Message from the CEO
For Light, 2010 was a year in which we conquered significant challenges. The
changes introduced late 2009 in our Company's controlling interests resulted in
modifications in our executive board. The new management team began its tenure in
March 2, 2010 amidst recurrent power supply shortages, specially in the South and
Downtown regions of the city of Rio de Janeiro. The need to swiftly respond to this
challenge and the fact that the executive board began working in such an
environment caused the new team to operate in an integrated fashion since their
very first minute. This integration effort, far from being restricted to the executive
board, also reached other leadership groups within the Company.
Given this setting, an emergency plan was soon laid out in an attempt to reduce the
level of dissatisfaction of those consumers affected by power shortages and the
consequent negative publicity in the media, and thus pave the way for a project
designed to address issues in the long run. The issue was dealt with transparently;
as a result, nowhere in the media could anyone read anything like “Light could not
be contacted or they did not respond”. In doing so we managed to avoid the
spreading of negative articles, preventing many from being written at all and
mitigating the impact of any news released that had a potential negative effect on
the Company's reputation.
The first measures adopted ranged from rather simple actions, such as replacing the
material used in underground chamber buoys, which had been systematically stolen
for the copper of such items, to changes of a more strategic nature, including doing
part of underground grid operation and maintenance services with in-house
employees. This in-house approach did not result from an ideological stance but
rather upon the acknowledgment that we could accomplish more, and with better,
cost-effective results if those specific services were performed by our own teams.
The truth of this approach was confirmed when the services provided to our
customers were restored to their prior level of quality.
Those vendors and suppliers involved in and with responsibility for these shortages
that nevertheless showed a capability to provide quality services were called to
satisfy new requirements in terms of qualification and labor conditions of the relevant
work forces. As a result, Light entered into new long-term service agreements that
commanded a significant increase in the unit cost of the relevant services. We
adopted the motto “Nossa Gente é Toda Gente” (“Our People is All People”) to
signal the message that Light will respect and acknowledge contractor teams and
that we expect from them the same level of commitment to service quality
demanded from our own employees. This bet on the success of long-term alliances
with service providers will be monitored on an ongoing basis so that we can actually
confirm the expected improvement in reliability and productivity levels.
1
Equipment recovery plans were designed over the months, focusing first on our
underground grids. These grids were then the source of most difficulties, the severity
of which was dramatically made known to the public in the incident involving an
underground explosion where a couple of foreign tourists was badly burned.
As a result, a thorough, engineering-level servicing was performed, which included
replacement of obsolete or defective pieces of equipment, partitioning of the grid into
several smaller sections, monitoring of chambers and several preventive measures
to stay ahead of any potential failures. In the meantime, a media campaign was
launched to convey the message that Light was aware of the quality issues affecting
its services, based on the understanding that customers will tend to tolerate failures
of utility companies if they perceive that a genuine effort is being made to improve
the quality of services provided. Conversely, customers will be disgruntled if they
think the utility company is averting or ignoring critique and unwilling to perform any
self-evaluation.
Owing to the fact that Light's underground grid system is the largest in Latin
America, we could not accomplish everything that was required in 2010. In other
words, the recovery work will continue throughout 2011. Our overhead network was
also a point of attention. Approximately 530 km of our overhead network, which were
particularly prone to being damaged due to entanglement with tree branches during
storms or gusts, were replaced for a more modern, safer and compact spacer cable
network.
In order to ensure development of the areas in which it operates, Light made
investments in construction, expansion, and retrofitting of substations and
transmission lines. Six additional substations (three in the Baixada Fluminense, two
in the South Zone of the capital, and one in Itaguaí) are being built. In addition to
this, we are expanding the operations of other six substations. The Company's
investment plan also includes implementation and modernization of three
transmission lines, which together comprise an electric grid of 21 km. These
investments are being made in anticipation of the 2014 Soccer World Cup and the
2016 Olympic Games. These global-scale sports events will put Light's concession
area in the spotlight for billions of spectators around the world.
Contrary to what had happened until very recently, the behavior of consumers within
Light's concession area was consistent with the growth of the country's economy.
The market's average expansion rate was up 4.2% compared to the prior year, with
positive developments being seen in all business segments. In addition to the
increase in purchasing power experienced by lower income individuals, for the first
time in many decades there is a positive and coordinated effort to formalize certain
economical activities and businesses that had until then happened at the margin of
the formal economy. This is the outcome of implementation of new public policies
designed to advance social coexistence and utilization of public facilities.
2
For a large part, this success results from the state government reclaiming the socalled “risk areas”, formerly territories controlled by criminal organizations. This
resumed the urbanization process that is so critical for Light. Indeed, issues such as
fraud and theft of power can reduce the quality of the supply and increase accident
levels. Additionally, these problems also damage consumers, in that they could be
charged lower rates if everyone would pay, the government, because of decreased
taxation, and Light itself. However, the worst effect of such noxious practices is the
advancement of a wasteful culture. Individuals involved in theft usually exhibit in
wasteful power consumption patterns.
Power thefts within Light's concession area add up to over 5,000 GWh per year,
which is equivalent to the supply requirement of a state the size of Espírito Santo.
Only 40% of all power stolen disappear in risk areas. The other 60% disappear in a
scattered fashion over our concession area. However, risk areas offer the best costeffective opportunities when community normalization procedures are adopted. This
is an excellent opportunity to add value to our Company and contribute to the
universalization of supply and citizenship. Naturally, this effort requires improvement
in the level of security provided.
Thus, the successful deployment of the so-called Unidades de Polícia Pacificadora
(Pacifier Police Units), or UPPs, has opened a whole new frontier, nonexistent until
then, for a regular electric power consumer market. Working in the trail of the
government's law enforcement teams, Light has entered pacified communities with
the triple goal of supporting government authority through new investments,
improving the quality of power supply services, and fighting fraud and power theft.
Investments in UPPs occur in the form of grid reconstruction actions (i.e.
replacement of posts, cables, and transformers, and installation of electronic
metering systems), renovation of internal premise facilities, and replacement of
lamps and refrigerators. The ultimate goal is to make sure bills will not hurt
consumers' pockets. Throughout 2010 the peoples of seven communities, including
Chapéu Mangueira, Cidade de Deus, and Cantagalo, were reached.
Light resumed deployment of more technologically advanced grids, consistent with
what had been done in prior years. Electronic meters installed atop of light posts
support telemetry and tele-command, which allows measurements, power cut-offs
and reconnection to be made at a distance and without exposing Light's Personnel
to risks. However, this effort, which takes place also in areas other than the UPPs,
happens at a slower pace only due to a limited number of suppliers of duly certified
electronic metering equipment. The situation is aggravated by constraints faced by
the few manufacturers of certified meters, which prevents timely delivery and
installation of a sufficient number of equipment to meet Light's needs. Despite these
shortcomings, the investments made in technological improvements already reflect
in our loss indicators, which have dropped for the third consecutive quarter.
3
In an attempt to increase availability of electronic metering, Light channeled
substantial resources into R&D to design a smart metering system with good
prospects of obtaining certification by Inmetro. Six patent applications were filed with
Inpi in connection with this R&D project. A total of three companies have started
manufacturing prototypes for testing purposes. All this technological advance,
however, is but the tip of the iceberg. The rest consists in the alliance formed by
Light and Cemig to develop the so-called smart grids, which among other benefits
will provide customers with real-time information on their power consumption, thus
allowing predictable changes in consumption patterns. This is a R&D project worth
R$65 million, the scope of which integrates research conducted by the Brazilian
Electricity Regulatory Agency (Aneel), the Ministry of Mines and Energy (MME), and
the U.S. Government through its Trade and Development Agency.
Over 2010, Light improved its relationship with customers. The Company began to
act proactively, providing special support in incidents such as prolonged shortages in
areas with greater potential of large population affected (i.e. downtown Rio de
Janeiro and shopping malls). In such instances, Light staff will now reach
consumers, even at their doorsteps, to clarify issues and even take reimbursement
claims for losses and damages caused by electricity supply issues. In doing so, it
was possible to avoid legal action that could be taken by consumers affected by
supply shortages.
In addition to the foregoing, Light has created an emergency customer support
service, the “Light Já” (Light Now), which allows consumers to report power
shortages using SMS capabilities. We enhanced our call center capabilities to the
point of exceeding ANEEL requirements in terms of ease of access. These
improvements were captured in a survey conducted by the Exame magazine in
which Light ranked first in customer service for power utility companies.
Light continued to leverage its installed hydroelectric power plant capacity of 855
MW in 2010. Our well maintained and operated equipment presented satisfactory
availability levels. The pace of generation expansion efforts was increased when
construction of the 25-MW Paracambí Hydroelectric Power Plant reached full speed.
This facility is slated to start up by the end of 2011. Also running within the schedule
are the construction works for the HPP of Lajes. In a recent development, a machine
was installed in a building within the Lajes Complex, which hosts the largest
operating plants of the Company. A sophisticated environment management layout
was designed to avoid deforestation in connection with construction of a new
pumping station within the complex. A hoist was used to move piping items, with
fittings being reverted in order to allow welding in the inside and thus avoid
elimination of waste to the forest. The Itaocara Plant project has advanced further,
and is only pending the last environmental permits required for commencement of
the construction works.
4
The amount of electricity transactions in 2010 (120 MWmed of conventional power,
and 19 MWmed of stimulus power) was 86% higher than 2009 figures. By the end of
2010, Light had a total of 107 free consumers in its consumer portfolio, including
large manufacturers, shopping malls, hotels and general business premises, in
several locations throughout Brazilian jurisdiction but more specifically in São Paulo
and Rio de Janeiro. In order enhance its operations in the São Paulo market, Light
incorporated a subsidiary for trading energy and providing services in São Paulo
(LightCom). The Company also engaged in projects of energy efficiency for
Petrobrás (the new Cenpes), Fundação Oswaldo Cruz, Rede Globo (Projac), among
others.
Light has contributed actively for the enhancement of Brazil's electric power industry
regulations. As a result of technically qualified interaction, we managed to revert
some penalties that had been imposed on the Company. These included both
unmerited and unreasonable fines. Additionally, Light made significant contributions
of a technical nature in connection with ANEEL's Public Consultation No. 40. This
consultation was launched for the purpose of laying the foundations for the third rate
review cycle, which, as far as Light is concerned, begins in November 2013, and that
has been subject of heated discussions in the electric power industry.
Currently, Light has in its asset portfolio two wind farms in Ceará with a total output
of 30 MW, which are currently in environmental licensing phase. These farms are
expected to become viable once the related power is sold through auctions or freemarket agreements. In addition to these wind farms, Light is actively considering
other investment opportunities in connection with hydroelectric, wind, natural gas,
solid was and photovoltaic generation.
A task force has been set up to promptly take action upon accidents involving
technicians or the public in general. The outcome of this effort has transpired in
minimized suffering of injured individuals and enhancement of the Company's
reputation with the public. However, we do not have only good news to report.
Regrettably we recorded a total of 4 accidents that resulted in death (3 contractors
and 1 lady that touched a live wire). Staff development, in addition to continued
leadership and technical qualification programs, provided through the Academia
Light (Light Academy), has faced the additional challenge of training new hires in
connection with our strategy of keeping grid servicing activities in-house. All
managers were evaluated against competency indicators, an effort that provided
input to our successor mapping program. For the first time ever, this competency
evaluation system was extended to all of the Company's work force.
Our variable compensation policy has once again fulfilled its goal of bringing
individual efforts in line with our corporate goals, a practice that has now been fully
incorporated in our Company's daily activities.
5
As for our relationship with our investors, represented at year end by 32.85% of our
stock being held by minority shareholders (in addition to BNDESPar, which holds
15.02% of our stock), Light organized or took part in several conferences and road
shows, in Brazil and abroad. Because of these efforts and obviously in expectation
of our future operating and financial results, in 2010 our stock experienced a 15%
increase in their value. This percentage was considerably higher than the variation
of the Ibovespa index (1%) and the electricity utilities index, the IEE (12%).
Investments in generation, distribution, and corporate activities amounted to
R$700.6 million. This represents an all-time record. The amount of dividends paid
throughout the year also set an all-time record at the Company. A total of R$795
million was distributed as dividends.
In the accounting front, the challenge remained in converting the Company's
financial statements to international standards, which requires compliance with
rather complex accounting standards that are hard to construe in light of the
circumstances of Brazil and our electric industry. As a result of adopting said
accounting standards, our Company managed to achieve a EBITDA-measured cash
flow of R$1,585 million, plus a net income of R$575 million. These figures provide a
comfortable basis to allow Light will continue to honor its commitments with
consumers, suppliers, creditors, governments, employees and shareholders.
The good results achieved by the Company would never be possible without the
stable and business-oriented environment afforded by federal, state, and municipal
authorities, whose coordinated efforts have ushered in a noticeable progress to Rio
de Janeiro.
Managing a private utility operator in Brazil, in which there still remains a lot of
prejudice against making a profit from a public utility, is no easy task. Success,
however, is a material achievement because Light brings together all the conditions
necessary and sufficient to achieve its trifocals goal of: (a) providing service quality
at a reasonable cost to its consumers; (b) being profitable to its shareholders; and
(c) afford our employees a satisfactory work environment so that they can perform
their duties.
We have overcome our most immediate hurdles. There is much more to be done,
however, specially in terms of increasing our productivity. In order to conquer yet this
objective, we rely on the competence, dedication, and hard work of our more than
11,000 professionals that make the People of Light (3,800 employees and 7,300
outsourced contractors).
6
Corporate Profile
Grupo Light is headquartered in Rio de Janeiro and has 4,070,263 billed clients in its
concession area that consists in 31 municipalities in the State of Rio de Janeiro. The
Group consists of the following companies: Light S.A., the holding company; Light
Serviços de Eletricidade S.A. (Light SESA), the distribution arm; Light Energia S.A.
(Light Energia), the generation and transmission arm; and Light Esco – Prestação
de Serviços S.A. (Light Esco) and Lightcom, the trading and services arm.
Holding
Distribution
Light
Serviços de
Eletricidade
S.A.
Generation
Light Energia
S.A.
100%
100%
Trading/Services
Itaocara
Energia Ltda
100%
Lightger S.A.
Lighthidro
Ltda
(SHPP
Paracambi)
(Non
Operational)
51%
100%
Light Esco
Prestação de
Serviços
S.A.
100%
Technology
Lightcom
Comercializadora de
Energia S.A.
100%
Axxiom
Axxiom S.A.
S.A.
51%
EBL
33%
Operating Context
Business Environment
As the Government reclaimed its rights over Rio de Janeiro communities through
Pacifying Police Units (UPPs), and as the country undergoes significant economic
growth and Rio lives a new urbanization cycle, particularly due to the important
7
sports events to be hosted in Rio (the 2014 World Cup and the 2016 Olympic
Games), Light is presented with a scenario of opportunities.
