aDuke - Duke Energy Brasil

Transcrição

(A free translation of the original ín Portuguese)
Duke Energy International,
Geração Paranapanema S.A.
Financial statements at
December 31, 2011
and independent auditor's report
..L
pwc
(A free translation ofthe original in Portuguese)
Independent auditor's report
on the financiaI statements
To the Board of Directors and Stockholders
Duke Energy lntemational, Geração
Paranapanema S.A.
We have audited the accompanying financia1 statements of Duke Energy International, Geração
Paranapanema SA, which comprise the balance sheet as at December 31, 2011 and the statements of
income, comprehensive income, changes in equity and casb flows for the year then ended, and a summalY
of significant accounting policies and other explanatolY information.
Management's responsibillty
for the financiaI statements
Management is responsible for the preparation and fair presentation of these financiai ststements in
accordance with accounting practices adopted in Brazil and the International Financia1 Reporting
Standards (IFRS) issued by the Intemational Accounting Standards Board (IASB), and for such internai
controI as management determines is necessalY to enabIe the preparation of financiaI statements that are
free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financiai statements based on our audit. We conducted
our audit in accordance with Brazilian and Intemational Standards on Auditing. Those standards require
that we compIy with ethicaI requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement
An audit invoIves performing procedures to obtain audit evidence about the amounts and disclosures in
the financiaI statements. The procedures selected depend on the auditor'sjudgment, including the
assessment of the risks of material misstatement ofthe financiai statements, whether due to fraud ar
error.
In making thase risk assessments, the auditor considers internaI control relevant to the entity's
preparation and fair presentation of the financiai statements in arder to design audit procedures that are
appropriate in tbe circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity's internaI control. An audit aIso incIudes evaluating the appropriateness of the accounting
poliCÍes used and the reasonableness of accounting estimates made by management, as well as evaIuating
the overaIl presentation ofthe financiaI statements.
2
.......................
""
............. --...... " .. " ............. ,, ...................................... " .......... " ... " ... -- ... ". PricewaterhouseCoopers, Av, Francisco Matarazzo 1400. Torre Thrino, São Paulo, SP, Brasil 05001·903_, Caixa Postal 61005
7:' (11) 3674·2000, F: (11) 3674-2000, www.pwc.com/br
Duke Energy International, Geração
Paranapanema S.A.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a baais for our
audit opinion.
Opinion
In our opinion, the financiai statements referred to above present fairly, in all material respects, the
financial posmon of Duke Energy lnternational, Geração Paranapanema S.A. as at December 31, 2011, and
its financiaI performance and cash f10ws for the year then ended, in accordance with accounting practices
adopted in Brazil and International Financiai Reporting Stsndards (IFRS) issued by the lntemational
Accounting Standards Board (IASB).
Other matters
Supplementary infannatian . statement
af value added
We also have audited the statement of value added for the year ended December 31, 2011, prepared by
management, the presentation of which is required by the Brazilian corporate legislation for listed
companies, but is considered supplementary information for IFRS. This statement was subject to the same
auditing procedures arorementioned and, in our opinion is fair1y presented, in ali material respects, in
relation to the financial statements taken as a whole.
São Paulo, March 21, 2012
PIV.~~~~
PricewaterhouseCoo rs
A ditores Indepen ntes
""T""/O<
.,;,j-~_.
C C
Cõntador CjRC lSP165875/Q-.6
3
(A Iree translation 01 lhe original in Portuguese)
Geraç.%o Paranapanema
Duke Energy Intemational, Geração Paranapanema S,A. CNPJ 02,998,30110001-81 Llsted Company
Contents
ANNUAL MANAGEMENT REPORT FOR 2011 ................................................................................................ 3 BALANCE SHEETS AS AT OECEMBER 31, 2011 ANO 2010........................................................................ 28 STATEMENTS OF INCOME ............................................................................................................................30 STATEMENTS OF COMPREHENSIVE INCOME ............................................................................................ 31 STATEMENTS OF CHANGES IN EQUITY ......................................................................................................32 STATEMENTS OF CASH FLOWS................................... ................... ...................................................... 33 STATEMENTS OF VALUE ADDED .................................................................................................................34 1.
GENERAL INFORMATION ...................................................................................................................35 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ....................................................................35 2.1.
Basis 01 preparation...............................................................................................................................35 2.2.
Cash and cash equivalents ..................................................................................................................35 2.3.
Financiai instruments.............................................................................................................................36 2.4.
Trade receivables ..................................................................................................................................38 .. ............................................ 38 2.5.
Provision for impairmen! of trada receivables............... ........
2.6.
Inventories .............................................................................................................................................38 2.7.
Prepaid expenses ..................................................................................................................................38 2.8.
Services in progress ......................... ............. ..................................................................................... 38 2.9.
In!angible asseis ...................................................................................................................................38 2.10. Property, plan! and equipment ..............................................................................................................39 2.11. Impairment of non-financial assets ........................................................................................................40 2.12. Trade and other payables ......................................................................................................................40 2.13. Debentures ..........................................................................................................................................40 2.14. Provisions .............................................................................................................................................40 2.15. Current and deferred Income tax and social contribu!ion on nel income ............................................... 41 2.16. Employeebenelits ................................................................................................................................41 2.17. Revenue recognition ..............................................................................................................................42 2.18. Dlstribution of dividend and interest on capilal .................................................................................... 43 3.
CRITICAL ACCOUNTING ESTIMATES ANO JUDGMENTS ................................................................ 43 3.1.
Criticai accounting estimates and assumptions ............... .. ........... ....... .............................................43 3.1.1. Income tax, social contribution and olher taxes .....................................................................................43 3.1.2. Usefullives 01 long-lived assets ............................................................................................................44 3.2.
Criticai judgments in applying lhe Company's accounting policies ........................................................ 44 4.
FINANCIAL RISK MANAGEMENT ......................................................................................................44 4.1.
Financiai risk factors ..............................................................................................................................44 4.1.1. Market risk.... .......................................................................................................... ............................. 44 4.1.2. Credit nsk ..............................................................................................................................................45 4.1.3. Liquidity risk ...........................................................................................................................................45 4.1.4. Debtacceleration risk ............................................................................................................................45 4.1.5. Hydrological risks ..................................................................................................................................45 4.1.6. Regulatory risk ......................................................................................................................................45 4.1.7. Environmentaloisk...............................................................................................................................46 4.1.8. Sensitívity analysis ................................................................................................................................46 4.2.
Capital management .............................................................................................................................46 4.3.
Fair value estimation .............................................................................................................................47 5.
CREDIT QUALlTY OF FINANCIAL ASSETS ...................
........
. ................................. ..47 6.
CASH ANO CASH EQUIVALENTS ..................................................................................................48 7.
TRADE RECEIVABLES .......................................................................................................................48 8.
TAXES ANO CONTRIBUTIONS ........................................................................................................... 49 8.1.
Oeferred Income tax and social contoibulion ..........................................................................................50 Ta. bene!it - merged goodwíll.......................................................
.. ......................................... 50 8.2.
8.3.
Income ta. and social contribution calculatlon ......................................................................................51 9.
JUDICIAL DEPOSITS ..........................................................................................................................52 10.
PROPERTY, PLANT ANO EQUIPMENT .............................................................................................. 53 10.1. Deemed cosI 01 property, plant and equipmenL ..................................................................................53 1
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Ouke Energy International,
Geração Paranapanema S.A. CNPJ 02,998.301/OO01~1 _____
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10,2, Depreciation rates " ... ,... "., .................... ,.. ,.,.,.... ,................... ,., ............. ,.................. ,.............. " ...... "".54 10,3. Assets Iinked to lhe coneessiQn ...... " ......................... '"" .. " ........ ,..,........... "" .. ,....... ,........... "."." ........ ,55 10A. Coneession agreements .... " .. " .. ,...................... ,... ".",., .................... "," ...... ,......... ,...... ,.. ,.. "., .......... , ... ,55 10,5, Expansion 15% .. ,...... " .... ", ............ ,.. ,.." .... """" ........ ,.... ,... ,.. """ .. , ........... ,....... ,.. "", .. ,............... ,.... ,." 55 11.
INTANGIBLE ASSETS .... , ........................................,.. ,.. ,................... , ....... ,.............. ' ...... ,.... ,.. ,.......... 57 12.
SUPPlIERS .. ,.. ,.... ' ................... ,.......... ,.,... " ..... " .. "." ...................... ', .. ,.. " ....................... '", ..........,., .... 57 13,
RELATED PARTIES., .... "", ... ".,.", ............ "",., ................ ,..", ... """ ........ ,...... ,., .... "" ......... , .............. " .. 59 13.1. Transaetions and balaness ................ ,.... ,.......... , ........ ,....... ,...., ...... ,............. ,....................................... 59 13,2, Key management remuneration " .. ,.......... ,........................ , .. ,........ ,.................................. ,.. , ........... ,.... ,60 14.
OEBENTURES .... ,........ ,.... , ........... ,........................ ,............ , .............................. ,............. ,.......... ,...... 61 14,1. Composition and maturily of lhe debentures ...... ,.... , ...... ,....... ,.., .......... ,........... ,.................................... 61 14.2, Firs! issue of debentures ,....... ,.. " .. ,.. " .. ,., ... ,., ..... ,...... ,.. ,......... ,..,... ,...... "., ....................... " .. ,.. " ............. 61 14,3, Second issua of debentures"", ....... ,............... "", ...................... " .. ,.. " ....................... "" ...... ", .............. 62 15,
CIBACAP - INTERMUNICIPAL CONSORTIUM OF THE CAPIVARA RIVER BASIN .......................... , 63 16.
PENSION AND RETIREMENT PLAN ..................... ,......... , .... ,..... ,....
.. .... , ........................ ,........ ,,64 16.1, Cesp ti Foundalion ..................................... ,........ ,.. ,.....,...... ,...... ,.... ,...., .............. ,.... ,.... ,........ ,............. ,65 16.2, CVM Resolution 600"., ..... ,......... ,..,.......... "", .. ,.,.................. " .. ,....................... ,.. ,.. " .................. ,., ... ", .. 66 17,
NET CONTINGENCIES ' .............. ',.,." ...................... " .. ""' ...................... ,,,,' ............... , ......... ", ... ,...... ,66 17,1. Probable loss contingancies, ................................... ,...... ,.. ,..
,., ............ , ................... , ...... ,........ 67 17.2, Possible loss contlngancies .......... ,...... ,.... "",.".", .. ,... , ........ ""'.", .. ,, ...... ,..,........ """", .................... "'" 68 18,
SPECIAL OBLlGATIONS .... ,........... ",.,., ..................... ,.. """., ...................""",., ................. ,.. ,.............. 69 19.
ELECTRIC INDUSTRY CHARGES., ...... ,..,........... ,..... " .. ,.,... ,..,....................... ,............... ,., .................. 69 20.
EOUITY "" .. " ........... ,............. , ...... ,...... ,.......... ,." .. "., ,.. ,., ..... ,...................... ,.,. ,., ..... ,..... ,..... ,.." ..,...... ,. ,., 70 20.1. Share capital ...................................... ,...... ," " ................ ,...... " ............ ,............ " ......................... , ......... 70 20,2. Capital reserves ."".................... "." .. ,.,.... ,............. ,'.,., ....... ,.................. ,." .... ,.................... "", ............. 71 20.3, Revanue reserves .................,." ............. ,........ ,." .. " .......... ,............ "" .............................. ".,.,' ....... " .... ,71 204, Dividends and interes! on capital.. ........... ,....... " .... ,............ , .......... , .... ,............................ , .......... ,......... , 72 20.5. Interest on capital .. ,............................ ,.... ,...... ,........ , .......... ,........... ,............ ,. .. ...... ,.......................... 73 20.6. Share-based payment .......... ,.,., .............. ,., .......... ,.......................... ,.. " ...................... " .. ,........ ,..,.......... 73 20.7. Carrying value adjustments ..... ,..... ,.,., ....... ,....... " ................. ,.. " ......... ,................... ,.................. ,....... ,.,.74 21.
NET SALES REVENUE ............................................... ,............ ,.......................... ,.............. ,.... ,........... 75 22.
OPERATING COSTS ANO EXPENSES ............................ ,........................ , ........... ,............. ,............ ,.. 75 23.
ELECTRIC POWER SOLD AND PURCHASED ANO ELECTRIC GRID USAGE CHARGES ............. 76 23.1. Eleciric power sold .", ..............,." ......... ,.......................... "" ....................... " .. ,............................ ,......... 76 23,2, Electnc energy purchased for resale .............. ,................................................. ,......... ,....... ,..... ,........... 76 23,3, E!ectric grid usage charges ............................................ " ......................... " ........ ,........... " ................... 77 24,
FINANCE RESULT... ,... ,..................... ,., ..........................,.""",................... ,.. ,.. " ................... ,... ,.. ,....... 77 25.
EARNINGS PER SHARE .... ,... ,.............................................................. ,.......................... ,..... " " .......... 78 26.
FINANCIAL INSTRUMENTS, .............................. ,...... ,.................. ,., ... ,., ..... ,.............. ",,,, ....... ,............ 78 27,
INSURANCE .......... ,.. ", ...... " .. " ........ " .... ,.... ,..... ,.,........... ",.,., ... ,... " ..... ,....... ,.,.,., ... "".,,, ............. ,., ... ,,, 79 28.
SUBSEOUENT EVENTS .......... ,................... ,..,........... ,... ,' ...... " .......... ,.. ,.. ,., ........ " ............. "" ... ,...... ,.. 79 28.1, Interest on capital .. " .. " ..... ,... " ........ , .. " ......................... ,.......... ,........................ ,............ ,........ ,............. , 79 28.2. Third issue of debentures .... ,............ ,............................... " .. ,.. ,.. " .. " .. " ..... ,....... ,.................................. 79 28.3. Reduction of capital." .. " ...................... ,.. " ..... ,.,. " ..........,., .. " .................... ",., ... , ...... ,.,., ........ ,.", ........... 81 REPORT OF THE STATUTORY AUOIT COMMITTEE.. " ........ , .......... ,.............. ,.... ", ...... ,...... ,,, .. ,,,,, .. ,.......... ,82 BOARO OF OIRECTORS' STATEMENT.. ............................................. ,,, .................. ,,,,, ..............." ..... 83 EXECUTIVE BOARD'S STATEMENT ,.............. ,........................ "
...... , ...... ,......... ,.... ,.. " ..... ,....... ,,, .... 64 MANAGEMENT MEMBERS ..,....... ,.. " .. "", ........ , ..... ",., ..... ,.................. ,......... ,... ,.... ,.,.,.,., ,.,.,.,.,., ... " ............... 85 2
(A Iree translalion 01 lhe original in Portuguese)
_Dule
r"Energy~
Geraçdo Parilnapanema
Duke Energy Inlernatíonal,
CNPJ 02,998,30110001-81
Llsled Comp.",'",nv,--_~
ANNUAL MANAGEMENT REPORT FOR 2011
Dear Stockholders and Debenture Holders,
Duke Energy International, Geração Paranapanema S.A. is pleased to submit ils Annual
Management Report and the Financiai Statements for lhe year ended December 31, 2011,
accompanied by lhe reports 01 lhe independen! auditors and lhe Stalutory Audit Committee.
3
(A Iree translalion of lhe original in Portuguesa)
Duke Energy Internatlonal, Geração Paranapanema S.A. CNPJ 02,998,30110001-81
Listed Company
~--------------==~-~~~--------~----
Geração Paran<lpanema
A MESSAGE FROM THE CEO
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Confidenc:e and sense of direclion: Ihis is the energy which drives us forward
Conlidenee and sense oi direelion were very presenl concepts ai Duke Energy Brasil in 2011. We
have achieved good resulls over lhe years, bul more than Ihese numbers, it is importan! lo highlighl
lhe manner by which such performance has been conslructed, Ihrough a process 01 involvemenl
and dedicalion 01 our employees.
Our locus in 2011 was lo provide direclion lar our aelivi!ies. by stimulating the confidence to seek
eflicíeney gain opportunities in every area oI our business. Our array 01 organie growth projecls has
made il possible lo increase lhe volume oi energy available for sale wilhoul lhe need lar significant
inveslments.
We encourage our people lo express Iheir ideas, visíons and concerns, creating conlidence and
Iransparency Ihrough a series oi mechanisms lo provoke dialog, such as, lar example, quarterly
meelíngs Ihal are held wilh lhe employees lo share lhe Company's results and allow discussíons on
Ihis ar any olher issue. There is also a direct channel Ihrough which lhe employees may send their
doubts, opinions or suggestions lo the CEO, by email, anonymously or no!. The TV Duke was
created to broadcasl monthly programs in which lhe employees present their work, area projects
and daily aclivilies.
We also reinlorced lhe Company's values, exemplilied by employees' altitudes oI care !owards lhe
communities and the environment; inlegrity; openness to changes and new ideas; passion lor our
work; respect lar olhers and salety above alI. Wilhin this line oi action, we also crea!ed a salety visit
program to each plant, with the altendance oi directors and ali lhe managers. This initiative
represenled an opportunily lar us to lalk aOOut salety, which is our absolule priorily, and also about
integration and construc!ion oi a work environmenl where collaboration is emphasized.
Besides Ihis internally-Iocused approach, we performed a mapping oi our stakeholders. This task,
which required a signilican! eflort, will serve as lhe basis lor us to deline management priorities. Ali
lhe slakeholder groups were lisled - conlrolling and non-controlling stockholders, regulalory bodies,
customers, suppliers, employees and communities surrounding the plants - aiming ai idenlilying
their requirements, as well as the impact lhe Company and its stakeholders have on each olher.
We are developing a global risk management syslem intended to map the main factors which
impacl our aclivities and idenlffy the best way to mitigate their inlluence on the sustainable
performance 01 our business, making the decision-making process more eflicien!. This study is
being developed as a research and developmen! projee!, lor the purpose of implementing a syslem
thal would be specilic the energy industry and which could, afterwards, be used by olher companies
in lhe electrical seclor.
The Company's good results lor 2011 were achieved through our eflorts 10 do our homework well
and our concern aOOut "how" 10 do things and nol just, "whal" !o do. In 2011, our ne! revenue
4
Ouke Energy International, Geração Paranapanema S.A. Geração Paranapanema
CNPJ 02,998,30110001-81 Liste<! Company
increased by 11.1 %, reaching R$ 958 million and our ne! proli! was R$ 281 million, a growth 01
55.8%. As a consequence 01 lhe strong and consistent performance, appropriate financiai
managemenl and low indebledness levei, lhe risk rating agencies Standard & poor's and Moody's
upgraded our classificalion lo lhe inlernational inveslmenllevel.
Our achievements are lhe resull 01 lhe commijmenl 01 our employees. We know lhat Ihere is still
room for more advances, by improving even more our good performance through effíciency gains
and molivalion Ihal consolidale lhe plalform thal will sustain our future growth.
This is lhe energy which dríves us forward.
Armando de Azevedo Henriques
CEO
5
(A Iree translation 01 the original in Portuguese)
_Ou"e
[f/II1Energy~
Ger<I'ç§o paranapanema
Duke Energy Intemational,
CNPJ 02,998,30110001·81
Listed Company
1. PROFILE
Duke Energy International, Geração Paranapanema SA is a listed company engaged in the
generalion and sale of electric power in the Brazllian market. The Company is a subsidiary and lhe
main international investment 01 Duke Energy Corporalion, one 01 the largest electric power
companies in the Unlled Slales, and manages eight hydroeleclric power planls installed on lhe
Paranapanema Rlver: Jurumlrim, Chavanles, sano Grande, Capivara, Taquaruçu, Rosana, Canoas
I and Canoas 11, lhe lasl two operaled under a consortium arrangement wilh Companhia Brasileira
de Alumínio (CBA). The Company's has 294 employees and its main administrative headquarters is
localed in São Paulo, capilal of lhe Slale of São Paulo.
The Company has an inslalled capacily 01 2,241 MW, which places il among BrazH's lop privale
power generation companies, according lo lhe Nalional Eleclric Power Agency (ANEEL). In 2011,
the Company produced 12,012.25 GWh and recorded gross operaling revenue 01 R$ 1,063,556
Ihousand and nel prolil 01 R$ 281,261 Ihousand, which represenled an increase 01 9.0% and
76.4%, respectively, in comparison with 2010. The EBITDA lor the year was R$ 696,579 Ihousand
and the EBTIDA margin was 72.7%.
1.1.
Recognition
In 2011, Duke Energy Brazil received various awards, among which we highlight the lollowing:
Eloy Chaves Medal - Regarded as lhe mosl importanl award in lhe eleclric power seclor, Ihis
medal is awarded to companies Ihal operale in lhe sector and sland oul in occupalional accidenl
prevenlion. Duke Energy was granled lhe gold medal in lhe "Generalinglíransmission companies"
category for lhe second consecutive year, regardless of lhe number of ils own employees. The
Company was awarded 10 medals in lhe lasl 11 edítions.
Environmental Benchmarking Award - For lhe fillh consecutive time, a Company's project,
"Preservalion 01 lhe Parque Estadual do Cerrado de Jaguariaíva through the Control of Exotic
Grasses" was selected to compete for the award, beíng ranked among the besl 25 ínitiatíves for
social and envíronment managemenl in Brazi!.
Great Place to Work - The Company ranked 15th in the survey 01 lhe Greal Place to Worl<
Instilute Ihat evaluates lhe employees' perception, organizational climale and human resouree
policies which prillilege quality 01 lile, competitive compensalion and benelits in relalion to the
markel, and professional development possibilities, Duke Energy Internalional, Geração
Paranapanema SA is the only energy generating company included in the ranking 01 lhe Inst~ule,
published in the Brazilian magazine "Época". Also, according lo lhe Institule, the Company is
among lhe 25 besl companies lo work for in Lalin America,
50 Psychologícally Heallhy Companies- In Ihis ranking published by the magazine "Gestão e
RH", was included in lhe lop 10 companies and was mentioned in the Lile & Work calegory as a
company that slands out by providing ils employees wíth good quality 01 life.
6
a
Duke Energy Internalions!.
Duke
rlllEnergy.
CNPJ 02,998.30110001-81
Geração
Paranapanema
Listed Company _ _ _ _ _ _.._ _.._ _.._ _
_ ._
_._
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2.SCENARIO
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2.1 Economic environment
The year 2011 was marked by the world economic crisis, which allected mainly Europe, Japan and
lhe United States. As a result 01 this international scenario and the prudenl measures adopted by
lhe Brazilian government, lhe domeslic economy slowed, as well as lhe Gross Domeslic
Producl (GDP), which grew only 2.7%, as compared to lhe 7.5% expansion in 2010. Investmenls,
govemment expenditures and lamilies' consumplion - the main economic drivers in 2010
decreased.
Jobs and income conlinued to grow and by lhe end 01 lhe year, Brazil had a situation 01 almost fuI!
employment, wilh an unemployment rate 01 4.7% in December and 6% average during lhe year.
However, as a resul! 01 the measures adopted by lhe govemmenl lo curb credil and inflation, lhe
grow1h in bank credil was less inlense than in 2010: 19% as compared with 21 %, wilh a balance 01
R$ 2,030 billion ai lhe end 01 2011, equivalent lo 49.1% 01 GDP, accordíng lo lhe Brazilian Cenlral
Bank.
The global economic slowdown also negalively allected lhe demand lor commodilies, wilh a
consequenl price reductíon. The inllatíon rate measured by lhe General Markel Price Index (IGP-M)
01 lhe Gelúlio Vargas Foundalion (FGV) was 5.1 % in lhe year, against 11.3% in 2010.
The Amplilied Consumer Priee Index (IPCA) aI lhe end 01 2011 was 6.51%, or 0.6 pereenlage
poínls above lhe rale lor 201 O (5.9%).
Exports amounled lo USS 256 billion, a 26.8% grow1h in relalion lO lhe prior year and imports grew
24.5%, lolaling US$ 226,2 billion, wilh a Irade balance surplus 01 US$ 29.8 billion.
t December 31
IGP-M
IPCA
GOP
Exehange rate lo USS
'" % exchange rale
Selic (Iargel)
2011
5.1%
6.5%
2.7%
1.9
12.6%
11.0%
2010
11.3%
5.9%
7.5%
1.7
·4.3%
10.8%
2009
·1.7%
4.3%
-0.3%
1.7
-25.5%
8.8%
2008
9.8%
2007
7.8%
5.9%
4.5%
6.1%
5.2%
2.3
1.8
31.9%
-24.3%
13.8%
11.3%
3. CORPORATE GOVERNANCE
Duke Energy primarily seeks transparency, accounlabílity and non-discriminatory Ireatmenl and is
committed lo lhe constant improvemenl of its corporate governance mOdel, which is based on the
complianee with legislalion and on lhe adoption of besl practices. Since 2004, lhe Company has
complied wíth the requiremenls 01 the Sarbanes-Oxley Acl (SOX) and maíntained automaled
conlrol processes and systems. 11 also provides ils professionals wilh Iraining on issues relaled lo
lhe Prevenlion 01 Corruption Praclices Abroad. in aecordanee wilh lhe Foreign Corrupl Practices
Acl (FCPA).
7
Duke Energy International, Geração Paranapanema S.A. CNPJ 02,Q98,301/OO01.al
Ge-raçãQ
---
Paranapanema
Li.ted Company
- - - - - _ . __. _ . _ . -
The Company also lollows the instructions 01 lhe Brazilian Securities Commission (CVM), a
Brazilian market regulatory body, and provides public information about significant actians ar events
involving its business while slill saleguarding lhe conlidenlialily 01 lhe informalion, lhe disclosure 01
which is cansidered lo be canlrary lo lhe Company's inleresls by ils controlling slockholders,
debenlure holders or members 01 lhe Board 01 Directors.
The Company seeks lo lollow lhe praclices recommended by lhe Brazilian Institute 01 Corporale
Governance (IBGC), such as lhe hiring 01 an independent lirm lo audij ils balance sheels and
financiai stalements; Iree access lo inlormalion and lacilities by the members 01 the Board 01
Direclors, and lhe eslablishment of duties and limits 01 authority lor the Company's direelors and
olher executives.
The Company's values are communicaled lo the employees, who aet in conlormity with lhe
Business Ethics Code, which conlains guidelínes on lhe behavior expecled lrom emplayees.
Anolher 1001 is the Elhics Line, an externai communication channel available 24 hours a day and
used lo repor! improper behaviar, which can be made anonymously by telephone ar e-mail.
Through Ihis channel, anyone interested can also requesl inlormation on lhe Company's policies
and procedures.
3.1 Organizationat structure
The permanent governance bodies 01 Duke Energy are lhe Board 01 Direclors and the Execulive
Board. When requesled by lhe slockholders, a Stalutory Audil Committee is established, which is
responsible for reviewing the linancial slatemenls and averseeing managemenl's actions, among
alher duties.
The Board 01 Direclors is made up 01 live members and Iheir respective deputies, wrth one member
and one deputy representing lhe employees. Ali members are elecled at a General Slockholders'
Meeling for a Ihree-year lerm in olliee, and reelection is permilted. The dulies 01 Ihis body are: to
eSlablish lhe general policies of lhe business, lo eleet and replace members 01 lhe Execulive
Board, as well as approve Iheir attribulions, as assigned by lhe CEO, and supelVise their
pertormanee.
The Executive Board is responsible for managing lhe busines$ and implemenling lhe resolulions 01
lhe Board 01 Directors. II can be made up 01 ai leasl three and ai lhe moSI eight executive oflieers
elecled by the Board 01 Direclors for a Iwo-year lerm in olliee, wilh lhe possibility of reelection. II is
lhe CEO's responsibilily lo assign lhe lunclions and duties 01 each executive officer. In December
2011 the Executive Board was comprised 01 tive members.
In 2011, by decision 01 lhe Annual Slockholders' Meeling held on April 29, the Stalulory Audil
Committee was eslablíshed with three permanent members and Ihree deputies, with one 01 lhe
permanenl members and one 01 the deputies represenling lhe holders 01 non-conlrolling inleresls.
Acling independently lrom lhe managemenl and lhe independenl auditors, lhe Slalulory Audil
Commiltee will be in place until lhe nexl Annual Slockholders' Meeling.
8
aDuke
riI1 Energy..
