 Total long-term liabilities 5,072,614,109 5,662,488,179 8,647,793 Minority interest 3,622,062,715 3,954,923,425 6,039,988 Committments and contingencies Shareholders’ equity: Paid-in capital, no par value Additional paid-in capital – share premium Other reserves Retained earnings Net income for the year 729,328,347 32,398,114 7,491,989 272,625,237 92,875,150 729,328,347 32,398,114 26,384,539 350,149,143 40,926,246 1,113,835 49,479 40,295 534,750 62,503 Total shareholders’ equity 1,134,718,837 1,179,186,389 1,800,862 Total liabilities and shareholders’ equity 11,412,964,818 12,388,154,673 18,919,279 The accompanying notes are an integral part of these consolidated fi nancial statements. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 7 7 2 2 / / 7 3 Audited Consolidated Statements of Income Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001 and thousands of US dollars) Operating income: Sales Cost of sales Gross profi t Administrative and selling expenses Years ended December 31, 2001 ThCh$ 2001 ThUS$ 2000 ThCh$ 2,676,744,755 (1,839,839,861) 836,904,894 (300,254,777) 2,970,272,584 (1,966,322,400) 1,003,950,184 (271,383,420) 4,536,222 (3,002,982) 1,533,240 (414,459) Operating income 536,650,117 732,566,764 1,118,781 Non-operating income and expense: Interest income Equity participation in income of related companies Other non-operating income Equity participation in losses of related companies Amortization of goodwill Interest expense Other non-operating expenses Price-level restatement, net Foreign currency translation, net 72,001,799 4,414,996 450,001,303 (4,340,479) (69,625,055) (485,479,435) (115,427,232) (14,807,760) (1,215,264) 54,944,497 3,523,584 190,906,981 (13,910,766) (77,988,545) (436,089,073) (177,032,205) 2,111,724 (29,962,583) 83,912 5,381 291,555 (21,245) (119,105) (665,998) (270,365) 3,225 (45,759) Non-operating expense, net (164,477,127) (483,496,386) (738,399) Income before income taxes, minority interest and amortization of negative goodwill Less: Income taxes Income before minority interest and amortization of negative goodwill Minority interest Income before amortization of negative goodwill Amortization of negative goodwill 372,172,990 (142,061,655) 249,070,378 (132,706,349) 380,382 (202,670) 230,111,335 (178,640,998) 51,470,337 41,404,813 116,364,029 (121,507,397) (5,143,368) 46,069,614 177,712 (185,567) (7,855) 70,358 Net income for the year 92,875,150 40,926,246 62,503 The accompanying notes are an integral part of these consolidated fi nancial statements. Audited Consolidated Statements of Changes in Shareholders’ Equity Translation of fi nancial statements originally issued in Spanish – See Note 2 (Expressed in thousands of historical Chilean pesos, except as stated) Additional Net income Number Paid-in paid-in Other Retained (loss) for of shares capital (in thousands) ThCh$ capital ThCh$ reserves earnings the year ThCh$ ThCh$ ThCh$ Total ThCh$ 6,800,000 398,624,586 24,184,786 23,295,280 330,716,485 (78,158,729) 698,662,408 As of January 1, 2000 Transfer of prior year loss to retained earnings Price-level restatement of capital Changes in equity of affi liates Cumulative translation adjustment - - - - - - - (78,158,729) 78,158,729 - 22,015,443 1,203,739 1,094,879 11,870,214 - - - - (18,382,462) 1,259,024 - - - - 36,184,275 (18,382,462) 1,259,024 292,794,395 90,082,590 90,082,590 - - - - Issuance of shares 1,491,020 286,758,950 6,035,445 Net income for the year - - - - - As of December 31, 2000 8,291,020 707,398,979 31,423,970 7,266,721 264,427,970 90,082,590 1,100,600,230 As of December 31, 2000 (1) 8,291,020 729,328,347 32,398,114 7,491,989 272,625,237 92,875,150 1,134,718,837 As of January 1, 2001 8,291,020 707,398,979 31,423,970 7,266,721 264,427,970 90,082,590 1,100,600,230 Transfer of prior year income to retained earnings Dividends Price-level restatement of capital Cumulative translation adjustment Net income for the year - - - - - - - - - - - (14,976,824) 90,082,590 (90,082,590) - 21,929,368 974,144 225,268 10,615,407 - - - - 18,892,550 - - - - - - (14,976,824) 33,744,187 18,892,550 40,926,246 40,926,246 As of December 31, 2001 8,291,020 729,328,347 32,398,114 26,384,539 350,149,143 40,926,246 1,179,186,389 (1) Restated in thousands of constant Chilean pesos as of December 31, 2001. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 7 7 4 4 / / 7 5 Audited Statement of Consolidated Cash Flows Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, and thousands of US dollars) Years ended December 31, 2001 ThCh$ 2001 ThUS$ 2000 ThCh$ Cash fl ows from operating activities: Net income for the year Gain (losses) from sales of assets: Gain on sales of property, plant and equipment Gain on sale of investments 92,875,150 40,926,246 62,503 (61,064,928) (202,046,395) (5,567,418) - (8,503) - Charges (credits) to income which do not represent cash fl ows: Depreciation Amortization of intangibles Write-offs and accrued expenses Equity participation in income of related companies Equity participation in losses of related companies Amortization of goodwill Amortization of negative goodwill Price-level restatement, net Foreign currency translation, net Other credits to income which do not represent cash fl ows Other charges to income which do not represent cash fl ows 388,953,861 33,080,473 91,397,809 (4,414,996) 4,340,479 69,625,055 (41,404,813) 14,807,760 1,215,264 (48,132,142) 110,037,719 413,612,079 8,678,208 80,871,961 (3,523,584) 13,910,766 77,988,545 (46,069,614) (2,111,724) 29,962,583 (106,474,373) 82,984,300 631,671 13,253 123,508 (5,381) 21,245 119,105 (70,358) (3,225) 45,759 (162,608) 126,734 Changes in assets which affect cash fl ows: Decrease (increase) in trade receivables Decrease in inventory Decrease (increase) in other assets (106,207,841) 22,432,568 (51,806,718) 116,467,244 1,176,106 23,717,139 177,870 1,796 36,221 Changes in liabilities which affect cash fl ows: Decrease in accounts payable associated with operating results Increase in interest payable Increase (decrease) in income tax payable Decrease in other accounts payable associated with non-operating results Net decrease in value added tax and other similar taxes payable Income attributable to minority interest (2,662,939) 97,040,399 11,139,307 (73,222,347) (1,622,900) 178,640,998 (60,374,730) 14,669,615 (52,498,394) 7,961,412 (114,201,522) 121,507,397 (92,205) 22,404 (80,176) 12,159 (174,409) 185,567 Net cash fl ows provided by operating activities 523,000,823 643,612,242 982,930 Cash fl ows from fi nancing activities: Issuance of shares Proceeds from the issuance of debt Proceeds from bond issuances Other sources of fi nancing Dividends paid Payment of debt Payment of bonds Payment of loans obtained from related companies Payment of bond issuance costs Payment of other loans from related companies Other disbursements for fi nancing Years ended December 31, 2001 ThCh$ 2001 ThUS$ 2000 ThCh$ 305,169,385 1,553,604,420 51,007,966 43,556,446 (145,933,415) (2,061,623,319) (204,237,868) (81,388,242) - (71,874,189) (178,854,087) - 1,880,485,153 272,208,589 29,450,901 (140,259,670) (1,815,594,628) (154,631,146) (97,961,304) (967,133) - (32,356,128) - 2,871,890 415,719 44,978 (214,206) (2,772,789) (236,154) (149,607) (1,477) - (49,415) Net cash used in fi nancing activities (790,572,903) (59,625,366) (91,061) Cash fl ows from investing activities: Proceeds from sales of property, plant and equipment Sale of investment in related companies Proceeds from loans obtained from related parties Other loans received from related companies Other receipts from investments Additions to property, plant and equipment Long-term investments Investment in fi nancial instruments Other loans granted to related companies Other investment disbursements 136,145,406 503,776,350 3,743,364 15,879 208,465,508 (333,018,938) (313,721,205) (1,844,601) - (32,089,850) 19,142,442 - 5,365,011 - 13,277,523 (331,605,569) (12,504,600) - (226,811) (182,418,471) 29,234 - 8,193 - 20,278 (506,430) (19,097) - (346) (278,591) Net cash provided by (used) in investing activities 171,471,913 (488,970,475) (746,759) Positive (negative) net cash fl ow for the year Effect of price-level restatement on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents beginning of year (96,100,167) 3,995,572 (92,104,595) 208,644,113 95,016,401 (72,811) 94,943,590 116,539,518 145,110 (111) 144,999 177,980 Cash and cash equivalents end of year 116,539,518 211,483,108 322,979 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 7 7 6 6 / / 7 7 Notes to the Audited Consolidated Financial Statements Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, except as stated) Note 1 Description of Business: Enersis S.A. (the “Company”) is registered in the Securities Register under No. 0175 and is regulated by the Chilean Superintendency of Securities and Insurance (the “SVS”). The Company issued publicly registered American Depositary Receipts in 1993 and 1996. Enersis S.A. is a reporting company under the United States Securities and Exchange Act of 1934. The Company’s subsidiaries, Chilectra S.A., Compañía Eléctrica del Río Maipo S.A. (Río Maipo S.A.), Empresa Nacional de Electricidad S.A. (Endesa S.A.) and Aguas Cordillera S.A. are registered in the Securities Register under No.’s 0321, 0345, 0114, and 0369 respectively. Note 2 Summary of Signifi cant Accounting Policies: (a) General: The consolidated fi nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in Chile and the regulations established by the SVS (collectively “Chilean GAAP”), and the specifi c corporate regulations of Law No. 18.046, related to the formation, registration and liquidation of Chilean corporations, among others. Certain amounts in the prior years’ fi nancial statements have been reclassifi ed to conform to the current year’s presentation. The preparation of fi nancial statements in conformity with Chilean GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the fi nancial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying fi nancial statements refl ect the consolidated results of operations of Enersis S.A. and its subsidiaries. All signifi cant intercompany transactions have been eliminated in consolidation. Investments in companies in the development stage are accounted for using the equity method, except that income or losses are included directly in equity instead of being refl ected in the Company’s consolidated statement of income. The Company consolidates the fi nancial statements of companies in which it controls over 50% of the voting shares, which are the following: Company name Chilectra S.A. Compañía Eléctrica del Río Maipo S.A. Synapsis Soluciones y Servicios IT Ltda. Inmobiliaria Manso de Velasco Ltda. Cía. Americana de Multiservicios Ltda. Endesa Chile S.A. (1) Enersis de Argentina S.A. Enersis International Ltd. Inversiones Distrilima S.A. Empresa Distribuidora Sur S.A. (Edesur) Empresa Eléctrica de Panamá S.A. Enersis Investment S.A. Interocean Developments Inc. Luz de Bogotá S.A. (2) Cerj (2) Investluz (2) Cía. Americana de Multiservicios Uno Ltda. Electric investment Enersis Energia de Colombia S.A. Percentage participation as of December 31, 2000 Total 97.97 98.40 99.99 100.00 100.00 59.98 100.00 100.00 53.93 64.29 99.61 100.00 100.00 44.21 57.38 46.50 100.00 100.00 100.00 Direct 98.24 98.74 99.99 99.99 99.93 59.98 99.99 100.00 14.79 16.02 81.00 - 100.00 25.71 8.00 - 99.99 - 100.00 2001 Indirect - - 0.01 0.00 0.07 - 0.00 - 39.75 49.07 18.67 - - 18.95 50.16 47.02 0.01 - - Total 98.24 98.74 99.99 100.00 100.00 59.98 100.00 100.00 54.54 65.09 99.67 - 100.00 44.66 58.16 47.02 100.00 - 100.00 (1) Includes certain majority owned companies not presented herein. (2) The Company obtained shareholder agreements dated June 25, 1999, from Endesa International, the majority shareholder of these companies, giving the Company the right to elect a majority of the Board of Directors. The Superintendency of Securities and Insurance were notifi ed on June 28, 1999. (b) Periods covered: These fi nancial statements refl ect the Company’s fi nancial positions as of December 31, 2000 and 2001, and the results of its operations, the changes in its shareholders’ equity and its cash fl ows for the years ended December 31, 2000 and 2001. (c) Constant currency restatement: The cumulative infl ation rate in Chile as measured by the Chilean Consumer Price Index (“CPI”) for the three-year period ended December 31, 2001 was approximately 10.66%. Chilean GAAP requires that the fi nancial statements be restated to refl ect the full effects of loss in the purchasing power of the Chilean peso on the fi nancial position and results of operations of reporting entities. The method described below is based on a model that enables calculation of net infl ation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of local currency. The model prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the year-end. The fi nancial statements of the Company have been price-level restated in order to refl ect the effects of the changes in the purchasing power of the Chilean currency during each year. All non-monetary assets and liabilities, all equity accounts and income statement accounts have been restated to refl ect the changes in the CPI from the date they were acquired or incurred to year-end (see also Note 24). A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 7 7 8 8 / / 7 9 The purchasing power gain or loss included in net income refl ects the effects of Chilean infl ation on the monetary assets and liabilities held by the Company. The restatements were calculated using the offi cial consumer price index of the National Institute of Statistics and based on the “prior month rule,” in which the infl ation adjustments are based on the CPI at the close of the month preceding the close of the respective period or transaction. This index is considered by the business community, the accounting profession and the Chilean government to be the index that most closely complies with the technical requirement to refl ect the variation in the general level of prices in Chile, and consequently it is widely used for fi nancial reporting purposes. The values of the Chilean consumer price indices used to refl ect the effects of the changes in the purchasing power of the Chilean peso (“price-level restatement”) are as follows: November 30, 2000 November 30, 2001 Index 106.82 110.10 Change over Previous November 30, 4.7% 3.1% By way of comparison, the actual values of the Chilean consumer price indices as of the balance sheet dates are as follows: December 31, 2000 December 31, 2001 Index 106.94 109.76 Change over previous December 31, 4.5% 2.6% The above-mentioned price-level restatements do not purport to represent appraisal or replacement values and are only intended to restate all non-monetary fi nancial statement components in terms of local currency of a single purchasing power and to include in net income or loss for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of infl ation. Index-linked assets and liabilities Assets and liabilities that are denominated in index-linked units of account are stated at the year-end values of the respective units of account. The principal index-linked unit used in Chile is the Unidad de Fomento (“UF”), which is adjusted daily to refl ect the changes in Chile’s CPI. Certain of the Company’s investments are linked to the UF. As the Company’s indexed liabilities exceed its indexed assets, the increase in the index results in a net loss on indexation. Values for the UF are as follows (historical Chilean pesos per UF): December 31, 2000 December 31, 2001 Ch$ 15,769.92 16,262.66 Comparative fi nancial statements For comparative purposes, the historical December 31, 2000 and 2001 consolidated fi nancial statements and their accompanying notes have been presented in constant Chilean pesos as of December 31, 2001. Amounts previously presented in constant Chilean pesos as of each balance sheet date have been adjusted by the percentage changes in the CPI to December 31, 2001, as follows: Period 2000 Change in Index 3.1% (1) (1) Equivalent to the amounts for 2000 multiplied by the change in the CPI for 2001. This updating does not change the prior periods’ statements or information in any way except to update the amounts to constant Chilean pesos of similar purchasing power. Convenience translation to U.S. dollars The fi nancial statements are stated in Chilean pesos. The translations of Chilean pesos into US dollars are included solely for the convenience of the reader, using the observed exchange rate reported by the Chilean Central Bank as of December 31, 2001 of Ch$ 654.79 to US$ 1.00. The convenience translations should not be construed as representations that the Chilean peso amounts have been, could have been, or could in the future be, converted into US dollars at this or any other rate of exchange. (d) Assets and liabilities in foreign currencies: Assets and liabilities denominated in foreign currencies are detailed in Note 31. These amounts have been stated at the observed exchange rates reported by the Central Bank of Chile as of each year-end as follows: A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 0 0 / / 8 1 Currency Symbol used United States dollar (Observed) British pound sterling Colombian peso New Peruvian sol Brazilian real Italian lira (2) Japanese yen Euro French Franc (2) Pool Unit (IBRD)(1) Unidad de Fomento (UF) Unit of Account (IBD)(1) Argentine peso (3) US$ £ $ Col Soles Rs Lira ¥ _ FFr UP UF UC $ Arg 2000 Ch$ 573.65 856.58 0.26 162.69 294.33 0.28 5.01 538.84 82.15 7,230,629.88 15,769.92 850.92 573.65 2001 Ch$ 654.79 948.01 0.29 190.29 282.97 0.30 4.99 578.18 88.36 7,742,160.26 16,262.66 929.26 654.79 (1) Units of measurement used by the International Bank for Reconstruction and Development (IBRD) and Interamerican Development Bank (IDB) to express the weighted-average of multicurrency loan obligations granted using fi xed currency ratios to the US dollar, at a determined date. (2) Beginning on January 1, 2002, these currencies will be expressed in the Euro. (3) During the years ended December 31, 2000 and 2001, the Argentine peso has been pegged to the US dollar at a rate of 1 Argentine peso to 1 US dollar. In early December 2001, restrictions were put in place that prohibited cash withdrawals above a certain amount and foreign money transfers, with certain limited exceptions. While the legal exchange rate remained at 1 peso to 1 US dollar, fi nancial institutions were allowed to conduct only limited activity due to these controls, and currency exchange activity was effectively halted except for personal transactions in small amounts. In January 2002, the Argentine government announced its intent to create a dual currency system with a “offi cial” fi xed exchange rate of 1.4 pesos to 1 US dollar for import, and export transactions and a “free” fl oating exchange rate for other transactions. On January 11, 2002, the exchange rate market holiday ended and closing new “free” fl oating exchange rates ranged from 1.6 to 1.7 pesos to 1 US dollar. In accordance with SVS Circular No. 81 the conversion of Argentine subsidiary fi nancial statements refl ect the conversion of 1.7 pesos to 1 US dollar. (e) Time deposits and Marketable securities Time deposits are presented at cost plus accrued interest and UF indexation adjustments, as applicable. Marketable securities consist of short-term highly liquid Chilean Government debt securities valued at cost plus accrued interest, which approximates market value. (f) Allowance for doubtful accounts: Accounts receivable is classifi ed as current or long-term, depending on their collections terms. Current and long-term trade accounts receivable, notes receivable and other receivables are presented net of allowances for doubtful accounts (see Note 5). Write-offs of uncollectible accounts amounted to ThCh$ 10,291,653 and ThCh$ 6,155,429 for the years ended December 31, 2000 and 2001, respectively. (g) Inventories: Inventory of materials in transit and operation and maintenance materials, are valued at the lower of price-level restated cost or net realizable value. The cost of real estate projects under development, included in inventory, include the cost of land, demolition, urbanizing, payments to contractors and other direct costs. The costs and revenues of construction in progress are accounted for under the completed contract method in accordance with Technical Bulletin No. 39 of the Chilean Association of Accountants and are included in current assets as their completion is expected in the short-term. (h) Property, plant and equipment: Property, plant and equipment were previously valued at net replacement cost as determined by the former Superintendcy of Electric and Gas Services (SEG) adjusted for price-level restatement in accordance with D.F.L. No. 4 of 1959 until 1980. Property, plant and equipment are currently shown at contributed amounts or cost, as appropriate, plus price-level restatement. The interest cost on debt directly obtained in the construction projects is capitalized during the period of construction. In 1986, an increase based upon a technical appraisal of property, plant and equipment was recorded in the manner authorized by the SVS in Circulars No.’s 550 and 566 dated October 15 and December 16, 1985, respectively, and Communication No. 4790, dated December 11, 1985. Property, plant and equipment received in leasing which qualify as capital leases, are accounted as acquisitions, recording the total of the lease obligation and interest on an accrual basis. (i) Depreciation Depreciation expense is calculated on the revalued balances using the straight-line method over the estimated useful lives of the assets. Depreciation expense was ThCh$ 388,953,861 and ThCh$ 413,612,079 as of December 31, 2000 and 2001, respectively. Depreciation expense of ThCh$ 375,916,142 and ThCh$ 401,771,524 were included in Costs of sales and ThCh$ 13,037,719 and ThCh$ 11,840,555 were included in Administrative and selling expenses, respectively. (j) Power installations fi nanced by third parties: As established by D.F.L. 1 of the Ministry of Mines dated September 13, 1982, power installations fi nanced by third parties are treated as reimbursable contributions. As such, the installations constructed using this mechanism form part of the Company’s plant and equipment. Such installations made prior to D.F.L. 1 are deducted from Plant and equipment and their depreciation is charged to Power installations fi nanced by third parties. (k) Investments in related companies: Investments in related companies are included in “Other assets” using the equity method. This valuation method recognizes in income the Company’s equity in the net income or loss of each investee on the accrual basis (Note 11). Investments in foreign affi liates are recorded in accordance with Technical Bulletin No.64 of the Chilean Association of Accountants. (l) Intangibles, other than goodwill: Intangibles, other than goodwill, correspond mainly to easements, parent company contributions, and rights for the use of telephone lines and are amortized over 20 to 40 years in accordance with Technical Bulletin No.55 of the Chilean Association of Accountants. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 2 2 / / 8 3 (m) Severance indemnity: The severance indemnity that the Company is obliged to pay to its employees under collective bargaining agreements is stated at the present value of the benefi t under the vested cost method, discounted at 9.5% and assuming an average employment span which varies based upon years of service with the Company. (n) Revenue recognition: Energy supplied and unbilled at each year-end is valued at the selling price using the current rates and has been included in revenue from operations. The unbilled amount is presented in current assets as trade receivables and the corresponding cost is included in cost of operations. The Company also recognizes revenues for amounts received from highway tolls for motorized vehicles. (o) Income tax and deferred income taxes: The Company records income taxes in accordance with Technical Bulletin No. 60 of the Chilean Association of Accountants, and with circular No. 1466 issued on January 27, 2000 by the SVS, recognizing, using the liability method, the deferred tax effects of temporary differences between the fi nancial and tax values of assets and liabilities. As a transitional provision, a contra asset or liability has been recorded offsetting the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Such contra asset or liability must be amortized to income over the estimated average reversal periods corresponding to the underlying temporary differences to which the deferred tax asset or liability relates calculated using the tax rates to be in effect at the time of reversal. For the years ended December 31, 2000 and 2001, the Company recorded current tax expense according to the tax laws and regulations within each country of ThCh$ 155,527,993 and ThCh$ 124,813,922, respectively. (p) Accrued vacation expense: In accordance with Technical Bulletin No.47 issued by the Chilean Association of Accountants, employee vacation expenses are recorded on the accrual basis. (q) Reverse repurchase agreements: Reverse repurchase agreements are included in “Other current assets” and are stated at cost plus interest and indexation accrued at year-end, in conformity with the related contracts. (r) Statements of cash fl ows: The Consolidated Statements of Cash Flows have been prepared in accordance with the indirect method. Investments considered as cash equivalents, as indicated in point 6.2 of Technical Bulletin No. 50 issued by the Chilean Association of Accountants, include time deposits, investments in fi xed income securities classifi ed as marketable securities, repurchase agreements classifi ed as other current assets, and other balances classifi ed as other accounts receivable with maturities less than 90 days. For classifi cation purposes, cash fl ows from operations include collections from clients and payments to suppliers, payroll and taxes. (s) Financial derivative contracts: As of December 31, 2000 and 2001 the Company has forward contracts, currency swaps, and interest swaps and colars with various fi nancial institutions, which are recorded according to Technical Bulletin No. 57 of the Chilean Association of Accountants. (t) Goodwill and negative goodwill: Goodwill and negative goodwill are determined according to Circular No. 368 of the SVS. Amortization is determined using the straight-line method, considering the nature and characteristic of each investment, foreseeable life of the business and investment return, and does not exceed 20 years. (u) Pension and post-retirement beneftis: Pension and post-retirement benefi ts are recorded in accordance with the respective Collective Bargaining Contracts of the employees based on the actuarially determined projected benefi t obligation. (v) Bonds: Bonds payable are recorded at the face value of the bonds. The difference between the face value and the placement value, equal to the premium or discount, is deferred and amortized over the term of the bonds. (w) Reclassifi cations: Certain amounts in the prior years’ fi nancial statements have been reclassifi ed in order to conform to the current year’s method of presentation. (x) Investments in other companies The invesments in other companies is presented at acquisition cost adjusted for pricel-level restatement. (y) Research and development costs Costs incurred in research and development by the Company are either general in nature (water-level studies, hydroelectric research, seismic-activity surveys) which are expensed as incurred, or studies related to specifi c construction projects Note 3 which are capitalized. Change in Accounting Principles: There where no changes in accounting principles during the current year that would effect the comparison with the prior year’s fi nancial statements. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 4 4 / / 8 5 Note 4 Time deposits: Time deposits as of each year-end are as follows: Financial Institution ABN Amro Bank Banco Alfa Banco Bilbao Vizcaya Banco Boston Banco Boston Banco CCF Brasil Banco CCF-Comodities Banco Chile New York Banco Chile New York Banco Colpatria Banco Crédito del Perú Banco de Bogotá Banco de Chile Banco de Credito del Perú Banco de Credito del Perú Banco do Estado do Ceara Banco Galicia Banco Ganadero Banco Interbank Banco Itau Banco Liberal Banco Nationale de Paris Banco Rio de la Plata Banco Santander Banco Santander CDB Banco Santender Do Brasil Banco Sudameris Banco Tequendama Banco Union Colombiano Banco Wiese Sudameris Bank of America Bonos de Solidaridad Bradesco Caja Ahorro en Dólares Caja Ahorro en Pesos Chase Manhattan Bank Citibank New York Citiliquid Reserves - NY Colcorp S.A. Corfi valle Corporacion las villas Remunerada Fiduciaria Banco Colpatria Fiduciaria Banco de Bogotá Fiduciaria Cancolombia Fiduciaria Cititrust Fiduciaria de Crédito Fiduciaria de Santander Fiduciaria Lloyds Bank Fiducolombia Fiducrédito Fiduganadero Fiduoccidente HSBC - Bamerindus Megabanco Time Deposit Total Annual Rate % Scheduled Maturity As of December 31, 2000 ThCh$ 2001 ThCh$ - - 1.80 1.10 1.40 1.38 0.00 2.15 1.25 12.30 1.50 12.00 0.02 2.25 1.50 14.92 0.00 13.92 3.00 0.00 1.38 1.67 12.80 1.39 11.75 19.00 12.00 12.30 12.30 3.25 1.55 10.00 13.11 0.00 0.00 0.00 0.69 0.00 12.20 12.00 12.50 3.25 11.32 12.24 11.43 10.53 11.15 10.91 10.94 13.15 0.00 11.70 12.03 1.41 2.00 1.21 - - Feb 28, 2002 Jan 2, 2002 Jan 31, 2002 Jan 31, 2002 - Jan 2, 2002 Jan 2, 2002 Feb 1, 2002 Jan 2, 2002 Feb 28, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 - Jan 2, 2002 Jan 2, 2002 - Jan 31, 2002 Jan 3, 2002 Jan 2, 2002 Jan 31, 2002 Feb 2, 2002 Feb 18, 2002 Feb 1, 2002 Feb 2, 2002 Jan 2, 2002 Jan 3, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 - - - Jan 3, 2002 - Jan 1, 2002 Jan 1, 2002 Mar 1, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 Jan 2, 2002 - Jan 2, 2002 Jan 2, 2002 Jan 31, 2002 Jan 31, 2002 Jan 2, 2002 2,066,798 617,317 2,465,685 3,197,684 1,793,070 - 684,866 - - 3,992,979 20,694 355,671 - - - 985,937 2,258,091 16,631,081 - 2,905 318,099 - 6,518,480 470,601 - - 5,810,411 703,082 - 148,369 - - 1,357,408 773 4,894 670,685 15,692,170 3,337,446 - 2,948,422 - - 443 451 1,044 865 83,026 - 592 92,250 131 4,082 4,139,900 - - - - 28,032,671 492,066 791,845 788,954 - 482,965 2,759,402 8,402,145 1,114,899 431,810 477,436 285,524 311,090 4,815,225 - 10,795 380,250 - 468,221 12,668,715 9,546 773,530 1,027,375 883,434 3,689,513 2,851,334 2,641,692 161,606 17,042,269 655 663,467 - - - 52,847,915 - 1,625,167 9,526,560 3,378,917 2,669,232 18,882 6,109,593 1,390,090 40,629 288,840 22,854 50,813 121,473 - 752,007 4,922 41,064 1,008,377 77,376,402 172,925,470 Note 5 Accounts, notes and other receivables: Current accounts, notes and other receivables and related allowances for doubtful accounts as of each December 31, are as follows: Account Under 90 days ThCh$ 2000 91 days to 1 year ThCh$ Allowance ThCh$ Total ThCh$ Under 90 days ThCh$ 2001 91 days to 1 year ThCh$ Allowance ThCh$ Total ThCh$ As of December 31, Accounts receivable Notes receivable Other receivables 530,315,529 60,736,066 5,023,314 10,699,093 5,329,546 50,315,604 (116,164,380) (844,875) (790,050) 474,887,215 9,507,985 60,224,647 559,676,985 6,112,015 41,498,773 16,801,935 6,545,612 30,519,962 (42,256,598) 534,222,322 11,668,161 63,966,838 (989,466) (8,051,897) Total 585,960,679 76,458,473 (117,799,305) 544,619,847 607,287,773 53,867,509 (51,297,961) 609,857,321 Long-term other receivables as of December 31, 2000 and 2001 are ThCh$ 46,112,705 and ThCh$ 98,935,497, respectively. Current and long-term accounts receivables per country as of each December 31, are as follows: Country Chile Peru Argentina Colombia Brasil (1) Total 2000 2001 ThCh$ % ThCh$ 129,174,389 36,431,631 112,182,759 127,007,176 185,936,597 21.87 6.17 18.99 21.50 31.48 175,332,739 38,977,828 72,931,374 123,402,281 298,148,596 % 24.74 5.50 10.29 17.41 42.06 590,732,552 100.00 708,792,818 100.00 (1) In accordance with Decree Law No. 14 and Resolution No. 91 of the Council for Managing the Electric Energy Crisis (CGCEE), both dated December 21, 2001, and based on Resolution No. 31 of the National Agency of Electric Energy (ANEEL) dated January 24, 2002, the Company’s distribution subsidiaries in Brasil have recongized as of December 31, 2001, a regulated asset, which will be recovered through extraordinary tarrifs in order to recover losses experienced during the period of energy rationing from June 1, 2001 to December 31, 2001. The regulated asset recorded by the Company’s distribution subsidiaries (Cerj and Coelce) was ThCh$ 94,486,000 as of December 31, 2001, and is recorded as revenue during 2001. This revenue represents lost revenues resulting from the Program of Emergency Reduction of Electric Energy Consumption (Program of Rationing). This regulated asset will be recovered through the increase of energy prices, over a period estimated to be three years. This amount is to be confi rmed by ANEEL. In order to record this asset as revenue, the Company’s subsidiaries and other companies in the Energy Sector must agree to forfeit any future claim related to the events and regulations derived from the Program of Rationing and increases through the extraordinary tarrif. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 6 6 / / 8 7 Note 6 Transactions with Related Companies: Balances of accounts receivable and payable classifi ed according to the nature of the transaction are as follows as of December 31, 2000 and 2001: a. Notes and accounts receivable: Company Name Aguas Santiago Poniente S.A. Atacama Finance Co. Central Geradora Term. de Fortaleza Cía. Interconexión Energética S.A. Com. de Energía del Mercosur Consorcio B & R Ingendesa Ltda. Consorcio Energetico Punta Cana-Macao Distrilec Inversora S.A. Edenor S.A. Electrogas S.A. Elesur S.A. Empresa Eléctrica de Bogotá S.A. Empresa Eléctrica Piura S.A. Endesa España Endesa Internacional S.A. Etevensa Gasoducto Atacama y Cía Ltda. Gasoducto Tal Tal Ltda. Gesa S.A. Inversiones Electrica Quillota S.A. Nopel S.A. Sacme Smartcom S.A. Soc. de Inv. Chispa Uno S.A. Transmisora Eléctrica de Quillota Ltda. Unelco S.A. As of December 31, Short-term Long-term 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 1,973,046 5,227,247 - 8,147,965 - 78,234 968 - 977,306 1,550 27,411 27,750 34,069 - 757,232 42,568 458 715,868 242,699 - 171,851 240,044 545,160 1,535 196,560 89,696 2,423,833 4,172,183 11,051 2,917,350 3,271,536 - 939 6,612 181,667 - 19,785 130,076 97,262 353,985 2,318,129 185,033 - 304,679 - 1,000 47,790 169,949 870,156 806 10,915 - - 142,507,800 - - - - - - - - - - - - - - - - - - - - - - 1,427,568 - - 164,268,594 - - - - - - - - - - - - - - - - - - - - - - 1,428,291 - Total 19,499,217 17,494,736 143,935,368 165,696,885 b. Notes and accounts payable: Company Name Aguas Santiago Poniente S.A. Com. de Energía del Mercosur Compañía Transmisión del Mercosur S.A. Consorcio B & R Ingendesa Ltda. Edenor S.A. Electrogas S.A. Elesur S.A. Empresa Eléctrica de Bogotá S.A. Empresa Eléctrica Piura S.A. Endesa Internacional S.A. Etevensa Gasoducto Cuenca Noreste Ltda. Gasoducto Tal Tal Ltda. Mundivia S.A. Nopel S.A. Sacme Smartcom S.A. Transmisora Eléctrica de Quillota Ltda. As of December 31, Short-term Long-term 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ - - - 18,054 69,755 195,971 11,711,657 14,053,669 1,193,192 483,429 957,044 262,991 - 45,064 2,721,840 273,645 18,602 39,952 8 6,966,606 329,359 - - - 16,785,722 3,523,412 699,585 332,678 1,084,373 - 207,378 74 - 180,391 63,336 41,300 - - - - - - 1,033,330,967 - - 17,406,657 - - - - - - - - - - - - - - 956,291,278 - - 16,239,944 - - - - - - - - Total 32,044,865 30,214,222 1,050,737,624 972,531,222 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 8 8 8 8 / / 8 9 c. Effects in income (expense) for each year-ended December 31 are as follows: Company Atacama Finance Co. Com. de Energía del Mercosur Com. Transmisión del Mercosur S.A. Cía. Interconexión Energética S.A. Inv. Eléctr.Transquillota S.A. Nopel Ltda. Empresa Eléctrica Piura S.A. Gasoducto Tal tal Ltda. Elesur S.A. Etevensa Exchange difference Electrogas S.A. Edenor S.A. Smartcom S.A. Aguas Santiago Poniente S.A. Endesa Internacional S.A. Sacme Gasoducto Atacama y Cía Ltda. Mundivía S.A. Soc. de Inv. Chispa Uno S.A. Nature of Transaction Interest Monetary correction Exchange difference Sale of energy Purchase of energy Purchase of energy Sale of energy Services Interest Services Services Sale of energy Purchase of energy Services Exchange difference Services Interest Services Monetary correction Exchange difference Sale of energy Services - Services Sale of energy Services Services Interest Services Services Interest Services Services Services Services Income (expense) 2000 ThCh$ 2001 ThCh$ 10,701,400 4,913,981 3,679,900 - - - 38,540,741 457,702 128,481 (461,597) (1,582,825) 2,400,156 - (1,176,074) - 611,474 (71,361,781) 8,656 (50,290,063) - (10,294,455) (44,830) (547) (2,251,599) 37,597,406 2,756,147 823,896 - - (8,145) (2,925,860) (749,657) 121,323 - 17,270 9,763,386 4,442,082 16,537,140 22,146,226 (14,900,189) (3,869,809) 45,475,475 877,070 130,492 - 315,897 911,023 (9,596,258) 1,177,815 (785) - (50,012,000) 19,882 (29,657,462) (731,275 ) 2,974,089 3,152,840 (2,378,285 ) - 4,305,339 3,974,420 203,326 28,930 235,839 (2,129,579) (799,542) - 59,376 6,390 Total (36,964,353) 3,052,220 The transfer of short-term funds between related companies, which are not for collection or payment of services, is on the basis of a current cash account, at a variable interest rate based on market conditions. The resulting accounts receivable and accounts payable are essentially on 30 day terms, with automatic rollover for the same period and settlement in line with cash fl ows. The most signifi cant transactions are as follows: Company Elesur S.A. Endesa Internacional Transmisora Eléctrica de Quillota Ltda. Atacama Finance Co. Type Due Date Note payable Note payable Note payable Note payable Note receivable Note receivable May 2003 May 2003 Aug 2003 Nov 2003 2006 (total) 2016 (total) Interest Currency UF UF UF Reales UF US$ Capital 35,827,780 22,873,999 101,103 57,550,000 87,846 250,872,179 Rates 4.66% 5.38% 5.38% 14.00% 9.00% 4.59% Note 7 Inventories: Inventories include the following items and are presented net of a provision for obsolescence amounting to ThCh$ 6,448,500 and ThCh$ 3,985,169 as of December 31, 2000 and 2001, respectively: Real estate under development Materials in transit Operation and maintenance materials Other As of December 31, 2000 ThCh$ 31,261,062 2,757,448 30,373,445 8,744,496 2001 ThCh$ 26,468,905 485,401 40,722,575 7,492,123 Total 73,136,451 75,169,004 Note 8 Deferred income taxes: a. Income taxes recoverable (payable) as of each year-end are as follows: Income tax payable Income tax recoverable Net As of December 31, 2000 M$ 2001 M$ (115,542,094) 69,488,255 (75,032,060) 55,835,050 (46,053,839) (19,197,010) A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 9 9 0 0 / / 9 1 b. The Company incurred taxable losses in the amount of ThCh$ 110,436,055 and ThCh$ 87,130,898 for the years ended December 31, 2000 and 2001, respectively. c. The balance of taxed retained earnings and the related tax credits are as follows: Year 2000 2001 Retained Defi cit ThCh$ - (17,630,654) Credit ThCh$ - - d. The net effect of timing differences, amortization of complementary accounts, changes in valuation allowance, and other charges or credits generated a net credit to income of ThCh$ 13,466,338 and a net charge of ThCh$ 7,892,427 during the years ended December 31, 2000 and 2001, respectively e. In accordance with BT No. 60 and 69 of the Chilean Association of Accountants, and Circular No. 1,466 of the SVS, the Company and its subsidiaries have recorded consolidated deferred income taxes as of December 31, 2000 and 2001 as follows:. As of December 31, 2000 As of December 31, 2001 Asset Liability Asset Liability Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Depreciation Severance indemnities - - - Allowance for doubtful accounts 28,470,379 7,247,866 Actuarial defi cit (companies in Brazil) Intangibles Deferred income Deferred charges - - - - 563,725 571,788 3,070,129 6,883,666 292,975,488 - 6,019,042 113,225 360,880,877 - - - - - 1,756,225 297,431 187,066 - 25,302,734 10,103,789 - 7,269,312 2,503,693 - - - 1,942,208 - - 218,529 - 2,864,105 13,898 1,771,789 - 718,919 633,433 - - - - 795,102 4,182,262 - - 1,866,600 14,103,501 - - Obsolescence of raw materials 1,069,495 283,093 - 623,068 327,037 - - Finance costs Derivative contracts Vacation accrual Tax losses Contingencies Leasing receivables Hid. El Chocón investments Metered energy Salaries for construction-in- progress Reserves utilized Residual value Imputed interest on construction Cost of studies Other events - - - 3,259,679 - - 196,662 564,072 2,241,772 1,585,058 - 16,563,317 70,907,551 - - - - - 2,694 971,830 1,377,759 - 3,898,560 77,125,508 6,631,376 26,503,369 1,619,068 7,217,566 4,199,633 33,281,255 - - - - - - - - 137,319 - 6,620,972 6,314,140 - - - - - - - - - - - - 3,020,289 6,470,837 4,482,547 4,506,077 - - - - - - - - - - - 5,673,299 - - - - - - - - - - 4,693,305 - - - - - 1,867,467 2,163,547 885,436 5,271,785 1,411,194 3,418,966 1,870,388 7,361,514 497,368 - 111,450 - - 5,233,893 - - 3,251,844 7,014,763 4,689,434 4,539,456 2,620,122 Complementary accounts, net (7,851,744) (61,954,731) (8,625) (258,838,763) (12,906,460) (44,829,924) (17,584) (283,955,007) Valuation allowance (54,784) (1,138,679) - - - (3,225,561) - - Total 48,844,289 54,532,145 19,174,710 74,522,521 32,194,844 95,053,538 8,736,494 130,063,212 f. Income tax expense for the years ended December 31, 2000 and 2001 is as follows: Tax expense Income tax provision Deferred taxes Adjustment for tax expense prior year Deferred taxes Benefi ts for tax losses Amortization of complementary accounts Change in valuation allowance Other charges or credits As of December 31, 2000 ThCh$ 2001 ThCh$ 155,527,760 123,520,780 233 26,202,873 (27,236,631) (21,772,292) 1,157,819 8,181,893 1,293,142 18,341,175 (10,793,195) (2,409,719) 1,528,476 1,225,690 Total 142,061,655 132,706,349 Note 9 Other current assets: Other current assets as of each year-end are as follows: Forward contracts and swaps (1) Guarantees and indemnities Deferred expenses Post-retirement benefi ts Deposits for commitments and guarantees Investment projects Reverse repurchase agreements (2) Other As of December 31, 2000 ThCh$ 115,920,897 1,043,875 6,465,146 859,863 2,946,013 2,960,545 - 3,987,078 2001 ThCh$ 107,509,356 1,733,084 3,024,796 858,456 4,815,945 2,957,200 1,853,782 782,556 Total 134,183,417 123,535,175 (1) See detail in Note 28. (2) The details of reverse repurchase agreements as of December 31, 2001 are as follows: A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 9 9 2 2 / / 9 3 Issuer Bank of Boston ABN Amro Bank Banco Scotiabank Banco Central Banco Central Total Purchase Date Maturity Date Dec 2001 Dec 2001 Dec 2001 Dec 2001 Dec 2001 Jan 2002 Jan 2002 Jan 2002 Jan 2002 Jan 2002 Market Value as of Purchase Date ThCh$ 8,295 660,581 154,480 43,101 986,837 December 31, 2001 ThCh$ 8,296 660,701 154,508 43,123 987,154 1,853,294 1,853,782 Note 10 Property, plant and equipment: The composition of property, plant and equipment as of each year-end is as follows: Land Buildings and infrastructure Distribution and transmission lines and public lighting Less: third party contributions Sub-total As of December 31, 2000 ThCh$ 2001 ThCh$ 135,520,049 152,826,632 5,681,038,075 3,987,368,931 (45,197,449) 9,623,209,557 6,121,635,261 4,565,625,336 (54,108,614) 10,633,151,983 Machinery and equipment 1,631,034,099 1,770,039,183 Work in progress Construction materials Leased assets (1) Furniture and fi xtures, tools, and computing equipment Vehicles Equipment in transit Other assets Sub-total 313,389,846 51,756,288 2,246,761 13,495,554 10,582,720 7,818,583 14,122,432 413,412,184 307,796,507 62,021,434 2,478,402 80,522,684 15,141,402 7,954,982 13,532,624 489,448,035 Technical appraisal 602,049,118 660,687,154 Total property, plant and equipment 12,405,225,007 13,706,152,987 Less: accumulated depreciation (3,720,940,728) (4,361,444,579) Total property, plant and equipment, net 8,684,284,279 9,344,708,408 (1) Leased assets consist primarily of a leasing contract from July 1, 2000 to December 31, 2001, in the amount of US$ 250,000 a month, with a purchase option during January 2002. Note11 Investment in related companies: a) Investments as of each year-end are as follows: Related Companies Number of Shares Percentage Owned % Related Equity ThCh$ Carrying Value Equity in net earnings (losses) 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ Cía. de Interconexión Energética S.A. Nopel Ltda. Gasoducto Cuenca Noroeste Ltda. Gasoducto Atacama Ltda. Inversiones Eléctricas Quillota S.A. Inversiones Electrogas S.A. Com. de Energía del Mercosur S.A. Transquillota Ltda. Atacama Finance Co. Endesa Market Place Sacme Consorcio Ing. B y R Ingendesa Ltda. Electrogas S.A. Distrilec Inversora S.A. Consorcio Ingendesa – Minmetal Ltda. Central Geradora Termelectrica Fortaleza S.A. Ingendesa do Brasil Limitada 128,270,527 - - - 608,676 425 6,305,400 - 3,150,000 210 12,000 - 85 4,416,141 - 20,246,908 - 45.00 50.00 50.00 50.00 50.00 42.50 45.00 50.00 50.00 15.00 50.00 - 00.02 51.50 50.00 48.82 100.00 109,315,645 70,487,168 54,174,024 45,043,484 14,761,592 13,792,501 10,097,650 4,639,559 4,961,934 3,898,873 81,196 - 9,313,363 21,282 45,869 10,712,307 48,154 49,542,022 34,918,355 28,575,990 17,445,367 7,687,935 5,828,237 4,061,417 2,255,228 2,134,962 810,580 68,772 4,370 1,943 - - - - 49,192,040 35,243,584 27,087,012 22,521,741 7,380,796 5,861,813 4,543,943 2,319,780 2,480,967 584,831 40,599 - 1,979 10,960 22,935 5,229,748 48,154 (1,517,689) (2,519,643) 279,161 2,867,235 597,987 291,491 190,578 93,851 88,164 (303,147) 2,914 3,452 163 - - - - (5,657,136) (3,340,813) (4,550,161) 3,207,553 (28,926) 33,098 47,449 85,282 117,300 (326,609) (7,121) - 36 10,959 21,907 - - Total 153,335,178 162,570,882 74,517 (10,387,182) b) Income and (losses) recognized by Enersis S.A. according to the participation in the related companies as of December 31, 2001, amounted to ThCh$ 4,414,996 and ThCh$ 3,523,584, and (ThCh$ 4,340,479) and (ThCh$ 13,910,766), in 2000 and 2001, respectively. c) In accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants for the years ended December 31, 2000 and 2001, the company has recorded foreign exchange gains and losses on liabilities related to net investments in foreign countries that are denominated in the same currency as the functional currency of those foreign investments. Such gains and losses are included in the cumulative translation adjustment account in shareholders’ equity, and in this way, act as a hedge of the exchange risk affecting the investments. As of December 31, 2001 the corresponding amounts are as follows: Company Country of Origin Central Hidroeléctrica Betania Cachoeira Dourada Edegel S.A. Cía, Interconexión Energética S.A. Atacama Finance Co. Hidroeléctrica El Chocón S.A. Com, de Energía del Mercosur S.A. Central Costanera S.A. Edesur S.A. Edelnor S.A. Cía, do Electricidade do Río do Janeiro Codensa S.A. Coelce Colombia Brasil Perú Brasil Islas Caymán Argentina Argentina Argentina Argentina Perú Brasil Colombia Brasil Investment ThCh$ 505,455,998 471,739,965 203,771,911 49,192,040 2,480,967 233,231,560 4,511,219 91,317,516 452,788,607 104,336,669 405,722,190 287,219,528 135,421,280 Reporting Currency US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Liability ThCh$ 304,116,982 557,582,569 221,862,388 57,017,606 3,646,107 118,843,799 4,119,537 68,369,818 371,447,581 33,495,123 387,370,348 319,535,193 100,161,314 Total 2,947,189,450 2,547,568,365 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 9 9 4 4 / / 9 5 d) The investments made by Enersis S.A. and it affi liates during the year ended December 31, 2001, amounted to ThCh$12,504,600, which are detailed as follows: Acquisitions Central Termoeléctrica Fortaleza S.A. Chilectra S.A. Compañía Eléctrica del Río Maipo S.A. Cachoeira Dourada S.A. Cerj Other As of December 31, 2000 ThCh$ 5,739,102 4,837,695 483,628 1,444,175 - - 2001 ThCh$ - 215,784,091 13,621,454 77,920,070 6,395,590 Total 12,504,600 313,721,205 Note 12 Investments in other companies: Investments in other companies at December 31, 2000 and 2001 are as follows: Company Club de la Banca y Comercio Club Empresarial Edegas Empresa Eléctrica de Aysen S.A Inmobiliaria España S.A. Inverandes S.A. Cooperativa Eléctrica de Chillán CDEC-SIC Ltda. Empresa Eléctrica de Bogotá S.A. Autopista del Río Maipo S.A. Financiera Eléctrica Nacional Saelpa Teleceara Supra CCVM Lltda. Banco Destak Menescal Produções Artisticas Soproco Coger Total Number of shares Percentage owned % As of December 31, 2000 ThCh$ 2001 ThCh$ 2 1 1 2,516,231 1 1,011,899 - - 6,409,132 - - - - - - - - - - - - - - - - - 5.50 - - - - - - - - - 5,914 2,366 1,819 1,920,450 95 3,288 12,529 148,567 129,049,898 66 - 1,077 767 39,416 63,820 8,676 4,687 3,024 2,497 6,144 2,540 1,920,418 95 3,321 12,531 148,641 142,874,547 4,686 120,393 1,006 716 36,802 59,588 8,101 - 2,825 131,266,459 145,204,851 Note 13 Goodwill a. In accordance with current standards, recognition has been given to the excess of purchase price of the proportional equity in the net assets acquired (goodwill) in the purchase of shares as of December 31, 2000 and 2001, as follows: Company Amortization ThCh$ Net Balance ThCh$ Amortization ThCh$ Net Balance ThCh$ As of December 31, 2000 2001 Central Costanera S.A. Chilectra S.A. Cía. de Electricidade do Río de Janeiro C. Hidroeléctrica Cachoeira Dourada Coelce Codensa Distrilec Inversora S.A. Edegel S.A. Edesur S.A. Emgesa S.A. Empresa Eléctrica de Colina S.A. Endesa (Chile) Gasoducto Atacama y Cía Ltda. Hidroeléctrica El Chocón S.A. Hidroinvest S.A. Inversiones Distrilima S.A. Investluz S.A. Lajas Inversora S.A. Luz de Bogotá S.A. Cía. Eléctrica del Río Maipo S.A. (1,434,198) (1,009,716) (5,965,463) (3,578,330) (10,673,844) (1,471,550) (579,368) (33,235) (560,868) (1,330,008) (179,794) (41,707,068) (4,633) (492,731) (68,133) (1,235) (54,631) (92,494) (353,159) (34,597) 21,202,462 111,564,970 95,983,132 60,831,607 186,792,263 24,771,336 10,161,201 567,772 8,366,290 22,388,470 2,831,752 731,610,790 84,172 5,806,052 1,203,677 17,285 956,043 1,572,397 5,944,818 10,633,471 (1,587,837) (5,998,849) (6,604,509) (3,961,656) (11,817,271) (1,629,118) (641,435) (36,796) (620,951) (1,472,484) (179,794) (41,707,069) (4,633) (545,515) (75,431) (1,367) (60,483) (102,402) (390,989) (549,956) 21,885,925 109,150,041 99,660,748 63,386,494 194,984,978 25,796,107 10,608,278 591,799 8,641,573 23,314,335 2,651,958 689,903,722 79,541 5,882,504 1,257,188 17,768 997,974 1,638,437 6,190,662 10,487,406 Total (69,625,055) 1,303,289,960 (77,988,545) 1,277,127,438 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 9 9 6 6 / / 9 7 b. Following current standards, recognition has been given to the excess of the equity in the net assets purchased over the purchase price (negative goodwill) in the purchase of shares as of December 31, 2000 and 2001 as follows: Company As of December 31, 2000 2001 Amortization ThCh$ Net Balance ThCh$ Amortization ThCh$ Net Balance ThCh$ Synapsis Soluciones y Servicios IT Ltda. Edelnor S.A. Central Hidroeléctrica Betania S.A. Cía. Eléctrica Cachoeira Dourada Edegel S.A. Empresa de Energía de Bogotá S.A. Cía. de Electricidade do Río de Janeiro Coelce 14,868 1,023,974 29,691,397 1,721,820 8,315,520 209,708 - 427,526 167,282 4,265,826 78,749,377 30,131,832 68,863,741 3,565,052 2,073,715 7,980,463 14,870 1,133,666 32,782,251 1,938,603 9,379,933 232,174 114,794 473,323 152,411 3,589,135 54,403,096 33,361,175 66,860,786 3,714,781 2,181,068 8,362,042 Total 41,404,813 195,797,288 46,069,614 172,624,494 Note 14 Other assets: Other assets as of each year-end are as follows: Bond discount Forward contracts and swaps (1) Deferred expenses Loan costs Concession rights Post-retirement benefi ts Deposits Others Total (1) See detail in Note 28. As of December 31, 2000 ThCh$ 11,819,650 - 42,679,447 14,074,843 934,997 4,565,030 18,567,769 13,316,406 2001 ThCh$ 23,554,931 7,826,657 47,480,297 17,124,937 5,885,140 46,035,301 18,111,793 26,733,815 105,958,142 192,752,871 Note 15 Due to banks and fi nancial institutions: a. Short-term debt due to banks and fi nancial institutions: Financial Institution American Express Atlantic Security Banco Alfa Banco Bandeirantes Banco Bansur Banco Barings Banco Bayernische Landes Banco Brasiletros Banco BBVA Bhif Banco BBVA Argentaria Banco Beal Banco Bice Banco Bradesco Banco Colombia Banco Continental-Perú Banco Crédito - Chile Banco Crédito -Perú Banco Deutsche Banco de Chile Banco Estado Banco do Brasil Banco Francés Banco Ganadero Banco HBSC Banco Interamericano Des. Banco Itaú Banco Lloyd’s Banco Nationale de Paris Banco Nazionale del Lavoro Banco Real Banco Río Banco Safra Banco Santander Banco Santiago Scotiabank Banco Wiese Perú Bank Boston Bank of América Bank of Tokio Bndes