The region of its concession area is also likely to receive large investments in
infrastructure and record significant growth in the oil, tourism, steelwork and logistics
industries, which will also be reflected in the expansion of the labor market and the
rise of new consumption hubs. In addition, the increase in purchasing power has a
direct impact on the increase in electric power consumption, mainly due to the higher
volume of home appliances acquired by the mass of people who migrated to the
middle class.
In order to meet this growing demand we are focusing our investments on strategic
fronts, including the strengthening and improvement of our distribution network,
where the initiative carried out in 2010 with underground chambers stands out,
including the direct contracting of workforce (insourcing) and strong team
qualification. The investments seek to guarantee the quality of the service and are
focused on the execution of preventive actions to reduce the need for corrective
actions.
In power generation, we will expand our current installed capacity, which is currently
855 MW, by 117 MW with the start-up of three new plants in coming years: PCH
Lajes, UHE Itaocara and PCH Paracambi, the latter expected to start-up in late
2011. We are thus working to ensure that the state of Rio de Janeiro will have the
necessary generation capacity to meet local demand.
8
Operational Performance
Energy Distribution
Light SESA is the fourth-largest distribution company in Brazil in terms of number of
clients and the fifth-largest in amount of energy distributed, according to data
furnished by the Energy Research Company (EPE), arm of Ministry of Mines and
Energy.
Tariff Adjustment
On November, 2010, Brazil’s electric power agency (ANEEL) ratified an average
adjustment of 6.99% to Light’s tariffs, effective for the 12-month period beginning
November 7, 2010, and applicable to all consumption classes (residential, industrial,
commercial, rural and others). The adjustment index, consists of two components:
the structural component, which accounts for 8.31% percent of the tariff; and the
financial component of -1.33% valid for this period.
Light 2010 Tariff Adjustment
Structural TRI
8.31%
Financial Additions
-1.33%
Total
6.99%
The annual tariff adjustment process consists of the pass-through to end consumers,
of non-manageable concession costs (energy purchased for supply, sector charges
and transmission charges), which are calculated in detail annually, and the
restatement of the manageable costs by the variation in the IGPM inflation index,
less Factor X, which transfers to consumers the annual efficiency gains of the
concessionaire. The manageable costs of the concession are calculated in detail
only in the years of Tariff Revision.
The 8.34% variation in non-manageable costs (Part A) is mainly due to the increase
in Sector Charges, in turn due both to the recently approved Law 12,111, which
increased the costs of the Fuel Consumption Account and the Research and
Development Account, and the increase in the System Service Charges. Part B,
which corresponds to manageable costs, increased by 7.95%, chiefly due to the
8.81% increase in the IGPM during the period.
Consumers of Light SESA will notice an average increase of 2.20% in their
electricity bills starting November 7, as a result of the inclusion of the above-
9
mentioned negative financial adjustments of 1.33% and the end of the previous
period’s positive financial adjustments of 4.77%.
Market Growth
Billed captive and free clients in the concession area consumed a total of 22,384
GWh in 2010. ; The number of billed captive clients reached 4,070,591 (including
own consumption), while billed free clients totaled 45. The industrial clients CSN,
Valesul and CSA were excluded. When the energy consumed by these clients is
taken into account, the volume increases to 23,170 GWh. In addition to the free
clients, there are nine generators connected to the Company’s distribution network.
Total energy consumption in Light SESA’s concession area (captive customers +
transport of free customers) came to 22,384 GWh in 2010, a 4.2% increase over
2009, largely driven by the strong performance of the free market and the upturn in
residential consumption.
Warmer temperatures during the summer, together with higher income of the
population, were responsible for the increase in billed energy consumption among
Light’s captive clients, especially in the residential segment, that accounted for
36.8% of the total market in 2010.
The number of billed residential clients grew by 1.9%, totaling 3.76 million in
December 2010, with an average monthly consumption of 184.4 kWh in 2010,
compared to 179.5 kWh in 2009.
ELECTRICITY CONSUMPTION (GWh)
(CAPTIVE + FREE)
+4,2%
22.384
21.492
+4,6%
2,408
7.880
+4,2%
8.243
6.413
+5,0%
2009
2010
Residential
2,925
3,757
3,945
1,900
2,228
1,857
1,717
2009
2010
Industrial
339
6,074
2009
6.680
523
6,157
2010
Commercial
Captive
Free
+2,2%
3,442
3,516
169
174
3,273
3,342
2009
2010
Others
19,084
19,459
2009
2010
Total10
Breakdown of consumption
Residential
Commercial
Industrial
Other
Classes
Share of total
market (%)
36.8
29.8
17.6
15.7
Number of billed
clients (captive
market)
3,759,911
275,268
11,403
23,681
Number of billed
clients
(free
market)
-
22
22
1
Light Losses Evolution
12 months
15.40%
15.56%
15.39%
15.18%
15.00%
7,493
21.29%
7,544
21.48%
7,549
21.70%
7,504
Light SESA’s total energy losses amounted to 7,493
GWh, or 21.29% of the grid load, in the 12 months
ended December 2010, 0.19 p.p. down on the closeof-September ratio.
21.98%
7,269
Energy Losses
21.82%
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Losses (GWh)
Non-technical losses %Grid Load
Non tecnical losses / Low Voltage market
12 months
42.4%
41.8%
5,278
42.1%
5,330
42.7%
5,352
42.5%
5,313
Conventional energy recovery processes, such as
the negotiation of amounts owed by customers
where fraud has been detected, resulted in the
recovery of 178.2 GWh in 2010, 17.3% higher than
in the previous year. Fraud regularization programs
yielded a total of 89,366 normalized clients, 0.5%
up on 2009.
Losses / Grid Load %
5,149
In 2010, non-technical losses totaled 5,278 GWh,
representing 41.8% of billed energy in the lowvoltage market, or 15.00% of the grid load, 0.7 p.p.
down in relation to 2009.
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Non Tecnincal Losses (GW)
Despite the problems occurred in the beginning of
2010, due to outages affecting the distribution
network, jeopardizing the loss prevention program,
there was a great recovery during the year after three
consecutive decreases quarter by quarter. The second
quarter mark the beginning of efforts to catch up
following the previous delays. Convetional energy
recovery initiatives were stepped up and moreover the
new technologies presented important progress with
Non tecnical Losses % Low Voltage Mkt
Recovered Energy (GW)
17.3%
178.2
151.9
2009
2010
11
the extension of network protection to more then 150,000 clients and the installation
of around 110,000 eletronic meters certified by Inmetro, with billing through remote
electronic metering.
The delay in the approval of electronic meters, which had been an obstacle in
implementing the program of new technologies, was another problem with good
solutions in 2010. These meters are manufactured by the Swiss company Landis +
Gyr and the American company Itron, the only companies approved by Inmetro to
produce the meters until the end of last year, when another supplier - the German
company Elster - got the approval by Inmetro for its centralized remote telemetering
system giving Light one more supplier option.
Collection
The 2010 collection rate stood at 97.9%, 0.6 p.p.
up on 2009. It is worth noting that collection in the
retail segment increased from 93.1%, in 2009, to
94.1%. Major and government clients continued
to record collection rates of more than 100%, due
to the collection of current and previous past due
bills.
In 2010, Provisions for Past Due Accounts (PPD)
totaled R$254.8 million, representing 3.2% of
gross billed energy. At the end of 2010, Light
implemented a special program called “War
Against PDD”, which consists of segmented
collection initiatives, aiming to reverse PDD and
recover the monthly flow of electricity bills by
offering more flexible repayment conditions for
clients in default.
Collection Rate per Segment
Year
107.6%107.1%
100.4%100.8%
93.1% 94.1%
Retail
Large Customers
2009
Public Sector
2010
PDD/Gross Revenue (Billed Sales)
3.3%
3.2%
As a result, PDD fell from R$61.7 million in 4Q09
to R$49.3 million in 4Q10, or 2.5% of gross billed
2008
2009
energy. The factors contributing to the result were: (i) the increased number of
negotiations with retail segment clients; (ii) negotiations with 18 hospitals that are
part of the major client base; and (iii) default recovery of nearly 694,000 clients in
4Q10 compared to 426,000 clients in 4Q09, which offset the Company’s operational
difficulties at the beginning of the year.
3.2%
2010
Operating Quality
Ensuring high levels of quality in the supply of electricity is an essential part of
establishing good relations between the distribution company and its clients. 2010
began with a series of incidents that jeopardized supply, due to substantially-higherthan-average summer temperatures that caused a bigger-than-expected surge in
12
energy demand, leading Light to further intensify its distribution improvement
investment plan. In 2010, the Company invested R$219.9 million in efforts to improve
the quality of its electricity supply business and increase the capacity of its distribution
network, 41.2% more than the R$155.7 million invested in 2009.
At the end of 2010, the equivalent length of interruption indicator (DEC), expressed in
hours, registered 11.33 hours, while the equivalent frequency of interruption indicator
(FEC), expressed in occurrences, stood at 5.76 times.
The performance of the electricity system was hindered by adverse weather conditions
in 2010, including 1,580 mm of rainfall, 26% more than in 2009 and 32% more than in
2008, and high summer temperatures, which resulted in strong load growth. In addition,
the renewal of agreements with outsourced maintenance and emergency service
providers, which took place in 3Q10, caused delays in these procedures, negatively
impacting network performance.
In the second half of the year, Light implemented the Summer Action Plan, aiming to
prevent outages and other incidents due to the expected increase in demand during
the 2010/2011 summer. In the distribution network, 48 new circuits in 13.8-kV were
installed, 161 km of low-voltage cable were replaced by multiplex cable, and 368 km of
open network were replaced with spacer cable. In 2010, 14,000 transformer vaults and
12,000 manholes were inspected, more than twice as many as in 2009. In addition,
1,594 fiber glass buoys were installed to prevent flooding in the vaults, twice as many
as in 2009, and 2,703 underground reticulated system protectors were inspected, six
times as many as in the previous year.
DEC and FEC as of Dec, 2010
INDICATOR
DEC Global
2010
FEC Global
2010
Regulatory
Target
Global
Result
9.95
11.33
8.77
5.76
DEC and FEC
FEC
DEC
Unit
Number
interruptions
Hours
2008
2009
2010
7
11
6
10
5.76
11.33
of
Customer Service
Light's retail service is evaluated in three annual satisfaction surveys: the ANEEL Index
of Consumer Satisfaction (IASC), Light's Index of Satisfaction with Service Execution
13
(ISES), and the Abradee survey. Abradee's evaluation is carried out based on three
indicators: the Perceived Quality Satisfaction Index (ISQP), the Customer Approval
Index (IAC) and the Overall Satisfaction Index (ISG). For the Large Customers
segment, Light also carries out its own evaluation on an annual basis, entitled the
Large Customer Satisfaction Survey.
In 2010, the disturbances caused by extremely high temperatures in the summer and
the problems in the underground network early in the year resulted in power supply
interruptions and caused Light's customers to criticize and question the company. This
questioning affected the results of some of the satisfaction surveys carried out in the
year. However, despite these obstacles, an important survey showed that our
customers realized that the Company was committed to a transparent dialogue about
these challenges and to proposing medium and long-term emergency solutions. In
ANEEL's evaluation (IASC), Light reached 67.55% of satisfaction, the highest rate ever
recorded by the Company. In the previous year, the IASC showed a 64.2% rate.
In customer service, one of Light's major initiatives in 2010 was the introduction of a
new call center with the theme "Positive Energy – More Power to Rio," using nextgeneration technologies and processes. The call center has 700 operators and 300
workstations, and capacity to handle 6.7 million commercial and emergency calls per
year.
We also created Light Now, an automatic emergency service channel to report power
outage via SMS.
Generation
The 5,125 MWh of net energy¹ generated in 2010 represents an 5.6% decrease
compared to the 2009 total. The origin of all of this energy, considered “clean” since it
was generated exclusively from hydraulic sources, is basin created by the Paraíba do
Sul River and the Ribeirão das Lajes. According to ANEEL data, Light Energia is
Brazil’s sixth-largest private hydraulic energy generation company. Its generation
complex consists of five plants and two pumping stations located in the States of Rio
de Janeiro and São Paulo totaling 855 MW of installed capacity.
1
Gross generation less own consumption, water pumping and technical losses.
Energy sales totaled 5,651.8 GWh In 2010, 11.5% up on 2009. Energy sold on the
captive market came to 4,189.7 GWh, identical to the 2009 figure, while energy sold
on the free market (ACL) amounted to 529.5 GWh, up by 8.9%. Spot market sales
volume increased by 137% over the year before, driven by the upturn in first-half sales,
due to higher hydroelectric generation in the National Interconnected System, which
resulted in more secondary energy for settlement in the CCEE, and to the CCEE
booking procedures, which failed to deduct the energy consumed by pumps in 1H10,
LIGHT ENERGIA (GWh)
Regulated Contracting Environment Sales
Free Contracting Environment Sales
Spot Sales (CCEE)
Total
4Q10
4Q09
1,102.1
1,101.4
186.5
35.6
1,324.3
%
2010
2009
0.1%
4,189.7
4,189.7
%
161.0
15.9%
529.5
486.0
8.9%
117.4
-69.7%
932.7
393.6
137.0%
1,379.8
-4.0%
5,651.8
0.0%
5,069.3 11.5%
14
totaling around 394.3 GWh. Excluding this factor, 2010 spot market sales volume
would have risen by 35.3%.
Generation Projects
In a few years, three new hydropower plants will add about 117MW in Light’s installed
capacity: Paracambi Small Hydroelectric Plant, Lajes Small Hydroelectric Plant and
Itaocara Hydroelectric Plant
Paracambi Small Hydroelectric Plant. Construction began on this plant in Ribeirão das
Lajes, State of Rio de Janeiro, in late 2009. The plant will have 25 MW of installed
capacity, and is expected to start operations in December 2011. Efforts to relocate
persons from the reservoir area involved in the development of the Paracambi PCH
are in progress. Should be acquired 107 properties related to the areas of the
reservoir, construction site and APP. By the time, were completed the acquisitions of
95 properties, representing 89% of the total to be disappropriated.
Lajes Small Hydroelectric. The preliminary project for this plant, which will be located
in the Lajes Complex in the State of Rio de Janeiro, is undergoing the approval
process. The plant will have 18 MW of installed capacity and is expected to start
operations in the end of 2012.
Itaocara Hydroelectric Plant. The two plants (Itaocara I and II) will have 195 MW of
installed capacity and is located on the Paraíba River between the states of Rio de
Janeiro and Minas Gerais. It is currently in the engineering project approval and
environmental licensing phase. It is expected to start the commercial operations in
2014.