Geração Paranapanema
Duke Energy In!erna!ional,
CNPJ 02,998,30110001-111 Lisléd Company 3.2 Externai Audit
Duke Energy engages externai audíl services based on principies lhal saleguard lhe audílor's
independence. Therelore, il makes sure Ihat lhe auditor does nol audil his own work, does nol
perform manageriallunclions in the Company or promote lhe Company's ínleresls.
In 2011, in addition to audiling the Annual Balance Sheet and conducting the limiled review 01 the
Quarterly Information (ITR), PricewalerhouseCoopers Audilores Independentes (PwC) was
engaged to provide services related lo the analysis, on a sample basis, of the concepls and
procedures used lo determine the Income Tax (IRPJ) and Social Contribution on Net
Income (CSLL) calculalion bases lor the calendar year ended December 31, 2010, as well as lhe
criteria adopted to calculale the amounls paíd on a monthly basis. PwC also reviewed lhe lax
procedures used in the complelion 01 the 2011Corporate Income Tax Return (DIPJ) relaling to
calendar year 2009. Fees 01 R$ 264 Ihousand were charged for lhe services provided.
3.3 Ratings
As a resul! 01 Duke Energy's strong and consistent performance, Moody's upgraded the Company's
credil ratings 10 Baa3 (global seale) and Aa1.br (Brazilian scale), within lhe investment grade
category.
AI the same time, Slandard and Poor's inereased lhe Company's credit ratings to BBB ~ (global
scale) and BrAAA (local scale). also investment grade. This upgrading rellecls lhe agency's
expeclation thal the Company's operations and solid financiai melrics resulting Irom the slrong cash
generalion and stable levei 01 leverage wíll be maintained.
4. BUSINESS PERFORMANCE
4.1 Generation
The Company operales its hydroelectric power plants based on two concession agreements:
(i) Agreement 76/1999, which regulates lhe operalions 01 lhe Jurumirim, Chavantes, Salto Grande.
Capivara, Taquaruçu and Rosana power plants for a 30-year period ending in 2029; and
(li) Agreement 183/1998, by means of which lhe Company operates Canoas I and Canoas" power
planls Ihrough a consortium arrangement with CBA, for a 35-year period ending in 2033. The
Company owns 49.7% of the power generaled in lhe system il shares wíth CBA.
The total capacity 01 Ihese power plants, the reservoirs 01 which store about 6% of the waler in
Brazil's Southeastern and Central-Western regions, changed lrom 2,307 MW to 2,241 MW, upan
the signature of lhe Firsl Amendmenl lo lhe Generalion Cancession Agreemenl 76/1999 - Aneel
Paranapanema, on August 5, 2011. The document adjusted the installed capacity of the Capivara,
Jurumirim, Taquaruçu, Rosana and Salto Grande hydroeleclric power plants, wilhout, however,
changing the assured powerl physical guarantee, established as 1,087 average MW.
In 2011, Duke Energy generated 12,012.25 GWh, a 10.8% decrease in relalion to the previous
year, bul 26.2% above lhe assured power/ physical guarantee eslablished for lhe year, 019,522.12
GWh. This volume corresponds lo 2,4% 01 lhe eleclric power produced in Brazil in lhe year.
9
. .Dulce
rtllEnergy.
õerdç.lo Paranapanema
CNPJ 02,998,301/0001-61
.__Lis~ec:l.Comp.nL...
The decrease in lhe energy produclion occurred despile lhe lavorable hydrologic condilions in lhe
year, resultíng lrom lhe higher rain/all in lhe Paranapanema River Basin. which, inslead 01
generating more energy, was used lO recover lhe resefVoirs' waler slorage levei in lhe period
between lhe months 01 January and May 2011. Therefore, as delailed in lhe chart and lable below,
lhe generalion ai lhe Jurumirim, Chavanles, Taquaruçu and Rosana hydroelectric power planls in
2011 was lower than Ihal 01 2010.
AI lhe end 01 2011, lhe resefVoirs were ai 69.9% 01 Iheir lolal slorage capacily, which is considered
satisfactory and higher Ihan lhe Company's historical average 01 65.1 %.
Anolher highlighl 01 the year was lhe operating performance 01 lhe Company's asseIs, Wilh an
availabilily 01 95.4%, and lhe low outage rale in lhe generating unils. This resul! arises Irom our
employees' accumulated experience, technical capacily and commilmenl, our consislenl capital
expenditure policy, which includes improvements in operaling syslems - and efficienl equipment
maintenance.
Allhough lhe general performance 01 the power planls remained ai favorable leveis, lhe Company is
developing a number 01 projecls aimed at improving ils produclion capacilY, w~h a locus on lhe
reliabilíly and availability 01 ils lacililies.
Electric Power Productíon - GWh
Plant
Jurumirim
Chavantes
Salto Grande
Canoas 11
Canoas I
Capivara
Taquaruçu
Rosana
otal
2011
569.23
1,765.60
509.70
462.74
526.86
3,871.44
2,245.33
2061 35
12,012.25
2010
%
691.19 -17.6
2,393.71 -26.2
519.37
-1.9
431.16
7.3
589.95 -10.7
3,822.53
1.3
2,730.43 -17.8
229248 -lO 1
13,470.82 -10.
10
Duke Energy Internalíonal,
CNPJ 02,998,301I!l001-81
. .Dulce
r41Energy.
__ ._~ __ ~G.~(~~~O p~ranapa(te_m_'_ _ _ _ _~ ____~isted_~mp::.:an:LY_ _
Rainfall sinoe January 2010
• Rainfall
_
Long-term Average (LTA)
l/l/12-l/4/12=12,5mm
10/1//11-1/4/12=392.7mm
1/4/12- O,Omm
Jan
2010
Apr
Jul
Oct
LTAJan=177,9mm
LTA Oct-Jan=667,5mm
Jan
Apr
2011
Jul
Oct
Jan
2012
Source: Cenler for Wealher Forecasl and Climale S/udies (CPTEC)
4.2 Sales
The Company has a physical guaranlee oi power generation of 1,087 MWA, assured by lhe
Minislry 01 Mines and Energy (MME) Ihrough 2014. OI this volume, 52 MW generaled by Canoas I
and Canoas 11 pawer planls are allocated lo CBA, 30 MW are used lor internai cansumplian and
syslern losses and lhe balance is available lor Irading.
In 2011, due lO lower system losses and management's slralegy, available power was 1,010 MW.
The Company sald 99% of the pawer generaled, which resulted in a stable revenue flow.
The cancenlrated efforts on sales and markeling in lhe Free Contracting Environmenl (ACL) of lhe
Soulheastern and Central-Weslern regions allawed lhe Company lO enler inla 49 sales agreemenls
wilh Iree consumers and resellers in lhe year, aI a higher average price Ihan in 2010. The sales ta
Ihis segmenl accounled lor 59.9% af lhe Company's gross operaling revenue in the year. Ouke
Energy currently mainlains a goOO levei 01 lang-Ierm agreements. The sales 10 dislribulian
campanies in lhe Regulaled Conlractíng Environmenl (ACR), in turn, accounted lor 35.7% 01 gross
operating revenue.
11
CNPJ 02,998,30110001·81
Usted Company
_Dulce
r"EnergJf..
GeraçJo Paran<tpanema
--~
Electríc power contracted
99%
68% 58% 2012
2013
2014
2015
2016
These resulls are in line wilh lhe Company's strategy of expanding lhe volume of revenues Irom
free consumers and assuring a stable customer base in lhe Regulated Contracting Environment.
The terms and conditions of Free Contracling Envirenmenl agreemenls are more lavorable. as
Ihere is more flexibilily in Iheir negoliation. Regulaled Contracling Environment agreemenls, on lhe
olher hand, are generaliy long-Ierm agreemenls (effective lrom Ihree 10 eighl years), assuring cash
Ilow slabilily.
The Company entered inlo agreements with the main power distribution companies in Brazíl at lhe
1sI. and 4th.Power Auctions held in December 2004 and OClober 2005, respeclively. and
commilted 10 deHver approximalely 500 MW Irom 2007 10 2012 and 300 KW Irom 2013 to 2014. In
addilion lo lhe auction conlracls, in 2011 lhe Company participaled in lhe 11th. Adjustment Auction
held by lhe Eleclric Energy Trade Chamber (CCEE), when il Iraded 9 MW for the period from
October to December.
Auctions
Term
Year of the (years)
Date of the 1st delivery
auction
12/7/2004
2005
8
12/7/2004
2006
8
2007
12/7/2004
8
9/30/2011
2011
0.25
Contracted Base price
energy
(R$! MWh)
(average
MW
214
60.00
70.00
58
76.00
218
50.00
9
Number of
distribution
companies
34
35
31
4
In addition to lhe agreements Irem the Iree and regulated environments, Duke Energy also selis
power in transactions carried QUI through lhe Energy Reallocation Mechanism (MRE). In 2011,
because 01 the favorable rainfal! and the consequent recovery of the Brazilian water slorage
system, which overall was greater than in the Paranapanema's reservoirs, lhe dispalch 01 lhe
Company's power planls was le55 lhan in 2010, re5ulling in lower revenues earned through the
12 Ouke Energy International, Geração Paranapanema S.A. CNPJ 02,998,301IOOOHll
___
G_er_',o..,ã_o_Pa_'_an_a_pa_"_om_a_ _ _ _ _ _-=L::;;isc:.teccdCom,,;p.:c.n-"Y,--~_ _ _ _ ~._._. _ _.___ ._~. __ _
Energy Reallocation Mechanism in eomparison lo lhe previous year. The exceptional storage levei
during 2011 reduced signilicantly lhe dispaleh of Ihermal planls, with a consequenl reduclion in lhe
spot prices.
4.3 Research & Development
The regulalions of lhe eleclric power seClor establish Ihal 1% 01 net operating revenue musl be
alloealed 10 Research and Developmenl (R&D), dislribuled as follows: 0.2% lo lhe Minislry 01 Mines
and Energy, 0.4% lo lhe National Fund for Scienlilic and Technological Development (FNDCT) and
0.4% lo R&D projecls. In compliance wilh lhese regulalions, Duke Energy allocates resources lo
lechnological innovation projects and lor lhe development of solulions aimed aI improving ils
operational resulls.
Currently Duke Energy has sixteen R&D projecls, seven 01 which are in progress and mainly
locused on lhe areas 01 oparalions and management. Also, lhere are projects dedicated lo lhe
analysis and modeling 01 lhe energy inpuI supply chain, sueh as natural gas and sugar cane
biomass. in addition to researches on alternalives lo improve calorifie pOlential lar eleetricity
generalion.
Three 01 lhe projecls are ai lhe linal stage of contracting and are mainly locused on lhe areas 01
sustainabilily, oplimization 01 syslemic models and geolechnology.
Furthermore, as lhe Company considers Ihal stralegic projeets are 01 greal importance lo lhe
Brazilian eleclric power seclor, and require joinl and coordinated efforts from various sector
companies and olher enlilies, Duke Energy also participales in six initíatives in lhe areas of energy
transmission, impacts of climale changes on lhe hydrological resources, energy integration in Soulh
America and generalion of solar photovoltaic energy.
13 Duke Energy International, Geração Paranapanema S.A. CNPJ 02,996,301/0001·81
Geraçáo parÇJn(!lpanem.,.._~.~~.~~.
_ _ _ _ _ _ _ _ _ _ _ _ _ __
u~~ C~~panv
5. ECONOMIC ANO FINANCIAL PERFORMANCE
Main Indicalors (In thousands of R$)
2011
Economic indicators
Gross operating revenue
(-) Deductions Irom operatíng revenue
Ne! operating revenue
(-)Operating expenses
Result 01 services
EBITDA
EBITDA Margín . %
Finance resul!
Operating resul!
Prolil for lhe year
Nel margin • %
Financiai indicators
Total asseis
Debts in local currency
Equily
Shares
Oulstanding shares (in thousands 01 shares)
1,063,556
(105,553)
958,003
(492,164)
465,839
696,579
14 2010 % Varialio
964,913
(102,610)
862,303
(497,860)
364,443
599,573
72.7%
69.5%
(92,568)
373,271
281,261
29.4%
(102,783)
261,660
180,505
20.9%
4,410,468
811,250
2,825,265
4,875,524
837,186
3,253,807
94,433
94,433
10.2
2.9
11.1
-1.1
27.8
16.2
'9.9
42.7
55.8
-9.5
-3.1
-13.2
Duke Energy International, Geração ParaR8pi1nema S.A. CNPJ 02,998,301/0001·81
___
G_"'_a,;..S_"_p._'_an_a'-pa_n_e_m_._ _ _ _ _ _.. _L:::í"'st"'ed::.:-:C"'om=pa::.:""y_ _ _ _ _ _ _ _ _ _ __
5.1 Profi! for the year
In 2011, the Company recorded net profil of R$ 281,261, an increase of 55.8% in comparison lo
2010. The main factor Ihat contribuled to this performance was the growth in operaling revenue. On
lhe other hand, finance income decreased due lo lhe lower volume 01 financiai inveslments. The
Company dlstributes 100% of its profit as dividends and Interest on capital, pursuant to its bylaws,
after lhe transler to the legal reserve.
Net profit (in thousands of reais)
281.261
180.505
2011
2010
5.2 Gross operatíng revenue
Gross operating revenue for the year was R$ 1,063,556 thousand, which represented a growth 01
R$ 98.643 thousand, or 10.2% in comparison lo the previous year, arising Irom lhe better prices
obtained in bilateral agreements. Energy sales through auction contracls increased by R$ 21,005
thousand in relalion to 2010, due lo priee adjustments. The sales in lhe MRE market decreased by
R$14,163 thousand (56.1%) as a result 01 lhe lower energy generailon. However, in spite 01 the
priee reduction, revenue from lhe energy sold in lhe spot market increased by RS 4,420 thousand
(14.2%) as a result of higher sales volume.
Compositíon of revenue (in !housands of reais)
2011
379,444
2010
356.439
Ij
bilateral Agreements
101 Auctlon lontr<cts
15
.~~ü I /
46.627
6.523
VlKt I Ulher
r"'Energy~
CNPJ 02,998,30110001-<11
_ _G...:e_raçiQ paranilP<J_ne_m_a_ _ _ _ _ _ _ .~isted ~pany .._ _._____ ~ ___.. ~ _______ ~ ____ ~ __ _
_Dulce
5.3 Deductions from operating revenue
Deductions from operaling revenue increased by R$ 2,943 Ihousand, or 2.9%, in relation lo 2010.
This increase does nOI correspond lo lhe same percenlage increase in gross revenue due lo lhe
sales mix inside and outside lhe Slale 01 São Paulo.
5.4 Net operating revenue
As a resull of ali these lactors, nel operating revenue for lhe year increased by 11.1 % in
comparison wilh 2010, reaching R$ 958,003 Ihousand.
5.5 Operating expenses (in thousands 01 reais)
Operaling expenses tolaled R$ 492,164 thousand, a decrease of 1.1% in relalion lo 2010
(R$ 497,860 Ihousand). This result was mainly due lo: the recognilion, in 2010, of an additional
provision, based on lha recalculation 01 lhe amounl required lo honor lhe commitmenls in the
Conduct Agreemenl (TAC) 01 the Intermunicipal Consortium 01 lhe Capivara River Basin
(CIBACAP); lhe decrease in expenses under the caption "Financiai compensalion for use 01 waler
resources" (CFURH), partially oflset by the Increase in the provisions for contingencies.
Personnel expenses for the year decreased by 3.9%, particularly as a result of the worklorce
renovation program and lower indemnity payments. The salary increase 01 7.21% in 2011 was
delermined based on a collective bargaining agreement.
Oulsourced services totaled R$ 35,784 thousand, a decrease 01 15.3% in relalion to lhe previous
year, mainly due to lhe recognition, in 2010, of an additional provision, based on the recalculation 01
lhe amount required lo honor lhe commitmenls in lhe TAC CIBACAP, menlioned above. Operaling
expenses also include expenses with externai consulling and audil, mainlenance 01 lacililies and
lechnical and IT services.
Electric grid usage charges increased by 4.5% in relalion lo the previous year, mainly as a resull of
lhe 8.4% adjuslmenl of the Tust tarill, in July 2011.
On the olher hand, lhe financiai compensalion for use of water resources (CFURH) decreased by
6.2% in 2011, lOlaling R$ 53,237 Ihousand. This calculation is based on lhe eflective generation of
lhe power plants, which was 11,540,774 MWh, already discounted lhe portion relating to CBA in lhe
Canoas / and 11 plants, i.e., 11.2% below lhe 12,999,345 MWh generated in 2010. The Adjusled
Reference Tarift (TAR) increased by 5.3%, lrom R$ 64.691MWh in 2010 to R$ 68.34fMWh in 2011.
Changes in lhe provision for conlingencies main/y resulted Irom lhe increase in provisions for lax
conlingencies, partially ollsel by lhe decrease in labor contingencies.
5.6 EB/TDA and EB/TDA Margin
In 2011, lhe Company's EBITOA (prolit belore interest, taxes deprecialion and amortizalion)
increased by 16.2% in comparison to 2010, as a resun 01 lhe faclors already mentioned.
16 Ouke Energy International,
Geração Paranapanema S.A. CNPJ 02,998,3011000HI1 Llstod Comp.n~ - - - .._-_..._--..._ - - -
Composition of EBITDA (in thousands of reais) 2011
2010
72.7%
69,5%
% Variation Proli! lar the year
Income tax and social contribulion
Finanee result, ne!
Netmargin
EBITDA (in thousands of reais)
696,579
599,573
72.7%
69.5%
2011
• EBITOA
2QI0
EBITOA Margin - %
5.7 Finance income (cosIS) (in thousands 01 reais)
2011
Finanee ineome
39,515
2010 % Variation Absolute variation
(11,140)
50.655
In 2011, lhe Company's linane e result improved by 9.9% in comparison with 2010. Finance income
!olaled R$ 39,515 thousand in 2011, a decrease of 22% when compared to the previous year
(R$ 50,655 thousand), mainly as a result of the lower volume 01 financiai investments, due to lhe
reduction in capital. Finance costs decreased by 13.9%, mainly as a resul! of the fali in lhe General
Market Priee Index (IGP-M) in 2011; Irom 11.3% in 2010 to 5.1%. This priee index is one 01 the
main indexes applied to the Company's debt
17 Duke Energy Intemational, Geração Paranapanema S.A. CNPJ 02,998,30110001-81
Listed Company
5.8 Indebtedness
AI December 31. 2011, lhe Company's gross debl IOlaled R$ 811,250 Ihousand, a decrease 01
3.1 % in comparison lo lhe R$837,186 Ihousand aI lhe end of 2010, as a consequence of lhe
repayments made in lhe period, partially offsel by lhe interest added 01 lhe debl.
bt profile
Debentures
Debentures
1st issue
1st I$sue
Series
Series 1
Series 2
Currency
Reais
Remuneration
Reais
COI variation + .2.15~/(I p.a.
IPCA variaüon + 11.6'% p.a,
ReaiS
IGP-M variation + 8.Sgo!o
Maturit
911512013
9115/2015
2011
128,772
111,476
201
192,692
104,566
7116/2015
571,002
811,250
539,928
837,186
810gle
Debentures
2nd issue
series
Debt Adjustment Factor in 2011
Nel debt . represented by indebledness less cash and cash equívalents . increased by 76%, mainty
as a result 01 lhe lower volume of cash and cash equivalenls afler the capital reduction of
R$ 360,000 thousand. in January 2011.
Net Oebt (in R$ thousands)
600.879
341.414 2011
2010 18
Duke Energy Inlernational, Geração Paranapanema S.A. GeraçAo Paranapanema
CNPJ 02,998,30110001-81 Usted Company
~---
5.9 Property, plant and equipment
Additions to property, plant and equipmenl in 2011 lotaled R$ 15,641 thousand (R$ 9,188 thousand
In 2010). The main acquisilions 01 2011 include lhe transformers of lhe Jurumin hydroelectric power
plant, equipmenl to modemize lhe generating unils No. 1 (completed) and 2 (inilialed),
replacemenls 01 general dislributíon panels in lhe Chavanles hydroeleclric power planl, general
resloration 01 the floodgates in the Rosaoa and Capivara hydroelectric power plants and lhe
replacement 01 IT equipment. These inveslmenls were aimed aI improving lhe production process
and modernizing lhe asseIs in order lo increase lhe syslem reliability.
6. PERSONNEL MANAGEMENT
Duke Energy ended lhe year with 294 employees. During 2011, 45 new prolessionals were hired, of
which 49% are undergraduates and 32% have a universily degree. Ali 01 them received the Manual
of Inlegration and the Business Code of Ethics, which describe the guidelines and behaviors
required by lhe Company, as well as Iraining sessions Ihal included subJects such as the prevenlion
01 corrupt practices. Also in 2011, 31 employees left lhe Company.
Duke ollers to its employees, salades compatible with those 01 similar companies. plus bonuses
and prolit sharing, which is calculaled based on individual achievement and collective goals. II also
provides benelits in addition to those required by lhe current legislalion, such as medicai and dental
care, which benelited 651 people in 2011, load, transportation, life insurance and a supplementary
pension plan. In 2011, in order to pay these benelits, the Company allocated resources equivalent
to 21 % 01 the payroll.
Also. R$I,331 was invesled in training and recycling. which accounled for 129.4 hours (or 16.2
days per employee.) Training initiatives are undertaken in the context 01 the Personnel
Development Program (PDP) and Individual Development Program (PDlj, which include 360
degree assessmenl lor ali hierarchical leveis, every Iwo years. Among lhe lopics addressed are
health and safety, environment, and technical, financiai and commercial aspects.
In addilion, lor lhe purpose 01 conlributing lo prolessional developmenl, lhe Company pays 100% 01
language course fees, which benefited 7.1% of employees in 2011, and supports the Educational
Allowance Program, through which undergraduate, extension and language courses are partially
subsidized. This scheme benefited 21.4% 01 the Company's employees.
6,1 Health, salety and quality 01 lile
Based on its Cullure 01 Zero IlIness and Injury. Duke Energy develops dillerenl programs ínlended
10 slrenglhen lhe concept 01 prevention and improve standards and procedures relaled to lhe
salety, health and qualíty 01 lile 01 its own employees or service províders. Among Ihese. the
programs "Conlacl Me", "Behavioral Salely Procedures" and lhe "Executive Salety Plan" are lo be
highlighted.
The "Executive Safely Plan" is based on three basic actions: Sale Power Plant program, with visits
of executives to the lacílities lor safety inspectíons; Salely Recognitíon Program, with initiatives lo
detecl problems in behavior and processes; activities of the Internai Commissíon for Accidenl
19 aDuke
r4l1Energy..
Duke Energy Inlernalional,
CNPJ 02,998,30110001-81
Geração Paranapanema Listed Company
--------------~~.~~~
Preventíon (CIPA) and oi Internai Weeks fOr Aeeídent Prevenlíon (SIPATs), bo!h dediea!ed to
eommuoication 00 safe!y issues.
In arder lo reinforee these eoncepts, lhe employees reeeived lhe Pocket Guide on Operalional
Procedures of lhe Environmental, Health and Salety Management System (SGMASS), eontaining a
summary for ease 01 referenee. In addilíon, the SGMASS processes were improved, wíth the
inclusion oi online eourse on lhe operational procedures in ali facilities, whieh resulted in lhe issue
oi 1,900 course completion certificates, besides the inventory update for chemical and inflammable
products oi lhe eighl power planls.
There are olhe r aelions in line wilh this priorily, for example:
• "Talk to lhe CEO Program": an easily accessible 1001, avaílable on lhe Company's internai
websíle portal, and which allows lhe employee lo forward commenls and conlribulíons on
health and safety, or on olher íssues relaled lo the Company's operations and business,
direetly lo lhe CEO;
• "Super Safe Program": this program recognizes outstanding professionals in heallh and
salety issues, such as avoidance of accidenls and participatíon in salely events and training
programs;
• Safety Slandards Primer: a brochure explainlng lhe behavloral standards thal must be
lollowed by everyone in the Company.
Thanks lO Ihese and olher iniliatives, the Company made considerable progress in lhe year,
reaching a tolal oI 4.7 millíon hours worked without aeeidenls resullíng in absence Irom work, in
relatíon to ils own employees,
Hands-on exercises thal simulate responses to the Emergeney Response Program seenarios
prepare the professionals to acl in a quiek and sale manner in speeilie situalions. During 2011, lor
example, planl employees took part in training sessíons related to spillage 01 chemícals and firsl-aid
procedures, Besides, in order to ensure readiness and knowledge 01 internai procedures, a
simulated crisis management session was held wilh the participalion 01 ali the members oi lhe
Company's Crisis Managemenl Committee.
Other actions were undertaken to strengthen the Zero Illness and Injury Culture at lhe day-to-day
levei, Ineluding revisions and improvemenls in operalional proeedures, on-site inspeetions with a
foeus on employee behavior, inslallation 01 electronie inspeetion management systems, and
Environmental, Health and Salety (MASS) audits,
As a resul! 01 its eommitmenl to the developmenl of lhe communilies around ils plants, Duke
Energy maintains diflerenl iniliatives lo slrengthen this relationship and loster lhe well-being 01 lhe
local residenls.
20 Duke Energy Inlernalional,
Geração Paranapanema S.A. CNPJ 02,998,30110001-81 _ _G_e_ra'iáo P~r;iJllapa(f.ema .. ~ __ .~_~._~~~íste~~ompa~~y~. _ _ _ _ _ __
One of these inilialives is lhe allocation 01 up lo 1% 01 lhe Company's income tax to Municipal
Funds for Children and Teenagers (FUMCAD), aiming at safeguarding lhe righls of lhis group. In
2011, lhe Company contribuled R$ 371.6 thousand lO institutions 01 Assis, Bernardino de Campos,
lepê, Piraju, Tejupá, Teodoro Sampaio and Taquariluba, in the Slale 01 São Paulo, and Andirá and
Primeiro de Maio, in lhe Slale 01 Paraná.
Other forms of integration with the communilies are lhe programs 01 guided tours lo lhe Company's
hydroeleclric plants, which had the participation of more than 10 Ihousand students and lourisls in
2011, and lhe aclivities of the SOCIal Communication and Environmental Education, which involved
approximately 16 thousand people Ihis year.
In order lo spread culture, the Company uses the resources subsidized by lhe Rouanet Law lo
promote lhe Cultural Circuit, an ilinerant cinema, musie and lheater caravan, which visited 46 towns
in the Rio Paranapanema region, 12 more Ihan in the previous year, and altracted more than
43 thousand spectators. With almost 200 performances, lhe Cultural Circurl coordinaled by the
NGO "Teatro de Tábuas" Iraveled over 6 Ihousand kilometers in 118 days with the projects:
"Estradalora - Energia da Criação"; "Eslradalora - Meio Ambiente"; and "Aulo de Natal Humanos
AnJOS e Lunáticos". On several occasions, lhe Cultural Cireuit conducts theater workshops wllh
teachers, as well as an action to develop environmenlal awareness, lhe Green Hug aI SChools,
when native tree species are planled.
The involvemenl with the communily also arises lrom the Company's practice of stimulaling
volunteer actions among lhe employees. In 2011, 456 people, includlng own employees, service
providers and Iheir relatives, joined lhe Volunteer Program mainlained by lhe Company and earried
oul aetivities in Cambará, State of Paraná and in Chavantes, Palmital, Piraju, Porecatu, Primavera,
São Paulo and Teodoro Sampaio in the Stale of São Paulo, helping local enlilies in aclions which
benefited more Ihan One thousand people.
In 2011, Duke's policy of sponsoring social and environmenlal aclivilies also resulled in a series 01
events, among them:
• Ninth Inter-Basin Dialogue: direcled lo environmenlal educalors, Ihis event was promoted
by lhe Commiltee of the Paranapanema River Basin and gathered logether approximately
700 particípants, In 2011, the evenl was enhanced wilh lhe participation 01 ali lhe 21 Basin
Commitlees 01 lhe Slate 01 São Paulo. The lheme was: 'Water for eities - responding lo the
Urban Challenge".
• First Seminar for Integration of the Paranapanema River - Evenl similar lo lhe Inler
Sasin Dialogue, lhis was lhe firsl inilialive of this type, aimed aI consolidating lhe work
developed by the six eommitlees conneeled wilh lhe Paranapanema River, between lhe
Stales 01 São Paulo and Paraná,
• Fourth Environmental Law Forum of Pontal do Paranapanema - The Company
sponsored this lraditional evenl Ihal brings logether the mosl well-known people involved in
lhe Environmenlal Law of Brazil and is held by lhe Brazilian Bar Associalion (OAB) and by
lhe Public Ministry of lhe Presidenle Prudenle region.