Caixa General de Depósito Chase Manhattan Bank Citibank Interbank Unibanco Santander Overseas Bank Standard Chartered Foreign Currency US$ 2000 ThCh$ 2001 ThCh$ Other foreign currencies 2001 ThCh$ 2000 ThCh$ Local Currency UF Ch$ Total 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 29,696,906 18,965,581 - - - - 2,529,569 - - - 520,986 19,845 - - 37,707 23,535,568 - - 221,738 - 254,249 12,216,016 - 12,842,359 - - - 5,405,967 12,226,086 - 7,471,414 4,423,599 7,198,846 1,539,519 - - 21,488,352 12,554,142 13,368,588 - - - 6,754,453 25 - - 6,124,388 - - - - - 6,570,818 3,786 - 11,349,564 18,819,302 - - 11,582,199 - 5,914,464 6,067 - 3,408,065 - - - - - - - 14,435,270 12,354,392 5,292,569 25,241 3,189,990 15,313,969 4,486,709 1,461,690 1,366,383 - 35,478 22,216,619 17,513,640 125,795 - - 561 22,264,421 - 5,018,583 9,825,138 - - - - 2,584,490 3,059,181 - - - 1,708,088 14,996,964 - - 7,650,992 5,940,031 3,402,433 9,070,340 - - - - - - 8,449,069 - - - - - - 5,180,866 365,498 - 14,945,883 - - - 11,643,500 - - 5,336,715 - - 872 - - - 4,873,744 - - - - - 9,687,512 - - - 2,857,889 - - - - - 315,762 - - - - - - - - - 6,449,924 - - - 14,612,464 - 4,273,096 - 20,122,780 - - - - - 15,299,768 - - - - - 8,085,958 - - - - - - - - - - - - - - - 22,085 - - - 8,195,398 - - - - - 22,596 - 12,466,197 - - - - - - - 2,857,937 - - - 7,396,952 - 169 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 252 40,992,650 - - - - - - - - - - - - 91 8,232,356 - - - - - 13,527,124 - 15,383,403 - - - - - - - - - 4,620,368 - - - - - - - - - - - - - - 20,636,218 - 50,121,671 2,295,006 - 8,185,707 - - - - - - - 670,908 - - - - - - - - - - - - - - - - - 29,696,906 - 18,965,581 9,687,512 - - 2,584,490 2,857,889 3,059,181 6,570,818 - 3,786 2,529,569 315,762 - 11,349,816 42,700,738 18,819,302 14,996,964 - 520,986 - 19,845 18,032,123 7,650,992 5,940,031 - 3,440,140 20,526,928 40,838,264 4,279,254 - 20,122,780 - 3,408,065 13,748,862 - 30,683,171 - 254,249 - 12,216,016 - 8,449,069 8,085,958 12,842,359 - 4,620,368 - - 14,435,270 - 12,354,392 5,405,967 5,292,569 12,226,086 25,241 3,189,990 5,180,866 7,836,912 15,336,054 4,486,709 4,423,599 9,657,088 42,780,947 3,661,389 51,661,190 - 8,185,707 58,074 - 33,131,852 34,682,816 12,554,142 17,513,640 125,795 14,039,496 5,336,715 - 2,857,937 - 561 - 6,755,325 29,661,373 169 5,018,583 9,825,138 - 25 - - 10,998,132 162,370,405 2,295,349 476,274,742 292,242,781 162,282,268 2,295,349 462,269,098 223,184,833 7.58% - 9.03% 10.99% A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 9 9 8 8 / / 9 9 Total 199,395,903 192,580,713 99,208,666 97,366,719 15,299,768 Total principal 187,899,403 156,362,585 99,208,666 64,526,899 12,878,761 Weighted average annual interest rate 7.55% 10.98% 12.06% 11.28% 6.00% Percentage of debt in foreign currency: Percentage of debt in local currency: Total As of December 31, 2001 2000 % % 99.21 62.70 0.79 37.30 100.00 100.00 To develop investment plans the Company obtained fi nancing from banks and fi nancial institutions through the issuance of debt in local and foreign markets which have fi nancial and non-fi nancial covenants. Financial Institution ABN Amro Bank Argentaria Bank Banco Bayernische Landes Banco Beal Banco BBVA Bhif Banco Bndes Banco Continental Banco de Chile Banco Estado Banco do Brasil Banco Ganadero Banco Hermes Banco Medio Crédito Banco Nacional Desarrollo Soc. Banco Rio Banco Santander Banco Santiago Banco San Paolo Scotiabank Banesto Bank Boston Bank of América Bank of Tokyo Mitsubishi Banque Nationale París Bco. do Estado de Ceará Bco. do Nordeste do Brasil BIRF BNP España Chase Manhattan Bank Citibank N.A. Dresner B. Luxemburg Electrobras - Brasil Eximbank Export Develop. Corp. HSBC Bank Kreditankstal Fur Weideraubau Midland Bank Santander Central Hispano Santander Inv. Bank Skandinaviska Enskildabnken Societe Generale Unibanco b. Current portion of long-term debt due to banks and fi nancial institutions: Foreign Currency US$ 2000 ThCh$ 2001 ThCh$ Other foreign currencies 2000 ThCh$ 2001 ThCh$ Local Currency UF Ch$ Total 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 2,039,670 3,985,490 - - - - - - 1,474,145 137,777 - 2,662,900 3,643,820 - - 5,791,350 - 41,810,633 813,498 2,951,183 5,836,549 1,043,419 6,362,038 4,328,005 - - - 3,463,866 720,504 14,229,307 1,231,899 - 3,882,984 1,542,244 - 425,418 929,492 9,331,489 3,825,336 1,996,294 3,852,736 - 4,506,025 - 20,712,107 15,033,081 569,287 - - - 1,605,919 142,977 - 6,386,167 4,091,783 - - 2,890,978 - 65,542,037 543,502 4,167,953 - 67,497,008 54,449,296 4,365,319 - - - - 56,060,016 21,972,641 225,973 - - 1,536,967 20,961 391,490 4,937,486 - 4,915,551 2,164,185 1,690,246 - - 13,482 - - - 647,271 7,619,386 - - 1,065,169 5,737,086 - - - - 3,295,340 - - - - 4,748,645 - 871,338 - 12,547 187,364 1,010,772 - - - - 3,209,178 - - - - - - - - - 73,865 - - - - - - - - - 889,597 - - - 632,429 1,841 2,115,286 - - - - - - 866,018 - 6,665 179,761 1,035,409 - - - - 2,882,866 - - - - - - - - - 70,904 - - - - - - - 26,230,239 902,419 - - - - - - 129,332 26,100,906 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 17,225,680 19,106,377 - - - - - - 17,225,681 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 647,271 7,619,386 2,039,670 4,506,025 - 3,998,972 - 20,712,107 - 15,033,081 - 569,287 - - 26,230,239 17,225,680 2,376,564 20,712,296 1,032,574 1,202,946 - 5,737,086 6,386,167 2,662,900 4,091,783 3,643,820 - 632,429 1,841 - 9,216,022 22,231,945 - 26,100,906 41,810,633 65,542,037 543,502 813,498 4,167,953 2,951,183 10,585,194 - 1,043,419 67,497,008 7,233,376 55,315,314 4,365,319 4,328,005 6,665 12,547 187,364 179,761 1,010,772 1,035,409 - 3,463,866 720,504 56,060,016 14,229,307 21,972,641 1,231,899 225,973 3,209,178 2,882,866 - 3,882,984 1,536,967 1,542,244 - 20,961 425,418 391,490 929,492 4,937,486 - 9,331,489 4,915,551 3,825,336 2,164,185 1,996,294 3,852,736 1,690,246 70,904 73,865 210,166,385 408,657,469 200,426,448 361,107,060 8.35% 5.62% Total 128,312,046 346,418,955 28,491,443 8,680,776 53,362,896 53,557,738 Total principal 123,716,201 298,870,387 27,351,785 8,678,935 49,358,462 53,557,738 Weighted average annual interest rate 7.33% 6.03% 12.73% 8.60% 8.50% 7.50% Percentage of debt in foreign currency: Percentage of debt in local currency: Total As of December 31, 2001 2000 % % 74.61 86.89 13.11 25.39 100.00 100.00  Note 16 Long-term portion of debt due to banks and fi nancial institutions : Financial Institution Currency As of December 31, 2000 Long-term portion ThCh$ After 1 year but within 2 years ThCh$ After 2 years but within 3 years ThCh$ After 3 years but within 5 years ThCh$ As of December 31, 2001 After 5 years but within 10 years ThCh$ After 10 years ThCh$ Total long term portion ThCh$ Annual interest rate % ABN Amro Bank Banco Bayernische Landes Banco BBVA Banco Beal Banco de Chile Banco del Estado Banco do Brasil Banco Hermes Banco Medio Crédito Banco Nacional Desarrollo Soc. Banco Nacional del Lavoro Banco Rio Argentaria Banco Santander Banco Santander Central His. Scotiabank Banesto Bank Boston Bank of America Bank of Tokyo Mitsubishi Banque Nationale París Bco. do Estado de Ceará Bco. do Nordeste do Brasil BIRF BNDES Bnp España Chase Manhattan Bank Citibank N.A. Dresner B. Luxemburg Electrobas - Brasil Export Develop. Corp. HBSC Bank Kreditankstal Fur Weideraubau Lloyd’s Bank Midland Bank Santander Investment Bank Skandinaviska Enskildabnken Societe Generale Unibanco US$ US$ US$ US$ US$ UF UF US$ Rs US$ US$ US$ Rs US$ US$ $ Arg US$ US$ US$ US$ UF US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Lira Libra Yen US$ Rs Rs U.P. Rs Rs US$ US$ US$ US$ US$ US$ US$ US$ US$ Rs US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Rs 5,024,236 - 16,268,960 - 11,839,684 17,100,627 25,097,071 2,172,150 9,953,915 3,913,537 5,731,848 34,566,502 - - 4,140,032 21,613 130,115,293 - - - 17,100,626 247,810,490 118,403,934 615,707 35,223,808 2,676,777 82,150,064 41,400,321 17,513,206 - 22,699,164 365,377 1,345,021 1,572,630 60,269,249 118,852 395,832 2,869,506 14,685,008 3,207,090 50,271,817 2,362,022 64,001,767 34,303,123 41,400,321 65,057,647 119,100,019 173,792,631 14,785,829 5,535,877 7,845,484 - 2,426,507 - - 74,520,577 8,871,497 12,479,239 10,751,213 19,460,364 254,233 317,756 65,479,000 2,024,396 31,593,618 - - 2,193,231 834,673 1,728,870 122,368 - 4,028,268 1,236,944 3,206,897 - - - 7,114,429 - 344,042 - - 93,798,668 20,078 3,986,725 13,832,374 26,780,910 - 14,354,629 7,901,616 6,481,120 94,926 360,957 379,814 3,822,130 53,756 112,106 983,441 - - - 35,977 - - - 35,253,894 - 75,366,329 - 508,754 1,152,158 9,821,850 358,192 6,547,900 - - - 5,696,673 2,164,186 1,674,218 140,080 317,756 - - 363,408,450 - - 19,774,400 4,195 864,393 88,472 - 4,028,268 618,472 - - - - - 7,504,151 344,043 - - 261,916,000 - 3,986,725 - - - - - 6,282,699 94,926 360,957 379,814 2,988,733 53,756 56,053 1,013,242 9,166,621 - - 35,977 - 5,238,320 - - - - - - 950,810 - 358,192 - 982,185 12,160,385 - 3,339,429 2,164,186 1,255,663 35,020 635,512 - - - - - 34,371,115 - 1,728,786 562,890 - 4,028,268 618,472 - - - - - - - - 127,029,260 - - 7,973,450 - - - - - 6,084,276 94,926 360,957 379,814 19,407,954 53,756 46,711 - - - - - 36,013,450 - 51,447,785 - 351,622,230 - - - 1,901,620 - 716,384 - - - - - 4,328,267 - - 635,517 - - - - - - - 4,321,965 1,244,733 - 4,028,268 - - - - - - - - - - - - 15,946,901 - - - - - - - - - 37,518,001 - - - - - - - 16,369,750 - - - - - - - 3,327,836 - 895,480 - - - - - - - - - - - - - - - - 1,080,490 2,217,780 - 18,127,483 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,906,541 65,479,000 2,024,396 395,002,068 - - 56,338,746 838,868 9,724,504 4,236,243 - 34,240,555 2,473,888 3,206,897 - - - 7,114,429 7,504,151 688,085 - 127,029,260 355,714,668 20,078 31,893,801 13,832,374 26,780,910 - 14,354,629 7,901,616 18,848,095 284,778 1,082,871 1,139,442 63,736,818 161,268 214,870 1,996,683 9,166,621 - - 71,954 52,383,200 5,238,320 51,447,785 35,253,894 351,622,230 75,366,329 - 508,754 7,332,424 9,821,850 2,328,248 6,547,900 982,185 12,160,385 - 9,036,102 8,656,639 2,929,881 175,100 5,63 3,31 10,55 2,70 - - 6,43 6,50 14,66 7,04 - 1,75 13,49 7,89 - - - 8,24 8,43 5,83 - 3,04 2,99 2,10 4,86 6,61 3,46 - 7,48 10,30 3,70 4,44 5,38 0,90 5,59 8,00 10,00 5,32 10,00 - - 5,61 8,53 3.36 5.38 2.28 2.80 2.93 - 19.20 4.69 2.96 4.85 7.82 6.70 3.02 - 7.25 0.65 2.24 8.50 Total 1,643,588,297 431,907,953 709,772,293 649,405,883 84,288,451 21,425,753 1,896,800,333 Percentage of debt in foreign currency: Percentage of debt in local currency: Total As of December 31, 2001 2000 % % 97.03 96.39 2.97 3.61 100.00 100.00 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 0 0 / / 1 0 1 Note 17 Other current liabilities: Other current liabilities for each year-end are as follows: Advances on construction Taxes payable Contingencies Customer advances Charity fund Employee obligations Forward contracts and swaps Emergency energy provision Other current liabilities As of December 31, 2000 ThCh$ 8,464,108 1,108,387 19,587,259 4,322,620 9,978,975 1,404,786 115,126,482 2,744,883 3,437,629 2001 ThCh$ 6,605,063 4,168,111 16,369,457 4,214,924 - 3,094,714 111,046,267 1,281,231 3,851,516 Total 166,175,129 150,631,283 Note 18 Promissory notes: Financial Instrument 2001-029 2000-040 Commercial paper Total Face Value ThCh$ Maturity Date Interest Rate % As of December 31, 2001 ThCh$ 2000 ThCh$ 42,328,262 7,640,750 10,456,868 May 13, 2002 Nov 21, 2000 Feb 01, 2002 18.13 - 08.48 - 16,635,381 - 42,328,262 - 10,710,814 16,635,381 53,039,076  Note 19 Bonds payable: a) Details of the current portion of bonds payable is as follows at each year-end: Instrument Face Value Series Interest Currency Outstanding Maturity Bonds – Distrilima Bonds – Distrilima Bonds – Distrilima Bonds – Distrilima Bonds – Distrilima Bond No.269 Yankee Bonds – Enersis Yankee Bonds – Enersis Yankee Bonds – Enersis Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Internacional Bonds Endesa Bonds Endesa Bonds Pehuenche Bonds Edegel Bonds Edegel Bonds Edegel Bonds Edegel Bonds Edegel Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Endesa Eurobonds 1 2 3 1st Prog 1st Prog B1 – B2 1 2 3 1 2 3 1 1 E-1, E-2 C B-1, B-2 C1, C2; D1, D2 1 1 2 3 4 5 B-1 B-5 B-7 B-10 C-10 B-10 2nd A-5 B-3 A-1 F First Soles Soles US$ Soles Soles UF US$ US$ US$ US$ US$ US$ US$ US$ UF US$ UF UF US$ US$ US$ US$ US$ US$ $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. UF Euro ThCh$ 49,919,000 28,529,386 8,975,023 15,104,316 18,949,365 422,614 300,000,000 350,000,000 150,000,000 230,000,000 220,000,000 200,000,000 400,000,000 400,000,000 6,000,000 150,000,000 750,000 1,439,153 170,000,000 30,000,000 30,000,000 30,000,000 20,000,000 10,000,000 85,000,000 12,750,006 19,500,010 229,825,122 19,777,918 60,000,031 70,568,381 31,525,018 15,000,006 1,500,000 400,000,000 Par Value Rate % Date 2000 ThCh$ 2001 ThCh$ 9.61 5.50 7,70 7.50 6.90 5.63 6.90 7.45 6.63 7.88 7.33 8.13 7.75 8.50 6.20 7.20 6.00 6.80 7.30 8.75 8.41 8.75 8.44 11.50 15.80 13.62 13.94 14.26 10.07 14.19 8.34 11.75 13.43 6.20 3.34 Feb 01, 2011 Oct 01, 2011 Jul 01, 2001 Jul 01, 2006 Oct 01, 2006 Jun 15, 2009 Nov 21, 2006 Nov 21, 2016 Nov 21, 2026 Feb 01, 2027 Feb 01, 2037 Feb 01, 2097 July 15, 2008 Apr 01, 2009 Aug 01, 2006 Apr 01, 2006 Oct 01, 2001 May 01, 2010 May 01, 2003 June 13, 2007 Feb 14, 2007 Jun 03, 2006 Nov 21, 2005 Aug 22, 2003 Jun 01, 2006 Oct 09, 2004 Oct 09, 2006 Oct 09, 2009 Oct 09, 2009 Jan 09, 2009 Feb 09, 2002 Feb 09, 2002 July 09, 2006 Aug 01, 2022 July 24, 2003 5,834 28,467,203 8,891,455 - - - 986,213 1,233,960 471,668 4,463,472 3,971,228 4,004,496 8,403,279 5,027,182 - 1,632,355 12,374,337 2,157,170 1,223,281 118,246 554,509 76,016 108,661 - - 120,225 187,372 2,249,637 167,330 275,282 174,220 14,243 - - 3,300,934 5,656 - - 560,818 265,109 7,124,286 1,091,861 974,781 522,194 4,465,325 4,396,643 881,043 9,303,474 5,565,715 2,482,820 1,767,933 - 2,264,334 1,354,324 135,589 629,499 88,834 120,301 272,091 1,671,716 115,575 180,930 2,181,610 132,386 326,721 221,893 9,186,308 105,663 620,705 2,001,651 Total 90,659,808 61,017,788 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 2 2 / / 1 0 3 b) Details of the long-term portion of bonds payable is as follows at each year-end: Instrument Face Value Series Interest Currency Outstanding Maturity Par Value Rate Date ThCh$ % 2000 ThCh$ 2001 ThCh$ Bonds – Distrilima Bonds – Distrilima Bonds – Distrilima Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Endesa Bonds Pehuenche Bonds Edegel Bonds Edegel Bonds Edegel Bonds Edegel Bonds Edegel Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Emgesa Bonds Endesa Internacional Bond No. 269 Yankee Bonds – Enersis Yankee Bonds – Enersis Yankee Bonds – Enersis Eurobonds 1 1st Prog 1st Prog 1 2 3 1 First E-1, E-2 F C1, C2; D1, D2 First 1 2 3 4 5 A-1 B-1 B-3 B-5 B-7 B-10 C-10 B-10 2nd First B1, B2 1 2 3 First Soles Soles Soles US$ US$ US$ US$ US$ UF UF UF US$ US$ US$ US$ US$ US$ $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. $ Col. US$ UF US$ US$ US$ Euro 825,918 15,104,316 18,949,365 230,000,000 220,000,000 200,000,000 400,000,000 400,000,000 6,000,000 1,500,000 1,439,153 170,000,000 30,000,000 30,000,000 30,000,000 20,000,000 10,000,000 15,000,006 85,000,000 404,908 12,750,006 19,500,010 229,825,122 19,777,918 60,000,031 150,000,000 5,874,406 300,000,000 350,000,000 150,000,000 400,000,000 9.61 7.50 6.90 7.88 7.33 8.13 7.75 8.50 6.20 6.20 6.80 7.30 8.75 8.41 8.75 8.44 11.50 13.43 15.80 14.79 13.62 13.94 14.26 10.07 14.19 7.20 5.63 6.90 7.45 6.63 3.34 Feb 01, 2011 July 01, 2006 Oct 01, 2006 Feb 01, 2027 Feb 01, 2037 Feb 01, 2097 July 15, 2008 Apr 01, 2009 Aug 01, 2006 Aug 01, 2022 Nov 01, 2010 May 01, 2003 Jun 13, 2007 Feb 14, 2007 Jun 03, 2006 Nov 21, 2005 Aug 22, 2003 Jul 09, 2006 Jun 01, 2006 Oct 09, 2002 Oct 09, 2004 Oct 09, 2006 Oct 09, 2009 Oct 09, 2009 Jan 09, 2009 Apr 01, 2006 Jun 15, 2009 Nov 21, 2006 Nov 21, 2016 Nov 21, 2026 July 24, 2003 821,388 - - 136,029,625 130,115,293 118,286,630 236,573,260 236,573,260 23,398,880 100,543,636 17,742,995 17,742,995 17,742,995 11,828,663 414,178 3,462,801 5,296,048 62,420,029 4,644,438 14,473,532 88,714,972 177,429,945 207,001,600 88,714,974 225,454,317 930,072 15,104,316 18,949,365 134,808,820 144,053,800 26,463,993 261,916,000 261,916,000 - 97,575,960 - 24,393,990 21,401,008 111,314,300 19,643,700 19,643,700 19,643,700 13,095,800 - 6,654,370 - 4,286,809 - 24,291,915 - 3,643,787 5,572,851 65,681,051 5,652,274 17,147,234 98,218,500 - 95,533,472 196,437,000 163,523,326 98,218,500 249,605,948 Total 1,925,426,454 2,225,321,561 c) Bonds payable are comprised of the following: i) Enersis S.A. Series A On September 10, 1999, Enersis S.A. registered a bearer bond issue as of June 7, 1999 for a maximum amount of UF 7,000,000, as follows: Series A Total amount In UF No. of bonds per series Face value In UF 7,000,000 700 10,000 The scheduled maturity of the bonds is 30 years, interest is payable semi-annually with the principal payable in one installment on June 15, 2029. Annual interest is 5.80%, compounded semi-annually. No placements from this registration have been made as of December 31, 2001. ii) Enersis S.A. Series B1-B2 On September 11, 2001, Enersis S.A. registered two series of bearer bonds as of June 14, 2001, as follows: Series B1 B1 B2 B2 Total amount In UF No. of bonds per series Face value In UF. 1,000,000 3,000,000 1,000,000 1,500,000 1,000 300 1,000 150 1,000 10,000 1,000 10,000 The scheduled maturity of the Series B-1 bonds is 8 years, interest and principal payable semi-annually. Annual interest is 5.50%, compounded semi-annually. The scheduled maturity of the Series B-2 bonds is 21 years, principle payments beginning after 5 years, interest and principal payable semi-annually. Annual interest is 5.75%, compounded semi-annually. iii) Enersis S.A. Yankee Bonds On November 21, 1996, the Company, acting through its agency in the Cayman Islands, issued corporate notes (Yankee Bonds) for US$ 800 million in three series, as follows: Series 1 2 3 Total amount In US$ 300,000,000 350,000,000 150,000,000 Years to maturity Stated annual interest rate 10 20 30 6,90% 7,40% 6,60% A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 4 4 / / 1 0 5 Interest is payable on a semi-annual basis and principal is due upon maturity. The Series 3 bond holders have an option to require the Company to redeem all or any US$ 1,000 portion thereof on December 31, 2003 at a redemtion price equal to face value. Repurchase of Yankee Bonds During November 2001, the Company made a tender offer to repurchase all or a portion of the Series 2 Yankee Bonds. The offer expired November 21, 2001 and the Company repurchased a total of US$ 100,266,000 in bonds with accrued interest, at a price of US$ 95,536,000, generating a fi nancial gain of US$ 8,201,000 (ThCh$ 5,369,952), which is included in other non-operating income (see Note 23a). iv) Edelnor Bonds (Subsidiary of Distrilima S.A.) First issue Date of Issue Number of bonds subscribed Face value Redemption term Interest rate Interest payment Principal amortization Second issue Date of Issue Number of bonds subscribed Face value Redemption term Interest rate Interest payment Anticipated redemption option Third issue Date of Issue Number of bonds subscribed Face value Redemption term Interest rate Interest payment : March 1, 1996 : : : : : : 49,919 100 soles each 15 years 9.6136% annual Annually, on coupon maturity Amortization of total principal upon maturity : November 10, 1998 : : : : : : : : : : : : 146,300 1000 soles each 4 years 14.396% Accrued and paid within 90 days Early redemption option August 7, 1998 15,000 US$ 1,000 each 3 years 7.7% Accrued and paid within 90 days First program of corporate bonds First issue Date of Issue Face value Redemption term Interest rate Interest payment : October 29, 2001 : : : : 30,000 soles each 2 years 7.5% Periodically accrued Second issue Date of Issue Number of bonds subscribed Face value Redemption term Interest rate Interest payment : October 19, 2001 : : : : : 20,000 5,000 soles each 5 years 6.9% Periodically accrued v) I) • Endesa Chile The Company made four public offerings of bonds in the local market on the following dates: On September 12, 1988, the Company registered in the Securities Register of the Chilean Superintendency of Securities and Insurance, under No. 105, the fi rst issuance of bonds in the amount of UF 5,000,000, which was fully placed prior to the end of the year ending December 31, 1988. • On August 24, 1989, the second issuance of bonds was registered under No. 111, amounting to UF 6,000,000, and was fully placed as of December 31, 1990. • On December 7, 1990, the third bond issuance was registered under No. 131 in the amount of UF 4,000,000. Of this issuance the amount of UF 2,030,000 has been placed as of December 31, 1997. The balance of UF 1,970,000 has been cancelled due to the expiration of the placement period. • On August 9, 2001, the fourth bond issuance was registered under No. 264 in the amount of UF 7,500,000, and was fully placed as of December 31, 2001. Risk rating of the bonds issued is as follows as of the date of these fi nancial statements: - Comisión Clasifi cadora de Riesgo - Fitch IBCA Chile Clasifi cadora de Riesgo Ltda. - Clasifi cadora de Riesgo Humphreys Ltda Category AA+ AA AA ISSUANCE TERMS First Issuance Issuer Securities issued Issuance Value Indexation Amortization period Capital amortization Early Redemption Nominal interest rate : : : - - : : : : : Empresa Nacional de Electricidad S.A. Bearer bonds in local currency, denominated in Unidades de Fomento Five million Unidades de Fomento (UF 5,000,000) divided into: Series A-1: 300 bonds at UF 10,000 each Series A-2: 2,000 bonds at UF 1,000 each Based on variations in Unidad de Fomento index 12 years (3-year grace period and 9 years for capital amortization) 18 consecutive installments patable semi-anually starting March 1, 1992, of equal value except for the last installment. As elected by the issuer, starting March 1, 1992 and only on the interest payment and amortization dates. 5.5% annually upon expiration, compound and actual rate per semester on outstanding capital, readjusted by the value of the Unidad de Fomento. The applicable semi-anually interest rate will be equal to 2.71319%. Interest Payments : Interest will be paid semi-anually each March 1 and September 1, starting March 1, 1989. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 6 6 / / 1 0 7 Placement period : 24 months from the registration date in the Securities Register of the Chilean Superintendency of Securities and Insurance. The fi rst issuance has been fully repaid as of December 31, 2001. Second Issuance Issuer Securities issued Issuance Value Indexation Amortization period Capital amortization Early Redemption Nominal interest rate : : : - - : : : : : Empresa Nacional de Electricidad S.A. Bearer bonds in local currency, denominated in Unidades de Fomento Six million Unidades de Fomento (UF 6,000,000) divided into: Series B-1: 360 bonds at UF 10,000 each Series B-2: 2,400 bonds at UF 1,000 each Based on variations in Unidad de Fomento index 12 years (4-year grace period and 8 years for capital amortization) 16 consecutive installments payable semi-anually starting April 1, 1994, all of equal value. As elected by the issuer, starting October 1, 1990 and only on the interest payment and amortization dates. 6.0% annually upon expiration, compound and actual rate per semester on outstanding capital, readjusted by the value of the Unidad de Fomento. The applicable semi-anually interest rate will be equal to 2.95630%. Interest Payments : Interest will be paid semi-anually each April 1 and October 1, starting April 1, 1990. Accrued interest at the end of the period amounts to ThCh$ 0, (ThCh$ 180,247 in 2000), and is shown under current liabilities. Placement period : 24 months from the registration date in the Securities Register of the Chilean Superintendency of Securities and Insurance. The second issuance has been fully repaid as of December 31, 2001. Third Issuance Issuer Securities issued Issuance Value Indexation Amortization period Capital amortization : : : - - - - : : : Empresa Nacional de Electricidad S.A. Bearer bonds in local currency, denominated in Unidades de Fomento Four million Unidades de Fomento (UF 4,000,000) divided into: Series C-1: 120 bonds at UF 10,000 each Series C-2: 800 bonds at UF 1,000 each Series D-1: 120 bonds at UF 10,000 each Series D-2: 800 bonds at UF 1,000 each Based on variations in Unidad de Fomento index Series C-1 and C-2: 15 years (5-year grace period and 10 years to amortize capital). Series D-1 and D-2: 20 years (5-year grace period and 15 years to amortize capital). Series C-1 and C-2: 20 consecutive installments payable semi-anually, starting April 1, 1996. Series D-1 and D-2: 30 consecutive installments payable semi-anually, starting May 1, 1996. Amortization installments will increase in time. Early Redemption : As elected by the issuer, starting May 1, 1996 and only on the interest payment and amortization dates. Nominal interest rate : 6.8% annually upon expiration, compound and actual rate per semester on outstanding capital, readjusted by the value of the Unidad de Fomento. The applicable semi-anually interest rate will be equal to 3.34409%. Interest Payments : Interest will be paid semi-anually each May 1 and November 1, starting May Guarantee Placement period Fourth Issuance Issuer Securities issued Issuance Value (1) Readjustment Amortization period : : : : : : : 1, 1991. Accrued interest at the end of the period amounts to ThCh$ 260,889 (ThCh$ 281,732 in 2000), and is shown under current liabilities. There is no specifi c guarantee, however, a general guarantee covers all the issuer’s assets. 48 months from the registration date in the Chilean Securities Register of the Superintendency of Securities and Insurance. Empresa Nacional de Electricidad S.A. Bearer bonds in local currency, denominated in Unidades de Fomento Seven and a half million (UF 7,500,000) divided into: Series E-1: 1,500 bonds at UF 1,000 each. Series E-2: 600 bonds at UF 10,000 each. Series F: 200 bonds at UF 10,000 each. Variation in the UF Series E-1 and E-2: August 1, 2006. Series F: August 1, 2022. Early redemption : Only in the case Series F, beginning February 1, 2012. Nominal interest rate : 6,2% annually, compounded quarterly y efectiva, sobre el capital insoluto reajustado por el valor de la Unidad de Fomento. The interest rate applied quarterly will be equal to 3.0534%. Placement period Interest payments : : 36 months from the registration date in the Chilean Securities Register of the Superintendency of Securities and Insurance. Accrued interest as of Decembe 31, 2001 amounts to ThCh$ 3,103,525 which is shown under current liabiliites. (1) The Company holds a currency swap that swaps UF payments to US dollars, and which has a fair value of ThCh$ 2,978,245 as of December 31, 2001 and is included in other assets. II) The Company has issued and placed three public offerings of bonds in the international market as follows: First Issuance Issuer Securities issued Issuance Value : Empresa Nacional de Electricidad S.A. : Marketable securities denominated in US$ (Yankee bonds) in the US market. : Six hundred and fi fty million US Dollars (US$ 650,000,000) divided into: Readjustment Amortization period : : Series 1: US$ 230,000,000 Series 2: US$ 220,000,000 Series 3: US$ 200,000,000 Variation in the US Dollar Series 1 full expiration on February 1, 2027 Capital amortization: Series 2 full expiration on February 1, 2037 ( Put Option on February 1, period 2009, on which date the holders may redeem 100% of them plus accrued interest). Series 3 full expiration on February 1, 2097. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 0 0 8 8 / / 1 0 9 Nominal interest rate : Series 1: 7.875% annually Series 2: 7.325% annually Series 3: 8.125% annually Interest Payments : Interest will be paid semi-anually each February 1 and August 1 annually, starting January 27, 1997. Accrued interest as of the year end amounts to ThCh$ 13,771,736 (ThCh$ 12,439,196 in 2000), which is shown under current liabilities. Second Issuance Issuer Securities issued Issuance Value Readjustment Capital amortization Nominal interest rate Interest Payments Third Issuance Issuer Securities issued Issuance Value Readjustment Capital amortization Nominal interest rate Interest Payments : Empresa Nacional de Electricidad S.A. : Marketable securities denominated in US$ (Yankee bonds) in the US market. : : : : : Four hundred million US Dollars (US$ 400,000,000) : Variation in the US Dollar Series 1 full expiration on July 15, 2008. period Series 1: 7.75% annually Interest will be paid semi-anually each January 15 and July 15 annually, starting January 15, 1999. Accrued interest as of the period end amounts to ThCh$ 9,303,474 (ThCh$ 8,403,279 in 2000), which is shown under current liabilities. : Empresa Nacional de Electricidad S.A. : Marketable securities denominated in US$ (Yankee bonds) in the US market. : : : : : Four hundred million US Dollars (US$ 400,000,000) Variation in the US Dollar Series 1 full expiration on April 1, 2009. Series 1: 8.502% annually Interest will be paid semi-anually each October 1 and April 1 annually, starting October 1, 1999. Accrued interest as of the period end amounts to ThCh$ 5,565,715 and ThCh$ 5,027,182 in 2001 and 2000, respectively, which is shown under current liabilities. The risk rating of these bonds is as follows as of the date of these fi nancial statements: - Standard & Poor’s - Moodys Investors Services - Fitch Repurchase of Yankee Bonds Category BBB + Baa1 A - During November 2001, the Company made a tender offer to repurchase all or a portion of the Series 1 and 3 Yankee Bonds. The offer expired November 21, 2001 and the Company repurchased a total of US$ 24,119,000 and US$ 159,584,000 of Series 1 and 3 bonds, respectively, with accrued interest, at prices of US$ 21,324,000 and US$ 134,828,000 for Series 1 and 3, respectively, generating a fi nancial gain of US$ 27,551,000 (ThCh$ 18,040,575) which is included in other non-operating income (see Note 23a). vi) I) Subsidiaries of Endesa S.A. Endesa Chile Overseas Co. issued Yankee Bonds on April 1, 1996. Risk rating of the bond issuance is as follows as of December 31, 2001: - Standard & Poor’s - Moodys Investors Services Category BBB + Baa1 ISSUANCE TERMS First Issuance Issuer Securities issued Issuance Value Capital amortization Nominal interest rate Interest Payments : Endesa Chile Internacional. : Marketable securities denominated in US$ (150,000 bonds). : One hundred and fi fty million Dollars (US$ 150,000,000): : : : Full expiration as of Aril 1, 2006 7.2 % annually upon expiration Interest will be paid every six months, upon expiration, starting October 1, 1996. Accrued interest as of the period end amounts to ThCh$ 1,767,933 (ThCh$ 1,632,355 in 2000) and is shown under current liabilities. Guarantee : Guarantee from Empresa Nacional de Electricidad S.A. As of July 24, 2000, the fi rst registration of Eurobonds (European Medium Term Note Programme) was registered in England, for a total of 1,000 million Euros. ISSUANCE TERMS First Registration Securities registered Issuance value Capital amorization Nominal interest rate : : : : 1,000 millon Euros Euros 400,000,000 Principal due July 24, 2003 Euribor + 0.80 Interest payments : Quarterly beginning October 24, 2000 Guarantee : Empresa Nacional de Electricidad S.A. This liability is presented under “Due to banks and fi nancial institutions – long-term” and the accrued interest as of December 31, 2001 through the use of a foreign currency swap the original currency was converted to US Dollars. II) Empresa Eléctrica Pehuenche S.A. issued bonds on May 2, 1996. First Issuance Issuer Securities issued Issuance Value Capital amortization Nominal interest rate Interest payments : Empresa Eléctrica Pehuenche S.A. : Marketable securities denominated in US$. : One hundred and seventy million US Dollars (US$ 170,000,000) : : : : Full expiration as of May 1, 2003 7.3 % annually Interest will be paid semi-anually, starting November 1, 1996. Accrued interest as of the period end amounts to ThCh$ 1,354,324 (ThCh$ 1,223,280 in 2000) and is shown under Other Current Liabilities. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 1 1 0 0 / / 1 1 1 III) Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000 and November 27, 2000 and August 22, 2001 as per the following: First Issuance Issuer Securities issued Issuance value Capital amortization Nominal interest rate Interest payments : Edegel S.A. : Marketable securities denominated in US$ (120,000 bonds). : US$ 120,000,000 : : : June 3, 2006, February 14, 2007, June 13, 2007, November 26, 2005 and August 22, 2003, respectively. 8.75%, 8.41%, 8.75%, 8.4375% and 11.50% annually Interest will be paid semi-anually, starting December 3, 1999. Accrued interest as of the year-end amounts to ThCh$ 1,246,314 ThCh$ 857,432 in 2000) and is shown under Other Current Liabilities. IV) Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001 as per the following: First Issuance Issuer Securities issued Issuance Value Capital amortization Interest nominal rate Interest payment: : Emegesa S.A. : Marketable securities denominated in Colombian pesos : : : : $Col 530,000,000 Full expiration as of 2002, 2004, 2006, 2007, 2009 and 2010 for $Col 1,525,000; $Col 15,000,000; $Col 85,000,000; $Col 81,407,744; $Col 19,500,000; $Col 297,567,256 and $Col 30,000,000 respectively 15.5% annual average rate Interest will be paid semi-anually. Accrued interest as of the period end amounts to ThCh$ 5,549,184 (ThCh$ 3,188,309 in 2000) and is shown under current liabilities. Bond discounts of Enersis S.A. and its affi liates of ThCh$ 11,819,650 and ThCh$ 23,554,931 as of December 31, 2000 and 2001, respectively are included in Other Assets (see Note 14). Note 20 Accrued expenses a. Short-term accruals: The accrued expenses included in current liabilities as of each year-end are as follows: Profi t sharing and other employee benefi ts Litigation and contingencies Construction and other Energy purchases and other Income tax installments and other taxes Pension accruals Suppliers and services Other accruals As of December 31, 2000 ThCh$ 23,921,296 21,900,309 4,505,562 2,491,126 7,041,515 942,526 1,604,411 9,014,845 2001 ThCh$ 28,724,702 21,182,380 7,531,593 9,713,578 186,441 1,245,328 2,807,106 6,201,424 Total 71,421,590 77,592,552 b. Long-term accruals: Long-term accruals include severance indemnities to personnel, calculated in accordance with the policy described in Note 2. An analysis of the changes in the accruals in each year is as follows: Opening balance as of January 1 Increase in accrual Post retirement benefi ts provision Payments during the period Sub-total Complementary pension and others As of December 31, 2000 ThCh$ 65,572,705 22,440,136 8,100,748 (19,410,679) 76,702,910 46,069,477 2001 ThCh$ 62,567,721 52,647,753 8,469,983 (34,014,488) 89,670,969 137,891,107 Total 122,772,387 227,562,076 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 1 1 2 2 / / 1 1 3 Note 21 Minority interest: a. Minority shareholders’ participation in the shareholders’ equity of the Company’s subsidiaries as of each year-end is as follows: Company Autopista Los Libertadores S.A. Cam Argentina S.A. Cam Colombia S.A. Capital de Energía S.A. Central Hidroeléctrica Betania S.A. Central Cachoeira Dourada Central Costanera S.A. Central Termoelectrica Buenos Aires S.A. Cía. do Electricidade do Río do Janeiro Chilectra S.A. Cía. Eléctrica San Isidro S.A. Cía. Peruana de Electricidad S.A. Codensa S.A. Companhia Energetica Do Ceara - Coelce Compañía Eléctrica del Río Maipo S.A. Constructora y Proyectos Los Maitenes S.A. Edegel S.A. Edelnor S.A. Edesur S.A. Emgesa S.A. Empresa Eléctrica Pangue S.A. Endesa Endesa Argentina S.A. Generandes Perú S.A. Hidroeléctrica El Chocón S.A. Hidroinvest S.A. Inecsa 2000 S.A. Infraestructura 2000 S.A. Ingendesa S.A. Inmobiliaria Centro Nuevo Ltda. Inmobiliaria y Constructora Stgo. 2000 Ltda. Inversiones Distrilima S.A. Investluz S.A. Luz de Bogotá S.A. Pehuenche S.A. Soc. Agrícola de Cameros Ltda. Soc. Agrícola Pastos Verdes Ltda. Túnel El Melón S.A. As of December 31, 2000 Participation % Total ThCh$ Equity ThCh$ Equity ThCh$ As of December 31, 2001 Participation Total ThCh$ 24,516,214 2,032,864 584,928 485,074,156 441,180,655 441,708,509 113,569,387 36,585,872 432,230,436 442,322,327 30,697,271 35,676,365 967,292,763 600,678,337 21,757,680 1,389,998 578,589,126 244,833,070 572,068,097 810,845,898 51,461,296 1,336,793,430 37,325,663 335,394,369 200,353,152 95,672,777 24,736,309 60,770,139 2,632,196 (10,281) 69,903 142,723,272 486,276,684 560,298,331 143,253,570 6,050,651 46,400,092 601,209 0.05 0.10 0.001 49.00 14.38 1.16 48.32 22.17 41.25 2.03 50.00 49.00 51.52 43.41 1.61 45.00 30.16 40.00 34.11 51.52 7.52 40.02 0.01 45.74 34.81 30.07 2.68 40.00 2.36 0.08 7.50 32.75 37.55 55.00 7.45 42.50 45.00 0.05 12,259 2,033 8 237,686,337 63,432,072 5,138,528 54,876,728 8,111,088 178,293,878 8,955,973 15,348,636 17,481,418 498,302,343 260,756,166 350,842 625,499 174,482,229 97,933,228 195,142,384 417,708,492 3,869,889 534,972,375 3,732 153,399,322 69,742,932 28,768,804 662,933 24,308,056 62,186 (7) 5,243 46,741,871 182,596,894 308,164,082 10,672,391 2,571,527 20,880,043 301 % 0.05 0.10 0.001 49.10 14.38 0.49 48.07 24,559,995 667,054 1,050,283 519,220,980 480,028,205 484,651,568 133,695,741 - - 475,231,501 483,782,188 29,477,896 38,775,842 1,080,269,268 639,500,724 21,612,434 909,507 642,400,210 264,228,004 657,526,144 892,683,376 57,838,517 1,404,416,926 29,753,985 341,721,553 233,476,738 108,421,438 24,767,669 61,737,393 2,407,806 (11,692) 72,586 155,063,394 516,620,463 624,508,581 172,767,050 5,889,990 51,002,358 (1,274,892) 41.25 1.76 50.00 48.99 51.52 43.41 1.26 45.00 36.44 40.00 34.11 51.52 7.52 40.02 0.01 40.37 34.36 30.07 2.68 40.00 2.36 0.08 7.50 32.75 37.55 55.00 6.34 42.50 45.00 0.05 12,280 667 14 254,937,501 69,017,495 2,381,239 64,264,150 - 196,031,700 8,515,315 14,738,948 18,995,550 556,526,974 277,609,074 271,788 409,278 234,115,048 105,691,202 224,269,136 459,882,803 4,349,456 562,034,673 2,975 137,949,642 80,232,067 32,602,326 663,774 24,694,957 56,884 (9) 5,444 50,783,262 193,990,984 343,479,726 10,953,431 2,503,246 22,951,062 (637) Total 3,622,062,715 3,954,923,425 b. Minority shareholders’ participation in the net income of the Company’s subsidiaries as of each year-end is as follows: Year-ended December 31, 2000 Year-ended December 31, 2001 Company Autopista Los Libertadores Cam Argentina S.A. Cam Colombia S.A. Capital de Energía S.A. Central Hidroeléctrica Betania S.A. Central Cachoeira Dourada Central Costanera S.A. Central Termoeléctrica Buenos Aires S.A. - Cía. do Electricidade do Río do Janeiro Chilectra S.A. Cía. Eléctrica San Isidro S.A. Cía. Peruana de Electricidad S.A. Codensa S.A. Companhia Energetica Do Ceara - Coelce Compañía Eléctrica del Río Maipo S.A. Constructora y Proyectos Los Maitenes S.A. Edegel S.A. Edelnor S.A. Edesur S.A. Emgesa S.A. Empresa Eléctrica Pangue S.A. Endesa Endesa Argentina S.A. Generandes Perú S.A. Hidroeléctrica El Chocón S.A. Hidroinvest S.A. Inecsa 2000 S.A. Infraestructura 2000 S.A. Ingendesa S.A. Inmobiliaria y Constructora Stgo. 2000 Ltda. Inmobiliaria Centro Nuevo Ltda. Inversiones Distrilima S.A. Investluz Luz de Bogotá S.A. Pehuenche S.A. Soc. Agrícola de Cameros Ltda. Soc. Agrícola Pastos Verdes Ltda. Túnel El Melón S.A. Net Income ThCh$ 135,873 197,055 (55,003) 20,230,464 (6,719,783) 23,307,773 16,043,071 950,353 (4,930,306) 65,015,793 2,403,992 1,916,830 20,976,637 18,367,800 9,869,354 (45,007) 32,830,769 11,175,926 58,524,553 36,585,243 (2,012,815) 111,577,566 3,587,403 34,166,265 9,730,502 2,831,660 98,621 436,948 904,445 2,607 (1,407) 7,701,062 (7,064,924) 10,229,443 (6,159,340) (1,806) (56,112) (2,073,785) Participation % Total ThCh$ 0.05 0.10 0.001 49.00 14.38 1.16 48.32 22.17 41.25 2.03 50.00 49.00 51.52 43.41 1.61 45.00 30.16 40.00 34.11 51.52 7.52 40.02 0.01 45.74 34.81 30.07 2.68 40.00 2.36 7.50 0.08 32.75 37.55 55.00 7.45 42.47 45.00 0.05 68 197 (39,742) 9,912,928 (966,157) 271,147 7,752,011 210,693 (3,445,356) 17,543,802 1,201,997 939,247 11,947,829 7,973,514 1,464,494 (20,253) 9,900,611 4,470,370 21,101,585 18,846,944 (151,364) 44,652,310 359 15,626,624 3,387,188 851,480 2,643 174,779 21,367 196 - 2,522,098 (2,652,880) 5,626,193 (458,871) (767) (25,249) (1,037) Net Income ThCh$ 43,780 (1,387,142) 402,696 8,351,781 (8,413,609) 25,089,146 (11,230,971) - (3,301,312) 71,053,639 (98,331) 2,985,048 22,134,848 13,048,931 8,992,219 (480,492) 27,802,116 18,128,290 81,242,223 18,249,066 6,377,221 70,058,270 (10,508,051) 27,115,992 8,669,848 2,559,227 31,360 967,254 848,232 2,683 - 11,982,797 (11,379,476) 11,188,397 4,819,025 10,661 2,942,867 (1,876,100) Participation % Total ThCh$ 0.05 0.10 0.001 49.10 14.38 0.49 48.07 - 41.25 1.76 50.00 49.00 51.52 43.41 1.36 45.00 36.44 40.00 34.11 51.52 7.52 40.02 0.01 40.37 34.81 30.07 2.68 40.00 2.36 7.49 - 32.75 37.55 55.50 6.34 42.50 45.00 0.05 22 (1,387) 5 4,100,725 (1,209,692) 123,271 (5,398,443) (1,361,782) 1,341,797 (49,166) 1,462,674 11,403,305 5,664,577 130,032 (216,221) 10,132,148 7,251,316 27,710,112 9,401,353 479,567 28,036,672 (1,051) 10,946,460 3,017,974 769,560 840 386,902 20,039 201 - 3,924,366 (4,272,993) 6,153,618 305,526 (68,281) 1,324,289 (938) Total 178,640,998 121,507,397 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 1 1 4 4 / / 1 1 5 Note 22 Shareholders’ equity: a. Issuance As of October 10, 2000, the Company fi nalized a private offering of shares, which commenced September 11, 2000, issuing a total of 1,491,020,100 shares for total proceeds of ThCh$ 292,794,395 or US$ 520,000,000. b. Dividends There are no restrictions on the payment of dividends. The following dividends were paid as of each period-end: Dividend Number Payment date Historical value Ch$ per share Type of dividend Related to 71 April 2001 1.806391 Final 2000 c. Number of shares As of December 31, 2001 Number of shares Series Subscribed Paid With voting rights First 8,291,020,100 8,291,020,100 8,291,020,100 d Subscribed and paid capital is as follows as of the year-end: Series First As of December 31, 2001 Capital subscribed Capital paid ThCh $ ThCh$ 729,328,347 729,328,347 e. Net losses from operations and accumulated net earnings (losses) of development-stage subsidiaries are as follows: Company As of December 31, 2001 Net Earnings (Losses) Of the period Accumulated ThCh$ ThCh$ Central Termeléctrica Fortaleza S.A. Empresa Nacional de Electricidad S.A. (352,381) (47,006) (352,381) 44,287 Total (399,387) (308,094) f. Other reserves Other reserves are composed of the following as of December 31, 2001: Accumulated net losses of development - stage subsidiaries Reserve for variations in equity Reserve for accumulated conversion differences Total As of December 31, 2001 ThCh$ (308,094) 2,318,686 24,373,947 26,384,539 Detail of changes in the cumulative translation adjustment are as follows for the year ended December 31, 2001: Initial Balance ThCh$ Reserve for Assets ThCh$ Reserve for Liabilities ThCh$ Final Balance ThCh$ Cumulative translation adjustment 5,082,010 129,217,211 (109,925,274) 24,373,947 Total 5,082,010 129,217,211 (109,925,274) 24,373,947 The changes in the cumulative translation adjustment due to gains and losses on assets and liabilities for the year ended December 31, 2001 are as follows: Distrilec Inversora S.A. Inversiones Distrilima S.A. Cía. Peruana de Electricidad S.A. Edesur S.A. Cía. de Electricidade do Río de Janeiro Luz de Bogotá S.A. Investluz Endesa Market Place Central Termoelétrica Fortaleza S.A. Total As of December 31, 2001 ThCh$ 1,194,316 1,988,910 3,646,102 7,704,951 4,083,256 1,366,696 4,445,832 100,857 (156,973) 24,373,947 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 1 1 6 6 / / 1 1 7 Note 23 Other income and expenses: a. The detail of other non-operating income in each year is as follows: Adjustments to investments in related companies Gain on sale of property, plant and equipment Gain on forward contracts and swaps Services to companies and customers Penalties charged to contractors and suppliers CDEC-SING power settlement gain Gain on sale of investments (1) Cost recoveries Recoverable taxes Effect of application of BT 64 (2) Comahue fourth line income Gain on repurchase of bonds Other Year ended December 31, 2000 ThCh$ 11,209,486 95,670,427 7,518,624 30,446,760 5,928,996 8,091,340 202,046,395 12,406,174 4,081,070 43,038,825 12,652,645 - 16,910,561 2001 ThCh$ 8,425,321 12,471,667 17,303,868 22,538,187 14,700,345 6,298,308 3,071,188 6,164,200 7,880,395 56,094,130 399,371 23,410,527 12,149,474 Total 450,001,303 190,906,981 (1) Before taxes (2) These amounts correspond to the net adjustments related to the translation of fi nancial statements of foreign affi liates from the respective local country currency to US dollars. As discussed in Note 2(d), the Company used an exchange rate of 1.7 Argentine pesos to the US dollar for fi nancial statement accounts as of December 31, 2001. The Company has direct and indirect investments in Argentina, which are recorded according to the Chilean Association of Accountants, Technical Bulletin No. 64. These investments represent 14.3% of total assets, 26.9% of total revenues, and 20.8% of total operating income. The application of SVS Circular No. 81 for the Company’s Argentine subsidiaries, amounted to a charge of approximately US$3,000,000, net of minority interest. b. Other non-operating expenses in each year are as follows: Adjustments to investments in related companies Cost of sales – materials Cost of projects, inspections and other Effect of application of BT 64 (2) Contingencies and litigation Deferred expense amortization SIC power settlement loss Loss on forward contracts Pension plan expense Penalties and fi nes Other Year ended December 31, 2000 ThCh$ 10,746,456 5,321,069 22,234,627 4,685,633 9,647,802 28,803,537 9,487,263 3,159,830 6,025,008 2,594,321 12,721,686 2001 ThCh$ 2,118,353 14,375,298 8,048,850 33,523,957 34,139,791 4,712,409 9,174,807 22,888,497 21,754,812 15,206,939 11,088,492 Total 115,427,232 177,032,205 Note 24 Price-Level Restatement: The (charge) credit to income for price-level restatement as of each year-end is as follows: As of December 31, 2000 ThCh$ 2001 ThCh$ Assets Inventory Current assets Accounts receivable from subsidiaries Fixed assets Investment in subsidiaries Investment in other companies Amortization of goodwill Other assets Credit to income statement for asset accounts Net credits from assets 280,611 13,007,196 4,913,981 99,753,518 7,649,844 2,791,103 35,813,492 20,741,732 6,282,755 191,234,232 Liabilities and Shareholders’ equity Shareholders’ equity Current and long-term liabilities Minority interest Accounts payable to subsidiaries Non-monetary liabilities Charge to income statement for liability and shareholders’ equity accounts (37,305,988) (124,518,645) 14,803,241 (50,290,063) 204,268 (8,934,805) 659,997 84,296 4,442,082 67,580,431 4,694,240 24,997,762 26,822,216 24,370,396 8,351,108 162,002,528 (33,744,187) (108,276,041) 22,357,727 (29,657,462) (659,450) (9,911,391) Net charges from liabilities and shareholders’ equity accounts (206,041,992) (159,890,804) Net credits (charges) to income (14,807,760) 2,111,724 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 1 1 8 8 / / 1 1 9 Note 25 Foreign currency translation: The (charge) credit to income for foreign currency translation as of each year-end is as follows: Assets Liabilities Current assets Currency As of December 31, 2000 ThCh$ 2001 ThCh$ Current liabilities Currency Cash Time deposits Marketable securities Accounts receivable, net Other accounts receivable, net Inventory Prepaid expenses Other current assets Non-current assets Long-term receivables Amounts due from related companies Deferred expenses Other Assets Forward contracts and swaps US$ Other US$ Other US$ Other US$ Other US$ Other Other US$ Other US$ Other US$ Other US$ US$ US$ US$ (63,704) (260) 1,452,351 (54,651) Short-term debt due to banks and fi nancial institutions - 196,392 Current portion of long-term debt - - - 25,195 - (75,135) due to banks and fi nancial institutions 11,454,143 (1,831) 101,067 (47,246) Current portion of bonds payable Current portion of notes payable 21,108 1,091,930 Dividends payable 79,364 - 50,966 (11,480) Account payable 152,338 164,064 Notes payable - (2,296) 277,027 11,185,514 Miscellaneous payables 9,414 (256,752) Other current liabilities Accrued expenses Deferred income Long-term liabilities Due to bans and fi nancial institutions (17,968) 1,523 1,023,441 269,093 6,201,890 16,537,140 1,013,659 239,669 Bonds payable - 27,510,759 Notes payables 27,303,869 34,962,341 Accounts payable Other long-term liabilities US$ Other US$ Yen Other US$ US$ Other Other US$ Other US$ Other US$ Other US$ Other US$ Other US$ US$ Yen Other US$ US$ US$ US$ As of December 31, 2000 ThCh$ 2001 ThCh$ (357,394) (6,625,198) (238,830) (1,835) (290,473) (2,278,463) 25,485 - - - (61,718) (3,719,994) (465,275) (1,384,555) - - - - - - 18,570 98 276,421 187,774 (298,816) (79,511) (528,591) (417,755) (38,444) 189,714 - - (3,341) - - (894,814) (11,575) 36,617 (29,075) (55,126) (13,543,112) (40,845,317) 28,582 22,175 898 (239,731) (12,907,392) (50,519,854) (2,171,656) (6,538,747) (217,349) (966,616) (5,483,599) (21,568,881) Total (loss) gain 35,003,455 105,789,479 Total (loss) gain (36,218,719) (135,752,062) Net charges to income (1,215,264) (29,962,583) Other (2,743) 28,665 Note 26 Bond issuance costs: The bond issuance costs related to the registration and issuance of the Enersis S.A. Series B-1 and Series B-2 Bonds incurred as of December 31, 2001 are as follows: Series B-1 ThCh$ Series B-2 ThCh$ Series E-1, E-2 ThCh$ Series F ThCh$ Total ThCh$ Registration taxes Broker commission Other issuance costs 780,373 104,050 19,630 487,782 50,811 12,268 1,167,376 165,989 - 291,844 41,497 - 2,727,375 362,347 31,898 Total 904,053 550,861 1,333,365 333,341 3,121,620 Bond issuance costs are included in Other Current Assets and Other Assets, and will be amortized over the life of the bonds. The amortization period for the Series B-1 is 8 years, Series B-2 and Series F is 21 years, and Series E-1 and E-2 is 6 years, respectively. Note 27 Supplemental cash fl ows disclosure: Further detail of the Statement of cash fl ows for each year is as follows: Detail of other receipts from investments: Payment to Cono Sur from Graña and Montero Proceeds from sale of Transelec Other As of December 31, 2000 ThCh$ 2001 ThCh$ 4,015,549 193,473,192 10,976,767 - - 13,277,523 Total 208,465,508 13,277,523 Detail of other investment disbursements: Disbursements for highway construction costs Disbursements for bond repurchases Other 26,317,670 - 5,772,180 8,925,575 170,583,474 2,909,422 Total 32,089,850 182,418,471 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 0 0 / / 1 2 1 Note 28 Financial derivatives: As of December 31, 2001 the Company and its subsidiaries held the following fi nancial derivative contracts with fi nancial institutions with the object of decreasing exposure to interest rate and foreign currency risk according to the following detail: Type (1) Nominal Amount US$ Date of Maturity Item Sales/ Purch. Hedged Item As of December 31, 2001 Closing Initial Hedged Hedged Amount Amount ThCh$ ThCh$ FR FR FR FR FR FR EO EO EO EO EO EO EO EO S S S S S S S S S S S S S S S S S S S S S S 214,000,000 198,850,000 164,000,000 125,000,000 28,550,000 3,000,000 50,000,000 50,000,000 27,500,000 50,000,000 50,000,000 275,000,000 125,000,000 50,000,000 46,630,000 20,360,000 156,390,000 100,000,000 100,000,000 13,400,000 50,000,000 3,330,000 119,530,000 104,560,000 3,330,000 3,100,000 92,163,783 2,840,000 383,110,000 41,930,000 50,000,000 144,470,000 3,330,000 40,550,000 14,920,000 3,330,000 I Quarter 02 I Quarter 02 I Quarter 02 I Quarter 03 II Quarter 02 I Quarter 02 II Quarter 04 II Quarter 04 II Quarter 05 II Quarter 06 II Quarter 06 III Quarter 04 III Quarter 04 III Quarter 05 I Quarter 02 I Quarter 02 I Quarter 03 I Quarter 03 I Quarter 03 I Quarter 04 I Quarter 04 II Quarter 02 II Quarter 02 II Quarter 02 II Quarter 03 II Quarter 03 II Quarter 09 III Quarter 02 III Quarter 03 III Quarter 04 III Quarter 04 III Quarter 06 IV Quarter 02 IV Quarter 02 IV Quarter 02 IV Quarter 03 Exchange rate Exchange rate Exchange rate Exchange rate Exchange rate Exchange rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Exchange rate Interest rate Exchange rate Interest rate Interest rate Exchange rate Interest rate Exchange rate Exchange rate Interest rate Exchange rate Exchange rate Currency Exchange rate Exchange rate Exchange rate Interest rate Currency Exchange rate Exchange rate Interest rate Exchange rate (1) Fr = Forward, EO = European Option, S = Swap, (2) Non-hedging instruments P P P P P P P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P/S P P/S P/S P P/S P P/S P/S P/S P/S P P P/S P/S P Bank Obligations and Bonds 140,125,060 126,141,617 Bank Obligations - (2) 84,354,436 Bank Obligations 19,981,164 Bank Obligations 1,981,208 Yankee Bonds 32,739,500 Bank Obligations 32,739,500 Bank Obligations 18,006,725 Bank Obligations 32,739,500 Bank Obligations 32,739,500 Bank Obligations 180,067,250 Bank Obligations 81,848,750 Bank Obligations 32,739,500 Bank Obligations 22,250,919 Bank Obligations 13,331,524 Bank Obligations 87,308,888 Bank Obligations 65,479,000 Bank Obligations 65,479,000 Bank Obligations 7,764,030 Bank Obligations 32,739,500 Bank Obligations 1,742,361 Bank Obligations 61,697,218 Bank Obligations 68,464,842 Bank Obligations 1,742,361 Bank Obligations 1,625,702 Bank Obligations 61,749,743 Bonds 1,819,528 Bank Obligations 209,224,267 Bank Obligations 28,419,735 Bank Obligations 32,739,500 Bank Obligations 97,575,960 Bonds 1,742,361 Bank Obligations 13,560,222 Bank Obligations 9,769,467 Bank Obligations 1,742,361 Bank Obligations 140,125,060 130,204,992 - 81,848,750 18,694,255 1,964,370 32,739,500 32,739,500 18,006,725 32,739,500 32,739,500 180,067,250 81,848,750 32,739,500 30,532,858 13,331,524 102,402,608 65,479,000 65,479,000 8,774,186 32,739,500 2,183,064 67,201,098 68,464,842 2,183,064 2,029,849 61,749,743 1,859,604 250,856,597 27,455,345 32,739,500 94,597,715 2,183,064 15,125,649 9,769,467 2,183,064 Note 29 Commitments and contingencies: Direct guarantees held by third parties: Guarantee Subsidiary Type Under 1 year 1 to 3 years Over 3 years Total ThCh$ ThCh$ ThCh$ ThCh$ Dirección Gral. de Obras Públicas Autopista del Sol Contract completion 154,495 - 496,011 650,506 As of December 31, 2001 Guarantee Released - - 10,961,804 58,931 - - 10,961,804 58,931 Mortgage security 3,875,883 14,441,428 64,581,238 82,898,549 Banco del Estado de Chile Pehuenche S.A. Security deposit Director Aduana de Chile Bancos Acreedores Mitsubishi Corp. Pangue S.A. Pangue S.A. Letter of credit San Isidro S.A. Security deposit - Dir. Gral. De Obras Públicas Autop. Los Libertadores Contract completion 154,495 Dir. Gral. De Obras Públicas Autop. Los Libertadores Contract completion 650,506 Ministerio de Obras y Serv. Publico Boston Personal guarantee Banco del Estado Túnel El Melón Sec. De Energia de la Rep. Argentina EASA Security deposit Security deposit - - - - - - - - - 69,246,537 69,246,537 - - 154,495 650,506 2,207,502 2,207,502 1,285,845 1,285,845 60,932,875 60,932,875 Total 4,835,379 25,462,163 198,750,008 229,047,550 Indirect guarantees held by third parties: Guarantee Subsidiary Type Under 1 year 1 to 3 years Over 3 years ThCh$ ThCh$ ThCh$ Total ThCh$ As of December 31, 2001 Guarantee Released Chase Manhattan Bank CitbanK N.A. CitbanK N.A. Midlanbank B. Santander C. Hispano J.P. Morgan and CSF Boston Banco San Paolo BNP BBVA YPF S.A. Mitsibishi Co. B. Santander C. Hispano Chase Manhattan Bank Banco Español de Crédito ABN Amro Bank Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l Endesa Chile Int’l San Isidro S.A. Celta S.A. Celta S.A. Celta S.A. Celta S.A. Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant Warrant B. Estado de Chile and Santander Autopista Del Sol S.A. Warrant - - - - - - - 125,820,068 125,787,533 - - 2,133,080 - - 5,912,684 - Chase Manhattan Bank Endesa Colombia S.A. Warrant 176,774,993 B. Santander C. Hispano Cono Sur S.A. Personal Guarantee Banco Exterior de España Gasoducto Taltal Warrant - - - 38,555,260 38,555,260 327,931,354 - 327,931,354 - - - 24,444,620 24,444,620 17,097,871 17,097,871 127,418,895 127,418,895 99,986,433 - 99,986,433 - - - - 52,184,585 - - 36,061,757 - - - 120,504,758 65,542,037 65,542,037 - - 125,820,068 125,787,533 3,548,599 3,548,599 - - 52,184,585 2,133,080 2,664,352 2,664,352 - - 36,061,757 5,912,684 51,861,623 51,861,623 - - 176,774,993 120,504,758 6,680,297 - 6,680,297 Total 436,428,358 636,668,887 337,813,554 1,410,910,799 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 2 2 / / 1 2 3 Litigation and other legal actions: Enersis S.A. Individual i. Court : 21st Civil Court of Santiago Process number : C-2437-1999 Cause : Lawsuit in summary process interposed by the lawyer Mr. Eduardo Rodriguez Guarachi. The lawyer has represented to the court that Enersis pay him US$ 250,000 for professional services rendered. Process status: First petition ruling period. Amounts involved: US$ 250,000. ii. Court : International court of the International Chamber of Commerce, París, France Process number : 11046/KGA Cause : On May 30, 2000, Pecom Energia S.A. and PCI Power Edesur Holding Limited (together, “Pérez Companc”) commenced an action against Endesa - Chile, Chilectra and Enersis before the Arbitration Court of the International Chamber of Commerce, Paris, France. Pérez Companc has petitioned the court to either recognize its alleged right to nominate both a director and an alternate director in addition to the directors whom it already has the right to nominate; or to state that Pérez Companc and the Enersis group should each have an equal number of directors in Distrilec Inversora. Enersis, Endesa - Chile and Chilectra have contested Pérez Companc’s action. Process status : Final allegations presented, awaiting decision. Amounts involved : A fi xed amount for the case was set between US$ 180 million and US$ 200 million. iii. Court : Honorable resolutive commission Process number : 577-99 Cause : Requirements of the “Fiscal Nacional Economico” against Enersis S.A. for the increase of ownership in Endesa- Chile S.A., asserting the transaction has considerably increased the vertical integration in the electric sector, affecting free competition. Process status : The discussion stage has ended and the corresponding complaints have been made. The case is now in the sentencing stage. It is important to note the Commission decided not to receive the case in trial. Additionally, the petitions of the Fiscalía Nacional Económica have changed since the beginning of the case, limiting the request to the inability of Enersis S.A. and Endesa Chile to have common directors and the necessity for these companies to hire different external auditors. Amounts involved: Undetermined. iv. Chilean Internal Revenue Service review on taxable income for the 1999, 2000 and 2001 tax years, and the tax trial in fi rst petition for the difference of First Category Income Tax and Reintegration of Monthly Tax Prepayments for absorbed net income in the amount of ThCh$ 62,400, corresponding to the 1998 tax year. v. Court : 25th Civil Court of Santiago Process number : 3151-00 Cause : Complaint fi led for compensation of damages by Mrs. Odette Legrand Halcartegaray against Enersis S.A.. Process status : First petition sentencing stage Amounts involved: ThCh$ 50,000 vi. Court : 2nd Labor Court of Santiago Process number : 6061-2001 Cause : Complaint fi led for severance pay for years of service on December 19, 2001 by Mr. Guillermo Calderón Ortega against Enersis S.A. Process status : First petition reconciliation and evidence stage. Amounts involved: ThCh$ 50,000 Chilectra S.A. As of December 31, 2001, there are certain complaints against the Company for damages, which management believes are not signifi cant based on reports from its legal counsel or for which the Company has made provisions up to the corresponding insurance coverage deductibles. Compañia Electrica del Rio Maipo S.A. As of December 2001 and 2000 there are complaints against the Company for compensation of damages, which Management and its legal counsel believe are not signifi cant since they have insurance coverage for these types of events. Inmobiliaria Manso de Velasco S.A. i. Court : Arbitration Court Process number : N/A Cause : Originates in Mr. Valero’s intention to charge professional fees for measures related to reducing the value of the Company’s Real Estate Taxes Process status : First petition resolution, being appealed. Amounts involved: Ch$ 100 million was claimed. The fi rst petition resolution was for a sum of Ch$ 37 million, which is being appealed. A provision was made for 50% of the claim. ii. Court : Arbitration Court Process number : N/A Cause : Inmobiliaria Manso de Velasco Ltda., which jointly owns a piece of real estate with other owners in the community of La Dehesa, is initiating a proceeding to forcibly liquidate the community. Process status : Pending decision. Amounts involved: Undeterminable. iii. Court : 25th Courthouse Process number : 4008 – 98 Cause : Complaint fi led by Agregados Livianos S.A. against Sociedad Agrícola Pastos Verdes Ltda. (a subsidiary of Inmobiliaria Manso de Velasco S.A.), with the purpose of imposing a mining easement on the Company’s land. Process status : Final sentence, being appealed before the Santiago Court Amounts involved: Indemnity of UF 5,800 for each year of effective occupation. The set indemnity has not been consigned, therefore the legal easement has not been constituted. No provision of any kind is necessary. iv. Court : 11th Court Process number : 5918 – 99 Cause : Complaint fi led by Agregados Livianos S.A. against Sociedad Agrícola Pastos Verdes Ltda. (a subsidiary of Inmobiliaria Manso de Velasco S.A.), with the purpose of imposing a mining easement on the Company’s land. Process status : The Judge determined an indemnity that did not satisfy the owner, therefore the pertinent legal actions were taken, appealed before the Santiago Court Amounts involved: Undeterminable. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 4 4 / / 1 2 5 v. Court : Court of Appeals Process number : 4087 - 2000 Cause : Sociedad Agrícola Pastos Verdes Ltda. (a subsidiary of Inmobiliaria Manso de Velasco S.A.), fi led Indemnity Assessment Complaint Proceeding for expropriation of Access Road to Aeropuerto Arturo Merino Benítez. The Chilean Government expropriated a piece of land for construction of the access road; experts in accordance with the Expropriation Procedure appraised the indemnity paid. The Appraisal was protested, there is a fi rst petition judgment that raised the indemnity by approximately UF 35,000. Process status : Pending in the Court of Appeals. Amounts involved: Undeterminable. vi. Court : 13th Court Process number : 44 – 2001 Cause : Expropriation for Construction of San Pablo Junction, San Pablo - Ruta 68 - Américo Vespucio. In conformity with D.L. 2.186 the provisional indemnity amount established by the Government was contested, commencing the respective litigations. Process status : The Government renounced the expropriation, therefore the proceeding has concluded. Amounts involved: None. Cam Ltda. On October 27, 1998, Cam Ltda., was notifi ed of closure by a municipal inspector by municipal decree No. 694 dated September 15, 1998. To date conversations are taking place with the Municipality of Santiago to revoke such closure. Cerj S.A. The Company has civil, fi scal and labor legal proceedings for which it has made a provision of approximately R$ 261 million. Coelce S.A. The Company has legal proceedings of a civil, fi scal and labor nature, for which it has recorded provisions of approximately R$ 20 million. Edesur S.A. According to the present litigation, Transportes Metropolitanos General Roca (T.M.G.R.) intends to charge the Company an annual rental fee for each crossing or stretch of electrical lines parallel to the right of way, existing or future, over areas destined to railroad service. The Company’s Management and their legal counsel estimate that the outcome of the stated issue would not have a signifi cant impact on the fi nancial statements taken as a whole. On December 14, 1999, Edesur fi led a legal complaint against Alstom Argentina S.A. and its representative Alstom Energietechnik Gmbh for approximately US$ 77 million, in relation to their responsibility in the accident that occurred on February 15, 1999 at the Azopardo Substation. As of the date of issuance of these fi nancial statements the proceeding is at the evidence stage, the parties attended, formulated reciprocal oppositions and the judge’s resolution is pending. Endesa-Chile Individual Pending litigation There is litigation pending against Endesa-Chile, for which defenses have been fi led, totaling ThCh$730,260 and ThCh$2,176,946as of December 31, 2000 and 2001, respectively. Other litigation i. Court : Supreme Court of Argentina Process number : 2753-4000/97 Cause : Dirección Provincial de Rentas, Provincia de Neuquén versus TGN (Transportadora de Gas del Norte S.A.). Resolution regarding Stamp Tax sum that eventually should be paid jointly by TGN and ENDESA. Process status : TGN requested a precautionary measure before the Supreme Court of Argentina to paralyze the proceeding fi led by the Province of Neuquen, which was accepted. Therefore the administrative complaint proceeding is paralyzed and does not constitute a contingency for San Isidro S.A. Amounts involved: $Arg 13,943,572.54 (Includes tax, interest and fi nes). ii. Court : Arbitration Court Process number : N/A Cause : On December 27, 2001, Empresa Nacional de Electricidad S.A. was notifi ed of an arbitration to resolve controversies related to insurance policy No. 94.676, issued by Compañía de Seguros Generales Consorcio Allianz, currently AGF/Allianz Chile Compañía de Seguros Generales S.A., in favor of Endesa, for the construction of the Ralco Hydroelectric Plant. Process status : Claimant and the Insurance Company have a period of 20 days to corroborate the complaint. Amounts involved: Undeterminable. Endesa-Chile Subsidiaries Pehuenche S.A. i. Court : 20th Civil Courthouse of Santiago Process number : 5863-2001 Cause : Empresa Eléctrica Pehuenche S.A. versus Empresa Eléctrica Colbún S.A. This complaint is for services rendered by Pehuenche S.A. to Colbún during the drought period. Process status : Colbún S.A. was recently notifi ed of the complaint. Amounts involved: Undeterminable. ii. Court : Court of Appeals of Talca Process number : 39945 Cause : Asociación del Canal Maule versus DGA Resolution 1768 dated November 1984 related to the approval of reservoir works and building of the Colbún power plant. Pehuenche also fi led a complaint to reinforce the claim of the irrigation subscribers that it is the obligation of Colbun S.A. to operate a reservoir above an elevation of 425 meters above sea level. Process status : Pending resolution. Amounts involved: Undeterminable. iii. Court : Court of Appeals of Talca Process number : 39945 Cause : Asociación del Canal Maule versus DGA Resolution 1768 dated November 1984 related to the approval of reservoir works and building of the Colbún power plant. Pehuenche also fi led a complaint to reinforce the claim of the irrigation subscribers that it is the obligation of Colbun S.A. to operate a reservoir above an elevation of 425 meters above sea level. Process status : Pending resolution. Amounts involved: Undeterminable. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 6 6 / / 1 2 7 iv. Actions were fi led related to the payment of compensation as per Supreme Decree No. 287, dated 1999 and issued by the Ministry of Economy, Development and Reconstruction and modifi cation of Art. 99 bis of DFL No. 1/82 of Mining Law. v. Court : 24th Civil Court of Santiago Process number : 3908-99 Cause : A precautionary prejudicial measure was presented and was denied by the Tribunal. In the same proceeding Pehuenche presented an ordinary public law motion to vacate against Sociedad Austral de Electricidad S.A. Witnesses gave evidence. Process status : Expert Appraisal. Amounts involved: Undeterminable. vi. Court : 17th Civil Courthouse of Santiago Process number : 3940-99 Cause : Pehuenche versus Chilectra S.A. A precautionary prejudicial measure was presented and denied by the Tribunal. Pehuenche presented in the same case, an ordinary demand to annul public right against Chilectra S.A. Process status : Expert Appraisal, Appeal of inapplicability Process number 4798-2000 with Supreme Court. Amounts involved: Undeterminable. vii. Court : 20th Civil Courthouse of Santiago Process number : 4005-99 Cause : A precautionary prejudicial measure was presented and denied by the Tribunal. Pehuenche presented in the same case, an ordinary demand to annul public right against Empresa Electrica Atacama S.A. Process status : Expert Appraisal. Amounts involved: Undeterminable. viii. Court : Santiago Court of Appeals Process number : 6515-99 Cause : CDEC-SIC failure to provide timely information to the CNE. Resolution 1,557 dated October 1, 1999. The State Defense Council made itself a party to the case. Process status : Expert Appraisal. Amounts involved: Five fi nes for a total of 1,610 UTM. ix. Court : 5th Civil Courthouse of Santiago Process number : 2272-99 Cause : Resolution 631 dated April 27, 1999, for not establishing Dispatch Center before January 1, 1999. The court informed a resolution that it received the case for trial. Pending offi cial letter to the Superintendency of Electricity and Fuels (SEC). Process status : Pending sentence. Amounts involved: Fine of 500 UTM. x. Court : 16th Civil Courthouse of Santiago Process number : 4164-97 Cause : Claim against Resolution 856, resulting in a fi ne imposed on October 16, 1997, for failure on May 11, 1997. Process status : Pending reopening of the fi le. Amounts involved: Fine of 450 UTM xi. Court : 16th Civil Courthouse of Santiago Process number : 1928-98 Cause : Claim against Resolution 331 dated May 8, 1998, for failure on October 13, 1997. Process status : Pending reopening of the fi le. Amounts involved: Fine of 300 UTM xii. Court : SEC Process number : N/A Cause : Reposition appeal before the SEC for Resolution 805 dated May 2, 2000 for a fi ne for failure on July 14, 1999. Process status : Pending resolution. Amounts involved: Fine of 400 UTA xiii. Court : 20th Civil Courthouse of Santiago Process number : 6549-99 Cause : Inversiones Tricahue with Pehuenche and Endesa. Minority shareholders’ claim. Process status : Arbitrator declared the document preparation and exhibition stage complete, and before expiry of his nomination, offered to mediate between the parties in each meeting, pending concretion of measures to avoid the lawsuit. Amounts involved: Undeterminable. xiv. Court : 3rd Local Police Court of Santiago Process number : 50419-AGO Cause : SERNAC with Pehuenche, claim for lack of electrical supply Process status : Pending sentence. Amounts involved: Undeterminable. xv. Court : 24th Civil Court Process number : 1407-2001 Cause : GTD Teleductos S.A. with Pehuenche S.A. Acknowledgement of debt summons. The debt was denied. There were previous conversations with the commercial manager of the petitioner, who did not authorize the basis of the invoice. Process status : Pending sentence. Amounts involved: ThCh$ 344 xvi. Court : 5th Labor Court of Santiago Process number : 2923-2001 Cause : Labor lawsuit for work accident. There are incidents of former adjudication and prescription pending verdict. Second petition verdict confi rming First Petition verdict. Pending confi rmation of appeal for dismissal. Process status : Pending confi rmation of appeal for dismissal. Amounts involved: Undeterminable. Empresa Eléctrica Pangue S.A. i. Court: 1st Civil Court of Santiago Process number : 1294-99 Cause : Claim against Resolution SEC 415 dated March 12, 1999 which fi ned Pangue for not complying with Article 9 of rationing Decree 640, which is to inform the SEC of normal customer consumption of its customers. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 2 2 8 8 / / 1 2 9 Process status : Remitted the fi le to the Santiago Court of Appeals. Amounts involved: Fine of 10 UTM. ii. Court: 1st Civil Court of Santiago Process number : 2273-99 Cause : Claim against SEC Resolution No. 631 dated April 27, 1999 that fi ned Pangue for infraction of Article 183 of the Regulation when it did not build an independent Dispatch and Control Center. Process status : Reception of case to trial was notifi ed. A motion to set aside was presented against the writ of evidence. Amounts involved: Fine of 500 UTM. iii. Court: 23rd Court Process number : 4293-97 Cause : Claim against SEC Resolution No. 856 dated October 16, 1997, which fi ned for a blackout on May 1, 1997. Process status : Appealed to the Court of Appeals and is pending hearing. Amounts involved: Fine of 450 UTM. iv. Court: 23rd Court Process number : 1910-98 Cause : Claim against SEC Resolution No. 331 dated May 8, 1998 that fi ned Pangue for a blackout on October 13, 1997. The Tribunal rejected the recourse in its verdict dated July 30, 1999. Process status : Appealed to the Court of Appeals and is pending hearing. Amounts involved: Fine of 500 UTM. v. Court: SEC Process number : N/A Cause : Appeal to set aside before the SEC by SEC Resolution No. 740 dated April 26, 2000 which fi ned Pangue for blackout on July 14, 1999. Process status : Pending motion to set aside verdict. Amounts involved: Fine of 300 UTA. vi. Court: 18th Civil Court of Santiago Process number : 3886-99 Cause : Ordinary public right annulment complaint. Request to annul obligation to pay compensation to regulated price users derived from electric rationing decree No. 287 issued by the Ministry of Economy. Process status : At the evidence stage. Amounts involved: Undeterminable. vii. There are 37 administrative oppositions presented by Pangue S.A. before the Provincial Government of Malleco, to the corresponding requests of diverse individuals to regularize water use rights in the Commune of Lonquimay. San Isidro S.A. i. Court: 7th Civil Court of Santiago Process number : 2195-99 Cause : Claim against Resolution No. 628 dated April 27, 1999, which applied a fi ne for infraction of Article 183 of D.S. No. 327 dated 1997. (Non construction of independent Dispatch Center). Process status : Offi cial reports are being fi led at the evidential stage. Amounts involved: Fine of 500 UTM ii. Court: SEC Process number : N/A Cause : Appeal to set aside before the SEC for SEC Resolution No. 719 dated April 24, 2000, which fi ned San Isidro 150 UTA, for blackout on July 14, 1999. Process status : Pending reinstatement verdict. Amounts involved: Fine of 150 UTA Compañía Eléctrica de Tarapacá S.A. i. Court: Customs Court of Iquique Process number: 97-99 Cause : Pre-trial for customs fraud for alleged infraction by Celta S.A. to General Customs Ordinance in clearing a crane for the Port of Patache and other merchandise. Process status : First petition sentencing declared. Amounts involved: Fine of 5 UTM for each SRF improperly issued ii. Court: SEC Process number: Offi cial Letter 4966 Cause : Formulation of SEC charges, dated August 3, 2000 for SING blackout on September 23, 1999. Process status : Pending SEC Resolution. Amounts involved: Undeterminable. iii. Court: 20th Civil Court of Santiago Process number: 2760-2000 Cause : Verifi cation of Credit in Inmobiliaria La Cascada Agreement for ThCh$ 203,718. There was a fi rst distribution of funds from the sale of goods. Process status : Report No. 1 from the Liquidating Commission was received. Amounts involved: Celta received ThCh$ 60,558. Ingendesa S.A. i. Court: Court of First Petition of Santa Bárbara Process number: 420-00 Cause : Labor lawsuit for alleged unjustifi ed dismissal Process status : Court rejected lawsuit, currently being appealed. Amounts involved: ThCh$ 24,462. ii. Court: 8th Work Court of Santiago Process number: 5085–99 Cause : Labor lawsuit for labor services Process status : Court rejected lawsuit, appeal expected. Amounts involved: Undeterminable. iii. Court: 4th Work Court of Santiago Process number: 6224-99 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 3 3 0 0 / / 1 3 1 Cause : Labor lawsuit for alleged unjustifi ed dismissal. The lawsuit requests reincorporation to work, and secondly payment of alleged pending services rendered. Process status : The fi rst petition judgment was in favor of Ingendesa and appeal by the claimant is at a recital stage at the Santiago Court of Appeals. Amounts involved: Ingendesa has made provisions for the allegedly owed services rendered. iv. Court: 4th Work Court of Santiago Process number: 6224-99 Cause : The claim requests payment of professional fees in the amount of ThCh$ 2,000. The claimant worked as an attorney at the external counsel’s law fi rm. Process status: Replied to the complaint, awaiting fi rst petition judgment. Amounts involved: Undeterminable. Infraestructura Dos Mil S.A. i. Court: Talagante Local Police Court Process number: 217-00 Cause : Damage indemnity complaint for stoning at the Talagante Overpass Process status: Pending judgment. Amounts involved: Approximate amount of ThCh$ 3,840. Autopista del Sol S.A. There are lawsuits pending in favor of the company for indemnity claims for damages to the Autopista del Sol. The total amount is ThCh$ 174,423. There are lawsuits pending against the company, for which the corresponding defense has been fi led. The total amount is for ThCh$ 357,000. i. Court: Arbitration Commission Process number: 217-00 Cause : A complaint was fi led due to larger sums that the Autopista del Sol S.A. has had to pay the Treasury to fi nance the expropriations needed to carry out the works of the concession contract and for greater costs and expenses which the agent has had to incur to support the expropriation processes carried out by the Ministry of Pubic Works to take timely material possession of the land required to carry out the works. Process status: Final judgment was handed down on April 12, 2001, condemning the Ministry of Public Works to pay Autopista del Sol. Amounts involved: UF 45,510 Inecsa Dos Mil S.A. i. Court: Arbitration Commission Process number: 3049-2000 Cause : Complaint for annulment of the public right of the bidding called by the Ministry of Public Works for the Northeast Santiago Access. Process status: Complaint has been suspended by court resolution Amounts involved: Undeterminable. Central Cachoeira Dourada The Company has made a provision of US$ 213,000 for payment of labor lawsuits. Hidroeléctrica el Chocón S.A. Federal Public Revenues Administration – General Tax Services The Federal Public Revenues Administration – General Tax Services (FPRA-GTS) notifi ed the Company for alleged tax evasion on revenues earned between tax year 1993 and 1994, due to deduction of certain start-up and fi nancing costs incurred by Hidroeléctrica el Chocón S.A. in the calculation of taxable income, which the FPRA-GTS considers to be capitalizable costs to be depreciated in accordance with the terms of the concession. In addition, the FPRA-GTS claimed that the Company omitted making certain withholding taxes on payments made outside of the country for a bank loan obtained in 1994. The Company had not made these withholding taxes as it considered that they related to foreign-source income not subject to taxes. The corresponding amount of taxes on these revenues in dispute equals approximately US$ 9.7 million, which does not include accrued interest. The Company is disputing these charges. On December 28, 2000 the FPRA-GTS notifi ed the Company of Resolution No. 166/00 in the amount of US$ 1,754,938 on withholding taxes for foreign-source incomes. In addition it deemed that the Company should submit US$ 3,987,219 for accrued interest up to December 20, 2000. Finally, the FPRA-GTS assessed a penalty of US$ 1,228,457 for alleged infraction of Article 45 of Law 11,683. Regarding the complaint against treatment of certain startup and fi nancing expenses, it prescribed on January 1, 2001. On December 28, 2000 the Company was notifi ed of Resolution No. 204/00, which offi cially determined that the tax credits and debits for the period from December 1993 to July 1995 , equaled to US$ 794,095 for interest assessed as of December 11, 2000. Additionally, it was resolved to fi ne the Company US$ 1,002,504 for alleged infraction of Article 45 of Law 11,683. The FPRA-GTS considers the moment at which the Company determined that the taxable event was generated to be in error, therefore it deems Article 18 of Regulatory Decree of the Value Added Tax Law to be applicable. The Company rejected the pretension of the FPRA-GTS to apply Article 18 of the Regulatory Decree of the Value Added Tax Law to the taxable events mentioned previously, before the date of publication of the regulation in the Offi cial Bulletin. They invoked the inconstitutionality of the above-mentioned regulation and the application of decree 493/95, which condoned interest and fi nes for obligations or infractions overdue or committed as of July 31, 1995. On February 20, 2001, the Company fi led an appeal before the Fiscal Court of the Nation. Royalties On June 26, 2000, the Company was notifi ed of a complaint for interest charged for royalties allegedly paid outside the terms, initiated by the province of Neuquén before the Nation’s Court of Supreme Justice. The complaint includes an initial amount of approximately US$ 1,574,000. Additionally, on September 27, 2000 the Company was notifi ed regarding a new complaint from the province of Neuquén against the National State and hydroelectric generators of Comahue to obtain royalties charged on accumulated funds in the Sales Account. The mentioned complaint does not state a precise amount or date as of which the sums claimed are considered as owing, but the action would seek to charge each generator 12% of the funds the plaintiff understands were contributed by them to the referred account. Provincial Revenue Service of the Province of Buenos Aires On September 10, 2001, the Company received the notifi cation from the Provincial Revenue Services of the Province of Buenos Aires of the beginning of an offi cial determination for US$ 1,732,564 (amount that does not include interest or A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 3 3 2 2 / / 1 3 3 fi nes), for taxes on gross income for the fi scal periods from February 1995 to December 1998. The differences claimed originate in: a) lack of presentation of tax in the Province of Buenos Aires between February 1995 and June 1996 for contracts signed by the Company and b) for the use of an estimated tax payment less than what the government deemed applicable. Subsequently the Company resorted to a moratorium from the Province of Buenos Aires in which it input the differences claimed by the government for lack of tax revenue in that province for contracts signed by the Company in the sum of US$ 642,575, rejecting the differences claimed related to the applied estimated tax payment. In the opinion of the Company’s Management and their legal counsel the complaints made by the government organizations mentioned above are not applicable, except for the concepts mentioned in the previous paragraph, therefore it is not probable that those matters will generate a signifi cant adverse effect on the Company’s shareholders’ equity situation and income as of December 31, 2001. Edegel S.A. National Superintendency of Tax Administration – Income Tax and General Sales Tax As of December 31, 2001, the National Superintendency of Tax Administration (NSTA) has completed its compliance oversight of tax obligations mainly related to Income Tax and General Sales Tax for the Company’s tax years from 1995 to 1999, and as a result of this oversight, NSTA gave notice in December 2001 through determination resolutions and fi nes amounting to US$ 86,601,000 (equivalent to ThCh$ 56,705,818) for Income Tax and approximately US$ 732,000 (equivalent to ThCh$ 479,133) for General Sales Tax. In this respect, management fi led an appeals claim against the mentioned resolutions on January 4 and 7, 2002. Thus, on January 10, 2002 an arbitration process has begun against the State in which it submits to arbitration the controversy regarding noncompliance by the Peruvian State of its obligation with respect to the régime of legal stability signed by the company on November 29, 1995. In the opinion of management and their legal advisors these arbitration processes will be resolved in favor of the Company. On December 28, 1998, the government published Law 27,034, which in the Seventh Transitory and Final Disposition, effected 1999, states that “the amount of depreciation corresponding to the greater value attributed to a voluntary revaluation of assets due to an achieved reorganization is not deductible as an expense under Law 26283, regulatory and complementary standards”. As indicated, in 1995 the Company signed a 10-year tax legal stability agreement, that permits it to maintain, among others, the Income Tax regime in force on the date of signing the agreement. In 1995 the Company reevaluated its property, plant and equipment, which originated a revaluation surplus, as a consequence of the ruling made under Law 26283 and D.S. 120-94-EF. As of the date of the signing of the agreement, the tax regime considered tax deductible the expense for depreciation of the greater amount due to revaluation made under Law 26283 and D.S.120-94-EF. Company management and their external legal counsel consider that the mentioned legal standard is unconstitutional, since it violates the principle of non-retroactivity of the law stated in Article 103 of the Constitution, which orders that “no law will have retroactive force or effect”. Thus, if the NSTA should persist in relation to fi scal years subsequent to 2005, in the application of the mentioned standard to not acknowledge depreciation taken on revalued asset values, Edegel will have the possibility of formulating complaints based on the law. Therefore the company has not determined any effect of the application of that legal standard in their fi nancial statements. The sworn income tax declaration for 2000 tax year is pending review. Any expense that exceeds the provisions made to cover tax obligations will be charged to income in year in which the fi nal adjustment is made. ESSALUD Lawsuits fi led by (ESSALUD) for payment of contributions under Law Decrees 22482, 19990 and 18846 amounting to US$ 4,282,000 (equivalent to ThCh$ 2,804,013). In the opinion of management and their legal counsel, these proceedings will be resolved in favor of Edegal S.A.. Talleres Moyopampa S.A. Resolutions of Determination and fi nes in the amount of US$ 1,184 (equivalent to Ch$ 775,592) were issued against the Talleres Moyopampa S.A. for which Edegal S.A. has fi led the corresponding complaints and appeals when the referred company divided. Said complaints and appeals are pending fi nal resolution by Tax Administration. It is the opinion of management and their legal advisors that these actions will not have a signifi cant negative effect, independently or jointly, on the fi nancial position, operating income, or liquidity of Edegal S.A.. Municipality of Huarochiri-Matucana Resolutions of non-tax fi nes issued by the Municipality of Huarochiri-Matucana for payment of building license in the amount of US$ 698,000 (equivalent to ThCh$ 457,138). On November 12, 1999 the Superior Court of Justice of Lima admitted a precautionary measure in favor of the company, ordering the suspension of the coercive collection procedure of the imposed fi ne. On the 4th, 6th and 16th of October and the 29th of December of 2000, the objections presented by the company against the mentioned Resolutions were declared to have foundation, which have been appealed by the Huarochiri-Matucana Municipality. In the opinion of management and their legal advisors, the fi nal resolution will be in favor of the company. Edegal’s Workers Syndicate Complaint fi led by Edegal’s workers syndicate, which seeks that the percentage of participation, which the law sets at 5%, be risen to 10%, in this way duplicating the payment of profi ts for fi scal years 1994, 1995 and 1996 by approximately US$ 4,780,000 (equivalent to ThCh$ 3,129,935). On August 24, 2000 the sentence was issued in the fi rst petition, declaring the action unfounded. By means of the sentence dated December 12, 2000 (notifi ed November 13, 2001) the Second Labor Court Room of the Superior Court of Lima annulled the fi rst petition sentence which declared the syndicate’s action unfounded. The Company fi led a motion to vacate against said sentence, which was not admitted, whereby the fi le will return to the court for the issuing of a new sentence. As of December 31, 2001, Generandes Peru’s sworn declarations on the Income Tax Statements from 1997 to 2001, are presently pending review by the tax authorities. Any major expense which exceeds the provisions made to cover tax obligations, will be charged to income in the years in which the fi nal liquidations are produced. Central Hidroeléctrica de Betania S.A. There are pending lawsuits against the Company in which the corresponding defense actions have been fi led, the Company registers a provision in the amount of ThCh$ 847,494. Restrictions: Enersis S.A. The Company’s loan agreements establish an obligation to comply with the following fi nancial ratios, on a consolidated level: • The ratio between debt and debt plus equity, not exceeding 0.8; A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 3 3 4 4 / / 1 3 5 • The ratio between operational cash fl ow and payment of debt interest, not less than 1.7; • Net tangible equity not less than UF 27 million; • Assets corresponding to companies whose business is regulated, no less than 50% of total consolidated assets. Chilectra S.A. The Company does not have any management restrictions or fi nancial covenants during the years ended December 31, 2000 and 2001. The Company holds long-term energy purchase contracts with Endesa, Gener S.A., Pangue S.A., Colbún Machicura S.A., Carbomet Energía S.A., Empresa Eléctrica Puyehue S.A. (formerly Pilmaiquén), Sociedad Canalistas del Maipo and Iberoamerica de Energía IBENER S.A., the terms of which extend subsequent to 2001, in order to ensure its supply and corresponding cost. Compañía Eléctrica del Río Maipo S.A. The Company holds signed energy purchase contracts with Chilectra S.A. and Gener S.A., in order to assure its supply and corresponding cost. The Company does not have any management restrictions or fi nancial covenants during the years ended December 31, 2000 and 2001. Endesa S.A. On a consolidated level, Endesa must comply with fi nancial covenants and requirements derived from loan agreements with fi nancial institutions, among which the following are emphasized: • Gross Cash Flows equal to or greater than 12% of the average consolidated fi nancial debt for terms longer than one year, plus short-term bank debt if its term is extendable to more than one year, obtained according to the debt refl ected in the consolidated fi nancial statements at the closing date of the last four quarters. • Gross Cash Flow equal to or greater than 1.7 times the consolidated fi nancial expenses, obtained according to the expenses refl ected in the consolidated fi nancial statements at the closing date of the last four quarters. • The fi nancial debt for terms longer than one year, plus short-term bank debt if its term is extendable to more than one year, cannot exceed 60% of the sum of shareholders’ equity, plus minority interests, plus the fi nancial debt for terms longer than one year and short-term bank debt. Pehuenche S.A. The Santander Investment Bank Ltd. and the Chase Manhattan Bank N.A., in relation to loans granted to the Company, place obligations and restrictions on Pehuenche S.A., some of which are of a fi nancial nature, such as: long-term fi nancial liabilities not exceeding 1.5 times the shareholders’ equity, and a minimum company equity of UF 9,500,000. Empresa Eléctrica Pangue S.A. The following is a summary of the main obligations, which Empresa Eléctrica Pangue S.A. must comply with as per agreements with the fi nancial institutions: • Maintain their creditors duly informed regarding the fi nancial situation. • Different conditions with the objective of guaranteeing a healthy fi nancial situation. Thus, the institutions have defi nes some indexes such as restrictions for the payment of dividends and indebtedness, and acceleration clauses. In regard to the long-term debt limit for loans in cash, for these events, the limit is 2.0 Shareholders´ equity. • Insure and maintain insured all assets. As of December 31, 2000 and 2001 all these obligations have been complied with. Infraestructura Dos Mil S.A. As of February 21, 1996, the Company signed a Syndicated Credit Contract with the Banco del Estado, Banco de Chile and the Banco Santander, in favor of its subsidiary Sociedad Concesionaria Autopista del Sol S.A.. The contract was formed to fi nance the construction and/or the execution of public works named “Autopista Santiago - San Antonio”, for an amount of up to UF 3,189,000 with a six-year term, constituting in the favor of the banks who signed the Syndicated Loan Contract a pledge on all the shares issued by Sociedad Concesionaria Autopista del Sol S.A. belonging to Infraestructura Dos Mil S.A. Furthermore, due to this credit agreement the following indirect obligations also exist: • The Company is obligated to complete and facilitate the conclusion on time and in form of the previously identifi ed work, comply timely with all obligations imposed by the concession contract with the Department of Public Works, and to sign and pay for shares for capital increases in its subsidiary in proportion to its current ownership participation. • There is a commitment not to diminish its current participation in the ownership of shares issued by Sociedad Concesionaria Autopista del Sol S.A., until all concession work is defi nitively placed in service. Subsequent to such event, its participation cannot be less than 51%. Autopista del Sol S.A. Derived from fi nancing obtained through fi nancial institutions through the “Opening of Credit and Agreement” contract, the Company must comply with the obligations and indicators mentioned below: • Conclude and facilitate the construction on time and in form, of the applicable portion of the fi scal public works in concession. • Partial and total restriction of every type of dividend distribution during the term of the credit agreement. • Capital increase to UF 1,831,000. • Recovery of the guaranteed performance bonds that the Ministry of Public Works executed, both during the construction period and in the operation period. • • • • Total restriction on modifi cation of company stock, except with previous authorization from the creditor banks. Handing over of fi nancial, operating and expropriation information. Maintain a relationship of debt to equity of no more than 2 to 1. Maintain insurance coverage as stipulated in the bank agreement. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 3 3 6 6 / / 1 3 7 • Hire the services of the engineering company, Ingendesa S.A. to carry out the inspections of the work and submit a monthly report to the creditor banks. • • • • • Do not accumulate sanctions from the Ministry of Public Works. Obtain bank authorization to carry out actions or contracts which involve guarantees in favor of third parties, investments in related companies or signing of new construction contracts. Maintain in custody, at a syndicated bank, the guarantees received on behalf of the contractor in charge of the works. Do not acquire obligations with third parties, except when the object is to pay or prepay the total loan. Do not agree with the Ministry of Public Works for an early termination to the concession. The Company has complied with all the aforementioned restrictions and limits. As of December 31, 2001 the project has had excess costs that reached approximately 16% of the original budget, which has been fi nanced through the Company’s own resources. Autopista Los Libertadores S.A. Autopista Los Libertadores S.A. was established as a Public Works Concession Special Pledge, as defi ned in the Concession Law, in favor of the Banco de Chile and Bank of Santiago. In accordance to the fi nancing agreement signed on December 29, 1998, the pledge amounts to UF 4,000,000. The object of the mentioned loan is to fi nance a part of the project’s total investment. Endesa S.A. is the endorsing guarantor and co-debtor for these loans. Central Costanera S.A. Central Costanera S.A. is not in compliance with one of the fi nancial ratios established in the Company’s Union credit agreement. The Company’s management is negotiating a waiver to exempt the Company from this requiremnet. Because of the non-compliance, the related debt has been classifi ed as short-term in these fi nancial statements. Edegel S.A. Financial indicators originated by credit contracts and Bonds Program: • • • Net shareholders’ equity not less than Soles 2,400 million adjusted for infl ation. EBITDA for the period / Interest expenses from the subsequent period, of no less than 3.5 to 1.0. Total Financial Debt / EBITDA, not greater than 3.5 to 1.0. Note 30 Sureties obtained from third parties: Chilectra S.A. The Company presents among its current liabilities, guarantees received in cash for the use of temporary connections by customers of the company in the amounts of ThCh$ 121,027 and ThCh$ 123,112 for the years ended December 31, 2000 and 2001, respectively. Inmobiliaria Manso de Velasco Ltda. The Company has received guarantees from contractors and third parties to guarantee jobs and construction of ThCh$ 26,042,732 as of December 31, 2001. Compañía Americana de Multiservicios Uno Ltda. Deposits and guarantees received by the Company were ThCh$ 128,080 as of December 31, 2001. Compañía Americana de Multiservicios Ltda. Deposits and guarantees received by the Company were ThCh$ 988,728 as of December 31, 2001. Endesa S.A. The Company has received guaranteed performance bonds from contractors and third parties to guarantee jobs and construction (mainly the Ralco Project), in the amount of ThCh$ 28,467,566 as of December 31, 2001. San Isidro S.A. Deposits and guaranteed performance bonds received of ThCh$ 4,258,356 as of December 31, 2001. Compañía Eléctrica de Tarapacá S.A. The Company has received documents in guarantee of ThCh$ 893,944 as of December 31, 2001. Autopista Los Libertadores S.A. The Company has deposits and guaranteed performance bonds of UF 73,510 and ThCh$ 27,177 as of December 31, 2001. Sociedad Concesionaria Autopista del Sol S.A. The Company has deposits and guaranteed performance bonds of UF 25,713 and ThCh$ 27,341 as of December 31, 2001. Pangue S.A. The Company has received from contractors, bank guaranteed performance bonds of ThCh$ 328,070 as of December 31, 2001. Túnel El Melón S.A. The Company has submitted documents in guarantee from Banco Santiago for UF 20,000. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 3 3 8 8 / / 1 3 9 Note 31 Foreign currencies: As of December 31, 2000 and 2001, foreign currency denominated assets and liabilities are as follows: a. Current assets Account Cash Time deposits Marketable securities Accounts receivable, net Notes receivable Other receivables As of December 31, Currency UF Ch$ US$ Yen $ Col. Soles $ Arg. Reales US$ $ Col. Soles $ Arg. Reales Ch$ US$ $ Arg. UF Ch$ US$ $ Col. Soles $ Arg. Reales Ch$ US$ $ Col. Soles $ Arg. Reales UF Ch$ US$ $ Col. Soles $ Arg. Reales U.C. 2000 ThCh$ 35,380 3,174,324 647,163 - 9,201,241 3,755,499 2,172,985 8,268,990 4,252,848 43,909,969 148,369 16,130,531 12,934,685 4,714 120,108 11,827,883 - 77,785,606 5,687,239 98,355,073 30,042,478 104,367,200 158,649,619 1,025,659 435,163 374,113 5,074,909 - 2,598,141 - 18,268,315 938,723 19,837,648 590,108 3,886,333 15,740,963 962,557 2001 ThCh$ 484,319 6,751,948 2,280,485 277 12,263,258 1,829,763 2,177,695 10,764,484 112,597,902 46,091,602 827,380 3,193,573 10,215,013 4,683 192,474 - 7,302,079 92,842,117 10,115,931 100,510,997 29,788,527 68,022,172 225,640,499 2,948,858 741,077 - 5,510,489 53,355 2,414,382 3,532,682 10,511,378 8,626,527 18,732,713 1,294,155 2,898,476 17,364,759 1,006,148 Account Currency Amounts due from related companies Inventories, net Income taxes recoverable Prepaid expenses and other Deferred income taxes - Other current assets Ch$ US$ $ Col. Soles $ Arg. Ch$ $ Col. Soles $ Arg. Reales Ch$ $ Col. Soles $ Arg. Reales UF Ch$ US$ $ Col. Soles $ Arg. Reales Ch$ $ Arg. Reales UF Ch$ US$ $ Col. $ Arg. Reales As of December 31, 2000 ThCh$ 3,711,673 6,317,842 27,750 76,637 9,365,315 44,455,086 10,670,467 11,093,850 5,616,633 1,300,415 35,049,268 2,814,892 841,028 20,784,306 9,998,761 491 304,942 3,572,360 1,855,894 1,439,618 1,342,132 951,441 11,290,612 3,156,580 15,222,387 - 16,919,978 116,493,650 - 769,789 - 2001 ThCh$ 3,658,373 7,053,439 130,076 463,962 6,188,886 43,587,495 12,454,075 13,086,808 4,770,358 1,270,268 32,634,102 1,320,070 208,192 13,362,460 8,310,226 786 649,152 3,274,026 162,591 1,191,776 934,059 7,352,238 4,859,626 1,672,027 16,926,697 123,975 15,047,244 107,646,809 - 458,265 258,882 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 0 0 / / 1 4 1 Total current assets 996,648,333 1,128,589,120 b. Fixed assets Account Land Buildings, Infrasture and Works in Progress Machinery and equipment Other fi xed assets Technical appraisal Accumulated depreciation Currency Ch$ $ Col. Soles $ Arg. Reales Ch$ $ Col. Soles $ Arg. Reales Ch$ $ Col. Soles $ Arg. Reales Ch$ US$ $ Col. Soles $ Arg. Reales Ch$ $ Col. Soles Reales Ch$ $ Col. Soles $ Arg. Reales As of December 31, 2000 ThCh$ 74,466,518 27,968,791 8,352,102 8,083,400 16,649,238 3,461,795,188 2,603,583,190 945,374,264 1,292,191,193 1,320,265,722 50,218,406 22,076,061 375,852,386 685,119,584 497,767,662 29,347,416 513,568 5,961,046 36,042,919 97,113,713 244,433,522 25,963,542 57,998,074 416,810,362 101,277,140 2001 ThCh$ 74,514,339 30,957,731 9,246,249 9,262,877 28,845,436 3,540,927,768 2,925,165,203 1,075,117,074 1,494,615,317 1,597,326,621 51,624,615 23,851,224 407,507,288 715,242,107 571,813,949 50,091,748 333,835 7,763,522 47,763,896 155,291,796 228,203,238 25,867,622 62,873,345 461,460,872 110,485,315 (1,378,564,379) (1,449,683,385) (409,467,304) (748,581,237) (681,612,434) (502,715,374) (546,659,892) (861,134,630) (854,828,192) (649,138,480) Total property, plant and equipment 8,684,284,279 9,344,708,408 c. Other assets Account Currency Investments in related companies Investments in other companies Goodwill, net Negative goodwill, net Long-term accounts receivable Amounts due from related companies Other assets Ch$ US$ $ Arg. Ch$ $ Col. Soles Reales Ch$ US$ $ Col. Soles $ Arg. Reales Ch$ US$ $ Col. Soles Reales UF Ch$ US$ $ Col. Soles $ Arg. Reales U.C. Ch$ US$ UF Ch$ US$ $ Col. Soles $ Arg. Reales As of December 31, 2000 ThCh$ 96,723,617 56,542,791 68,770 2,089,682 129,049,897 10,099 116,781 861,187,271 177,798,259 47,159,806 2,140,169 28,212,191 186,792,264 (167,281) (35,770,600) (78,749,377) (73,129,567) (7,980,463) - 15,034,838 6,362,027 8,440,342 724,136 3,929,226 8,947,874 2,674,262 1,427,568 142,507,800 - 38,319,086 17,883,515 49,661,151 2,867,073 14,897,385 26,261,614 2001 ThCh$ 100,487,795 62,042,489 40,598 2,089,692 142,994,940 11,181 109,038 816,476,110 239,870,243 25,796,107 - - 194,984,978 (152,411) (35,542,243) (58,117,877) (70,449,921) (8,362,042) 7,988,439 2,877,466 24,950,177 4,158,571 2,384,657 1,957,371 52,728,956 1,889,860 1,428,291 164,268,594 3,555,109 35,926,357 43,114,856 42,535,140 4,079,790 895,067 107,839,767 Total other assets 1,732,032,206 1,914,857,145 d. Total assets Account Total assets by currency Currency UF Ch$ US$ Yen $ Col. Soles $ Arg. Reales U.C. As of December 31, 2000 ThCh$ 35,871 3,489,831,649 504,302,456 - 2,650,728,724 1,019,525,202 1,627,422,715 2,117,481,382 3,636,819 2001 ThCh$ 22,987,389 3,465,970,983 751,566,621 277 2,852,983,396 1,130,187,508 1,626,208,267 2,535,354,224 2,896,008 Total assets 11,412,964,818 12,388,154,673 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 2 2 / / 1 4 3 e. Current liabilities Within 90 days 91 days to 1 year As of December 31, 2001 As of December 31, 2000 Avg Rate % Avg Rate % Amount ThCh$ Amount ThCh$ As of December 31, 2001 Avg Rate % Amount ThCh$ Account Currency Short-term debt due to banks and fi nancial Due to banks and fi nancial institutions Promissory notes Bonds payable Current portion of notes payable Dividends payable Accounts payable Notes payable Miscellaneous payables UF Ch$ US$ Euro $ Col. Soles $ Arg. Reales UF US$ Yen $ Col. Soles $ Arg. Reales U.P. Libra Other Soles Reales UF US$ Euro $ Col. Soles Ch$ US$ Other Ch$ $ Col. Soles $ Arg. Reales Ch$ US$ Euro $ Col. Soles $ Arg. Reales Other Ch$ Reales UF Ch$ US$ $ Col. Soles $ Arg. Reales Other As of December 31, 2000 Avg Rate % Amount ThCh$ - 160,092,648 128,907,070 - - 19,055,477 365,498 50,452,708 - 16,027,196 - - 7,619,386 13,482 5,198,401 - - - - 7.58 7.55 - - 15.05 6.55 16.30 - 7.33 - - 10.20 6.55 10.69 - - - - 2,295,349 109,591,416 2,857,937 - 23,977,272 22,085 31,206,909 51,989,755 42,740,798 - - - 1,841 5,474,159 - - - - - 10.98 4.35 - 12.20 6.80 15.50 7.50 5.17 - - - 8.60 15.50 - - - 15,299,768 2,277,757 70,488,833 - 29,334,983 - - - 53,362,896 112,284,850 400,482 5,737,086 - - 8,040,978 1,010,772 371,527 99,329 6.00 6.40 7.55 - 12.00 - - - 8.50 7.33 1.26 15.50 - - 11.75 5.26 7.13 5.94 - - 82,989,297 - 10,953,683 28,348,833 - - 1,567,983 303,678,157 383,674 - - - 1,303,349 1,035,409 382,644 99,700 - - - - 4,937,956 - 10.00 - - 16,635,381 - 16.00 5,772,858 42,328,262 - 2,691,842 3,300,934 - - 59,031 12,790,333 - - 7.50 3.34 - - - 7.20 - 936,973 10 53,420 10 191,916 23,081,703 19,707,936 28,832 40,029,407 15,821,569 80,697,080 55,117,155 70,856 351 14,269,865 - 6,451,104 4,460,572 8,942,447 2,609,018 - 6,471,588 - - - - - - - - - - - - - - - - - - - - - - - - - - 2,001,651 14,122,802 831,583 - 22,922,837 - 470,178 - 35,638 1,402 4,912,957 46,946,307 14,275,070 133,907 19,919,818 18,713,680 43,527,020 91,181,167 - 210 44,105,683 - 14,665,054 6,030,493 8,813,215 3,093,188 102,327 13,137,517 - - - 3.34 13.70 10.00 - 7.40 - 14,531,507 38,474,179 - 3,188,309 28,473,037 6.80 7.50 - 15.50 9.61 - 16,417,832 18,430 - 7.20 9.75 - - - - - - - - - - - - - - - - - - - - - - - 1,774,999 2,782,259 - 2,154 - 10,635,902 776 - 3,030,351 - - - 18,926 - - - 1,651,184 - 182,194 - 6,319 - 82,208 - - - - - - - - - - - - - - - - - - - - - - - 12,492,145 31,569,607 - - - 87,663 8,204,582 - 1,384,632 - - - - 4,202,759 1,690,000 - 8,720,835 1,967,821 - - 134,529 - - 81,878 152,295 69,896 69,598 - 4,267 - - - - 10.98 - 15.00 12.20 - - 7.50 6.15 0.90 - - - 15.50 5.32 5.38 4.44 6.92 18.13 11.80 14.87 - - - - 7.20 - - - - - - - - - - - - - - - - - - - - - - - - Account Currency As of December 31, 2000 Avg Rate % Amount ThCh$ As of December 31, 2001 As of December 31, 2000 Avg Rate % Avg Rate % Amount ThCh$ Amount ThCh$ As of December 31, 2001 Avg Rate % Amount ThCh$ Within 90 days 91 days to 1 year Amounts payable to related companies Accrued expenses Withholdings Income taxes payable Deferred income Customer advances Other current liabilities Total current liabilities by currency - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - UF Ch$ US$ $ Col. Soles $ Arg. UF Ch$ US$ $ Col. Soles $ Arg. Reales Other Ch$ $ Col. Soles $ Arg. Reales Other Ch$ $ Col. Soles $ Arg. Reales Other UF Ch$ US$ $ Col. UF Ch$ UF Ch$ US$ $ Col. Soles $ Arg. Reales UF Ch$ US$ Euro Yen $ Col. Soles $ Arg. Reales U.P. Libra Other - 9.67 6.37 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2.70 - - - - - - 11,711,657 3,257,409 528,493 14,053,669 1,193,192 343,401 - 11,351,651 139,144 6,893,007 512,534 5,488,314 24,371,801 - 6,967,550 1,378,501 3,866,571 27,926,903 23,578,706 - 13,034,967 15,714,970 1,313,182 14,668,326 27,302,183 - - 5,142,418 - 220,013 - - 31,242,747 455,021 - 1,853,508 36,302 31,846,399 5,375,740 42,954,404 230,830,826 185,252,586 3,329,766 - 89,085,532 52,080,651 161,349,413 212,330,063 - - 70,856 16,785,722 312,022 513,143 - 1,783,958 7,295,965 - 15,738,918 - 4,977,736 1,601,339 4,399,586 25,742,499 - 5,710,387 1,777,384 2,461,130 16,618,672 24,868,783 - 417,935 15,128,924 154,356 9,895,238 32,199,233 - 245,604 1,454,249 399,688 - - - 109,869,724 67,088 1,158,571 2,545,035 44,024 13,085,698 11,654,844 178,890,805 88,077,697 197,632,016 4,993,495 - 67,284,914 57,634,124 94,949,834 284,483,751 - - - - 9.14 8.49 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 957,044 - - 19,561,702 - 2,793,947 260,401 - - 49,089 1,840,548 - - - - 20,700 40,598,181 2,825,312 - - - 84,973 - 5,312,543 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2.70 - - - - - - 82,218,149 4,479,446 - 556,267 8,111,431 119 - 2.70 - - - - - - 165,412,320 88,132,262 237,666,470 - 400,482 50,430,708 37,801,913 8,592 24,676,359 1,010,772 371,527 373,655 - - - 3,523,412 - - 8,131 20,158,347 181,374 3,125,981 1,658,641 - - - 949,656 - - - - - 8,775,666 2,862,659 5,598,049 - - - - 3,573,294 5,312,179 - - - 6,901 5,648,188 - 999,557 5,551,576 77 - 14,157,038 44,932,500 433,695,092 - 383,674 30,255,725 48,897,778 4,344 43,631,611 1,035,409 382,644 234,229 Total current liabilities 977,284,097 973,946,636 606,285,060 617,610,044 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 4 4 / / 1 4 5 f. Long-term liabilities, December 31, 2001 Account Currency 1 to 3 years 3 to 5 years Amount ThCh$ Avg Rate % Amount ThCh$ Avg Rate % 5 to 10 years Amount Avg Rate ThCh$ % More than 10 years Avg Rate Amount % ThCh$ Due to banks and fi nancial institutions Bonds payable Notes payable Accounts payable Amounts payable to related parties Accrued expenses Deferred income taxes Reimbursabe employee taxes Other liabilities Total long-term liabilities By currency UF US$ Yen Reales U.P. Libra Other UF US$ Euro $ Col. Soles US$ Reales UF Ch$ US$ $ Col. Reales UF US$ Ch$ $ Col. Reales Ch$ UF Ch$ Soles UF Ch$ Soles $ Arg. Reales UF Ch$ US$ Euro Yen $ Col. Soles $ Arg. Reales U.P. Libra Other 19,593,691 133,119,934 379,814 2,447,725 6.93 4.01 0.90 12.00 - - - 80,007,109 4.04 20,304,640 - - - 4,281,342 10.93 1,121,113 36,745,055 1,580,101,125 759,628 14,574,825 1,996,683 721,914 189,852 19,325,503 190,607,144 249,605,948 7.44 4.01 0.90 12.00 5.32 5.38 4.44 6.30 7.90 3.34 - - 360,957 94,926 119,935,962 242,272,300 5.38 4.44 6.30 7.90 - - - - - 126,275,921 - 34,983,753 53,987,031 34,606,367 7.13 10.27 41,130,295 4,456,902 13.70 7.50 7.13 10.27 75,330 2,060,718 22,812,102 430,306 8,162,265 - - 6.50 - - 956,291,278 16,239,944 4.90 7.07 - - - - - - - 2,394,342 - 8,675,629 - 2,426,496 - 16,489,740 139,604,470 10.00 - - - - - - - - - - - - - - - - - - 52,844,488 235,724,400 6.30 7.90 46,798,477 906,947,665 - - - - - - - - - 69,008,816 9,684,415 7.13 10.27 14,278,266 - - - - - - - - - - - - - - - 176,310 17,870 - - - - - - 1.75 - 10.93 - - - 6.30 7.90 - - - 7.13 - - - - - - - - 4,746,079 - - 6,218,531 - 39,548,006 5,724,909 10.00 9.50 - 10.00 10.00 1,733,874 - - - - - - - - - 9,955,807 - 5,312,315 - 13,305,588 - 6,435,964 7,308 4,241,649 3,021,814 492 10,353,717 2,964,629 8,489,247 729,238 1,012,444,966 29,006,233 1,863,747,546 249,605,948 759,628 430,306 5,986,443 8,489,247 66,748,324 1,996,683 721,914 189,852 - - - - - - - - 8,843 2,071,694 352,179 - 1,083,895 - 1,451,410 - - - - - - - - - 466,591 860,714 1,963,382 - 2,401,395 - 1,589,418 - 10.00 - - - - - - - - 2,318,705 - - - - - - 139,538,496 10,894,400 416,522,529 - 379,814 142,765,661 35,335,932 1,451,410 146,509,097 - 360,957 94,926 53,311,079 21,313,776 384,740,325 - - - 1,963,382 1,589,418 15,699,631 - - - 46,974,787 14,991,070 941,530,571 - - 39,548,006 - - 6,846,022 - - - Total long-term liabilities 3,240,126,890 893,853,222 478,617,611 1,049,890,456 g. Long-term liabilities, December 31, 2000 Account Currency 1 to 3 years 3 to 5 years Amount ThCh$ Avg Rate % Amount ThCh$ Avg Rate % 5 to 10 years Amount Avg Rate ThCh$ % More than 10 years Avg Rate Amount % ThCh$ Due to banks and Financial institutions Bonds payable Notes payable Accounts payable Amounts payable to Related companies Accrued expenses Deferred income taxes Client advances Other long-term liabilities Total long-term liabilities by currency UF US$ Yen $ Arg. Reales U.P. Libra Other UF US$ Euro $ Col. Soles US$ Reales Ch$ US$ $ Col. Reales UF US$ Ch$ $ Col. Soles Reales Ch$ $ Arg. UF Ch$ Soles Ch$ Soles $ Arg. Reales UF Ch$ US$ Euro Yen $ Col. Soles $ Arg. Reales U.P. Libra Other 52,434,027 1,239,432,391 982,894 13,485 20,833,405 2,367,343 840,638 228,360 4,142,138 100,543,636 225,454,317 8.50 7.33 1.26 6.10 10.69 5.26 7.13 5.94 6.80 7.50 3.34 4,265,802 133,685,561 589,736 8,128 7,441,710 502,163 504,383 137,017 8.50 7.33 1.26 6.10 10.69 5.26 7.13 5.94 2,598,495 83,778,001 8.50 7.33 - 87,069,066 - - - - - - 4,052,201 10.69 1,823,491 - - - - - - 4,724,622 88,714,973 6.80 7.50 14,532,120 242,487,592 6.80 7.50 1,153,294,642 - - - - - - - - 20,271,120 15.50 - - 70,439,906 821,388 15.50 9.61 - - - - - - - 43,202,481 13,349,522 7.20 8.64 34,815,944 23,923,520 7.20 8.64 73,868,130 15,176,675 7.20 8.64 23,616,398 534,142 8.90 - - - - - - - - - - - - - - - - - 785,620 10,829,422 382,615 2,013,654 - 8.00 - - 1,033,330,967 17,406,657 6.06 7.24 348,564 11,973,927 320,617 - - - 3,133,607 - 26,127 16,850 - - - - 3,542,855 14,650,160 - - 5,146,844 683,155 6,643 6,048,313 3,548,331 1,183,932 2,353,666 8,846,299 7,458,911 1,089,913,775 16,298,316 1,411,414,587 225,454,317 982,894 382,615 5,928,124 9,542,939 43,672,342 2,367,343 840,638 228,360 - - 2,089,242 508,538 - - - - - - - 8,037 3,807,706 522,624 1,902,439 1,176,835 2,147,998 - 8,998,461 11,690,806 269,190,405 - 589,736 35,241,897 1,699,459 2,664,664 31,365,230 502,163 504,383 137,017 - 379,737 - 893,831 - - - - - - - - - 198,679 - - - - - 6,857,182 - - 60,027,732 - 3,471,182 - 31,046,692 - - - - 3,717,566 1,097,452 566,364 1,835,299 2,090,092 1,819,663 - 2,342,503 895,288 17,696,979 14,609,447 400,133,723 - - 71,333,737 2,911,480 3,439,955 80,151,896 - - - - - - - - - - - - 6,110,376 637,203 - 3,600,690 - 1,323,860 - - - - 14,704,787 1,263,980,106 - - 31,046,692 - 637,203 2,357,633 - - - - 7.33 - - 10.69 - - - - 7.50 - - - 7.20 8.64 - - - - - - - - - - - - - - - - - - - A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 6 6 / / 1 4 7 Total long-term liabilities 2,807,026,250 362,584,221 590,277,217 1,312,726,421 Note 32 Sanctions: Chilectra S.A. During 2001, the Superintendency of Electricity and Fuels (SEC) has not applied sanctions to the Company. Details of previous sanctions with pending judicial complaint are as follows: Exempt Resolution: No. 356 Resolution Date: May 18, 1998. Date of Chilectra S.A.’s Notifi cation : June 17, 1998. Note 33 Differences between Chilean and United States Generally Accepted Accounting Principles: Chilean GAAP varies in certain important respects from U.S. GAAP. Such differences involve certain methods for measuring the amounts shown in the fi nancial statements. Differences in Measurement Methods The principal differences between Chilean GAAP and U.S. GAAP are described below together with an explanation, where appropriate, of the method used in the determination of the adjustments that affect net income and total shareholders’ equity. References below to “SFAS” are to Statements of Financial Accounting Standards issued by the Financial Accounting Standards Board in the United States. a) Infl ation accounting The cumulative infl ation rate in Chile as measured by the Consumer Price Index for the three-years ended December 31, 2001 was approximately 10.75%. Pursuant to Chilean GAAP, the Company’s fi nancial statements recognize certain effects of infl ation. The inclusion of price-level adjustments in the accompanying consolidated fi nancial statements is considered appropriate under the prolonged infl ationary conditions affecting the Chilean economy even though the cumulative infl ation rate for the last three years does not exceed 100%. As allowed pursuant to Form 20-F the reconciliation included herein of consolidated net income, comprehensive income and shareholders’ equity, as determined in accordance with U.S. GAAP, excludes adjustments attributable to the effect of differences between the accounting for infl ation under Chilean GAAP versus U.S. GAAP. b) Reversal of revaluation of property, plant and equipment In accordance with standards issued by the SVS, certain property, plant and equipment are recorded in the fi nancial statements at amounts determined in accordance with a technical appraisal. The difference between the carrying value and the revalued amount is included in shareholders’ equity, beginning in 1989, in “Other reserves”, and is subject to adjustments for price-level restatement and depreciation. Revaluation of property, plant and equipment is an accounting principle not generally accepted under U.S. GAAP, therefore, the effects of the reversal of this revaluation, as well as of the related accumulated depreciation and depreciation expense are included in paragraph (aa) below. c) Depreciation of property, plant and equipment Under Chilean GAAP, certain costs related to the cost of acquisition of Edesur S.A., at the time of the acquisitions in 1992 and 1994 by Distrilec Inversora S.A., were charged to earnings as incurred. Under U.S. GAAP, these costs would have been included in the purchase price and would have been allocated to the net assets acquired based upon fair values. For purposes of the reconciliation to U.S. GAAP, these costs were considered to be a part of property, plant, and equipment, the primary assets of Edesur S.A. As discussed in paragraph (i), under Chilean GAAP, assets acquired and liabilities assumed are recorded at their carrying value, and the excess of the purchase price over the carrying value is recorded as goodwill. Under U.S. GAAP, assets acquired and liabilities assumed are recorded at their estimated fair values, and the excess of the purchase price over the estimated fair value of the net identifi able assets and liabilities acquired is recorded as goodwill. As part of the purchase of the majority ownership interest in Endesa-Chile, under U.S. GAAP, the cost of the purchase price would have been allocated to the fair value of property, plant and equipment. The effect on shareholders’ equity and net income for the years presented is included in paragraph (aa) below. d) Intangibles Under Chilean GAAP, the Company has recorded intangible assets relating to the transfer of revalued assets which originated in the predecessor company, “Compañía Chilena de Distribución Eléctrica S.A.” at the time of the Company’s formation. Under U.S. GAAP, such intangible assets would not have been recorded as the assets would have been recorded at the Predecessor Company’s carrying values. The effects of adjusting shareholders’ equity for the intangible asset net of accumulated amortization, inclusive of accumulated price-level restatement, and net income statement for the annual amortization expense are included in paragraph (aa) below. e) Deferred income taxes Under Chilean GAAP, until December 31, 1999, deferred income taxes were recorded based on non-recurring timing differences between the recognition of income and expense items for fi nancial statement and tax purposes. Accordingly, there was an orientation toward the income statement focusing on differences in the timing of recognition of revenues and expenses in pre-tax accounting income and taxable income. Chilean GAAP also permitted not providing for deferred income taxes where a deferred tax asset or liability was either offsetting or not expected to be realized. Starting January 1, 2000, the Company recorded income taxes in accordance with Technical Bulletin No. 60 of the Chilean Association of Accountants, recognizing, using the liability method, the deferred tax effects of temporary differences between the fi nancial and tax values of assets and liabilities. As a transitional provision, a contra (referred to as “complementary”) asset or liability has been recorded offsetting the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Such complementary asset or liability are being amortized to income over the estimated average reversal periods corresponding to the underlying temporary differences to which the deferred tax asset or liability relates. Under U.S. GAAP, companies must account for deferred taxes in accordance with SFAS No. 109, which requires an asset and liability approach for fi nancial accounting and reporting of income taxes, under the following basic principles: (i) A deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and tax loss carryforwards. (ii) The measurement of deferred tax liabilities and assets is based on the provisions of the enacted tax law. The effects of future changes in tax laws or rates are not anticipated. (iii) The measurement of deferred tax assets are reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Temporary differences are defi ned as any difference between the fi nancial reporting basis and the tax basis of an asset and liability that at some future date will reverse, thereby resulting in taxable income or expense. Temporary differences ordinarily become taxable or deductible when the related asset is recovered or the related liability is settled. A deferred tax liability or asset represents the amount of taxes payable or refundable in future years as a result of temporary differences at the end of the current year. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 4 4 8 8 / / 1 4 9 In 1999, the principal effect on the Company due to the difference in the accounting for deferred income taxes between Chilean and U.S. GAAP relates to the treatment of temporary differences arising from provisions, net operating loss- carryforwards and accelerated depreciation methods. In subsequent years the principal difference relates to the reversal of the complementary assets and liabilities recorded as a transitional provision for unrecorded deferred taxes as of January 1, 2000 and their corresponding amortization into income. The effect of these differences on the net income and shareholders’ equity of the Company is included in paragraph (aa) below. f) Staff severance indemnities As described in Note 2 n), under the Company’s employment contracts, it has committed to provide a lump sum payment to each employee at the end of their employment, whether due to death, termination, resignation or retirement. Those obligations are calculated based on the present value of the liability determined at each year-end based on the current salary and average service life of each employee. The Company, and certain of its subsidiaries, used a real discount rate of 9.5% for the years ended December 31, 2000 and 2001, and assumed an average service life which varies based upon years of service with the Company. The real annual discount rate does not include a projection of infl ation and, accordingly, future salary increases are also excluded from the calculation of the obligation, because all such future increases are expected to approximate the increase in infl ation over a long-term period. Under U.S. GAAP, this arrangement is considered to be a termination indemnity plan and should therefore be accounted for in accordance with SFAS No. 87 “Employers’ Accounting for Pensions”. The liability would be measured by projecting future expected severance payments using an assumed salary progression rate and discounting the resulting amounts to their present value. In practice, the Company believes that the salary progression rate will not differ signifi cantly from the general infl ation rate. The application of U.S. GAAP would not have produced results materially different from the acceptable method under Chilean GAAP. g) Pension and post-retirement benefi ts The Company has obligations related to complementary pension plan benefi ts and other post-retirement benefi ts as stipulated in collective bargaining agreements. Under U.S. GAAP, post-retirement employee benefi ts have been accounted for in accordance with SFAS No. 87 and SFAS No. 106. The effects of accounting for post-retirement benefi ts under U.S. GAAP have been presented in paragraph (aa). h) Investments in related companies The Company’s equity share of the effect of the adjustments from Chilean GAAP to U.S. GAAP of equity accounted investees is included in paragraph (aa) below. The principal U.S. GAAP adjustments affecting the Company’s equity investees are as follows: (a) The recording of pension benefi ts in accordance with SFAS No. 87. (b) The recording of deferred taxes in accordance with SFAS No. 109. (c) Organizational costs deferred under Chilean GAAP that under U.S. GAAP should have been included in income. (d) For the year beginning January 1, 2001, the recording of derivative instruments in accordance with SFAS No. 133. (e) The deferred income tax effects of adjustments (a), (c) and (d). i) Goodwill (i) Under Chilean GAAP, assets acquired and liabilities assumed are recorded at their carrying value, and the excess of the purchased price over the carrying value are recorded as goodwill. Circular No. 1358, dated December 3, 1997 issued by the SVS, extended the maximum amortization period of goodwill to 20 years from the previous 10 years. Under U.S. GAAP, assets acquired and liabilities assumed are recorded at their estimated fair values, and the excess of the purchased price over the estimated fair value of the net identifi able assets and liabilities acquired are recorded as goodwill. The Company amortizes goodwill on a straight-line basis over the estimated useful lives of the assets, ranging from 20 to 40 years. Goodwill acquired after June 30, 2001 is not amortized (see Note 33 II(o)).The effects of recording the different amortization periods are included in paragraph (aa) below. (ii) In accordance with SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”, the Company evaluates the carrying amount of property, plant and equipment and certain intangibles, including attributable goodwill, in relation to the operating performance and future undiscounted cash fl ows of the underlying business. This standard requires that an impairment loss be recognized in the event that facts and circumstances indicate that the carrying amount of an asset may not be fully recoverable, when compared to the estimated future undiscounted cash fl ows. Impairment is recorded based on an estimate of future discounted cash fl ows, as compared to current carrying amounts. For the years ended December 31, 1999, 2000, and 2001 no additional amounts were recorded for impairment under U.S. GAAP. (iii) During the year ended December 31, 2001, a revision of U.S. GAAP goodwill was made to previous U.S. GAAP amounts included in the reconciliation of consolidated shareholders’ equity because U.S. GAAP goodwill was understated in the subsidiary Coelce by ThCh$50,077,237 during the years ended December 31, 1999 and 2000. This revision does not have an impact on the reconciliation to consolidated net income for the years ended December 31, 1999 and 2000 as the accumulated differences of Chilean and U.S. GAAP goodwill amortization are appropriately stated. See paragraph (aa) below for the restated amounts. The restatement of the reconciliation to conform shareholders’ equity amounts to U.S. GAAP is as follows: Account Shareholders’ equity in accordance with U.S. GAAP, as previously reported Difference due to goodwill (paragraph h) Difference due to effects of minority interest on restatement As of December 31, 2000 ThCh$ 1,074,869,774 50,077,237 (26,559,605) Shareholders’ equity in accordance with U.S. GAAP, as restated 1,098,387,406 j) Negative goodwill Under Chilean GAAP, the excess of the carrying value of the assets assumed in a business combination over the purchase price is recorded as negative goodwill. Circular No. 1358, dated December 3, 1997 issued by the SVS, extended the maximum amortization period of negative goodwill to 20 years from the previous 5 years. Under U.S. GAAP, the fair values of the assets acquired less the fair values of the liabilities assumed in excess of over the purchase price is allocated proportionately to reduce the values assigned to non-current assets. If the allocation reduces the non-current monetary assets to zero, the remainder of the excess is recorded as a deferred credit account called negative goodwill. The effect of reducing depreciation expense, due to the proportionate allocation of the excess purchase price to property, plant and equipment, as compared to the amortization of negative goodwill under Chilean GAAP is included in paragraph (aa) below. k) Capitalized interest and exchange differences In accordance with Chilean GAAP, the Company has capitalized both interest on debt directly related to property, plant and equipment under construction and fi nance costs corresponding to exchange differences generated by the loans associated with such assets. The capitalization of interest costs associated with projects under construction is optional when incurred on debt that is not directly related to such projects. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 5 5 0 0 / / 1 5 1 Under U.S. GAAP, the capitalization of interest on qualifying assets under construction is required, regardless of whether interest is associated with debt directly related to a project. In addition, under U.S. GAAP, foreign translation exchange differences may not be capitalized. The accounting differences between Chilean and U.S. GAAP for fi nancing costs and the related depreciation expense are included in the reconciliation to U.S. GAAP under paragraph (aa) below. l) Accumulated defi cit during the development stage Under Chilean GAAP, the losses incurred during the development stage of subsidiary companies is recorded directly in the parent company’s equity. Under U.S. GAAP, such costs must be charged to income as incurred. The effects are included in paragraph (aa) below. m) Minimum dividend As required by the Chilean Companies Act, unless otherwise decided by the unanimous vote of the holders of issued and subscribed shares, the Company must distribute a cash dividend in an amount equal to at least 30% of its net income for each year as determined in accordance with Chilean GAAP, unless and except to the extent the Company has unabsorbed prior year losses. Since the payment of the 30% dividend out of each year’s income is required by Chilean law, an accrual has been made in the reconciliation in paragraph (aa) below to refl ect the unrecorded dividend liability, whenever and to the extent the recorded interim dividends do not reach the 30% minimum dividend. n) Capitalized general and administrative expenses Until 1993, Endesa-Chile capitalized a portion of its administrative and selling expenses as part of the cost of construction in progress because a substantial portion of the efforts of management were involved in the administration of major projects. Under U.S. GAAP, general and administrative expenses are charged to expense unless they can be directly identifi ed with the supervision of the constructions of specifi c projects. The effects of eliminating capitalized general and administrative expenses and the related depreciation for U.S. GAAP purposes are shown below under paragraph (aa). o) Workers’ profi t sharing in Peru Statutory worker’s profi t sharing in Peru is computed at 5% of the Peruvian subsidiary’s taxable income before workers’ profi t sharing. Because workers’ profi t sharing is calculated on taxable income, under U.S. GAAP, differences between fi nancial reporting and taxable income should be considered in the calculation of workers’ profi t sharing for each period on a basis consistent with that used for income taxes. The difference in accounting for Peruvian profi t sharing between Chilean and U.S. GAAP is included in the reconciliation to U.S. GAAP under paragraph (aa) below. p) Involuntary employee termination benefi ts Under Chilean GAAP, the Argentine subsidiaries, Central Costanera and Hidroelectricidad, recorded an accrual of certain involuntary employees termination benefi ts related to the restructuring plan announced in 1997. Since that date employees have continued to be made redundant pursuant to this plan. In accordance with U.S. GAAP, in order to recognize a liability at the balance sheet date for the cost to terminate employees involuntarily, there must be a plan that specifi cally includes notifi cation of such employees prior to the balance sheet date. As of December 31, 2001, this requirement had not been met. The effect of eliminating the accrued liability recognized is presented in paragraph (aa) below. q) Adjustment in selling price of investment Under Chilean GAAP, pursuant to the share transaction contract entered into in 1995 between Endesa-Chile and Endesa Overseas Co. with Enersis International Limited, Chilectra S.A. and Chilectra International Limited, Endesa Argentina recognized income related to an adjustment of the share purchase price. Under U.S. GAAP, the contingent price adjustment would be considered a part of the purchase price, and would therefore be offset against the amount of goodwill that was originally determined. The effects of the adjustments to conform to U.S. GAAP are included under paragraph (aa) below. r) Elimination of capitalized legal reserve Under Chilean GAAP, the Company capitalized interest to property, plant and equipment as a result of the creation of a legal reserve specifi cally permitted in Brazil for the electricity industry. Under U.S. GAAP, interest capitalized must be based on actual interest incurred, and as such the effects of the elimination of the interest capitalized to property, plant and equipment and the effects on depreciation expense are included in paragraph (aa) below. s) Organizational and start-up costs Certain costs related to the organization and creation of certain subsidiaries of the Company were deferred and capitalized under Chilean GAAP. Under U.S. GAAP, such organizational and start-up costs may not be deferred and must be included in income as incurred. The effects of this difference are included in paragraph (aa) below. t) Translation of Financial Statements of Investments Outside of Chile Under Chilean GAAP, in accordance with Technical Bulletin 64 (“BT 64”) the fi nancial statements of foreign subsidiaries that operate in countries exposed to signifi cant risks (“unstable” countries), and that are not considered to be an extension of the parent company’s operations, are remeasured into US dollars. The Company’s foreign subsidiaries in Argentina, Peru, Brazil, and Colombia all meet the criteria of foreign subsidiaries that operate in countries exposed to signifi cant risks under BT 64, and are remeasured into US dollars. The Company has remeasured its foreign subsidiaries into US dollars under this requirement as follows: • Monetary assets and liabilities are translated at year-end rates of exchange between the US dollar and the local currency. • All non-monetary assets and liabilities and shareholder’s equity are translated at historical rates of exchange between the US dollar and the local currency. • • Income and expense accounts are translated at average rates of exchange between the US dollar and local currency. The effects of any exchange rate fl uctuations between the local currency and the US dollar are included in the results of operations for the period. Under BT 64, the investment in the foreign subsidiary is price-level restated, the effects of which are refl ected in income, while the effects of the foreign exchange gains or losses between the Chilean Peso and the US Dollar on the foreign investment measured in US dollars, are refl ected in equity in the account “Cumulative Translation Adjustment”. The amount of foreign exchange gain included in income that is attributable to operations in unstable countries because these amounts have been remeasured into US dollars was ThCh$168,761,152, ThCh$43,038,825, and ThCh$56,094,130 for the years ended December 31, 1999, 2000 and 2001, respectively (See note 23 (a)). In the opinion of the Company, the foreign currency translation procedures described above are part of the comprehensive basis of preparation of price-level adjusted fi nancial statements required by Chilean GAAP. Inclusion of infl ation and translation effects in the fi nancial statements is considered appropriate under the infl ationary conditions that have historically affected the Chilean economy, and accordingly, are not eliminated in the reconciliation to U.S. GAAP as permitted by Form 20-F. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 5 5 2 2 / / 1 5 3 u) Derivative instruments Under Chilean GAAP, forward foreign exchange contracts gains and losses are recorded at the closing spot exchange rate and included in earnings as “Other non-operating income and expense”. The initial discount or premium is amortized over the life of the contract as interest expense. Previously, under U.S. GAAP, contracts that were designated and effective as hedges of existing assets and liabilities were recorded in the same manner as described under Chilean GAAP above. However, contracts not designated or effective as hedges were recorded at fair value with the unrealized gains and losses recognized in income. For contracts with fair values different from the values of the contracts at the closing spot exchange rate, a difference between U.S. and Chilean GAAP resulted. The effects of the difference were not considered material to the consolidated fi nancial statements and accordingly were not previously included in paragraph (aa) below. In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), “Accounting for Derivative Instruments and Hedging Activities”. In June 1999, the FASB issued Statement No. 137, “Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133”. In June 2000, the FASB issued Statement 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133”. SFAS No. 133, as amended, establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative instrument’s fair value be recognized currently in earnings unless specifi c hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative instrument’s gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The Company adopted SFAS No. 133, as amended, on January 1, 2001. SFAS No. 133 requires that as of the date of initial adoption, the difference between the market value of derivative instruments recorded on the balance sheet and the previous carrying amount of those derivatives be reported in net income or other comprehensive income, as appropriate, as the cumulative effect of a change in acounting principle in accordance with Accounting Principles Board Opinion No. 20, “Accounting Changes.” Statement 133 cannot be applied retroactively. SFAS No. 133 must be applied to (a) derivative instruments and (b) certain embedded derivative instruments. As permitted under this standard, the Company has applied SFAS No. 133 to only those embedded instruments that were issued, acquired, or substantively modifi ed after January 1, 1999. SFAS No. 133, in part, allows special hedge accounting for “fair value” and “cash fl ow” hedges. SFAS No. 133 provides that the gain or loss on a derivative instrument designated and qualifying as a “fair value” hedging instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk be recognized currently in earnings in the same accounting period. The accounting standard provides that the effective portion of the gain or loss on a derivative instrument designated and qualifying as a “cash fl ow” hedging instrument be reported as a component of other comprehensive income and be reclassifi ed into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The remaining gain or loss on the derivative instrument, if any, must be recognized currently in earnings. While the Company enters into derivatives for the purpose of mitigating its global fi nancial and commodity risks, these operations do not meet the documentation requirements to qualify for hedge accounting under U.S. GAAP. Therefore changes in the respective fair values of all derivatives are reported in earnings when they occur. Current Chilean accounting rules do not consider the existence of derivative instruments embedded in other contracts and therefore they are not refl ected in the fi nancial statements. For U.S. GAAP purposes, certain implicit or explicit terms included in host contracts that affect some or all of the cash fl ows or the value of other exchanges required by the contract in a manner similar to a derivative instrument, must be separated from the host contract and accounted for at fair value. The Company separately measures embedded derivatives as freestanding derivatives instruments at their estimated fair values recognizing changes in earnings when they occur. Estimates of fair values of fi nancial instruments for which no quoted prices or secondary market exists have been made using valuation techniques such as forward pricing models, present value of estimated future cash fl ows, and other modeling techniques. These estimates of fair value include assumptions made by the Company about market variables that may change in the future. Changes in assumptions could have a signifi cant impact on the estimate of fair values disclosed. As a result such fair value amounts are subject to signifi cant volatility and are highly dependent on the quality of the assumptions used (see Note 33 II(j)). The effect of adopting SFAS No. 133 as of January 1, 2001, resulted in a cumulative effect on net income of ThCh$20,402,957, which is presented net of deferred taxes of ThCh$45,219,341 and minority interest under the caption “Cumulative effect of change in accounting principles.” The effects of the adjustment with respect to fi nancial derivatives, commodity derivatives, and embedded derivatives for the year ended December 31, 2001 is included in the net income and shareholders’ equity reconciliation to U.S. GAAP under paragraph (aa) below. For additional disclosures required under FAS No. 133 see Note 33 II(k). v) Fair value of long-term debt assumed As discussed in paragraph (i), under Chilean GAAP, assets acquired and liabilities assumed are recorded at their carrying value, and the excess of the purchased price over the carrying value are recorded as goodwill. Under U.S. GAAP, assets acquired and liabilities assumed are recorded at their estimated fair values, and the excess of the purchased price over the estimated fair value of the net identifi able assets and liabilities acquired are recorded as goodwill. As part of the purchase of the majority ownership interest in Endesa-Chile, under U.S. GAAP, the cost of the purchase price would have been allocated to the fair value of long-term debt. The effect on shareholders’ equity and net income for the years presented is included in paragraph (aa) below. w) Sale of subsidiaries Corresponds to the reversal of the December 31, 1999 accumulated adjustments to U.S. GAAP which under U.S. GAAP would have been included in the determination of any gain or loss on sale made in connection with the subsidiaries Compañía Nacional de Transmisión Eléctrica S.A. (Transelec), Aguas Cordillera S.A., and Aguas Puerto S.A., as these subsidiaries were sold during 2000. x) Deferred income During 2000, fi ber optic cable was contributed to the Company in return for granting the contributing company access to the fi ber optic network after installation in the Company´s electricity distribution system. Under Chilean GAAP, the contributed assets were recorded at their fair market value, with a corresponding credit recognized as income in 2000. Under U.S. GAAP and in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”), the fair market value of the assets to be used in the future is considered an upfront payment which is not the result of the culmination of a separate earning process, and therefore, should be deferred and recognized in income over the estimated useful life of the fi ber optic assets. The effect on shareholders’ equity and net income for the years presented is included in (aa) below. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 5 5 4 4 / / 1 5 5 (y) Regulated assets and deferred costs The electricity sector in Chile and other countries of operation in Latin America is regulated pursuant to the Chilean and other country electricity laws. Most of the Company’s sales are subject to node price regulation, which is designed to ensure an adequate supply of energy at reasonabe, determined prices, which considers a variety of factors. The marginal cost pricing model is not solely based upon costs incurred by the Company, and as a result, the requirements of U.S. GAAP under SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation,” related to a businesses whose rates are regulated are not applicable to the Company’s fi nancial statements, except for the Company’s operations in Brazil as described below. As a result of changes in Brazilian Electricity Laws and Regulations, the Company’s distribution subsidiaries in Brazil, Companhia de Electricidad do Rio de Janiero (Cerj) and Companhia Energética do Ceará (Coelce), are subject to the provisions of SFAS No. 71 beginning on January 1, 2001. With the new regulations issued by the National Agency of Electric Energy (ANEEL), the rate-setting structure in Brazil is now designed to provide recovery for allowable costs incurred, which will be recovered through future increases in energy tariffs in order to recover losses experienced during the period of Brazilian Federal Government mandated energy rationing from June 1, 2001 to December 31, 2001. The Company estimates costs will be recovered over a period estimated to be three years (as described in Note 5). Accordingly, the Company capitalizes incurred costs as deferred regulatory assets when there is a probable expectation that future revenue equal to the costs incurred will be billed and collected as a direct result of the inclusion of the costs in an increased rate set by the regulator. The deferred regulatory asset is eliminated when the Company collects the related costs through billings to customers. ANEEL performs a rate review on an annual basis. If ANEEL excludes all or part of a cost from recovery, that portion of the deferred regulatory asset is impaired and is accordingly reduced to the extent of the excluded cost. The Company has recorded deferred regulatory assets, which it expects to pass on to its customers in accordance with and subject to regulatory provisions. The regulations also included certain VPA costs, which are certain costs that each distribution company is permitted to defer and pass on to their customers using future rate adjustments. VPA costs are limited by concession contracts to the cost of purchased power and certain other costs and taxes. Due to uncertainty in the Brazilian economy, ANEEL delayed the approval of such VPA rate increases. An Executive Order in October 2001 created a tracking account mechanism, in order to calculate the variation in the VPA costs for future rate adjustment calculation purposes. The Company has not recognized any regulatory assets for VPA costs incurred prior to 2001, because costs incurred prior to January 1, 2001, are not recoverable through the tracking account. Under Chilean GAAP, the Company recognized revenue and deferred costs related to the regulated assets. Under U.S. GAAP, in accordance with Emerging Issues Taskforce (EITF) No. 92-7, “Accounting by Rate Regualted Utilities for the Effects of Certain Alternate Revenue Programs,” revenue amounts not expected to be collected within 24 months, have been deferred. The effect of deferring revenues expected to be collected after two years is included in (aa) below. (z) Reorganization of subsidiaries Corresponds to the reorganization of the Company’s subsidiaries Central Costanera and Central Buenos Aires (CBA) during 2001, in which Central Costanera acquired the minority interest in CBA from third parties and exchanged shares with Endesa Argentina. Under Chilean GAAP, the Company recorded the transactions under the pooling method, using the book values of the net assets acquired under merger accounting. Under U.S. GAAP the exchange of shares between entities under common control is recorded at book values. To the extent that shares in CBA were acquired from third parties, the identifi able assets acquired and liabilities assumed are recorded at fair value using purchase accounting together with the shares issued by the subsidiary Central Costanera. The effect on shareholders’ equity for the years presented is included in (aa) below. (aa) Effects of conforming to U.S. GAAP: The reconciliation of reported net income required to conform with U.S. GAAP is as follows: For the year ended December 31, 2000 ThCh$ 2001 ThCh$ Net income (loss) in accordance with Chilean GAAP 92,875,150 40,926,246 Reversal of amortization of revaluation of property, plant and equipment (paragraph b) Depreciation of property, plant and equipment (paragraph c) Amortization of intangibles (paragraph d) Deferred income taxes (paragraph e) Staff severance indemnities (paragraph f) Pension and post-retirement benefi ts (paragraph g) Investments in related companies (paragraph h) Amortization of goodwill (paragraph i) Amortization of negative goodwill (paragraph j) Capitalized interest and exchange differences (paragraph k) Accumulated defi cit during the development stage (paragraph l) Capitalized general and administrative expenses (paragraph n) Workers’ profi t sharing in Peru (paragraph o) Involuntary employee termination benefi ts (paragraph p) Adjustment in selling price of investment (paragraph q) Elimination of amortization of capitalized legal reserve (paragraph r) Organizational and start-up costs (paragraph s) Derivative instruments (paragraph u) Fair value of long-term debt assumed (paragraph v) Sale of subsidiaries (paragraph w) Deferred income (paragraph x) Regulated assets (paragraph y) Effects of minority interest on the U.S. GAAP adjustments Deferred tax effects on the U.S. GAAP adjustments Net income (loss) in accordance with U.S. GAAP before cumulative effect of change in accounting principle Cumulative effect of change in accounting principle, net of tax of Ch$45,219,341 and minority interest 2,521,393 (1,417,027) 1,333,569 (67,492,919) - (10,694,058) - (7,321,475) (18,480,660) 33,390,506 152,203 (1,567,184) (278,961) (2,614,610) 130,052 (3,241,009) 797,269 - 129,525 20,945,635 (3,118,842) - 56,305,307 (20,090,362) 1,844,446 (1,791,679) 185,471 (27,785,276) - 3,629,742 (17,591,894) (1,067,846) (26,120,033) 4,745,549 (399,387) (123,269) (758,454) (8,541) (74,203) 574,251 3,844,926 63,290,927 (169,155) - 160,601 (40,682,757) (4,033,211) (16,000,786) 72,263,502 (17,404,332) - 20,402,957 Net income (loss) in accordance with U.S. GAAP 72,263,502 2,998,625 Other comprehensive income (loss): Cumulative translation adjustment determined under Chilean GAAP Cumulative translation adjustment related to U.S. GAAP adjustments 1,298,054 (4,281,630) 18,892,550 (3,392,426) Comprehensive income (loss) in accordance with U.S. GAAP 69,279,926 18,498,749 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 5 5 6 6 / / 1 5 7 The reconciliation to conform shareholders’ equity amounts to U.S. GAAP is as follows: Shareholders’ equity in accordance with Chilean GAAP Reversal of revaluation of property, plant and equipment (paragraph b) Reversal of accumulated amortization of revaluation of property, plant and equipment (paragraph b) Depreciation of property, plant and equipment (paragraph c) Intangibles (paragraph d) Deferred income taxes (paragraph e) Pension and post-retirement benefi ts (paragraph g) Investments in related companies (paragraph h) Goodwill (paragraph i) Negative goodwill (paragraph j) Capitalized interest and exchange differences (paragraph k) Minimum dividend (paragraph m) Capitalized general and administrative expenses (paragraph n) Workers’ profi t sharing in Peru (paragraph o) Reversal of accrual of certain involuntary employee termination benefi ts (paragraph p) Adjustment in selling price of investment (paragraph q) Elimination of capitalized legal reserve (paragraph r) Organizational and start-up costs (paragraph s) Derivative instruments (paragraph u) Fair value of long-term debt assumed (paragraph v) Deferred income (paragraph x) Regulated assets (paragraph y) Effects of minority interest on the U.S. GAAP adjustments Deferred tax effect of U.S. GAAP adjustments As of December 31, 2000 ThCh$ Revised 1,134,718,837 2001 ThCh$ 1,179,186,389 (66,917,222) (66,779,833) 48,653,022 691,439 (1,367,443) (201,793,335) (45,327,753) - 305,441,090 (158,745,588) 34,464,314 (27,862,545) (25,883,386) (3,631,641) 409,272 (4,074,383) (8,742,566) (37,958,771) - 1,487,057 (3,118,842) - 156,297,941 1,647,909 50,028,260 740,847 (1,182,912) (237,293,130) (46,708,749) (16,879,367) 322,415,294 (199,880,362) 43,640,699 (12,277,874) (26,432,441) (4,888,327) 400,731 (4,092,438) (9,104,855) (38,180,150) 204,240,437 1,317,903 (3,292,344) (40,682,757) 93,851,459 (67,103,924) Shareholders’ equity in accordance with U.S. GAAP 1,098,387,406 1,121,042,556 The changes in shareholders’ equity in U.S. GAAP as of each year-end are as follows: Shareholders’ equity in accordance with U.S. GAAP – January 1, Dividends paid during the year Reversal of dividends payable as of previous balance sheet date Minimum dividend (paragraph m) Issuance of shares Cumulative translation adjustment Reorganization of subsidiaries (paragraph z) Net income (loss) in accordance with U.S. GAAP for the year As of December 31, 2000 ThCh$ Revised 751,648,100 - - (27,862,545) 305,321,925 (2,983,576) - 72,263,502 2001 ThCh$ 1,098,387,406 (14,976,824) 27,862,545 (12,277,874) - 15,500,124 3,548,554 2,998,625 Shareholders’ equity in accordance with U.S. GAAP – December 31, 1,098,387,406 1,121,042,556 II. Additional Disclosure Requirements: a) Goodwill and negative goodwill: The following is an analysis of goodwill and negative goodwill, determined on a Chilean GAAP basis, as of December 31, 2000 and 2001, respectively: Goodwill Less: accumulated amortization Goodwill, net Negative goodwill Less: accumulated amortization Negative goodwill, net b) Basic and diluted earnings per share: Chilean GAAP (loss) earnings per share (Ch$) (1) U.S. GAAP (loss) earnings per share (Ch$1) (1): U.S. GAAP (loss) earnings per share before extraordinary gain Extraordinary gain U.S. GAAP (loss) earnings per share before cumulative effect of change in accounting principle Cumulative effect of change in accounting principle U.S. GAAP (loss) earnings per share As of December 31, 2000 ThCh$ 2001 ThCh$ 1,557,236,893 (253,946,933) 1,601,427,266 (324,299,828) 1,303,289,960 1,277,127,438 349,425,728 (153,628,440) 367,703,264 (195,078,770) 195,797,288 172,624,494 Year ended December 31, 2000 Ch$ 12.94 10.06 - 10.06 - 10.06 2001 Ch$ 4.94 (4.92) 2.82 (2.10) 2.46 0.36 Weighted average number of common shares outstanding (000’s) 7,180,409 8,291,020 (1) The earnings per share fi gures for both U.S. GAAP and Chilean GAAP purposes have been calculated by dividing the respective earnings (loss) amounts in accordance with U.S. GAAP and Chilean GAAP, respectively, by the weighted average number of common shares outstanding during the year. The Company has not issued convertible debt or equity securities. Consequently, there are no potentially dilutive effects on the earnings per share of the Company. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 5 5 8 8 / / 1 5 9 c) Income taxes: The provision (benefi t) for income taxes charged to the results of operations determined in accordance with U.S. GAAP is as follows: Chile ThCh$ Argentina ThCh$ Peru ThCh$ 2000 Brazil ThCh$ Colombia ThCh$ Other ThCh$ Total ThCh$ Income tax provision under Chilean GAAP: Current income taxes as determined under Chilean GAAP (1) Deferred income taxes as determined under Chilean GAAP 63,123,186 (8,702,847) 37,100,638 642,132 1,250,548 16,161,359 20,854,372 (23,244,478) 32,139,206 (1,655,887) 312,356 - 154,780,306 (16,799,721) Total income tax provision under Chilean GAAP 54,420,339 37,742,770 17,411,907 (2,390,106) 30,483,319 312,356 137,980,585 U.S. GAAP adjustments: Deferred tax effect of applying SFAS No. 109 8,941,674 (5,401,710) 9,996,028 53,104,967 851,960 Deferred tax effect of adjustments to U.S. GAAP (849,599) 5,519,958 76,313 15,343,690 - Total U.S. GAAP adjustments 8,092,075 118,248 10,072,341 68,448,657 851,960 - - - 67,492,919 20,090,362 87,583,281 Total income tax provision under U.S. GAAP 62,512,414 37,861,018 27,484,248 66,058,551 31,335,279 312,356 225,563,866 (1) The income tax provisions under Chilean GAAP for the years ended December 31, 1999 and 2000 are stated net of income tax recovery of ThCh$21,404,001 and ThCh$4,081,070, respectively. Chile ThCh$ Argentina ThCh$ Peru ThCh$ 2001 Brazil ThCh$ Colombia ThCh$ Other ThCh$ Total ThCh$ Income tax provision under Chilean GAAP: Current income taxes as determined under Chilean GAAP (1) 12,422,194 43,886,503 7,973,143 22,000,780 30,581,595 69,690 116,933,904 Deferred income taxes as determined under Chilean GAAP 5,886,367 2,328,112 12,789,922 (13,279,797) 167,445 - 7,892,050 Total income tax provision under Chilean GAAP 18,308,561 46,214,615 20,763,065 8,720,983 30,749,040 69,690 124,825,954 U.S. GAAP adjustments: Deferred tax effect of applying SFAS No. 109 965,856 22,706,147 669,910 3,283,995 159,368 Deferred tax effect of adjustments to U.S. GAAP (3,643,910) 2,945,155 (754,271) (6,192,449) 23,646,261 Deferred tax effect of cumulative effect of change in Accounting principle Total U.S. GAAP adjustments (1,787,748) 40,320,249 (4,465,802) 65,971,551 208,105 125,744 (197,324) 6,676,059 (3,105,778) 30,481,688 - - - - 27,785,276 16,000,786 45,219,341 89,005,403 Total income tax provision under U.S. GAAP 13,842,759 112,186,166 20,886,809 5,615,205 61,230,728 69,690 213,831,357 (1) The income tax provision under Chilean GAAP for the year ended December 31, 2001 is stated net of income tax recovery of ThCh$7,880,395. Deferred tax assets (liabilities) as of balance sheet dates are summarized as follows: As of December 31, 2000 As of December 31, 2001 SFAS No. 109 Applied to Chilean GAAP Balances ThCh$ 3,070,130 - - 35,718,245 - 1,135,513 1,352,944 564,072 - 2,239,407 SFAS No. Total 109 applied to U.S. GAAP Adjustments ThCh$ Deferred Taxes under SFAS No. 109 ThCh$ - - - - - - - - - - 3,070,130 - - 35,718,245 - 1,135,513 1,352,944 564,072 - 2,239,407 15,411,436 SFAS No. 109 Applied to Chilean GAAP Balances ThCh$ 2,620,021 - - 35,406,523 9,773,005 1,044,114 950,105 - 2,742,911 2,210,532 SFAS No. Total 109 applied to U.S. GAAP Adjustments ThCh$ Deferred Taxes under SFAS No. 109 ThCh$ 4,258,265 13,832,137 8,161,408 - - 1,119,398 - 7,335,073 - - 6,878,286 13,832,137 8,161,408 35,406,523 9,773,005 2,163,512 950,105 7,335,073 2,742,911 2,210,532 - 15,888,989 15,888,989 - 15,411,436 133,317,288 33,134,745 6,314,140 4,031,014 - - - 133,317,288 74,714,038 33,134,745 37,460,751 6,314,140 6,363,517 10,394,531 12,747,514 - - - 74,714,038 37,460,751 12,747,514 Deferred income tax assets Property, plant and equipment Regulated assets and related deferred costs (companies in Brazil) Negative goodwill Allowance for doubtful accounts Actuarial defi cit (companies in Brazil) Deferred income Obsolescence of raw materials Derivative contracts Severance indemnities Vacation accrual Post retirement benefi ts Tax loss carry forwards (1) Contingencies Salaries for construction-in progress Others Total deferred income tax assets 220,877,498 21,774,953 242,652,451 179,669,514 50,595,270 230,264,784 Deferred income tax liabilities Negative goodwill Property, plant and equipment Severance indemnity Intangibles Deferred charges Finance costs Derivative contracts Tax loss carryforwards (1) Contingencies Metered energy Capitalized interest Lease receivable Post retirement benefi ts Others - (619,564) (619,564) - 367,815,233 1,178,206 4,457,331 2,253,147 3,259,679 2,241,772 - 8,836,634 6,620,972 - - - - - - - - - 367,815,233 364,418,683 1,178,206 4,457,331 2,253,147 3,259,679 2,241,772 - 8,836,634 6,620,972 398,900 81,122 9,445,502 1,811,992 497,368 111,450 - 4,693,305 1,871,390 5,844,188 1,871,390 370,262,871 - - - - 398,900 81,122 9,445,502 1,811,992 83,792,615 84,289,983 - - - 111,450 - 4,693,305 - 20,746,608 20,746,608 137,319 - 16,191,335 - - - 137,319 - - - - 25,959,723 25,959,723 - 8,015 - 8,015 16,191,335 18,824,041 223,263 19,047,304 Total deferred income tax liabilities 412,991,628 20,127,044 433,118,672 400,282,363 117,699,194 517,981,557 Net deferred tax assets (liabilities) Resulting from application of SFAS No. 109 (192,114,130) 1,647,909 (190,466,221) (220,612,849) (67,103,924) (287,716,773) (1) Tax loss carryforwards relate primarily to Peruvian, Chilean, and Brazilian entities. In accordance with the current enacted tax law in Chile and Brazil, such tax losses may be carried-forward indefi nitely, however Peruvian tax carryforwards expire after fi ve years. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 0 0 / / 1 6 1 A reconciliation of the Chilean Statutory income tax rate to the Company’s effective tax rate on net income is as follows: Statutory Chilean tax (15%) Effect of higher foreign tax rates Increase (decrease) in rates resulting from: Price-level restatement not accepted for tax purposes Deductible items Non-deductible items Prior years’ income tax Other Chile ThCh$ Argentina ThCh$ Peru ThCh$ 2000 Brazil ThCh$ Colombia Other ThCh$ Total ThCh$ 41,042,733 19,734,358 11,838,874 6,336,025 15,767,855 (31,695,387) 63,024,458 - 18,165,066 7,829,320 1,059,889 8,680,437 (3,339,252) 32,395,460 8,539,706 (296,994) 2,813,890 (5,781,613) 4,530,420 - 9,805,409 (24,600,984) 39,010,110 (1,530,033) 50,882 259,491 6,398,715 (5,978,218) (421,400) 4,668,489 - 333,637 38 2,175,426 (7,842,459) 67,365,237 2,746,046 4,917,775 (861,349) 35,034,639 - - (1,699,859) - 312,356 22,454,836 36,705,017 60,190,623 988,063 Tax (benefi t) expense at effective tax rate 62,512,414 37,861,018 27,484,248 66,058,551 31,335,279 312,356 225,563,866 Statutory Chilean tax (15%) Effect of higher foreign tax rates Increase (decrease) in rates resulting from: Price-level restatement not accepted for tax purposes Deductible items Non-deductible items Prior years’ income tax Effect of Chilean tax rate increase Other Chile ThCh$ Argentina ThCh$ Peru ThCh$ 2001 Brazil ThCh$ Colombia ThCh$ Other Total ThCh$ 34,181,716 32,084,090 8,021,841 (728,185) 19,190,391 (31,625,108) 61,124,745 - 61,795,760 15,982,402 1,592,855 29,222,497 (6,369,147) 102,224,367 10,515,700 (457,668) (459,042) (1,121,357) 14,540,341 - 23,017,974 (21.160.646) 12,519,616 4,552,827 91,915 - 37,994,255 33,997,966 (23,468,145) 19,738,664 (7,353,502) (307,282) (698,707) 1,928,780 7,973,416 - - 389,600 (2,100,737) - - - - - - - (12,088,972) 217,643 7,973,416 3,871,938 (13,494,295) (247,317) 8,187,996 (1,023,794) 69,690 (2,635,782) Tax (benefi t) expense at effective tax rate 13,842,759 112,186,166 20,886,809 5,615,205 61,230,728 69,690 213,831,357 d) Acquisitions: During the year ended December 31, 2001, the Company did not have signifi cant acquisitions. In December 2000, the Company acquired an additional ownership interest of 18.5% in Companhia de Electricidade do Río de Janerio (Cerj) under the purchase method for a total purchase price of US$136,092,000 in cash. This and other transactions increased the Company’s direct and indirect ownership from 37.41% to 57.38%. As described in Note 2 (a), Cerj is consolidated with the Company’s results beginning in January 1, 1999, thus proforma results are not required. Under Chile GAAP, negative goodwill of ThCh$2,075,116 has been recorded and is being amortized on a straight-line basis over 20 years. Under U.S. GAAP, the negative goodwill of ThCh$2,075,116 has been allocated to tangible assets and is being depreciated on a straight-line basis over 25 years. In November 2000, the Company entered into a series of transactions to acquire an additional ownership interest of 25.4% in Chilectra and 14.7% of Rio Maipo under the purchase method through a public offering of shares (Oferta Pública de Acciones) for a total purchase price of approximately US$378,377,000 and US$23,713,000, respectively, in cash. This increased the Company’s direct and indirect ownerships from 72.56% and 83.74% to 97.97% and 98.40%, respectively. Proforma results for the additions to Chilectra and Rio Maipo are not disclosed due to the immateriality of these step purchases. Under Chile GAAP, goodwill of ThCh$99,823,214 and ThCh$10,284.020 has been recorded and is being amortized on a straight-line basis over 20 years. Under U.S. GAAP goodwill of ThCh$99,823,214 and ThCh$10,284,020, respectively, has been recorded and is being amortized on a straight-line basis ranging from 20 to 30 years. In May 1999, the Company entered into a series of transactions to acquire an additional ownership interest of 34.7% in Endesa-Chile through a public offering of shares (Oferta Pública de Acciones) for a total purchase price of ThCh$1,030,014,725 (historic pesos) in cash. This increased the Company’s ownership from approximately 25.3% to approximately 60.0%. Under Chile GAAP, goodwill of ThCh$642,296,073 has been recorded and is being amortized on a straight-line basis over 20 years. Under U.S. GAAP, goodwill of ThCh$750,060,726 has been recorded and is being amortized on a straight-line basis over 20 years. In April 1999, through its subsidiary Aguas Puerto S.A., the Company purchased a 40.4% interest in Esval S.A. for approximately ThCh$72,422,378 in cash. Goodwill of ThCh$20,034,684 has been recorded and is being amortized on a straight-line basis over 20 years. For acquisitions accounted for using the purchase method, assets and liabilities have been consolidated as of the purchase date and earnings from the acquisitions have been included in consolidated earnings of the Company subsequent to the purchase date. e) Segment disclosures: The Company is primarily engaged in the distribution, generation and transmission of electricity in Chile, Argentina, Brazil, Colombia and Peru. Enersis provides these and other services through four business segments: (cid:127) (cid:127) (cid:127) (cid:127) Generation Distribution Engineering Services and Real Estate Corporate and other Generation involves the generation of electricity primarily through its subsidiary Endesa-Chile. Distribution involves the supply of electricity to regulated and unregulated customers. Engineering Services and Real Estate includes engineering services and real estate development. Corporate and other includes computer-related data processing services, private water utilities (for the year ended December 31, 1999), and the sale of electric-related supplies and equipment. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately. The methods of revenue recognition by segment are as follows: (cid:127) Generation Revenue is recognized when energy and power output is delivered and capacity is provided at rates specifi ed under contract terms or prevailing market rates. (cid:127) Distribution- Operating Revenues Revenue is recognized when energy and power is provided at rates specifi ed under contract terms or prevailing market rates. (cid:127) Distribution- Non Operating Revenues Revenue is recognized as services are provided, such as public light posts, telephone poles, and other services related to distribution services. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 2 2 / / 1 6 3 (cid:127) Engineering Services and Real Estate Revenue is recognized as services are provided, or when projects are sold. (cid:127) Corporate and Other Revenue is recognized as services are provided, or when supplies or equipment are sold. The following segment information has been disclosed in accordance with U.S. reporting requirements; however, the information presented has been determined in accordance with Chilean GAAP: 2000: Sales to unaffi liated customers Intersegment sales Total revenues Generation Distribution Engineering services and real estate ThCh$ ThCh$ ThCh$ Corporate and other ThCh$ Eliminations Consolidated ThCh$ ThCh$ 680,418,590 1,915,513,282 46,427,221 34,385,662 - 2,676,744,755 229,921,521 28,571,711 31,353,659 25,051,602 (314,898,493) - 910,340,111 1,944,084,993 77,780,880 59,437,264 (314,898,493) 2,676,744,755 Operating income 259,154,378 264,049,016 14,520,312 (8,551,438) 7,477,849 536,650,117 Participation in net income of affi liate companies - - 3,452 71,065 - 74,517 Depreciation and amortization 164,614,685 236,458,550 1,227,510 48,212,506 (258,674) 450,254,576 Identifi able assets including investment in related companies 5,841,327,996 5,830,367,016 138,941,636 4,591,409,845 (4,989,081,675) 11,412,964,818 Capital expenditures 87,051,233 243,224,042 99,028 1,744,634 - 333,018,938 2001: Sales to unaffi liated customers Intersegment sales Total revenues 811,791,137 2,064,202,101 34,025,879 60,253,467 - 2,970,272,584 203,043,154 42,432,733 27,511,309 29,672,554 (302,659,750) - 1,014,834,291 2,106,634,834 61,537,188 89,926,021 (302,659,750) 2,970,272,584 Operating income 337,839,964 375,243,372 9,838,130 (4,412,906) 14,058,204 732,566,764 Participation in net income of affi liate companies (10,053,452) - - (333,730) - (10,387,182) Depreciation and amortization 145,720,093 252,696,067 1,205,144 54,846,587 (258,673) 454,209,218 Identifi able assets including investment in related companies 6,176,282,881 6,126,274,349 131,443,284 4,801,679,448 (4,847,525,289) 12,388,154,673 Capital expenditures (51,429,536) (279,602,805) (403,392) (169,836) - (331,605,569) A summary of activities by geographic area is as follows: 2000: Total revenues Chile ThCh$ Argentina ThCh$ Perú ThCh$ Brazil ThCh$ Colombia ThCh$ Total ThCh$ 678,872,943 737,238,399 227,173,863 615,545,031 417,914,519 2,676,744,755 Long-lived assets (net) (1) 2,721,426,266 1,398,666,634 1,033,763,703 1,218,147,673 2,312,280,003 8,684,284,279 2001: Total revenues 781,662,453 803,255,207 257,756,449 671,512,735 456,085,740 2,970,272,584 Long-lived assets (net) (1) 2,296,930,987 1,517,365,212 1,139,769,240 1,887,430,149 2,503,212,820 9,344,708,408 (1) Long-lived assets include property, plant and equipment. f) Concentration of risk: The Company does not believe that it is exposed to any unusual credit risk from any single fi nancial institution. The Company’s debtors are dependent on the economy in Latin America, which could make them vulnerable to downturns in the economic activity in the countries in which the Company operates. No single customer accounted for more than 10% of revenues for the years ending December 31, 1999, 2000 and 2001. g) Schedule of debt maturity: Following is a schedule of debt maturity in each of the next fi ve years and thereafter: 2002 2003 2004 2005 2006 Thereafter Total ThCh$ 678,815,180 2,103,999,654 1,076,026,296 175,020,284 560,911,881 1,456,220,868 6,050,994,163 h) Disclosure regarding interest capitalization: Interest cost incurred Interest capitalized under Chilean GAAP Interest capitalized under U.S. GAAP Year ended December 31, 2000 ThCh$ 505,173,387 20,702,535 54,093,041 2001 ThCh$ 443,904,173 23,544,000 28,289,549 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 4 4 / / 1 6 5 i) Cash fl ow information: (i) The statement of cash fl ows under Chile GAAP differs in certain respects from the presentation of a statement of cash fl ow under U.S. GAAP as follows: Year ended December 31, 2000 ThCh$ 2001 ThCh$ Cash provided by operating activities under Chilean GAAP Development stage subsidiaries 523,000,822 - 643,612,242 1,265,918 Cash provided by operating activities under U.S. GAAP 523,000,822 644,878,160 Cash provided by (used in) fi nancing activities under Chilean GAAP Development stage companies Repurchase of Yankee Bonds (790,572,903) - - (59,625,366) (957,008) 172,008,613 Cash provided by (used in) fi nancing activities under U.S. GAAP (790,572,903) 111,426,239 Cash provided by (used in) investing activities under Chilean GAAP Development stage companies Repurchase of Yankee Bonds 171,471,913 - - (488,970,475) (301,838) (172,008,613) Cash provided by (used in) investing activities under U.S. GAAP 171,471,913 (661,280,926) (ii) Cash and cash equivalents includes all highly liquid debt instruments purchased with a maturity of three months or less: Cash Time deposits Marketable securities Other current assets Year ended December 31, 2000 ThCh$ 27,255,582 77,376,402 - 11,907,534 2001 ThCh$ 36,552,229 172,925,470 192,474 1,812,935 Total cash and cash equivalents 116,539,518 211,483,108 (iii) Additional disclosures required under U.S. GAAP are as follows: Interest paid during the year Income taxes paid during the year Assets acquired under capital leasing Year ended December 31, 2000 ThCh$ 370,662,184 149,846,117 2,246,761 2001 ThCh$ 393,435,333 128,347,973 231,641 j) Disclosures about fair value of fi nancial instruments The following methods and assumptions were used to estimate the fair value of each class of fi nancial instruments as of December 31, 2000 and 2001 for which it is practicable to estimate that value: (cid:127) Cash The fair value of the Company’s cash is equal to its carrying value. (cid:127) Time deposits The fair value of time deposits approximates carrying value due to the relatively short-term nature. (cid:127) Marketable securities The fair value of marketable securities is based on quoted market prices of the common stock held and approximates carrying value. (cid:127) Long-term accounts receivable The fair value of long-term accounts receivable was estimated using the interest rates that are currently offered for loans with similar terms and remaining maturities. (cid:127) Long-term debt The fair value of long-term debt was based on rates currently available to the Company for debt with similar terms and remaining maturities. • Derivative instruments Estimates of fair values of derivative instruments for which no quoted prices or secondary market exists have been made using valuation techniques such as forward pricing models, present value of estimated future cash fl ows, and other modeling techniques. These estimates of fair value include assumptions made by the Company about market variables that may change in the future. Changes in assumptions could have a signifi cant impact on the estimate of fair values disclosed. As a result such fair value amounts are subject to signifi cant volatility and are highly dependent on the quality of the assumptions used. The estimated fair values of the Company’s fi nancial instruments compared to Chilean GAAP carrying amounts are as follows: As of December 31, 2000 2001 Carrying amount ThCh$ Fair Value ThCh$ Carrying Amount ThCh$ Fair Value ThCh$ Cash Time deposits Marketable securities Accounts receivable (1) Notes receivable, net Other accounts receivable, net Amounts due from related companies Long-term accounts receivable Accounts payable and other Notes payable Long-term debt Derivatives instruments (2) 27,255,582 77,376,402 11,952,705 474,887,215 9,507,985 60,224,647 163,434,585 46,112,705 (253,982,234) (242,757,028) (5,533,802,481) (1,719,000) 27,255,582 77,376,402 11,952,705 474,887,215 9,507,985 60,224,647 163,434,585 46,112,705 (253,982,234) (242,757,028) (5,452,244,783) 124,700,793 36,552,229 172,925,470 197,157 439,736,322 11,668,161 63,966,838 183,191,621 98,935,497 (258,217,720) (271,257,985 (6,050,994,163) (77,652,775) 36,552,229 172,925,470 197,157 439,736,322 11,668,161 63,966,838 183,191,621 98,935,497 (258,217,720) (271,257,985) (6,011,052,665) 126,587,662 (1) Accounts receivable is presented net of the regulated assets amounting to ThCh$94,486,000 as of December 31, 2001 (see Note 5). (2) Fair values of derivative instruments includes commodity, fi nancial and embedded derivatives, however as only fi nancial derivatives are accounted for under Chilean GAAP only fi nancial derivatives are included in the carrying amounts (see paragraph (k) ). A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 6 6 / / 1 6 7 k) Derivative instruments The Company is exposed to the impact of market fl uctuations in the price of electricity, primary materials such as natural gas, petroleum, coal, and other energy-related products, interest rates, and foreign exchange rates. The Company employs policies and procedures to manage its risks associated with these market fl uctuations on a global basis through strategic contract selection, fi xed-rate and variable-rate portfolio targets, net investment hedges, and fi nancial derivatives. All derivatives not qualifying for the normal purchase and sales exemption under SFAS No. 133 are recorded at their fair value. On the date that swaps, futures, forwards or option contracts are entered into, the Company designates the derivative as either a normal purchase or sale contract or leaves the derivative undesignated and marks it to market, with the exception of net investment hedges. The Company does not have the appropriate documentation in place to designate contracts as hedges of a forecasted transaction or future cash fl ows (cash fl ow hedge) or as a hedge of a recognized asset, liability or fi rm commitment (fair value hedge). The Company has classifi ed their derivatives into the following general categories: commodity derivatives, embedded derivatives, and fi nancial derivatives. Certain energy and other contracts for the Company’s operations in Chile are denominated in the US dollar. According to SFAS No. 133, an embedded foreign currency derivative should be separated from the host contract because none of the applicable exclusions are met. For purposes of evaluating the functional currency of the Company’s subsidiaries in Argentina, Peru, Brazil, and Colombia, the Company applied BT 64, consistent with the methodology described in paragraph (u), thus the functional currency of these subsidiaries was the US dollar as these subsidiaries were remeasured into US dollars because foreign subsidiaries operate in countries exposed to signifi cant risks as determined under BT 64. The following is a summary of the Company’s adjustment to fair values for all identifi ed derivative contracts at the date of implementation of SFAS No. 133 on January 1, 2001 and as of the year-ended December 31, 2001. Commodity derivatives Embedded derivatives Financial derivatives Effects of minority interest Deferred tax effects Distribution ThCh$ 15,855,296 24,530 (1,602,068) 14,277,758 (7,716,267) (5,034,259) As of January 1, 2001 Generation ThCh$ 124,188,805 (8,380,385) (3,666,383) 112,142,037 (53,081,230) (40,185,082) Total ThCh$ 140,044,101 (8,355,855) (5,268,451) 126,419,795 (60,797,497) (45,219,341) Cumulative change in accounting principle 1,527,232 18,875,725 20,402,957 Commodity derivatives Embedded derivatives Financial derivatives Investment in related companies Derivative instruments U.S. GAAP 78,570,101 (22,417,154) 342,452 56,495,399 - 131,827,201 (3,763,128) (18,472,392) 109,591,681 38,153,357 210,397,302 (26,180,282) (18,129,940) 166,087,080 38,153,357 Shareholders’ equity adjustment 56,495,399 147,745,038 204,240,437 Commodity derivatives Certain of the Company’s generation and distribution commodity contracts meet the defi nition of a derivative under SFAS No. 133 and are required to be accounted for at fair value. These are contracts that (i) have an underlying, which is the market price of power at the delivery location and a notional amount specifi ed in the contract; (ii) have no initial payment on entering into the contract; and (iii) do not have a net settlement provision but has the characteristic of net settlement because power is readily convertible to cash, as it is both fungible and actively traded in the country of generation or country of distribution. The Company’s commodity contracts that are requirements contracts were concluded to not have notional amounts, if they only had maximum amounts or no specifi ed amounts, and did not include an implicit minimum amount in a settlement or a default clause. A requirements contract allows the purchaser to use as many units of power as required to satisfy its actual needs for power during the period of the contract, and the party is not permitted to buy more than its actual needs. The Company concluded that all of its power is readily convertible to cash as energy is actively traded, or the Company has access, to markets where energy is actively traded. However, only certain participants have access to the energy markets, thus determination as to whether energy could be considered readily convertible to cash was analyzed on a case by case basis. Currently, Chilean distributors do not have access to the Chilean spot market, however this could change in the future if energy regulations are changed. The Company has also concluded that multiple-delivery long- term power contracts meet the net settlement characteristic. Multiple-delivery long-term power contracts are readily convertible to cash because the Company operates in countries with active spot markets, that although they contain varying levels of liquidity, can rapidly absorb the contract’s quantities at each delivery date without signifi cantly affecting the price, and thus meet the defi nition of net settlement. k) Derivative instruments, continued: Derivative contracts were evaluated for qualifi cation under the normal purchase and sale exception, if it was probable the contracts would result in physical delivery, and if the contract did not contain a price that was tied to an unrelated underlying, such as, the U.S. Price for Finished Products (PPI) index, or if the price of the contract is denominated in a currency other than the functional currency of one of the parties to the contract and the commodity is not internationally denominated in that currency. The Company does not consider the local country or U.S. Consumer or Purchase Price Indexes to be clearly and closely related to the energy purchased or sold because these indices measure the level of price changes of certain items in the economy and are not a direct factor in the production of energy. The Company’s Argentine generation entities have access to the Brazilian energy market through an interconnection system between the two markets. In order to calculate the fair values of the purchase and sale contracts related to the energy to be sold in the Brazilian market, the Argentine market prices were used. The Company believes this is the best measure for fair value, because in the event that the Brazilian market prices are below the cost to produce the energy in Argentina, the Company will sell the energy in Argentina and purchase the energy from the spot market in Brazil. Additionally, the interconnection line was established to sell energy generated in Argentina in the Brazilian market, as the Brazilian energy market heavily relies on hydro-electric generation and has historically had signifi cant problems with meeting its energy needs economically due to lack of rainfall. Because both the purchases and sales interconnection contracts are for periods up to 20 years in complex markets, where no similar term forward market information is available, the Company has estimated such values based on the best information available, including using modeling and other valuation techniques. The Company has recorded the best estimate of fair value, however with different assumptions such as interest rates, infl ation rates, exchange rates, electricity rates, and increases in cost trends, materially different fair values could result. As a result such estimates A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 6 6 8 8 / / 1 6 9 are highly volatile and dependent upon the assumptions used. The assumption to measure the fair value of these interconnection related contracts using the Argentine market prices has a signifi cant effect on the Company’s net income and shareholder’s equity. If Brazilian market prices had been used instead of Argentine prices estimated fair values of the related energy contracts a signifi cantly different fair value would result. Had the Company used Brazilian price curves in the valuation, the Company estimates on a preliminary basis that net fair value of such contracts would result in a loss of approximately ThCh$196,512,379 and ThCh$285,827,609 as of January 1, 2001 and December 31, 2001, respectively. Similarly, the Argentine energy market does not have long-term quoted foreign energy prices. The Company does not have concessions to sell the Argentine generated energy in the Brazilian market to any parties other than those currently contracted. Therefore the Company views the interconnection as an extension of the Argentine market and as a more appropriate measure of the fair value of energy. The Company has estimated a range of fair values, which result in gains of between ThCh$106,780,682 and ThCh$698,822,690 as of January 1, 2001 and gains of between ThCh$105,399,643 and ThCh$785,224,431 as of December 31, 2001. Based on the current available information, the Company has recorded the low end of this range as its best estimate of interconnection contract fair values. Such values are included in the reconciliation to U.S. GAAP in paragraph (aa). k) Derivative instruments, continued: Embedded Derivative Contracts The Company enters into certain contracts that have embedded features that are not clearly and closely related to the host contract. As specifi ed in SFAS No. 133, bifurcation analysis focuses on whether the economic characteristics and risks of the embedded derivative are clearly and closely related to the economic characteristics and risks of the host contract. In certain identifi ed contracts, the host service contract and the embedded feature are not indexed to the same underlying and changes in the price or value of service will not always correspond to changes in the price of the commodity to which the contract is indexed. U.S. GAAP requires embedded features to be measured at fair value as freestanding instruments. Unless the embedded contracts are remeasured at fair value under otherwise applicable GAAP, the embedded feature must be valued at fair value with changes in fair value reported in earnings as they occur. Embedded foreign currency derivative instruments are not separated from the host contract and considered a derivative instrument if the host contract is not a fi nancial instrument and it requires payments denominated in either: (1) the functional currency of any substantial party to the contract, (2) the local currency of any substantial party to the contract, (3) the currency used because the primary economic environment is highly infl ationary, or (4) the currency in which the good or service is routinely denominated in international commerce. Financial Derivatives Changes in interest rates expose the Company to risk as a result of its portfolio of fi xed-rate and variable-rate debt. The Company manages interest rate risk exposure on a global basis by limiting its variable-rate and fi xed-rate exposures to certain variable/fi xed mixes set by policy. The Company manages interest rate risk through the use of interest rate swaps and collars and cross-currency swaps. The Company does not enter into fi nancial instruments for trading or speculative purposes. Net Investment Hedges The Company is also exposed to foreign currency risk arising from long-term debt denominated in foreign currencies, the majority of which is the US dollar. This risk is mitigated, as a substantial portion of the Company’s revenues are either directly or indirectly linked to the US dollar. Additionally, the Company records the foreign exchange gains and losses on liabilities related to net investments in foreign countries which are denominated in the same currency as the functional currency of those foreign investments. Such unrealized gains and losses are included in the cumulative translation adjustment account in shareholders’ equity, and in this way act as a net investment hedge of the exchange risk affecting the investments (see Note 11 (c) and Note 22 (f) for further detail). The Company also uses short duration forward foreign currency contracts and swaps, and cross-currency swaps, where possible, to manage its risk related to foreign currency fl uctuations. l) Reclassifi cations to U.S. GAAP Certain reclassifi cations would be made to the Chilean GAAP income statement in order to present Chilean GAAP amounts in accordance with presentation requirements under U.S. GAAP. Amortization of negative goodwill, amortization of goodwill, and certain other non-operating income and expense, would be included in operating income. Recoverable taxes included in other non-operating revenues would be recorded as part of income taxes under U.S. GAAP. The gain from the repurchase of Yankee bonds by Enersis S.A. and Endesa Chile S.A. included in non-operating income under Chilean GAAP would be presented as an extraordinary gain according to U.S. GAAP. Equity participation in income or losses of related companies included in non-operating income would be presented after income taxes and minority interest in accordance with U.S. GAAP. The following reclassifi cations included in the column labeled “Reclassifi cations” disclose amounts using a U.S. GAAP presentation, although the amounts displayed have been determined in accordance with Chilean GAAP: Operating income Non-operating expense, net Income taxes Minority interest Equity participation in income of related companies, net Amortization of negative goodwill Net loss Operating income Non-operating expense, net Income taxes Minority interest Equity participation in loss of related companies, net Amortization of negative goodwill .. Net income before extraordinary gain Extraordinary gain Net income Year ended December 31, 2000 Chilean GAAP ThCh$ Reclassifi cation ThCh$ U.S. GAAP Presentation ThCh$ 536,650,117 (164,477,127) (142,061,655) (178,640,998) - 41,404,813 92,875,150 Chilean GAAP ThCh$ 732,566,764 (483,496,386) (132,706,349) (121,507,397) - 46,069,614 40,926,246 - 40,926,246 250,827,798 (213,578,572) 4,081,070 - 74,517 (41,404,813) 787,477,915 (378,055,699) (137,980,585) (178,640,998) 74,517 - - 92,875,150 Year ended December 31, 2001 Reclassifi cation ThCh$ U.S. GAAP Presentation ThCh$ (81,568,966) 106,734,840 7,880,395 - (10,387,182) (46,069,614) (23,410,527) 23,410,527 650,997,798 (376,761,546) (124,825,954) (121,507,397) (10,387,182) - 17,515,719 23,410,527 - 40,926,246 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 7 7 0 0 / / 1 7 1 Certain reclassifi cations would be made to the Chilean GAAP balance sheet in order to present Chilean GAAP amounts in accordance with presentation requirements under U.S. GAAP. Deferred taxes from depreciation differences that are recorded as short-term under Chilean GAAP would be recorded as long-term under U.S. GAAP. Debt discounts are included in other assets in Chilean GAAP while the discount would be offset against the debt under U.S. GAAP. The amounts receivable and payable related to fi nancial derivatives have been recorded in the balance sheet at their gross amounts, whereas, these amounts would have been recorded at their net amounts by fi nancial institution under U.S. GAAP, provided the contracts have net settlement provisions. Real estate properties under development and construction-in-progress are included in current assets as inventory in Chilean GAAP and under U.S. GAAP such assets would have been included as property, plant and equipment. Additionally, the regulated asset recorded during 2001 by Coelce and Cerj, Brazilian subsidiaries, has been partially recorded in trade receivables and an additonal component was recorded in current assets by Coelce under Chilean GAAP. However, under U.S. GAAP the presentation of these regulated assets should be classifi ed as non-current assets as the recovery of these assets is not expected in the short term. These reclassifi cations exclude consolidation of development stage companies, the effect of which is immaterial. The effect of the following reclassifi cations included in the column labeled “Reclassifi cations” discloses amounts using a U.S. GAAP presentation although the amounts displayed have been determined in accordance with Chilean GAAP: Current assets Property, plant, and equipment, net Other assets Chilean GAAP ThCh$ 996,648,333 8,684,284,279 1,732,032,206 As of December 31, 2000 Reclassifi cation ThCh$ U.S. GAAP Presentation ThCh$ (32,263,097) 31,261,062 (11,912,512) 964,385,236 8,715,545,341 1,720,119,694 Total assets 11,412,964,818 (12,914,547) 11,400,050,271 Current liabilities Long-term liabilities Minority interest Shareholders’ equity 1,583,569,157 5,072,614,109 3,622,062,715 1,134,718,837 (7,885,701) (5,028,846) - - 1,575,683,456 5,067,585,263 3,622,062,715 1,134,718,837 Total liabilities and shareholders’ equity 11,412,964,818 (12,914,547) 11,400,050,271 Current assets Property, plant, and equipment, net Other assets Chilean GAAP ThCh$ 1,128,589,120 9,344,708,408 1,914,857,145 As of December 31, 2001 Reclassifi cation ThCh$ U.S. GAAP Presentation ThCh$ (205,150,674) 26,468,905 (51,171,013) 923,438,446 9,371,177,313 1,863,686,132 Total assets 12,388,154,673 (229,852,782) 12.158,301,891 Current liabilities Long-term liabilities Minority interest Shareholders’ equity 1,591,556,680 5,662,488,179 3,954,923,425 1,179,186,389 (107,385,560) (122,467,222) - - 1,484,171,120 5,540,020,957 3,954,923,425 1,179,186,389 Total liabilities and shareholders’ equity 12,388,154,673 (229,852,782) 12,158,301,891 m) Employee Benefi t Plans Enersis S.A. and its subsidiaries sponsor various benefi t plans for its current and retired employees. A description of such benefi ts follows: Severance indemnities The provision for severance indemnities, included in the account “Accrued expenses” short and long-term is calculated in accordance with the policy set forth in Note 2 (n), using the current salary levels of all employees covered under the severance indemnities agreement, an assumed discount rate of 9.5% for the years ended December 31, 1999, 2000 and 2001, and an estimated average service period based on the years of services for the Company. Benefi ts for Retired Personnel Other benefi ts provided to certain retired personnel of Enersis include electrical service rate subsidies, additional medical insurance and additional post-retirement benefi ts. Descriptions of these benefi ts for retired personnel are as follows: i) Electrical rate service This benefi t is extended only to certain retired personnel of Enersis. These electric rate subsidies result in the eligible retired employees paying a percentage of their total monthly electricity costs, with Enersis paying the difference. ii) Medical benefi ts This benefi t provides supplementary health insurance, which covers a portion of health benefi ts not covered under the institutional health benefi ts maintained by employees of Enersis. This benefi t expires at the time of death of the pensioner. iii) Supplementary pension benefi ts Eligible employees are able to receive a monthly amount designed to cover a portion of the difference between their salary at the point of retirement and the theoretical pension that would have been received had the employee reached the legal retirement age of the Institución de Previsión Social (Institute of Social Welfare). This benefi t expires upon the death of the pensioner for the Enersis employee, however, continues to cover the surviving-spouse in the case of employees of the subsidiary Endesa-Chile. iv) Worker’s compensation benefi ts Employees that were entitled to Worker’s compensation insurance in prior years for work related accidents receive benefi ts from the Company as such insurance has expired. This benefi t continues at the time of death of the pensioner, to cover the surviving-spouse. The Company has recognized liabilities related to complementary pension plan benefi ts and other post-retirement benefi ts as stipulated in collective bargaining agreements. Under U.S. GAAP, post-retirement employee benefi ts have been accounted for in accordance with SFAS No. 87 and SFAS No. 106, with inclusion of prior-period amounts in current years income as the amounts are not considered signifi cant to the overall fi nancial statement presentation. The effects of accounting for post-retirement benefi ts under U.S. GAAP have been presented in paragraph (aa), above. The following data are presented under U.S. GAAP for Company’s post-retirement benefi t plans. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 7 7 2 2 / / 1 7 3 Changes in benefi t (obligations) Benefi t (obligations) at January 1 Price-level restatement Foreign exchange effect Net periodic expense Benefi ts paid Company contributions Pension Benefi ts Other Benefi ts 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ (115,175,964) 5,170,269 (3,670,179) (10,883,108) 816,456 172,988 (123,569,537) 3,715,475 (15,284,730) (14,353,009) 1,097,357 8,009,986 (5,271,536) 93,472 - (2,141,808) 1,853,117 - (5,466,755) 132,093 - (11,967,321) 879,686 - Benefi t (obligations) at December 31 (123,569,538) (140,384,458) (5,466,755) (16,422,297) Funded Status of the Plans Projected Benefi t Obligation Fair value of plan assets Funded status Unrecognized loss Unrecognized net transition obligation (214,353,707) 85,409,383 (128,944,324) (14,117,051) 19,491,838 (217,712,560) 90,803,782 (126,908,778) (29,642,525) 16,166,845 (8,207,710) - (8,207,710) - 2,740,955 (18,876,334) - (18,876,334) - 2,454,037 Net liability recorded under U.S. GAAP (123,569,537) (140,384,458) (5,466,755) (16,422,297) Change in plan assets Fair value of plan assets, beginning Foreign exchange effect Actual return on plan assets Employer contributions Plan participant contributions Benefi ts paid Fair value of plan assets, ending Assumptions as of December 31 Discount rate Salary increase Return on plan assets Components of net periodic Benefi ts expenses Service cost Interest cost Expected return on assets Amortization gain (loss) Amortization of transition asset Pension Benefi ts 2001 ThCh$ 85,409,383 (2,474,036) 11,843,898 7,981,778 1,522,326 (13,479,567) 90,803,782 Pension Benefi ts Other Benefi ts 2000 ThCh$ 15.0% 9.6% 10.4% 2001 ThCh$ 12.2% 7.0% 10.4% 2000 ThCh$ 9.5% - - 2001 ThCh$ 11.8% - - (727,061) (15,637,310) 996,956 5,923,776 (1,439,469) (677,397) (22,907,916) 15,365,359 (3,726,996) (2,406,059) (1,235,032) (695,934) - - (210,842) (10,805,028) (957,790) - - (204,503) Net periodic expenses (10,883,108) (14,353,009) (2,141,808) (11,967,321) n) Comprehensive income (loss) In accordance with U.S. GAAP, the Company reports a measure of all changes in shareholders’ equity that result from transactions and other economic events of the period other than transactions with owners (“comprehensive income”). Comprehensive income is the total of net income and other non-owner equity transactions that result in changes in net shareholders’ equity. The following represents accumulated other comprehensive income balances as of December 31, 1999, 2000 and 2001 (in thousands of constant Chilean pesos as of December 31, 2001). Chilean GAAP cumulative translation adjustment 2000 Effect of U.S. GAAP adjustments on cumulative translation adjustment Accumulated Other Comprehensive Income (Loss) Beginning balance Credit (charge) for the period Ending balance 8,208,478 1,298,054 9,506,532 4,015,186 (4,281,630) (266,444) 12,223,664 (2,983,576) 9,240,088 Chilean GAAP cumulative translation adjustment 2001 Effect of U.S. GAAP adjustments on cumulative translation adjustment Accumulated Other Comprehensive Income (Loss) Beginning balance Credit (charge) for the period Ending balance 9,506,532 18,892,550 28,399,082 (266,444) (3,392,426) (3,658,870) 9,240,088 15,500,124 24,740,212 o) Recent accounting pronouncements On July 20, 2001, the Financial Accounting Standards Board issued Statements No. 141, “Business Combinations” (“SFAS No. 141”) and No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Poolings initiated prior June 30, 2001 are grandfathered. SFAS No. 142 replaces the requirements to amortize intangible assets with indefi nite lives and goodwill with a requirement for an impairment test. SFAS No. 142 also requires an evaluation of intangible assets and their useful lives and a transitional impairment test for goodwill and certain intangible assets. After transition, the impairment tests are to be performed annually. The Company is required to adopt SFAS No. 142 on January 1, 2002. Under SFAS No. 142, the Company will cease to amortize existing goodwill related to previous acquisitions beginning on January 1, 2002. The effect of not amortizing intangible assets with indefi nite lives and goodwill will increase annual net income determined under U.S. GAAP by approximately ThCh$79,056,391, notwithstanding any future transactions. The Company is still assessing the extent of impairment, if any, of intangible assets with indefi nite lives and goodwill, that may need to be recorded as a result of the adoption of these new accounting standards. In June 2001 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). This standard requires that obligations associated with the retirement of tangible long-lived assets be recorded as liabilities when those obligations are incurred, with the amount of the liability initially measured at fair value. Upon initially recognizing a liability for an asset retirement obligation, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. Over A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 7 7 4 4 / / 1 7 5 time, this liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is effective for fi nancial statements issued for fi scal years beginning after June 15, 2002. The Company will adopt SFAS No. 143 effective January 1, 2003. The Company does not expect that the adoption of this statement will have a material impact on their results of operations, fi nancial position or cash fl ows. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business (as previously defi ned in that opinion). SFAS 144 requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and broadens the presentation of discontinued operations to include more disposal transactions than were included under the previous standards. For the Company and other calendar-year companies, SFAS No. 144 is effective beginning January 1, 2002. The Company does not expect the adoption of SFAS 144 to have a material impact on its results of operations, fi nancial position or cash fl ows. In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. This statement rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of SFAS 145 related to the rescission of SFAS No. 4 shall be applied in fi scal years beginning after May 15, 2002, although early application is encouraged. Any gain or loss on extinguishment of debt that was classifi ed as an extraordinary item in prior periods presented that does not meet the criteria in APB Opinion 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” for classifi cation as an extraordinary item shall be reclassifi ed. Debt extinguishments used as part of an entity’s risk management strategy represent one example of debt extinguishments that do not meet the criteria for classifi cation as extraordinary items in APB Opinion No. 30. The Company will apply SFAS 145 beginning January 1, 2002. The Company’s application of SFAS 145 will require the reclassifi cation of the extraordinary gain on early retirement of Yankee bonds of ThCh$23,410,527 (as presented in Note 33 l(l) to other non-operating income, so upon application there will be no presentational difference between Chile and U.S. GAAP for the early extinguishment of debt. (p) Economic situation in Argentina Due to the changes in the economic situation in Argentina, the Argentine Government decided to amend the Convertibility Law which had been in force since March 1991, and adopted certain measures the main effects of which are the following: the devaluation of the Argentine peso with respect to the US dollar, the pesifi cation of certain assets and liabilities in foreign currency held in the country, the pesifi cation of all private contracts entered into as of January 6, 2002, the introduction of restrictions on the withdrawal of funds deposited at fi nancial institutions, the need to obtain prior authorization by the Argentine Central Bank (BCRA) to make transfers abroad in respect of fi nancial loan servicing payments and dividends. On a consolidated basis, these investments refl ect total assets of 14 percent, total revenues of 27 percent, and total operating income of 21 percent, of the related consolidated totals as of December 31, 2001. As described in Notes 23 and 31 to these fi nancial statements, the Company has valued investments in Argentina in accordance with Technical Bulletin No. 64 issued by the Chilean Association of Accountants. The Argentine Government is still analyzing the possible implementation of additional policies or modifi cations to those already approved. It is not possible to predict the future evolution of the situation in the country, nor, accordingly, the impact that this uncertainty may have on the consolidated fi nancial statements of the Company due to the investments held in companies present in Argentina. The consolidated fi nancial statements have been prepared assuming that the Company’s Argentine subisidiaries and equity method investments will continue as a going concern and do not include any further adjustments that might result from Note 34 the outcome of these uncertainties. Subsequent events: a. Situation in Argentina On January 6, 2002, the Congress of the Republic of Argentina approved Law No. 25,561 entitled Public Emergency and Reform of the Exchange Regime. The law established: the end of convertibility at parity of the Argentine peso 1 to 1 with the US dollar, fees for public services are converted into Argentine pesos at a rate of exchange of 1 to 1, the indexation clauses based on price indices of other countries are no longer in effect, and the Argentine Government’s Executive is authorized to renegotiate concession contracts with public service companies. By function of the powers conferred to the Executive by this law, an offi cial exchange rate was established at $1.40 Argentine pesos per US dollar for settled foreign commerce transactions and another rate that is “free” from restriction for all other transactions. The “free” fl oating exchange rate of the US dollar on the day the exchange market opened was $1.70 per US dollar. (See Note 2(d)(3)). Subsequently, the Executive Branch agreed to convert all assets and liabilities using a conversion rate into Argentine pesos of rate of exchange of 1 to 1, except for deposits maintained in the fi nanial system. On February 12, 2002, the Executive issued Decree No. 293, which granted authority to the Minister of Economics to renegotiate concession contracts with public service companies. Within the public services included in the renegotiation of the contracts, the Decree specifi cally mentions the distribution and commercialization of electric energy. Based on these factors described above and before negotiations have started with the Argentine government, the Company estimates that net cash fl ows (operating cash fl ows less fi nancing fl ows) for 2002 will decrease by approximately US$ 112,000,000, from the total of its Latin American operations which represents an 18.7% of total cash fl ows during 2001. The Company plans to compensate for this reduction in net cash fl ows, during the renegotiation of concession contracts with the Argentine Government. The economic criteria of these negotiations have been defi ned in the decree, and it is the Company’s belief that it will be possible to recouperate the diminished net cash fl ows in a reasonable period of time. Despite the diffi cult economic postion present in Argentina as described above during the months of January and February 2002, the Company’s subsidiaries and affi liates in Argentina have continued to operate regularly in the electric sector and continued to service all client contractual demands. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 7 7 6 6 / / 1 7 7 At the date of issuance of these fi nancial statements and considering the instable political and economic situation in Argentina, there is uncertainty regarding the correct application of transactions at the offi cial or “free” fl oating exchange rate. Thus, it is not possible to determine the current extent of the effects of the situation in Argentina with certainty, or the future changes that could result. b. Merger of Subsidiaries The partners of Compañía Americana de Multiservicios Ltda. and Compañía Americana de Multiservicios Uno Ltda would like to merge both entities, so that the fi rst absorbs the second. At the date of issuance of these fi nancial statements the public deed was in the process of being signed. The fi rst transitional artice of the deed was signed and ratifi ed, so that the merger was effective as of January 1, 2002. c. Dissolution of Subsidiaries According to the minutes of the Extraordinary General Shareholders’ Meeting held on January 28, 2002, the following companies have been dissolved: Empresa Eléctrica de Panamá S.A., Interocean Development Inc., Sociedad Panameña de Electricidad S.A. and Estelmar Holding S.A. The assets and liabilities of these companies have been proportionally distributed according to the shareholder participation of each one of the partners. d. Regulated Assets The Company has no knowledge of other important events occurring after the close of these fi nancial statements that could affect them signifi cantly, other than what is described in Note 5. Note 35 Environment: Edesur S.A. As of December 31, 2001, the Company incurred environmental expenses of US$ 1,466,000. As of the same period, the investment related to these expenses was US$770,000. Endesa S.A. During the period from January 1 to December 31, 2001, the Company and its subsidiaries have made disbursements for a value of Th$5,886,203, which mainly correspond to: Operating expenses: corresponding to studies, follow-up procedures and laboratory analysis. Investments related to the following projects: - Central Ralco’s environmental program. - Central San Isidro environmental management system (EMS) installation and its ISO 14,001 certifi cation. - Environmental regulation and commitment project in intranet platform. - DLN installation for the No. 1 unit of the Tal Tal Power Plant (Region II). - DLN installation for the TG-9171E of the Cabrero Power Plant (Region VIII). Central Costanera S.A. During the period from January 1 to December 31, 2001, the Company made disbursements amounting to US$239,699. Edegel S.A. Based on the environment protection regulations for electrical activities the Company ordered the preparation of an environmental adaptation and management program to be presented before the MEM. The program presented was approved and established for a 5-year term (expiring in November 2000) to make the necessary investments and expenses in order to adapt the operations to the regulations and maximum limits permitted. To date, the Company has complied with the measures established in the program to adapt its operations to the environmental regulations. Additionally, the Company is subject to an annual environment audit entrusted to independent entities duly authorized for this purpose and that are contracted directly by the supervising organization of the energy investment. As of December 31, 2001, the expense directly related to protection of the environment amounted to ThCh$ 415,265. ENRIQUE GARCIA ALVAREZ Chief Executive Offi cer JUAN CARLO WIECZOREK C. General Account JUAN I. DOMINGUEZ ARTEAGA Adjunct Chief Executive Offi cer A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 7 7 8 8 / / 1 7 9 Enersis S.A. and Subsidiaries Relevant Facts Individual Enersis Defi nitive Dividend As of April 2, 2001, the Ordinary Stockholders’ Meeting of Enersis S.A. agrees the distribution of the defi nitive minimum obligatory dividend, charged to the profi t of the period that ended on December 31, 2000, reaching $1.806 per share, which totals M$14,976,820. OPAs On April 2, 2001, the Ordinary Stockholders’ Meeting of Enersis S.A. agrees to have recourse to the provision contained in the 10th transitory article of Law No. 19,705, of December 20, 2000, that “Regulates the Tender Offer for Shares (POPS, OPA in Spanish), and Establishes Corporate Government Regime”, so that the current Company controller may exercise the option to freely alienate the shares issued by Enersis S.A., even though the price is substantially higher than the market price, privided that such alienation is performed in the next three years, counted from day 1 of the month following the month in which such law was published. Likewise, the already mentioned Stockholders’ Meeting agrees to carry all necessary agreements to duly comply with and carry out the aforementioned resolution. Purchasing Powers On June 28, 2001, the Board of Directors of Enersis S.A., agreed, by unanimous vote of its present members, to open two Purchasing Powers in Chile to purchase the totality of the stock issued by Chilectra S.A. and the totality of the stock issued by Compañía Eléctrica del Río Maipo S.A. that are offered on sale by Enersis S.A. The holders of ADSs issued by Chilectra S.A. shall be able to sell in the Purchasing Power over Chilectra S.A. by exchanging its ADSs into shares issued by Chilectra S.A. The Chilectra S.A. shares will be purchased at a price of Ch$2,200, legal currency, per share, and the Rio Maipo shares will be purchased at a price of Ch$250, legal currency, per share. Such prices will be paid in cash and they are identical to the prices offered in the Purchasing Powers opened by Enersis S.A. on such companies, as of November 21, 2000. The Purchasing Powers will be opened as of July 3, 2001, date in which the present relevant fact and other pertinent information will be published in the Diario El Mercurio de Santiago newspaper. Each Purchasing Power will expire at 14:00 of the fi fteenth day, counted since the publication of an ad in Diario El Mercurio de Santiago announcing that the number of shareholders of Chilectra S.A., or Río Maipo S.A., as it corresponds, has become lower than 500. Anyway, both Purchasing Powers will expire not later than December 26, 2001, at 14:00. Finally, the Board of Directors of the Company made the decision to declare that it is the intention of Enersis S.A. to propose, in the corresponding corporate instances and subject to applicable legal provisions at the moment, that the shares of Chilectra S.A. and Rio Maipo S.A, cease to be registered in the national and foreign stock exchanges as it corresponds, as soon as the conditions for such are given. After considering the nature of the operations, whose performance depends on the volume of the purchases and sales become perfected, and the time in which such purchase and sales take place during the in force period of the Purchasing Powers, it is not possible to a priori determine the effects that they may produce in the result. It is possible to state, though, that the total investment that the maximum share purchasing might imply, corresponding to the Purchasing Powers previously mentioned, would amount to the equivalent in Chilean pesos to approximately US$28,7 million. Enersis Internacional tender offer to purchase bonds As of November 6, 2001, the Enersis Internacional partnership, a company 100% owned by Enersis S.A., with domicile in the Cayman Islands, announced in the United States of America Tender offer to purchase in cash the issuing of bonds in dollars performed by Enersis S.A. (Cayman Islands Agency) on Nov. 1, 1996, whose expiration date is on Dec. 1, 2016 (the “Offer”). Such issuing of bonds was originally for a total amount of US$350,000,000 (three hundred fi fty million American dollars, herein after “US$”) for twenty years, that is, to expire on 2016, at a cover annual rate of 7.4% (hereinafter “the Bonds”), and was registered in the Securities and Exchange Commission (“SEC”) of the United States of America. The Enersis Internacional Offer is over the total amount of the Bonds that are circulating in the market and that reach the total of the originally issued, that is, US$350,000,000. The terms and conditions of the Enersis Internacional offer are recorded in the Offer to Purchase document dated November 6, 2001. The Offer dealer agent is Chase Manhattan International Limited (“JPMorgan”). The exact price to be paid by Enersis Internacional for each US$1,000 of Bond capital will be determined by a formula which is explained in the Offer to Purchase and that will basically be the estimation of a margin or Spread over the yield to maturity of the United States Treasure Bond with a coupon rate of 5.0%, expiring on August 15, 2011. Enersis Internacional has offered, as well, to pay all the Bond holders that accept the Offer an amount equivalent to the interest accrued and not paid since the payment time of the last Bond coupon. The Offer period has started with this date and will expire at 17:00, New York time, of November 16, 2001, unless Enersis Internacional decides to extend it or cancel it in advance (the “Termination Date”). The payment of Bonds to those holders that shall have accepted the offer will happen at the third labored day of transactions in the New York Stock Exchange since the acceptance from a holder. Once a holder has accepted the Offer, this operation is irrevocable. The remaining conditions of the Offer shall be contained in the Offer to Purchase. The result of the Offer will be communicated to the market after the Termination Date (including any extension of it). On the other hand, it is worth mentioning that the immediate fi nancing needed to carry on the described operation is duly negotiated in the in the international credit markets. Extension of the public offer period As of November 19, 2001, Enersis Internacional informed the extension of the Offer termination date to the market. The Offer shall now expire at 17:00, New York time, of Wednesday, November 21, 2001, but all the remaining terms and conditions of the Offer shall remain unaltered. Finally, and according to the provisions of communication No. 988 of the Superintendence of Securities and Insurance, the fi nal effects of the operation described in the results of Enersis S.A. cannot be reasonably quantifi ed at this time. These effects may only be determined once the defi nitive result of the Offer is known. Latibex As of December 17, 2001, the entering of Enersis S.A. stock to the so-called Mercado de Valores Latinoamericano de la Bolsa de Valores de Madrid (Latin American Securities Market of the Madrid Stock Exchange, Latibex) has been formalized, and the fi rst transactions of the titles in the European market have already been done. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 0 0 / / 1 8 1 Chilectra S.A. and Subsidiaries ADRs The Board of Directors of Chilectra S.A., in an ordinary meeting held on July 31, 2001, has agreed to put an end to the ADRs Program, so that the contract of deposit between Chilectra S.A. and JP Morgan (Morgan Guaranty Trust) expires on February 1, 2002. The effects in the results of the Company are not quantifi able. Compañía Electrica Del Rio Maipo S.A. For the term ranging from January 1 and December 31, 2001, the following relevant facts happened: Equity reduction by power of the law At the end of the period provided for the issuing, subscription and payment of the shares that represent the equity increase of Compañía Eléctrica del Río Maipo S.A., it has been reduced by the articles 11 and 24 of Law No. 18,046, from December 9, 2001, to the amount of Ch$14,561,360,076, divided in 360,613,552 shares with no nominal value. Risk classifi cation As of May 16, 2001, the company informs the Superintendence of Securities and Insurance that, according to article 90 of Law No. 18,045 about Securities Market, Compañía Eléctrica del Río Maipo S.A. will suspend the process of risk classifi cation of its titles, which is being done by its own will through Fitch Chile Clasifi cadora de Riesgo Ltda. and Feller & Rate Clasifi cadora. Endesa S.A. and Subsidiaries During the period January-December 2001, and according to the General Rule No. 30, the partnership proceeded to inform the Superintendence of Securities and Insurance about the following essential or relevant facts. Endesa Sale of Participation As of April 17, 2001, it is informed as an essential fact that, in an extraordinary meeting of the Board of the Company held in this date, it was agreed to alienate to Sociedad Obrascon Huarte Lain S.A. the stock participation of Empresa Nacional de Electricidad S.A. (ENDESA) in Sociedad Infraestructura Dos Mil S.A., which corresponds to 60% of its capital stock, and in Sociedad Concesionaria Autopista del Sol S.A., a partnership in which ENDESA owns 0,10% of the total equity, while the remaining percentage is owned by Sociedad Infraestructura Dos Mil S.A. The price of the hereinbefore mentioned alienation is 2,253,000 U.F. (two million, two hundred fi fty three thousand Unidades de Fomento), exchangeable into American dollars at the time of the execution of the contract of promise of purchase of the referred stock participation. The alienation process of the partnership Infraestructura Dos Mil S.A. shares to the partnership Obrascon Huarte Lain S.A., whose contract should have been executed before December 31, 2001, has extended the subscription to March 31, 2002. Emgesa S.A. Trial As of September 7, 2001, it is informed as an essential fact that EMGESA E.S.P., Colombian subsidiary of Empresa Nacional de Electricidad S.A., in which it owns 22.41% of its stock capital, was notifi ed of a environmental claim, also presented against the Corporación Autónoma Regional de Cundinamarca (Colombia) and the Empresa de Energía de Bogotá S.A. E.S.P., a company owned by the Bogotá Municipality that owns 51,5% of Emgesa S.A. E.S.P. The plaintiffs are the residents of the Sibaté-Cundinamarca Municipality, who are suing in representation of the total residents of such Municipality through a group action. The claim was presented to the Administrative Court of Cundinamarca, and aims, according to its text, to obtain the declaration of liability of the defendants, and the complete repair of all material and moral damages that the plaintiffs may have suffered regarding the negative affectation and consecutive environmental damage that the defendants might have caused and shall cause to the Sibaté-Cundinamarca Municipality, as they would have permitted, bombed and shall continue bombing the contaminated waters of the Bogotá river in the Embalse del Muña reservoir, in order to use it in the generation of electric energy. The totality of the demanded rendering reach approximately US$1,500,000,000, according to the plaintiffs themselves, for supposed material and moral damages. The supposed actions performed by the defendants, in what concerns to Emgesa S.A., E.S.P., in its condition of current owner and operator of the electric energy chains Guaca-Paraíso y Canoas, Salto I, Salto II y Laguneta, and Empresa de Energía de Bogotá S.A. E.S.P., in its condition of former owner and operator of the Embalse del Muña reservoir, would consist and would have consisted, respectively, in the plaintiffs’ opinion, to gather the contaminated waters of Bogotá river in the Embalse del Muña in order to make use of them in the generation of electric energy. The Corporación Autónoma Regional de Cundinamarca, a corporate public entity in charge of managing the environment and natural resources within the jurisdiction of Cundinamarca, is sued for its supposed and permanent omission by allowing the pumping of the contaminated waters of the Bogotá river to the Embalse del Muña, in the plaintiffs’ opinion as well. Currently, the local lawyers of Emgesa S.A. E.S.P. in Colombia are analyzing the claim and corresponding defense strategy. Notwithstanding, we might immediately say that the economic activity performed by our subsidiary Emgesa S.A. E.S.P. is framed within the most strict attachment to the body of laws in force, that has been awarded all permissions and authorizations from the competent entities, including those with environmental competence, and that the eventual ecological damage is not imputable, absolutely, to such company’s behavior, as the water that is utilized in the generation of electric energy is not contaminated by such company and it cannot be considered as a polluting agent. Additionally, it must be said that the claim aims to obtain the payment of compensations for supposed damages originated since many decades in the area, although Emgesa S.A. E.S.P. only generates energy in this reservoir since the end of 1997, date of its constitution. Therefore, Emgesa S.A. E.S.P. and my represented are absolutely convinced that the Colombian Justice will fi nally reject this bold claim. It is the excessive and unusual amount of the informed complaint and not its content or degree of juridical viability what has moved the Board of Directors of Empresa Nacional de Electricidad S.A. to communicate it as a relevant fact to such Superintendence. Re-purchase of Bonds As of November 6, 2001, it is informed as an essential fact that the Sociedad Endesa Chile Internacional partnership, 100% subsidiary of Endesa, domiciled in Cayman Islands, has announced in the United States of America a public offer or Tender offer to purchase in cash the issuing of bonds in dollars performed by Endesa (Cayman Islands Agency) on Feb. 1, 1997, whose expiration date is on 2027, as well as for the purchase in cash of the issuing of bonds in dollars performed by Endesa on Feb. 1, 1997, whose expiration date is on 2097 (the “Offer”). A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 2 2 / / 1 8 3 The fi rst of these two bond issues was originally for a total amount of US$230,000,000 (two hundred thirty million American dollars, hereinafter “US$”) to thirty years, that is, expiring on 2027, at a cover annual rate of 7.875%. The second of these two bond issues was originally for a total amount of US$200,000,000 (two hundred million of US$) to one hundred years, that is, expiring on 2097, at a cover annual rate of 8.125%. Both issues (hereinafter “the Bonds”), were registered in the Securities and Exchange Commission (“SEC”) of the United States of America. The Endesa Chile Internacional Offer is over the total amount of the Bonds that are circulating in the market and that reach the total amount of the originally issued, that is, US$430,000,000. The terms and conditions of the Endesa Internacional offer are recorded in the Offer to Purchase document dated November 6, 2001. The Offer dealer agent is Chase Manhattan International Limited (“JPMorgan”). The exact price to be paid by Endesa Chile Internacional for each US$1,000 of Bond capital will be determined by a formula which is explained in the Offer to Purchase and that will basically consist in calculating a margin or Spread over the yield to maturity of the United States Treasure Bond with a coupon rate of 5.375%, expiring on February 15, 2031. Endesa Chile Internacional has offered, as well, to pay all Bondholders that accept the Offer an amount equivalent to the interest accrued and not paid by the Bonds, excluding the payment date for this calculation. The Offer period has started with this date and will expire at 17:00, New York time, of November 16, 2001, unless Endesa Chile Internacional decides to extend it or cancel it in advance (the “Termination Date”). The payment of Bonds to those holders that shall have accepted the offer will happen at the third labored day of transactions in the New York Stock Exchange since the acceptance from a holder. Once a holder has accepted the Offer, this operation is irrevocable. The remaining conditions of the Offer shall be contained in the Offer to Purchase. The result of the Offer will be communicated to the market after the Termination Date (including any extension of it). On the other hand, it is worth mentioning that the immediate fi nancing needed to carry on the described operation is duly negotiated in the in the international credit markets. Finally, and according to the provisions of the communication No. 988 of the Superintendence of Securities and Insurance, the fi nal effects of the operation described in the results of Endesa cannot be reasonably quantifi ed at this time. These effects may only be determined once the defi nitive result of the Offer is known. Extension of Bond re-purchase period As of November 19, 2001, it is informed as an essential fact as follows: As was informed to the Superintendence of Securities and Insurance on November 6, 2001, the partnership Endesa Chile Internacional, 100% subsidiary of Endesa, announced in the United States of America a public offer or Tender offer to purchase in cash the issuing of bonds in dollars performed by Endesa’s Agency abroad on February 1, 1997, whose expiration date is on 2027, as well as for the purchase in cash the issuing of bonds in dollars performed by Endesa on February 1, 1997, whose expiration date is on 2097 (the “Offer”). As of today, Endesa Chile Internacional informed the extension of the Offer termination date to the market. The Offer shall now expire at 17:00, New York time, of Wednesday, November 21, 2001, but all the remaining terms and conditions of the Offer shall remain unaltered. Finally, and according to the provisions of the communication No. 988 of the Superintendence of Securities and Insurance, the fi nal effects of the operation described in the results of Endesa cannot be reasonably quantifi ed at this time. These effects may only be determined once the defi nitive result of the Offer is known. End of Bond re-purchase period As of November 22, 2001, it is informed as a relevant fact as follows: As was informed to the Superintendence of Securities and Insurance on November 19, 2001, the partnership Endesa Chile Internacional, 100% subsidiary of Empresa Nacional de Electricidad S.A. (“Endesa”) extended the termination date of the public offer (the “Offer”) for the total or partial purchase in cash of the following issues of bonds in dollars: (i) Endesa Bonds expiring on 2027, and (ii) Endesa Bonds expiring on 2097. The Offer expired on Wednesday, November 21, 2001. The nominal value of bonds purchased with expiration in 2027 was US$23,719,000 and the nominal value of the bonds purchased with expiration in 2097 was US$160,264,000. These consolidated operations show a non-operational profi t (tax-free) for Endesa of approximately US$27 million, amount that will be accounted for in this trimester. Datibex As of December 17, 2001, it is informed as an essential fact that the entering of Empresa Nacional de Electricidad S.A. stock to the so-called Mercado de Valores Latinoamericano de la Bolsa de Valores de Madrid (Latin American Securities Market of the Madrid Stock Exchange, Latibex) has been formalized, and the fi rst transactions of the titles in the European market have already been done. Autopista Los Libertadores S.A. As of October 26, 2001, it is informed as an essential fact that as of October 24, 2001, Sociedad Concesionaria Autopista Los Libertadores S.A has proceeded to formalize a bond issuing agreement for an amount of UF 4,000,000, aiming to obtain long-term refi nancing. Autopista del Sol S.A. As of October 17, 2001, it is informed as an essential fact that Sociedad Concesionaria Autopista del Sol S.A. has proceeded to formalize a bond issuing agreement for an amount of UF 5,065,000, in order to obtain long-term refi nancing. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 4 4 / / 1 8 5 Consolidated Management Analysis Financial statements for the year ended December 31, 2000 and 2001 Economic-fi nancial summary As at December 31, 2001, the Company achieved a Net Profi t of $ 40,926 million compared to the profi t of $ 92,875 million as at December 2000. With respect to the decrease in profi t in the period December to December, it is important to consider that the signifi cant profi t achieved in 2000 was due mainly to an extraordinary income of some $ 150,500 million produced by the sale of the Company’s investments in Aguas Cordillera, Aguas Puerto and Transelec. Such divestments were not repeated during the year 2001. An essential element in the positive result in 2001 was the signifi cant growth in operating income that grew by 36% or $ 195,917 million. The subsidiaries that contributed most to this improvement in operating income were Endesa, Cerj and Edesur. This improved operating income comprises mainly $ 111,194 million from the distribution business (57%) and $ 76,360 million from the generating business (39%). This positive achievement is particularly remarkable considering it was attained in the midst of a fairly depressed regional economic scenario throughout the year 2001 that was made signifi cantly worse by the events that took place in Argentina from November 2001 on. Furthermore, another positive aspect achieved during 2001 was the greater balance reached between the generation and the distribution businesses in most of the countries where we operate. This has contributed to a greater stability in aggregate cash fl ows. Finally, in the area of fi nancial operations, we must highlight the repurchase of Yankee Bonds carried out by Enersis and its subsidiary, Endesa Chile that produced a fi nal profi t of $ 23.411 million after taxes. With regard to the evolution of the Minority Interests, this decreased by $ 57.133 million, essentially as a result of the lower profi ts from affi liated companies and, to a lesser degree, of the increase in the shareholding in Chilectra and Río Maipo, investments made by the Company during the past two years. Performance of distribution business In this segment, we highlight the increase in physical sales achieved by Chilectra and Río Maipo (Santiago), Edesur (Buenos Aires) and Edelnor (Lima) which, unfortunately, were not able to compensate the decrease in sales registered by Codensa (Bogotá), Cerj (Río de Janeiro) and Coelce (Ceará). In the case of the last two, the fall was due to the rationing of power due to the drought in Brazil during 2001, and implied , for the whole group, a 1.2% reduction in aggregated physical sales or 593 GWh. In this same line of business, there was also a sustained improvement in the productivity ratio during 2001 in all subsidiaries in the fi ve countries where they operate. The average productivity rose from 1,223 clients per employee to 1,379 clients per employee, an improvement of 13%. This was the result of the addition of 317,000 new clients as well as a reduced staff complement related to a more effi cient distribution of human resources within the Group that led to a signifi cant reduction in cost of salaries that will continue to be refl ected in future periods. Performance of generating business The Operating Income of this business segment rose by 30%, due principally to the improved results in Chile, Peru and Colombia while they declined in Brazil and Argentina. In Chile, the improvement in operating income was the result of an increase of 34.9% in average tariffs and an increase of 13.2% in the generation of hydroelectricity. In Peru, the increase was due mainly to a 17.6% rise in physical sales, refl ecting the greater generating capacity, and to the increase, in October 2000, of 191 MW of new additional capacity. In Colombia, operating income rose as a result of a 9.2% increase in physical sales and a 16.4% rise in average tariffs. In Brazil, the fall in operating income is due to a lower level of generation of hydroelectricity which implied a greater need to purchase power. Finally, in Argentina the fall is explained by the drop in physical sales at Central Costanera and to lower spot prices that could not be entirely compensated by the increase in generation of hydroelectricity at El Chocón as a result of a greater availability of water. Details of the variations described above can be found in the following pages, in the Analysis of the Financial Statements, which includes comments on the principal accounts in the Income Statement, Financial Statements and Principal Cash Flows, compared with the information corresponding to December 31, 2000. As of December 17, 2001, the shares of both Enersis and Endesa Chile, are being traded in the Latin American Stock Market, Latibex, listed under the Madrid Stock Market within the framework of globalization of the principal companies in the region. Markets in which the company operates Enersis’ commercial activities are handled through subsidiaries that operate the various businesses in the countries where the company has a presence. For Enersis, the most important activities are the Distribution and Generation of electricity. The following tables illustrate the evolution of the key ratios in the different countries Distribution Business Company Chilectra Río Maipo Edesur Edelnor Cerj Coelce Codensa Energy sales (GWh) ( * ) Dec-00 Dec-01 Energy losses (%) Clients (th) Clients per employee (th) Dec-00 Dec-01 Dec-00 Dec-01 Dec-00 Dec-01 9,089 1,186 12,597 3,583 7,656 5,894 8,776 9,585 1,245 12,909 3,685 6,739 5,352 8,673 5.2% 5.4% 10.3% 9.9% 19.7% 13.3% 10.5% 5.4% 6.4% 9.9% 8.9% 22.7% 13.0% 11.8% 1,262 287 2,108 852 1,581 1,796 1,802 1,289 294 2,097 867 1,691 1,917 1,850 1,455 3,121 886 1,379 1,128 1,128 1,860 1,785 3,764 925 1,557 1,249 1,309 2,276 Total 48,781 48,188 11.5% 11.9% 9,688 10,005 1,223 1,379 (*) It includes sales to fi nal clients, tools, and intercompany sales A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 6 6 / / 1 8 7 Generating Business Country Chile Argentina Perú Colombia Brasil Total Market of operations SIC y SING SIN SICN SIN SICN Energy sales (GWh) Market share Dec-00 Dec-01 Dec-00 Dec-01 20,086 15,549 3,604 13,356 3,887 18,673 12,988 4,239 14,591 3,743 56,482 54,234 55.4% 21.6% 20.9% 19.7% 1.1% 49.0% 13.5% 23.0% 23.3% 1.2% I.- ANALYSIS OF THE FINANCIAL STATEMENTS 1. -Analysis of the Income Statements The profi t obtained as at December 31, 2001 amounted to $ 40,926 million that is 56% or $ 51,949 million lower than the profi t of $ 92,875 million at the same date in the previous year. It is important to point out that despite the lower profi t, operating income during the period rose by 36% and the fall in profi t is mainly the result of profi ts obtained on the sale of assets in 2000, specifi cally of the investments in Aguas Cordillera S.A., Aguas Puerto S.A. and Transelec S.A., which produced extraordinary revenues of approximately $ 150,500 million. The following table illustrates the comparisons and variations of each item in the Income Statement: Income Statement (million Ch$) Dec-00 Dec-01 Dec 01-00 %Var 01-00 Operating Revenues Operating Costs Operating Margin Selling and Administrative Expenses Operating Income Profi t(Loss) in Related Companies Inet Other Non Operating Income Net Financial Margin Positive Goodwill Amortization Monetary Corrección Exchange Difference Non Operating Income Income tax Iminority interest Negative Goodwill Amortization Net Income 2,676,745 (1,839,840) 836,905 (300,255) 536,650 2,970,272 (1,966,322) 1,003,950 (271,383) 732,567 74 334,574 (413,477) (69,625) (14,808) (1,215) (164,477) (142,062) (178,641) 41,405 92,875 (10,387) 13,875 (381,144) (77,988) 2,112 (29,964) (483,496) (132,706) (121,508) 46,069 40,926 293,527 (126,482) 167,045 28,872 195,917 (10,461) (320,699) 32,333 (8,363) 16,920 (28,749) (319,019) 9,356 57,133 4,664 (51,949) R.A.I.I.D.A.I.E. (*) Earnings per share $ 1,014,739 11.20 1,171,563 4.94 156,824 (6.27) (*) Earnings before taxes, interests, depreciation, amortization and extraordinary items. 11.0% (6.9%) 20.0% 9.6% 36.5% (14136,5%) (95.9%) 7.8% (12.0%) 114.3%) 2366,2% (194.0%) 6.6% 32.0% 11.3% (55.9%) 15.5% (55.9%) a.- Operating Income Operating Income as at December 31, 2001 amounted to $ 732,567 million, an increase of 36% or $ 195,917 million with respect to the same period of 2000. The increase in operating income came mainly from the subsidiaries Endesa, Cerj and Edesur. In the Generating Business, the consolidated operating income of Endesa Chile rose by 30.4% during the period, amounting to $ 337,840 million. This growth in operating income can be explained basically by the improved performance of the operations in Chile, Peru and Colombia though partly affected by the reduction in the operating income from Argentina and Brazil. In Chile, operating income increased by 102% or $ 132,627 million due principally to the rise by 34.9% in average sales prices and to the increase by 13.2% in the generation of hydroelectricity as a result to the improvement in the supply of water in the country. This implied a reduction of $ 18,569 million in the cost of purchasing power and fuel. In Peru, the increase by 21.2% in operating income is mainly due to the rise in physical sales of power, refl ecting the greater generating capacity the Company had during this year as a result of adequate levels of water in the reservoirs and of the increase of 191 MW in the level of capacity to produce hydroelectricity. The last of these units went into operation in October 2000. In Colombia, operating income rose by 14% to $ 72,211 million as a result of the increase in average sales prices due to the restrictions on the transmission of electricity in Colombia at the beginning of 2001 and to the growth by 9.2% in sales of physical power. In Brazil, the operating income of Endesa Chile Cachoeira Dourada decreased by 10.6% to $ 27,106 million as a result of a fall in hydroelectric generation during the year which led to a greater need to purchase power. The generating subsidiaries in Argentina suffered a fall of 11.1% in operating income that amounted to $ 41,787 million. This reduction is mainly the result of lower physical sales at Central Costanera due to the end of the contracts with the distribution companies in Buenos Aires and to lower spot prices during the year 2001. This was partly compensated by the increase of 173.4% registered by El Chocón and explained by a greater generation of hydroelectricity during the period as a result of larger fl ows and the higher water levels in the reservoirs in the region. The Distribution Business has shown a signifi cant increase in operating income from practically all its subsidiaries, especially Cerj and Edesur whose operating income rose by $ 56,876 million and $ 26,236 million, respectively. Cerj’s increase was principally due to a greater volume of sales of power and to lower remunerations expenses following staff cuts at the plant. At Edesur, an Argentine subsidiary, the increase in operating income was due mainly to greater physical sales of power, a reduction in power losses and lower remuneration costs following staff cuts. Consolidated physical sales amounted to 48,188 GWh during the period ending on December 31, 2001. This implied a small reduction of 1% with respect to the same period of 2000 that had sales of 48,781 GWh due mainly to the rationing imposed by the Brazilian authorities. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 8 8 8 8 / / 1 8 9 The operating income of the subsidiaries of the Enersis Group for the periods ending on December 31, 2001 and 2000 are shown in the following table: Operating income variation by subsidiary Company (thousand Ch$) Dec-01 Dec-00 Var 01-00 %Var 01-00 Chilectra S.A. Río Maipo S.A. Edesur S.A. Edelnor S.A. Cerj Coelce Codensa S.A. Endesa S.A. Compañia Americana de Multiservicios Uno Ltda. Inmobiliaria Manso de Velasco Ltda. Compañia Americana de Multiservicios Ltda. Synapsis soluciones y servicios IT Ltda. 74,020 10,502 88,180 28,932 11,097 29,974 20,446 259,154 6,268 8,252 2,658 5,107 79,289 10,029 114,416 33,632 67,973 42,438 27,762 337,840 6,926 2,912 5,112 7,170 5,269 (473) 26,236 4,700 56,876 12,464 7,316 78,686 658 (5,340) 2,454 2,063 7.1% (4.5%) 29.8% 16.2% 512.6% 41.6% 35.8% 30.4% 10.5% (64.7%) 92.3% 40.4% Operating Income by Line of Business The table below illustrates the operating income and expenses for the periods ending on December 31, 2001 and 2000, broken down by line of business: Operating income by business December 2001 and 2000 (Million Ch$) Company Generation Distribution Dec-00 Dec-01 Dec-00 Dec-01 Dec-00 Eng. services & Real Estate Parent Co & Other services Adjustments Dec-01 Dec-00 Dec-01 Dec-00 Dec-01 Total Dec-00 Dec-01 Operating Revenues Operating Costs Operating Margin Selling & Adm, Expenses 1,944,085 879,072 978,692 (595,709) (617,995) (1,424,868) 519,217 283,363 360,697 (255,168) (31,594) (30,620) 2,106,635 109,049 (81,306) (1,503,579) 27,743 603,056 (6,811) (227,813) 97,679 (71,074) 26,605 (8,030) 59,437 (39,257) 20,180 (28,731) 89,926 (314,898) (302,659) 2,676,745 2,970,273 (64,700) 301,300 291,026 (1,839,840) (1,966,322) 836,905 1,003,951 (11,633) 25,226 (271,384) (300,255) 25,692 (29,639) (13,598) 21,075 Operating Income 252,743 329,103 264,049 375,243 20,932 18,575 (8,551) (4,413) 7,477 14,059 536,650 732,567 b.- Non-Operating Income The non-operating result was a loss of $ 483,496 million, which represents an increase of 194% or $ 319,019 million in comparison to the loss as at December 2000. The net fi nancial margin was a loss of $ 381,144 million that, when compared to the same period of the previous year, refl ects a decrease in costs by 8% as a result of lower interest rates on the international markets with respect to the year before that led to a reduction of $ 32,333 million in fi nancial costs. Investments in related companies. As at December 2001, these amounted to a net loss of $ 10,387 million in comparison with a profi t of $ 74 million for the same period of the previous year. This negative variation of $ 10,461 million is caused mainly by the effects of the exchange rates in the results of the related companies of Endesa Chile. Amortization on lower value of investments. As at December 31, 2001, this refl ects an increase in costs of $ 8,363 million and amounted to $ 77,988 million. The increased amortization is the consequence of the Lower Value produced by the purchase of shares in Chilectra and Río Maipo. Non-operating income and expenses as at December 31, 2001 amounted to a net profi t of $ 13,875 million, refl ecting a fall of $ 320,699 million with respect to the year before when the profi t reached $ 334,574 million. The principal reasons for this fall in the results are detailed below: • A reduction of $ 198,975 in comparison with the profi ts registered in 2000 following the divestments in Aguas Cordillera S.A., Aguas Puesto S.A. and Transelec and a reduction of $ 74,144 million in the profi t on the sale of fi xed assets. • A reduction of $ 15,783 million as at December 31, 2001 in comparison with last year due to the conversion over to Chilean Accounting Rules (Technical Bulletin Nº 64) mainly of the subsidiaries in Brazil and Argentina. This was principally due to the devaluation of the Brazilian Real and the Argentine Peso with respect to the US Dollar. • A reduction of $ 9,944 million in the compensation from exchange insurance that fell from a profi t of $ 4,359 million in December 2000 to a loss of $ 5,585 million in the current year • • Increase of $ 24,492 million in provisions for contingencies and lawsuits. Increase of $ 15,730 million in staff benefi ts related mainly to the obligatory pension plan introduced during the period by the Brazilian authorities. • This is partly compensated by the profi t of $ 23,410 million on the repurchase of Bonds. Price-level restatement and exchange differences. These show a rise of $ 16,053 million in the loss with respect to the same period of the previous year, going from a loss of $ 16,023 million as at December 31, 2000 to a loss of $ 27,852 million in this exercise. This is mainly due to the effects of the devaluation of the Peso with respect to the US Dollar during the current period. This was compensated to a great extent by the exchange insuance explained above. Interest rate risks On a consolidated basis, as at December 31, 2000, 54% of the total debt was expressed in variable terms (principally Libor USD and Chilean TAB), whilst 46% was at fi xed rates and secure. As at December 31, 2001, the debt at variable rates represented 43% of the total debt, whilst 57% was at fi xed rates and secure. The reduction in the percentage of debt at a variable rate during this year is explained basically by the refi nancing of the obligations at fi xed rates and by closing operations to hedge the Libor USD rate for a value of USD 650 million of which USD 425 million were done by Enersis and USD 225 million by Endesa Chile. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 9 9 0 0 / / 1 9 1 The Company manages its interest rate risk by concentrating its debt structure on the long term with a suitable combination of debts at fi xed and variable interest rates. Foreign currency risk The Company’s exposure to an exchange risk is brought about by the assets and liabilities denominated in foreign currency, mainly in US Dollars. On a consolidated basis, as at December 31, 2000, Enersis had 68% of its total debt expressed in US Dollars. Bearing in mind the Dollar/UF forward position, the weight of this debt in US Dollars was reduced to 58%. As at December 31, 2001, 72% of the debt was expressed in US Dollars. When considering the US Dollar/UF forward policy mentioned below, the percentage of the debt expressed in US Dollars is reduced to 65%. The reason behind the largest part of our debt being denominated in US Dollars is the fact that an important proportion of our revenues is directly or indirectly related to the Dollar. Thus, the tariffs in the majority of the countries in which we have operations are tied to a large extent to the evolution of the US Dollar, particularly in Argentina, Chile and Peru. In countries where the indexation of the US Dollar is less, the companies take a greater proportion of their loans in local currency. As we have mentioned before, despite the hedging, we are exposed to the fl uctuations in the Peso/US Dollar rates of exchange. These are managed through the use of fi nancial derivative instruments, basically US Dollar/UF forward contracts, with which the exchange risk is hedged. The exchange risk exposure is currently handled on a consolidated basis, taking into consideration the portion of this risk that our Chilean subsidiaries have not covered. The Company’s policy is to hedge between 60% and 70% of the booked exposure to exchange risks. On a consolidated basis, as at December 31, 2001, the Company had US Dollar/UF forward contracts for USD 506 million whilst as at December 31, 2000, the total was USD 902 million. The reduction is due to a decrease in the exposure to the variations in the Dollar exchange rate on our books. Although the actual exchange risk to which we are exposed depends on the fl uctuation of the exchange rates at which the Company’s assets and liabilities are maintained, for accounting purposes, our results are also affected bearing in mind the contents of Technical Bulletin Nº 64. In accordance with this Chilean accounting regulation, debts in foreign currency that were utilized to fi nance investments in countries with an “unstable currency” are matched to their corresponding investment and the variations in the US Dollar/Chilean Peso rate on those matched debts are not refl ected by entries in the Income Statement. 2. - Analysis of the fi nancial statements The Company’s total assets refl ect an increase of $ 975,189 million with respect to the same period of the previous year. This is principally due to: Assets (million Ch$) Dec-00 Dec-01 Dec 01-00 %Var 01-00 Current Assets Fixed Assets Other Assets Total Assets 996,649 8,684,284 1,732,032 1,128,589 9,344,708 1,914,857 131,940 660,424 182,825 11,412,965 12,388,154 975,189 13.2% 7.6% 10.6% 8.5% • The increase in Fixed Assets as a result of applying the methodology of carrying the non-monetary assets in unstable countries in historic Dollars, as required by Technical Bulletin Nº 64. • Current Assets include Term Deposits for $ 95,549 million and Sales Debtors for $ 59,335 million, compensated by a reduction of $ 10,648 million in forward contracts. • The rise in Other Assets can be explained by the increase of $ 86,795 million in deferred expenses. Liabilities (million Ch$) Dec-00 Dec-01 Dec 01- 00 %Var 01- 00 Short Term Liabilities Long Term Liabilities Minority interest Equity 1,583,569 5,072,614 3,622,063 1,134,719 1,525,544 5,728,501 3,954,923 1,179,186 (58,025) 655,887 332,860 44,467 (3.7)% 12.9% 9.2% 3.9% Total Liabilities 11,412,965 12,388,154 975,189 8.5% Total debt increased by 9% or $ 597,862 million due mainly to the higher exchange rate applied to obligations with banks and fi nancial institutions and bonds. Minority interests rose by $ 332,860 million as a result of the increase in the equity of the overseas subsidiaries in line with the methodology of carrying non-monetary liabilities (equity) on the books in historic US Dollars. This was partially offset by the purchase of shares in the minority interests, Chilectra and Río Maipo. With regard to equity, we should point out that this increased by $ 44,467 million with respect to December 2000. This variation is explained by the increase of $ 19,245 million in Other Reserves, the decrease of $ 15,704 million in Retained Earnings and the booking of the profi t for the period of $ 40,926 million. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 9 9 2 2 / / 1 9 3  Below we illustrate the evolution of the principal fi nancial ratios: Indicator Unit Dec-00 Dec-01 Var Dec 01- 00 %Var 01-00 Liquidity Indebtedness Profi tability Current liquidity Acid Ratio (1) Working Capital Leverage % Short term debt % Long term debt Interest Coverage (2) ROE ROA (1) Current assets net of expenses (2) RAIIDAIE divided by interest expenses times times MM$ times % % times % % 0.63 0.62 (586,920) 1.40 0.24 0.76 2.09 8.18% 0.8% 0.71 0.70 (462,968) 1.41 0,22 0,78 2.69 3.47% 0.3% 0.8 0.8 123,952 0.01 (0.02) 0.02 0.60 -4.7% -0.5% 12.7% 12.9% 21.1% 0.7% (7.8%) 2.4% 28.7% (57.6%) (59.5%) The liquidity ratio as at December 2001 was 0.71 that refl ects an improvement of 0.8 points with respect to the same date of the previous year. The debt ratio as at December 31, 2001 was 1.41 times, which refl ects an improvement of 0.01 points when compared to the same period of the year 2000. Furthermore, return on equity was 3.47%. As at the same date in the previous year, this was 8.18%. 3.- Principal cash fl ows During the period, the Company generated positive net fl ows worth $ 95,017 million composed of the following: Effective Cash Flow (million Ch$) Dec-00 Dec-01 Dec 01- 00 %Var 01-00 Operating Cash Flow Financing Cash Flow Cash Flow on Investments Net Cash Flow 523,001 (790,572) 171,472 (96,100) 643,612 (59,625) (488,970) 95,017 120,611 730,947 (660,442) 191,117 23.1% (92.5%) (385.2%) (198.9%) Operating activities generated a net positive fl ow of $ 643,612 million, 23% more than that produced in the same period of the previous year. This fl ow comprises mainly the profi t for the period of $ 40,926 million plus the net charges to income that do not represent cash fl ow for $ 544,262 million. Added to these is a reduction in assets that affect the operating fl ow for $ 141,361 million, compensated in part by the reduction in liabilities that affect the operating fl ows by $ 204,444 million. Financing activities produced a negative fl ow of $ 59,625 million due mainly to: the payment of loans for a value of $ 1,815,595 million, the payment of dividends for a total of $ 140,260 million, the payment of Bonds for $ 154,631 million and Other Payments for $ 32,356 million. These are partially compensated by the loans received and the Bond issue for $ 1,880,485 and $ 272,209 million, respectively. Investment activities generated a net negative fl ow of $ 488,970 million, due fundamentally to the net incorporation of fi xed assets worth $ 331,605 million, other investments made for $ 182,418 million and investments in subsidiaries for $ 12,505 million. These were partly compensated by the sale of fi xed assets and other income for $ 37,785 million. II. BOOK VALUE AND MARKET VALUE OF THE ASSETS With regard to the more important assets, we mention the following: The value of the items in fi xed assets have been adjusted in accordance with the accounting criteria established by the Chilean Superintendency of Securities and Insurance in its Circulars Nº 550 and 556 issued in 1985. In the case of the foreign company, Inversiones Distrilima S.A., the value of the fi xed assets were adjusted in accordance with the exception criteria indicated in Technical Bulletin Nº 45 issued by the Chilean College of Accountants, the norm in force at the time the investment was made and which was not modifi ed by Technical Bulletin Nº 51 that replaced it. Depreciation is calculated on the updated value of the goods in accordance with the years of useful life remaining for each item. Investments in related companies are valued at their proportional equity value. In the case of foreign companies, as from the second quarter of 1998, this methodology has been applied on the basis of the fi nancial statements prepared in accordance with the norms established in Technical Bulletin Nº 64 of the Chilean College of Accountants. Intangible values have been adjusted by price-level restatement and are amortized according to the norms indicated in Technical Bulletin Nº 55 of the Chilean College of Accountants. The assets expressed in foreign currency are shown at the exchange rate reigning as at the date of closure of the period. Investments in fi nancial instruments with repurchase/resale agreements are shown at their purchase value plus the proportion of the interest calculated on the implicit rate of each operation. Accounts and bills receivable from related companies are classifi ed according to their short and long-term maturities. The operations are adjusted to equal conditions similar to those that are normally applied in the market. In summary, assets are valued according to generally accepted accounting principles and norms and to instructions given on this matter by the Superintendency of Securities and Insurance explained in Note 2 of the Financial Statements. A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 9 9 4 4 / / 1 9 5 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 9 9 6 6 / / 1 9 7 Audited Unconsolidated Financial Statements For the years then ended December 31, 2000 and 2001 INDEX TO THE AUDITED UNCONSOLIDATED FINANCIAL STATEMENTS Accounts Inspector’s Report Report of Independent Accountants Unconsolidated Balance Sheets as of December 31, 2000 and 2001 Unconsolidated Statements of Income for the years ended December 31, 2000 and 2001 198 199 200 202 Unconsolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2000 and 2001 203 Unconsolidated Statements of Cash Flows for the years ended December 31, 2000 and 2001 Notes to the Unconsolidated Financial Statements Enersis S.A. Relevant Facts Parent Company Management Analysis 204 205 232 235 Application of Constant Chilean Pesos The consolidated fi nancial statements included herein have been restated for general price-level changes and expressed in constant Chilean pesos of December 31, 2001 purchasing power. Accounts Inspector’s Report Pursuant to the provisions in law No. 18,046 on Limited Liability Stock Companies and in compliance with the mandate granted by the Ordinary Shareholders’ Meeting held on April 02, 2001, we have examined the Consolidated Financial Statements of Enersis S.A. for period between January 1 and December 31, 2001. Our assignment was focused on verifying, on a selecyive basis, the coincidence of the fi gures presented in the Financial Statements with the offi cial records of the Company and its subsidiaries and to such and end we compared the fi gures presented in the ledger with the grouping and classifi caton worksheets. To subsequently ascertain if these amounts which are the balances of accounts of the same nature match with those included in the Financial Statements, a revision which entailed no objections. Marcela Araya Accounts Inspector Marco Acevedo Accounts Inspector Santiago, February 26, 2002 Report of Independent Accountants (Translation of a report originally issued in Spanish – See Note 2 to the fi nancial statements) To the Shareholders of Enersis S.A.: We have audited the accompanying balance sheets of Enersis S.A. (the “Company”) as of December 31, 2000 and 2001, and the related statements of income, changes in shareholders’ equity and cash fl ows for the years then ended. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audits. We did not audit the fi nancial statements of the subsidiary Endesa – Chile S.A., whose total assets and revenues constitute 30 percent and 18 percent, in 2000, and 30 percent and 23 percent in 2001, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. The fi nancial statements referred to above have been prepared to refl ect the individual fi nancial position of Enersis S.A. based on the criteria described in Note 2(a), before proceeding to the line-by-line consolidation of the subsidiaries detailed in Note 8(a). Therefore, for adequate interpretation, these fi nancial statements should be read and analyzed in conjunction with the consolidated fi nancial statements of Enersis S.A. and its subsidiaries which are required by generally accepted accounting principles in Chile. This report is presented only for the information and use of the Board of Directors, the Company’s management and the Superintendency of Securities and Insurance. In our opinion, based on our audits and the report of other auditors, the fi nancial statements referred to above present fairly, in all material respects, the fi nancial position of Enersis S.A. as of December 31, 2000 and 2001, and the results of its operations and its cash fl ows for the years then ended in conformity with generally accepted accounting principles in Chile. As described in Notes 8(e) and 25(a) to these fi nancial statements, the Company has valued investments in Argentina in accordance with Technical Bulletin No. 64 issued by the Chilean Association of Accountants. On a consolidated basis, these investments refl ect total assets of 14 percent, total revenues of 27 percent, and total operating income of 21 percent, of the related consolidated totals. Due to the unstable political and economic situation in Argentina and considering the effects of the Public Emergency Law, the Company’s subsidiaries and equity method investments are exposed to conditions which could affect the valuation of their assets, liabilities and equity and generate uncertainty as to their ability to pay obligations and continue operations. These fi nancial statements have been prepared assuming that the Company’s Argentine subsidiaries and equity method investments will continue as a going concern and do not refl ect the effects or eventual adjustments that may result from the resolution of these uncertainties. Cristián Bastián E. ARTHUR ANDERSEN – LANGTON CLARKE Santiago (Chile) February 26, 2002 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 1 1 9 9 8 8 / / 1 9 9 Audited Unconsolidated Balance Sheets Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, and thousands of US dollars) Assets Current assets: Cash Time deposits Marketable securities Notes receivable Miscellaneous receivables Amounts due from related companies Income taxes recoverable Prepaid expenses Deferred income taxes Other current assets As of December 31, 2000 ThCh$ 2001 ThCh$ 2001 ThUS$ 36,260 - 64 760 15,195,856 25,775,928 7,938,830 15,379 16,081,228 121,151,728 538,698 3,242,367 - 737 9,371,937 76,396,897 11,643,727 22,859 2,805,857 110,123,424 823 4,952 - 1 14,313 116,674 17,782 35 4,285 168,181 Total current assets 186,196,033 214,146,503 327,046 Property, plant and equipment, net 13,677,861 13,292,794 20,301 Other assets: Investments in related companies Goodwill, net Negative goodwill, net Long–term receivables Amounts due from related companies Intangibles Less: Accumulated amortization Other assets Total other assets Total assets 2,379,652,948 853,587,693 (1,041,731) - 469,783,759 1,382,224 (199,483) 3,163,918 2,352,356,825 821,037,312 (1,072,131) 475,381 644,499,929 1,382,224 (268,724) 14,023,809 3,592,536 1,253,894 (1,637) 726 984,285 2,111 (410) 21,417 3,706,329,328 3,832,434,625 5,852,922 3,906,203,222 4,059,873,922 6,200,269 The accompanying notes are an integral part of these fi nancial statements Liabilities and Shareholders’ Equity Current liabilities: Due to banks and fi nancial institutions current portion Current portion of bonds payable Dividends payable Accounts payable Notes payable and other accounts payable Amounts payable to related companies Accrued expenses Withholdings Income taxes payable Deferred income Other current liabilities 2000 ThCh$ As of December 31, 2001 ThCh$ 18,245,673 2,691,842 644,079 461,918 2,543,058 257,034,386 2,093,347 74,193 12,002,124 1,419,415 113,458,020 40,756,250 10,104,488 377,639 473,180 1,071,201 102,565,446 2,505,161 892,739 16,675 411,337 111,022,831 2001 ThUS$ 62,243 15,432 577 723 1,636 156,639 3,826 1,363 25 628 169,555 Total current liabilities 410,668,055 270,196,947 412,647 Long-term liabilities: Due to banks and fi nancial institutions Bonds payable Amounts payable to related companies Accrued expenses Other long-term liabilities 599,914,301 473,146,520 1,284,370,354 1,572,412 1,812,743 963,418,719 619,365,472 1,021,991,372 1,767,386 3,947,637 1,471,340 945,899 1,560,793 2,699 6,029 Total long-term liabilities 2,360,816,330 2,610,490,586 3,986,760 Shareholders’ equity: Paid-in capital Additional paid-in capital – share premium Other reserves Retained earnings Net income for the year 729,328,347 32,398,114 7,491,989 272,625,237 92,875,150 729,328,347 32,398,114 26,384,539 350,149,143 40,926,246 1,113,835 49,479 40,295 534,750 62,503 Total shareholders’ equity 1,134,718,837 1,179,186,389 1,800,862 Total liabilities and shareholders’ equity 3,906,203,222 4,059,873,922 6,200,269 The accompanying notes are an integral part of these fi nancial statements A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 0 0 / / 2 0 1 Audited Unconsolidated Statements of Income Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, and thousands of US dollars) Operating income: Sales Cost of sales Gross profi t Administrative and selling expenses Years ended December 31, 2001 ThCh$ 2001 ThUS$ 2000 ThCh$ 4,159,886 (847,105) 3,312,781 (19,427,826) 4,175,558 (820,292) 3,355,266 (20,040,255) 6,377 (1,253) 5,124 (30,606) Operating loss (16,115,045) (16,684,989) (25,481) Non-operating income and expenses: Interest income Equity participation in income of related companies Other non-operating income Equity participation in losses of related companies Amortization of goodwill Interest expense Other non-operating expenses Price-level restatement Foreign currency translation 63,308,855 226,192,196 105,562,555 (12,281,800) (43,189,598) (200,226,544) (10,307,906) 227,453 (24,517,588) 45,635,420 241,518,946 28,639,122 (9,839,356) (49,000,967) (156,981,932) (15,808,213) 1,536,998 (36,216,375) 69,695 368,849 43,738 (15,027) (74,835) (239,744) (24,142) 2,347 (55,310) Non-operating income, net 104,767,623 49,483,643 75,571 Income before income taxes and amortization of negative goodwill Income tax benefi t Income before amortization of negative goodwill Amortization of negative goodwill 88,652,578 4,207,703 92,860,281 14,869 32,798,654 8,064,316 40,862,970 63,276 50,090 12,316 62,406 97 Net income for the year 92,875,150 40,926,246 62,503 The accompanying notes are an integral part of these fi nancial statements Audited Unconsolidated Statements of Changes in Shareholders’ Equity Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, except as stated) Number of shares Thousands Paid-in capital ThCh$ Additional paid-in capital ThCh$ Other reserves ThCh$ Retained earnings ThCh$ Net income (loss) for the years ThCh$ Total ThCh$ As of January 1, 2000 Transfer of prior year loss to retained earnings Changes in equity of affi liates Cumulative translation adjustment Issuance of shares Price-level restatement Net income for the year 6,800,000 - - - 1,491,020 - - 23,295,280 398,624,586 24,184,786 - - - - (18,382,462) - 1,170,476 - - - 6,035,445 286,758,950 1,183,427 1,203,739 22,015,443 - - - 330,716,485 (78,158,729) - - - 11,870,214 - (78,158,729) 78,158,729 - - - - 90,082,590 698,662,408 - (18,382,462) 1,170,476 292,794,395 36,272,823 90,082,590 As of December 31, 2000 8,291,020 707,398,979 31,423,970 7,266,721 264,427,970 90,082,590 1,100,600,230 Restated as of December 31, 2001 (1) 8,291,020 729,328,347 32,398,114 7,491,989 272,625,237 92,875,150 1,134,718,837 As of January 1, 2001 Transfer of prior year income to retained earnings Dividends Cumulative translation adjustment Price-level restatement Net income for the year 8,291,020 - - - - - 707,398,979 31,423,970 - - - - - - 974,144 21,929,368 - - 7,266,721 - - 18,892,550 225,268 - 264,427,970 90,082,590 (14,976,824) - 10,615,407 - 90,082,590 1,100,600,230 - (14,976,824) 18,892,550 33,744,187 40,926,246 (90,082,590) - - - 40,926,246 As of December 31, 2001 8,291,020 729,328,347 32,398,114 26,384,539 350,149,143 40,926,246 1,179,186,389 (1) Restated in thousands of constant pesos as of December 31, 2001. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 2 2 / / 2 0 3 Audited Unconsolidated Statements of Cash Flows Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, except as stated) Cash fl ows from operating activities: Net income for the year Gain (loss) from sales of assets: Loss from sales of fi xed assets Gain on sales of investments Charges (credits) to income which do not represent cash fl ows: Depreciation Amortization of intangibles Equity participation in income of related companies Equity participation in losses of related companies Amortization of goodwill Amortization of negative goodwill Price-level restatement Foreign currency translation Changes in assets which affect cash fl ows: Increase in trade receivables Decrease in other assets Changes in liabilities which affect cash fl ows: Decrease in accounts payable associated with operating results Increase in interest payable Decrease in income tax payable Increase (decrease) in other accounts payable associated with non-operating results Net decrease in value-added tax and other similar taxes payable 2000 ThCh$ Years ended December 31, 2001 ThCh$ 2001 ThUS$ 92,875,150 40,926,246 62,503 - (83,662,791) 786,097 67,757 (226,192,196) 12,281,800 43,189,598 (14,869) (227,453) 24,517,588 (428,272) 41,935,808 (11,383,528) 7,186,264 (4,207,703) (1,597,144) (1,809,030) 5,625 - 776,885 69,241 (241,518,946) 9,839,356 49,000,967 (63,276) (1,536,998) 36,216,375 (29,439) 81,386,875 (15,297,423) 31,281,561 (8,064,316) 15,777,470 (2,208,549) 9 - 1,186 106 (368,849) 15,027 74,835 (97) (2,347) 55,310 (45) 124,295 (23,362) 47,773 (12,316) 24,095 (3,373) Net cash fl ows used in operating activities (106,682,924) (3,438,346) (5,250) Cash fl ows from fi nancing activities: Issuance of shares Proceeds from the issuance of debt Proceeds from bond issuances Proceeds from other loans obtained from related companies Dividends paid Payment of debt Payment of bonds Payment of loans obtained from related companies Payment of other loans obtained from related companies Payment of bond issuance costs Other disbursements for fi nancing 305,169,385 22,090,228 - 147,527,405 (238,256) (325,123,150) (6,930,794) (123,416,037) (4,630,154) - - - 708,926,167 99,340,735 6,965,213 (15,394,425) (393,889,224) (3,300,903) (149,319,991) (156,548,844) (967,133) (5,573,871) - 1,082,677 151,714 10,637 (23,510) (601,550) (5,041) (228,043) (239,083) (1,477) (8,512) Net cash provided by fi nancing activities 14,448,627 90,237,724 137,812 Cash fl ow from investing activities: Sale of permanent investments Proceeds of loans from related parties Other investment income Additions to property, plant and equipment Long-term investments Loans granted to related companies Other loans granted to related companies Other investment disbursements - 326,793,311 9,458,609 (640,533) (297,913,918) (111,449,158) (85,924,901) - 241,104,507 93,059,244 13,009,803 (71,286) (11,060,425) (178,338,316) - (20,151) - 142,121 19,869 (109) (16,892) (272,360) - (31) Net cash provided by (used in) investing activities 81,427,917 (83,421,131) (127,402) Positive (negative) net cash fl ow for the year Effect of price-level restatement on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents beginning of year (10,806,380) 2,133,770 (8,672,610) 8,708,870 3,378,247 366,556 3,744,803 36,260 Cash and cash equivalents end of year 36,260 3,781,063 5,160 560 5,720 55 5,775 Notes to the Audited Unconsolidated Financial Statements Translation of fi nancial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2001, except as stated) Note 1 Note 2 Description of Business: Enersis S.A. (the “Company”) is registered in the Securities Register under No. 0175 and is regulated by the Chilean Superintendency of Securities and Insurance (the “SVS”). The Company issued publicly-registered American Depositary Receipts in 1993 and 1996. Enersis S.A. also reports to United States Securities and Exchange Comission of the United States. Summary of Signifi cant Accounting Policies: (a) General: The fi nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in Chile and the regulations established by the SVS (collectively “Chilean GAAP”), except for the investments in related companies which are reported on a single line in the balance sheet at their equity value, and therefore, have not been consolidated line-by-line. This treatment does not modify the net income or equity of the Company for the year. The preparation of fi nancial statements in conformity with Chilean GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the fi nancial statements, and the reported amounted amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying unconsolidated fi nancial statements refl ect the fi nancial position and results of operations of the agency formed by the Company in the Grand Cayman Islands in 1996. (b) Periods covered: These fi nancial statements refl ect the Company’s fi nancial positions as of December 31, 2000 and 2001, and the results of its operations, the changes in its shareholders’ equity and its cash fl ows for the years ended December 31, 2000 and 2001. (c) Constant currency restatement: The cumulative infl ation rate in Chile as measured by the Chilean Consumer Price Index (“CPI”) for the three-year period ended December 31, 2001 was approximately 10.66%. Chilean GAAP requires that the fi nancial statements be restated to refl ect the full effects of loss in the purchasing power of the Chilean peso on the fi nancial position and results of operations of reporting entities. The method described below is based on a model that enables calculation of net infl ation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of local currency. The model prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the year-end. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 4 4 / / 2 0 5 The fi nancial statements of the Company have been price-level restated in order to refl ect the effects of the changes in the purchasing power of the Chilean currency during each year. All non-monetary assets and liabilities, all equity accounts and income statement accounts have been restated to refl ect the changes in the CPI from the date they were acquired or incurred to year-end (see also Note 17). The purchasing power gain or loss included in net income refl ects the effects of Chilean infl ation on the monetary assets and liabilities held by the Company. The restatements were calculated using the offi cial consumer price index of the National Institute of Statistics and based on the “prior month rule,” in which the infl ation adjustments are based on the CPI at the close of the month preceding the close of the respective period or transaction. This index is considered by the business community, the accounting profession and the Chilean government to be the index that most closely complies with the technical requirement to refl ect the variation in the general level of prices in Chile, and consequently it is widely used for fi nancial reporting purposes. The values of the Chilean consumer price indices used to refl ect the effects of the changes in the purchasing power of the Chilean peso (“price-level restatement”) are as follows: November 30, 2000 November 30, 2001 Change over Previous November 30, 4.7% 3.1% Index 106.82 110.10 By way of comparison, the actual values of the Chilean consumer price indices as of the balance sheet date are as follows: December 31, 2000 December 31, 2001 Change over previous December 31, 4.5% 2.6% Index 106.94 109.76 The above-mentioned price-level restatements do not purport to represent appraisal or replacement values and are only intended to restate all non-monetary fi nancial statement components in terms of local currency of a single purchasing power and to include in net results for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of infl ation. Index-linked assets and liabilities Assets and liabilities that are denominated in index-linked units of account are stated at the year-end values of the respective units of account. The principal index-linked unit used in Chile is the Unidad de Fomento (“UF”), which is adjusted daily to refl ect the changes in Chile’s CPI. Certain of the Company’s investments are linked to the UF. As the Company’s indexed liabilities exceed its indexed assets, the increase in the index results in a net loss on indexation. Values for the UF are as follows (historical Chilean pesos per UF): December 31, 2000 December 31, 2001 Ch$ 15,769.92 16,262.66 Comparative fi nancial statements For comparative purposes, the historical December 31, 2000 and 2001 consolidated fi nancial statements and their accompanying notes have been presented in constant Chilean pesos as of December 31, 2001. Amounts previously presented in constant Chilean pesos as of each balance sheet date have been adjusted by the percentage changes in the CPI to December 31, 2001, as follows: Period 2000 (1) Equivalent to the amounts for 2000 multiplied by the change in the CPI for 2001. Change in Index 3.1% (1) This updating does not change the prior periods’ statements or information in any way except to update the amounts to constant Chilean pesos of similar purchasing power. Convenience translation to U.S. dollars The fi nancial statements are stated in Chilean pesos. The translations of Chilean pesos into US dollars are included solely for the convenience of the reader, using the observed exchange rate reported by the Chilean Central Bank as of December 31, 2001 of Ch$ 654.79 to US$ 1.00. The convenience translations should not be construed as representations that the Chilean peso amounts have been, could have been, or could in the future be, converted into US dollars at this or any other rate of exchange. (d) Assets and liabilities in foreign currency: Assets and liabilities denominated in foreign currency are detailed in Note 23. These amounts have been stated at the observed exchange rates reported by the Central Bank of Chile as follows: Currency United States dollar (Observed) Euro Unidad de Fomento (UF) Symbol used Ch$ US$ _ UF 2000 Ch$ 573.65 538.84 15,769.92 2001 654.79 578.18 16,262.66 During the years ended December 31, 2000 and 2001, the Argentine peso has been pegged to the US dollar at a rate of 1 Argentine peso to 1 US dollar. In early December 2001, restrictions were put in place that prohibited cash withdrawals above a certain amount and foreign money transfers, with certain limited exceptions. While the legal exchange rate remained at 1 peso to 1 US dollar, fi nancial institutions were allowed to conduct only limited activity due to these controls, and currency exchange activity was effectively halted except for personal transactions in small amounts. In January 2002, the Argentine government announced its intent to create a dual currency system with a “offi cial” fi xed exchange rate of 1.4 pesos to 1 US dollar for import, and export transactions and a “free” fl oating exchange rate for other transactions. On January 11, 2002, the exchange rate market holiday ended and closing new “free” fl oating exchange rates ranged from 1.6 to 1.7 pesos to 1 US dollar. In accordance with SVS Circular No. 81 the conversion of Argentine subsidiary fi nancial statements refl ect the conversion of 1.7 pesos to 1 US dollar. (e) Property, plant and equipment: Property, plant and equipment are recorded at contributed amounts or cost, as appropriate, plus price-level restatement. The charge to income by depreciation of the period as amount to ThCh$786,097 and ThCh$776,885 for the years ended December 31, 2000 and 2001. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 6 6 / / 2 0 7 In 1986, an increase based upon a technical appraisal of property, plant and equipment was recorded in the manner authorized by the SVS in Circulars No.’s 550 and 566 dated October 15 and December 16, 1985, respectively, and Communication No. 4.790, dated December 11, 1985. (f) Depreciation: Depreciation expense is calculated on the revalued balances using the straight-line method over the estimated useful lives of the assets. The depreciation charged to income amounted to ThCh$786,097 and ThCh$776,885 for the years ended December 31, 2000 and 2001, respectively. The charges are classifi ed under “Cost of sales” in amounts of ThCh$779,347 and ThCh$751,050, and under “Administrative and selling expenses” in amounts of ThCh$6,750 and ThCh$25,835 for the years ended December 31, 2000 and 2001, respectively. (g) Allowance for doubtful accounts: There were no write-offs of uncollectible accounts receivable during the years ended December 31, 2000 and 2001. (h) Intangibles, other than goodwill: Intangibles other than goodwill correspond mainly to easements and are amortized according to the standards defi ned in Technical Bulletin No. 55 of the Chilean Association of Accountants. (i) Investments in related companies: Investments in related companies are included in Other non-current assets using the equity method. This valuation method recognizes in income the Company’s equity in the net income or loss of each investee on the accrual basis (Note 8). Investments in foreign affi liates are recorded in accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants. (j) Goodwill and negative goodwill: Goodwill and negative goodwill are determined according to Circular No. 368 of the SVS. Amortization is determined using the straight-line method, considering the nature and characteristic of each investment, foreseeable life of the business and investment return, and does not exceed 20 years. (k) Bonds: Bonds payable are recorded at the face value of the bonds. The difference between the face value and the placement value, equal to the premium or discount, is deferred and amortized over the term of the bonds. (l) Income taxes and deferred income taxes: In accordance with circular No. 986 issued in 1991 by the SVS and Technical Bulletin No. 41 issued by the Chilean Association of Accountants, the Company records the effects of deferred taxes resulting from signifi cant timing differences that will not be fully offset when they reverse by similar new differences. In accordance with circular No. 1466 issued in 2000 by the SVS, deferred taxes are presented in accordance with BT’s No.’s 60 and 68 of the Chilean Association of Accountants, which is effective as of January 1, 2000. (m) Severance indemnity: The severance indemnity that the Company is obliged to pay to its employees under the collective bargaining agreements is stated at the present value of the benefi t under the vested cost method, discounted at 9.5% for the years ended December 31, 2000 and 2001, and assuming an average employment span which varies based upon years of services with the Company. (n) Pension and post-retirement benefi ts: Pension and post-retirement benefi ts are recorded in accordance with the respective Collective Bargaining Contracts of the employees based on the actuarially determined projected benefi t obligation. (o) Financial derivative contracts: As of December 31, 2000 and 2001, the Company has entered into foreign currency forward, interest rate swaps and collars contracts with various fi nancial institutions to manage exposure related to certain foreign currency denominated balance sheet positions. Forward contracts are recorded in accordance with Technical Bulletin No. 57 of the Chilean Association of Accountants, and are held with related companies for investment purposes. (p) Research and development costs: Costs incurred in research and development by the Company are either general in nature (water-level studies, hydroelectric research, seismic-activity surveys) which are expensed as incurred, or studies related to specifi c construction projects which are capitalized. (q) Statements of cash fl ows: The Consolidated Statements of Cash Flows have been prepared in accordance with the indirect method. Investments considered as cash equivalents, as indicated in point 6.2 of Technical Bulletin No. 50 issued by the Chilean Association of Accountants, include time deposits, investments in fi xed income securities classifi ed as marketable securities, repurchase agreements classifi ed as other current assets, and other balances classifi ed as other accounts receivable with maturities less than 90 days. For classifi cation purposes, cash fl ows from operations include collections from clients and payments to suppliers, payroll and taxes. (r) Reclassifi cations: Certains amounts in the prior years’ fi nancial statements have been reclassifi ed in order to conform with the current Note 3 year’s method of presentation. Change in Accounting Principle: There were no changes in accounting principles during the current year that would effect the comparison with the prior year’s fi nancial statements. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 0 0 8 8 / / 2 0 9 Note 4 Transactions with Related Companies: Balances of accounts receivable and payable classifi ed according to the nature of the transaction are as follows as of December 31, 2000 and 2001: a. Notes and accounts receivable: Company As of December 31, Short-term 2000 ThCh$ 2001 ThCh$ Long-term 2000 ThCh$ 2001 ThCh$ Chilectra S.A. Synapsis, Soluciones y Servicios IT Ltda. Inmobiliaria Manso de Velasco Ltda. Cía. Americana de Multiservicios Ltda. Compañía Eléctrica del Río Maipo S.A. Enersis Internacional Agencia Chilectra S.A. Enersis de Argentina S.A. Empresa Eléctrica de Panamá S.A. Edelnor S.A. Sociedad Panameña de Electricidad S.A. Companhia de Eletricidade do Río de Janeiro Enersis Investment S.A. Interocean Developments Inc. Luz de Bogotá S.A. Edesur S.A. Luz de Rio Ltda. Cerj Overseas Codensa S.A. Empresa Eléctrica de Colina Ltda. Endesa S.A. (Chile) Cía. Americana de Multiservicios Uno Ltda. Elesur S.A. Inversiones Distrilima S.A. Ingendesa S.A. Infraestructura 2000 S.A. Túnel el Melón S.A. Smartcom S.A. Luz Andes Ltda. Autopista Los Libertadores S.A. Endesa S.A. (España) Endesa Inversiones Generales S.A. Autopista del Sol S.A. Compañía Eléctrica Tarapacá S.A. (Celta) Endesa Internacional S.A. 2,893,101 178,340 15,475,935 4,064,031 296,084 110,416 3,637 1,021 23,270 56,281 317 17,731 58 181 20,529 50,828 14,171 15,579 12,097 151 553,122 1,898,050 312 503 38,073 46,594 5,516 - - - - - - - - 3,815,026 77,318 10,792,183 6,341,342 78,350 523,072 10,691 1,130 43,759 62,985 350 19,631 - 1,079 22,729 58,364 15,689 1,099,361 13,393 1,114 47,851,369 4,870,517 16,600 488 67,321 175,137 50,658 17 165 1,627 353,985 15,765 2,542 10,754 2,386 217,021,249 - - - 5,992,644 33,676,790 213,093,076 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 259,039,035 - - - - 36,708,459 300,709,305 - 15,303,630 - - - - - - - - 32,739,500 - - - - - - - - - - - - - - - - - Total 25,775,928 76,396,897 469,783,759 644,499,929 b. Notes and accounts payable: Company Chilectra S.A. Synapsis, Soluciones y Servicios IT Ltda. Inmobiliaria Manso de Velasco Ltda. Cía. Americana de Multiservicios Ltda. Compañía Eléctrica del Río Maipo S.A. Enersis Internacional Endesa S.A. (Chile) Edelnor S.A. Cía. Americana de Multiservicios Uno Ltda. Enersis de Argentina S.A. Enersis Investments S.A. Edesur S.A. Elesur S.A. Smartcom S.A. Infraestructura 2000 S.A. Túnel el Melón S.A. Endesa Inversiones Generales S.A. Ingendesa S.A. Interocean Developments Inc. As of December 31, Short-term 2000 ThCh$ 2001 ThCh$ Long-term 2000 ThCh$ 2001 ThCh$ 117,063,898 6,117,517 182,436 272,025 25,862,634 13,421 52,941,743 13,881 8,129,699 19,871 34,672,396 13,210 11,711,657 19,998 - - - - - 77,204,560 4,607,654 70,128 142,181 3,144,762 15,857 398,995 15,368 78,072 35,097 - 14,626 16,785,722 19,396 410 61 27,887 376 4,294 30,966,400 - - - - 59,116,556 - - - - 160,956,430 - 1,033,330,968 - - - - - - 58,569,056 - - 2,208,423 4,922,615 - - - - - - - 956,291,278 - - - - - - Total 257,034,386 102,565,446 1,284,370,354 1,021,991,372 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 1 1 0 0 / / 2 1 1 c. Effects in income (expense) for each year-ended December 31 are as follows: Company Name Chilectra S.A. Inmobiliaria Manso de Velasco Ltda. Cía Americana de Mulitiservicios Ltda Synapsis, Soluciones y Servicios IT Ltda. Compañía Eléctrica del Río Maipo S.A. Enersis Internacional Enersis Investment S.A. Chilectra Internacional Interocean Development Inc. Empresa Eléctrica de Panamá S.A. Empresa distribuidora del Sur S.A. Elesur S.A. Endesa S.A. (Chile) Endesa inversiones Generales S.A. Compañía Americana de Multiservicios Uno Ltda. Atacama Finance Co. Through the Agency : Agencia Caymán de Chilectra S.A. Empresa Eléctrica de Panamá S.A. Enersis Investment S.A. Enersis Internacional Chilectra Argentina S.A. Sociedad Panameña de Electricidad S.A. Interocean Developments Inc. Cerj Overseas Luz de Panamá S.A. Endesa Agencia Compañía Eléctrica del Cono Sur S.A. Chilectra Internacional Nature of Transaction Income (expense) 2000 ThCh$ 2001 ThCh$ Loans Property rentals Services Materials Loans Property rentals Services Loans Services Materials Loans Services Loans Services Loans Loans Loans Loans Loans Services Loans Loans Property rentals Loans Property maintenance Services Loans Loans Loans Loans Loans Usufruct dividend loss Loans Loans Loans Loans Loans Loans Loans (13,908,715) 4,156,301 4,403,709 (826) 2,796,319 (818,337) 1,430 292,961 194,603 (274,914) (637,621) (536,923) 223,258 587,700 (354,326) 415,278 9,004 339,028 45,796 4,069,306 (71,361,781) 10,534,882 - 1,542,556 (709,855) 405,087 517,552 18,677,991 5,508,655 (4,677,845) 2,060,087 (5,608,079) 302 4,853,217 5,680,831 1,455,814 181,135 869,170 (196,640) 9,208,102 4,159,238 4,277,980 - 1,909,251 (454,927) - 243,818 191,011 (154,800) (533,583) (541,626) (42,267) 534,597 121,387 - - - - 6,789,680 (50,012,000) (286,787) (203,608) 311,055 (458,541) 389,289 - 20,301,811 1,216,637 - (1,900,570) (15,032,698) - - 1,134,545 - 628,596 - - Total (29,263,890) (18,204,410) The transfer of short-term funds between related companies, which are not for collection or payment of services, is on the basis of a current cash account, at a variable interest rate based on market conditions. The resulting accounts receivable and accounts payable are essentially on 30 day terms, with automatic rollover for the same period and settlement in line with cash fl ows. The most signifi cant transactions in accounts receivable and accounts payable are as follows: Company Name Type Due Date Currency Capital Chilectra S.A. Chilectra S.A. Accounts receivable 09/29/03 Accounts payable Accounts payable Accounts payable Accounts payable 12/31/03 08/29/04 08/29/04 08/14/03 Cia. Americana de Multiservicios Ltda. Accounts payable 06/05/04 Cía. Eléctrica del Río Maipo S.A. Accounts payable 07/25/04 Elesur S.A. Through the agency : Agencia Caymán de Chilectra S.A. Accounts payable Accounts payable Accounts payable 05/13/03 05/13/03 08/29/03 Accounts receivable Accounts receivable 07/10/07 12/12/03 Cerj Overseas Accounts receivable 08/02/04 Enersis International Accounts receivable Accounts receivable 11/21/03 12/07/03 Empresa Eléctrica de Panamá S.A. Accounts receivable 12/22/03 US$ UF UF UF US$ UF UF UF UF UF US$ US$ US$ US$ US$ US$ 395,606,279 2,003,541 339,609 452,501 20,012,988 135,797 302,694 35,827,779 22,873,999 101,103 456,941,413 2,304,000 50,000,000 22,061,423 34,000,000 23,371,813 Interest Rate 7.56% 5,97% 5.98% 5.98% 5.38% 6.56% 4.82% 4.66% 5.38% 5.38% 7.07% 2.98% 7.88% 3.19% 3.00% 6.99% Note 5 Deferred income taxes: a. Income taxes (recoverable) payable as of each year-end are as follows: Income tax provision – current Income tax installments Total As of December 31, 2000 ThCh$ 7,758,685 180,145 7,938,830 2001 ThCh$ 11,513,829 129,898 11,643,727 b. The Company incurred taxable losses in the amount of ThCh$ 110,436,055 and ThCh$ 87,130,898 for the years ended December 31, 2000 and 2001, respectively. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 1 1 2 2 / / 2 1 3 c. The balance of taxed retained earnings and the related tax credits are as follows: Year 2000 2001 Retained Defi cit ThCh$ - (17,630,654) Credit ThCh$ - - d. In accordance with BT No. 60 and 69 of the Chilean Association of Accountants, and Circular No. 1,466 of the SVS, the Company has recorded consolidated deferred income taxes as of December 31, 2000 and 2001 as follows: As of December 31, 2000 As of December 31, 2001 Asset Liability Asset Liability Short-term ThCh$ 212,912 - 16,563,317 - - 77,079 - - - (18,333) - Long-term ThCh$ - - Short-term ThCh$ - - Long-term ThCh$ 1,489,525 61,928 - - - - 78,516 - - - - - - - - 753,072 420,483 - 5,311 - - - - - - (4,636) (80,677) - - Short-term ThCh$ - - 2,820,905 69,927 38,618 85,964 13,258 187,979 - - - Long-term ThCh$ - - Short-term ThCh$ - - Long-term ThCh$ 1,852,190 93,539 - - - - 88,931 - - - - - - - - 251,907 587,026 - - - - 5,494 12,721 156,766 1,655,226 (3,373) (164,134) - - Depreciation Severance indemnities Tax losses Deferred income Deferred charges Vacation accrual Other events Other provisions Bonds discounts Complementary accounts, net Valuation allowance Total 16,834,975 78,516 753,747 1,891,259 3,216,651 88,931 410,794 4,036,568 2000 ThCh$ Net short -term deferred tax assets Net long-term deferred tax liability 16,081,228 (1,812,743) 2001 ThCh$ 2,805,857 (3,947,637) e. According to Law No. 19,753, the income tax rate for fi rst category taxes will increase from 15% to 16% during 2002, 16.5% in 2003, and 17% in 2004. As of December 31, 2001, the new tax rate increased deferred income tax assets and liabilities by ThCh$ 232,231 and ThCh$ 502,690, respectively. These deferred tax amounts are presented in the balance sheet as current or noncurrent, depending on the amortization period that management has determined. Additionally, the increased tax rate has resulted in a greater tax expense of ThCh$ 270,459. f. Income tax expense for the year ended December 31, 2000 and 2001 is as follows: Tax expense Income tax provision Deferred taxes Adjustment to tax expense prior year Benefi t for tax losses Amortization of complementary accounts Change in complementary accounts Other changes or credits As of December 31, 2000 ThCh$ (12,002,124) - 16,563,317 (1,593,105) 1,239,615 - 2001 ThCh$ - (1,249,470) 10,229,123 102,541 (1,001,203) (16,675) Total 4,207,703 8,064,316 Note 6 Other current assets: Other current assets as of each year-end are as follows: Forward contracts and swaps (1) Deferred expenses Post-retirement benefi ts Interest rate collars Bond discount Others Total (1) See detail in Note 20. As of December 31, 2000 ThCh$ 115,920,897 4,683,479 35,402 - 337,005 174,945 2001 ThCh$ 107,385,560 787,226 34,338 787,194 979,785 149,321 121,151,728 110,123,424 Note 7 Property, plant and equipment: The composition of property, plant and equipment at each year-end is as follows: Buildings and infrastructure Machinery and equipment Equipment in transit Sub-total Technical appraisal Total property, plant and equipment Less: accumulated depreciation Total property, plant and equipment, net As of December 31, 2000 ThCh$ 19,992,617 1,421,538 1,010,327 22,424,482 31,933 22,456,415 (8,778,554) 13,677,861 2001 ThCh$ 19,992,617 1,502,357 1,312,457 22,807,431 31,914 22,839,345 (9,546,551) 13,292,794 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 1 1 4 4 / / 2 1 5 Note 8 Investment in related companies: a. Investments are summarized as follows: Related Companies Number of Shares Percentage Owned % Carrying Value Equity in net earnings (losses) Related Equity ThCh$ 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ Empresa Nacional de Electricidad S.A. Chilectra S.A. 4,919,488,794 359,602,436 59.98 98.24 1,404,416,926 483,782,188 Enersis Investment S.A. Enersis Internacional Interocean Developments Inc. Empresa Eléctrica de Panamá S.A. Empresa Distribuidora Sur S.A. Distrilec Inversora S.A. Inmobiliaria Manso de Velasco Ltda. - 360,557,687 21,960 186,081,623 143,996,758 101,684,374 29,462,253 - 100.00 100.00 80.99 16.02 20.43 99.99 - 293,490,193 132,793,176 130,732,979 657,526,145 370,573,441 48,773,158 801,821,151 424,252,616 360,141,411 256,970,537 119,142,402 103,721,761 91,672,962 65,882,910 45,014,840 842,382,354 475,266,873 66,925,263 47,425,812 - 22,889,774 38,464,693 293,490,194 42,021,602 69,711,842 - 54,747,417 132,793,176 105,893,600 105,367,472 75,724,715 (1,121,850) (10,854,593) 5,318,212 (9,002,504) 9,101,387 6,528,527 13,018,931 9,360,525 48,773,141 7,777,446 5,433,176 Companhia de Eletricidade do Río de Janeiro 136,290,186,189 7.99 475,231,502 34,570,357 38,009,639 - (264,043) Compañía Eléctrica del Río Maipo S.A. Inversiones Distrilima S.A. Compañía Americana de Multiservicios Uno Ltda. Synapsis, Soluciones y Servicios IT Ltda. Compañía Americana de Multiservicios Ltda. Endesa Market Place Enersis de Argentina S.A. Electric Investment Codensa S.A. Enersis Energía de Colombia S.A. Synapsis Colombia S.A. Central Termelétrica Fortaleza S.A. Luz de Bogotá S.A. Constructora El Gobernador 356,078,645 58,311,641 29,462,253 10,569,721 4,359,440 210 119,999 - 1 30,000,000 1 20,246,908 98.74 14.79 99.99 99.99 99.93 15.00 99.99 21,612,434 21,406,839 21,340,646 8,404,859 8,862,187 155,063,394 21,108,772 22,933,876 1,138,987 1,772,256 11,161,354 7,310,711 5,121,713 3,898,874 95,160 8,678,712 5,027,646 2,321,269 810,596 99,995 11,161,350 4,687,229 4,069,975 7,309,980 4,996,589 5,313,725 5,118,191 584,831 2,259,687 3,993,070 (303,148) (326,608) 95,159 5,591,941 15,018,563 - - 17,008,146 - 1,080,269,268 99.99 0.10 48.82 25.71 293,346 574,766 10,712,307 624,508,581 15,529,421,297,372 - - 19,885,420 - 6 293,346 574 5,229,748 - - - - - 160,587,923 26 31 (2,209) - - - - - 2 - - (246,201) 444 - 2,877,018 3 Total 2,379,652,948 2,352,356,825 213,910,396 231,679,590 b. In accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants for the years ended December 31, 2000 and 2001, the Company has recorded foreign exchange gains and losses on liabilities related to net investments in foreign countries that are denominated in same currency as the functional currency of those foreign investments. Such gains and losses are included in the cumulative translation adjustment account in shareholders’ equity, and in this way, act as a hedge of the exchange risk affecting the investments. As of December 31, 2001 the corresponding amounts are as follows: Company Country of Origin Edesur S.A. Edelnor S.A. Companhia de Eletricidade do Río de Janeiro Luz de Bogotá S.A. Investluz S.A. Argentina Perú Brasil Colombia Brasil Investment ThCh$ 215,447,128 45,024,920 193,828,458 164,125,446 81,214,637 Reporting Currency US$ US$ US$ US$ US$ Liability ThCh$ 195,637,576 33,495,134 154,029,298 211,802,052 89,225,234 Total 699,640,589 684,189,294 c. Investments year 2001 The investments made by Enersis during the year ended December 31, 2001 amounted to ThCh$11,060,425, which are described as follows . Acquisitions Central Termelétrica Fortaleza S.A. Chilectra S.A. Compañía Electrica del Río Maipo S.A. Panaguide Corporation Inc. Endesa Market Place Electric Investment Companhia de Electricidade do Río de Janeiro As of December 31, 2000 ThCh$ - 198,706,282 13,621,454 (47) 1,124,204 17,078,117 67,383,908 2001 ThCh$ 5,739,102 4,837,695 483,628 - - - - Total 297,913,918 11,060,425 d. Dissolution of investment vehicles During the period ended as of December 31, 2001, Electric Investment S.A. and Enersis Investment S.A. have been dissolved and have been absorbed by Enersis S.A. e. Subsidiaries in Argentina The Company has direct and indirect investments in Argentina, which are recorded according to the Chilean Association of Accountants, Technical Bulletin No. 64. These investments represent 14.3% of total assets, 26.9% of total revenues, and 20.8% of total operating income. The application of SVS Circular No. 81 for the Company’s Argentine subsidiaries amounted to a charge of approximately US$3,000,000, net of minority interest. Note 9 Goodwill: a. In accordance with current standards, recognition has been given to the excess of purchase price of the proportional equity in the net assets acquired (goodwill) in the purchase of shares as of December 31, 2000 and 2001, as follows: Company Empresa Nacional de Electricidad S.A. Distrilec Inversora S.A. Chilectra S.A. Inversiones Distrilima S.A. Compañía Electrica del Río Maipo S.A. Empresa Distribuidora Sur S.A. Luz de Bogotá S.A. As of December 31, 2000 2001 Amortization ThCh$ Net Balance ThCh$ Amortization ThCh$ Net Balance ThCh$ (41,707,067) (225,448) (976,740) (1,235) (34,597) (244,511) - 731,610,791 3,995,159 103,683,693 17,285 10,633,471 3,647,294 - (41,707,069) (249,599) (5,998,849) (1,367) (549,956) (270,704) (223,423) 689,903,722 4,173,539 109,150,041 17,768 10,487,406 3,767,305 3,537,531 Total (43,189,598) 853,587,693 (49,000,967) 821,037,312 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 1 1 6 6 / / 2 1 7 b. Following current standards, recognition has been given to the excess of the equity in the net assets purchased over the purchase price (negative goodwill) in the purchase of shares as of December 31, 2000 and 2001 as follows: Company As of December 31, 2000 Amortization ThCh$ Net Balance ThCh$ 2001 Amortization Net Balance ThCh$ ThCh$ Synapsis Soluciones y Servicios IT Ltda. Companhia de Electricidade do Río de Janeiro 14,869 - (167,280) (874,451) 14,870 48,406 (152,411) (919,720) Total 14,869 (1,041,731) 63,276 (1,072,131) Note 10 Due to banks and fi nancial institutions current portion: Current portion of long-term debt due to banks and fi nancial institutions: Foreign Currency Local Currency Total US$ Other foreign currencies UF Ch$ Financial Institution 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 ThCh$ 2000 ThCh$ 2001 2000 2001 ThCh$ ThCh$ ThCh$ 2000 ThCh$ 2001 ThCh$ Bank of América 1,043,419 5,235,323 BBVA BNP España Citibank Dresdner Bank HSBC - 569,287 3,463,868 411,577 1,231,899 - - 394,607 228,970 20,961 Santander Central Hispano 8,009,615 1,056,350 Bank of Tokyo Mitsubishi ABN Amro - 32,750,868 - 499,884 Banco Negocios Argentaria 3,957,674 Midland Bank Argentaria Bank 99,804 27,817 - - - Total 18,245,673 40,756,250 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,043,419 5,235,323 - 569,287 3,463,868 411,577 1,231,899 - - 394,607 228,970 20,961 8,009,615 1,056,350 - - 32,750,868 499,884 3,957,674 99,804 27,817 - - - - 18,245,673 40,756,250 Percentage of debt in foreign currency: Percentage of debt in local currency: As of December 31, 2000 % 100.00 0.00 2001 % 100.00 0.00 Total 100.00 100.00 Note 11 Other current liabilities: Other current liabilities as of each year-end are as follows: Forward contracts and swaps Interest rate collars Cross-Currency swaps Total Note 12 Due to banks and fi nancial institutions: As of December 31, 2000 ThCh$ 2001 ThCh$ 113,458,020 - - 109,864,260 1,362,334 (203,763) 113,458,020 111,022,831 Long–term debt: As of December 31, 2000 Financial Institution Currency long term portion ThCh$ After 1 years but within 2 years ThCh$ As of December 31, 2001 After 3 years but within 5 years ThCh$ After 5 years but within 10 years ThCh$ After 2 years but within 3 year ThCh$ Bank of América Banco Negocios Argentaria BNP España Citibank Dresdner Bank HSBC Santander Central Hispano BBVA Midland Bank Argentaria Bank ABN Amro US$ 82,150,064 26,783,907 US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ 130,115,292 50,271,818 34,060,636 173,792,631 - 116,512,331 - 8,871,497 4,140,032 - - - 35,253,894 75,363,332 9,821,850 93,798,668 31,593,618 - - 65,479,000 - - - - - - 261,916,000 363,408,450 - - - Total US$ 599,914,301 338,094,269 625,324,450 - - - - - - - - - - - - - - - - - - - - - - - - Percentage of debt in foreign currency: Percentage of debt in local currency: As of December 31, 2000 % 100.00 0.00 2001 % 100.00 0.00 Total 100.00 100.00 After 10 years ThCh$ Total long Annual interest rate % term portion ThCh$ - - - - - - - - - - - - 26,783,907 3.46 - - 2.58 2.93 2.96 2.99 2.70 - - 3.31 - - 35,253,894 75,363,332 9,821,850 355,714,668 395,002,068 - - 65,479,000 963,418,719 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 1 1 8 8 / / 2 1 9 Note 13 Bonds payable: a) Details of the current portion of bonds payable is as follows at each year-end: Face Value Series Interest Currency Maturity Outstanding ThCh$ Par Value Rate % B-1 B-2 1 2 3 UF UF US$ US$ US$ 422,614 - - - - 5.50 5.75 6.90 7.40 6.60 Date Jun 15, 2009 Jun 15, 2022 Nov 21, 2006 Nov 21, 2016 Nov 21, 2026 2000 ThCh$ - - 986,214 1,233,960 471,668 2001 ThCh$ 7,021,839 102,447 1,091,861 1,366,147 522,194 2,691,842 10,104,488 b) Details of the long-term portion of bonds payable is as follows at each year-end: Face Value Series Interest Currency Maturity Outstanding ThCh$ Par Value Rate % Date 2000 ThCh$ 2001 ThCh$ B-1 B-2 1 2 3 UF UF US$ US$ US$ 3,374,406 2,500,000 300,000,000 350,000,000 150,000,000 5.50 5.75 6.90 7.40 6.60 Jun 15, 2009 Jun 15, 2022 Nov 21, 2006 Nov 21, 2016 Nov 21, 2026 - - 177,429,944 207,001,603 88,714,973 54,876,822 40,656,650 196,437,000 229,176,500 98,218,500 473,146,520 619,365,472 Instrument 269 269 Yankee Bonds Yankee Bonds Yankee Bonds Total Instrument 269 269 Yankee Bonds Yankee Bonds Yankee Bonds Total c) Bonds payable are comprised of the following: i) Series A: On September 10, 1999, the Company registered a bearer bond issue, as of June 7, 1999 for a maximun amount of UF 7,000,000 as follows: Series A Total amount in UF No of bonds per series Face value in UF 7,000,000 700 10,000 The scheduled maturity of the bonds is 30 years, interest is payable semi-annually with the principle payable in one installment on June 15, 2029. Annual interest is 5.8%, compounded semi-annually. No placements from this registration have been made as of December 31, 2001. ii) Enersis S.A. Series B1-B2 On September 11, 2001, Enersis S.A. registered two series of bearer bonds as of June 14, 2001, as follows: Series B1 B1 B2 B2 Total amount In UF No. of bonds per series Face value In UF 1,000,000 3,000,000 1,000,000 1,500,000 1,000 300 1,000 150 1,000 10,000 1,000 10,000 The scheduled maturity of the Series B-1 bonds is 8 years, interest and principal payable semi-annually. Annual interest is 5.50%, compounded semi-annually. The scheduled maturity of the Series B-2 bonds is 21 years, principle payments beginning after 5 years, interest and principal payable semi-annually. Annual interest is 5.75%, compounded semi-annually. iii) Enersis S.A. Yankee Bonds On November 21, 1996, the Company, acting through its agency in the Cayman Islands, issued corporate notes (Yankee Bonds) for US$ 800 million in three series, as follows: Series 1 2 3 Total amount In US$ 300,000,000 350,000,000 150,000,000 Years to maturity Statedannual interest rate 10 20 30 6.90% 7.40% 6.60% Interest is payable on a semi-annual basis and principal is due upon maturity. The Series 3 bond holders have an option to require the Company to redeem all or any US$ 1,000 portion thereof on December 31, 2003 at a redemtion price equal to face value. Bond discounts of Enersis S.A. and its affi liates of ThCh$ 11,819,650 and ThCh$ 23,554,931 as of December 31, 2000 and 2001, respectively are included in Other Assets. Repurchase of Yankee Bonds During November 2001, the Company made a tender offer to repurchase all or a portion of the Series 2 Yankee Bonds. The offer expired November 21, 2001 and the Company repurchased a total of US$ 100,266,000 in bonds with accrued interest, at a price of US$ 95,536,000, generating a fi nancial gain of US$ 8,201,000 (ThCh$ 5,369,952), which is included in Other non-operating income (see Note 16(a)). A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 0 0 / / 2 2 1 Note 14 Accrued expenses: a. Short-term accruals: The accrued expenses included in current liabilities as of each year-end are as follows: Bonus and other fringe benefi ts Other accrued expenses As of December 31, 2000 ThCh$ 1,527,340 566,007 2001 ThCh$ 1,698,631 806,530 Total 2,093,347 2,505,161 b. Long-term accruals: Long-term accruals include severance indemnities to personnel, calculated in accordance with the policy described in Note 2, and the accrual for post-retirement benefi ts. An analysis of the changes in the accruals in each year is as follows: Opening balance as of January 1 Increase in accrual Payments during the period Sub-total Complementary pension and others As of December 31, 2000 ThCh$ 739,215 1,454,840 (1,145,083) 1,048,972 523,440 2001 ThCh$ 1,017,432 1,024,345 (799,952) 1,241,825 525,561 Total 1,572,412 1,767,386 Note 15 Shareholders’ equity: a. Issuance As of October 10, 2000, the Company fi nalized a private offering of shares, which commenced September 11, 2000, issuing a total of 1,491,020,100 shares for total proceeds of ThCh$ 292,794,395, or US$ 520,000,000. b. Dividends There are no restrictions on the payment of dividends. The following dividends were paid as of each period-end: Dividend Number Payment date Historical value Ch$ per share Type of dividend Related to 71 April 2001 1.806391 Final 2000 c. Number of shares Series First Subscribed As of December 31, 2001 Number of shares Paid With voting rights 8,291,020,100 8,291,020,100 8,291,020,100 d. Subscribed and paid capital is as follows as of the year-end: Series First As of December 31, 2001 Capital subscribed ThCh $ Capital paid ThCh$ 729,328,347 729,328,347 e. Net losses from operations and accumulated net earnings (losses) of development-stage subsidiaries are as follows: Company Central Termeléctrica Fortaleza S.A. Empresa Nacional de Electricidad S.A. Total f. Other reserves As of December 31, 2001 Net Earnings (Losses) Of the period ThCh$ Accumulated ThCh$ (352,381) (47,006) (352,381) 44,287 (399,387) (308,094) Other reserves are composed of the following as of December 31, 2001. Accumulated net losses of development-stage subsidiaries Reserve for variations in equity Reserve for accumulated conversion differences Total As of December 31, 2001 ThCh$ (308,094) 2,318,686 24,373,947 26,384,539 Detail of changes in the cumulative translation adjustment are as follows for the year ended December 31, 2001: Initial Balance ThCh$ Reserve for Assets Reserve for Liabilities ThCh$ ThCh$ Final Balance ThCh$ Cumulative translation Adjustment 5,082,010 129,217,211 (109,925,274) 24,373,947 Total 5,082,010 129,217,211 (109,925,274) 24,373,947 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 2 2 / / 2 2 3 The changes in the cumulative translation adjustment due to gains and losses on assets and liabilities for the year ended December 31, 2001 are as follows: Distrilec Inversora S.A. Inversiones Distrilima S.A. Cía. Peruana de Electricidad S.A. Edesur S.A. Cía. de Electricidade do Río de Janeiro Luz de Bogotá S.A. Investluz Endesa Market Place Central Termoelétrica Fortaleza S.A. Total Note 16 Other income and expenses: a. The detail of other non-operating income in each year is as follows As of December 31, 2001 ThCh$ 1,194,316 1,988,910 3,646,102 7,704,951 4,083,256 1,366,696 4,445,832 100,857 (156,973) 24,373,947 Gain on repurchase of bonds Adjustments to investments in related companies Cost of projects, inspections and other Gain on sale of investments (1) Gain on forward contracs Gain on interest rate swaps Others Total (1) Before taxes b. Other non-operating expenses in each year are as follows: Adjustments to investments in related companies Loss on forward contracts Cost of projects, inspections and other Usufruct contract Other Year ended December 31, 2000 ThCh$ - 5,712,674 10,503,382 83,662,791 5,314,780 - 368,928 2001 ThCh$ 5,369,952 1,176 13,016,716 - 7,933,740 1,449,557 867,981 105,562,555 28,639,122 Year ended December 31, 2000 ThCh$ 160,274 3,159,830 437,737 5,608,079 941,986 2001 ThCh$ 206,346 - - 15,032,698 569,169 Total 10,307,906 15,808,213 Note 17 Price-Level Restatement: The (charge) credit to income for price-level restatement as of each year-end is as follows. As of December 31, Assets Accounts receivable from subsidiaries Long-term accounts receivable from subsidiaries Fixed assets Investment in subsidiaries Investment in other companies Amortization of goodwill Other current assets Other long-term assets Credit to income for asset accounts Net credits from assets 2000 ThCh$ 3,781,891 21,803,457 655,678 81,224,805 2,791,103 35,740,525 484 3,215,594 1,004,659 150,218,196 Liabilities and Shareholders’ equity Current accounts payable to subsidiaries Long-term accounts payable to subsidiaries Long-term portion of debt due to banks and fi nancial institutions Long-term portion of bonds payable Shareholders’ equity Other long-term liabilities Credit (charge) to income for liability and shareholders’ equity accounts Net charges from liabilities and shareholders’ equity accounts (4,969,356) (50,488,333) (36,977,634) (20,548,482) (37,305,988) - 299,050 (149,990,743) 2001 ThCh$ (41,850) 15,664,740 423,364 52,391,458 10,426,410 26,135,604 298 629,477 3,099,743 108,729,244 (703,133) (31,540,634) (22,338,578) (14,226,520) (33,744,187) (3,474,147) (1,165,047) (107,192,246) Net credit to income 227,453 1,536,998 Note 18 Foreign currency translation: The (charge) credit to income for foreign currency translation as of each year-end is as follows: Assets Liabilities Current assets Currency As of December 31, 2000 ThCh$ 2001 ThCh$ Current liabilities Currency 2000 ThCh$ 2001 ThCh$ As of December 31, Cash Amounts due from related companies Time deposits Other current assets Long-term receivables Amounts due from related companies Other current assets US$ US$ US$ US$ US$ US$ 81,155 124,255 Accounts payable to related companies US$ (3,647,306) (6,321,448) 7,536,721 2,230,537 Debt due to banks 2,622,450 157,012 Bonds payable 999,981 50,102 Other liabilities Long-term liabilities US$ US$ US$ (1,552,939) (302,887) (743,046) (1,091,808) - (411,334) 9,209,723 51,851,195 Accounts payable to related companies US$ (514,654) (5,371,305) - 66,133 Debt due to banks Debt due to banks US$ US$ (9,444,820) (69,796,712) (29,064,853) (7,400,115) Total (loss) gain 20,450,030 54,479,234 Total (loss) gain (44,967,618) (90,695,609) Net charges to income (24,517,588) (36,216,375) A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 4 4 / / 2 2 5 Note 19 Bond issuance costs: The bond issuance costs related to the registration and issuance of the Enersis S.A. Series B-1 and Series B-2 Bonds incurred as of December 31, 2001 are as follows: Registration taxes Broker commission Other issuance costs Total Serie B-1 ThCh$ 780,373 104,050 19,630 904,053 Serie B-2 ThCh$ 487,782 50,811 12,268 550,861 Bond issuance costs are included in Other Current Assets and Other Assets, and will be amortized over the life of the bonds. The amortization period for the Series B-1 is 8 years, Series B-2 is 21 years. Note 20 Financial derivatives: As of December 31, 2001 the Company held the following fi nancial derivative contracts with fi nancial institutions with the object of decreasing exposure to interest rate and foreign currency risk according to the following detail: Type (1) FR S S S S EO EO EO EO Nominal Amount US$ 164,000,000 92,163,783 100,000,000 50,000,000 50,000,000 50,000,000 50,000,000 275,000,000 50,000,000 Date of Maturity Item Sales/ Purch. Hedged Item As of December 31, 2001 Closing Hedged Amount ThCh$ Initial Hedged Amount ThCh$ I Quarter 02 II Quarter 09 I Quarter 03 I Quarter 04 III Quarter 04 II Quarter 04 II Quarter 06 III Quarter 04 III Quarter 05 Exchange rate Exchange rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate P P P/S P/S P/S P/S P/S P/S P/S (2) Bonds Bank Obligations Bank Obligations Bank Obligations Bank Obligations Bank Obligations Bank Obligations Bank Obligations - 61,749,743 65,479,000 32,739,500 32,739,500 32,739,500 32,739,500 180,067,250 32,739,500 - 61,749,743 65,479,000 32,739,500 32,739,500 32,739,500 32,739,500 180,067,250 32,739,500 (1) Fr=Forward, EO=European Option, S=Swap (2) Non-hedging instruments Note 21 Commitments and contingencies: Litigation and other legal actions i. Court : 21st Civil Court of Santiago Process number : C-2437-1999 Cause : Lawsuit in summary process interposed by the lawyer Mr. Eduardo Rodriguez Guarachi. The lawyer has represented to the court that Enersis pay him US$ 250,000 for professional services rendered. Process status: First petition ruling period. Amounts involved: US$ 250,000. ii. Court : International court of the International Chamber of Commerce, París, France Process number : 11046/KGA Cause : On May 30, 2000, Pecom Energia S.A. and PCI Power Edesur Holding Limited (together, ¨Pérez Companc¨) commenced an action against Endesa-Chile, Chilectra and Enersis before the Arbitration Court of the International Chamber of Commerce, Paris, France. Pérez Companc has petitioned the court to either recognize its alleged right to nominate both a director and an alternate director in addition to the directors whom it already has the right to nominate; or to state that Pérez Companc and the Enersis group should each have an equal number of directors in Distrilec Inversora. Enersis, Endesa-Chile and Chilectra have contested Pérez Companc’s action. Process status: Final allegations presented, awaiting decision. Amounts involved: A fi xed amount for the case was set between US$ 180 million and US$ 200 million. Process status : Final allegations presented, awaiting decision. Amounts involved : A fi xed amount for the case was set between US$ 180 million and US$ 200 million. iii. Court : Honorable resolutive commission Process number : 577-99 Cause : Requirements of the “Fiscal Nacional Economico” against Enersis S.A. for the increase of ownership in Endesa- Chile S.A., asserting the transaction has considerably increased the vertical integration in the electric sector, affecting free competition. Process status : The discussion stage has ended and the corresponding complaints have been made. The case is now in the sentencing stage. It is important to note the Commission decided not to receive the case in trial. Additionally, the petitions of the Fiscalía Nacional Económica have changed since the beginning of the case, limiting the request to the inability of Enersis S.A. and Endesa Chile to have common directors and the necessity for these companies to hire different external auditors. Amounts involved: Undetermined. iv. Chilean Internal Revenue Service review on taxable income for the 1999, 2000 and 2001 tax years, and the tax trial in fi rst petition for the difference of First Category Income Tax and Reintegration of Monthly Tax Prepayments for absorbed net income in the amount of ThCh$ 62,400, corresponding to the 1998 tax year. v. Court : 25th Civil Court of Santiago Process number : 3151-00 Cause : Complaint fi led for compensation of damages by Mrs. Odette Legrand Halcartegaray against Enersis S.A.. Process status : First petition sentencing stage Amounts involved: ThCh$ 50,000 vi. Court : 2nd Labor Court of Santiago Process number : 6061-2001 Cause : Complaint fi led for severance pay for years of service on December 19, 2001 by Mr. Guillermo Calderón Ortega against Enersis S.A. Process status : First petition reconciliation and evidence stage. Amounts involved: ThCh$ 50,000 Restrictions. As of December 31, 2001, the Company did not have any restrictions. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 6 6 / / 2 2 7 Note 22 Note 23 Guaranties. As of December 31,2000 and 2001, the Company had letters of credit outstanding of ThCh$ 1,153, and ThCh$ 943,967, respectively. Sureties obtained from third parties: As of December 31, 2000 and 2001, the Company did not have any sureties from third parties. Foreign Currencies: As of December 31, 2000 and 2001, foreign currency denominated assets and liabilities are as follows: a. Assets. Account Current Assets Cash Time deposits Marketable securities Miscellaneous receivables Current notes receivable Current accounts receivables from related companies Recoverable expenses Prepaid expenses Deferred income taxes Other current assets Total current assets Property, plant and equipment Buildings and infrastructure Machinery and equipment Others Technical reappraisal Depreciation Total property, plant and equipment Other assets Investment in related companies Goodwill Negative Goodwill Long-term receivables Long-term accounts receivables from related companies Intangibles Accumulated amortization Others Total other assets Total assets Currency As of December 31, 2000 ThCh$ 2001 ThCh$ Ch$ US$ Ch$ Ch$ Ch$ UF Ch$ US$ Ch$ Ch$ Ch$ Ch$ US$ Ch$ Ch$ Ch$ Ch$ Ch$ Ch$ Euros US$ Ch$ US$ Ch$ US$ Ch$ Ch$ UF US$ Ch$ Ch$ Ch$ 36,260 - 64 15,195,856 760 976,211 23,083,631 1,716,086 7,938,830 15,379 16,081,228 5,189,591 115,962,137 186,196,033 19,992,617 1,421,538 1,010,327 31,933 (8,778,554) 13,677,861 538,698 3,242,367 - 9,371,937 737 1,038,280 70,777,158 4,581,459 11,643,727 22,859 2,805,857 2,737,864 107,385,560 214,146,503 19,992,617 1,502,357 1,312,457 31,914 (9,546,551) 13,292,794 2,166,417,946 - 213,235,002 845,927,955 7,659,738 (167,280) (874,451) - 4,261,023 1,731,620 463,791,116 1,382,224 (199,483) 3,163,918 3,706,329,328 3,906,203,222 1,943,625,269 584,831 408,146,725 809,541,169 11,496,143 (152,411) (919,720) 475,381 - - 644,499,929 1,382,224 (268,724) 14,023,809 3,832,434,625 4,059,873,922 b. Current liabilities : Account Currency Short-term debt due to banks and fi nancial institutions Bonds payable Dividends payable Accounts payable Notes payable Accounts payable to related companies Accrued expenses Withholdings Income taxes payable Deferred income Other current liabilities Total current liabilities US$ US$ UF Ch$ Ch$ Ch$ UF Ch$ US$ Ch$ Ch$ Ch$ Ch$ US$ UF Amount ThCh$ - 2,691,842 - 644,079 461,918 2,543,058 11,697,246 186,304,852 46,964 2,093,347 74,193 12,002,124 1,419,415 - 31,239,871 251,218,909 Within 90 days 91 days to 1 year 2000 2001 2000 2001 Avg Rate Amount Avg Rate Amount Avg Rate Amount Avg Rate % ThCh$ % ThCh$ % ThCh$ % - - - - - - - 9.67 - - - - - - 8,016,750 2.87 18,245,673 - - 377,639 473,180 1,071,201 16,876,539 85,327,864 85,243 2,505,161 892,739 16,675 411,337 1,158,571 - - - - - - 9.14 - - - - - - - - - - - 13,084,564 - 45,900,760 - - - - - - - - - - - 6.12 - 5.38 - - - - - 5.58 109,864,260 5.06 82,218,149 5.58 32,739,500 2.5 2,980,202 7,124,286 6.7 5.5 - - - 275,800 - - - - - - - - - - - - - - - - - - - - 227,077,159 159,449,146 43,119,788 c. Long-term liabilities, December 31, 2001 Account 1 to 3 years 3 to 5 years 5 to 10 years More than 10 years Currency Amount ThCh$ Avg Rate Amount Avg Rate Amount Avg Rate Amount Avg Rate % ThCh$ % ThCh$ % ThCh$ % Debt due to banks and fi nancial institutions US$ 963,418,719 Accounts payable to related companies Bonds payable Accrued expenses Income taxes payable UF US$ US$ UF Ch$ Ch$ 1,008,887,067 13,104,305 - 14,900,647 - 3,947,637 3.85 4.90 5.38 - 5.5 - - - - - - - - - - - - - - - - - - - 196,437,000 6.9 327,395,000 17,381,727 5.51 32,715,282 5.57 30,535,816 - - - - 525,561 - - - 1,241,825 - - - - 7.16 5.75 - - Total long-term liabilities 2,004,258,375 17,381,727 229,677,843 359,172,641 d. Long-term liabilities, December 31, 2000 1 to 3 years 3 to 5 years 5 to 10 years More than 10 years Avg Rate Account Currency Amount Avg Rate Amount Avg Rate Amount Avg Rate Amount ThCh$ % ThCh$ % ThCh$ % ThCh$ % Debt due to banks and fi nancial institutions US$ 599,914,301 Accounts payable to related companies Bonds payable Accrued expenses Income taxes payable Total long-term UF US$ US$ Ch$ Ch$ 1,033,330,968 - - - 1,812,743 6.81 6.06 - 30,966,399 - 6.10 - - - - - - - - - - - - - - 220,072,987 177,429,945 523,441 - - - 7.75 - - - - - - 7.06 295,716,575 7.06 - - 1,048,971 - - - liabilities 1,635,058,012 30,966,399 398,026,373 296,765,546 A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 2 2 8 8 / / 2 2 9 Note 24 Note 25 Sanctions: As of December, 2000 and 2001, there were no outstanding sanctions for the Company, directors, or management. Subsequent events: a. Situation in Argentina (unaudited) On January 6, 2002, the Congress of the Republic of Argentina approved Law No. 25,561 entitled Public Emergency and Reform of the Exchange Regime. The law established: the end of convertibility at parity of the Argentine peso 1 to 1 with the US dollar, fees for public services are converted into Argentine pesos at a rate of exchange of 1 to 1, the indexation clauses based on price indices of other countries are no longer in effect, and the Argentine Government’s Executive is authorized to renegotiate concession contracts with public service companies. By function of the powers conferred to the Executive by this law, an offi cial exchange rate was established at $1.40 Argentine pesos per US dollar for settled foreign commerce transactions and another rate that is “free” from restriction for all other transactions. The “free” fl oating exchange rate of the US dollar on the day the exchange market opened was $1.70 per US dollar. (See Note 2(d)). Subsequently, the Executive Branch agreed to convert all assets and liabilities using a conversion rate into Argentine pesos of rate of exchange of 1 to 1, except for deposits maintained in the fi nanial system. On February 12, 2002, the Executive issued Decree No. 293, which granted authority to the Minister of Economics to renegotiate concession contracts with public service companies. Within the public services included in the renegotiation of the contracts, the Decree specifi cally mentions the distribution and commercialization of electric energy. Based on these factors described above and before negotiations have started with the Argentine government. The Company estimates that net cash fl ows (operating cash fl ows less fi nancing cash fl ows) for 2002 will decrease by approximately US$ 112,000,000, from the total of its Latin American operations which represented an 18.7% of total cash fl ows during 2001. The Company plans to mitigate this reduction in net cash fl ows through the renegotiation of concession contracts with the Argentine Government. The economic criteria of these negotiations have been defi ned in the decree, and it is the Company’s belief that it will be possible to recouperate the diminished net cash fl ows in a reasonable period of time. Despite the diffi cult economic postion present in Argentina as described above during the months of January and February 2002, the Company’s subsidiaries and affi liates in Argentina have continued to operate regularly in the electric sector and continued to service all contractual client demands. At the date of issuance of these fi nancial statements and considering the instable political and economic situation in Argentina, there is uncertainty regarding the correct application of transactions at the offi cial or “free” fl oating exchange rate. Thus, it is not possible to determine the current extent of the effects of the situation in Argentina with certainty, or the future changes that could result. b. Merger of Subsidiaries The company is in the process of merging its subsidiaries Compañía Americana de Multiservicios Ltda. and Compañía Americana de Multiservicios Uno Ltda. so that the fi rst absorbs the latter, effective as of January 1, 2002. At the date of issuance of these fi nancial statements the public deed was in the process of being signed. c. Dissolution of Subsidiaries According to the minutes of the Extraordinary General Shareholders’ Meeting held on January 28, 2002, the following companies have been dissolved: Empresa Eléctrica de Panamá S.A., Interocean Development Inc., Sociedad Panameña de Electricidad S.A. and Estelmar Holding S.A. The assets and liabilities of these companies have been proportionally distributed according to the shareholder participation of each one of the partners. Note 26 Environment: As the Company is a holding company and does not have any operations, there are no environmental disclosures required. ENRIQUE GARCIA ALVAREZ Chief Executive Offi cer JUAN CARLO WIECZOREK C. General Account JUAN I. DOMINGUEZ ARTEAGA Adjunct Chief Executive Offi cer A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 3 3 0 0 / / 2 3 1 Enersis S.A. Relevant Facts Provisional Dividend The Board of Directors of Enersis S.A., as of February 2, 2001, agreed upon unanimous vote of its members not to distribute, in February 2001, a provisional dividend charged to the results of December 2000, due to not satisfying the requirements provided for such action in the Dividend Policy of the Company. Defi nitive Dividend As of April 2, 2001, the Ordinary Stockholders’ Meeting of Enersis S.A. agreed the distribution of the defi nitive minimum obligatory dividend, charged to the profi t of the period that ended on December 31, 2000, reaching $1.806 per share, which totals M$14,976,820. OPAs On April 2, 2001, the Ordinary Stockholders’ Meeting of Enersis S.A. agrees to have recourse to the provision contained in the 10th transitory article of Law No. 19,705, of December 20, 2000, that “Regulates the Tender Offer for Shares (POPS, OPA in Spanish), and Establishes Corporate Government Regime”, so that the current Company controller may exercise the option to freely alienate the shares issued by Enersis S.A., even though the price is substantially higher than the market price, privided that such alienation is performed in the next three years, counted from day 1 of the month following the month in which such law was published. Likewise, the already mentioned Stockholders’ Meeting agrees to carry all necessary agreements to duly comply with and carry out the aforementioned resolution. Provisional dividend The Board of Directors of Enersis S.A., as of April 27, 2001, agrees upon unanimous vote of its present members not to distribute, in May 2001, a provisional dividend charged to the results of March 2001, according to the policy in force on this matter, due to not satisfying the requirements provided for such action in the dividend Policy of the Company. Purchasing Powers On June 28, 2001, the Board of Directors of Enersis S.A., agreed, by unanimous vote of its present members, to open two Purchasing Powers in Chile to purchase the totality of the stock issued by Chilectra S.A. and the totality of the stock issued by Compañía Eléctrica del Río Maipo S.A. that are offered on sale by Enersis S.A. The holders of ADSs issued by Chilectra S.A. shall be able to sell in the Purchasing Power over Chilectra S.A. by exchanging its ADSs into shares issued by Chilectra S.A. The Chilectra S.A. shares will be purchased at a price of Ch$2,200, legal currency, per share, and the Rio Maipo shares will be purchased at a price of Ch$250, legal currency, per share. Such prices will be paid in cash and they are identical to the prices offered in the Purchasing Powers opened by Enersis S.A. on such companies, as of November 21, 2000. The Purchasing Powers will be opened as of July 3, 2001, date in which the present relevant fact and other pertinent information will be published in the Diario El Mercurio de Santiago newspaper. Each Purchasing Power will expire at 14:00 of the fi fteenth day, counted since the publication of an ad in Diario El Mercurio de Santiago announcing that the number of shareholders of Chilectra S.A., or Río Maipo S.A., as it corresponds, has become lower than 500. Anyway, both Purchasing Powers will expire not later than December 26, 2001, at 14:00. Finally, the Board of Directors of the Company resolves to declare that Enersis S.A. has the intention of proposing, in the corresponding corporate instances, and according to the then-applicable legal provisions, that the shares of Chilectra S.A. and Rio Maipo S.A, cease to be registered in the national and foreign stock exchanges as it corresponds, as soon as the conditions for it become feasible. Given the nature of the operations, whose performance depends on the volume of the purchases and sales become perfected, and the time in which such purchase and sales take place during the in force period of the Purchasing Powers, it is not possible to a priori determine the effects that they may produce in the result. It is possible to indicate, though, that the total investment that the maximum share purchasing might imply, corresponding to the Purchasing Powers previously mentioned, would be equivalent in Chilean pesos to approximately US$28,7 million. Provisional dividend The Board of Directors of Enersis S.A., as of July 31, 2001, agrees upon unanimous vote of its present members not to distribute, in August 2001, a provisional dividend charged to the results of June 2001, according to the policy in force on this matter, due to not satisfying the requirements provided for such action in such dividend Policy of the Company. Empresa Nacional de Electricidad S.A. As of Sept. 7, 2001, E.S.P., Colombian hydroelectric partnership controlled by our subsidiary Empresa Nacional de Electricidad S.A., of which Enersis indirectly owns 14,70%, was notifi ed of a environmental complaint, also presented against the Corporación Autónoma Regional de Cundinamarca (Colombia) and the Empresa de Energía de Bogotá S.A. E.S.P., a company property of the Bogotá Municipality and that owns 51,5% de Emgesa S.A. E.S.P. The plaintiffs are the residents of the Sibaté-Cundinamarca Municipality, who are demanding in representation of the 25,000 residents of such Municipality through a group action. The complaint aims to obtain the repair of all supposed material and moral damage that the defendants might have suffered when the plaintiffs allowed the use of the contaminated waters of the Bogotá river in the Embalse del Muña reservoir, in order to use it in the generation of electric energy. The complaint demands approximately to US$1,500,000,000, an amount which, beyond considerations of the essence, is considered as completely disproportionate regarding the supposed damages. Notwithstanding, it can be said that the economic activity performed by Emgesa S.A. E.S.P. is framed in the most strict attachment to the body of laws in force, that has been awarded all permissions and authorizations from the competent entities, including those with environmental competence, and that the eventual ecological damages are not imputable, absolutely, to such company’s behavior, as the water that is utilized in the generation of electric energy is not contaminated by such company and it cannot be considered as a polluting agent. Therefore, Emgesa S.A. E.S.P. is absolutely convinced that the Colombian justice will fi nally reject this bold complaint. Attending the foundations of the complaint, it is considered that it will cause no effect or infl uence in the property of Enersis S.A: A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 3 3 2 2 / / 2 3 3 Enersis Internacional tender offer to purchase bonds As of November 6, 2001, the Enersis Internacional partnership, a company 100% owned by Enersis S.A., with domicile in the Cayman Islands, announced in the United States of America Tender offer to purchase in cash the issuing of bonds in dollars performed by Enersis S.A. (Cayman Islands Agency) on Nov. 1, 1996, whose expiration date is on Dec. 1, 2016 (the “Offer”). Such issuing of bonds was originally for a total amount of US$350,000,000 (three hundred fi fty million American dollars, hereinafter “US$”) for twenty years, that is, to expire on 2016, at a cover annual rate of 7.4% (hereinafter “the Bonds”), and was registered in the Securities and Exchange Commission (“SEC”) of the United States of America. The Enersis Internacional Offer is over the total amount of the Bonds that are circulating in the market and that reach the total of the originally issued, that is, US$350,000,000. The terms and conditions of the Enersis Internacional offer are recorded in the Offer to Purchase document dated November 6, 2001. The Offer dealer agent is Chase Manhattan International Limited (“JPMorgan”). The exact price to be paid by Enersis Internacional for each US$1,000 of Bond capital will be determined by a formula which is explained in the Offer to Purchase and that will basically be the estimation of a margin or Spread over the yield to maturity of the United States Treasure Bond with a coupon rate of 5.0%, expiring on August 15, 2011. Enersis Internacional has offered, as well, to pay all the Bond holders that accept the Offer an amount equivalent to the interest accrued and not paid since the payment time of the last Bond coupon. The Offer period has started with this date and will expire at 17:00, New York time, of November 16, 2001, unless Enersis Internacional decides to extend it or cancel it in advance (the “Termination Date”). The payment of Bonds to those holders that shall have accepted the offer will happen at the third labored day of transactions in the New York Stock Exchange since the acceptance from a holder. Once a holder has accepted the Offer, this operation is irrevocable. The remaining conditions of the Offer shall be contained in the Offer to Purchase. The result of the Offer will be communicated to the market after the Termination Date (including any extension of it). On the other hand, it is worth mentioning that the immediate fi nancing needed to carry on the described operation is duly negotiated in the in the international credit markets. Extension of the public offer period As of November 19, 2001, Enersis Internacional informed the extension of the Offer termination date to the market. The Offer shall now expire at 17:00, New York time, of Wednesday, November 21, 2001, but all the remaining terms and conditions of the Offer shall remain unaltered. Finally, and according to the provisions of the communication No. 988 of the Superintendence of Values and Insurance, the fi nal effects of the operation described in the results of Enersis S.A. cannot be reasonably quantifi ed at this time. These effects may only be determined once the defi nitive result of the Offer is known. Latibex As of December 17, 2001, the entering of Enersis S.A. stock to the so-called Mercado de Valores Latinoamericano de la Bolsa de Valores de Madrid (Latin American Securities Market of the Madrid Stock Exchange, Latibex) has been formalized, and the fi rst transactions of the titles in the European market have already been done. Parent Company Management Analysis Financial statements for the year ended December 31, 2000 and 2001 Economic-fi nancial summary As at December 31, 2001, the Company achieved a Net Profi t of $ 40,926 million compared to the profi t of $ 92,875 million as at December 2000. With respect to the decrease in profi t in the period December to December, it is important to consider that the signifi cant profi t achieved in 2000 was due mainly to an extraordinary income of some $ 150,000 million produced by the sale of the Company’s investments in Aguas Cordillera, Aguas Puerto and Transelec. Such divestments were not repeated during the year 2001. An essential element in the positive result in 2001 was the signifi cant growth in operating income that grew by 36% or $ 195,917 million. The subsidiaries that contributed most to this improvement in operating income were Endesa, Cerj and Edesur. This improved operating income comprises mainly $ 111,194 million from the distribution business (57%) and $ 76,360 million from the generating business (39%). This positive achievement is particularly remarkable considering it was attained in the midst of a fairly depressed regional economic scenario throughout the year 2001 that was made signifi cantly worse by the events that took place in Argentina from November 2001 on. Furthermore, another positive aspect achieved during 2001 was the greater balance reached between the generation and the distribution businesses in most of the countries where we operate. This has contributed to a greater stability in aggregate cash fl ows. Finally, in the area of fi nancial operations, we must highlight the repurchase of Yankee Bonds carried out by Enersis and its subsidiary, Endesa Chile that produced a fi nal profi t of $ 23.411 million after taxes. With regard to the evolution of the Minority Interests, this decreased by $ 57.133 million, essentially as a result of the lower profi ts from affi liated companies and, to a lesser degree, of the increase in the shareholding in Chilectra and Río Maipo, investments made by the Company during the past two years. Performance of distribution business In this segment, we highlight the increase in physical sales achieved by Chilectra and Río Maipo (Santiago), Edesur (Buenos Aires) and Edelnor (Lima) which, unfortunately, were not able to compensate the decrease in sales registered by Codensa (Bogotá), Cerj (Río de Janeiro) and Coelce (Ceará). In the case of the last two, the fall was due to the rationing of power due to the drought in Brazil during 2001, and implied , for the whole group, a 1.2% reduction in aggregated physical sales or 593 GWh. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 3 3 4 4 / / 2 3 5 The growth of US$ 170 million in operating income was explained mainly by Cerj (US$ 87 million), Edesur (US$ 40 million), Coelce (US$ 19 million) and Codensa (US$ 11 million). In this same line of business, there was also a sustained improvement in the productivity ratio during 2001 in all subsidiaries in the fi ve countries where they operate. The average productivity rose from 1,223 clients per employee to 1,379 clients per employee, an improvement of 13%. This was the result of the addition of 317,000 new clients as well as a reduced staff complement related to a more effi cient distribution of human resources within the Group that led to a signifi cant reduction in cost of salaries that will continue to be refl ected in future periods. Performance of Generating Business The Operating Income of this business segment rose by 30.4%, due principally to the improved results in Chile, Peru and Colombia while they declined in Brazil and Argentina. In Chile, the improvement in operating income US$ 103 million, was the result of an increase of 34.9% in average tariffs and an increase of 13.2% in the generation of hydroelectricity. In Peru, the increase by US$ 18 million was due mainly to a 17.6% rise in physical sales, refl ecting the greater generating capacity, and to the increase, in October 2000, of 191 MW of new additional capacity. In Colombia, operating income rose by US$ 13 million as a result of a 9.2% increase in physical sales and a 16.4% rise in average tariffs. In Brazil, the fall in operating income by US$ 5 million is due to a lower level of generation of hydroelectricity which implied a greater need to purchase power. Finally, in Argentina the fall by US$ 8 millions explained by the drop in physical sales at Central Costanera and to lower spot prices that could not be entirely compensated by the increase in generation of hydroelectricity at El Chocón as a result of a greater availability of water. Details of the variations described above can be found in the following pages, in the Analysis of the Financial Statements, which includes comments on the principal accounts in the Income Statement, Financial Statements and Principal Cash Flows, compared with the information corresponding to December 31, 2000. On the other hand, in the fi nancial area, the exchange rate continued to rise, reaching a record level of over Ch$ 700, a circumstance which had great impact on the foreign exchange translation line. The closing exchange rate on December 31 was Ch$ 654.79 which, compared to the closing fi gure on December 31, 2000 of Ch$ 573.65, represents a devaluation of 14%. As of December 17, 2001, the shares of both Enersis and Endesa Chile, are being traded in the Latin American Stock Market, Latibex, listed under the Madrid Stock Market within the framework of globalization of the principal companies in the region. Markets in which the company operates Enersis’ commercial activities are handled through subsidiaries that operate the various businesses in the countries where the company has a presence. For Enersis, the most important activities are the Distribution and Generation of electricity. The following tables illustrate the evolution of the key ratios in the different countries. Distribution Business Company Chilectra Río Maipo Edesur Edelnor Cerj Coelce Codensa Energy sales (GWh) ( * ) Dec-00 Dec-01 Energy losses (%) Clients (th) Clients per employee (th) Dec-00 Dec-01 Dec-00 Dec-01 Dec-00 Dec-01 9,089 1,186 12,597 3,583 7,656 5,894 8,776 9,585 1,245 12,909 3,685 6,739 5,352 8,673 5.2% 5.4% 10.3% 9.9% 19.7% 13.3% 10.5% 5.4% 6.4% 9.9% 8.9% 22.7% 13.0% 11.8% 1,262 287 2,108 852 1,581 1,796 1,802 1,289 294 2,097 867 1,691 1,917 1,850 1,455 3,121 886 1,379 1,128 1,128 1,860 1,785 3,764 925 1,557 1,249 1,309 2,276 Total 48,781 48,188 11.5% 11.9% 9,688 10,005 1,223 1,379 (*) It includes sales to fi nal clients, tools, and intercompany sales Generating Business Country Chile Argentina Perú Colombia Brasil Total Market of operations SIC y SING SIN SICN SIN SICN Energy sales (GWh) Market share Dec-00 Dec-01 Dec-00 Dec-01 20,086 15,549 3,604 13,356 3,887 18,673 12,988 4,239 14,591 3,743 56,482 54,234 55.4% 21.6% 20.9% 19.7% 1.1% 49.0% 13.5% 23.0% 23.3% 1.2% I.- ANALYSIS OF THE FINANCIAL STATEMENTS 1. - Analysis of the Income Statements The profi t obtained as at December 31, 2001 amounted to $ 40,926 million that is 56% or $ 51,949 million lower than the profi t of $ 92,875 million at the same date in the previous year. It is important to point out that despite the lower profi t, operating income during the period rose by 36% and the fall in profi t is mainly the result of profi ts obtained on the sale of assets in 2000, specifi cally of the investments in Aguas Cordillera S.A., Aguas Puerto S.A. and Transelec S.A., which produced extraordinary revenues of approximately $ 82.663 million. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 3 3 6 6 / / 2 3 7 The following table illustrates the comparisons and variations of each item in the Income Statement: Income Statement (million Ch$) Dec-00 Dec-01 Dec 01-00 %Var 01-00 Operating Revenues Operating Costs Operating Margin Selling and Administrative Expenses Operating Income Profi t(Loss) in Related Companies Net Other Non Operating Income Net Financial Margin Positive Goodwill Amortization Monetary Adjustment Exchange Difference Non Operating Income Income tax Negative Goodwill Amortization Net Income 4,160 (847) 3,313 (19,428) (16,115) 213,910 95,255 (136,917) (43,190) 227 (24,518) 104,767 4,208 15 92,875 4,175 (820) 3,355 (20,040) (16,685) 231,680 12,831 (111,347) (49,001) 1,537 (36,216) 49,484 8,064 63 40,926 R.A.I.I.D.A.I.E. (*) Earnings per share $ 238,590 11.20 226,797 4.94 (*) Earnings before taxes, interests, depreciation, amortization and extraordinary items. 15 27 42 (612) (570) 17,770 (82,424) 25,570 (5,811) 1,310 (11,698) (55,283) 3,856 48 (51,949) (11,793) (6.27) 0.4% 3.2% 1.3% (3.2%) (3.5%) 8.3% (86.5%) 18.7% (13.5%) 577.1% (47.7%) (52.8%) 91.6% 320.0% (55.9%) (4.9%) (55.9%) Non-Operating Income The non-operating result recorded a profi t of $ 49.484 million, which represents a decrease of 53% or $ 55.283 million in comparison to December 2000. The net fi nancial margin registered $ 25.570 million profi ts compared to December 2000. This positive outcome is related to lower indebtedness and also lower interest rates in the international markets. Investments in related companies show a net profi t of $ 231.680 million, that is $ 17.770 million higher than December 2000. This positive variation is mainly related to better results of Edesur, Distrilec, Enersis de Argentina, Luz de Bogota y Chilectra by $ 41.339 million, partially compensated by lower results recognized from Endesa Chile by $ 24.904. Amortization on lower value of investments increased by $ 5.811 amounting to 49.001 million. This increase is mainly related to the acquisition of additional equity interest in our subsidiaries Chilectra and Rio Maipo. Non-operating income and expenses as at December 31, 2001 amounted to a net profi t of $ 12,831 million, refl ecting a fall of $ 82.424 million respect to the year before, when the profi t reached $ 95.255 million. The main reasons for this fall are: • A reduction of $ 82.663 million related to the one time profi ts registered in 2000 in connection with the divestments in Aguas Cordillera S.A., Aguas Puesto S.A. • • An increase in losses because of the dividends granted to Chilectra de Argentina S.A., by $ 9.425 million. Higher non operating income related to the repurchase of bonds made by our subsidiary Enersis International , adn equivalent to $ 5.370 million. Price-level restatement and exchange differences. These show a higher loss of $ 11,698 million, from a loss of $ 24.518 million as at December 31, 2000 to a loss of $ 36.216 million in this exercise. This was mainly due to the effects of 11.04% devaluation of the Peso respect to the US Dollar, compared to only 3.52% devaluation during the year 2000. Interest rate risks As at December 31, 2001, Enersis had 40% of its debt exposed to fl oating rates (basically Libor and TAB Chile rate, while debt at variable rate for the year 2000 was 71%. The reduction in the percentage of debt at variable rate during this year is mainly explained by changing obligations to fi xed rates, as well as by hedging US$ 425 million over Libor rate. Considering the situation of debt exposed to fl oating rate trough all its subsidiaries, this would result 54% in 2000, and 43% in 2001. Foreign currency risk The Company’s exposure to an exchange risk is brought about by the assets and liabilities denominated in foreign currency, mainly in US Dollars. As at December 31, 2000, 51% of the debt was expressed in US Dollars. When considering the US Dollar/UF forward policy, the percentage of the debt expressed in US Dollars is reduced to 45%. As at December 31, 2001, 60% of the debt was expressed in US Dollars. When considering the US Dollar/UF forward policy, the percentage of the debt expressed in US Dollars is reduced to 56%. The important proportion of debt denominated in US Dollars is basically explained because a very important percentage of Enersis revenues are, directly or indirectly, linked to the US Dollar. The exchange risk exposure is currently handled on a consolidated basis. The Company’s policy is to hedge between 60% and 70% of the exposure to exchange risks. On a consolidated basis, as at December 31, 2001, the Company had US Dollar/UF forward contracts for USD 506 million whilst as at December 31, 2000, the total was USD 902 million. The reduction is due to a decrease in the exposure to the variations in the Dollar exchange rate on our books. This hedging policy lies in maintaining a certain position in forward contracts US$/UF. In December 2000, Enersis had forward contracts by US$ 196 million, while as of December 2001, these contracts amounted to US$ 164 million. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 3 3 8 8 / / 2 3 9 2. - Analysis of the fi nancial statements Total assets increased by $ 153.671 million respect to the previous year. This is principally due to: Assets (million Ch$) Dec-00 Dec-01 Dec 01-00 %Var 01-00 Current Assets Fixed Assets Other Assets Total Assets 186,196 13,678 3,706,329 214,146 13,293 3,832,435 27,950 (385) 126,106 15.0% (2.8%) 3.4% 3,906,203 4,059,874 153,671 3.9% • • Increase of $ 225.337 million on receivable accounts from related companies, both long and short term. Decrease in investments in related companies by $ 27.296 million related to the merge of Enersis Investments, partially compensated by an icrease in the investment in Luz de Bogotá, as well as in Endesa S.A., Chilectra S.A., Edesur S.A., Distrilec S.A., and Enersis´SPVs. Liabilities (million Ch$) Dec-00 Dec-01 Dec 01- 00 %Var 01- 00 Short Term Liabilities Long Term Liabilities Equity 410,668 2,360,816 1,134,719 270,197 2,610,491 1,179,186 (140,471) 249,675 44,467 (34.2%) 10.6% 3.9% Total Liabilities 3,906,203 4,059,874 153,671 3.9% Total liabilities by 23.6% or $ 109.204 million mainly due to an increase in the obligations with banks and also to a higher exchange rate applied to obligations with banks and fi nancial institutions and over bonds. In relation to the equity, it increased by $ 44,467 million. This variation is explained by the increase of $ 19,245 million in Other Reserves, the decrease of $ 15,704 million in Retained Earnings and profi ts of 2001 for $ 40,926 million. Below we illustrate the evolution of the principal fi nancial ratios: Indicator Unit Dec-00 Dec-01 Var Dec 01- 00 %Var 01-00 Liquidity Indebtedness Profi tability Current liquidity Acid Ratio (1) Working Capital Leverage % Short term debt % Long term debt Interest Coverage (2) ROE ROA (1) Current assets net of expenses (2) RAIIDAIE divided by interest expenses times times MM$ times % % times % % 0.45 0.43 (224,472) 2.44 0.15 0.85 1.19 8.18% 2.4% 0.79 0.76 (56,051) 2.44 0.09 0.91 1.44 3.47% 1.0% 0.34 0.33 168,421 - (0.05) 0.05 0.25 -4.7% -1.4% 75.6% 76.7% (75.0%) 0.0% (36.7%) 6.4% 21.2% (57.6%) (57.6%) The liquidity ratio as at December 2001 was 0.79 that refl ects an improvement of 0.34 points respect to the same date of the previous year. The debt ratio as at December 31, 2001 was 2.44 times, which remained almost fl at compared to December 2000. Furthermore, return on equity was 3.47%. As at the same date in the previous year, this was 8.18%. 3.- Main cash fl ows items During the period, the Company generated a positive net cash fl ow of $ 3.379 million composed of the following: Effective Cash Flow (million Ch$) Dec-00 Dec-01 Dec 01- 00 %Var 01-00 Operating Cash Flow Financing Cash Flow Investment Cash Flow Net Cash Flow (106,683) 14,449 81,428 (10,806) (3,438) 90,238 (83,421) 3,379 103,245 75,789 (164,849) 14,185 (96.8%) 524.5% (202.4%) (131.3%) Operating activities generated a net negative cash fl ow of $ 3.438. This fl ow comprises mainly by profi ts for the period of $ 40,926 million less additions to the net income that do not represent cash fl ow for $ 147.217 million. Additionally, a positive variation in liabilities impacting the operating cash fl ow for $ 21.489 million, and by positive variation on assets that do impact the operating cash fl ow for $ 81.358 million. Financing activities produced a positive cash fl ow of $ 90.238 million mainly due to new loans hired in the amount of $ 708.926 million and bonds issued by $ 99.341 million. This was partially offset by prepayment of loans for $ 393.889 million, dividends paid for $ 15.394 million, loans paid to related companies for $ 305.869 million, and other payments for $ 9.842 million. Investment activities generated a net negative fl ow of $ 83.421 million, basically due to loans granted to related companies for $ 178.338 million and investments for $ 11.060 million. This was compensated by collection on loans given to related companies in the amount of $ 93.059 million, and others for $ 13.010 million. A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 4 4 0 0 / / 2 4 1 II. BOOK VALUE AND MARKET VALUE OF THE ASSETS With regard to the more important assets, we mention the following: The value of the items in fi xed assets have been adjusted in accordance with the accounting criteria established by the Chilean Superintendency of Securities and Insurance in its Circulars Nº 550 and 556 issued in 1985. In the case of the foreign company, Inversiones Distrilima S.A., the value of the fi xed assets were adjusted in accordance with the exception criteria indicated in Technical Bulletin Nº 45 issued by the Chilean College of Accountants, the norm in force at the time the investment was made and which was not modifi ed by Technical Bulletin Nº 51 that replaced it. Depreciation is calculated on the updated value of the goods in accordance with the years of useful life remaining for each item. Investments in related companies are valued at their proportional equity value. In the case of foreign companies, as from the second quarter of 1998, this methodology has been applied on the basis of the fi nancial statements prepared in accordance with the norms established in Technical Bulletin Nº 64 of the Chilean College of Accountants. Intangible values have been adjusted by price-level restatement and are amortized according to the norms indicated in Technical Bulletin Nº 55 of the Chilean College of Accountants. The assets expressed in foreign currency are shown at the exchange rate reigning as at the date of closure of the period. Investments in fi nancial instruments with repurchase/resale agreements are shown at their purchase value plus the proportion of the interest calculated on the implicit rate of each operation. Accounts and bills receivable from related companies are classifi ed according to their short and long-term maturities. The operations are adjusted to equal conditions similar to those that are normally applied in the market. In summary, assets are valued according to generally accepted accounting principles and norms and to instructions given on this matter by the Superintendency of Securities and Insurance explained in Note 2 of the Financial Statements. Financial Statements of Subsidiaries A N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 2 4 4 2 2 / / 2 4 3 Comparative Balance Sheets For the years ended 2000 & 2001 (thousand Ch$ as of December 2001) CHILECTRA 2000 2001 RÍO MAIPO 2000 2001 SYNAPSIS 2000 2001 CAM UNO LTDA, INM, MANSO DE VELASCO CAM LTDA, (Ex - Diprel) ENERSIS ARGENTINA 2000 2001 2000 2001 2000 2001 2000 2001 ENERSIS INTERNATIONAL 2000 2001 EMPRESA ELÉCTRICA DE PANAMÁ 2000 2001 DISTRILIMA 2000 2001 EDESUR ENDESA CHILE INTEROCEAN DEVELOPMENT 2000 2001 2000 2001 2000 2001 ASSETS Current assets Fixed assets Others assets Total assets LIABILITIES AND EQUITY Short term liabilities Long term liabilities Minority interest Equity and reserves Subsidiary´s organization cost Accumulated profi ts (losses) Net income Interim dividends 175,955,902 247,745,052 698,675,046 149,574,451 262,860,113 792,338,683 35,210,295 33,873,635 1,122,420 11,752,740 36,407,811 5,857,552 17,754,825 4,183,517 15,568 21,521,184 3,863,178 9,538 25,232,423 9,922,239 100,430 17,230,872 9,994,459 123,931 36,405,042 54,785,404 12,496,097 46,012,325 49,963,322 8,118,375 15,224,962 604,013 258,593 22,263,642 1,160,978 2,832,381 102,680 339 457 101,185 - 182 10,281,521 - 284,940,895 223,366,703 - 114,140,665 7,342,402 - 207,461,431 5,172,566 - 214,578,698 39,708,104 312,718,128 6,845,030 41,723,866 359,540,523 898,942 127,388,592 760,612,730 3,813,320 66,061,280 850,411,823 19,229,008 310,646,300 5,140,608,420 390,073,276 306,073,806 5,402,808,808 467,400,267 4,290,481 - 114,852,569 4,782,014 - 128,012,612 1,122,376,000 1,204,773,247 70,206,350 54,018,103 21,953,910 25,393,900 35,255,092 27,349,262 103,686,543 104,094,022 16,087,568 26,257,001 103,476 101,367 295,222,416 337,507,368 214,803,833 219,751,264 359,271,262 402,163,331 891,814,642 935,702,111 5,841,327,996 6,176,282,881 119,143,050 132,794,626 187,749,188 474,787,390 17,517,095 293,207,503 113,139,614 65,015,793 (29,040,583) - 86,012,418 615,944,324 19,034,317 307,045,388 137,543,147 71,053,639 (31,859,986) - 38,353,067 10,095,603 - 19,261,309 1,014,512 9,869,354 (8,387,495) - 11,697,847 20,707,822 - 19,261,309 1,002,292 8,992,219 (7,643,386) - 16,301,327 623,329 1,105 4,065,831 15,079 4,997,089 (4,049,850) - 17,660,340 420,832 2,017 4,135,553 15,998 5,314,256 (2,155,096) - 25,732,600 639,699 204,078 1,354,138 6,319,688 4,687,231 (3,682,342) - 14,619,475 968,489 599,945 1,689,930 6,783,256 4,069,976 (1,381,809) - 34,000,918 443,687 24,082,344 6,029,959 36,354,529 7,777,450 (5,002,344) - 12,704,053 16,603,008 25,869,064 6,029,959 38,232,416 5,433,178 (777,656) - 13,405,773 358,930 - 1,588,365 3,687 2,261,242 (1,530,429) - 16,622,868 4,512,420 - 1,662,913 471,055 3,995,818 (1,008,073) - 3,362 - - 80,353 24,995 5,592,107 (5,597,341) - 6,207 - - 80,353 19,643 15,018,688 (15,023,524) - 112,972 33,676,790 - 197,723,037 34,035,212 38,206,020 (8,531,615) - 606,594 44,577,090 - 202,273,602 63,709,617 54,488,744 (28,148,279) - 774,093 88,204,485 (2,226,439) 137,478,138 3,258,520 (12,684,964) - - 60,339 97,485,842 (8,527,896) 151,273,638 (9,426,445) (11,114,214) - - 89,436,846 29,177,915 97,933,228 117,995,959 17,026,252 7,701,062 - - 79,024,832 62,383,903 105,691,202 131,563,763 18,189,782 11,982,797 (6,672,948) - 259,860,996 59,885,550 - 570,121,700 (46,523,793) 58,524,553 (10,054,364) - 201,545,448 76,630,519 - 634,254,216 (57,970,295) 81,242,223 - - 558,996,234 2,677,251,416 1,268,286,916 1,267,744,541 (44,629,055) 111,577,566 - 2,100,378 659,556,909 2,721,454,706 1,390,854,340 1,273,450,789 58,874,284 70,058,270 - 2,033,583 648 - - 125,571,248 (5,306,996) (1,121,850) - - 1,449 - - 133,903,809 (6,428,846) 5,318,214 - - Total liabilities and equity 1,122,376,000 1,204,773,247 70,206,350 54,018,103 21,953,910 25,393,900 35,255,092 27,349,262 103,686,543 104,094,022 16,087,568 26,257,001 103,476 101,367 295,222,416 337,507,368 214,803,833 219,751,264 359,271,262 402,163,331 891,814,642 935,702,111 5,841,327,996 6,176,282,881 119,143,050 132,794,626 Comparative Income Statements For the years ended 2000 & 2001 (thousand Ch$ as of December 2001) CHILECTRA 2000 2001 RÍO MAIPO 2000 2001 SYNAPSIS 2000 2001 CAM UNO LTDA. INM. MANSO DE VELASCO CAM LTDA. (Ex - Diprel) ENERSIS ARGENTINA 2000 2001 2000 2001 2000 2001 2000 2001 ENERSIS INTERNATIONAL 2000 2001 EMPRESA ELÉCTRICA DE PANAMÁ 2000 2001 DISTRILIMA 2000 2001 EDESUR ENDESA CHILE INTEROCEAN DEVELOPMENT 2000 2001 2000 2001 2000 2001 OPERATING INCOME Operating revenues Operating costs Gross margin S&A expenses Operating income NON - OPERATING INCOME Non - operating income Non - operating expenses Price level restatement Foreign currency translation Non - Operating income Income tax Minority interest Negative goodwill amortization 306,907,763 (199,751,376) 107,156,387 (33,137,152) 360,032,392 (250,107,715) 109,924,677 (30,635,280) 42,797,036 (29,706,776) 13,090,260 (2,588,171) 51,601,728 (37,348,168) 14,253,560 (4,224,724) 32,300,348 (21,335,211) 10,965,137 (5,858,091) 44,561,341 (31,700,394) 12,860,947 (5,691,102) 43,563,070 (33,631,162) 9,931,908 (3,663,454) 49,728,961 (38,540,074) 11,188,887 (4,262,756) 34,217,810 (24,650,699) 9,567,111 (1,315,252) 11,808,227 (7,221,431) 4,586,796 (1,674,797) 22,977,032 (17,069,254) 5,907,778 (3,250,019) 41,189,122 (32,179,103) 9,010,019 (3,898,304) - - - (10,652) - - - (9,477) - - - (131,014) 74,019,235 79,289,397 10,502,089 10,028,836 5,107,046 7,169,845 6,268,454 6,926,131 8,251,859 2,911,999 2,657,759 5,111,715 (10,652) (9,477) (131,014) - - - - - - (5,177) (5,177) (17,210) (22,387) - - - - - 165,848,680 (120,441,374) 45,407,306 (16,475,686) 183,573,451 (131,281,615) 52,291,836 (18,660,194) 531,961,114 (373,187,803) 158,773,311 (70,593,296) 581,914,971 (396,174,400) 185,740,571 (71,324,275) 910,340,111 (618,733,865) 291,606,246 (32,451,869) 1,014,834,291 (643,308,541) 371,525,750 (33,685,786) - - - (696) 28,931,620 33,631,642 88,180,015 114,416,296 259,154,377 337,839,964 (696) - - - - - 78,272,294 (69,080,374) (7,459,539) - 94,039,228 (81,496,034) (2,572,646) 3,109,782 3,476,318 (2,638,524) 116,444 - 3,680,195 (2,958,029) 141,248 - 1,390,417 (565,320) (49,282) - 956,191 (1,172,942) 31,298 29,728 2,099,417 (2,976,734) 158,956 - 206,450 (1,409,364) 122,940 (9,170) 4,138,196 (5,169,707) 1,467,724 - 7,990,271 (4,742,866) 629,831 98,027 839,396 (909,634) 129,815 - 1,073,969 (845,726) 248,573 (700,565) 5,599,807 - 2,952 - 15,037,201 (20,561) (3,253) 14,778 27,236,239 (4,798,549) 15,899,344 - 31,534,760 (760,571) (280,707) 23,995,262 10,605,224 (19,100,426) (6,304,901) - 7,113,093 (11,839,773) (1,912,010) (10,707,293) 7,930,319 (15,830,079) - - 6,885,899 (14,562,094) - - 12,981,117 (16,220,752) - - 31,677,500 (22,597,198) - - 302,402,299 (333,805,646) 888,976 (4,510,824) 78,587,445 (302,418,842) 4,211,876 (14,082,369) 4,361,859 (6,338,057) 855,044 - 2,678,466 (1,823,440) (42,424) 4,505,612 1,732,381 13,080,330 954,238 863,414 775,815 (155,725) (718,361) (1,089,144) 436,213 3,975,263 59,577 (223,749) 5,602,759 15,028,165 38,337,034 54,488,744 (14,800,103) (17,345,983) (7,899,760) (7,676,195) (3,239,635) 9,080,302 (35,025,195) (233,701,890) (1,121,154) 5,318,214 (9,794,659) (941,164) - (19,916,817) (1,465,659) 66,388 (1,586,973) - - (1,900,031) - - (885,372) (400) - (1,698,733) (1,131) - (747,097) (115,765) - (1,392,809) (374,202) - (956,699) 46,077 - (414,096) (1,039,988) - (456,094) - - (892,148) - - - - - - - - - - - - - - (50,944) 2,188,470 - (69,689) 6,301,458 - (9,884,402) (4,470,370) 1,023,974 (7,855,000) (7,251,316) 1,133,666 (26,415,827) - - (42,254,375) - - (85,906,651) (66,583,410) 39,938,445 (45,387,668) (33,025,097) 44,332,961 - - - - - - Net income 65,015,793 71,053,639 9,869,354 8,992,219 4,997,089 5,314,256 4,687,231 4,069,976 7,777,450 5,433,178 2,261,242 3,995,818 5,592,107 15,018,688 38,206,020 54,488,744 (12,684,964) (11,114,214) 7,701,062 11,982,797 58,524,553 81,242,223 111,577,566 70,058,270 (1,121,850) 5,318,214 Comparative Cash Flows For the years ended 2000 & 2001 (thousand Ch$ as of December 2001) CHILECTRA 2000 2001 RÍO MAIPO 2000 2001 SYNAPSIS 2000 2001 CAM UNO LTDA. INM. MANSO DE VELASCO CAM LTDA. (Ex - Diprel) ENERSIS ARGENTINA 2000 2001 2000 2001 2000 2001 2000 2001 ENERSIS INTERNATIONAL 2000 2001 EMPRESA ELÉCTRICA DE PANAMÁ 2000 2001 DISTRILIMA 2000 2001 EDESUR ENDESA CHILE INTEROCEAN DEVELOPMENT 2000 2001 2000 2001 2000 2001 Net cash fl ows from operating activities 109,374,457 124,850,394 10,857,339 12,148,358 7,493,789 4,535,404 4,935,250 4,605,178 17,418,796 4,492,602 976,036 1,389,012 5,587,470 15,018,616 13,200,994 31,583,318 3,854,588 1,122,873 44,549,448 48,304,352 143,792,777 108,892,706 277,620,044 348,636,299 2,738,401 171,559 Net cash provided by (used in) fi nancing activities (320,813,215) (123,254,684) (8,863,068) (8,711,624) (4,325,666) (4,015,426) (13,167,227) (4,013,242) (18,739,636) (5,858,461) (474,659) 2,087,220 (5,597,341) (15,023,545) (81,319,130) (19,465,894) (18,294,473) (3,931,538) (22,880,171) (15,303,533) (64,420,082) (50,878,659) (807,738,966) (180,811,460) (54,930,644) - Net cash used investing activities 207,612,105 4,141,497 (1,981,462) (3,375,572) (2,078,423) 611,517 7,819,017 1,479,389 1,075,414 1,406,139 (375,062) (2,988,111) - (20,145) 68,121,851 (12,068,975) 17,946,635 - (21,613,924) (31,102,453) (64,042,748) (82,317,817) 468,755,778 (109,229,093) 52,157,003 (167,603) Positive (negative) net cash fl ow for the year (3,826,653) 5,737,207 Effect of price level restatement on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents beginning of year (295,233) (4,121,886) 4,683,211 (74,572) 5,662,635 561,325 Cash an cash equivalents end of year 561,325 6,223,960 12,809 (11,722) 1,087 45,342 46,429 61,162 1,089,700 1,131,495 (412,960) 2,071,325 (245,426) 40,280 126,315 488,121 (9,871) (25,074) 3,715 48,449 3,506,750 (2,808,665) 55,353 1,898,366 15,329,947 (24,303,770) (61,363,144) 58,595,746 (35,240) (88,761) (27,599) 46,429 (65,029) 1,024,671 765,108 (68,964) 1,062,531 1,789,778 (47,666) (460,626) 801,431 (187,659) 1,883,666 340,805 (10,101) (255,527) 274,558 (3,096) 37,184 19,031 (25,386) 100,929 129,814 (37,553) 450,568 230,743 - (9,871) 48,323 - (25,074) 38,453 (3,581) 134 281 (18,225) 30,224 415 (33,437) 3,473,313 897,705 3,754 (2,804,911) 4,371,017 - 55,353 1,835,485 (2,553,369) (655,003) 2,093,083 - 15,329,947 10,985,870 - (24,303,770) 29,134,887 7,651,552 (53,711,592) 83,172,007 3,182,945 61,778,691 29,460,415 18,830 1,789,779 2,852,309 340,805 2,224,471 19,031 56,215 230,743 681,311 38,452 13,379 415 30,639 4,371,018 1,566,106 1,890,838 1,438,080 26,315,817 4,831,117 29,460,415 91,239,106 35,788 548 - 548 3,956 (3,631) 325 549 874 A N N U A L R E P O R T E N E R S I S 2 0 0 1 P A G E S 2 4 4 / 2 4 5 NOTE: Complete fi nancial statements of the subsidiaries shown above are available for the public in Enersis and in the Superintendency of Securities and Insurance (SVS) LUZ DE BOGOTÁ CERJ INVESTLUZ 2000 2001 2000 2001 2000 2001 ENERSIS ENERGIA DE COLOMBIA 2001 2000 135,124,730 888,001,668 145,415,192 186,142,391 968,144,994 141,088,255 116,754,969 600,101,017 203,649,580 172,642,829 687,214,555 310,896,365 85,958,329 617,586,716 211,771,658 108,819,605 699,182,586 254,531,563 5,532,857 8,280 - 927,838 7,203 - 1,168,541,590 1,295,375,640 920,505,566 1,170,753,749 915,316,703 1,062,533,754 5,541,137 935,041 78,894,225 31,046,692 498,302,343 529,281,257 32,213,140 10,229,443 (11,425,510) - 70,906,555 43,433,530 556,526,974 586,757,973 26,562,211 11,188,397 - - 153,546,864 334,728,265 - 654,923,192 (217,762,448) (4,930,307) - - 405,390,224 290,132,024 - 478,532,813 - (3,301,312) - - 86,828,430 81,455,422 260,756,166 516,585,805 (18,290,118) (7,064,924) (4,954,078) - 222,574,359 45,729,858 277,609,074 562,249,536 (34,249,597) (11,379,476) - - 5,053,796 - - 92,173 3,034 392,134 - - 641,695 - - 536,273 3,274 (246,201) - - 1,168,541,590 1,295,375,640 920,505,566 1,170,753,749 915,316,703 1,062,533,754 5,541,137 935,041 LUZ DE BOGOTÁ CERJ INVESTLUZ 2000 2001 2000 2001 2000 2001 ENERSIS ENERGIA DE COLOMBIA 2001 2000 296,882,881 (243,347,611) 53,535,270 (33,089,866) 317,381,297 (262,046,958) 55,334,339 (27,572,553) 345,393,318 (259,710,764) 85,682,554 (74,585,359) 365,889,680 (266,815,024) 99,074,656 (31,101,745) 221,973,803 (143,700,525) 78,273,278 (48,298,799) 240,315,466 (153,836,516) 86,478,950 (44,040,481) 25,821,380 (24,284,245) 1,537,135 (638,155) 5,925,849 (5,968,411) (42,562) (253,403) 20,445,404 27,761,786 11,097,195 67,972,911 29,974,479 42,438,469 898,980 (295,965) 21,858,403 (2,540,862) - - 16,310,161 (7,983,714) - - 40,897,200 (68,583,911) - - 53,132,589 (126,226,821) - - 11,660,233 (37,756,885) - - 11,431,869 (52,788,999) - - 65,058 (310,491) - - 175,483 (82,503) - - 19,317,541 8,326,447 (27,686,711) (73,094,232) (26,096,652) (41,357,130) (245,433) 92,980 (17,585,673) (11,947,829) - (13,496,531) (11,403,305) - 11,659,209 - - 1,820,009 - - (3,396,762) (7,973,514) 427,525 (7,269,561) (5,664,577) 473,323 (261,413) - - (43,216) - - 10,229,443 11,188,397 (4,930,307) (3,301,312) (7,064,924) (11,379,476) 392,134 (246,201) LUZ DE BOGOTÁ CERJ INVESTLUZ 2000 2001 2000 2001 2000 2001 ENERSIS ENERGIA DE COLOMBIA 2001 2000 42,105,392 88,784,328 299,358 (4,989,359) 34,046,047 15,993,294 1,947,685 (1,972,869) (48,242,418) (10,196,205) 67,803,840 67,353,022 (5,853,389) 36,374,239 (36,460,322) (38,959,485) (69,809,456) (57,265,689) (28,513,316) (50,625,191) - - - 654 (42,597,348) 39,628,638 (1,706,258) 5,097,974 (320,658) 1,742,342 1,947,685 (1,972,215) (4,772,898) (47,370,246) 87,930,140 (3,526,137) 36,102,501 44,904,844 - (1,706,258) 3,890,791 - 5,097,974 2,038,110 - (320,658) 7,011,099 - 1,742,342 6,489,273 (15,472) 1,932,213 - (16,382) (1,988,597) 2,139,199 40,559,894 81,007,345 2,184,533 7,136,084 6,690,441 8,231,615 1,932,213 150,602 

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