Trading and Services
In the year as a whole, Light Esco’s energy sales amounted to 3,190.5 GWh, 87.4%
higher than in 2009, reflecting the period’s new long- and short-term operations, and
the expansion of the sales contract portfolio to include Owens Illinois, BR Metals, MD
Papéis, Schincariol and TRW. Light Esco also increased the sale of energy from the
Light Group that will no longer be contracted as of 2013.
Furthermore, Light Esco continued to provide consulting services and represent free
customers before the CCEE (broker), with operations totaling 1,960.6 GWh in 2010.
A Light Esco possui atualmente 107 clientes de comercialização de energia, sendo 98
clientes da atividade de trading e 9 clientes na atividade de consultoria e
intermediação de contratos (broker), em comparação a 61 clientes em dezembro de
2009.
15
Currently, Light Esco has 107 energy commercialization clients, versus 61 in
December 2009, 98 of which use the Company’s trading services and nine use its
consulting and contract intermediation (brokerage) services.
Six of Light Esco’s ongoing service contracts were added in 2010, one of which in the
fourth quarter (the implementation of a cooling system for a large shopping mall in the
city of São Paulo).
Volume (GWh)
Trading
Broker
Total
2010
2009
1,229.9
645.8
1,960.6 1,057.0
3,190.5 1,702.8
Var.%
90.5%
85.5%
87.4%
Capex
The Company invested R$700.6 million in 2010. The main destination was to improve
the quality of the distribution network, in addition to combat losses, important issues to
ensure a quality service, efficiently and safely to all its customers. Another focus of the
investment was the expansion of the energy generation capacity of the Group
amounted to R $ 121.8 million in the year.
CAPEX (R$ MM)
The High Voltage System received investments of $ 123.6
million, the largest ever made in history of Light in this
segment. Among the highlights is the construction of two
new substations: Copacabana (120 MVA) and Marapicu
(60 MVA), the start of construction of four substations and
the expansion and improvement in five others. Also, R $
134.9 million was invested in shielded grid, measuring
system and electronic settlement of fraud.
24.3%
700.6
563.8
51.8
57.6
4.2
50.0
527.5
450.3
2009
Distribution
Administration
1.3
121.8
2010
Generation
16
Commercial
Comments on the Financial Performance and Capital Markets
Financial Performance
Revenue
Consolidated net operating revenue totaled R$6,508.6
million in 2010, 4.9% up on 2009, mainly impacted by
the distribution and commercialization segments,
which recorded respective growth of 3.2% and
100.7%, in turn due to increased consumption in the
concession area and the greater volume of energy
purchases and sales. The generation segment also
posted a positive performance, with an increase of
8.5% over the year before.
Net Revenue
2008
2009
Costs and Expenses
In 2010, operating costs and expenses totalized R$
5,276.4 millions, an increase of 2.1%, mainly driven by
costs and expenses incurred by the distribution and
commercialization businesses, which increased by 1.5%
and 80.9%, respectively, over 4Q09.
2010
Costs and Expenses
(R$ MN)
5,276
5,169
4,195
2008
EBITDA
6,509
6,207
5,387
2009
2010
EBITDA
(R$ MN)
27.9%
26.6%
24.3%
In 2010, EBITDA amounted to R$1,584.6 million, 14.7% up
on 2009, with an EBITDA margin of 26.6%, a 2.3 p.p.
improvement. The distribution segment accounted for 84.2%
of the total, followed by the generation and
1,585
1,504
1,381
2008
2009
EBITDA
2010
EBITDA MARGIN
17
commercialization segments, with 14.4% and 1.4%, respectively.
Net Income
Light posted net income of R$575.2 million in
2010, 2.3% down on the R$588.8 million
974
recorded in 2009, mainly due to the financial
result, which was a net expense of R$319.4
million in 2010, 276.1% higher than in 2009.
Financial expenses were mainly impacted by the
actuarial deficit and monetary restatement of the
Braslight liability, which amounted to R$158.9
million. Excluding the non-recurring R$49.3
2008
million related to Braslight’s actuarial deficit,
annual net income came to R$607.7 million, 3.2% higher than in 2009.
Net Income
(R$ MN)
589
575
2009
2010
Income Allocation Proposal
At its March 25, 2011 meeting, the Board of Directors approved the dividend proposal
in the amount of R$350,979,306.36, equal to R$1.72 per share, based on the results
of the 2010 fiscal year. The proposal will be submitted to the Ordinary Shareholders
Meeting to be scheduled.
Financial Condition
Net debt at the end of December was R$1,947.4 million, an increase of 18.9%
compared to December 2009. This increase was primarily due to lower cash
generation of the company. Despite the increase in net debt, the ratio net debt /
EBITDA of December 2010 was in line with 2009, 1.2 x.
The Company’s debt has an average term to maturity of 3.1 years. The average cost
of Real-denominated debt was 11.1% p.a., 0.2 p.p. down on the figure at the close of
September 2010, while the average cost of foreign-currency debt (US$ +5.4% p.a.)
remained flat. At the end of December, only 3.0% of total debt was denominated in
foreign currency and, considering the FX hedge horizon, 1.7% of this total was
exposed to foreign currency risk, 0.2 p.p. less than in September 2010. Light’s hedge
policy consists of protecting cash flow falling due within the next 24 months (principal
and interest) through the use of non-cash swap instruments with premier financial
institutions.
18
Net Debt
(R$ MN)
1,947
1,637
1,580
1.1
2008
1.2
1.2
2009
2010
Net Debt
Net Debt/EBITDA
Corporate Governance and the Capital Markets
On December 31, 2010, the capital stock of Light S.A. was comprised of 203,934,060
common shares with no par value.
The Company shares have been listed on Bovespa's Novo Mercado since July of
2005, adhering to the best corporate governance practices and the principles of
transparency and equity, in addition to granting special rights to minority shareholders.
Light S.A.’s shares are listed on the Ibovespa, Itag, IGC, IEE, IBrX and ISE indexes.
Light’s Board of Directors is composed of 11 members, 2 of whom are elected
independently. The following five committees support the Board of Directors: Finance,
Management, Audit, Human Resources, and Governance and Sustainability.
Changes in shareholding structure in 2010
On November 17 of 2009, in compliance with the requirements of Section 9.1 of the
shareholders' agreement (signed on 23 March 2006), RME - Rio Minas Energia
Participações SA (RME), promoted the incorporation of Lidil Comercial Ltda. (Lidil),
and on December 31, 2009, RME was divided into three parts. The portions were
incorporated by Andrade Gutierrez SA (AGC), Companhia Energetica de Minas Gerais
(CEMIG), and Luce Emprendimentos e Participações SA (LEPSA), a company formed
and controlled by Luce Brazil Private Equity Fund. Equatorial Energia SA (Equatorial)
remained the sole shareholder of RME. The reorganization of RME by its shareholders
simplified the corporate structure by eliminating the holding company RME, passing
the four shareholders AGC, CEMIG, LEPSA and RME to be holding, each 26,576,149
common shares issued by the Company, representing direct interest of approximately
13.03% of the capital. The Shareholders' Agreement of RME gave place to a new
agreement between the four shareholders of the Company, reproducing the rights and
obligations under the Shareholders Agreement of RME.
19
On December 30, 2009, CEMIG and AGC celebrated the Purchase and Sale
Agreement ("Agreement AGC"), and on March 25, 2010 was held by CEMIG the
payment for the purchase of 25,494,500 (twenty-five million Four hundred and ninetyfour thousand five hundred) common shares of the Company, owned by AGC,
representing 12.50% of the total voting capital of the Company. Moreover, it was held
on November 17, 2010, the payment and transfer of 1,081,649 (one million, eighty-one
thousand, six hundred forty-nine) common shares of the Company, owned by AGC,
representing 0 53% of the total voting capital of the Company to CEMIG,
corresponding to the remaining portion of the acquisition.
On December 30, 2009, the Fundo de Investimento em Participações PCP (“FIP
PCP”), the indirect controlling shareholder of Equatorial and CEMIG, celebrated the
Purchase and Sale of Shares and Other Covenants (" Agreement Equatorial "), having
Equatorial as an intervener and consenting, and aiming at the indirect sale of the FIP
PCP in the Company, representing 55.41% of an amount of 26,576,149 (twenty six
million, five hundred seventy-six thousand, one hundred and forty-nine) common
shares of the Company or of a society which CEMIG participate in not less than 20%
(twenty percent). On April 29, 2010, the ordinary and extraordinary general meetings
of Equatorial agreed to the split-off upon release of the portion of its net assets
corresponding to their participation in the capital of RME, to a new corporation called
Redentor Energia S.A. ("Redentor"), formed specifically for this purpose at the time of
the Partial Split. The closing of Equatorial Contract is subject to certain conditions laid
down therein, by the registration of the Redentor on CVM and other regulatory
approvals and government agencies, as applicable.
On March 24, 2010, Companhia Energética de Minas Gerais (“CEMIG”) and
ENLIGHTED PARTNERS VENTURE CAPITAL LLC (“ENLIGHTED”), signed an option
agreement for the sale of shares (“Option”), to CEMIG or to another party indicated
thereby. The purpose of this operation was to grant an option to sell shares of LUCE
INVESTMENT FUND (“LUCE Fund”), which holds 75% of the shares of LUCE BRASIL
FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES (“FIP Luce”), which in turn,
through LUCE EMPREENDIMENTOS E PARTICIPAÇÕES S.A. (“LEPSA”) indirectly
holds 26,576,149 common shares issued by the Company, approximately 13.05% of
its total and voting capital. On October 6, 2010, the ENLIGHTED exercised its option
to sell its shares in LUCE Fund to CEMIG or third party specified by it, subject to
fulfillment of certain contractual requirements established, and to approval by ANEEL,
the Administrative Council for Economic Defense - CADE, Banco Nacional de
Desenvolvimento Economico e Social - BNDES and other financial agents and
debenture holders of the Company and its controllers, when necessary.
On October 28, 2010, the Company received a communication from its shareholder
BNDES Participações S.A. – BNDESPAR, announcing the sale of 10,347,200 (ten
million, three hundred and forty-seven thousand and two hundred) common shares
issued by Light S.A. (“Company”), on the Securities, Commodities and Futures
Exchange (BMF&BOVESPA) between March 19 and October 27, 2010, reducing its
20
interest in the Company by 5.07% (five point zero seven per cent). After this sale,
BNDESPar held 39,429,583 (thirty-nine million, four hundred and twenty-nine
thousand, five hundred and eighty-three) common shares issued by the Company,
equivalent to 19.33% (nineteen point thirty-three per cent) of the Company’s total
capital stock. On December 31, 2010, BNDESPar held 30,631,782 common shares,
corresponding to 15.02% of the Company’s capital.
Light x Ibovespa x IEE
Base jan/09 = 100 until 12/30/2010
220
200
2010
IEE
IBOV
LIGT3
2009
IEE
59%
IBOV 83%
LIGT3 34%
12%
1%
15%
180
85% Ibovespa
78% IEE
160
53% Light
140
120
100
80
60
R$/share
01/02/09
12/30/10
17.82
25.43
De
cJa 0 8
nFe 0 9
b
M - 09
ar
Ap 09
r- 0
M 9
ay
Ju 09
nJu 0 9
l
Au -09
gSe 09
pO 09
ct
No 09
v
De -0 9
cJa 0 9
nFe 1 0
b
M - 10
ar
Ap 10
M r- 10
ay
Ju 10
n1
Ju 0
Au l-10
g
Se - 10
p
O - 10
ct
No 10
vDe 1 0
c10
40
Shareholder Structure
The shareholding structure of Light on December 31, 2010 was: Control Group with
52.13% and free float representing 47.87% which 15.02% with BNDESPar and
32.85% under the control of minority shareholders. The Control Group is, made by
Companhia Energética de Minas Gerais (CEMIG), with 26.06%, Luce
Empreendimentos e Participações SA (LEPS) with 13.03% and Rio Minas Energia SA
(RME) with 13.03%.
Shareholders structure as of December 31, 2010:
21
Grupo de Controle
52,13%
Free Float
47,87%
CEMIG
Companhia
Energética de MG
LEPSA
LUCE
Empreendimentos
Participações S.A.
RME
Rio Minas Energia
26,06%
13,03%
13,03%
BNDESPAR
MINORITÁRIOS
EDFI
32,85%
15,02%
LIGHT S.A
LIGHT
S.A
(Holding)
(Holding)
100%
LIGHT
Serviços de
Eletricidade
S.A
100%
LIGHT
Energia S.A.
100%
LIGHT
ESCO
Prestação de
Serviços S.A.
51%
LIGHTGER
S.A.
100%
ITAOCARA
Energia Ltda
100%
100%
51%
LIGHTCOM
Comercializ.
de Energia S.A.
LIGHTHIDRO
Ltda
AXXIOM
Soluções
Tecnológicas
The table below shows Light’s shareholders and the respective number of shares:
Shareholders
# of Shares
Country
Particip.
Social
(R$)
Capital
RME - RIO MINAS
ENERGIA
PARTICIPAÇÕES S.A
26,576,150
Brazil
13.03
290,063,291.07
COMPANHIA
ENERGÉTICA
DE
MINAS GERAIS S.A. CEMIG
53,152,298
Brazil
26.06
580,126,560.31
LUCE
EMPREENDIMENTOS
E PARTICIPAÇÕES
S.A.
26,576,149
Brazil
13.03
290,063,280.15
BNDES
PARTICIPAÇÕES S.A
- BNDESPAR
30,631,782
Brazil
15.02
334,328,166.35
MARKET
66,997,681
-
32.85
731,240,900.01
Total
203,934,060
100.00
2,225,822,197.89
22
Commitment to the Future
People Management
The actions focused on the Company's internal audience have the purpose of
stimulating the personal and professional development of the 3,693 people who
comprise its workforce, in line with the Company's strategic goals, and the
development of key competences that will secure business sustainability.
In 2010, we had 218,301.2 hours of workforce training and development, with a total of
11,789 participants. The highlights were the Leadership Development Program, the
Operational Training Program, and the Certification of Teams that work in the
underground network with 37,000 hours.
We also had the Employee Recognition Program, the Competences Evaluation
process for Managers and Employees, and the introduction of self-development
incentive programs—namely the Growth Portal and the Passport to Development.
The Social Security Foundation – Braslight, a private pension fund, was founded by
Light with the purpose of providing the Company's employees linked to the Foundation
with retirement income and pension to their dependents.
Workplace Safety
Light was the first company in the electric power industry to adopt the Workplace
Safety Management System (SGTS), a model developed in Canada and customized
to meet the specific needs of our industry with a focus on high risks. The System is
divided into five major subjects: Leadership, Risk Management, Education, Control &
Protection and Monitoring. One year after its implementation, an international audit
company reported that Light's level of adherence to the System reached 51%, within
the Company's target of reaching 50% in the period.