21 aDuke
rtllEnergy"
Duke Energy Intemational,
CNPJ 02,998,301/0001-81
Listed.Company
• Thirteenth Meeting 01 Educators in Delense 01 the Water - Promoted by lhe Committee
of lhe Hydrographic Basins 01 Pontal do Paranapanema, the evenl was held at lhe main
oflice 01 lhe Stale Park "Morro do Diabo" in lhe municipalily of Teodoro Sampaio and had
lhe participatíon 01 450 educalors, who discussed lhe theme: "Waler lor ctlies - responding
lo the Urban Challenge".
• Third Topography Meeting - Promoted by Duke with support 01 the "Escola Técnica de
Paraguaçu Paulista" and inlended lar the technical community, inc1uding companies with
lield activilies and students 01 technical courses, Ihis event has the objective of updating
inlormation on lopographic techniques.
• Second Water Week and Second Environment Week 01 Ouke Energy • Environmental
aclivities with lhe participation 01 more than one thousand students of basic and technical
education. Visits lo the Center of Hydrobiology and Aquaculture of the Salto Grande
hydroelectric power plant were conducted, in addition to leclures aI schools in various cilies
along the lalls.
• Meeting with the communities on reservo ir operations - Annual meetings held for lhe
purpose of explaining the operalion 01 the power plants and leveis of the reservoirs, with lhe
participation 01 representatives of lhe municipalities, members 01 the Civil Defense, Fire
Brigade, Environmenlal Policy and other interested groups.
• Carlópolis, Andirá and Avaré Sport Fishing Tournament - the aim was lo slimulale sport
fishing or, in some cases, fishing lor croaker, which is an alien species and a predalor in lhe
Paranapanema River. During lhe events of Carlópolis and Avaré, lhe Company released
fish, presenting its Management Program and disclosing lhe importance 01 preserving and
respecling the reproduclive aycle 01 the local aqualic fauna.
• Sarutaiá Cultural Festival - The event provided lhe communities wilh 33 hours of sports
and cultural enlertainmenl. A similar event, lhe Song Festival 01 the Stale School João da
Cruz Mellão also received support lrom Duke Energy.
• University and school events • Duke Energy also sponsors the organization 01 universily
and technical school events, particularly those linked to the environmental area. In 2011,
lhe Company provided its support to lhe following aClions, among olhers: Second
Symposium on Soil and Water Preservatlon (Unesp Ourinhos); Seventh Geography Week
(Unesp Ourinhos): Ecologic TolI (Escola Técnica Nadir Ribeiro· Teodoro Sampaio).
8. ENVIRONMENTAL ANO PROPERTY MANAGEMENT
8.1 Assets
The proteclion of lhe natural resources surrounding ils hydroelectric power plants is part of Duke
Energy's commilments with lhe environmenl and preservatíon 01 its asseIs. Accordingly, a
permanent inspeclion program is adopted for ali lhe reservoirs, as well as the conlinuous exchange
of inlonmalion with environmental supervisory bodies, in order lo identily and regulate lhe use and
occupalion of lhe areas under lhe Company's concession.
22
aDuke
r"Energy.,
CNPJ 02,998,301/0001.81
Liste<! Company
Initiatives to prevenI lhe improper use of Ihese areas and irregular occupations slrengthen lhe
relationship with prosecutor's ollices, environmental instilutions and olher stakeholders. Integralion
with lhe communilies involved lakes place Ihrough participation in evenls and meetings 01 specific
inleres!.
Also, aI ali reservoirs georelerencing aclivities were developed along the boundaries 01 properties
in order lO meel bolh lhe requiremenls 01 lhe legislation and the requests of lhe owners 01 adjacent
properties to delimil the areas under lhe concession 01 lhe Company.
In 2011, 263 inspections were also held lo evaluate land occupation and observation 01 the
territorial limits 01 reservoirs. Furthermore, the Company provided lhe maintenance 01 95 hectares
01 lirebreaks in Environmenlal Conservalion Areas and constructed more Ihan 2,000 meters 01
lences lo proteel these areas.
8.2 Environment
In 2011, the Company oblained Irom lhe Brazilian Environmental Institule (IBAMA) a validily lerm
never granled belore lor a power planl Operating Permil (LO): ten years lor lhe Sallo Grande
hydroelectric power plan!. The usual period ranges Irom lour to six years. The extended lerm was
due to lhe good environmental eondilions 01 lhe planl, arising Irom lhe environment programs in
course and lhe responsible management by lhe Company, in addition to lhe relationship with the
surrounding communilies.
As part 01 lhe environmenlal licensing process for the Jurumirim hydroeleclric power plant, an
inspection was conducted by the São Paulo Stale Basic Sanitation Technology and Environment
Proleclion Agency (CETESB) in 2011,
At a dillerent licensing levei, the National Waler Agency (ANA) granled lhe permit for lhe sanilary
drainage of lhe Chavantes, Sallo Grande, Canoas I and Canoas II hydroeleclric power plants valid
up lo 2029, in addilion lo lhe right to the cotlection 01 superficial waler by Canoas L
Environmenlal managemenl initiatives ineluded lhe reslocking of reservoirs with 1.5 million Iry of
native species of the Paranapanema Ríver, monítoring 01 lhe processes 01 erosion, silling and
washouts of lhe reservoirs edges and lhe envlronmenlal reCOvery of lhe areas where the clay 01 the
Canoas Complex is slored.
The waler quality along the Paranapanema River falls was monitored in ali the reservoirs.
Based on a technical and seienlifie study developed by Duke and the State University of
Londrina (UEL) on lhe ecologieal ineflíciency 01 the físh ladders aI lhe Canoas Complex, IBAMA
issued aUlhorization for ciosíng those ladders, on a permanent basis.
Also, lhe Company conlinued to monitor lhe infestation by golden mussel in ali the reservoirs, as
well as in lhe dam structures, aimed at supporting the research and developmenl 01 techniques lor
lhe control 01 lhe speeies in lhe cooling water pipes 01 the eleclromeehanical equipmenl 01 the
power plants,
23
_Dulce
r~Energy~
Duke Energy Inlernational,
Geração Paranapanema S.A,
CNPJ 02,998,301/0001-81
__..~~~~~ão ~~ran~~dne~__._ _.._ _..___ Lís~~ C~~pa~_~ _ _ _ _._ _ _ .~_. __..__ .~_. ___._
In addilion, lhe Company monitored lhe aquatic macrophytes In lhe reservoirs of lhe Chavantes,
Canoas 11, Canoas I, Taquaruçu and Rosana hydroelectric power plants,
AI the Sallo Grande hydroelectric power plant, lhe operational levei 01 the reservoir was lowered
with the objeclive 01 controllíng lhe growlh of macrophyte populalions. This procedure is part 01 lhe
environmental monitoring, managemenl and control 01 Ihese planls, favoring multipla uses 01 lhe
reservoirs,
8.2.1 Reforestation
In 2011, Duke Energy relorested 220 hectares on the Paraná side 01 lhe Capivara reservoir, which
resulted in approximately 6,650 hectares totally relorested in the Paranapanema River Basin since
2000. This data was based on a new topographic survey, applied to the geographic Inlormation
System (SIG) methodology. In addition, lorest maintenance activities consolidated approximately
1,600 hectares relorested in previous years, in areas 01 the Chavantes, Salto Grande, Canoas
Complex, Capivara and Rosana reservoirs.
These aclions were undertaken under lhe "Revegetation Program" and generaled approximalely
110 direct jobs in sub-contracted companies.
Another initiative, lhe Foreslation Promotion Program involves rural property owners 01
28 municipalities in the neighborhood 01 the Company's reservoirs, who receive high-qualrty
seedlings and technical guidance lo recover preservation areas on Iheir properties, helping the
environmental conservalion of the Paranapanema River Basin. In 2011, approximalely
350 thousand native seedlings were distributed and 66 new contracts lor collaborative lorest
restoration 01 properties were signed, with the Company's commitmenl to provide the seedlings in
lhe coming years.
8.3 Partnerships
In order to strengthen and consolidale its environmental programs and to increase its participation
in initiatives involving lhe Paranapanema River Basin, the Company has contacls and partnerships
wilh educalion and research organizations and inslitulions, such as the University of
São Paulo (USP), the State Universily 01 São Paulo (UNESP), lhe State University 01 Londrina, the
Slate University 01 Maringá (UEM), Luiz Meneghel Colieges, lhe Integral Technrcal Assistance
Coordination (CATI) and lhe Ecological Research Institule (IPE).
Through a Technical Cooperation Agreemenl entered into wilh the Integrated Aquaculture and
Environmental Studies Group InstitUle (IGIA), Duke Energy supports studies to establish lish farms
in lhe reservoirs 01 the Paranapanema River, as part 01 a project conlracted by lhe Ministry 01
Fishing and Aquaculture (MPA).
The Company also collaborates wrth the management 01 waler resources, as a member of the
Water Resources Committee of lhe medium and high Paranapanema regions, in São Paulo, and 01
Prraponema and Norte Pioneiro, in the State 01 Paraná, In addition, it is part of the Support Group
lor lhe establishment 01 the Water Resources Committee oí Paranapanema River aI the lederal
leveI. The Company also provided support to the Seminar of the Paranapanema River Integration,
which occurred in November and had approximately 150 participants, among representativas 01 lhe
24 _Dulce
r",Energy.
Ger"s-ão Paranapal1E'ma
Duke Energy Internalional,
CNPJ 02,998,301/0001-81
Listed Company
Water National Agency (ANA), 01 lhe secrelarials 01 water resources of lhe States 01 Paraná and
São Paulo, 01 committees 01 state water resources, environmental bodies, universities, NGOs and
olhe r.
It also particlpates in lhe Environment Working Group (GTMA) of the Brazilian Association of
Electric Power Generating Companies (ABRAGE) and is involved in lhe discussion of
environmenlal topics related to the electricity sector, and in lhe Task Forces 01 Aqualic Ecosystems,
Permanent Conservation Areas and Asse! Managemenl. The Company is also part 01 lhe Energy
Seclor Environmental Chamber at CETESB, whose 90als are lo address environmental variables in
lhe planning and implemenlation 01 energy projects in lhe Stale 01 São Paulo.
Furthermore, lhe Company sponsored the Ninth Inter-Basin Dialogue aboul Environmental
Education on Waler Resources, conducted by the Committees of Water Resources 01 the Slate 01
São Paulo and aimed at sharing environmental education expenences among teachers. lechnicians
01 public agencies and students.
Other partnerships maintained by the Company are with the Association for Forest Recovery of
medium Paranapanema region (Flora Vale), which maintains seedling nurseries and production;
with lhe Foundation Paranapanema Projecl (ProiPar), which conducts archeology activities; and
with lhe Bioscience Institule Foundation, for specialized consulting on physical and bíologícal
monitoring of the aquatic environment.
25 (A Iree translation 01 lhe original in Portuguese)
_Dulce
r'Energy.
Geração Parilnap-anema
CNPJ 02,998,30110001-81
Llsted
SOCIAL RESPONSIBILITY REPORT AT OECEMBER 31,2011 ANO 2010
~~-
1 • Calcull'ltlon M$fS
.li
• Extemal-soem! mdtClltoffl
• I Envlrorunemal u.,d,catort;
,.
nil1lrlllB weste, general ccnsumpllOr" I
o;Jeralloos and Increase efficacy in irw use 01 natural
ros::urces lhe Company
26 aDulc.
fl/lEnergy.
Gcrdção Paranapdnema
CNPJ 02.998,301/0001-81
_ _-=L=-is"ted Company
SOCIAL RESPONSIBILITY REPORT AT OECEMBER 31, 2011 ANO 2010
• StllU II'U1lcatof$
2011
sD$Cial
~
Relevanl mformahon on cOtPQrate cltlumshlp
DI$~( butlOn 01 'la UG aooé<l
7
Other InforrrnitlQn
27
..,
2{)10
Duke Energy Internetíonel,
Geração Paranapenemo S.A.
GeraçJQ Paranapanema
CNPJ 02,998,30110001-81
Listed
BALANCE SHEETS AT DECEMBER 31, 2011 ANO 2010
(Ali amounts in thousands of reais)
ASSETS
Currenl asseis
Cash and cash equivalents
Trade receivables
Taxes recoverable
Services in progress
Prepaid expenses
Sundry debtors
Related parties
Olher asseis
2011
_
-
2010
210,371
111,710
22,223
5.203
343
259
847
137
495,772
96,430
7,797
3,724
346
260
218
84
.... _
351,093
604,631
398
10,897
420
4,426
436
4,898
373
4,646
16,141
10,353
26
4,005,482
37,726
26
4,219,836
40,678
4,059,375
.. 4,410,468
4,270,893
4,875,524
nole
-....
6
7
8
13
Non-currenl asseis
Long-term receivables
Taxes recoverable
Judicial deposits
Restricted funds
Prepaid expenses
8
9
Investments
Property, planl and equipmenl
Intangible asseIs
10
11
Total asseis
The accompanying notes are an integral part of Ihese financiai statements.
28
Duke Ener9Y Inlernational, Geração Paranapanema S.A. CNPJ 02,998,30110001'81 _~L=iste
...d Coml>.ny_~ ..~~..~~~_
BALANCE SHEETS AT OECEMBER 31,2011 ANO 2010
(Ali amounts in thousands 01 reais)
LlABILITIES ANO EQUITY
Currenl liabilities
Suppliers
Salaries and social charges
Debenlures
Taxes, lees and contributions
Dividends and ,nterest on capital
Estimated obligations
CIBACAP
Electric industry charges
Olher liabílítíes
note
2011
2010
12
20,739
9,254
90,156
23,077
183,119
5.118
3,521
16,211
203
351,398
34,425
9,758
91,082
16,269
136,419
7,276
4,718
15,558
1,558
317,063
721,094
746,104
22,617
6,646
8,128
9,398
500,585
10,852
324
1,304,654
14
8
20.4
15
19
Non-currenl liabilities
Debentures
Supplíers
Specíal obligations
Ne! contingencies
CIBACAP
Deferred income tax and social contríbution
Electric industry charges
Other liabilities
14
12
18
17
15
8
19
7,047
18,239
8,432
465.. 078
13,590
325..
1,233,805
-'-~~._~.~
Equity Capital Capital reserves Revenue reserves Carrying value adjustments 20.1
20.2
20.3
20.7
1,639,138
99,330
71.863
__-.1,0.!.4,f):3~
__ 2,825,265
4,410,468
Total liabilities and equity
The accompanying notes are an integral pari 01 these financiai statemenls.
29 1,999,138
99,133
63,401
1,092,135
3,253,807
4,875,524
(A Iree Iranslalion 01 lhe original in Portuguese)
aOuke
rtlfEnergy.,
CNPJ 02,998,30110001-81
Geração Paral"lapanema
Listed Company
STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2011 AND 2010 (Ali amounts in thousands of reais, unless otherwise stated) note..__..__
Net sales revenue
Operating income (expenses)
Personnel
Materiais
Outsourced services
ANEEL inspection lee
Electric power purchased for resale
Eleclric gríd usage charges
Financiai compensation lor lhe use 01
water resources
Depreciation and amortization
Provision for contingencies
Provision for impairment of trade receivables
Leases and renlals
Insurance
Olher
21
2011
958,003
2010
862,303
23.2
23.3
(54,968)
(3,418)
(35,784)
(4,298)
(1,302)
(77,585)
(57,204)
(3,004)
(42,250)
(4,051)
(2,807)
(74,274)
(53,237)
(230,740)
(11,045)
(3,003)
(3,235)
(2,575)
(10,974)
.. _(492,164)
465,839
(56,763)
(235,130)
(1,509)
(5,003)
(3,009)
(3,138)
1O.b and l1.b
Operating profit
Finance result
Finance income
Finance cosls
24
24
Protit betore income tax and social contribution
Income ta. and social contribution
Current
Delerred
Profit for the year
Earnings per share trom continuing
operations (in RS per share)
Basic/diluted earnings per
preferred share
Basic/diluled earnings per
common share
39,515
(132,083)
(92,56111
373,271
(497,860)
364,443
_
50,655
(153,438)
.. _- (102, 7831
261,660
(115,353)
34,198
180,505
8.3
8.3
(125,851)
- -... .. 33,841
281,261
25
2.97838
1.93533 25
2,97849
1.86544 The accompanying notes are an integral part of these financiai statements,
30 _~_...(92~.ilJ.
~
(A free translation of lhe original in Portuguese)
Duke Energy Internalional, Geração Paranapanema S.A. CNPJ 02,998,301/0001·81
Geração ParaniJpanema
Listed
STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31,2011 ANO 2010
(Ali amounts in Ihousands 01 reais)
~
Profit for lhe vear
Acluaríal galnsl (Iosses) on defined benelít
pensíon plan
Deferred income tax and social contríbutíon
on actuaríal gaíns/(losses)
Comprehensive income for lhe year
...
2011
...
281,261
2010
180,505
(4,899)
(1,722)
~~_
~~ _ _ ",1,665
586
(3,234)
(1,136)
278,027
179,369
The accompanying notes are an integral part of these financiai statements.
31
(A Iree translalion of lhe original in Portuguese)
aDuke
r"'Energy~
GE:'rclçáQ Paraflapanema
CNPJ 02,998,30110001-81
Listed
STATEMENTS OF CHANGES IN EaUITY YEARS ENOEO OECEMBER 31, 2011 ANO 2010 (Ali amounts in thousands of reais, unless otherwise stated) _--,-R",e",.er~ve
...s,----_
Carrylng
At December 31, 2009
Share
Retained
value
"""~!~~ J;:~!.!~~ J:~~ver'!~~ ___ .~arn!_~S!- __. adjustments -,;-T"o"t",al"""
1,999.138 98.763
54,376
(1,806)
1,168,895 3,319,366
Comprehenslve income for the year
Profit for the year
Pension and reHrement plan
Oeferred taxes on pension plan
180,505
180.505
(1,722)
(1,722)
586
586
-----'------'-----'---.1°80',505-- (1,136)-179,369
Contributions trom and distrlbutions to owners
9,025
Legal reserve
Interim dividends (R$ 1.69167 per share)
Dividends (R$ O.7059iper pmferred
share and RS 2,39758 per common share)
(9,025)
(106,500)
(106,500)
(119,911)
(18.887)
370
(tI9,911)
(18,887)
Interest on capital (RS 0,20 per share)
Share·based payments
370
Realization of carrying value adjustments
114,582
(note 20.7)
Oeferred taxes Ori realization of carryrrig va'ue adjustments (114,582) At December 31, 2010
Comprehensive income for the year
Profít for the year
Pension and retirement p!an
Deferred taxes on pension plan
281,261
(4,899)
281,261
(4,899)
281,261
Contributions Irom and dlstríbutions to owners
Capital decrease (note 20.1)
Oistributton of reserve
Legal reserve
(360,000)
(5,601)
(360,000)
(5,601)
14,063
Interím divldends (RS 1]3576 per preferred share
and R$ 1.11221 per common share)
Dividends (RS 0.83699 per preferred
share and R$1.46055 per common share)
Interest on capital (R$1 ,04 per share)
Share-based payments
Realization of carrying value adjustments
(t4,063)
(144,286)
(144,286)
(98,668)
(98,211 )
(98,668)
(98,211 )
197
197
(nole 20.7)
112,071
Deferred taxes Ori reallzation of carrying value adjustments AI December 31, 2011
The accompanying notes are an integral part of Ihese financiai slatemenls.
32 (112,071 )
(A Iree translation of the original in Portuguese)
Duke Energy Inlernational, Geração Paranapanema S.A. CNPJ 02,998,30110001-111
Llsted Company
Ger03çeio Paranapanema
._
STATEMENTS OF CASH FLOWS YEARS ENOEO OECEMBER 31,2011 ANO 2010 (Ali amounts in thousands 01 reais) _ .._ _.. 2011
2010
281,261
180,505
230,740
3,230
3.003
84,994
235,130
35,587
197
11,045
650;Õ57
56,042
---~--567:123
(18,283)
(8,175)
Cash flows from operating aetivities
Profít for the year
Adjustments:
Depr8ciation and amortlzation
Disposals oi property. plant and eqwprnent and intangible assets
ProvIsion for impairment of trade receivables
Provision for interest on borrawings
Moneta'Y variation on borrowings
Shars"based payments
Provision for contingencies
Changes in assets and liabilities
Customers
' - -..~
2,808
5,003
85,756
370
1,509
215
1
(629)
SundlY debtors
Related partias
Judicial deposits
Services in progress
Restricted funds
Prepaid expenses
Suppliers
Salaries and social charges
Taxes, fees and contribu1ions
(30)
(581)
(1,192)
(43)
270
(33,423)
761
71,998
(1,229)
(5,999)
(1,480)
(46)
222
(36,303)
(504)
81,368
Estimated obJigations
(2,158)
(2.163)
(934)
j759)
GrSACAP
Net contingencies
Other changes in asseiS and liabilities
Cash generated trom operations
Net cash generated trom operaUog aetivities
Cash flows from investing activities
Addi1ions to property, plant and equiprnent
Actditions to intangible asseIs
Net cash used in investíng activities
Cash tlows from finaoclng activities
Capital decrease
Nat cash used in financing activ1ties
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the eno of the year
(139,066)
(67.246)
(108,176)
439,246
419,970
(15.641)
(9,188)
___P.J.:11.l
_ _ _lê!'§)
(9,863)
(62.440)
(285.455)
(360,000)
(83,314)
(208.244)
(101,895)
(285,401)
495,772
210,371
. (291,558)
118,549
377,223
495,772
The accompanying notes are an integral part of these financiai statements.
33 _ ...fl,4561
28,269
595,392
(16.752)
Repayment of bOfr0wings and debentures
DjvidendS
,_
12,333
662,390
---- (84":078)
Inlerest paid on borrowings and debentures
Incame tax and social contributron paid
5.152
(2,998)
Duke Energy Inlernalional, Geração Paranapanema S,A, CNPJ 02,998,301/0001-81
aDuke
rtl1Energy®
GeraçàO Paranapanema
_ _~~_ _ .. Listed Company
STATEMENTS OF VALUE AOOEO
YEARS ENOEO OECEMBER 31, 2011 ANO 2010
(Ali amounts in thousands of reais)
2011
2010
1,003,463
964,867
93
(3,003)
46
(5,003)
(2,436)
1,058,117
957,632
(39,202)
(45,254)
(78,887)
(20,824)
(77,081 )
(11,011)
(133,346)
824,286
(235,130)
Generation 01 value added
Sales revenue
Olher revenue
Provision for impairment of trada receivables
OIher operaling Ilems
_~~..
(2,278)
Inpuls acquíred Irom third parties
Materiais and outsourced seNíces
Eleclric power purchased and electric grld
usage charges Olher operatíng cosls ,~J138,913)
Gross value added
919,204
Depreciation and amortization
Canyong value adjustments
Share-based paymenls
Pension and retirement plan
(230,740)
73,967
(875)
2,953
Net value added generaled by the entity
762,431
Finance income
666,858
50,655
717,513
39,515
Total value added to distributs
Distribution 01 value added
Personnef
Salarles and social charges
Pension and retirement plan
Government Severance Indemnity Fund
for Employees (FGTS) Olher 75,624
801,946
30,808
849
30,950
2,693
~~~...~..11.
48,461
3,935
_ _'Ó;15.801
51,461
254,862
233,406
8,077
262,939
17,992
251,398
132,083
3,235
153,438
775
Taxes, lees and contribulion.
Federal
Slate
~ _ _.
Third-party capital remuneration
Finance costs
Rentals
Own capital remuneration
Interes! on capilal Dividends -~ ~~135,318
3,009
156,447
98,211
18,887
_~-,2~42,95~4
341,165
Olher
Prolits retained
TOlal value added distributed
14,003
_ _~.. 14,063
801,946
The accompanying notes are an integral part of these financiai statements,
34
9,025
9,025
717,513
(A Iree translation 01 the original in Portuguese)
aDuke
r"Energy~
Ger4fâo
Par~n(lpanema
CNPJ 02,998,301/0001-81 Listed Compa~y NOTES TO THE FINANCIAL STATEMENTS AT DECEMBER 31, 2011 (Ali amounts in thousands 01 reais, unless otherwise stated) 1.
GENERAL INFORMATION
Duke Energy International, Geração Paranapanema SA (the "Company") is a listed company and
a public utility concessionaire. operating as an independent producer, and is headquartered in the
City and State 01 São Pauh IIs main activities are lhe generation and sale 01 electric power, which
are regulated and monitored by the National Electric Energy Agency (ANEEL), associaled wilh lhe
Ministry of Mines and Energy (MME).
The Company's installed capacily is 2,241 MW, comprising the following generaling complex in
operation in lhe State of São Paulo: Capivara Hydroeleclric Power Planl, Chavantes Hydroelectric
Power Plant, Jurumirim Hydroelectric Power Plant, Salto Grande Hydroelectric Power Plan!.
Taquaruçu Hydroelectric Power Planl and Rosana Hydroelectric Power Planl and 49.7% 01 lhe
Canoas Complex. formed by Canoas I and 11 Hydroelectric Power Plan!s.
The issue of Ihese financiai stalemenls was aulhorized by the Board of Direclors on March
20.2012,
2,
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The main accounting policies applied in lhe preparation of Ihese financiai slatemenls are set out
below, These policies have been consistently applied lo lhe years presented. unless otherwise
staled,
2.1. Basis 01 preparation
The financiai slatements have been prepared under lhe historieal cosI convention, as modified by
the "deemed cosi" 01 dams, buildings. machinery, furniture and vehicles on the transilion date to
IFRS, and certain financiai asseIs and liabililies measured aI lair value through prolit or loss,
The preparalion of financiai slatemenls requires lhe use of certain crilical accounling eslimales, 11
also requires management to exercise ils judgmenl in the process of applying lhe Company's
accounling policies, The areas involving a higher degree of Judgmenl or complexity. or areas where
assumptions and estimales are significant to lhe Company's financiai stalemenls, are disclosed in
nole 3,
The Company's financiai stalements have been prepared and are being presented in accordance
with accounling practices adopled in Brazil, including lhe pronouncements issued by lhe Brazilian
Accounting Pronouncements Committee (CPC), and also pursuant la lhe Internalional Financiai
Reporting Standards (IFRS) issued by lhe International Accounting Slandards Board (IASB).
There are no new pronouncemenls or interprelations of CPC/IFRS effective as from 2011. which
could have a significant impact on these financiai slatements,
2.2. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank deposils. other short-term highly liquid
inveslments with original malurities 01 Ihrse months Or less. and wilh immaterial rísk of change in
35
_Dulce
r'Energy.
Duke Energy Inte,national,
CNPJ 02,998,30110001-81
Listed
value, as well as overdraft accounts. These overdraft accounl balances are recorded in lhe balance
sheel as borrowings, under currenl liabililies.
2.3. Financiai inst,uments
2.3.1. Classification
The Company classifies ils financiai assets according to lhe following categories: measured at lair
value !hrough profit ar loss and loans and receivables. Management determines lhe classification 01
financiai assets aI initial recognition. The classification depends on lhe purpose for which lhe
financiai assets were acquired. In these financiai statemenls, lhe Company has recognized lhe
following financiai inslrumenls:
i.
Financiai asseIs aI lair value Ihrough profil or loss
Financiai asseIs a! fair value Ihrough profit or loss are financiai asseIs held for trading. A
financiai asseI is classified in this calegory if acquired principally for realization in lhe short
termo Ali financiai asseIs in Ihis category are classified as currenl assets.
ii.
Loans and receivables
Loans and receivables are non-derivative financiai assets wilh fixed or delerminable
payments Ihal are not quoled in an active markel. They are included in current asseIs or
non-currenl asseIs, depending on whelher Ihey fali due within or afler 12 months from lhe
balance sheel dale. The Company's loans and receivables comprise cash and cash
equivalents and olher receivables (note 7).
The Company does not operale wilh derivatives, nor does il apply lhe hedge accounting
methodology.
2.3.2. Recognition and measurement
Regular purchases and sales of financiai asseis are recognized on the Irade-dale lhe dale on
which lhe Company commits lo purchase or sell lhe asseI. Inves!ments are inilially recognized ai
lair value plus Iransaction cosls for ali financiai asseis nol carried ai fair value Ihrough profil or loss.
The cosls of lhe Iransaclions involving financiai asseIs ai fair value through profil ar los$ (held for
Irading) are expensed in lhe slalemen! of income. Loans and receivables are recorded at amortized
cosI.
Financiai asseis are derecognized when lhe nghls lo receive cash Ilows from lhe inveslments have
expired ar have been Iranslerred and lhe Company has Iransferred subslanlially ali risks and
rewards 01 ownership.
Gains ar losses arising Irom changes in lhe lair value of lhe "Financiai asseis aI lair value Ihrough
prolil or loss" calegory are presented in lhe statemenl of income wilhin "Olher income (expenses),
nel" in lhe period in which they arise.
2.3.3. Offselling financiai ínstruments
Financiai asseis and liabililies are ollsel and lhe net amounl reported in lhe balance sheel when
there is a legally enforceable righ! to offsel lhe recognized amoun!s and Ihere is an in!enlion lO
settle on a ne! basis, or realize lhe asseI and sellle lhe liability simullaneously.
36 aDule
riIIEnergy.
CNPJ 02,99S,301/000Hll
Geração p.,ranapanema Listed Company
2.3.4. Impairmenl of financiai asseis
Assets carried ai amorti~d coSi
lhe Company assesses at the end of each reporting period whelher there is objeclive evidence Ihal
a financiai asseI ar group of financiai asseIs is impaired. A financiai asseI or a group of financiai
asseis is impaired and impairmenl losses are incurred only if there is objeclive evidence of
impairment as a resull of one ar more evenls lhat occurred after the initial recognition of the asset
(a'105s event") and Ihal loss event (or events) has an impact on the estimated future cash flows of
the financiai asseI or group of financiai asseIs Ihat can be reliably estimaled.
lhe criteria Ihat lhe Company uses lo determine lhat Ihere is objeclive evidence of an impairment
loss include:
i. significanl financiai dilflcully of lhe issuer or debtor;
li. a breach of contracl, such as a defaull or delinquency in interesl or principal payments;
iii. lhe Company, for economic or legal reasons relating lo the borrowe,'s financiai ditficulty,
granting to lhe borrower a concession that il would not otherwise consider;
Iv. it becomes probable that lhe borrower will enler bankruptcy or other financiai
reorganizalion;
v. lhe disappearance of an aclive markel lor lha! financiai asseI because of financiai
difficullles; or
vi. observable data mdicaling that Ihere is a measurable decrease in lhe estimated future cash
flows from a portlolío of financiai asseis since lhe inilial recognition of those asseIs,
allhough lhe decrease cannol yet be idenlifled wilh lhe individual financiai assets in the
portlolio, inciudlng:
• adverse changes in lhe paymenl slatus of borrowers in the portfolio; and
• national or local economic condilions Ihat correlate with defaults on the asseIs in lhe
portfolio.
lhe amounl 01 any impairment loss is measured as lhe difference between the assel's carrying
amount and the present value of eslimated future cash flows (excluding fulure credit losses Ihat
have nol been incurred) discounted aI the financiai asset's original effeclive interest rate. lhe
carrying amount 01 the asset is reduced and lhe amount of lhe loss is recognized in lhe statement
of income. 11 a loan or investment has a floaling interest rate. the discount rate for measuring any
impairmenl loss is lhe curren! effective interesl rate delermined under lhe con!racl. As a practical
expedient, the Company may measure impairment based on an instrument's fai, value using an
observable market priee.
If. in a subsequent period, the amo uni of lhe impairmenl loss decreases and lhe decrease can be
related objectlvely lO an event occurring after lhe impairment was recognized (such as an
improvemenl in lhe debtor's credit rating), lhe reversal of lhe previously recognized impairment 10$s
is recognized in lhe slalemenl of income.
Impairment tesling of Irade receivables is described in note 2.4.
37
Duke Energy International, Geração Paranapanema S,A, CNPJ 02,998,301/0001-81
Listed
2_4_ Trade receivables
Trade receivables are amounls due lrom customers in lhe ordinary course 01 lhe Company's
aclivities. If collection is expecled in one year or less (or in lhe normal operaling cycie 01 lhe
Company's business il longer). they are classilied as currenl asseis. If nOI, Ihey are presenled as
non-current asseIs. Trade accounls receívable comprise lhe amounts relaled lo lhe supply 01
eleclric energy ínvoiced and nol yel invoíced, includíng lhe sal e of electríc energy made Ihrough lhe
Chamber for Electríc Energy Sales (CCEE), as well as lhe receívables from lhe Exlraordinary Tarílf
Recomposilíon (RTE), recognized on lhe accrual basis.
Trade receivables are recognized inilially aI lair value and subsequently measured aI amortized
cosI using lhe efleclive inleresl melhod, less a provisíon for impairmenl 01 Irade receívables.
Usually, in praclice, Ihey are recognized aI the amounl billed, adjusted by lhe provisíon for
impaírment, when necessary.
2_5. Provision lar impairment 01 trade receivables
The allowance is recorded based on lhe estimale 01 losses which may arise on colleclion of lhe
receivables.
The provisíon for impaírmenl 01 Irade receivables is established when there is objeclíve evidence
Ihal lhe Company wíll nol be able lo realize lhe amounts due according lo lhe original lerms of lhe
receívables. The amount 01 lhe provision is lhe dilference between lhe book value and the
recoverable vatue.
2_6. Inventaries
Material and equipmenl held in inventory, recarded within "Olher asseis" in current asseIs
(mainlenance and administrative storeroom) are recorded at acquísition cos!, wilh does not exceed
replacemenl costs ar realizable values, net of provisions for losses, when applicable.
2_7. Prepaid expenses
The amounts recorded in assets represent prepaid insurance expenses, lo be recognized on the
accrual basis (i.e., amortized on a slraight-line basis over lhe term 01 lhe insurance policy), as well
as expendilures incurred on lhe database syslem lar regislralion 01 lhe properties surrounding lhe
reservoirs. amortized aver lhe period of the concession
2_8. Services in progress
These reter lo the resources allocated lo R&D proJects, in conformlly wilh ANEEL Resolulion
441/2001. At Iheir complelion, Ihese projects are subjecl lo lhe approval of lhe ANEEL
superinlendence, which is responsible for Iheir evalualion, and they are subsequently wrilten 011
againsl lhe R&D liabililies account.
2_9_ Intangible assets
2.9_1_ Computer software
Compuler software licanses are capitalized on lhe basis of lhe costs incurred lo acquire and bring
to use the specific software. These cosls are amortlzed over thel[ eslimaled useful lives of
live years.
38 Duke Energy International,
Ger<tção Paranapanemit
~~----=--
CNPJ 02,998,30110001-81
Lisled Company
Costs associaled with maintaining compute r soltware programs are recognized as expenses, as
incurred. Development cosls Ihat are direclly allribulable 10 the design and testing of identifiable
and unique software products controlled by the Company are recognized as intangible assets.
2.9.2. Ulilizalion of Public Asseis (UBP)
In order to exploit the electric power generalion granted Ihrough the concession agreements, lhe
Company paid, over live years as from lhe execution of lhe contracls. annual charges divided into
monthly installments, wilh respect to lhe Utilization of Public Asseis (UBP). Such disbursements, at
hislorical amounls, were recognized in inlangible asseis and are amortized over lhe period of lhe
concession.
2.10.
Property, planl and equipmenl
Property, planl and equipment are slaled ai hislorical or deemed cosI less accumulaled
deprecialion. Except lar land, ali asseIs. or groups 01 asseIs, whose carrying amounts substanlially
differed Irom lhe fair values at lhe date 01 lhe lirsl-lime adoplion 01 the new accounting standards
were stated aI lair value as deemed cOSI as 01 lhe Iransilion dale, January 1, 2009. Hislorical cosI
includes expendilure Ihal is directly attribulable lO lhe acquisilion 01 lhe ilems and also includes
linance cosls relaled to lhe acquisilion of qualilying asseis.
Land was mainlained ai hislorieal cosI. as lhe Company understands thal Ihis is lhe amounl
accepted by lhe regulalory agency for indemnily purposes at the end 01 lhe concession period.
Subsequenl cosls are included in the assel's carrying amounl or recognized as a separate asset, as
appropríate, only when il is probable Ihal lulure economic benelils associated wilh the item wíll Ilow
lo the Company and lhe cosi 01 lhe ilem can be reliably measured. The carrying amount 01 lhe
replaced ilems or parts is derecognized, Ali Olher repairs and mainlenance are charged lo the
slatemenl of income during the financiai period in which Ihey are incurred.
Land is nol depreciated. Deprecialion 01 olher asseis is calculaled using lhe slraighl-line melhod lo
reduce Iheir cOSI lo lhe residual values over Iheir remaining uselul lives eslimaled according lo lhe
appraisal report. as follows:
Average usefullife
Reservoirs, dams and water mains
Buildings, civil conslruction and improvements
Machinery and equipmenl
Fumilure and littings
Vehicle
19 years
13 years
15 years
06 years
03 years
The residual values and lhe uselul lives 01 the assets are reviewed and adjusted, il appropriate, ai
lhe end 01 each reporting period,
An assel's carrying amounl is writlen down immediately to its recoverable amounl il lhe assel's
carrying amounl is greater than ils es!imated recoverable amount (note 10).
Gains and losses on disposals are delermined by comparing lhe proceeds with the carrying amoun!
and are recognized wilhin "Olher income (expenses), nel" in the Sla!emenl 01 income,
39 a Dulce
rtlEnergy~
(ieração
2.11.
P<}r<}flilpan~md
CNPJ 02,998,30110001-81
Listed Company
Impairment 01 non-financial assets
Asseis lhat are subJect lo amortization are reviewed for impairment whenever events or changes in
clrcumstances indicate Ihal lhe carrying amoun! may no! be recoverable. An impairmenl loss is
recognized for lhe amoun! by which lhe asset's carrying amounl exceeds ils recoverable amoun!.
The recoverable amounl is lhe higher of an asse!'s lair value less cosls to sell and ils value in use.
For lhe purposes of assessing impairmenl, asseis are grouped ai lhe lowes! leveis for which Ihere
are separately idenliliable cash flows (cash-generaling unils). Non-financial asseis that sullered
impairment are reviewed lor possible reversal 01 lhe impairment at each reporting date.
2.12.
lrade and other payables
Trade and olher payables are obtigations lo pay lor goods, electric power, eleclric grid usage
charges, material and services that have been acquired in lhe ordinary course 01 business Irem
suppliers. Accoun!s payable are classilied as curren! liabllilies il payment is due in one year or less,
or as non·current liabilities, if payment is due after one year (or in the normal operaling cycle of lhe
Company's buslness, even if longer),
Trade payables are recognized initially ai fair value and subsequently measured ai amortized cosi
using lhe elleclive interesl rale melhod, In praclice, they are usually recognized aI lhe amount 01
the related invoice,
2.13.
Debentures
Debentures are recognized initial!y at fair value, net 01 transaction costs incurred and are
subsequenlly carried ai amortized cosI. Any difference between lhe proceeds (net 01 Iransaction
COSls) and lhe settlemenl value is recognized in the statement of income over the period of the
borrowings using the effeclive interest melhod.
Fees paid in connection with lhe issue of debentures are recognized as costs 01 lhe Iransaclion
when it IS probable lhal some or ali of lhe lacility will be drawn down. In such case, fees are
deferred until lhe drawdown occurs, To the exlent there is no evidence Ihat it is probable lhat some
or ali 01 lhe facilily will be drawn down, the lee is capilalized as a prepayment for liquidity services
and amortlzed over the relaled period.
Debentures are classilied as current liabilities unless lhe Company has an unconditional righl lo
deler settlemenl 01 the liability for aI leasl 12 months after the reporting period.
2.14.
Provisions
Provisions for envirenrnental restoration, restructuring costs and legal lawsuils (labor, civil and
taxes) are recognized when: lhe Company has a present legal or constructive obligalion as a result
01 past evenls: il Is probable Ihat an outflow 01 resources will be requíred to settle the obllgalion;
and the amount has been reliably estlmaled Provisions are nol recognized lor future operating
losses,
Where Ihere are a number of similar obligations, the likelihood that an outflow will be required in
settlemenl is delermined by considering lhe class of obligations as a whole. A provision is
recognized even II lhe likelihood 01 an oulflow with respecI to any one ilem included in the same
class 01 obligallons may be srnal!,
Provisions are measured ai lhe presen! value of the expenditures expected to be required lo settle
lhe obligatlon using a rate belore tax eflects that reflecls currenl market assessments 01 lhe lime
40 Duke Energy International, Geração Paranapanema S.A. CNPJ 02,998,301/0001·81
Geração Paranapanema Listed Company ..
_-_
... _ - - ...
_------
value 01 money and the risks specific to the obligalion. The increase in the provision due lo passage
01 time is recognized as interest expense.
2.15. Current and deferred income tax and
social contribution on net in come
The income tax and social conlribulion expenses for lhe period compnse current and deferred
taxes. Income taxes are recognized in lhe statemenl 01 income. excepl lo lhe exlent that Ihey relate
lo items recognized in comprehensive income ar directly in equity. In such case, lhe taxes are also
recognized in equily or comprehensive income.
The curTent income tax and social contribution are calculated on lhe basis 01 the lax laws enacled
or subslantively enacted at lhe balance sheet dale. Management periodically evaluates posilions
taken by the Company in income tax returns with respect to situations in which applicable tax
regulatíon is subject to interpretation. It establishes provisions where appropriate on the basis 01
amounls expected lo be paid la lhe lax aulhorities.
The currenl income tax and social contribulion are presenled net, separated by taxpaying entity, in
liabilíties when Ihere are amounts payable, ar in assets when the amounts prepaid exceed lhe total
amount due on lhe reporting dale.
Delerred income tax and social contribution are recognized, using lhe liability method, on lemporary
dillerences belween lhe tax bases 01 asseIs and liabililies and lheir carrying amounls in the
financiai slatemenls. However, lhe deferred income lax and social conlribulion are not accounled
lar if Ihey arise lrom initial recognilion of an asseI ar liabilily in a transaclion olher lhan a business
eombination Ihal aI the lime 01 the transaelion alleels neilher accounting nor taxable prolit or loss.
Deferred tax asseIs are recognized only lo the extsnt Ihat il is probable lhat future laxable proli! will
be available againsl which lhe lemporary dillerences and/or tax losses ean be ulilized.
Delerred lax assets and liabililies are ollsel when there is a tegally enforceable righl lo olfsel
currenl lax asseis against currenl tax liabililies.
In arder to calculale the income tax and social conlribulion on currenl prolil, lhe Company adopts
the Transilional Tax Syslem (RTT), which aulhorizes lhe elimination 01 lhe ellecls arising Irom lhe
changes inlroduced by Laws 11638/2007 and 11949/2009 lrom the calculalion bases 01 lhese
laxes.
2.16. Employee benefits
2.16.1. Pension obligations
lhe Company sponsors relirement and pension plans lor ils employees. These plans were
eSlablished as delined benelils and delined contribulion. The costs, conlributions and lhe aCluarial
asseIS ar liabililies 01 lhe defined benefils plan are annually determined, aI December 31, by
independen! actuaries, using lhe projecled unil credil melhod, and recorded pursuanl to CVM
Resolulion 600/2009. A defined contributíon plan is a pension plan under which lhe Company pays
lixed contributions to a separate entity. Under this plan, lhe Company has no legal ar conslruclive
obligalions to pay lurther conlribulions il lhe lund does nol have suflicient asseIs lo pay ali
employees lhe benefils relaling lo employee service in lhe currenl and prior periods. A delined
benefits plan is a pension plan lhal is nol a delined conlribulion plan. Typically delined benefit plans
defone an amount 01 pension benefit Ihal an employee will receive on reli remen!, usually dependenl
on one ar more tactors sueh as age, years 01 service and salary. In Ihis case, the Company is
legally obliged lo pay further contríbulions il lhe lund does nol hold sullicient assets to pay the
benelils to ali employees.
41
CNPJ 02,998,30110001-81
Geração Pafanapanema
Lisled
The Company recognizes a liability in the balance sheel in relallon lo lhe defined benelils pension
plans il the present value of the delined benefit obligation at lhe balance sheet dale is higher than
the lair value 01 the plan's assets.
The Company recognizes an asseI in lhe balance sheel il lhe surpluses 01 lhe dellned benelits plan
lead lo an actual reduction in lhe payments 01 luture conlributions. Currenlly, lhe surplus calculated
does not meet this crilerion and no asseIS have been recognized (note 16).
The plan's current cosls. including interest, less lhe expecled retum on asseIs, are recognized in
lhe slalemenl 01 income lor lhe year, when incurred. Acluarial gains and losses are recognized in
olher comprehensive income, wilh an immediate impacl on lhe Company's equily.
2.16.2. Equlty-settled, share-based compensatlon plan
There is no compensalion plan based on shares issued by lhe Company lor lhe members of lhe
Board 01 Direclors, Execulive Board and Slalulory Direclors.
Duke Energy Corporalion ("Parenl Company"), on lhe other hand, has an equity-settled, share
based compensalion plan and selecls some 01 the Company's ollicers lo participale in il.
The Company receives lhe services Irem eligible executives as consideralion for the Parent
Company's share-based compensation, and Ihese amounls are calculated aI the lair value 01 the
Parenl Company's shares at lhe grant date, and recognized as expenses with a corresponding
entry to the Company's equity, pursuant to CPC 10 ("Share-based Paymenls") (notes 13.2
and 20.6).
2.16.3. Termination benefits
Terminalion benefits are payable when employment is terminated by the Company belore lhe
normal relirement date, or whenever an employee accepts voluntary redundancy in exchange for
these benefits. The Company recognizes lermination benefits when il is demonstrably commilted lo
a termination and when the entity has a delailed formal plan lo terminale lhe employmenl 01 currenl
employees wilhout possibilily of cancelation, or terminalion benelils are provided in lhe case of an
offer made lo encourage volunlary redundancy. Benelits falling due more Ihan 12 months after the
end 01 lhe reporting períod approximale Iheir presenl value.
2.16.4. Profíl sharíng
The Company recognizes a Ilabilily and an expense for prolil-Sharing based on a formula Ihal takes
inlo consideralion lhe resull from services pursuant lo a Collectlve Agreement in lorce. The
Company recognizes a provision where conlraclually obliged or where there is a pasl practice that
has created a conslructive obligalion.
2.16.5. Share capital
Common and preferred shares are classified as equity. Prelerred shares have no voling righls, bul
lake priorily in lhe seltlemenl 01 Iheir portion 01 share capital. The other characterislics 01 prelerred
shares are described in note 20.1.
2.17.
Revenue recognitíon
Revenue comprises lhe lair value 01 the cons.deration received or receivable for sales in lhe
ordinary course of lhe Company's aclivities. Sales revenue is shown net 01 value-added tax,
relurns. rebales and discounts granted.
42 •
Dulce
rllEnergy..
Geração Pafar1apanema
CNPJ 02,998,301/0001-111
listed Company
The Company reeognizes revenue when: (i) lhe amount of revenue can be reliably measured; (ii) il
is probable Ihat future economic benefits will be oblained Irom lhe Iransaetion and (iii) specilic
crileria have been mel lor each 01 lhe Company's aclivities, as described below. The amounl 01
revenue is no! considered reliably measured unlll ali sales-relaled conlingencies have been setlled.
The Company bases ils eslimales on historieal results. laking inlo consideralion the Iype of
cuslomer. lhe Iype of Iransaclion and lhe specifics 01 each arrangement.
The Company recognizes revenues Irom sale of energy in bilaleral agreements, auctions, MRE and
lhe spot market in lhe month of supply 01 energy, in accordance with lhe amoun!s included in lhe
contracts and Company's management estimates, subsequently adjUsled upon conflrmatlon 01 such
inlormation.
Finance income is recognized on lhe accrual basis. using lhe effeclive mleresl rale melhod, and is
mainly represenled by earnings on linancial investmenls, and interest and discounts oblained.
2.18.
Distribution of dividends and interest on capital
Distribulions of dividends lo lhe Company's slockholders are recognized as a liability in lhe
Company's linancial statemenls aI year-end based on lhe Company's bylaws.
The Company s bylaws establish that lhe paymenl 01 inleresl on own capilal can be deducled from
the amount of dividends payable. The amounl 01 inlerest on capital is calculaled in accordance with
the applieable legislation and lhe lax benelil generated is recognized in the statement 01 income.
3,
CRITICAl ACCOUNTING ESTIMATES AND JUDGMENTS
Accounting estimates and judgments are continualiy evaluated and are based on historieal
experience and olher lactors, including expectations 01 lulure events which are believed lo be
reasonable under the circumstances,
3,1. Criticai accounting estimates and assumptions
Based on assumptions, the Company makes estimales concerning the future. The resulting
accounting estimates will, by definition, seldom equal lhe relaled aclual results. The eslimales and
assumptions Ihat have a significant risk of causing a material adjustment lo the carrying amounts 01
asseIS and liabilities wilhin lhe next financiai year are described below.
3,1.1.
Income tax, social contribution and olher taxes
The liability method is used to calculale delerred lax arising Irom temporary differences between the
carrying amounts of asseIs and liabilities and lheir respective amounts lor lax purposes. Deferred
lax asseIs are reviewed at each balance sheet date and reduced by lhe amount, il any, which is no
longer realizable through future taxable profi!. Oeferred tax asseIs and liabilities are calculaled
using lhe fax rates applicable lo taxable income in lhe years these lemporary differences should be
realized. Fulure taxable income may be higher or lower fhan lhe estimales considered upon the
delinilion 01 lhe need lo record, and lhe amount lo be recorded, of tax assets.
The tax credils arising Irom temporary differences, mainly provision for tax liabilities and provision
lor losses, were recognized according to Iheir eslimate 01 realizalion.
43 a Duke
r.,Energy.
....
.... _ -
---
3.1.2.
~-_
CNPJ 02,998,30110001411
Lísted C0n1.o:Pa:::""'Y_ _ _ _ ...._ _ _ ...._ _ _.._ _
Usefullives of long-lived asseis
The Company applied lhe deemed cosI exemption upon lirst-time adoption of IFRS in accordanee
wilh CPC 27 ("Property, Plan! and Equipment") and engaged advisors from Ernsl & Young Tereo to
prepare the appraisal 01 ils property, planl and equipment. The Company records its depreeialion in
aceordance wilh lhe eslimaled useful lives delermined by lhe appraisers, which lake lhe following
into consideralion (i) lhe residual values 01 lhe asseIs (01 lhe indemnily aI lhe end of lhe period of
concession or permit issued by lhe regulalory agencies) and (ii) lhe uselul lives eslimaled by lhe
regulatory agencies Ihat have been aecepled by lhe market as appropriale, unless there is slrong
evidence Ihal anolher uselul life is more adequate. The Company does nol believe Ihat Ihere are
indicalions of a material change in the estimates and assumptions used lo calculale impairment
losses on long-lived asseIs.
3.2, Criticai judgments in applying the
Company's accounting policies
As a result 01 the applicalion, by lhe Company, 01 the deemed cosI aI lhe firsHime adoption 01 IFRS
on January 1, 2009, depreciation expense increased by R$ 110,894 in 2011 (R$ 114,331 in 2010).
4,
FINANCIAL RISK MANAGEMENT
4.1, Financiai risk factors
The Company's aetivities expose it to a variety of financiai risks: market risk (ineluding fair value
interest rate risk, eash Ilow interest rale risk and price risk), eredit risk and liquidily risk. The
Company's risk management program locuses on lhe unpredictabilily 01 financiai markets and
seeks to minimize po!ential adverse ellects on the Company's financiai performance.
Risk management is carried ou! by the Company according to policies approved by the Board of
Oireclors. The risk managemenl area identifies, evaluates and hedges financiai risks.
4.1,1,
Market risk
Cash flow and fair value interest rate risk
As the Company has no signilicanl inlerest·earning asseis, the Company's income and operaling
cash flows are subslanlially independent of changes in market inlerest rates.
The Company's interest rale risk arises Irom long-Ierm debentures. The debentures issued ai
floating rates expose the Company to cash Ilow interesl rate risk,
The Company's lirst issue 01 debentures is subjeet lo linanclal charges corresponding to the
variation 01 lhe Interbank Oeposit Certificale (COI) rate + 2.15% p.a, and lhe variation 01 the
Amplified Consumer Price Index (IPCA) + 11.60% p.a. (series 1 and series 2, respeclively)
whereas lhe second issue 01 debentures bears financiai charges corresponding to lhe varialion oI
lhe General Market Priee Index (IGP·M) + 8.59% p.a. Consequently, lhe Company's resul! is
impacted by lhe variation 01 Ihese priee indexes. The impacl caused by lhe varialion 01 lhe COI,
IPCA and IGP·M on lhe debenlures is mitigaled by lhe increase in lhe priees 01 bilateral
agreemenls and auctions, which are also indexed to the variation 01 lhe IPCA or IGP-M indexes.
44 aDuke
í"Energy~
Geração Paranapanema S,A.
CNPJ 02,998,30110001-81 ~.~ __G_e_ra_ç~~ PilranaPilne~~ _ _.._ _ _.____ ~~.~ Company ___. _ _ _"._ _ _ _ _.______"_ _
4,1,2,
Credit risk
Credil rísk arises lrom cash and cash equivalents, derivative financiai inslrumenls and deposils with
banks and other financiai instilutions, as well as credit exposures lo customers, Including
outstanding receivables, For banks and other financiai instilutions, only independently raled parties
wilh a minimum rating 01 "A" are accepted, The Company's credil analysis department assesses the
credit quality 01 the customer, taking into accounl its financiai position, past experience and olher
factors,
In the contracts wilh lhe distributors through public auction, the Company seeks to minimize the
credil risks with lhe use of guarantee mechanisms involving the receivables 01 the distribulors, The
auction contracts have standardized language and other types 01 credil support may be provided at
lhe purchaser's initialive, such as bank guaranlees and the asslgnment 01 Bank Deposit
Certilicates ("CDB"), Most of the distributors have provided the credit support based on their
receivables,
The price of lhe electric energy sold to dislribulors and Iree consumers, determined in auclion and
bilateral contracts, is consistenl wíth markel prices and any excesses ar shortages of energy will be
settled in the ambit of lhe CCEE. The Company considers the volumes conlracted as adequale
(see note 23),
4.1,3,
Liquidity risk
The Company monitors rolling lorecasls of lhe liquidity requiremenls lo enSUfe il has sufficienl cash
lo meet operalional needs, Such forecasling takes into consideration the Company's debt financing
plans, covenant compliance, compliance with internai balance sheel fatio largels and, if applicable,
externai regulatory ar legal requirements,
The Company invesls surplus cash in interesl-earning current accounls, time deposits, money
market deposits and rnarkelable securilies, choosing instruments with appropriale malurities or
sulficíenl liquidity to provide suflicient headroom as determined by the above-mentioned lorecasts,
4.1,4.
Oebt acceleration risk
The Company's debenlures have reslriclive covenants normally applicable to Iransactions 01 this
Iype, relating to cornpliance with certain economic and financiai ratios, cash generation and other
matters, These eovenants were complied wilh and do nol restriel lhe normal eourse of the
Company's operations (see nole 14),
4,1.5.
Hydrological risks
This risk is associaled with a shortage 01 water to generate eleclric power, The Nalional System of
Inlereonnection (SIN) is served by 85% of hydroeleelric generalion, In order to mitigale this risk, lhe
Energy Reallocalion Mechamsm (MRE) was created, which is a financiai meehanism thal enables
the sharing of the hydrological risks of the plants eentrally dispatched by the National System
Operator (ONS), 11 should be poinled out Ihat lhe risk is systemic, I.e" Ihere will be an elfeclive risk
for lhe companies that own hydroelectric power plants when lhe system as a whole is in an
unlavorable hydrological condilion and not only lhe region where lhe plants are located,
4.1.6.
Regulatory risk
The Company's aclivities, as well as those of ils competilors, are regulated and monitored by
ANEEL. Any change in lhe regulatory environment may impacl lhe Company's activilies,
CNPJ 02,998,30110001-81
aDuke
rtll'Ener9Y.
__
Geritção Paranapanema
...
.... _ . _ ...
4.1.7.