Another Health and Safety initiative was the revision of the Workplace Health and
Safety Policy; the elaboration of 50 step-by-step operating procedures; the safety
lecture with over 25,000 participants, and the introduction of new protection
technologies.
Research and Development (R&D)
The Research & Development (R&D) program is elaborated according to Law no.
9,991 of July 24, 2000, which establishes that electric power distribution utilities
concessionaires must invest 0.2% of their Net Operating Revenue in R&D projects, as
per Aneel resolution no. 271 of July 19, 2000, and according to the guidelines
approved by Aneel Resolution no. 316 of May 13, 2008.
23
In 2010, already under the new Aneel regulation, 12 (twelve) new projects were
contracted with an investment of R$24.7 million, and up to December a total of 89
(eighty-nine) R&D projects were being executed, of which 77 (seventy-seven) projects
were carried out through Light Serviços de Eletricidade S.A., and 12 (twelve) through
Light Energia S.A.
Environment
Light's Environmental Management System (EMS) was implemented in 2001 with the
purpose of preventing several risks to the Company and establishing standards in all of
its activities, handling environmental issues, avoiding fines, embargoes to
undertakings, environmental incidents, legal proceedings and damages to the
Company's image. All of the Company's plants have, in addition to the EMS, which
integrates the environmental requirements of the ISO 14001 standard and the
workplace health and safety requirements of OHSAS 18001. GRI PR1
In 2010, 34 of Light's stations were certified to ISO 14001, surpassing the target
established for this stage of the program, which was of 20 units, and another 101
stations were re-certified. The certification process was fully supported by various
teams to adjust the plants to the standard's requirements.
In the distribution segment, the environmental licenses obtained for the implementation
of seven new projects stand out, and in the generation segment, 300 people were
trained as environmental and safety agents, and 180 of these agents were contracted
by Light for the construction project of the Lajes duct and the reforesting of
approximately 60 hectares of land in the Lajes Complex.
Social Initiatives
In 2010, Light invested R$38 million in the Efficient Community Program, benefiting
over 300,000 people through power efficiency actions in 362 low-income
communities. This initiative is part of Light's Power Efficiency Program (PEP),
guided by the Brazilian Electricity Regulatory Agency (ANEEL), and since its
introduction in 1999, it has already invested R$209.6 million in 141 projects that
include the modernization of lighting, ventilation and cooling systems in public areas
such as gymnasiums and hospitals.
Through the Efficient Community Program, which started in 2002, the Company also
replaces equipment such as refrigerators and light bulbs with more efficient ones, in
addition to developing initiatives to share information and raise awareness about the
responsible use of power among members of low-income communities.
The Santa Marta community, where the first UPP was installed, is an example of the
Company's success in these locations: before 2008, when the Company was
24
starting power efficiency initiatives and building a closer relationship with the
communities, the number of customers was 80, timely payments totaled 24% of
power bills, and losses totaled 93%. Two years later, after investments that
amounted to R$3 million, the number of customers went up to 1,600, timely
payments reached 98% of power bills, and losses fell to only 2.7%.
Other Information:
Independent Auditors
The Company discloses, pursuant to CVM Rule 381/2003, that it engages KPMG
Auditores Independentes to perform external auditing services and to review Grupo
Light’s quarterly financial statements and that said firm has not provided any
service for the Company not related to auditing during the year ending December
31, 2010.
This Management Report includes information regarding projected investments and
non-financial data that do not pertain to the auditing of financial statements and
was therefore not reviewed by the independent auditors.
1
Balanço Social Anual / 2010
Empresa: CONSOLIDADO
1 - Base de Cálculo
2010 Valor (mil reais)
2009 Valor (mil reais)
Receita líquida (RL)
6.508.584
6.206.897
Resultado operacional (RO)
922.619
960.912
Folha de pagamento bruta (FPB)
218.471
222.243
2 - Indicadores Sociais Internos
Valor (mil R$) % sobre FPB % sobre RL
Valor (mil R$) % sobre FPB % sobre RL
Alimentação
14.142
6%
0%
16.762
8%
0%
Encargos sociais compulsórios
35.428
16%
1%
38.997
18%
1%
Previdência privada
6.618
3%
0%
6.559
3%
0%
Saúde
7.712
4%
0%
8.535
4%
0%
Segurança e saúde no trabalho
98
0%
0%
210
0%
0%
Educação
759
0%
0%
909
0%
0%
Cultura
0
0%
0%
0
0%
0%
Capacitação e desenvolvimento profissional
5.736
3%
0%
5.117
2%
0%
Creches ou auxílio-creche
481
0%
0%
499
0%
0%
Participação nos lucros ou resultados
15.146
7%
0%
20.507
9%
0%
Outros
2.855
1%
0%
3.813
2%
0%
Total - Indicadores sociais internos
88.976
41%
1%
101.907
46%
2%
3 - Indicadores Sociais Externos
Valor (mil R$)
% sobre RO
% sobre RL
Valor (mil R$)
% sobre RO
% sobre RL
Educação
2.178
0%
0%
2.165
0%
0%
Cultura
5.410
1%
0%
6.178
1%
0%
Saúde e saneamento
14.749
2%
0%
10.793
1%
0%
Esporte
497
0%
0%
837
0%
0%
Combate à fome e segurança alimentar
0
0%
0%
0
0%
0%
Outros
51.221
6%
1%
25.502
3%
0%
Total das contribuições para a sociedade
74.056
8%
1%
45.474
5%
1%
Tributos (excluídos encargos sociais)
3.105.901
337%
48%
2.731.688
284%
44%
Total - Indicadores sociais externos
3.179.957
345%
49%
2.777.162
289%
45%
4 - Indicadores Ambientais
Valor (mil R$)
% sobre RO
% sobre RL
Valor (mil R$)
% sobre RO
% sobre RL
Investimentos relacionados com a produção/ operação da empresa
28.678
3%
0%
19.966
2%
0%
Investimentos em programas e/ou projetos externos
0
0%
0%
0
0%
0%
Total dos investimentos em meio ambiente
28.678
3%
0%
19.966
2%
0%
Quanto ao estabelecimento de “metas anuais” para minimizar resíduos,
( ) não possui metas ( ) cumpre de 51 a 75%
( ) não possui metas ( ) cumpre de 51 a 75%
o consumo em geral na produção/ operação e aumentar a eficácia na ( ) cumpre de 0 a 50% (X) cumpre de 76 a 100%
( ) cumpre de 0 a 50% ( X ) cumpre de 76 a 100%
utilização de recursos naturais, a empresa
5 - Indicadores do Corpo Funcional
2010
2009
Nº de empregados(as) ao final do período
3.693
3.694
Nº de admissões durante o período
312
269
Nº de empregados(as) terceirizados(as)
8.010
7.689
Nº de estagiários(as)
109
101
Nº de empregados(as) acima de 45 anos
1.110
1.359
Nº de mulheres que trabalham na empresa
861
854
% de cargos de chefia ocupados por mulheres
23,10%
21,40%
Nº de negros(as) que trabalham na empresa
1.330
1.006
% de cargos de chefia ocupados por negros(as)
16,90%
15,20%
Nº de pessoas com deficiência ou necessidades especiais
164
173
6 - Informações relevantes quanto ao exercício da cidadania
2010
Metas 2011
empresarial
Relação entre a maior e a menor remuneração na empresa
45,88
ND
Número total de acidentes de trabalho
22
0
Os projetos sociais e ambientais desenvolvidos pela empresa foram
( ) direção
( ) direção e
( X ) todos(as)
( ) direção
( ) direção e
(X ) todos(as)
gerências
empregados(as)
gerências
empregados(as)
definidos por:
Os pradrões de segurança e salubridade no ambiente de trabalho foram
( ) direção e
( ) todos(as)
( X ) todos(as) +
( ) direção e
( ) todos(as)
( X ) todos(as) +
gerências
empregados(as)
Cipa
gerências
empregados(as)
Cipa
definidos por:
Quanto à liberdade sindical, ao direito de negociação coletiva e à
( ) não se envolve
( ) segue as
( x ) incentiva e
( ) não se
( ) seguirá as ( x ) incentivará e
normas da OIT
segue a OIT
envolverá
normas da OIT
seguirá a OIT
representação interna dos(as) trabalhadores(as), a empresa:
A previdência privada contempla:
A participação dos lucros ou resultados contempla:
Na seleção dos fornecedores, os mesmos padrões éticos e de
responsabilidade social e ambiental adotados pela empresa:
Quanto à participação de empregados(as) em programas de trabalho
voluntário, a empresa:
Número total de reclamações e críticas de consumidores(as):
% de reclamações e críticas atendidas ou solucionadas:
Valor adicionado total a distribuir (em mil R$):
Distribuição do Valor Adicionado (DVA):
7 - Outras Informações
( ) direção
( ) direção
( ) não são
considerados
( ) direção e
( X ) todos(as)
gerências
empregados(as)
( ) direção e
( X ) todos(as)
gerências
empregados(as)
( ) são sugeridos ( X ) são exigidos
( ) direção
( ) direção
( ) não serão
considerados
( ) direção e
gerências
( ) direção e
gerências
( ) serão
sugeridos
( X ) todos(as)
empregados(as)
( X ) todos(as)
empregados(as)
( X ) serão
exigidos
( ) não se envolve
( ) apóia
( x ) organiza e
incentiva
( ) não se
envolverá
( ) apoiará
( X ) organizará e
incentivará
na empresa
15.412
na empresa
ND
no Procon
1.213
no Procon
ND
na Justiça
38.438
na Justiça
ND
na empresa
Reduzir 10%
na empresa
100%
no Procon
Reduzir 10%
no Procon
100%
na Justiça
Reduzir 10%
na Justiça
100%
Em 2010: 5.084.931
Em 2009: 4.609.936
73,68% governo 4,56% colaboradores(as)
6,90% acionistas 10,45% terceiros 4,41% retido
75,50% governo 5,14% colaboradores(as)
9,38% acionistas 6,59% terceiros 3,39% retido
2
Independent auditors’ report on the financial statements
(A free translation of the original report in Portuguese, as filed with the Brazilian Securities and
Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in
Brazil, rules of the CVM and the International Financial Reporting Standards - IFRS)
To
Board of Directors and Shareholders
Light S.A.
Rio de Janeiro - RJ
We have examined the individual and consolidated financial statements of Light S.A.
(“Company”), identified as Parent Company and Consolidated, respectively, which
comprise the balance sheet as of December 31, 2010 and the respective statements of
operations, of comprehensive income, of changes in shareholders’ equity and of cash
flows for the year then ended, as well as a summary of the significant accounting
policies and other notes to the financial statements.
Management responsibility for the financial statements
The Company’s management is responsible for the preparation and fair presentation of
the individual financial statements in accordance with the accounting practices adopted
in Brazil and of the consolidated financial statements in accordance with International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board - IASB, and in accordance with the accounting practices adopted in Brazil as well
as for the internal controls, which they deemed necessary to enable the preparation of
these financial statements free of material misstatements, regardless of whether due to
fraud or error.
Independent auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit, carried out in accordance with Brazilian and International Standards on Auditing.
These standards require compliance of ethical requirements by the auditors and that the
audit be planned and performed for the purpose of obtaining reasonable assurance that
the financial statements are free from material misstatement.
3
An audit involves performing selected procedures to obtain evidence with respect to the
amounts and disclosures in the financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatements
of the financial statements, regardless of whether due to fraud or error. In the
assessment of these risks, the auditor considers relevant internal controls for the
preparation and fair presentation of the Company’s financial statements, in order to plan
the audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion about the effectiveness of the Company’s internal controls. An
audit also includes evaluating the adequacy of the accounting practices used and the
reasonableness of the accounting estimates made by Management, as well as evaluating
the overall presentation of the financial statements taken as a whole.
We believe that the audit evidence obtained is sufficient and appropriate for expressing
our opinion.
Opinion on the individual financial statements
In our opinion, the aforementioned individual financial statements present fairly, in all
material respects, the financial position of Light S.A. as of December 31, 2010, and of
its financial performance and its cash flows for the year then ended, in accordance with
accounting practices adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the aforementioned consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Light S.A. as of December
31, 2010, its consolidated financial performance and its cash flows for the financial year
then ended, in accordance with International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board - IASB and accounting
practices adopted in Brazil.
Emphasis
As mentioned in note 2, the individual financial statements were prepared in accordance
with accounting practices adopted in Brazil. In the case of Light S.A., these practices
differ from the IFRS applicable to the separate financial statements, only with respect to
the valuation of investments in subsidiaries, associated companies and joint ventures by
the equity accounting method, while for IFRS purposes it would be valued at cost or fair
value.
Other matters
Statements of added value
We have also examined the individual and consolidated statements of added value
(DVA) for the financial year ended December 31, 2010, which are the responsibility of
management, for which presentation is required by the Brazilian Corporation Law for
publicly-held companies and presented as supplementary information under IFRS, as
these standards do not require the presentation of a Statement of Added Value. These
4
statements were submitted to the same audit procedures previously described and, in our
opinion, are presented fairly, in all material respects, in relation to the financial
statements taken as a whole.
Rio de Janeiro, March 25, 2011
KPMG Auditores Independentes
CRC-SP-14.428/O-6-F-RJ
Original in Portuguese signed by
Vânia Andrade de Souza
Accountant CRC-RJ-057.497/O-2
5
FISCAL COUNCIL REPORT
The Fiscal Council of LIGHT S.A. in the use of its legal and statutory attributions,
according to the provisions of Article 163, Law 6,404/76, reviewed the Management
Annual Report, the Financial Statements and the proposal for allocation of profit for the
fiscal year ended December 31, 2010, related to parent company and consolidated.
Our review of the financial statements mentioned in the previous paragraph was also
added by an analysis of documents and substantially by information and clarifications
given by Independent Auditors and the Company’s Management to the members of the
Fiscal Council.
Therefore, also considering KPMG Auditores Independentes unqualified report issued
on March 25, 2011, this FISCAL COUNCIL, by unanimous vote of its members, agree
that these documents can be submitted for resolution at the Annual Shareholders
Meeting.
Rio de Janeiro, March 25, 2011.
Eduardo Grande Bittencourt
Chief Executive Officer
Ari Barcelos da Silva
Aristóteles Luiz Menezes Vasconcellos Drummond
Isabel da Silva Ramos Kemmelmeier
Mauricio Wanderley Estanislau da Costa
6
LIGHT S.A.