_--
Listed Com
..:!p::'",n!..y~~~_~~_ _ _~~_ __
Environmental risk
The Company's activities and lacilities are subjecl lo various lederal, slate and municipal laws and
regulalions, as well as lo a number 01 operalional requirements relaled lo lhe proleclion 01 the
environment. In addilion, lhe Company's inabilily lo operale ils planls due lo environmental nolices
of violalion or environmenlal lawsuils can PU! lhe generation of operaling revenue aI risk and
adversely impacl lhe Company's results.
The Company uses lhe Environmenlal, Heallh and Safely Managemenl Policy (MASS) lo ensure a
balance between environmenlal conserva!ion and lhe performance 01 ils activilies. miligaling lhe
risks il may lace.
4,1.8.
Sensitivity analysis
In accordance with CVM Inslruclion 475/2008. and in compliance with the provisions in ilem 59 01
CPC 14 - Financiai Inslruments: Recognilion, Measurement and Disclosure. the Company discloses
below lhe sensilivily analysis for each type 01 market risk considered as relevan! by managemenl,
arising lrom linancial inslrumenls exclusively comprised 01 debentures, lo which lhe Company is
exposed aI the end 01 lhe year.
The sensitivily lor lhe 2012 probable scenario was calculaled laking in!o consideralíon lhe
varialíons between lhe rates and indexes in 2011 and lhe estimates available in lhe markel lor 2012
(Source: Focus of Brazilian Central Bank), The sensilivity analysis also considered another IWO
scenarios, with 25% and 50% varialions on lhe interesl rales and Iloating indexes in relalion lo lhe
probable scenario. We show below lhe impacls on the Company's financiai results for lhe Ihree
scenarios eSlimated for 2012:
FI.isk offloatillJ!i.n.dex variali"n
Debentures
IGPM
IPCA
CDI
IGP-M incresse
I PCA increase
CDI increase
Index
variation
...
IGPM
IPCA
CDI
-_ _
Probable
.& scenario
.. _
Scenario
Scenario
1\.25%
--_._
_
...
1\.50%
571,002
111,476
12ª,772
811,250
(1,692)
(120)
[email protected])
(11,464)
7,215
1,555
972
9,742
14,424
3,108
1,936
19,468
Indexes
projected for
probable
Scenario
.. _ - -2011
_ ...
~----._--_
2011 indexes
5.10%
6.50%
2012
506%
5.38';la
~.~enarl~
Scenario
A 250/0
-0,04%
6.33%
7,60%
-1.12%
6.72%l
11.60'%
9.71'%
-1.89t;/o
12.13%
8.07%
14.56%
4.2. Capital management
Total debenlures
Nel debt
Total equity
Tolal capital
Gearing ralio (%)
2011
811,250
_ _-.,;210,371
600,879
2,825,265
3,426,144
17.5
46
2010
837,186
_ _-c:4!l~,772
341,414
3,253.807
3,595.221
9.5
1\.50%
a
Duke
f'iIIEnel'9Y..
Geraçao Paranapdflema
CNPJ 02,998,301/0001-81
Usted Company
The Company's objectives when managing capital are to safeguard its ability to continue as a going
concern in order to provide returns for slockholders and benefits for olher stakeholders and lo
maintain an optimal capital slruclure to reduce the cosI of capital.
In arder to maintain ar adjust the capital structure, the Company may review its dividend policy ar
return capital lo lhe stockholders.
The gearing ratio corresponds to the net debt expressed as a percentage of total capital.
4.3. Fair value estimation
The carrying value 01 Irade receivables (nel of the impairment provision) and payables is assumed
lo approximate fair value, The fair value of financiai liabilities for disclosure purposes is estimated
by discounting lhe future contractual cash flows aI the current market interes! rale Ihal is available
lo lhe Company for similar financiai inslrurnenls,
The lair value 01 financiai instruments traded in active markels is based on quoled markel prices aI
the balance sheet date, A market is regarded as aclive il quoted prices are readily and regularly
available from an exchange, dealer, broker, induslry group, pricing service, or regulatory agency,
and Ihose prices represent actual and regularly occurring markel transactions on an arm's lenglh
basis, The quoted market price used for financiai asseIs held by lhe Company is lhe currenl bid
price,
5.
CREOIT QUALITY DF FINANCIAL ASSETS
The credil quality of financiai asseIs thal are not past due is assessed by reference to externai
credil ratings (if available) ar to hístorical informalion about counterparty default rales (see notes 6
and 7):
Slandard & Poor's
A-3
A-2
A-1
B
Moody's
BR-1
Total
2011
2010
163,129
3,955
199,265
9,335
219,953
9.416
8
____
43,279
210,371
47
57.803
495,772
Duke Energy International, Geração Paranapanema S,A. CNPJ 02,998,301/0001-81
Geração Paranapanema 6,
Listed
CASH AND CASH EQUIVALENTS
2Qll
2010
1,296
636
Cash and banks
Local currency
Foreign currency
126
Financiai investments
Local cu rrency Bank Oeposíl Certificale (COB)
Fíxed income fund
Exclusive investment lund Fixed income
Variable income
Olher amounts (payable)/receivable
204,226
435,655 4,849 58,035 1,177 .._~ _ _...í§ID ===;;;2,;;10;;;,3;;,7;,,;,1
495,772
Financiai investmenls correspond lo fixed-income inveslmenl lunds, consolidated multimarket
exclusive inveslmenl funds and bank deposil certificates, with inslitutions operating in lhe local
financiai market and enlered into in accordance with usual markel rates and conditions, The
investments have high liquidíly, low credil risk and remuneralion based on lhe Inlerbank Deposil
Certificale (CDI) rate, The gains or losses arising lram variations in lhe fair value 01 these assets
are presented in the statemenl 01 income wilhin "Finance income (COSIS)" in lhe period in which Ihey
occur.
7,
TRADE RECEIVABLES
2010
2011 Non.:current
---;;"~"'--";-:CC-.,--="-',:,
__ ~C_ur_~.~
Customers of bilateral agreements
Auction customers
ShorHerrn electrlc power (MREíSpot))
Extraordinary Tariff Adjustmen1 (RTE)
66,177
44,708
11,455
-~~122,340
Provjsior. for impairmen1 of tfade receivables
(7,643)
(10,630) (1,653)
Composition of trade receivables:
NOI yel due
Overdue
Up lo 30 days
From 31 to 60 days
From 61 lo 90 days
Over 90 days
2011
110,712
2010
96,606
1,026
573
418
~ _ _ _... 9,611
131
158
884
~ ..._ _ ..11,628
6,294
7,467
122,340
104,073
Invoices issued by lhe Company lor bilateral contracts are due on one malurity date in lhe monlh
following Ihal of supply, while Ihose relaled lo auclion contracls are divided into three equal
installmenls, lalling due on lhe 15th and 25th 01 lhe month lollowing Ihal of supply and on lhe 5th 01
lhe second subsequenl monlh,
The Company seI up an allowance for doubtful accounts lor Conlracls 01 Purchase and Sale of
48 Duke Energy International, Geração Paranapanema S.A. CNPJ 02,998,301/0001-81
Geração Paranapimema
--~
Listed Company
~-------====-==-'-'--_
. . . _.- . . _ ..._ . _ ._--_.-
Energy, lhe form and invoiced amounls of which are under discussion, as well as lhe portion
refernng lo defaull observed in lhe short-Ierm sales of energy in lhe ambil of CCEE.
AI December 31,2011, lhe Company had R$ 11,628 (R$ 7,467 in 2010) recorded as overdue Irade
receivables. The Company is in the process of negotiating lhe partial recovery of lhe amounts
invoiced Ihat are overdue.
By virtue of expenses wilh lhe purchase 01 Iree power in the short-Ierm market. which was lorced
by lhe reduction in generalion of energy ai lhe power plants participating in lhe MRE during lhe
rationing period between 2011 and 2002, an Agreement for Reimbursement of Free Power was
prepared under lhe General Agreemenl of lhe Electric power Seclor. The Agreement established
lhe cornmitment by lhe dis!ribution companies (lhe collectors 01 lhe RTE) lo reirnburse lhe
Cornpany, as well as lhe olher companies aflecled by purchases of Iree power. The RTE resources
should be received over an average term of 72 rnonlhs, as deterrnined by GCE Resolulion 91/2001
and by ANEEL Resolution 31/2004.
In 2007, 2008, 2010 and 2011, lhe RTE arnounls of R$ 40,572, R$ 32,827, R$ 1,255 and R$ 1,670,
respeclÍvely, previously included in lhe balance of "Trade receivables - Cuslorners" were written 011
by the Company. Also, lhe corresponding balance 01 lhe "Provision for impairrnenl 01 trade
receivables" was reversed to the "Selling Expenses" caplion, pursuant to an inslruction received
lrorn ANEEL, In conlorrnilywith Itern 1601 Oflicial Lelter SFFiANEEL 2409/07.
8.
TAXES ANO CONTRIBUTIONS
ASSETS
lncame Tax (IRPJ) and Social Contdbution (CSLL)
recoverable
Sociallotegration Program (PIS) and Social
Contflbution on RevenuBs (COFINS) recov€rable
State Value-Added Tax (ICMS) recoveranle
Se,vices T ax (ISS)
Nationallnstitute af Social Security (INSS)
~~Current···
2011
Non~cuúent
21,853
276
34
21
39
22,223
2010
Cutrent
________M _ _ _ _ _
Non-eurrent
7._
398
398
260
411
21
39
436
7.i97
LIABILlTIES
IRPJ and
CS~L
PIS and COFINS
ICMS
Incorne Ta>: Withheld at Source (IRRF) on interest
on capital
Olher
7,877
472
5,693
6.380
1.227
14.611
117
23,077
2,848 121 16,269 DEFERRED TAX ASSETS
Temporary differences
Tax oenefit
DEFERRED TAX LIABILlTIES
Carrying value adjustments
DEFERRED TAX LIABILITIES, NET
(11.646)
(46.120)
(10.737)
(51.293)
522.844
465,078
562.615
500,585
The Company opted for lhe Transilional Tax System (RTT) lar taxable income calculation, which
addresses lhe tax adjustments arising lrorn lhe new accounting methods and criteria íntroduced by
Law 11638/2007 and by articles 36 and 27 01 Provisional Measure 449/2008 (converted into
Law 11941/2009). These new slandards. which aller the crileria lar lhe recognílíon 01 revenues,
49 Duke Energy Internatlonal, Geração Paranapanema S.A. Geraçao Paranapanema
--
CNPJ 02,998,301/0001-81
_ _ _ _ _ ~~L~i.~le'___dCompany
cosls and expenses in lhe statemenl 01 income for lhe year defined in article 191 of Law
6404/1976, will have no elleels for purposes 01 lhe calculation 01 lhe laxable income of legal enlities
subjecl lo lhe RTT, ando for lax purposes, lhe accounting melhods and crileria effeclive ai
December 31. 2007 should be considered.
8.1. Deferred income tax and social contribution
AI January 1. 2009, as eslablished in CPC 27 ("Property. planl and equipmenl") and in compliance
wilh lhe guidance provided by ICPC 10 ("Interprelalion of lhe Firsl-lime Adoplion of CPCs 27, 28,
37 and 43 lo Property. Planl and Equipmenl and Inveslmenl Properties"), lhe Company recognized
lhe lair value of property, planl and equipmenl (deemed COSI) as 01 lhe dale of lhe lirsl-time
adoplion 01 CPCs and IFRS. Consequenlly. lhe Company al80 recognized lhe relaled deferred
income lax and social conlribulion amounls, as of lhe Iransilion date.
AI December 31. 2011. lhe Company eslablished a provision for deferred income lax and social
conlribulion on a gain arising from an appraisal 01 lhe asseis of lhe pension and relirement ptan, in
lhe amount 01 RS 1,665 (R$ 586 aI December 31, 2010).
At December 31, 2011, lhe lemporary differences represenled by expenses deductible in lhe future
amounl lo RS 34.254 (R$ 31,578 at December 31,2010). The realízatíon 01 income tax and social
contribution wíll occur as these amounls become deductible lor lax purposes.
The Company classilies delerred income tax and SOCial contribution as non-currenl, pursuant lo
CPC 26 ("Presentalion 01 Financiai Statements").
8.2. Tax benefit - merged goodwill
The goodwill amount absorbed by lhe Company, due to the merger of Duke Energia do Sudesle
LIda. ("Duke Sudesle"), was attributed to lhe expectalion of future profitability and will be amortized
up to 2030. as determined by ANEEL Resolution 28/02, based on the projection 01 future results
prepared by externai advisors on the merger date. The Company constituted a provision lo maintain
the integrity of net equity, the reversal 01 which will neutralize lhe effecI 01 goodwill amortization.
The composition of lhe balances is as lollows:
Ba!ances arising trom the merger
Realization
Balances at the end of lhe year
-"'GC::-oo=-=ciWw--- ·-Pro-vis-ion-_-_-_-~N=.-!:;;am;;-u~-:
305.406
(201,568)
103,838
. (169,745)
112.027 ._~~~l.s7.7181
135,661 .._ - (89,541)
46,120
._~ (52,5~
51,293
For financiai statement presentation purposes, the net amounl corresponding to lhe tax benelit
income tax and social contribulion, delailed above, is pre8ented in lhe balance sheet as a reduction
01 these taxes wilhin "Delerred taxes" in non-currenl liabilllies. As determined by lhe regulations of
lhe Brazilian Securities Commission (CVM), there are no ellects on the resull for the year, as shown
below:
Amortization 01 goodwllI
Reversal of provi5ion
Tax beneli!
_ _~._20_1_1
2010
(15,214)
(16.003)
10,041
10.562
5,441
_._.._ _5_,173
Nel eftecl in lhe year
50
Duke Energy Internalional, Geração Paranapanema S.A. CNPJ 02,998,301/0001-81
~ .._ _~~~~_á_o:._.,_an_a~.a_n_.m_a~. _ _ ~.._ _.._ _.Listed Company
The expected realization 01 the tax benelit relerring to the goodwill merged from Duke Sudeste is as
follows:
Estimated reali1.8tion
2012
4,926
2013
-~---:4,616
2016
onwards
-"'28,182
_ ..__2014
.
4,334
Total
46,120
8,3, Income tax and social contribution calculation
The reconcilialíon belween the income tax and social contríbutíon expense ai the nominal and
effeclive rates is shown below:
2010
2011
·-~-~··~ôci~··
~ncome
tax
-~:l73,2fi
Proflt batore IRPJ and CSLL
Adjustrnents arising trom the Transltional Tal( System (RTf)
Profit bafore IRPJ and CSLL and after ATT adjustments
Slandard rate af IRPJ aná CSLL
112,269
495,540
25~/"
IRPJ and CSLL at statutory rates
121,351
Adjustments tor calcularian at the effective rate
Amortization 01 inflanonary eftects
Provislon for impairment of trade receivables
Tax beneflt· merged good.....i ll (ANEEL Resolution 0212002)
Non-deductible expenses
Interest on capital
Other
Taxable basis
Applicable rate
(9,772)
1,333
(15,2141
11,016
(98,211)
1,188
375~8BO
250ft>
_ . 93,945
Curr.n! IRPJ and CSLL
Tax incentives
Sports Incentive Law
(179)
Rouanet Law, Children's Fund ano Spor.lncentive Law
(2,618)
Prior years' IRP J and CSLL adjustments
. _.. 9(148
Total current IRPJ and CSLL with an impact on the results
Taxable basis of temporary differences in the results
Applícabl9 rate
Deferred IRPJ and CSLL with an impact on the results
Changes in temporary djfferences in equity
Taxable basis
Applicable rate
Deferred IRPJ and CSLL with an ímpact 00 equity
_
,~ontrlbu~~~~
Income
··-So·cia(··~·
ta.
contríbution
261,660 -261,660
117,905
117,905
379,565
379,565
25%
9%
94,867 - - 34,161
373,271
112,269
495,540
9%
--43,699
882
1.333
(9,772)
3,742
(15,214)
(16,003)
6,208
9,914
(98,21')
1,343
-----asS;S87
662
3,742
(16,003)
4,977
118,887)
116,887)
(1,738)
352,538
9%
31,728
_J1Jl~
342,951
25%
34,703 _. 85,714
g<>jc
1168)
(1,652)
_ ..~@!l _ . _ @
(99,533)
25'%,
1241884)
34,703
(99,633)
9%
18 ,957!
83,662
(100,583)
25%
31,691
(100,583)
ge!o
(4,699)
(4,899)
11. 722 )
í1 ,722)
(4,899)
(4,899)
gO!!)
(1,722)
(1,722)
25%
(1,224)
-(441) -
125 ,146!
25%
l431)
~9!O52~
-~.
9°/",
(155)
In lhe delerminalion of lhe calculalion basis of lhe Company's federal taxes, as determined by lhe
Transitional Tax System (RTT), lhe accounling adjustments ansing from lhe applicalion of lhe
lollowing standards were eliminated: Technícal Pronouncements CPC 33 ("Employee Benefils"),
CPC 1O (R1) ("Share-based Payments") and CPC 27 ("Property, Planl and Equipment").
At December 31, 2011, current and deferred IRPJ and CSLL lotaled R$ 125,851 and R$ 33,841,
respectively(R$ 115,353 and R$ 31 ,168 respectively in 2010),
51
Duke Energy Internatíonal,
aOuke
rtllEnergy.,
Geraçao Paranapanema
CNPJ o2,99a.301!OOo1-B1 Listed 9. JUDICIAL DEPOSITS
Environmental
Tax:
Municipal Real Estate Tax (IPTU) - Municipality
01 Primeiro de Maio
Arrears fine on IRPJ. IRPJ and CSLL
Arrears fine on PIS. COFINS. IRPJ. CSLL and IOF
Economic Domain Intervenhon Conlribution (CIDE)
2011
2,752
1.134
800
5.632 -_.__ ..579
_
10,897
2010
2.562
1,055 735 546
4,898
Only judicial deposils tor appeals nol relaled lO probable conlingent liabililies are recorded under
this caplion (see note 17).
L
Environmental In Seplember 2010, a judicial deposit was made by the Company in
connection wilh annulment action 6/2010 at the district 01 Paranavaí (state 01 Paraná),
referring to lhe administrative fine imposed by the Environmental Inslitule 01 Paraná (lAP)
wilh respect to the Rosana power plan\.
ii. Tax:
a. IPTU (Municipality of Primeiro de Maio) The Company filed a lawsuit for the
annulment of tax debls related lo lhe Municipal Real Estate Tax (IPTU) levied on
real estale properties Ihal lorm part 01 lhe reservoir of the Capivara Basin. claimed
by the municípality of Primeiro de Maio. The judicial deposits were made in 2008
and 2010.
b. Arrears fine on IRRF, IRPJ and CSLL due - Judicial deposits made in 2008 and
2010 and monetarily restated, referring to the Wrlt 01 mandamus liled by the
Company to be assured of the righl lO seltle the amounts relating lo IRRF. IRPJ
and CSLL without the application 01 a late payment fine, in view of voluntary
disclosure.
C. Arrears fine on PIS, COFINS, IRPJ, CSLL and IOF due - In Augusl 2011, a
judicial deposil was made. relerring to lhe wril of mandamus filed by the Company
in 2004. as guaranlee and for suspension 01 lhe enforceabilily of lax debls arising
Irom lhe applicalion of late payment fine on PIS. COFINS, IRPJ. CSLL and IOF
due. The Company. supported by the opinion 01 íts legal advlsors. understands tha!
lhe arrears fine is nol due in the evenl 01 voluntary dlsclosure, as determined by
article 138 of lhe National Tax Cade ando accordíngly, no Iiability was recorded
regarding this malter.
d. CIDE - The Company liled a writ of mandamus seeking lhe recognition 01 ils
unqueslionable righl lo pay lhe amounls established in an agreement entered inlo
with a foreign company for the rendering of financiai advisory servic8s, withoul the
obligalion 01 paying the Economic Domain Intervention Contribution (CIDEl. levied
on remittances abroad, in accordance wilh the provisions 01 Law t 0332/2001.
Accordingly. lhe Company made the judicial deposit in 2005, to maintain its regular
tax status for public enllties.
52 Duke Energy International, Geração Paranapanema S.A. Geraç.!!'Q
CNPJ 02,998,301/0001-81
Listed
Pafanap~nemd 10. PROPERTY, PLANT ANO EQUIPMENT
a) Composition
_ _~2011
2010
Depreciationl
Accumulated
amortlzation
depreciation ~~tamount..N~t amoun~ ~,__ rate~_
Cost
In use
Land
Res8rvoirs, dams and water mains
Buildings, CIVIl consiruction and improvements
Machinery and equlpmef"lt
210,997
3,503.118
469.440
698,794
4,289
6,411
(200,615)
4,692\374
Vehicles
Furníture and tittings
(-) Proyjsion for the Canoas I and 11 p!ants
In progress
Reservoirs, dams and water mains
210,997
3,027,258
361.393
579,587
2,544
4,394
..jgO,9,67!;)
3,985,498
(475,860)
(108,047)
(119,207)
(1,745)
(2.017)
(706,876)
~--'15,654
Land
-..
_-~--
4.249
81
4,712,358
Vehlc!es
(-) Obligations Ilnked to the concession
tsee note 18)
"'~~-----crs;654-~'
!l06, 8751
~
5.8%
5,6%
20,0%
16.4%
36
13,840
14,820
689
14,820
689
Furniture and llWngs
45%
1'1
145
145
Buildings, eMI cons1ruction and improvements
Machinery and equipment
210,997
3,177,713
388,427
617.840
2,652
3,623
1200,6751
4,200,577
1,299
15,192
4.067
4.249
81
4,005,482
~4,219,836
17,254}
207
(7,047)
(6,646)
4,705,104
(706,669)
3,998,435
4,21'3,190
b) Changes in property, plant and equipment
Reclassifications Net amount
and transfers
at 1213112011
215,246
8.105
3,0'27.403
Net amou"t
~~..1213112~ Addi~.ions
Land
Reservo:rs, darrs and water majns
Buildings, Civil construction
and improvements
Machínery and equipment
Vehic!es
Furniture and tittings
(.) Provision for the Canoas I
and 11 planls H Obligatlons linked to lhe
concesslon
Oepreciatlon OisposalS
215.064
3,177.730
182
217
(158,649)
388.463
631,680
2,652
4.922
210
12,636
1,335
1.061
(39,264)
(80B)
(80s)
(49)
(2,433)
(552)
(1gB)
(200.675)
4,219,836
15,641
~!765)
(3,230)
(6,646)
(489)
88
{27,238}
(226,677)
10.1.
~._-~
7
(8,212)
(1)
101
~
361,393
594.407
2.625
5,083
...1200,675)
4,006,482
(7,047)
(3,230) 3,998,435
Oeemed cost of property, plant and equipment
lhe Company applied lhe deemed cost at first~time adoptíon of IFRS in accordance with CPC 27
("Property, Plant and Equipment") and engaged advisors from Ernst & Young Terco to prepare lhe
appraisal of ils property, planl and equipment. lhe appraisal was carried oul in accordance with lhe
slandards and procedures of the Brazilian Association 01 TeChnical Standards (ABNl) and the
Ross-Heidecke depreciation method. which considers the state of conservation and elapsed lile of
the asseI to obtain its deemed cost, in addition to other requirements of the applicable legislation,
53 aDuke
r"Energy.
Geração Paranapimema ---
CNPJ 02,998,30110001·81 .~ ___ ~.
li$t~~ Com~!iny
_ ..___ ~. ____ ~ ____ ~ ___ ~ _________ .~ _____
AI January 1, 2009. dale of lhe fírsl·lime adoplion of IFRS, property, planl and equipmenl were
increased by R$ 2,083,565 Ihrough lhe applicalion 01 lhe deemed cosi wilh a corresponding entry
lo "Carrying value adjustments" in equily. In the fair value calculation, the Company considered as
reimbursable lhe residual values related lo concessions and lhe increase in lair value was limiled to
the indemnity amount. Accordingly, lhe Company eslablished a provision of R$ 200,675, relaling lo
lhe residual value aI lhe end of lhe concession period of lhe Canoas I and 11 planls.
The addilional deprecialion expense calculaled on lhe adjustments lo deemed cosi in lhe years
ended December 31.2011 and 2010 was R$ 110,894 and R$ 114,331, respeclively.
For lhe appraisal 01 movable asseIs, lhe Company used mainly lhe cosi quantilicalion melhod. As
regards the direct comparison wilh markel dala, this melhod depends on lhe nature 01 lhe asseI,
lhe availability 01 relevant markel dala, as well as inlormation on lhe lixed asseis themselves.
The melhod of direclly comparing market data is based on market condillons and Iransactions.
Under Ihis melhod, deemed cost is delermined Ihrough a comparison wilh recenllransaclions and
offers 01 ilems which are similar lo lhe asseIs Ihal are being appraised, when available,
Under Ihis melhod, physical deprecialíon and other obsoleseence faclors are measured aI market
rales, since lhe asseIs are quoted in their currenl condition (used).
In lhe case 01 asseIs lar which there is nol enough markel inlormation, the cosI quanlification
melhod was used. In lhe analysis 01 lhe appraisers, lhe Replacemenl CosI New (RCN) was
calculaled bolh in lhe direcl and indirecl manner for each asse!. Under lhe direct melhod, lhe
Replacemenl Cosi New estimaled for lhe asseIs was calculaled by using lhe Greenlield principies
which, in Ihis conlext, indicales Ihat lhe eslimated RCN considers lhe replacemenl 01 lhe asseI in a
new localion, laking inlo accounl ali lhe costs relaled 10 ils inslallalion and operalion.
The Company used lhe indirecl melhod for ali lhe olhe r assets lo which lhe direcl cosI method was
nol applied. Under Ihis melhod, lhe RCN 01 each asseI or group of assets was delermined by
updaling lhe original book cosI laking inlo account lhe age and Iype 01 each asseI. These cosls
generally include lhe base cosI 01 lhe asseI and any addilional cosls relaled lo its inslallalion.
Since the assets have been in use for some time, il is reasonable lo assume Ihal lhe deemed cosI
is lower Ihan lhe RCN. Therelore, physical and funclional obsolescence should be considered, as
well as various economic laclors Ihal can affect Iheir use and value.
In addilion, residual lactors were considered lor lhe assets. based on the assumption Ihat, if an
asseI is in use. il has value for lhe Company, regardless 01 ils elapsed lífe. For lhe captions "Dam",
"Machinery" and "Furnilure", a 5% residual faelor was applied to Iheir replacement value. For lhe
"Vehicles" caption, lhe residual faclor applied was 10%. II is importanl to note lhal, in lhe case 01
vehicles valued aI markel value, there is no need to use a residual faclor.
Land was mainlained aI historical cost, as lhe Company underslands Ihal lhe latler corresponds lo
lhe residual value, Le., lhe amounl accepted by lhe regulatory agency for indemnity purposes at the
end 01 lhe concession period.
10.2.
Depreciation rates
The Company records ils deprecialion in accordance wilh lhe estimated uselul Jile delermined by
lhe appraisers, which lakes inlo conslderalion lhe uselullives eslimaled by lhe regulatory agencies
lhal have been accepted by lhe markel as appropriate, unless lhere is strong evidence lha! anolher
usefullife is more adequale. Land is nol deprecialed.
54 Duke Energy International, Geração Paranapanema S.A. CNPJ 02,996,301/0001-61 GeT<ll{dO Paranapdnema
10.3.
Listed
Assets linked to the concession
In aeeordanee with item XI of ela use SIX of the eoncession contracl. lhe Company is nol allowed to
sell or assign for any purpose lhe assets and installations considered usable by the coneession,
without the previous and express authorization of ANEEL ANEEL Resolution 20/99 regulates lhe
release of assets from the eoncessions of lhe Public Electric Energy Service, granting prior
authorization lo release the assets nol usable by lhe concession when they are deslined for sale.
ANEEL is currently holding Public Hearing 39/2010, which deals wilh the review of this resolution.
10,4,
Concession agreements
On Seplember 22, 1999, the Company and ANEEL signed lhe Generalion Concession Agreement
76/1999, which regulales the concessions for use Df public assets in electric power generalion held
by lhe Jurumirim, Chavantes, Salto Grande, Capivara, Taquaruçu and Rosana power plants,
granted by an unnumbered Decree dated Seplember 20, 1999. The agreement grants the
Company the right lo generale and sei I eleclric power as an independenl producer, no longer
paying, as of Ihal date, the Global Reversion Reserve (RGR). bul instead a Charge for Use of
Publíc AsseIs, for a five'year period. The lerm 01 lhe concession and of lhe conlract is 30 years as
lrom lhe date 01 slgnature, and it may be renewed for an addilional period of 20 years.
On January 14, 2000, ANEEL, through Resolulion 14, approved lhe 6th amendmenl lo the conlracl
lor lhe constltution of the Canoas Consortium, which is formed by lhe Company, as an independent
producer of electric energy, and Companhia Brasileira de Alumínio (CBA). This agreemenl
establishes thal 50.3% of lhe energy generated will be made available to CBA and lhe remaining
49,7% will belong to the Company. Any surpluses 01 energy not used by CBA musI be absorbed,
wilhout onus, by lhe Company. Reciprocally, in the normal course 01 operalions, when generation is
lower Ihan Ihal eslablished in the contracl, lhe difference will be supplemenled, without onus, by the
Company. The concession agreemenl is effective for 35 years, as trom lhe date of signature, and
may be renewed for an additional period of 20 years.
In August 2011, the Company signed an amendment to lhe agreemenl with lhe obJective of
adJusting the installed capacity of the Capivara, Jurumirim, Taquaruçu, Rosana and Salto Grande
hydroeleclric power planls, lo conform lo attachment 01 of Concession Agreemenl 7611999. As a
result, lhe installed capacily increased from 2,307 MW to 2,241 MW.
~~ ANEEi:~·---~--·_-----_··
___________-.. --:-c=_.. _....f.once••i.onsat 12/3.1..12°1..1
lnstalled
capaeity Assured power $tart Df the
Concession
AgretLment
76/1999
76/1999
76/1999
..
Pla"t
..~e
Hyoroelectric
HydroeJectric
Sallo Grande Hydroelectnc
76/1999 Capivara
Hydroelectric
76/1999 TaQuaruçu Hydroelectric
76/1999 Rosana
Hydroelectnc
183/1998 Canoas I
Hydroelectric
183/1998 Canoas 11
Hydroelectric
10.5,
Jurumirlm
Chavantes
P"=o.....
w.....
er"'P"lu·nt
Power PJan1
Power Planl
Power Plant
Power Plant
power Plant
Power Pia0 I
Power Plant
State
SP
SP
SP
SP
SP
SP
SP
SP
Alver
------1~W}
Paranapanema
Paranapanema
Paranapanema
Paranapanema
Paranapanema
Paranapanema
Paranapanema
Paranapanema
(av~(age
End of lhe
MW) concession eonce$síon
47 09/2211999 09121/2029
101
414
17209/22/199909/21/2029
73
55 09/22/1999 0912112029
619
33009/22/1999 09l21/2029
525
201 09/22/199909/21/2029
354
177 09/22/199909/21/2029
83
5707/30/199807/29/2033
72
48 07/301199807/29/2033
-2,'2~~i
Expansion 15%
Through the Privatization Public Nolice SFlOO1/99 of lhe State of São Paulo, the Company
committed, in a maximum period 01 eíght years (as Irom Seplember 1999), and observing the
regulatory reslrictions: (i) lo increase its installed capacily in lhe Slate of São Paulo by 15%; or
(ii) contract this same quantíty of energy produced by new plants in the mentioned Slale, for more
Ihan tive years. Despíte lhe Company's efforts, il was not able to comply with Ihese obligations,
55 aDuke
rtl1Energy",
Gt'raçao Pdfanapanema
CNPJ 02,998,301/0001-81
Llsted
eilher for regulalory reasons subsequenl to lhe signalure 01 lhe Concession Conlracl 76/99, ar due
lo lechnical and physical ímpossibilily of expanding lhe generalion capacIIV in lhe Slale 01 São
Paulo.
The Company has been involved in discussions wílh ANEEL, lhe Governmenl 01 São Paulo and lhe
Federal Publíc Míníslry aboul lhe íssue since 2004.
Accordíng lO Order 316BIOB, ANEEL slated lhal il will nol ínclude a clause exlendíng lhe períod for
complíance wíth lhe expansíon oblígation ín lhe Concessíon Conlracl 01 lhe Company,
underSlandíng lhal lhe obligalion eSlablished in lhe privatizatíon notice concerns lhe seller of lhe
corporale control (Ihat is. lhe Slale 01 São Paulo) and not lhe Federal Conceding Power. Therelore,
lhe subjecI ís being analyzed by the Stale 01 São Paulo Attorney's oflice.
On July 16, 2009, lhe Company receíved a Nolificatíon from lhe State 01 São Paulo requestíng il to
evidence lhe measures adopled lo comply with lhe obligalíon 01 the expansion 01 its installed
capacity in the Slate of São Paulo by aI leasl 15%, in accordance wilh lhe Public Notice for lhe
Privatization of lhe Company and lhe Conlracl lor Purchase and Sale 01 Shares enlered into wilh
the Slale of São Paulo. Thal Nolilication was received by lhe Company afler lhe Slale 01 São Paulo
having requested in lhe records 01 lhe Civil Inquiry 535/2007 lhe ínformalion aboul the measures
adopled with regard lo the Company and AES Tietê SA The Company replied on July 17, 2009
and has presenled ils delense lo lhe allegations of lhe Slate 01 São Paulo, in lhe terms of lhe
Judicial Notification, clarilying also Ihat, since 2000, il has been endeavoring lo comply wilh this
oblígation and, despite lhe New Energy Model, II continues sludying inveslment opportunilies in lhe
Stale of São Paulo. In Augusl 2010, lhe Company became aware Ihal lhe poslponemenl of lhe
lerm for the conclusion 01 Ihal Civillnquiry for a lurther 180 days had been delermined,
In addition, lhe Company - logelher wilh lhe company AES Tielê SA, ANEEL, lhe Treasury 01 lhe
Slale 01 São Paulo and lhe Federal Governmenl - is defendanl in a civil aclion filed by Wilson
Marques de Almeida and olher cilizens, wilh lhe objective 01 applying lhe penallies in clauses 9, 10
and 11 01 lhe Concession Conlract, based on lhe non-compliance wlth Ihis obligalion of expanding
the produclion capacily. On Seplember 21,2010, lhe senlence was pronounced, eXlinguishing lhe
aelion wilhoul resolution 01 the merits Ihereof due lo lack 01 valid and regular conslitulion and
developmenl 01 lhe proceeding, based on article 267, ilem IV, 01 the Code 01 Civil Processo The
plaintills filed an appeal againsl lhe decision, which is pendlng judgmenl by lhe Federal Regional
Court (TRF) 01 lhe third Region.
The Company inlormed, through a Significant Evenl notíce disclosed on September I, 2011, Ihat il
had been summoned on August 31, 2011, regardlng lhe aclion seeklng specific performance liled
against lhe Company in progress at lhe 121h Court 01 lhe Central Jurisdiclion, filed by lhe Treasury
of lhe Slale of São Paulo ("Civil Aclion "), wllh lhe objeclive 01 compelling lhe Company 10 conclude
lhe expansion 01 ils inslalled generation capacily In lhe Stale 01 São Paulo in aI leasl 15%, as
eslablished in lhe Company's Conlracl lor Purchase and Sale of Shares, signed on AugusI 5, 1999
as a resull 01 lhe process 01 privalization 01 lhe Company ("Expansion Obligation"),
The Company also inlorms Ihat lhe judge responsible lor such Civil Aclion approved lhe anlicipaled
judicial proleclion requesled by lhe Treasury of lhe Stale 01 São Paulo, delermlning Ihal the
Company should presenl lhe expansion plan lor lhe lullillmenl 01 lhe Expansion Obligalion, which
was done on November 11, 2011.
The Company also challenged the Civil Action wilhin lhe legal lerm and will continue lo meel ils
obligations and lake the measures it considers appropriale wilh respect lo lhe malter. According lo
lhe Company's legal advisors, lhe alleged expanslon obligalion no longer exisls, considering lhe
currenllegislation.
56 Duke Energy Inlernational,
CNPJ 02,998.30110001·81
aDuke
rllllEnergy.
Lísted
11. INTANGIBLE ASSETS
The balance aI December 31, 2011 mainly comprises rights to use software, right of passage and
Ulilizalion 01 Public AsseIs (UBP).
a) Composition
_~__
In use
UBP
Software
RighI 01 passage
Cost _~a~ortization _ _ _amount_~----"ac.:mounl
53,494
21,022
-~._~
In progress
Software
2010
Net
2011
Net
Accumulated
75
(20,210)
(17,453)
.. _ - _ ..
~._-~
..
__..
33.284
3,569
~._-~
..
_._-~
..
75
~._-~~--
74,591
(37,663)
36,928
798
75,389
(37,663)
798
.37,726
35,121
5,199
..
_._-~--
..
_ ..
75
_------ ..
~
40,395
283
40,678
b) Changes in inlangible asseiS
Net amount
ai 12131/2010 _ _..cA".d=ditions
UBP
Soflware
Righi of passage
35,121
5,482
75
40,678
Nelamount
ai 12/31/2011
Amortization
33.284
4,367
75
37,726
(1,837)
1,111
(2,226)
1,111-"-- (4,063)
12. SUPPUERS
..
_.._ -Current
-_.-
Supply 01 eleclric energy
Materiais and services
Electric grid usage charges
Tust
Connection charges
Tusd·g
(.) Judicial deposit relaled
lo Tusd-g
2011
_-
....
Noncurrent
... _ - _ . -
-
...
..-142 ,8461
7,863
20,739
2010
..
Current
.. _
..
-~
72
5,158
7,630
16
12,876
50,709
_-
_
Noncurrent
..
..
_~
7
4,374
6,677
-
..
_.
_--..
~
__.
-_.._-.._14..
_.
_._- .. _,.
11,072
23,353
44,488
__. _
~.1,871)
23,353
34,425
22 617
1
22,617
Electric energy supply relers lo the purchase 01 energy via lhe MRE syslem and spol market.
Materiais and services compnse lhe purchase 01 materiais and services contracted.
57 . . Dulce
rtllEnergy.
Geração Par<'lnapanema
Geração Paranapanema S,A,
CNPJ 02,998,301/0001-81
~isted compa~y
ANEEl regulates lhe !arifts for access !o lhe dis!ribution and !ransmission sys!ems. The !ariffs due
by lhe Company are: (i) Tariff for the Use of Transmission Network (Tus!); (ii) Tarills lor lhe Use 01
Dis!ribution Syslem Applicable lo Generalor Uni!s Connec!ed lo lhe Dislribu!ion Sys!ems (Tusd-g);
and (iii) conneclion charges (nole 23.3).
The Company is presently discussing in cour! lhe review of lhe amounls lo be paid on accounl of
lhe Tarifl for lhe Use of Distribution Network - Tusd-g, underslanding lhal lhe Olher Transmission
Inslallalions (DITs) and lhe Border Transformers are par! of lhe Iransmission system and lha! lhe
tariff for remunerating Ihese asseIs of lhe Iransmission syslem should be calculated based on lhe
localion guideline.
In Seplember 2008, lhe Company adjusted lhe amoun! recorded as a resul! 01 a beller eslimale
based on !echnical studies prepared by lhe University of São Paulo - USP. According to lhe
Company's legal advisors, lhe chances 01 a lavorable oulcome in Ihis discussion are possible.
In December 2008, lhe General Director 01 ANEEl contacled the Company proposing an
agreemenl lo resolve, oul-ol-cour!, lhe dispule involving the TUSD-g amounts. Thal agreemenl
would, in summary, be carried oul as follows: (i) lhe Company would pay lo Eleklro and lO Vale
Paranapanema (díslribulion companies whose inslallations are remuneraled by lhe TUSD-g due by
lhe Company) lhe TUSD-g amounls relaled to lhe periods Irom July 2004 lo June 2009, calculated
in accordance wilh the slamp melhodology; (ii) Ihis paymenl could be made in installmenls over 36
monlhs, lrom January 2009, wilh no fine; (iii) lhe agreement would be lormalized Ihrough Conlracts
for lhe Use 01 lhe Dislribulion System ("CUSDs") in January 2009; and (iv) ANEEl would publish in
July 2009 a resolulion wilh lhe new melhodology for lhe calculalion 01 TUSD-g based on lhe legal
guideline of lhe localion.
Considering lha! the proposal for Ihis agreemenl did nol change lhe lactual and legal silualion
being challenged by lhe Company in lhe cour!s, lhe Company did not accepl ANEEl's proposal.
AI lhe end 01 January 2009, ANEEl suceeeded in suspending lhe elleels 01 lhe Anlicipa!ed Judicial
Proleclion obtained by lhe Company in July 200B unlil lhe judgmenl 01 ils appeal. AI lhe beginning
01 February 2009, lhe Company presenled a requesl lor lhe reconsideralion 01 and counler
arguments lO lhe ANEEL appeal.
In February 2009, lhe requesl by the Company lor reconsideralion was denied and presently il
awalts lhe final Judgmenl 01 lhe appeal.
AI lhe beginníng 01 Mareh 2009, lhe Company received Notification 141/09 SFG, issued by ANEEl,
which indicaled lhal lhe Company (i) did nol sign lhe CUSDs with lhe distribulion concessionaires
whose inslallalíons are remunerated by lhe TUSD-g due; and (ii) did not pay lhe accumulaled
liabilily of TUSD-g Irom July 2004 lo June 2007
On Mareh 17, 2009, lhe Company filed a petition lo inform lhe cour! 01 lhe issuance 01 ANEEl
Regulalory Resolulion 349/09, which represenls a new fac! recognizing lhe Company's requesl,
since il adopts as lhe new melhodology lor lhe calculation of TUSD-g lhe localion guideline, lO be
effective as Irom July 1, 2009. AI lhe same time, lhe Company requeSled anticipated Judgment 01
lhe litigation. On June 15, 2009, lhe judge issued a notice eSlablishíng, among olher mattem, lha!
ANEEl, Eleklro and Vale Paranapanema answer lhe Company's petilion.
On March 23, 2009, lhe Company filed a delense to lhe notlficalion issued by ANEEL. However,
lhls was nol accepled and, on April I, 2009, ANEEl issued Assessment Notice 014/09-SFG
againsl lhe Company lor non-compliance wilh lhe Notificalion. The Company filed ils defense lo lhe
58
Ger<.!ç-áo Pimmapanema
CNPJ 02,998,30110001·81
Listed
Assessmenl Notice on April 13, 2009. ANEEL's arder 1932/2009 was published on May 26, 2009,
upholding lhe full fine imposed on lhe Company. On June 23, 2009, lhe Company filed a Wril 01
Mandamus to suspend lhe paymenl 01 the line. The injunelion in lavor 01 lhe Company was granled
on June 29, 2009.
On June 23, 2009, lhe Company presented a petition in a Civil Aclion requiring lhe judicial deposil
of lhe TUSD-g amounts, lo avoid lhe difticulty of oblaining reimbursemenl of the payments made
directly to lhe dislribulors, and lhe judicial delermination Ihat lhe CUSD wilh Elektro and Vale
Paranapanema be considered as signed up lo June 30, 2009 lor ali legal purposes, including, bul
nol limiled lo, lhe compliance wilh the regulatory obligation established in §§ 4 c/c 6 01 Art. 4 01
ANEEL's Ratilying Resolution 497/07.
On June 29, 2009. the judge issued a decision: (i) to reject lhe request for a judicial deposit, based
on the lacl Ihat il would nol be possible lo mitigale ar prevenI lhe effecls 01 lhe appeal 01 ANEEL
(wilh lhe suspension 01 lhe elleets 01 lhe anticipated legal protection previously granted to lhe
Company): and (ii) to grant lhe request to recognize as sigoed the CUSD 01 lhe Company wilh the
dislribulors, based 00 the lact Ihat the lormalization 01 the CUSD with lhe acknowledgment 01
lodebledness would be equivalent to the recognition 01 the Company's request in the Civil Aclion as
being unjuslilied, without prejudiclng lhe lacl that the related paymenl should be eflectively made, in
accordance with §§ 5 and 6, 01 Art. 4 01 Resolution 497/07.
Accordingly, in view of lhe obligation to pay these amounts, on June 30, 2009, the Company
recognized in its stalement 01 income lhe amounl 01 R$ 71 ,262 (RS 59,311 of which under "Electric
grid usage charges" and RS 11,951 under "Finance costs"). R$ 30,534 in Current liabililies and
R$ 40,728 in Non-currenl líabililies, adjusting the amount recorded lo that eslablished by ANEEL's
Ratilyíng Resolulion 497/2007, in compliance with the decision rendered on June 29, 2009.
According to lhe Company's legal advisors, lhe chances of success in the Civil Aclion are not
altered due lo lhe rejection of lhe petition lor deposi! and remain elassified as possible.
On July 30, 2009, lhe Company received ANEEL Oflieial Lelters 203/09 and 204/09, informing lhe
decision and requesting lhe distribulors Elektro and Vale Paranapanema, respectively, to invoice
the charges lor lhe use related to the Company.
In August 2009, the Court of Appeals decided to authorize the judicial deposits 01 the amounts
related to the dillerence belween lhe tarills calculated in eonformity with ANEEL Resolution 349/09
and Resolution 497/07.
To date, there was no oew relevant evenl relerring to lhe judicial discussion 01 lhe revision of the
amounls to be paid on account of Tusd-g, and the Company continues making lhe judicial deposit
monthly, which aI December 31, 2011 amounls to RS 42,846 (R$ 21,871 aI December 31, 2010).
Liabilities are recorded net of lhe judicial deposits under the line item "Suppliers".
13. RELATED PARTIES
13.1,
Transactions and balances
The Company has an expense sharing agreement with the associate DEB - Pequenas Cenlrais
Hidrelétricas LIda. and with Duke Energy International, Brasil LIda. ("Duke Brasil"). The estimated
amount of Ihese agreements for 2011 is R$ 3,413 and R$ 488 respectively. lhe balance receivable
Irom related parties totais RS 847 at December 31, 2011 (R$ 218 aI December 31, 2010), 01 which
RS 49 (R$ 6 at December 31, 2010) relers to out-of-pocket expenses reimbursed by lhe paren!
company Duke Brasil.
59
Ouke Energy International, Geração Paranapanema S.A. CNPJ 02,998,30110001-81 Geração P,uallapanemi'.i
_ _~Listed Co",!,~ny_ _.._ _ _ .~.~_...._ _~ ~_ _ __
When lhe Company's cuslomers need guarantees in commercial transactions, Duke Brasil provides
these guarantees on behalf of the Company, whose amount at December 31, 2011 was
R$ 103,384 (R$ 77 ,533 ai December 31. 2010). The other sigmflcant transactions with related
parties refer lo the payment of dividends and equity accounling.
In addition. lhe Board 01 Directors' Meeting held on September 13. 2011 approved lhe Execulive
Board's proposal to sign a Remunerated Private Agreemenl for lhe Assignment 01 Rights of Use of
Properties with a related party of the Company's econom.c group. The related party is Duke Energy
International Brasil Commercial. lida. or "Duke Commercial", a subsidiary of Duke Energy
International. Brasil Ltda. or "Duke Brasil" (controlling stockholder of lhe Company), which
participates in biddings and/or auctions carried out in lhe electricity industry, obtaining lhe
corresponding concessions, permissions and aulhorizations.
The referred inslrumenl has lhe purpose of assigning lhe rights relaling lO properties lha! are nol
linked 10 lhe Company's concession, localed in lhe Municipality of Pederneiras, Slate of São Paulo,
since these properties are nol being eurrently used and are onerous to lhe Company. The
assignment 01 sueh righls will nOI alleet the aclivities developed by lhe Company.
The agreement term is 24 months, and atter the end ollhis period, it will be automalieally exlended
for an equal period, and so on, as long as bOlh parties agree wilh lhe extension. The monthly
remuneration provided for in lhe Instrument is R$ 18, annually restated by the posllive variation of
lhe Amplified Consumer Priee Index (IPCA).
The Instrument, however, will be valid and the payments will be made only if Duke Commercial is
the winner 01 the A-3 Auction.
The Board of Direetors' Meeling of Oetober 21, 2011, approved lhe Firsl Amendment, which has the
purpose of allering the date of the Auction for Pu rehase 01 eleetrie power generated by New
Generation Developmenls ("Auction"), held by ANEEL in the first half 01 2012, eonsidering thal
Duke Commereial did not participale in lhe Auetion held in lhe seeond hall of 2011, as well as
reetilying olhe r terms and eonditions in the instrumen!.
The signature 01 this inslrument by the Company and Duke Commercial is in aeeordance wilh the
dispositions 01 ANEEL's Normative Resolution 334/2008 and lhe Company's Internai Policies.
As the date of the A-3 Auetion, lo be held in the second half 01 2012, has been changed, the
agreement is not yel in loree.
13.2.
Key managemenl remuneralion
The Stoekholders Meeting held on April 29, 2011 approved management's annual remuneralion in
lhe overall amount of RS 9,750 for 2011, dislributed as follows: (i) R$ 3,000 to lhe Board of
Direetors; (li) R$ 6,000 10 the Executive Board and (iii) R$ 750 lo the Stalutory Audil Committee. In
2011, the Slatutory Audit Committee received remuneration of R$ 641 (R$ 277 in 2010),
aDuke
rtlEnergy.
CNPJ 02,998,301/0001·81
Listed
Presented below is lhe composition of key management remuneralion:
2011
5,345
165
Short-term benefils for employees and managemenl
Post-employmenl benefits
Terminallon benefits
Share·based remuneration
...
5,510
197
.

5,707
__.__
_
2010
...
-._-
5,795
151
939
-----6,885
370
7,255
_._~
..
~-_._---
In 2010, lhe Company disbursed R$ 421 with respecI to lhe Reliremenl Incentive Program (PIA) for
the members of management.
Certain Company managers are eligible for lhe Long-Ierm Incentive Program (LTI) established by
Duke Energy Corporallon and comprised of shares of lhe indirecl parenl company (lhe Company
does nol have a local plan involving ils shares). In 2011. lhe Company recognized expenses related
lo lhe Parenl Company's share-based remuneration plan in lhe amounl 01 R$ 197 (R$ 370 in 2010)
(see nole 20.6).
14. OESENTURE5
14.1.
Composition and maturity of the debentures
a) Composition
n...
_.1s_s_uEl_ .._5_erie...s....-._-· ~rrerlt"'_"'.."'
__
- .. -Non:current_:_-.-._.._currímt_·_.:....~...·-...N()... -cll...
rre
...
·rl_t__.:
First issue Senes 1
66,719
62,053
68,746
123,946
Firsl issue Series 2
3,352
108,124
3,185
101,381
Single
Second issue series ._ .....?0,08"-._ ,._ ':;50,fl,1l.. ..._ ...__ 1!l,15.l...._~O, 77L.._..
90,156
721,094
91,082
746,104
b) Maturity
...
Non·current
14.2.
2013
281,560
2014
219,507
_-._~---._~--~--~---~-----~--~----~--~
2015
220,027
Total
721,094
-~--~--~---~-----~------~----
First issue of debentures
The EXlraordinary General Slockholders Meeting held on September 1. 2008 approved the public
dislribution 0134,089 simple subordinated debentures, non·convertible Into shares, <n two series, ali
nominative and registered, 01 lhe f,rsl issue by lhe Company lar pubhc distribution.
The ne! resources oblained, of R$ 340,890, were fully used lar lhe partial prepayment 01 the
balance 01 the Company's loan contract with Eletrobrás.
61 a Duke
rtllEnergy. Duke Energy Inlernational,
Geraçáo Paranapaflema CNPJ 02,998,30110001-81
Listed
The Iransaclion cosls incurred are being recorded as a reduclion 01 the fair value initially
recognized and were considered lo determine lhe effective interesl rale, in accordance with CPC 08
("Transaction costs and premiums on issue of securilies").
The Company is in compliane8 with ali lhe covenan!s delermined in lhe Oebentures deed aI
Oecember 31,2011, sueh as:
vii. Ralio be!ween lhe Nel Oeb! (Iolal indeb!edness less cash and cash equivalenls) and
EBITOA (Earnings belore Inleres!, Taxes, Oeprecialion and Amortizalion in lhe lasl 12
monlhs) cannol exceed 3.2;
viii. Ra!io belween EBITDA and lhe Financiai Resul! (difference be!ween Finance Income and
Finance Cos!S in lhe last 12 months) cannot be less than 2.0:
Ix. Non-compliance, by lhe Company, of any pecuniary or non-peeuniary obligalion (ineludes
non-finanelal covenanls) established in lhe Oebentures deed;
x. Cross-Defaull. Early maturily ar non-paymenl of any olher financiai obligation, in an
aggregaled or individual manner. contracled by lhe Issuer, in lhe domestic or foreign
marke! in an amoun! above R$ 30 million:
xi. Change in lhe direct or indirect shareholding contrai 01 lhe Company, withoul previous
approval by the debenture holders aI a meeting specially held for Ihis purpose;
xii. Uquidalion, dissolulion, splil-off or any means of corporate reorganizalion involving lhe
Company, Ihal may, in any way, allecl lhe compliance with lhe obligalions arising Irom lhe
Oebenlures deed;
xiii. Petition for judicial or extrajudicial recovery or have such approved, request lar sell
bankruptcyar declaration 01 bankruptcy 01 lhe Issuer; and
xiv. Olher events delailed in lhe deed 01 the Debentures issued.
The issue was made in Iwo series, lhe lirst 01 which comprising 24,976 debentures, with a uni!
nominal value 01 R$ 10 and maturity in 5 years. The second series comprises 9,113 debentures, in
lhe uni! nominal value 01 R$ 10 and maturity in 7 years.
The interest 01 the first series 01 debentures corresponds lo the CDI varialion, plus interesl 01 2.15%
p.a. The debentures 01 the second series are monetarily restated by lhe IPCA varialion plus inlerest
of 11.6% p.a.
14.3.
Second issue 01 debentures
On July 16, 2010, lhe Company raised funds in lhe market totaling R$ 500,000, through lhe 2nd
public issue 01 sim pie subordinaled debentures, nol convertible inlo shares, ali nominative and
registered, in lhe local market, coordinaled by Banco Sanlander (Brasil) S.A. and Banco BTG
Pactuai S.A.: the debenlures were dislribuled wilh reslricled ellorts, according to CVM Instruction
476, 01 January 16, 2009, exclusívely destined to qualílied investors, as defined in CVM Instruction
476/2009.
The ofler was issued based on the lollowing: (i) the resolution 01 lhe Company's Exlraordinary
General Meeting held on July 5,2010, called as published in lhe Offieial Gazetle 01 the Slale 01 São
Paulo and lhe newspaper Valor Econômico on June 6, 2010, lhe minules 01 which were liled wilh
lhe São Paulo Board 01 Trade (JUCESP) on July 19, 2010; (ii) lhe resolution 01 lhe Slatulory Audit
62
aDuke
[ti Energy..
CNPJ 02,998,301/0001-81
Listed
Gentç.'iQ Paranapanema
Committee Meeling held on June 24, 2010, which was in favor 01 lhe lund raising through lhe
second issue 01 debenlures; (iií) lhe resolution 01 lhe Company's Board 01 Directors' Meeting held
on June 16,2010, the minutes 01 which were flled with JUCESP on June 25, 2010. under lhe
number 215769110-7, and publíshed in lhe Ollieial Gazette 01 lhe State 01 São Paulo and lhe
newspaper Valor Econômico on July 1. 2010. approving lhe proposal 01 Banco Sanlander (Brasil)
SA and Banco BTG Pactuai S.A. aI lhe 155th Executive Board Meeting, held on June 11, 2010
and liled with JUCESP under the number 215770/10-9 and published in the Oflieial Gazetle 01 lhe
State 01 São Paulo and lhe newspaper Valor Econômico on July 1, 2010, for lhe plaeement 01 lhe
debentures.
The nel lunds obtained, in the amount 01 R$ 500,000, were lully used in the prepayment 01 the
Company's debt with Centrais Elétricas Brasileiras S.A. - Elelrobrás and lhe paymenl 01 lhe lirsl
amortization 01 series 1 01 lhe lírst issue 01 Company's debenlures on September 15, 2008.
The Iransaclion cosls ineu rred are being recorded as a reduclion 01 lhe lair value initially
reeognized and were considered to determine the elleclive interesl rate, in accordance wilh CPC 08
(''Transaclion costs and premiums on issue 01 securities").