BALANCE SHEETS
(In thousands of reais)
Notes
ASSETS
Cash and cash equivalents
Marketable Securities
Consumers, concessionaires and permissionaires
Taxes and contributions
Inventories
Receivables from swap transactions
Dividends receivable
Services
Prepaid expenses
Other receivables
6
7
8
9
12/31/2010
Parent Company
12/31/2009
01/01/2009
Consolidated
12/31/2009
12/31/2010
01/01/2009
38,295
1,080
48,054
146
159
23,860
14,584
774
155,701
175
20,212
40,256
284
236,138
135
167
514,109
11,122
1,338,704
278,885
20,537
59,724
2,114
152,973
760,313
68,059
1,355,854
442,668
14,369
4
46,015
2,381
97,250
548,983
41,143
1,282,855
566,011
18,603
6,671
17,622
1,667
106,669
111,594
191,446
276,980
2,378,168
2,786,913
2,590,224
194
3,356,788
678
-
152
3,513,147
678
-
121
3,421,766
-
296,261
57,908
899,265
469,030
211
225,251
714
7,865
17,586
1,628,893
3,613,772
297,798
40,767
1,115,546
354,784
200,520
1,658
8,725
20,388
1,600,568
3,422,980
292,594
72,807
1,621,104
304,229
4,413
194,200
4,364
26,420
13,615
1,589,779
3,267,632
TOTAL NON-CURRENT ASSETS
3,357,660
3,513,977
3,421,887
7,216,756
7,063,734
7,391,157
TOTAL ASSETS
3,469,254
3,705,423
3,698,867
9,594,924
9,850,647
9,981,381
33
12
TOTAL CURRENT ASSETS
Consumers, concessionaires and permissionaires
Taxes and contributions
Deferred taxes
Financial assets from concessions
Receivables from swap transactions
Escrow deposits
Prepaid expenses
Other receivables
Investments
Property, plant and equipment
Intangible assets
8
9
10
11
33
12
13
14
15
The notes are an integral part of the financial statements.
LIGHT S.A.
BALANCE SHEETS
(In thousands of reais)
Notes
LIABILITIES
Suppliers
Taxes and contributions
Loans, financing and financial charges
Debentures and financial charges
Dividends payable
Estimated liabilities
Sector charges - consumer contributions
Provision for contingencies
Post-employment benefits
Other liabilities
16
9
17
18
25
19
20
21
22
TOTAL CURRENT LIABILITIES
Loans, financing and financial charges
Debentures and financial charges
Taxes and contributions
Deferred taxes
Provision for contingencies
Post-employment benefits
Other Liabilities
17
18
9
20
21
22
TOTAL NON-CURRENT LIABILITIES
SHAREHOLDERS' EQUITY
Capital stock
Capital reserves
Recognized granted options
Treasury shares
Profits reserves
Legal reserve
Profit retention
Proposed additional dividends
Equity valuation adjustments
Retained earnings/accumulated losses - IFRS
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Parent Company
12/31/2009
12/31/2010
01/01/2009
Consolidated
12/31/2009
12/31/2010
01/01/2009
280
31
136,598
220
1,981
6,348
53
143,647
223
1,524
283
10
231,433
38
1,286
658,421
350,169
165,878
381,332
136,598
45,264
117,218
95,555
236,318
564,181
285,180
197,150
96,412
143,647
52,374
110,791
95,044
236,028
486,204
230,461
116,799
61,523
231,433
57,843
126,733
2,237
87,744
304,998
139,110
151,795
233,050
2,186,753
1,780,807
1,705,975
-
-
-
1,197,500
727,891
177,699
275,755
551,897
920,630
226,655
1,006,204
1,165,759
303,585
301,230
669,353
861,386
208,695
1,046,550
945,549
324,743
341,113
993,883
944,417
213,334
-
-
-
4,078,027
4,516,212
4,809,589
2,225,822
2,225,822
2,225,819
2,225,822
2,225,822
2,225,819
-
34,406
(6,361)
22,459
-
-
34,406
(6,361)
22,459
-
162,756
37,669
409,795
494,102
3,330,144
133,999
499,188
288,693
518,761
(140,880)
3,553,628
103,757
451,669
268,205
546,978
(153,070)
3,465,817
162,756
233,083
214,381
494,102
3,330,144
133,999
499,188
288,693
518,761
(140,880)
3,553,628
103,757
451,669
268,205
546,978
(153,070)
3,465,817
24
3,469,254
3,705,423
3,698,867
9,594,924
9,850,647
9,981,381
The notes are an integral part of the financial statements.
7
LIGHT S.A.
INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
Notes
NET OPERATING REVENUE
28
COST OF OPERATIONS
GROSS PROFIT
01/01/2010 to 12/31/2010
Parent Company
01/01/2009 to 12/31/2009
01/01/2010 to 12/31/2010
Consolidated
01/01/2009 to 12/31/2009
-
-
6,508,584
6,206,897
-
-
(4,633,841)
(4,419,050)
-
1,874,743
1,787,847
-
Operating expenses
(6,772)
(56,701)
(632,730)
(742,006)
OPERATING INCOME
(6,772)
(56,701)
1,242,013
1,045,841
2,528
1,282
(319,394)
(84,929)
2,593
1,598
173,223
186,745
(492,617)
(271,674)
FINANCIAL RESULT
Revenues
32
Expenses
32
EQUITY IN THE EARNINGS OF SUBSIDIARIES
(65)
(316)
579,394
644,223
-
-
NET INCOME BEFORE INCOME TAX AND
SOCIAL CONTRIBUTION
575,150
588,804
922,619
960,912
Current income tax and social contribution
10
-
-
(103,482)
(168,994)
Deferred income tax and social contribution
10
-
-
(243,987)
(203,114)
575,150
588,804
575,150
588,804
NET INCOME FOR THE YEAR
Basic and diluted earnings per Share
No. of shares, Ex-Treasury
27
2.82000
2.88700
203,934,060
203,934,060
The notes are an integral part of the financial statements.
LIGHT - S.A.
CASH FLOW STATEMENTS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2010 AND 2009
( In thousands of reais )
Parent Company
01/01/2010 to 12/31/2010 01/01/2009 to 12/31/2009
Cash flows from operating activities
Net income before income tax and social contribution
Adjustments of expenses (revenues) not affecting cash
Allowance for doubtful accounts
Depreciation and amortization
Amortization of intangible assets
Share-based payments
Loss (gain) from the sale of intangible assets / Residual value of derecognized property, plant and equipment
Exchange losses (gains) from financial activities
Restatement of contingencies
Adjustment of receivables to present value
Interest expenses on loans
Charges and monetary variation on post-employment liabilities
Provision for / (Reversal of ) contingencies - liabilities
Equity in the earnings of subsidiaries
Other
(Increase)/decrease in assets
Marketable securities
Consumers, concessionaires and permissionaires
Taxes and contributions
Inventories
Receivables from services rendered
Prepaid Expenses
Escrow deposits
Dividends
Other
Increase/(decrease) in liabilities
Suppliers
Estimated liabilities
Taxes and contributions
Sector charges - consumer contributions
Contingencies
Post-employment benefits
Other liabilities
Interests paid
Income tax and social contribution paid
Consolidated
01/01/2010 to 12/31/2010 01/01/2009 to 12/31/2009
575,150
588,804
922,619
960,912
(579,394)
-
51,673
(644,223)
-
254,785
80,714
272,157
(3,983)
(8,024)
44,498
259,764
158,886
(42,039)
10,654
246,311
83,912
258,700
51,673
(11,807)
(55,551)
45,035
(11,831)
260,666
18,188
109,142
13,351
(306)
(146)
16
(42)
864,490
(3,648)
(490)
(40)
669,368
(20,045)
56,937
(236,098)
(37,865)
(6,168)
(13,709)
1,211
(24,731)
(55,070)
(26,916)
(312,683)
31,971
4,234
(28,393)
1,992
(6,320)
38,194
(6,068)
(4)
(22)
320
6,065
184
43
(168)
94,240
(7,108)
64,989
(4,227)
(119,915)
(99,131)
20,156
30,402
(5,469)
54,719
(29,293)
(76,320)
(93,919)
(73,609)
-
-
(252,980)
(98,042)
(261,514)
(161,228)
Net cash provided by operating activities
850,346
651,171
Cash flows from investment activities
Share acquisition
Receivables related to shares
Receivables from the sale of property, plant and equipment
Receivables from the sale of financial asset / investment
Capital increase - mergers
Acquisition of property, plant and equipment
Acquisition of intangible assets
Consumer contributions
Acquisition of financial assets (concession)
Additions to/acquisition of investment
Net cash used in investment activities
(45,352)
61,625
(47,564)
(31,291)
(117,201)
71,114
(36,388)
(82,475)
(45,352)
61,625
15,595
2,802
(141,317)
(491,021)
24,604
(114,646)
(3,976)
(691,686)
(117,201)
71,114
32,408
3
(100,790)
(456,057)
31,649
(54,707)
(6,773)
(600,354)
(795,344)
(795,344)
(594,368)
(594,368)
(795,344)
1,094,845
(1,086,539)
(787,038)
(594,368)
579,440
(227,937)
(242,865)
Increase (decrease) in cash and cash equivalents
23,711
(25,672)
(246,204)
211,330
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Changes in cash and cash equivalents
14,584
38,295
23,711
40,256
14,584
(25,672)
760,313
514,109
(246,204)
548,983
760,313
211,330
Cash flows from financing activities
Dividends and interest on equity paid
Loans and financing
Amortization of loans and financing
Net cash used in financing activities
1,232,520
1,054,549
The notes are an integral part of the financial statements.
8
LIGHT - S.A.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - Consolidated
YEARS ENDED DECEMBER 31, 2010 AND 2009
( In thousands of reais)
PROFIT RESERVES
CAPITAL
STOCK
2,225,819
BALANCE ON 01/01/2009
Realization of equit valuation adjustment
Capital increase
Recognized granted options
Exercised granted options
Treasury Shares
Dividends paid - profit reserves
Payment of proposed additional dividends
Net income for the year
Allocation of net income for the year:
Legal reserve
Proposed dividends
Proposed additional dividends
Profit retention reserve
3
-
BALANCE ON 12/31/2009
Realization of equity valuation adjustment
Loss absorption – adjustment to 1st time adoption of IFRS
Exercised granted options
Derecognition of treasury shares
Transfer of unexercised options
Equity interest related adjustment
Dividends paid - profit reserves
Payment of proposed additional dividends
Net income for the in year
Allocation of net income for the year:
Legal reserve
Proposed dividends
Proposed additional dividends
Profit retention reserve
BALANCE ON 12/31/2010
CAPITAL
RESERVES
22,459
TREASURY
SHARES
-
51,673
(39,726)
-
LEGAL
RESERVE
103,757
(6,361)
-
-
(94,730)
-
(268,205)
-
30,242
-
142,249
288,693
-
133,999
499,188
288,693
EQUITY
VALUATION
ADJUSTMENTS
546,978
RETAINED
EARNINGS /
(ACCUMULATED)LOSSES
(153,070)
(28,217)
-
TOTAL
3,465,817
28,217
588,804
3
51,673
(39,726)
(6,361)
(94,730)
(268,205)
588,804
-
(30,242)
(143,647)
(288,693)
(142,249)
(143,647)
-
518,761
(140,880)
-
-
2,225,822
34,406
(6,361)
-
(12,243)
(6,361)
(15,802)
-
6,361
-
-
(114,319)
15,802
(363,002)
-
(288,693)
-
(24,659)
-
24,659
114,319
1,902
575,150
(12,243)
1,902
(363,002)
(288,693)
575,150
-
-
-
28,757
-
195,414
214,381
-
-
(28,757)
(136,598)
(214,381)
(195,414)
(136,598)
-
-
-
162,756
233,083
214,381
2,225,822
-
PROPOSED
ADDITIONAL
ADIVIDENDS
268,205
PROFIT
RETENTION
451,669
494,102
-
3,553,628
3,330,144
The notes are an integral part of the financial statements.
LIGHT - S.A.
STATEMENTS OF ADDED VALUE FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
( In thousands of reais )
Parent Company
Consolidated
01/01/2010 to 12/31/2010
01/01/2009 to 12/31/2009
-
-
9,582,206
9,008,554
Sales of goods, products and services
-
-
9,836,991
9,254,630
Other revenues
-
-
Allowance/Reversal of allowance for doubtful accounts
-
-
(3,060)
-
Revenues
Input acquired from third parties
Costs of Products, Goods and Services Sold
Material – Energy – third-party services – Other
Gross added value
Retentions
Depreciation, amortization and depletion
Net added value produced
Added value received in transfers
01/01/2010 to 12/31/2010
-
01/01/2009 to 12/31/2009
-
(254,785)
(246,076)
(2,010)
(4,318,036)
(4,277,406)
-
(3,392,464)
(3,060)
(2,010)
(3,060)
(2,010)
(925,572)
-
-
(352,462)
-
-
(352,462)
(3,060)
(2,010)
5,264,170
(3,322,637)
(954,769)
4,731,148
(307,957)
(307,957)
4,911,708
4,423,191
173,223
186,745
581,987
645,821
579,394
644,223
2,593
1,598
173,223
186,745
Total added value to distribute
578,927
643,811
5,084,931
4,609,936
Distribution of added value
578,927
643,811
5,084,931
4,609,936
3,492
54,511
231,752
236,764
3,182
54,293
156,253
175,273
Benefits
179
166
31,257
35,364
Government Severance Fund for Employees (FGTS)
131
49
15,393
Other
-
3
28,849
5,539
233
451
3,746,405
3,480,428
Federal
233
451
1,517,026
1,392,026
State
-
-
2,220,013
2,081,205
Municipal
-
-
9,366
7,197
52
45
531,624
303,940
50
30
475,835
265,265
15
34,630
22,960
Equity in the earnings of subsidiaries
Financial income
Personnel
Direct remuneration
Taxes, fees and contributions
Third party capital remuneration
Interest
Rental
Other
Remuneration of own capital
2
-
-
-
-
20,588
21,159
15,715
575,150
588,804
575,150
588,804
Dividends
350,979
432,340
350,979
432,340
Retained earnings / accumulated losses for the year
224,171
156,464
224,171
156,464
The notes are an integral part of the financial statements.
9
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
1. OPERATIONS
The corporate purpose of Light S.A. (Company) and its subsidiaries, headquartered in the City and
State of Rio de Janeiro, is to hold equity interests in other companies, as partner or shareholder, and is
involved in the direct or indirect exploitation, as applicable, of electric power services, including
electric power generation, transmission, sale and distribution systems, as well as other related services.
The Company is listed in the New Market (Novo Mercado) of the São Paulo Stock Exchange (BM&F
Bovespa – under LIGT3).
Light S.A. is a direct parent company of the following companies:
Light Serviços de Eletricidade S.A. (Light SESA) - Publicly-held corporation engaged in the
distribution of electric power, with a concession area comprising 31 cities in the State of Rio de
Janeiro, including its capital.
Light Energia S.A. - (Light Energia) - Privately-held corporation, headquartered in the city of Rio de
Janeiro, whose main activity is to study, plan, construct, operate and exploit systems of electric power
generation, transmission and sales, and related services. It comprises the Pereira Passos, Nilo Peçanha,
Ilha dos Pombos, Santa Branca and Fontes Novas plants, with a total installed capacity of 855 MW.
Light Energia holds interest in the following subsidiaries:
 Central Eólica São Judas Tadeu Ltda. - Company at a pre-operating stage whose main activity
is the generation and sale of electric power through an wind power plant located in the state of
Ceará, with an 18 MW nominal power.
 Central Eólica Fontainha Ltda. - Company at a pre-operating stage whose main activity is the
generation and sale of electric through an wind power plant located in the state of Ceará, with
an 16 MW nominal power.
Light Esco Prestação de Serviços S.A. - (Light Esco) – Privately-held corporation , headquartered in
the city of Rio de Janeiro, whose main activity is the purchase, sale, import, export and provision of
advisory services in the energy sector.
Lightcom Comercializadora de Energia S.A. (Lightcom) – Privately-held corporation, headquartered in
the city of São Paulo, whose purpose is the purchase, sale, import, export and provision of advisory
services in the energy sector.
Itaocara Energia Ltda. - (Itaocara Energia) – Company in the pre-operating stage, primarily engaged in
the execution of project, construction, installation, operation and exploration of electric power
generation plants.
Lighthidro Ltda. (Light Hidro) – Company in the pre-operating stage that participate in auctions for
concession, authorization and permission for new plants.
10
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Instituto Light para o Desenvolvimento Urbano e Social (Light Institute) – Non-profit private limited
company, engaged in participating in social and cultural projects, with interest in the cities’ economic
and social development, affirming the Company’s ability to be socially responsible.
The subsidiaries jointly-controlled by the Company are:
Lightger S.A. (Lightger) - Company in the pre-operating stage that participate in auctions for
concession, authorization and permission for new plants. On December 24, 2008, Lightger obtained the
installation license that authorizes the start of implementation works of Paracambi small hydroelectric
power plant (PCH). Jointly-controlled by Light S.A (51%) and Companhia Energética de Minas Gerais
- CEMIG (49%).
Axxiom Soluções Tecnológicas S.A. (Axxiom) – Privately-held corporation, headquartered in the city
of Belo Horizonte, state of Minas Gerais, whose purpose is to offer technology solutions and systems
for operating management of public utilities companies, including electric power, gas, water and
sewage, in addition to other public utilities. It is jointly controlled by Light S.A (51%) and Companhia
Energética de Minas Gerais - CEMIG (49%).
Grupo Light’s concessions and authorizations:
Concessions / Authorizations
Generation, transmission and distribution
PCH Paracambi
Itaocara Hydroelectric Plant
Date of
Signature
Jul/1996
Feb/2001
Mar/2001
Maturity Date
Jun/2026
Feb/2031
Mar/2036
11
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
2. PRESENTATION OF THE FINANCIAL STATEMENTS
a) Declaration of compliance (regarding the IFRS and the accounting standards issued by the
Brazilian Committee on Accounting Pronouncements (CPC)
The financial statements herein include:
Consolidated Financial Statements
The consolidated financial statements were prepared according to the International Financial
Reporting Standards ( IFRS) issued by the International Accounting Standards Board (IASB) and also
according to accounting practices adopted in Brazil (BR GAAP).
In the initial financial statements following the IFRS, in January 1st, 2009, the Company assessed the
mandatory exceptions and optional exemptions presented in IFRS 1 and CPC 37, and presented such
effects in Note 3.
Individual Financial Statements
The individual financial statements are presented according to the accounting practices adopted in
Brazil, in compliance with the provisions of the Corporation Law, and comprise the changes
introduced by Laws no. 11,638/07 and 11,941/09, complemented by new pronouncements,
interpretations and guidance from CPC, issued in 2009 and 2010, approved by CFC Resolutions, and
in accordance with CVM rules.
Pronouncements, interpretations and guidance by CPC, approved by CFC Resolutions and CVM rules,
are convergent with the international accounting standards issued by IASB.
These standards are different from the IFRS applicable to individual financial statements due to the
evaluation of investments in subsidiaries by the equity method in BR GAAP, whilst for IFRS
purposes, it would be calculated at cost or fair value.
However, there is no difference between the consolidated shareholders’ equity and result of operations
attributable to the controlling shareholders, presented by the Company, and the shareholders’ equity
and result of operations of the parent Company presented in its individual financial statements.
Therefore, the consolidated financial statements and the individual financial statements of the parent
Company are being presented side-by-side in a sole set of financial statements.
The Company did not calculate comprehensive income, which is the reason why it is not presenting
the Comprehensive Income Statement.
These are the first consolidated financial statements prepared according to the IFRS in which the CPC
37 was applied.
12
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Financial Statements 2009
Until December 31st, 2009, the Company presented its individual and consolidated financial
statements according to the accounting standards adopted in Brazil, which comprised the changes
introduced by the Laws no. 11,638/07 and 11,941/09 (Provisional Measure nº 449/2008 - MP no.
449/2008), complemented by the pronouncements of the Accounting Pronouncements Committee –
CPC, approved by resolutions of the Federal Accounting Council – CFC and rules of the Securities
Commission – CVM until December 31st, 2008.
As established in the CVM Deliberation no. 609/2009 (CPC 37 – Initial Adoption of International
Accounting Standards), the international standards were retroactively implemented at January 1st,
2009. Therefore, the financial statements originally disclosed were adjusted and are presented
according to the international accounting standards.
The authorization to conclude these financial standards was given by the Board of Directors at March
25th, 2011.
b) Basis of measurement
The financial statements were prepared based at historical cost, except for the following items:
 Financial instruments measured by fair value through the profit and loss;
 The defined benefit actuarial asset is recognized as the net total of plan assets, adding the
unrecognized past service cost and unrecognized actuarial losses, deducing the
unrecognized actuarial gains and the present value of the defined benefit liability; and
 Fixed assets of the generation plants, measured at fair value as deemed cost.
c) Functional currency and presentation currency
The financial statements are presented in thousands of reais, which is the functional currency of the
Company, except when otherwise indicated, including the explanatory notes.
13
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
d) Use of estimates and judgement
The preparation of the financial statements according to the IFRS and CPC standards demand the
Management to make certain judgements, estimates and premises that affect the application of
accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual
results may differ from these estimates.
Estimates and premises are continuously reviewed. Reviews regarding accounting estimates are
recognized in the period when the estimates are effectively reviewed and in any affected future
periods.
Information about premises and estimates that may result in adjustments within the next financial year
are included in the following Notes:
Note 10 – Deferred income tax and social contribution
Note 20 – Contingencies
Note 21 – Post Employment Benefits
Note 28 – Detail of the net operating revenue (unbilled sales)
3. INITIAL ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
The approval of the Laws no. 11,638/07 and 11,941/09 started for publicly-held companies the
convergence process with international accounting standards, through issuance, by CPC, and approval
by Brazilian accounting regulating bodies, of several accounting pronoucements, interpretations and
guidance, in two steps: the first step, developed and applied in 2008, with the adoption of the technical
pronouncements CPC 00 to 14 (the latter revoked since 2010) and the second step, with issuance, in
2009, of the technical pronouncements CPC 15 to 43 (except for CPC 34), with mandatory adoption in
2010, with retroactive effects to 2009 for comparability purposes.
The financial statements for the year ended at December 31st, 2010, will be the first presented
according to these accounting pronouncements and according to the IFRS. The Company prepared its
transition opening balance sheet in January 1st, 2009.
a) Exemptions adopted
The Company has chosen to apply the following exemptions regarding retroactive application:
 Exemption of fair value as deemed cost: Light Energia chose to measure fixed asset
items by fair value in January 1st, 2009.
 Exemption of business combinations: The Company did not restated the business
combinations occurred before January 1st, 2009, which is the transition date.
 Exemption related to retroactive application of ICPC 01: the Company considered
unfeasible to remeasure, individually, the assets comprising the infrastructure used in
the concession of public service in its acquisition dates, choosing the residual value
14
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
method to measure: (i) intangible assets, corresponding to the estimated part of
investments made, which shall be amortized until the end of the concession and (ii)
financial assets corresponding to the unconditional contractual right to receive cash or
other financial asset of the grantor for the construction services performed and not
amortized until the end of the concession.
b) Reconciliation of the adoption of the CPCs issued in 2009 and 2010 in the transition date and
reclassifications taken into effect:
Opening balance sheet in January 1st, 2009:
Published on
12/31/2008
Consolidated
INITIAL ADOPTION IFRS
Reclassifications
Adjustments
Restated
01/01/2009
CURRENT ASSETS
Cash and cash equivalents
Marketable securities
Cash and cash equivalents
Consumers, concessionaires and permissionaires
Recoverable taxes
Taxes and contributions
Inventories
Receivables from swap transactions
Dividends receivable
Services provided
Prepaid expenses
Other receivables
590,126
1,350,832
836,504
18,603
6,671
57,500
383,291
107,879
548,983
41,143
(590,126)
(836,504)
566,011
(52,888)
(1,210)
(67,977)
13,010
(381,624)
-
548,983
41,143
1,282,855
566,011
18,603
6,671
17,622
1,667
106,669
TOTAL CURRENT
3,351,406
(324,591)
(436,591)
2,590,224
NON-CURRENT
Consumers, concessionaires and permissionaires
Recoverable taxes
Taxes and contributions
Deferred taxes
Financial assets from concessions
Receivables
Escrow deposits
Prepaid expenses
Other receivables
Investments
Property, plant and equipment
Intangible assets
292,594
1,109,566
4,413
194,200
129,435
26,420
13,615
4,059,358
280,958
(1,109,566)
72,807
1,307,252
304,229
(3,290,903)
2,986,674
313,852
(125,071)
821,324
-
292,594
72,807
1,621,104
304,229
4,413
194,200
4,364
26,420
13,615
1,589,779
3,267,632
TOTAL NON-CURRENT
6,110,559
270,493
1,010,105
7,391,157
TOTAL ASSETS
9,461,965
(54,098)
573,514
9,981,381
15
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Published on
12/31/2008
CURRENT LIABILITIES
Suppliers
Payroll
Taxes
Taxes and contributions
Loans, financing and charges
Debentures and charges
Dividends payable
Estimated liabilities
Sector charges
Prosvision for contingencies
Post-employment benefits
Other liabilities
Consolidated
INITIAL ADOPTION IFRS
Reclassifications
Adjustments
Restated
01/01/2009
486,204
2,791
230,461
116,799
61,523
499,638
55,052
126,733
2,237
87,744
519,757
(230,461)
230,461
(54,098)
(268,205)
(160,661)
486,204
2,791
230,461
116,799
61,523
231,433
55,052
126,733
2,237
87,744
304,998
TOTAL CURRENT
2,188,939
(54,098)
(428,866)
1,705,975
NON-CURRENT
Loans, financing and charges
Debentures and charges
Taxes
Taxes and contributions
Deferred taxes
Prosvision for contingencies
Post-employment benefits
Other liabilities
1,046,550
945,549
324,743
998,460
944,417
209,603
(324,743)
324,743
-
341,113
(4,577)
3,731
1,046,550
945,549
324,743
341,113
993,883
944,417
213,334
TOTAL NON-CURRENT
4,469,322
-
340,267
4,809,589
2,225,819
-
-
2,225,819
22,459
-
-
22,459
103,757
451,669
2,803,704
-
546,978
115,135
662,113
103,757
451,669
546,978
115,135
3,465,817
573,514
9,981,381
SHAREHOLDERS' EQUITY
Capital stock
Capital reserves
Recognized granted options
Profit reserve
Legal reserve
Profit retention
Equity valuation adjustments
Retained earnings/accumulated losses
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES
9,461,965
(54,098)
16
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Balance sheet in the year ended at December 31st, 2009:
Published in
2009
Consolidated
INITIAL ADOPTION IFRS
Reclassifications
Adjustments
Restated 2009
CURRENT ASSETS
Cash and cash equivalents
Marketable Securities
Cash and cash equivalents
Consumers, concessionaires and permissionaires
Recoverable taxes
Taxes and contributions
Inventories
Receivables from swap transactions
Dividends receivable
Services provided
Prepaid expenses
Other receivables
828,372
1,362,365
675,881
14,369
4
131,902
260,502
100,016
760,313
68,059
(828,372)
(675,881)
442,668
(98,897)
(2,766)
(6,511)
13,010
(258,121)
-
760,313
68,059
1,355,854
442,668
14,369
4
46,015
2,381
97,250
TOTAL CURRENT
3,373,411
(334,876)
(251,622)
2,786,913
NON-CURRENT
Consumers, concessionaires and permissionaires
Recoverable taxes
Taxes and contributions
Deferred taxes
Financial assets from concessions
Escrow deposits
Prepaid expenses
Other receivables
Investments
Property, plant and equipment
Intangible assets
297,798
820,843
200,520
37,779
8,725
20,388
4,319,087
281,608
(820,843)
40,767
1,013,289
354,784
(3,496,156)
3,141,372
102,257
(36,121)
777,637
-
297,798
40,767
1,115,546
354,784
200,520
1,658
8,725
20,388
1,600,568
3,422,980
TOTAL NON-CURRENT
5,986,748
233,213
843,773
7,063,734
TOTAL ASSETS
9,360,159
(101,663)
592,151
9,850,647
17
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Published in
2009
CURRENT LIABILITIES
Suppliers
Payroll
Taxes
Taxes and contributions
Loans, financing and charges
Debentures and charges
Dividends payable
Estimated liabilities
Sector charges
Provision for contingencies
Post-employment benefits
Other liabilities
Consolidated
INITIAL ADOPTION IFRS
Reclassifications
Adjustments
Restated 2009
564,181
3,338
285,180
197,150
96,412
432,340
49,036
110,791
95,044
377,471
(285,180)
285,180
(101,663)
(288,693)
(39,780)
564,181
3,338
285,180
197,150
96,412
143,647
49,036
110,791
95,044
236,028
TOTAL CURRENT
2,210,943
(101,663)
(328,473)
1,780,807
NON-CURRENT
Loans, financing and charges
Debentures and charges
Taxes
Taxes and contributions
Deferred taxes
Dividends payable
Provision for contingencies
Post-employment benefits
Other liabilities
1,006,204
1,165,759
303,585
673,930
861,386
251,298
(303,585)
303,585
-
301,230
(4,577)
(42,603)
1,006,204
1,165,759
303,585
301,230
669,353
861,386
208,695
TOTAL NON-CURRENT
4,262,162
-
254,050
4,516,212
2,225,822
-
-
2,225,822
34,406
(6,361)
-
-
34,406
(6,361)
133,999
499,188
-
-
518,761
147,813
133,999
499,188
518,761
147,813
TOTAL SHAREHOLDERS' EQUITY
2,887,054
-
666,574
3,553,628
TOTAL LIABILITIES
9,360,159
592,151
9,850,647
SHAREHOLDERS' EQUITY
Capital stock
Capital reserves
Recognized granted options
Treasury shares
Profits reserve
Legal reserve
Profit retention
Equit valuation adjustments
Retained ernings/accumulated losses
(101,663)
18
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Income statement for the year ended at December 31st, 2009:
Consolidated
INITIAL ADOPTION IFRS
Published
2009
REVENUES
DEDUCTIONS OF REVENUES
Reclassification
Restated
2009
Adjustments
8,641,045
-
613,585
9,254,630
(3,208,739)
-
161,006
(3,047,733)
5,432,306
-
774,591
6,206,897
(3,819,422)
-
(599,628)
(4,419,050)
GROSS PROFIT
1,612,884
-
174,963
1,787,847
OPERATING EXPENSES
(736,994)
-
(5,012)
(742,006)
General and administrative expenses
(427,904)
-
-
(427,904)
Selling expenses
(322,389)
-
-
(322,389)
38,144
-
-
38,144
Other operating expenses
(24,845)
-
(5,012)
(29,857)
OPERATING INCOME
875,890
-
169,951
1,045,841
(70,663)
-
NET REVENUE
COST OF OPERATIONS
Other operating income
FINANCIAL INCOME
(14,266)
(84,929)
Revenues
201,864
(15,119)
186,745
Expenses
(272,527)
853
(271,674)
-
-
-
-
805,227
-
155,685
960,912
Current income tax and social contribution
(168,994)
-
Deferred income tax and social contribution
(31,402)
-
(171,712)
(203,114)
604,831
-
(16,027)
588,804
EQUITY IN THE EARNINGS OF SUBSIDIARIES
NET INCOME BEFORE INCOME TAX AND
SOCIAL CONTRIBUTION
NET INCOME FOR THE YEAR
-
(168,994)
Table with the effects of the adjustments arising from the adoption of the issued CPCs in the
Shareholders’ Equity at January 1 st, 2009 and at December 31st, 2009, and in the Net Income of 2009,
with notes thereto:
Parent Company
12/31/2009
01/01/2009
Balance before the adoption of the new practices
Shareholders
Equity
Net Income
Shareholders
Equity
2,887,054
604,831
2,803,704
Investiments (*)
Equity method (*)
Dividends above the mandatory minimum (6)
Regulatory assets and liabilities (1)
Fair value as deemed cost (4)
Pre-operational expenses (9)
Other (9)
Deferred income tax and social contribution (5)
666,574
-
Total of adjustments
666,574
Balance after the adoption of the new practices
-
3,553,628
Consolidated
12/31/2009
01/01/2009
Shareholders
Shareholders
Equity
Net Income
Equity
2,887,054
604,831
2,803,704
(16,027)
-
662,113
-
288,693
(205,095)
786,000
(8,364)
4,312
(198,972)
199,512
(42,754)
(934)
(140)
(171,711)
268,205
(404,607)
828,754
(7,430)
4,452
(27,261)
(16,027)
662,113
666,574
(16,027)
662,113
3,465,817
3,553,628
588,804
588,804
3,465,817
(*) Reflex effect of subsidiaries in the parent company
19
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Description of the main adjustments arising from the new accounting pronouncements which affected
the financial statements of the Company:
(1) Framework of the preparation and presentation of the financial statements (CPC Framework):
This pronouncement establishes, among other concepts, the basis for recognition of assets,
liabilities, revenues and expenses.