Covenanls established in lhe deed 01 the second issue 01 debenlures are similar lo those included
in lhe first issue deed (see note 14.2).
The issue was in a sole series, comprised 01 500 debenlures, in the unit nominal value of RS 1,000
and maturity in 5 years.
The linance charges on lhe second series 01 debentures correspond lo lhe General Market Priee
Index (lGP-M) variation, plus inleresl 01 8.59% p.a.
15. CIBACAP - INTERMUNICIPAL CONSORTIUM
OF THE CAPIVARA RIVER BASIN
The Company signed commilments with lhe Municipalilies of lhe Capivara river basin and wilh lhe
Stale Highway Department of lhe State 01 Paraná, parties lo lhe Consórcio Intermunicipal da Bacia
de Capivara - CIBACAP which is involved wilh lhe lormalíon 01 the reservoir 01 lhe Capivara
hydroeleclric power plant ("Capivara"). These commilmenls involve projects, according lo lhe
Conducl Agreemenl (T AC) in conneclion with cosls, damages and/or losses caused lo these
municipalities due lo the construction of Capivara.
~.
Current
Non-currenl
__
..
2011
3,521
8,432
11,953
2010
4,718
9,398
14,116
In accordance with lhe proposal made lo CIBACAP, lhe Company rectilied the manner 01
performing lhe Iransition 01 lhe implementatíon and managemenl services 01 lhe aclivities to comply
with lhe obligation of implementation and developmenl 01 woods and vegelation along and arou nd
the Capivara reservoir. Due to lhe new conslruclion schedule lhe Company renegotialed lhe
amounls lo be spent.
The Company periodically revises the amounls required to meel the obligations 01 this agreemenl,
adjusting the balance of lhe provision recorded in liabilities whenever necessary.
63
Ouke Energy International, Geração Paranapanema S.A. Geração Paranapanema
CNPJ 02,998,301/0001-81
_ _--'L"'is=ted Company
16. PENSION ANO RETIREMENT PLAN
The obhgations with the CESP Foundation (Fundação CESP) (one of lhe entilies managing the
benefit plans), referring to the Oefined Benelits Plan, are recorded in non-currentliabilities, in lhe
caplion Retírement and pension plans.
Reconciliation 01 lhe assetsi(liabililies) lo be recognized in lhe balance sheet
Presenl value 01 actuarial obligallons lolally ar partially funded
Fair value 01 asseIs
AsseIs lo be recognized in lhe balance sheel belore adjustmenl
Elfecl of lhe restrictíon on lhe asseIs due (paragraph 58)
Assets/(líabilities) to be reoognized in the balance sheet alter
adjustment
2011
_ ..._
(159,126)
196,994
- - -2010
-(152,742)
185.111
__37,868
-----;.::3~2,:369
(37.868)
.....J-ª?,313(1).
Paragraph 58 01 CPC 33 ("Employee Benelils") requires Ihal any asseIS generated be analyzed
and, in lhe evenl lhe possibílity 01 using Ihese funds is nol evidenced by the Company, lhe
recognition Ihereof should be restricled. The restriclion on lhe recognition of lhe Company's asseIs
arose from lhe facl Ihal lhe surpluses of the pension plan will nol be used by lhe Company to
reduce future conlributions ar for lhe return 01 lunds lo the Company.
Pursuanl lo Resolution 26 01 lhe Privale Pension Managemenl Council (CGPC), 01 September
29,2009, and based on lhe local resulls of lhe acluaríal valualion 01 CESP Foundalion, no Speclal
Reserve was eslablished ai Oecember 31, 2011 and therelore, lhe Company cannol benelit Irom
lhe Plan's surplus aI Ihis time.
Changes in the assels/{liabílilíes) lo be recognized in lhe balance sheet are as lollows:
(Expense)frevenue for lhe year
Contribulions rnade by lhe Company ín lhe year
Gain! (Ioss) immedialely recognized • elfecl on equily
Change in lhe restriclion on asseis - effecl on equily
(Liabilities)/assets to be reçognized at end oi year
2011
4,330
569
600
_(5,499)
2010
----------1,180
544
(3,246)
_._1,522
Changes in lhe presenl value 01 obligallons in lhe year
Present value of lhe obligalions ai lhe begínning 01 lhe year
Current service cosI
Company conlríbutions
Employee contribulions
Interest cosI
Benefils paid in lhe year
(Gaín)iloss on líabilities
Present value oi the obtigations at the end oi the year
64 2011
2010
152,742
125,640
1,762
1,149
2,356
1,714
642
14,492
613
_ _~(2=!c,108)
13,207
(7,922)
20,055
159,126
152,742
(8,356)
aDuke
r",Energy..
CNPJ 02,998,30110001-81 Geração Paranapanema
Listed Changes in lhe fair value of asseIs in lhe year are as follows:
2010
2011
~1::;8=5=-:,111
Fair value of lhe asseIs at lhe beginning of lhe year
Aclual relum on plan asseis
Expecled relu rn on plan asseIs
Gaínl(loss)
Conlributions made by lhe Company
Benelils paid in lhe year
Faír value of lhe asseis ai lhe end of lhe year
159,531
32,286
15,536
16,750
1,186
_ _:;-,;(7,892)
18,989
20,536
(1,547)
1,250
(8,356)
196,994
185,111
Annual expense!(revenue) recognized in lhe slalement 01 income for lhe year:
~~~~2011
_.......:2"",010 2,356
14,492
(20,536)
Current serviee cosI
Interesl cosI
Expeeled retum on plan asseIs
Employee contribulions
Total
_.... _~J642)
(4,330)
1,762
13,207
(15,536)
(613)
(1,180)
Assumptions used in acluarial valualions:
Ec()nomic ~ssumptions .~. ______
Discounl rale
Expecled rale 01 relum on plan asseis
Fulure salary growth
Growth 01 social securily benelits and limíls
Inllalion
Capacity lactar
Salaries
Benefíts
Demographic..lIssumptiolls'----_~
Mortalily Table
Disabilily mortalily lable
Disabilily table
Tumover lable
Retírement age
Percentage of aclive participants
married at reti remenl date
Age diflerence belween participanl
and spouse
16,1.
---:::-:;
.....2011
~.~
......
__2010
._
9.72% p.a.
12.13% p.a.
7.12% p.a.
4.0%p.a.
4.0%p.a.
9.72% p.a.
11.28% p.a.
7.12%p.a.
4.0%p.a.
4.0%p.a.
100%
100%
100%
100%
2011
AT-1983
AT-1949
Light Average
Experience of CESP
Foundalion
Age entilled lo full benefits
2010
AT-1983
AT-1949
Light Average
Experience 01 CESP
Foundalion
Age enlitled to full benefíts
95~fO
95%
Wives are 4 years younger
than their husbands
Wives are 4 years younger
Ihan Iheir husbands
-~-
Cesp 11 Foundation
The Company has a Debt Acknowledgment Agreement lo fund the acluarial delieil relerring to the
Supplementary Proportional Settled Benefit (BSPS), with final maturity an November 30, 2017. The
balance af thís agreement is adjusted by the variation 01 the actuarial cost, ar by lhe General Price
Index (IGP-DI) varíation, plus inlerest of 6% per year, whichever is higher, and IS added monlhly lo
lhe principal amount.
65 aOuke
Ener9Y"
GeraçijQ Paranapanema
r"
~~~
CNPJ 02,998,301/0001-81
~~--~~
Listed.company ._ _~ __~
In accordance with Clause 10, alter lhe annual Publication of the Statemenl of lhe Resulls 01 lhe
Benelil Plan Actuarial Evaluation (DRAA) relative lo lhe previous year, lhe balance therein will be
compared lo lhe remaining debl balance. " the remaining balance is higher than lhe amounl
presenled in the DRAA as lhe deficit 01 lhe plan, lhe inslallments delermined in Clause B wíll be
reduced proportionalely. 11 lhe resull 01 lhe comparison is, on lhe conlrary, a lower value Ihan Ihal
presenled in the DRAA, the installments delermined in Clause 8 will be revised in arder to mainlain
in ils lotality lhe obligation specífíed in lhe contracl, observing the lerms 01 Clause 9, sole
paragraph. Due lo the exislence 01 a surplus, lhe balance was reduced lo zero in January 2007.
That surplus continues up lo December 31,2011.
16.2.
CVM Resolution 600
The Company is co-sponsor 01 Fundação CESP, a nol-for-proli! entity lormed wilh the purpose 01
providing benelits for lhe supplemenlation 01 retirement and pension income, using the
capitalization financiai system, according to which the present value of lhe benefits lo be paid, less
lhe present value 01 the contributions and earnings, determine the need for reserves.
Dn March 15, 2004, lhe Company implemenled a new retirement plan through lhe execution 01 a
privale pension agreemenl wilh Bradesco Vida e Previdência SA This plan consists 01 the
accumulation of capital, Ihrough an Executlve Financiai Inveslment Fund - FIFE, over lhe period
remaining to retiremenl, with the aim of generating resources for lhe acquisilion 01 private pension
benefils.
The Company appointed Towers Walson Consultoria LIda" ("Towers Watson") lo perform lhe
actuarial valuation of its posl-employment benelits lo order to determine the relaled benefit liabílities
and cosls, based on lhe rules of CPC 33 ("Employee Benelils"), made mandatory lar listed
companies Ihrough CVM Resolution 600/2009, which revoked CVM Resolution 371/2000,
The Plan PSAPIDuke Energy is a mixed plan thal encompasses lhe former PSAPICESP 8 and
PSAP/CESP 81 plans efleclive up lo December 31, 1997 and August 31, 1999, respectlvely.
The dealh-benefit has nol been considered for the purposes of complying wilh CVM Resolution
60012009. Since lhe participants adhesion lo Ihis benefít is voluntary, and it is fully paid by lhe
participanls via Fundação CESP, lhe consultants undersland Ihal this benelit does nol represenl a
risk for the Company.
Considering lhe oplions lor lhe recognition oi acluarial gains and losses in CPC 33 ("Employee
Benefils"), lhe Company elecled lo recognize acluarial gaíns and losses immediately through olher
comprehensive income, with an ímmedíate ellect on lhe Company's equity, as provided for in
paragraph 93A oi CPC 33, 1I is important to highlighl Ihal, in lhe event an asseI is calculated in lhe
year and Ihís asseI is above lhe limil eslablíshed in paragraph 58, lhe adjuslmenl to the asseI due
lo Ihls IImil will have an impacl on lhe Company's equity lhrough olher comprehensive income,
The information on lhe pension plans has been prepared In accordance wilh CVM Resolution
600/2009, based on lhe aCluaríal evalualion prepared by independenl consullanls, using lhe
proJecled unil credil method.
17, NET CONTINGENCIES
The Company's managemenl, based on analyses and reports prepared by lhe legal departmenl
and by exlernal legal advisors, has been eSlablíshlng provisions ai amounls deemed sufficient lo
cover probable losses and obtigations relaled lo labor, lax, environmenlal and regulalory lawsuíls.
66 aDuke
rtllEnergy.
CNPJ 02,998,301/0001·61 Geriição
Listed Company _ ._
_._Parilndpanema
_._ _ .~._.~.._ _.._....::==:..==:=:..-
..
_- .._ - -
Addilionally, lhe Company has labor, lax, environmental and regulalory lawsuits, as shown in lhe
lable below, involving risks 01 loss classilied by managemenl as possible, based on lhe evaluation
01 lhe legal advisors, lar which no provision lor was recognized. Judicial deposlls presented as
deduclions reler only 10 deposils relaled to provisioned conlingencies, and lhe olher deposils are
described in note 9.
a) Composition
_ __
-----
_ _ 1,869
9,681
-
..
_.
__
1
2010
Ne!
contlngenEY,
5.789
cOl1tín~9'
---9,681
Na!
3.857
_
..
_-~--
2,301
_.--._~
2,769
2,769
-
__
~depos~
7,658
7,658
..._ _10,138
9.681
_ ,:3,8,74"
2.769
.. 53.007
.
Judicial
__
Provision
_.
..-
.
_-
Reslaled
amounl
~
çontingencies
,oul~
Probable
labor
Labor
Possible
------Tax
Probable
Tax
..
.. _- ...l'<>ssibl,,--.
Environrnental
Probable
Environmental ., ' _
Possible
_._-._.
.. _ - ..Regulatory
Possible
.
Likelihood
olan
unfavorabte
~
_.~3.i'1
.. _ - _ . -
_.
138,371
20,108
__. 1,869
__ _
..__. _
..
..
18,239
1.970
,-_.~,_.-
--'-
8,128
b) Changes
AI 12/31/2010
Provision and restatement
Write-off and reversal
------ Labor 6,918
4,072
~ .._@,:33B
AI 12/3112011
17.1.
7,658
Environmental
1,970
1.010
_ .._ _(211)
2,769
--._----_._---~
2,301
7,380
- ..
_-
...- - .
9,681
Total
11,189
12,462
(3,543)
20,108
~---~-._---------~
Probable loss contingencies
a) Labor
These reler to labor lawsuíts fíled by lormer employees and outsourced employees, involving
overtíme, heallh hazard premium, salary equalízatíon, employment relationship, among olher
matters.
The wríte-offs in lhe penod reler lo the conclusion 01 claims in the normal course 01 lhe proceedíngs
and lhe constilulions reler to lhe new claims and reevaluations made by lhe Company legal
advisors.
b) Tax
The provisions at December 31, 2011 relaled lo tax contingencies, in respect 01 which unlavorable
oulcomes are regarded as probable, reler lo lhe lollowing:
i. Tax assessmenl relaled to lhe allocation 01 lhe payments 01 tax on inflalionary gains to the
Amazon Investment Fund (FINAM) tax incentive in January, February and March 2000.
The Company líled administrative proceeding 11831000528/02-92 wilh lhe Federal
Revenue Secretanat, which validated lhe paymenls made in January and February. The
amounl of R$ 2.394 related lo March 2000 conlinues to be provided lor.
67
aDuke
r"Energy"
Ouke Energy Inlernalional,
CNPJ 02,998,30110001-81
_._.~_~~ãO ~~,!!:~,!!:ma ~.~_~. ____.__ .~_
ii. . Li~ed ~omp~ny .
Administrative proceedíng 10880723970/2001-33, whích addresses the electronic requests
lor relund or relmbursement 01 COFINS credits of 2004. An objection was Iiled since par!
01 lhe amounts was not approved by lhe Brazilian Federal Revenue Service. These
amounts, restated to December 2011, and provided for lotai R$ 7,287.
c) Environmental
The provisions aI December 31, 2011 related to environmental conlingencíes, in respect of which
unlavorable oulcomes are regarded as probable, reler lo the following:
i. Lawsuits lor compensalion 01 environmental impacts filed by lhe munícípality 01 Sanlo
Inacio in lhe restated amounl 01 R$ 2,275;
ii. Lawsuils liled by fishermen relerring to environmental damages in lhe amount 01 R$ 346:
and
iii. Contíngency lo compensate environmental impacts relerring lo land located in lhe
Municipalily of Pederneiras in lhe amount of RS 148.
17.2.
P055ible 1055 contingencies
a) Tax
The provisions aI December 31. 2011 for the main tax contingencies. in respect of which
unfavorable outcomes are regarded as possible, reler lo the following:
I. Wril of mandamus 20046100025355-3, filed with lhe Federal Revenue Service in
São Paulo, requesling lhe prelimonary injunction lO recognize lhe Company's right of not
being subJect lo lale paymenl fines on the settlemenl of its debts of PIS, COFINS, IRPJ,
CSL and IOF Ihrough paymenls and offsels, based on lhe beneflt 01 volunlary disclosure.
as established in article 138 01 lhe National lax Code (CNT). Debts whose payment was
suspended by judicial deposits and lhe possible 108s is eslimaled aI R$ 5,470;
ii. Tax assessment notice referring lo lhe imposition of fine lor alleged failure lo issue lax
documenls relating to the Canoas 11 power plan!, in lhe period from 2001 to 2005. The
Company filed administrative proceedings aI lhe Paraná Stale Finance Secretarial. Ali lhe
proceedings. amounling to R$ 8.502, awail final decision at the administrative levei;
iií.
Administralive proceedings arising Irom requests lor relund due to tax losses (IRPJ, IRRF
and CSLL). For ali the cases, the Company inlerposed appeals which awail decision. The
amount of R$ 11,475 IS classif,ed as a possible loss; and
Iv.
Adminislrative proceedings arising from requests for refund due to lax overpaid by lhe
Company (CSLL, IRPJ and COFINS) in the amount 01 R$ 10,851.
b) Environmental
AI December 31. 2011, environmental contingencies with expectalion of possible loss
reler lo tax assessment notices issued by lhe Environmental Instilule of Paraná (IAP) and
by lhe Brazilian Environmenlal Institute (IBAMA), relating to alleged environmenlal
violations aI the Chavanles, Canoas I. Canoas 11. Taquaruçu and Capivara power plants.
The Company filed administrative appeals and a lawsuits seeking lhe annulment of lhe
fines. The amounl of R$ 53,007 was classified as possible loss.
68
Duke Energy International, Geração Paranapanema S.A. CNPJ 02.998.30110001-81 Geração Paranapanema
c) Regulatory
In 2008. lhe Company filed a lawsuíl agaínsl lhe colleclíon 01 transmíssíon taríffs resullíng
trom lwo ANEEL resolulions, whích ímposed on lhe energy generating companíes in lhe
Slate of São Paulo. the paymenl of retroaclíve tarífls due lo lhe utilizalion of lhe eleclric
energy Iransmíssíon syslem. As lhe Company refused lo pay lhe amounts under díspute ín
the lawsuit, in 20009, ANEEL ímposed a fine 01 R$16,371 (restaled amount), c1assilíed as
a possíble loss,
18. SPECIAL OBLIGATIONS
2011
4.947
1,632
468
Global Reversion Reserve (RGR)
Donalíons 01 equipment ONS
Research and developmenl - R&D
(see nole 10)
2010
~~.~~~.-
4,947
1,690
.. 9
~._~_
7,047
_~
6,646
Global Reversion Reserve: Resources orígínally held by CESP and partially translerred lo lhe
Company due lo lhe partial split-oll 01 lhal company. Any setllemenl lhereof will occur as
delermined by lhe Conceding Power.
Equipment donations: Operalíng equipmenl assígned by lhe National System Operator (ONS).
Research and Development: Property, planl and equipmenl acquired wilh resources 01 R&D.
19. ELECTRIC INDUSTRY CHARGES
The líabililies for charges eslablíshed by legislalíon relalíng to lhe electríc,ty seclor are as follows:
_
...
_._--~~
..
-
---~~.~
Current
..
2011
_----
Non-
current
Currenl
current
Financiai compensation for use Df water
resources (CFURH)
ANEEL inspectíon fee
Researcll and developmenl - R&D
Interest on lhe Global Reversion
Reserve (RGR)
8,849
338
9.898
358
5,955
13,590
16,211
13,590
6,359
10,852
10,852
Financiai Compensation lor Use 01 Water Resources - CFURH
Eslablishec by Law 7990;1989, lhe CFURH is inlended lo compensale lhe munícípalilies allected
by lhe loss of farmland In areas flooded for the conslruction 01 hydroeleclflc power planl reservoírs.
Electric Energy Utility Service Inspection Fee - TFSEE
Introduced by Law 9427;1 996, this fee ís equívalent 10 0.5% 01 lhe annual economic benelít earned
by lhe concessionaire, lícensee or authorized company of the Eleclric Power Utilily Servíce. The
annual amount of TFSEE is established by AN EEL lo provide its revenue and is usec lo cover lhe
COSI of Its aclivities. The TFSEE is lixed annually and one-lwelfth 01 the lee is paid monthly by lhe
concessíonaires. ANEEL is responsible for lhe collection of lhis contribution.
69
Duke Energy Inlernalional, Geração Paranapanema S.A. CNPJ 02,998,301/0001-81
Geração Paraoapaflema
Research and Developmenl - R&D
In accordance with Law 9991/00, Art. 24 of Law 10438/02, and Art. 12 of Law 10848/04, lhe
concessiona,re or dislribulor for lhe public service of dislribulion, generalion or transmission of
electric energy, as well as those aulhorized for lhe independenl produclion of eleclric energy,
excepl those lhal generale energy exclusively Irom small hydroelectric centers, biomass, qualified
co-generation, wind or solar plants, should apply annually a minimum percentage of lheír nel
operating revenue in projects of Technological Research and Development of the Eleclric Energy
Sector - R&D, following the regulations established by ANEEL.
In accordance with Art. 2 of Law 9991/00, lhe concessionarres of electric energy generation and
companies aulhorized for the independent production of electric energy are obliged to apply,
annually, aI Isasl, 1% of their operating revsnue in researeh and developmenl 01 lhe eleclric seclor.
Regulatory Inslruction 233/06. eftective as from January 1, 2007, established in its artiele 2 Ihal the
legal event necessary and suffident for lhe eonstitution of the obligalions referred 10 in its Art. 1 is
the accounting recognilion by the concessionaires and distributors, as well as by those authorized
for lhe independenl produclion 01 eleclric energy, 01 lhe items of operating revenues lísted in Art. 3,
§ 1 01 lhe Inslruction.
In compliance with Circular Oflicial Letter SFF/ANEEL 2409/07, the Company has classified lhe
expenses with Research and Development in lhe group of deduclions from gross revenue.
Regulatory Instruclion 316/2008 eslablished lha! an electric energy company should submil, in lhe
lorm provided for in paragraph1 of article 2, lhe final accounllng and financiai audil report
specilically related lo R&D projecls, for ANEEL's evalualion and recognítion of lhe investments
made.
20, EQUITY
20.1.
Share capital
The Company's authorized share capital is R$ 2,355,580 and comprises R$ 785,193 in common
shares and R$ 1,570,387 in preferred shares, ali 01 which are nominative, book-entry and with no
par value,
Subscribed and paid up capital tolals R$I,639,138 (R$1,939,138 aI December 3t, 2010),
represented by 94,433,283 shares, of which 31,477,761 are common shares and 62,955,522 are
prelerred shares, ali 01 which are nominative, book·entry and wilh no par value.
After receíving approval from ANEEL on August 12, 2010, and the lapse of lhe 60-day term for any
opposition by creditors, as delermined in paragraph 2 01 Article 174 of Law 6404/1976. The
Extraordinary Slockholders Meeling of November 11. 2010 approved a reduclion in lhe Company's
capital of R$ 360,000, which was paid lo stockholders on ,january 24, 2011. The amoun! was paid
with no monetary adjustmen! in respec! of lhe period from lhe decision of lhe AGE to lhe eftective
c redil to lhe slockholders.
Share position at 1213112011
in thousands of shares
-tommon-··~%··~~Preterred~%-··--·Total
%
S10ckholders
31,181
99.06 -57,650 --91.89
·----sg.031
-'--94.28
Duke Energy In!ernat. Brasil Una.
Juke Energy IntemaL Brazi! Holdlngs Ltd.
735
1.17
735
0.78
eia Metropolitano de São Paula
1,324
2.10
1.324
1.40
Other individuais and legal entít:es
_-.~29;;,7
0.94 _3,046
4.84
3.343
3.54
31.478
100.00
70
62,955
---,oo""Jjij~;433
100.00
aOuke
r"Energy~
CNPJ 02,998,301/0001-81 Lisled Prelerred shares have lhe lollowing characlerislics:
í. priority to capital reimbursement. with no righl lo premium, in the case of the Company's
liquidation;
ii. priorily dividend, non-cumulative, 01 10% p.a., calculated on the capital 01 this Iype 01 share;
lii. righl 01 being included in the public offer for sale of conlrol, under lhe condítions established
in article 254-A 01 Law 6404176;
Iv. right 01 indicaling a member of the Statutory Audit Committee, and related alternale, chosen
by the owners of lhe shares, in a separate vote;
v. right 01 participallng in capital increases, arising from the capilalization 01 reserves and
prolils, in condítions equal to Ihose 01 the common shares;
vi. do nol have voling ríghls and will nol be redeemable, whereas each nominative common
share will be entítled lo 1 vote aI General Slockholders Meetíngs.
20.2.
Capital reserves
2011
466
(6.416)
103,636
.._1..442
. 99,330
Share premium
Spin-olf account
Goodwill on downstream merger
Share-based paymenls
2010 468 (6,418) 103,838 ___.... 1,245 99,133
Goodwill on merger 01 parent company - In accordance with CVM Instruclion 319199 and ANEEL
Resolulion 28/02, Duke Energy International, Geração Paranapanema S.A. was aulhorized to
merge its parenl company Duke Energia do Sudeste Ltda., pursuant lo lhe terms 01 the Appraisal
Report 01 lhe eonsultanls Ernst & Young Audilores Independentes SIC.
20.3.
Revenue reserves
2011
71,863
Legal reserve
Slalutory reserve
71,863
-
...
2010
57,800 5,601 63,401 _.~-~~~
The purpose 01 lhe legal reserve is to proteet lhe integrity 01 lhe Company's capital, in accordance
with article 193 01 Law 6404176. The slalutory reserve relers to lhe amounl arising lrom the CESP
split-olf. The Annual and Extraordinary Sloekholders Meeting held on April 29, 2000 determined lhe
elirninalion 01 lhe requirement to establish this reserve as Irom Ihal date.
On May 30, 2011. as approved at the Stoekholders Meeting held on April 29, 2011, managemenl
dislributed lhe Company's revenue reserve 01 R$ 5,601 lo the stockholders, allocated lo lhe
eommon and prelerred shares aI lhe rale 01 R$ 0,059316899 per share, as determined by article 32
01 the Company's bylaws.
71
Duke Energy Inlernational,
CNPJ 02,998,30110001-81
aDule
í_Energ.,~
Geraçao Paran(lpanema
------
20.4.
Listed Company
........
_._._-~
Dividends and interest on capital
a) Distribution of profit for lhe year
2011
281,261
Calculal/on basis of the adjusted dividends
(14,063)
Transler lo legal reserve
110,894
Depreciation (deemed cost)
1,177
Disposals (deemed cost)
(38,104)
Delerred income tax and social conlribulion
Excess distribution referring to 2009 (Retained earnings)
Profil for the year adjusted for dividend distribution purposes ___3=-4,-,12..,1,-,6:.;:.5
Dividendsfinterest on capital proposed
(144.286)
Interim dividends
(98,211 )
Interesl on capital
(98,668)
Dividends proposed
(341,165)
Total
2010
180,505
(9,025)
114,331
251
(38,958)
(1,806)
245,298
(106.500)
(18,887)
_ _ 1l19,911)
(245,298)
b) Composition of dividends and interest on capital payable
2011
640
83,611
_ _ 1')13,668
183,119
Dividends held in custody
Interest on capital payable
Dividends proposed
2010
469
16,039
119,911
136,419
c) Amoun! of dividends and interes! on capital per share
I\l'proval
._
RCA 00 3120/2012
AGE on 12127/201'
AGE on 10/19/2011
AGO on 4129/2011
AGO on 4/29/2011
AGE on 12130/2010
!}'p~..ol
distributíoo_ _ _ _ __
~.Amount
98,668
Dividends proposed
Interest 00 capital
Dividends
Dividends proposed
Proposed dividends (Revenue reserve)
Interest on capital
Amount per
Preferred
0,83699
shar~m. _ _
Common
1.46055
98,211
1,04000
1.04000
144.286
119.911
5.601
1,73516
0,70591
0,05932
0,20000
1.11221
2,39758
0,05932
0,20000
18.887
Pursuanl to lhe Company's bylaws, lhe prolils ai June 30 and December 31 01 each year will be
distributed on a hall-yearly basis, aI a Slockholders Meeling, or in shorter periods, il lhe Board 01
Direclors decides on lhe payrnent 01 inlerim or quarterly dividends. The Stockholders Meeting shall
decide, up 10 October 31 01 each year, on lhe distribulion 01 dividends based on lhe results 01 lhe
hall-yearly linancial statements as 01 June 30, as delermined in the bylaws, in compliance wilh the
provisions 01 paragraph 3 01 article 205 01 Law 6404/1976,
The Board 01 Direclors may decide on lhe quarterly payment 01 dividends, based on speClal
linancial staternents prepared lor this purpose, providing Ihal lhe lolal dividends paid in each six
month period do nol exceed lhe arnount 01 lhe capital reserves delined in paragraph 1 01 Article 182
01 Law 6404/1976.
The Board 01 Directors can also determine lhe payment 01 interim dividends oul of retained
earnings or exisling revenue reserves, based on lhe lasl annual or hall-yearly financiai statemenls
already approved by lhe SIOckholders Meeting.