The differences between the estimated amounts included in the calculation of the electricity
tariff and those effectively incurred by the Company, recognized before applying the new
CPCs as regulatory assets and liabilities are not, according to this pronouncement, recognized
in the balance sheet since they do not fit in the definition of assets and/or liabilities. Therefore,
the balances of regulatory assets and liabilities accounted for before the date of initial adoption
of the new CPCs were recorded against retained earning and in the income statement of the
years 2009 and 2010, according to the competence period.
(2) CPC 25 – Provisions, Contingent Liabilities and Contingent Assets: The objective of this
pronouncement is to set forth the application of adequate recognition criteria and basis of
measurement to provisions, contingent liabilities and assets, as well as the disclosure of
sufficient information in the explanatory notes. According to this pronouncement, the amount
recognized as provision must be the best estimate of the demanded disbursement to settle the
present liability in the date of the balance sheet. The best estimate of the demanded
disbursement to settle the present liability is the amount the Company would reasonably pay to
settle the liability in the date of the balance sheet or to transfer it to a third party at this
moment.
Considering that the amounts recognized in the account “Services Rendered” related to the
expenditures incurred in the Research and Development (R&D) and Energy Efficiency
Programs (EEP) represent amounts effectively disbursed by the Company, reducing, therefore,
the remaining total amount the Company shall disburse in expenditures of this nature, such
amounts were written off against the provision account in Liabilities, so that they come to
represent solely the remaining total amount to be disbursed for EEP and R&D.
(3) CPC 26 – Presentation of the Financial Statements: The objective of this Pronouncement is to
define the basis for the presentation of the financial statements and to assure their
comparability, either with previous periods for the same entity, or with the financial statements
of other entities. In this scenario, this Pronouncement establishes general requirements to the
presentation of financial statements, guidelines for their structure and minimal content
requirements.
Deferred income tax and social contribution expected to be realized within twelve months after
the presentation of the financial statements were accounted for in current assets, as provided in
the Instruction CVM 371/2002. In compliance with CPC 26, these deferred taxes are now fully
accounted for in non-current assets/liabilities.
(4) CPC 27 – Fixed Assets: The objective of this Pronouncement is to establish the accounting
procedures regarding fixed assets, in order to allow users of financial statements to understand
information about investments of the entity in its fixed assets, as well as its changes. The main
points to be considered in accounting for fixed assets are asset recognition, establishing their
accounting values and depreciation values and devaluation losses to be recognized thereto.
20
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
In compliance with the guidelines provided in the pronouncements related to this matter, the
subsidiary Light Energia has adopted fair value as the deemed cost deemed for the fixed assets
of the plants that presented their book value substantially lower than their fair value. This
procedure was encouraged by CPC, through ICPC 10 (Clearance about CPC 27 and CPC 28)
and by CVM and the Company believes it represents the adoption of the best corporate
governance practices in the preparation of financial statements. The fair value adjustment of
the asset, in the amount of R$828,754 had, as its counterpart, the shareholders’ equity account
denominated “Equity Valuation Adjustments”, net of deferred income tax and social
contribution of R$281,776. Depreciation over the referred adjustment shall neither affect the
income tax and social contribution calculation basis, nor the basis of dividend distribution. The
Company maintained the useful lives of its assets used so far, since they are estimated and set
by ANEEL and are used in the industry and accepted as adequate by the market, being such
procedure supported by OCPC 05 (Guidelines on Concession Contracts).
(5) CPC 32 – Taxes on Income: The objective of this pronouncement is to set forth accounting
procedures related to taxes on income. It is about current and deferred assets and liabilities
related to taxes on income. It demands the recognition of deferred tax liabilities for all taxable
temporary differences between tax base and accounting base in the balance sheet, except in
certain specific cases For purposes of recognizing deductable temporary differences between
tax basis and book basis in the balance sheet, or recognizing tax losses and recoverable tax
credits, the pronouncement binds the recognition to the probable existence of taxable profit,
against which the deductable temporary difference and/or recoverable loss may be realized.
Due to the fact that the adjustments to adopt international standards have impact on the
Shareholders' Equity and the Income Statement previously used as calculation basis of the
taxes on income, it is necessary to recognize Deferred Income Tax (asset or liability) at the rate
of 34% on the IFRS/CPC adjustments. For purposes of the accounting standards used by the
Company (BR GAAP), a provision for non-recoverable deferred income tax assets was
recognized, which was reversed throughout the fiscal year ended at December 31st, 2009.
However, the adjustment mentioned should had been recognized in previous years, which is the
reason why there was a write-off of revenues against retained earnings in the fiscal year ended
at December 31st, 2009.
(6) ICPC 08 – Accounting for the Proposal of Payment of Dividends: The Pronouncement
provides that dividends in an amount above the minimum mandatory dividend established by
Law, not yet approved in a general meeting, shall be presented and disclosed in shareholders’
equity. According to previous accounting standards, these additional dividends above the
minimum statutory dividend were deduced from shareholders’ equity and recognized in
liabilities.
(7) ICPC 01 – Concession Contracts: This Interpretation provides that, since it is considered that
the concessionary does not control underlying assets, concession infrastructure (including
electricity) can not be recorded as fixed assets, being then recorded according to one of the
accounting models presented in the Interpretation, depending on the type of committment
regarding concessionary remuneration assumed before the grantor, according to the contract
21
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
established between the parties, which is the financial asset model, the intangible asset model
and the branched model.
The branched model is applied in distribution of electricity, due to the fact that the companies
in this segment are remunerated (i) by the Granting Authority, regarding the residual value of
the infrastructure at the end of the concession contract (financial asset of the concession) and
(ii) by users, for the part that is attributable to them for construction services and for electricity
supplying services (intangible assets).
(8) CPCs 38, 39 and 40 – Financial Instruments
All rules and interpretations currently in force and applicable to the Company were adopted in
2010, as follows:
 Changes to IFRS 7 Financial Instruments: The objective of this change is basically to
improve its disclosure requirements. It increases disclosure requirements for fair value
measurement, liquidity risk, market risk, credit risk and any other significant risk.
 Changes to IFRS 7 regarding fair value hierarchy: This change establishes fair value
hierarchy division regarding financial instruments. Hierarchy prioritizes unadjusted
quoted prices in an active market related to financial assets or liabilities classified as
Level 1. There are three types of levels of fair value classification related to financial
instruments, as follows:
Level 1 – Data coming from the active market (unadjusted quoted price), in order to
make possible daily access, including in the date of the fair value measurement.
Level 2 – Other data, different from those coming from the active market
(unadjusted quoted price) included in Level 1, extracted from the price model based
on observable market data.
Level 3 – Data extracted from the pricing model based on non-observable market
data.
Additionaly to the issues described above, the Company improving its Financial Statements, for
disclosure purposes, and started to present the following information:
 Earnings per share, as required by CPC 41 and IAS 33 (Earnings per share), presented
in Note 28;
 Segment information, as required by CPC 22 and IFRS 8 (Operating Segments),
presented in Note 39.
(9) Additionally, adjusting the financial statements at the transition date and at December 31st,
2009, the Company reclassified, for better disclosure, cash balances, presenting them as cash
and cash equivalents and securities and recognized an adjustment of the effects of the reversal
of deferred tax liabilities in the opening balance.
22
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
c) Presenting again the 2010 ITRs, comparably with those from 2009, equally adjusted to the
standards adopted in 2010.
In compliance with CVM Deliberation no. 656, of January 25th, 2011, the Company presents below
the effects in the income statement and in shareholders’ equity, in the quarters ended in 03/31/2009,
06/30/2009, 09/30/2009, 03/31/2010, 06/30/2010 and 09/30/2010, arising from full adoption of the
2010 standards.
3/31/2010
Balance before the adoption of the new practices
Pre-operational expenses
Investiment
Regulatory assets and liabilities
Fair value as deemed cost
Equity method
Income tax and differed social contribution
Balance after the adoption of the new practices
Shareholders
Equity
3/31/2009
Net Income
Shareholders
Equity
2,995,361
120,550
479,260
-
104,229
-
479,260
3,474,621
3/31/2010
Net Income
Net Income
Shareholders
Equity
2,981,969
168,288
2,995,361
120,550
2,981,969
298,907
-
26,400
-
(8,519)
(37,660)
776,720
(251,280)
(153)
167,435
(9,280)
(53,773)
(7,734)
(354,477)
819,085
(157,967)
(304)
50,130
(9,669)
(13,757)
104,229
298,907
26,400
479,260
104,229
298,907
26,400
224,779
3,280,876
194,688
3,474,621
224,779
3,280,876
194,688
Parent Company
06/30/2010
06/30/2009
Shareholders
Shareholders
Equity
Net Income
Equity
Net Income
Balance before the adoption of the new practices
Pre-operational expenses
Investiments
Regulatory assets and liabilities
Fair value as deemed cost
Equity method
Deferred income tax and social contribution
Balance after the adoption of the new practices
Pre-operational expenses
Investiments
Regulatory assets and liabilities
Fair value as deemed cost
Equity method
Deferred income tax and social contribution
Balance after the adoption of the new practices
Net
Income
168,288
Consolidated
06/30/2010
06/30/2009
Shareholders
Shareholders
Net
Equity
Net Income
Equity
Income
3,093,636
218,825
3,113,477
289,725
518,638
-
143,607
-
347,663
-
75,156
-
(8,696)
31,792
767,199
(271,657)
(330)
236,887
(18,801)
(74,149)
(7,924)
(270,648)
809,416
(183,181)
(494)
133,959
(19,338)
(38,971)
518,638
143,607
347,663
75,156
518,638
143,607
347,663
75,156
3,612,274
362,432
3,461,140
364,881
3,612,274
362,432
3,461,140
364,881
Parent Company
09/30/2010
09/30/2009
Shareholders
Shareholders
Equity
Net Income
Equity
Net Income
Balance before the adoption of the new practices
3/31/2009
Shareholders
Equity
3,093,636
218,825
3,113,477
289,725
Consolidated
09/30/2010
09/30/2009
Shareholders
Shareholders
Net
Equity
Net Income
Equity
Income
2,861,911
350,102
3,191,030
357,115
2,861,911
350,102
3,191,030
357,115
548,323
-
173,292
-
352,897
-
80,390
-
(8,839)
86,267
757,918
(287,023)
(472)
291,362
(28,082)
(89,515)
(8,006)
(252,925)
799,747
(185,919)
(575)
151,682
(29,007)
(41,710)
548,323
173,292
352,897
80,390
548,323
173,292
352,897
80,390
3,410,234
523,394
3,543,927
437,505
3,410,234
523,394
3,543,927
437,505
Regarding these information, the independent auditors applied the special review procedures,
according to CVM requirements for Quarterly Information (NPA 06, from IBRACON), not being,
therefore, audited.
4. SUMMARY OF ACCOUNTING PRACTICES
The accounting policies described in details below have been applied consistently to all periods
presented in these financial statements and in the preparation of the opening balance sheet in January
23
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
1st, 2009, with the purpose of transitioning to IFRS and CPC standards.
a) Financial instruments:
All financial instruments were recorded in the balance sheet of the Company, both in assets
and liabilities, and are initially measured at fair value when applicable and after initial
recognition, according to their classification.