72 aDuke
r'Energy"
GerdçãQ PiJrilnapanemiJ Duke Energy Inlernalional,
CNPJ 02,998,301/0001-81
Listed
Belore lhe dividend distribution, 5% will be translerred to lhe legal reserve unlil lhe balance 01 Ihis
reserve reaches 20% 01 share capital.
The remaining profit, afIe r lhe transler to lhe legal reserve, will be distribuled as follows:
i. dividend of up lo 10% per year lo prelerred shares, to be equally apportioned among Ihem.
calculated on the capital corresponding to this Iype 01 share;
ii. dividend of up to 10% per year to common shares, lo be equally apportioned among Ihem,
calculaled on lhe capital corresponding lo Ihis type of share; and
IIi, distribution 01 the remaining balance to common and prelerred shares, on equal condilíons,
At the EXlraordinary General Meeting held on October 19, 2011, the stockholders approved the
proposal 01 the Company's management for payment 01 inlerim dividends in lhe lotai amount of
R$ 144,286, lo be lully attribuled lo lhe prolit for lhe year, and allocated to prelerred shares aI lhe
rale 01 R$ 1,735762489 per share and to common shares at lhe rate of R$ 1,112205861 per share,
as eslablished in item (U), article 5, of the Company's bylaws, The total dividends approved ai the
Extraordinary General Meeling were paid up lo November 10, 2011 and lhe amount payable to lhe
slockholders was nOl subject lo monelary restatemenl corresponding lo lhe period belween lhe
dale 01 approval at the Meeting and lhe ellective paymenl to the slockholders, This amount shatl be
considered as an advance for lhe purposes 01 calculaling lhe fixed priority dividend attribulable to
prelerred shares in lhe Ordinary General Meeting of 2012, according to legal and stalutory
prov,sions.
20.5,
Inferest on capital
The Extraordinary General Meeting held on December 27, 2011 unanímously approved the
management's propasal for paying to lhe slockholders interest on capital of R$ 98,211, altributable
to lhe dividends payable by the Company for lhe year ended December 31, 2011, in compliance
wilh lhe tax limits determined based on lhe balance sheet as at December 31,2010, as estabtished
In article 9 of Law 9249/1995. The slockholders were crediled lhe gross amount of R$ 1.04 per
common or preferred share, paid nel of taxes, in accordance wilh the applicable legislation (see
note 28.1),
20,6.
Share-based paymenfs
There is no compensalion plan based on shares issued by lhe Company for the members of the
Board 01 Direclors, Stalulory Directors, or employees.
However, certain members of lhe Company's management are eligible for lhe Long-lerm Incentive
Program (LTI), which is eslablished by lhe parent company and subject lo lhe lulfillment of global
and/or individual corporate goals and/or permanence of lhe employee in lhe Company, as part 01 a
slrategy for long-term retention 01 professionals and crealion of value for the business in a
sustainable manner. The program oflers lhe executive an opportunity to receive a compensation
based on the shares of lhe parenl company (lhe Company does nol have a local plan involving ils
own shares), which 's delined and granled by Duke Energy Corporalion, wilh no burden on lhe
Company, The mentioned program is only granted to executives who are eligible, In 2010 and
2009, lhe program granled a certain number of shares or "performance shares" (lhe executive
receives a certain number of shares of Duke Energy Corporation, as well as their equivalent
dividends, and lhe number 01 shares can vary in accordance with certa in predefined goals), as wetl
as "phantom shares" (right lo receive shares of Duke Energy Corporation after a three·year period
has elapsed).
73
a
Dulce
r"Energy.
CNPJ 02,998,301/0001-81 Geraçâo P;jf;jnapanema
Ustod The table below presents the number 01 shares issued by Duke Energy Corporalion and lhe related
changes:
In number 01 shares
AI 1213C':1f-;;:2-=-00::-:9:---'~=
Granted
Exercised
ExpiredlCanceled
AI 12131f2010
Exercised
Expired/Canceled
At 1213112011
56,504
7.315
(13.169)
(6.146)
44,504
(6,751)
(30,324)
7,429
In 2011, Duke Energy Corporalion incurred R$ 197 (R$ 370 in 2010). relating lo lhe share-based
payments lo eligible executives. which was recognized as expense by the Company in the
statemenl 01 income with a corresponding entry to capital reserves, in conlormity Wllh CPC 10 (Rl)
("Share-based Paymenls") (see nole 13.2).
20.7_
Carrying value adjustments
Pension plans
10,339
At 1213112010
Depreciation
Reductions
Delerred income tax and SOCial contribution
Pension and relirement plan
Delerred income tax and social conlribution
AI 1213112011
(110,894)
(1,177)
38,104
1,007,829
(4,899)
...____
1,665
7,105
Tolal
1,092,135
(110,894)
(1,177)
38,104
(4,899)
1,665
1,014,934
As eslablished in CPC 27 ("Property, plant and equipment") and in compliance wilh lhe guidance
provided by ICPC 10 ("Interpretalion 01 lhe Firsl-lime Adoption of CPCs 27. 28, 37 and 43 lO
Property, Planl and Equipment and Inveslmenl Properties"), the Company recognized lhe lair value
01 property, planl ano equipmenl (deemed cost) as 01 lhe dale 01 lhe lirsl-lime adoplion of CPCs
and IFRS, which was January 1, 2009. The corresponding adjustmenl, net of deferred income tax
and social contribulion, was recognized in equily, under carrying value adjuslmenls. This caption is
realized against lhe relained earnings accounl la lhe extenl Ihal the depreciatíon 01 lhe lair value
incremenl 01 property, plant and equipmenl is recognized in lhe slalement 01 income (see
nole 10.1).
In addilion, considering lhe options lor lhe recognilion 01 actuarial gains and losses provided by
CPC 33 ("Employee Benetils"), the Company elecled lo recognize acluarial gains and losses
immedialely Ihrough olher comprehensive income, wilh an immediale etteel On lhe Company's
equity. 1I is importanl lo nole lha!, in lhe evenl a pension asseI is calculaled in lhe year, thal is
above lhe limil eslablished in paragraph 58, lhe adjustmenl lo lhe asseI due lo Ihis Iimil will have an
impacI on lhe Company's equily Ihrough olher comprehensive income (see nOle 16).
74
a Duke
r41Energy®
CNPJ 02,998,301IOOOHI1
GerdçdQ PiJranapanema
Listed
21. NET SALES REVENUE
Supply 01 electric energy
Bilateral agreements
Auctíon contracts
Spot market
Energy Reallocatíon Mechanism (MRE)
Other revenue
2011
2010
637,285
379,444
35.631
11,103
549,951
358,439
31,211
25,266
46
964,913
1,063,556
Oeductions lrom operating revenue
PIS and COFINS
ICMS
R&D
(88,271 )
(8,078)
(9,2~)
m
Net operating revenue
(105,553)
958,003
(76,000)
(17,992)
(8,618)
(102,610)
862,303
22. OPERATING COSTS ANO EXPENSES
Operatíng costs and ex penses, by nature. are detaíled below:
2011
CosI of
sold
~nergy
Personnel
Materiais
30,945
3.240
Outsourced services
19.996
ANEEL ínspectíon tee
Eleclríc power purchased lor resale
Electnc gríd usage charges
Financiai compensation for use of water
resources (CFURH)
Depreciation and amortizahon
Provision for contingendes
Provision for impairment 01 trade
receivables
Rantals
Insurance
Other operating incomeíexpenses
General and
administrative
expenses
24,023
178
15,788
2010
Total
57,204
3,418
3,004
42,250
4,298
35,784
4,298
1,302
77.585
1.302
77,585
2,807
74,274
4,051
53,237
56,763
235,130
8.110
230,740
11,045
3,003
53,237
228,250
2,490
2,935
1,509
3,003
5,003
10
2.575
819
3,225
3,235
10,155
425,192
66,972
2,575
1º,!'j74
492,164
3,009
3,138
9,718
75
497,860
a
Duke
r"Energy.
Geração
Paranapanema
CNPJ 02,998,301/0001-81
Listed Company
23. ELECTRIC POWER SOLO ANO PURCHASEO ANO ELECTRIC GRIO USAGE CHARGES
23.1. Electric power sold
Supply
Bilateral agreements
Auction contracts
Spot market
Energy Reallocation
Mechanism (MRE)
MWh ('!
4.671,725
4,138,390
1.342.560
2011
R$
638,278
378,451
35,631
MWh ('!
4.551.956
4,142,086
997,088
2010
R$
549,951
358,439
31,211
1,242,300
11,394,975
11,103
1,063,463
2,981,019
12,672,149
25,266
964,867
(0) Unaudited
lhe lable below summarizes the volumes in MW Df assured energy contracted/expeclation Df
realizalion Df contracts by the Company in the frameworks Df Free Contracting (ACL) and
Regulated Contracting (ACR) at December 31, 2011.
2010
1,008
473
200
55
218
521
521
994
14
99%
Electric power available for sale
Regulated Contracting Environment (ACR)
2005 (8 years)
2006 (8 years)
2007 (8 years)
Free Contracting Environment (ACL)
Bilateral contracts with free consumers
Subtotal
Energy available for contracting
Percentage Df contracted energy
2011
1,010
472
199
55
218
530
530
1,002
8
99%
MW r!
2012
1,011
470
198
55
217
535
535
1,005
6
99%
(') Unaudited
23.2.
Electric energy purchased for resale
Power purchased - Bilateral
Power purchased - Spot
Power purchased - MRE
MWh (')
2011
R$
63,168
63,168
732
570
1,302
MWh!')
13,460
21,236
2010
R$
331
2,476
34,696
2,807
(0) Unaudited
During 2011, lhe amount Df R$ 732, referring to lhe process Df accounting adjustments carried oul
by CCEE was recorded, and is shown above in lhe account Power purchased - Spot, without
discriminalion Df the corresponding power volumes.
Also, during 2011, it was necessary to purchase energy from the MRE market. Although the
Company's generation has exceeded its physical guarantee, the power generation Df the National
System Df Interconnection (SIN), in relation to the physical guarantee Df the syslem as a whole
presented volumes above those generated by the Company. As a consequence, there was the
need to buy energy in January and April
76
_Dulce
rflllEner9Y·
23.3.
CNPJ 02,998,301/0001·81
Listed
Tusl
Tusd·g
Conneetion charges
2011
64,804
12,645
136
2010 62,306 11,841 127 n,585
74,274
The tariffs established by ANEEL and due by lhe Company are: Tari" for the Use of lhe
Transmission Syslem (TUST). TUSD-g and eonneelion charges (see note 12).
TUST remunerates lhe use of lhe Basie Nelwork, whieh eomprises transmission installations with
lension equivalent lo or higher than 230 kV. The partieipation of eaeh company in lhe total charge is
calculated based on (i) amounl common lo ali lhe ventures (slamp), referring lo 80% of lhe TUST
charge, and (ii) amounl Ihat consíders lhe proxímily of the generation venture in relation to lhe large
consumer centers, in lhe case 01 generation, or proximily in relation lo lhe large generating cenlers
in the case 01 distributors or Iree consumers (Iocalion), referring to 20.0% of lhe TUST charge.
TUSD-g remunerales lhe use of lhe distributíon system of a concessionaire 01 specilic dislributíon.
The dislribution eoncessionaires operate energy lines in low and medium tensions that are used by
the generators lo connecl their plant lo lhe Basie Network or eonsumplion centers. Only lour of lhe
Company's planls should pay TUSD-g to aeeess lhe consumption cenlers, namely: Rosana Planl
(which is in lhe concession area of Elektro Eletricidade e Serviços S.A.) and lhe Canoas I, Canoas
11 and Salto Grande Plants (which are in the concession area of the Empresa de Distribuição de
Energia Vale Paranapanema SAl. The olher plants (Jurumirim, Capivara, Chavantes and
Taquaruçu) are directly connected to the Basic Nelwork.
The conneclion charge contemplates only lhe remuneration 01 lhe installalions used exclus.vely by
the Company.
24. FINANCE RESULT
Finanee íneome
Financiai investments
Pension plans
Olher monetary variations
Interest on RTE
Interes! and d.scounts obta.ned
Other finance income
Fínance eosts
Interes! • Eletrobrás
Interest - debentures
Monetaryadíustments
Eletrobras
Debentures
Tusd-g
Other
Finance costs - CCEE
Olhe r finance costs
Net linance result
2011
2010
28,367
4,330
4,455
591
1,689
83
--------39,515
43,433
1.180
1,373
764
3,891
14
50,655
(84,994)
(25,794)
(59,963)
(36.425)
(6,495)
(2,597)
(148)
(1,424)
(132,083)
(92,568)
77 (25.453) (30,589) (6,901) (1,701) (1,946) í1 ,091) (153,438) (102,783) a
Duke
rIEne"y",
Geração ParanlJpanema
CNPJ 02,998,30110001·81
Listed
25. EARNINGS PER SHARE
Basic earnings per share are calculaled by dividing lhe profil allribulable lo lhe holders 01 lhe
common and preferred shares by lhe weighled average number 01 common and preferred shares
oUlslanding during lhe year.
The lable below presenls informalion on lhe results and number 01 shares used lo calculale lhe
basic and diluted earnings per share:
Numeralor
Profil for attribulable lo lhe Company's slockholders
Prolit avallable lo lhe holders oI prelerred shares
Prolil avallable lo lhe holders 01 common shares
Denominator
Weighled average number 01 prelerred shares . Ihousands
Weighled average number of common shares . Ihousands
Basic and diluted earnings per share· R$
Prelerred share
Common shares
2011
2010
187,507
................ 93,754
281,261
120,337
J30J.§ª
180,505
62,956
62,179
31,477
32,254
94,433
94,433
2.97838
2.97849
1.93533
1.86544
26. FINANCIAL INSTRUMENTS
The Company's operalions comprise lhe generalion and sale of eleclric power lo dislribulion
companies and Iree consumers. The sales are made Ihrough "bilateral agreemenls". formalized in
lhe period subsequenl lo the Company's privalizalion, which delermine the quantily and sales price
of lhe eleclric power. The price is adjusled annually by lhe varialion of lhe General Markel Price
Index (IGP-M) or of lhe Amplified Consumer Priee Index (IPCA). Any dillerences belween lhe
quanlily of power generaled and lhe sum of lhe quanlilies sold under contracts (surpluses or
shortages) are adjuSled in accordance wilh markel rules and settled Ihrough lhe CCEE. The main
lactors of market risk which alfect lhe Company's business are descríbed in note 4.
In lhe conlracls entered ínlo in lhe free markel wilh Iree consumers and Iraders. lhe Company,
!hrough ils credil department, analyzes lhe credil risk and defines lhe limils and guaranlees Ihal will
be required.
Ali lhe conlracts contain clauses lha! permil the Company lo cancel lhe conlract and the delivery of
power in cases of non-compliance wilh conlracluallerms.
Financiai instruments in the balance sheet:
(a) Financiai inveslmenls In fixed income instruments, plus accrued income up lo the balance shee!
date, are realizable in less than 90 days. and are recognized in lhe accounting records at values
which relleel market rates.
78
Ouke Energy International,
CNPJ 02,998,301/0001·81
Geração PilNwilpanema
Listed Company
b) Debentures (see nole 14).
2010
2011
Debentures
Carrying
amount
811,250
Market
value
940.651
Carrying
amount
---::8·3-7-.1-8-6
Market
value
943,432
The Company did nol carry oul derivalive Iransaclions in lhe years presenled and did nol have
derivative Iransaclions oulslanding aI lhe dale 01 lhes e finandal slalemenls. The Company is nol
exposed to foreign exchange rate variations, since il does nol have significanl balances in foreign
currency aI such dates.
27. INSURANCE
The Company has ínsurance contracls compatíble wilh lhe nature and degree 01 risk, aI amounts
considered sullicienl lo cover possible significan! losses on ils asseIs andlor from ils civil liabilities.
The main coverage, according lo insurance policies, is:
Coverage
2011
Description
- - - - - - c...... Property damages and loss of prolils
825,500
Civilliabilily (concessionaire)
8,255
2010
- -..... ----c_="'~
867,135
8,331
28, SUBSEQUENT EVENTS
28.1,
Interest on capital
The in!eres! on capital approved aI lhe AGE held on December 27, 2011 was paid lo lhe
slockholders on January 30, 2012, wilhout monetary adjustment referring lo lhe period belween the
AGE and lhe eflective payment, and was included in the mlnimum mandatory dividends for lhe year
ended December 31,2011, lo be distribuled by lhe Company.
28.2.
Third issue of debentures
On January 10, 2012, lhe Company raised lunds in lhe markel lolaling R$ 150,000, Ihrough lhe 3rd
public issue 01 sim pie subordinated debentures, not convertible inlo shares, ali nominative and
regislered, in lhe local market. The debenlures were dislribuled with reslricled ellorts. according to
CVM Inslruclion 476. 01 January 16, 2009, exclusively destined lo qualilied investors, as defined in
Ihal Inslruclion.
The ofler was issued based on lhe lollowing: (i) resolulion 01 lhe AGE held on December 27,2011,
(ii) resolulion 01 the Stalulory Audil Committee's meeling held on November 30,2011, which gave a
lavorable opinion on lhe raising 01 lunds through lhe 3rd issue 01 debentures; (iii) resolution 01 the
Board 01 Directors' meeting held on November 22, 2011, which approved lhe proposal presented by
Banco BTG Pactuai S,A. aI lhe 189th Executive Board's meeling 01 November 17, 2011.
Covenanls eslablished in lhe deed 01 lhe 3rd issue 01 debentures are similar lo those included in
lhe deeds of lhe 1st and 2nd issues (se e note 14).
The debentures were detailed and regulated Ihrough a separale issue deed and have the lollowing
characteristics and main conditions:
79
aDuke
r'Energy~
CNPJ 02.998.30110001-81
Lísted
a. Issue value: RS 150.000
b. Series: single.
c. Number and nominal value: 15,000 sim pie debenlures, nol convertible in shares, ai lhe unil
nominal value 01 RS 10.
d. Use 01 resources: la relinance lhe principal amount and interest on the second and third
repayments 01 the series 1 01 lhe lirst issue 01 debentures, under lhe lerms 01 the "Privale Oeed
Instrument 01 lhe 1st Issue 01 Oebentures 01 Ouke Energy Internalional. Geração
Paranapanema S.A.. unsecured and non-convertible into shares signed on September
15, 2008 belween lhe Company and Planner T ruSlee OTVM LIda.
e. Reasons for lhe issue and consequences: lhe Company raised lunds lhrough the issue 01 debt
ai lower cosls and wilh betler maturily lerms Ihan those currently in place, wilh the purpose 01
extending ils indebtedness and beneliting trom markel condillons. With these lunds, lhe
payments menlioned in item "d" above can be se!tled.
f. Paymenl 01 lhe nominal amoun!: Wilhoul prejudice of the paymenls arising lrom the early
redemplion and/or aecelerated maturity 01 lhe debentures, under the terms established in lhe
deed, lhe nommal value 01 each debenture shali be paid in 2 installments, due as follows: (i) lhe
first instaliment. corresponding to 50% 01 the nominal value 01 each debenture, on January
10, 2016; and (ii) the second instaliment, corresponding to the other 50%, on the maturity date.
g. Remuneration: Each debenture shall be remunerated as loliows: (i) the nominal value 01 each
debenture will not be monetarily restated; and (ii) payment 01 interest corresponding to 100% 01
accumulated average daily Interbank Oeposit (DI) rates. "over exlra group", expressed as an
annual pereentage based on 252 working days, calculated and disclosed daily by CETIP in the
daily report posted on its Inlernet page (ntlp:!/www.cellp.cor'1.o-) ("DI Rate"). exponentialiy
increased by a spread 01 1.15% per year, on the basis 01 252 working days ('Spread" ando
together with lhe DI Rate, "Remuneration") calculated on exponenlial and cumulative bases pro
rata tempo ris per working days elapsed sinee the issue date or the date when the immediately
previous remuneration was paid, as applieable, up the effective payment date. Wilhout prejudice
01 the payments arising Irom the early redemption and/or accelerated malurity of lhe debenlures,
under lhe lerms established in the deed. lhe remuneration will be paid every six monlhs as Irom
lhe issue date up to lhe maturity date:
h. Type and guaranlees: the debentures are unseeured. with no additional guarantee.
L Maturity date 01 the debentures: the debentures will mature 5 years lrom the issue date. on
January 10, 2017, except in the case 01 early redemption and/or aeeelerated maturity of the
obligations arising lrom the debentures, as provided for in the deed.
j. Placement: the debentures are placed in a publie distribution ofler with restrieted eflorts (Le. only
to qualified inslitution - buyers). aecording to CVM Instruction 476/09.
k. Trustee for the debenture holders: Oliveira Trust Distribuidora de Títulos e Valores Mobiliários
SA
I. Risk classification: Moody's - National Rating: Aal.br and Global Rating: Baa3 I Standard &
Poor's - National Rating: brAAA and Global Rating: BBB.
m. Secondary markel: SNO - National Oebenlures Module, administered and operated by
CETIP SA - Organized Over-the-Counter Market of Assets and Derivatives
80
Duke Energy Inlernational, Geração Paranapanema S.A. CNPJ 02,998,301/0001·81
GeraçdO Paranapanemd
28.3.
Listed
Aeduction of capital
On November 22, 2011. lhe Company published a Signilicant Event NOlice to inform lhe markel
lhal lhe Board approved lhe requesl lar lhe prior approval 01 ANEEL, regulatory agency 01 lhe
Company, as established by ANEEL Regulatory Resolution 149. 01 February 28. 2005. in relalion lo
lhe proposal to decrease the Company's capital, currently deemed as excessive lar ils
requirements, Irom R$ 1,639,138 to R$ 1,339,138, an ellective decrease 01 RS 300,000, wilhoul
cancellation 01 any common or prelerred shares of the Company's capital. The percentage 01 lhe
slockholders' ownership interes! also remains lhe same,
On January 13, 2012, through Instruclion 107, ANEEL authorized the Company's capilal decrease.
The RCA held 00 November 22, 2011, approved lhe Executive Board's proposal la decrease the
Company's capilal. which now will be submitted lor approval aI a General Debenlure Holders'
Meetiog (AGD) slill lO be called.
AIler lhe approval 01 lhe debenture holders, the capital decrease will be subject lo analysis,
discussion and subsequenl decision at an AGE lo be called in due time.
aDuke
f'ií1Energy.
Geração
---
P<Jr<Jni)p~nemiJ
----
CNPJ 02.998,301/0001-81
_ _ _ _ ...Listed Comp.~ny~_
REPORT OF THE STATUTORY AUOIT COMMITTEE
The Slalutory Audit Committee 01 Duke Energy Internalional, Geração Paranapanema S.A.,
("Company"), a listed company headquartered aI Avenida das Nações Unidas, no, 12,901. 300.
andar, Torre Norte, Bairro Brooklin, in lhe cily 01 São Paulo, enrolied in lhe National Register 01
Legal Entilies (CNPJ) under No. 02,998,301/0001-81, in the discharge 01 ils legal and corporale
stalutory duties, at a meeting held on March 21, 2012, reviewed lhe Company's Financiai
Statements (and Explanatory Notes), Annual Management Report, Proposal for Payment 01
Dividends and Independen! Auditor's Report, referring lo lhe fiscal year ended December 31, 2011.
Based on lhe reviews and analyses carried oul, as well as on the clarifications presented by lhe
Company's management, the members 01 lhe Statutory Audlt Committee unanimously approve,
without any qualilications, the Company's Financiai Stalements (and Explanatory Notes), Annual
Management RepOr! and Proposal lar Payment 01 Dividends, determining that the present report be
lorwarded to lhe Annual Stockholders' Meeting, for lhe pertinent legal purposes,
São Paulo, March 21,2012
Jarbas Tadeu Barsanti Ribeiro
Chairman 01 the Slatutory Audil Committee
Marcelo Curti
Member
François Moreau
Member
Ary Waddington
Alternale
Marcelio Joaquim Pacheco
Alternale
82 Duke Energy tnternational, Geração Paranapanema S.A. CNPJ 02,99B,301/0001-81 Ger<1çâo Paranapanema
Listed
BOARD OF DIRECTORS' STATEMENT
The members 01 lhe Board 01 Direclors 01 Duke Energy Inlernational, Geração Paranapanema S.A.
("Company"). a listed company headquartered at Avenida das Nações Unidas. no. 12,901, 300.
andar. Torre Norte, Bairro Brooklin, in lhe cily of São Paulo, enrolled in lhe National Regisler of
Legal Enlilies (CNPJ) under No. 02,998,30110001-81. declare Ihal they have:
li) reviewed and held discussions aboul lhe Company's Management Report and Financiai
Statements lor lhe fiscal year ended December 31. 2011: and
(i;) unanimously approved Ihese documenls.
In view of the above. lhe Board 01 Director's determines Ihat these documents be submitted for
approval at the Annual Stockholders' Meeling to be held in Apri12012.
São Paulo. March 20, 2012
Jairo de Campos
Chairman
Maurício Lotulo Maudonnet
Director
Aulair Carrer
Director
Andréa Elízabeth Bertone
Director
Elizabeth Christina DeLa Rosa
Direclor
83
Duke Energy International, Geração Paranapanema S.A. CNPJ 02,998,30110001-81 Geração Pdf.imapanema
Lis1ed
EXECUTIVE BOARD'S STATEMENT
In compHance with lhe provisions 01 Ilems V and VI 01 article 25 01 CVM Instruetion No. 480, of
December 7, 2009, lhe members of lhe Exeeutive Board of Duke Energy Inlernalional, Geração
Paranapanema S/A. ("Company"). a listed company headquartered at Avenida das Nações Unidas,
no. 12,901, 300. andar, Torre Norte, Bairro Brooklin, in the eity of São Paulo, enrolled with lhe
National Register of Legal Entities (CNPJ) under No. 02,998,301/0001-81, declare thal they have:
(i) reviewed. held discussions about and agreed with the Company's Financiai Statemenls lor the
liscal year ended Deeember 31, 2011; and
(ii) ) reviewed, held discussions about and agreed with lhe opinion presented in lhe report 01
PricewalerhouseCoopers, the Company's independent auditors, wilh respeet to lhe Financiai
Statements for the fiscal year ended December 31.2011.
São Paulo, Mareh 15. 2012
Chiei Executive Oflicer
Angela Aparecida Seixas
Chiei Financiai and Internai Contrais Olfieer and Investor Relalions Offieer
Carlos Alberto Dias Costa
Chief Operating OUieer
César Teodoro
Executive Director of Environment, Health and Safety
Jairo de Campos
Executive Director 01 Human Resources, Administration, Purchasing and IT
84
(A free translation of lhe original in Portuguese)
Duke Energy International, Geração Paran.penema S.A. CNPJ 02,998,301/0001·81 Geraç.io ParanapiJflema
_---=L""s:.:te"'ó Compan.l' __~...
MANAGEMENT MEMBERS Managemenl Members Executive Board Board of Directors
Jairo de Campos
Chairman
Chief Executlve Officer
Andréa Elizabeth Bertone
Angela Aparecida Seixas
ChieI Financiai and Internai Controls
Director
Elizabeth Christina DeLaRosa
Oflicer and Investor Relations Oflicer
Director
Carlos Alberto Dias Costa
Mauricio Lofuto Maudonnet
Chief Operaling Oflicer
Director
César Teodoro
Executive Director of Environment,
Autair Carrer
Health and Safely
Director
Jairo de Campos
Ana Amélia de Conli Gomes
Alternale Director
Executive Direclor of Human Resources,
Administration, Purchasing and IT
Marco Antonio Leão
Alternale Director
Statutory Audit Committee
Jarbas Tadeu Barsanti Ribeiro Chairman of lhe Statulory Audil Committee Marcelo Curti Member François Moreau Member Ary Waddinglon Alternale Edmundo Falcão Koblitz Alternate Marcello Joaquim Pacheco Alternate Jacqueline Ribeiro
Claudio Herrans
General Manager of Corporale
Controlling
Accountanl - CRC 1SP200641/0-5
85