Non derivative financial assets – Include financial investments, cash and cash equivalents,
marketable securities, concessionaires and permissionaires, financial concession assets and
other credits. Receivables and financial concession assets are measured at amortized cost using
the effective interest rate method, reduced by occasional losses in recoverable value, when
applicable, plus directly attributable transaction costs. Financial investments are measured at
fair value through profit and loss.
The Company derecognizes a financial asset when the contractual rights to cash flows of the
asset expire, or when the Company transfers the rights to receive contractual cash flows over a
financial asset in a transaction in which essentially all risks and benefits inherent to the
ownership of the financial asset are transferred. Occasional participations created or held by
the Company in financial assets are recorded as individual assets or liabilities.
Financial assets recorded at fair value – A financial asset is classified at fair value through
profit and loss if it is classified as held for trading or is designated as such at the moment of its
initial recording. Financial instruments are designated as fair value through profit and loss if
the Company manages such investments and make purchase and sale decisions based on their
fair values, according to its risk management and its investment strategy. Transaction costs are
recorded in the income statement as incurred. Financial instruments recorded at fair value
through profit and loss are measured at fair value and changes of assets fair value are
recognized in the income statement.
Loans and receivables – Financial assets with fixed or calculated installments which are not
rated in the active market. Such assets are initially recorded at fair value plus any attributable
transaction costs. After initial recognition, loans and receivables are measured by amortized
cost through the effective interest rate method, less any losses from impairment.
Cash and cash equivalents – Include cash, bank deposits and immediate liquidity financial
investments, due until 3 months from the investment date and subject to non-significant value
risks.
 Non derivative financial liabilities – The Company initially recognizes liabilities in the
inception date. The Company writes-off a financial liability when its contractual obligations
are withdrawn, cancelled or expired.
Financial assets and liabilities are offset and the net balance is presented in the balance sheet
when, and only when, the Company has the legal right to offset the amounts and intends to
settle in an offset basis or to realize the asset and settle the liability simultaneously.
The Company has the following non-derivative financial liabilities: loans, financing,
debentures and suppliers. Such financial liabilities are initially recognized at fair value plus any
24
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
attributable transaction costs. After initial recognition, these financial liabilities are measured
by amortized cost through the effective interest rate method.
 Derivative financial instruments – The Company operates with derivative financial instruments
to hedge from foreign exchange risks.
Derivatives are initially recognized at fair value and attributable transaction costs are
recognized in the income statement as incurred. After initial recognition, derivatives are
measured at fair value and changes are accounted for in the income statement.
b) Concessionaries and permissionaries (Clients) – Include electricity supplying, billed and
unbilled, moratory charges, interest for arrears and electricity traded with other
concessionaries for electricity supply, according to the amounts available in the Electric
Energy Trade Chamber (CCEE).
c) Inventories (including fixed assets) – Materials in inventories, classified in Current Assets
(maintenance and administration warehouse) and those destined to investments, classified in
Non-Current Assets – Fixed Assets (warehouse), are recorded at average acquisition cost and
do not exceed their replacement costs or realizable values, less allowances for losses, when
applicable.
d) Financial Concession Assets – The subsidiary Light SESA recorded a financial asset
receivable from the Granting Authority due to the unconditional right to receive cash at the
end of the concession, as provided in contract, as an indemnification for construction
services performed and not received through services rendered related to the concession.
These financial assets are accounted for at present value of the right and are calculated based
on the value of the assets in services inherents to the concession, measured at historical cost,
which shall be reversible at the end of the concession. These assets are held at amortized cost
and are remuneratel, via tariff, at the average investment remuneration rate, represented by
the capital cost (regulatory WACC), established by ANEEL, being this amount monthly
recognized as financial revenue, in the group of operating revenues, consistent with OCPC
05.
e) Investments – The subsidiaries and joint ventures financial statements are included in the
consolidated financial statements from the date when control begins until the date when
control ceases to exist. Accounting policies of subsidiaries and joint ventures are jointly
aligned with policies applied by the Company.
The subsidiaries and Joint ventures financial information are recognized in the individual
financial statements of the parent company through the equity method.
Business Combination
Acquisitions effective in January 1st, 2009, or after this date
For acquisitions effective in January 1st, 2009 or after this date, the Company measures
goodwill as the fair value of the transferred counterpart, including the recognized amount of
25
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
any non-controlling interest in the acquired company, deducing the net recognized amount
(generally the fair value) of identifiable assets and liabilities assumed, all measured at the
acquisition date. When the exceeding amount is negative, a gain resulting from the purchase
deal is immediately recognized in the income statement.
For each business combination the Company chooses if it will measure non-controlling interest
by its fair value, or by the proportional participation of non-controlling interest on identifiable
net assets, identified in the acquisition date.
Other transaction costs than those associated with issuance of debt securities or shareholding
interest, incurred by the Company, related to a business combination, are recorded as expenses
as they are incurred.
Acquisitions prior to January 1st, 2008
As a part of the transition to IFRS and CPCs, the Company chose not to restate business
combinations prior to January 1st, 2008. Regarding acquisitions prior to January 1st, 2009,
goodwill represents the amount recorded under the accounting standards previously adapted.
f) Fixed assets
Only tangible assets not linked to the infrastructure of the concession are recorded in this
account.

Recognition and measurement – measured at acquisition, formation or construction cost,
monetarily restated until 1995, less accumulated depreciation. Interest and other financial
charges and inflation effects resulting from loans with third parties, effectively applied in
works in progress, are recorded as cost of the respective fixed assets. Average annual
depreciation rates are presented in Note 14.
According to guidelines provided in CPC 27, about fixed assets, and interpretation ICPC10,
subsidiary Light Energia adopted fair value as deemed cost for fixed assets of the plants
that presented book value substantially lower than their fair value. Other fixed assets were
held at historical cost, either for being under construction or for being in compliance with
fixed assets requirements provided in CPC 27 and, in the Management's opinion, being
aligned with their fair values.
 Depreciation – It is calculated by linear method, based on annual rates established by
ANEEL, which are used in the industry and accepted by the market as adequate.
g) Intangible assets
 Research and Development – Expenditures in research activities, made with a possibility of
gaining knowledgement and scientific or technological understanding, are recognized in the
income statement as incurred. Development activities involve a plan or project aiming at
producing new or substantially enhanced products. Development expenditures are
capitalized only if the development costs can be reasonably measured, if the product or
process is technically and commercially viable, if future economical benefits are probable,
26
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
and if the Company and its subsidiaries have the intention and enough resources to
conclude the development and use or sell the asset. Capitalized expenditures include cost of
materials, direct labor, manufacturing costs directly attributable to the preparation of the
asset for its proposed use, and cost of loans in qualifying assets for which the starting date
of capitalization is January 1st, 2009 or later. Other development expenditures are recorded
in the income statement as they are incurred. Capitalized development expenditures are
measured at cost, less accumulated depreciation and losses from impairment.
 Infrastructure assets linked to the concession – Subsidiary Light SESA recognizes an
intangible asset resulting from the service concession contract when it has the right to
charge for using the infrastructure of the concession, measured at fair value, in the date of
initial recognition. After initial recognition, the intangible asset is measured at cost, which
includes costs of capitalized loans, less accumulated depreciation and losses from
impairment, as applicable.
 Other intangible assets – Other intangible assets with finite useful lives are measured at
cost, less accumulated depreciation and losses from impairment, as applicable.
 Subsequent expenditures – Subsequent expenditures are capitalized only when they
increase future economic benefits incorporated in the specific asset they relate to. All other
expenditures, including expenditures with internally generated goodwill and trademarks are
recognized in the income statement as incurred.
 Amortization – Calculated on the cost of an asset, or other value replacing cost, less the
residual value. Amortization is recognized in the income statement based on the linear
method related to estimated useful lives of intangible assets, other than goodwill, from the
date when they are available for use, given that this method is the one that better reflects
the consumption pattern of future economic benefits incorporated in the asset. The useful
life of an intangible asset in a service concession contract is the period from which the
Company is able to charge public consumers for using the infrastructure, until the end of
the concession period. Amortization methods, useful lives and residual values are reviewed
at the end of each financial year and are adjusted whenever it is adequate.
h) Impairment
 Financial assets (including receivables) – A financial asset not measured at fair value
through profit and loss is evaluated at each reporting date to assess if there is objective
evidence of loss in its recoverable value. An asset has loss in its recoverable value if an
objective evidence indicates that a loss event occurred after the initial recognition of the
asset, and that such loss event has a negative effect on future projected cash flows, which
can be reasonably estimated.
The objective evidence that the financial assets (including) have lost value might include
default or late payment by the debtor, restructuring the amount due to the Company under
conditions the Company usually would not consider in other transactions, indications that
the debtor or issuer will face bankruptcy, or the disappearance of an active market for a
security. Additionally, for a equity instrument, a significant or long decrease in its fair
value below its cost is an objective evidence of impairment.
27
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
The Company considers evidences of impairment of receivables either individually as
collectively. All individually significant receivables are assessed for impairment. All
individually significant receivables identified as not suffering individual impairment are
then collectively assessed regarding any other impairment not yet identified. Receivables
that are not individually important are collectively assessed for impairment, by jointly
grouping securities with similar risk characteristics.
When collectively assessing impairment, the Company uses historical trends of probability
of default, recovery term and incurred loss amounts, adjusted to reflect the Management’s
judgement regarding premises, as current economic and credit conditions may be such that
actual losses will be probably higher or lower then those suggested by historical trends.
An impairment related to a financial asset measured by amortized cost is calculated as the
difference between book value and present value of estimated future discounted cash flows
at the original effective interest rate of the asset. Losses are recorded in the income
statement and reflected in an account of allowance for receivables. Interest on impaired
assets remain being recognized through discount reversal. When a subsequent event
indicates reversion of the impairment, a decrease on impairment is reversed and recorded
in the income statement.
Management has not identified any evidence that justifies the need to reduce the financial
assets to their recoverable value as of December 31st, 2010 and 2009, except for the
allowance for doubtful accounts.
 Non-financial assets – Assets with undefined useful lives, such as goodwill, are not subject
to amortization and are annually tested for impairment. Assets subject to amortization are
reviewed for impairment whenever events or changes in circumstances indicate that the
book value may not be recoverable. An impairment loss is recognized at the value for
which the book value exceeds its recoverable value. The latter is the highest amount
between the fair value of an asset less sale costs and its value in use. For purposes of
impairment assessment, assets are grouped in lower levels for which there are segregate
identifiable cash entries (Cash Generating Units-CGU). Non financial assets, except for
goodwill, suffering impairment, are subsequently reviewed, to analise possible impairment
reversals in the report presentation date. For purposes of testing the recoverable value of
goodwill, the amount of goodwill arising from a business combination is allocated to the
CGU or group of CGU for which the benefit of sinergies of the combination is expected.
This allocation reflects the lowest level in which goodwill is monitored for internal
purposes and is not higher than a certain operating segment according to IFRS 8 and CPC
22.
i)
Benefits to employees
 Defined contribution plans – A defined contribution plan is a post-retirement benefit plan
under which an entity pays fixed contributions to a separate entity (Pension Fund) and shall
not have any legal or constructive obligation to pay for additional amounts. Liabilities for
contributions to defined contribution pension plans are recorded as expenses with benefits
to employees in the income statement in the periods during which services are rendered by
the employees. Contributions previously paid are recognized as assets under the condition
that there is a cash reimbursement or a reduction in future payments is available.
28
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
 Defined benefit plans – The net liability of the Company regarding defined benefit pension
plans is individually calculated for each plan, by estimating the value of the future benefit
earned by the employees in return of services rendered in current and previous periods; the
benefit is discounted to its present value. Any unrecognized past service costs and the fair
values of any plan assets are deduced. The discount rate is the gains presented in the date of
presentation of the financial statements for first line securities which due dates are close to
the conditions of the liabilities of the Company and that are denominated in the same
currency in which the benefits are expected to be paid. The calculation is made annually by
a qualified actuary using the projected unit credit method. When the calculation results in a
benefit for the Company, the asset to be recognized is limited to the total of any
unrecognized past service costs and the present value of economic benefits available in the
form of future reimbursements of the plan or reduction in future contributions to the plan.
To calculate the present value of the economic benefits, any minimum cost demands
applicable to any plan are considered. A economic benefit is available if it is realizable
throughout the life of the plan, or in the settlement of the liabilities of the plan.
Sponsor costs of the pension plan and occasional plan deficits are recorded by competence
and in compliance with CVM Resolution no. 600/09, based on the actuarial calculation
prepared by independent actuary.
Actuarial gains and losses arising from adjustements and changes in actuarial premises of
pension and retirement benefit plans are recorded in the income statement.
 Short term benefit liabilities to employees – are measured in undiscounted basis and are
incurred as expenses as the related service is rendered. The liability is recorded at the
amount expected to be paid under the cash bonus or short term profit share plans if the
Company and its subsidiaries have a legal or constructive obligation to pay this amount
due to past services rendered by the employee and the liability can be reasonably
estimated.
 Benefits of termination of employment relationship – The termination of employment
relationship benefits are recognized as expenses when the Company is proven to be
committed, with no realistic possibility of change, with a detailed formal plan to terminate
the employment contract before normal retirement or to provide benefits of termination of
employment relationship due to an offer made to encourage voluntary resignation. The
benefits for termination of employment relationship for voluntary resignation are
recognized as expenses when the Company has made a voluntary resignation offer, it is
probable that the offer will be accepted, and the number of employees adhering to the
program can be reasonably estimated.
 Profit Sharing – The Company recognizes profit sharing liabilities and expenses based on
a formula that considers profits attributable to the shareholders of the Company after
certain adjustments. The Company recognize a provision when it is contractual obliged by
contract or when there is a past practice that created a liability not recorded.
 Share based payment transactions – The fair value of benefits of share based payment is
recognized in the granting date, as personnel expenses, with a corresponding increase in
shareholders’ equity, for the period when the employees unconditionally acquire the right
to these benefits. The amount recognized as an expense is adjusted to reflect the number
29
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
of shares for which there is an expectation that the service conditions and non market
acquisition conditions will be met, in such way that the amount eventually recognized as
an expense is based on the number of shares that really meet the service conditions and
non-market acquisition conditions in the date when the rights of payment of these benefits
are acquired (vesting date). For benefits of share based payment with non-acquired
condition (non-vesting), the fair value at the granting date of the share based payment is
measured to reflect such conditions and there are no changes for differences between
expected and actual benefits.
The fair value of the amount payable to employees related to rights over share valuations,
payable in cash, is recognized as an expense with corresponding increase in liabilities, for
the period when employees unconditionally acquire the right for payment. The liability is
measured again on each date of presentation of the financial statements and at the
settlement date. Any changes in the fair value of the liability are recognized as personnel
expenses in the income statement.
j) Income tax and social contribution – Current and deferred income tax and social contribution
of the year are calculated based on 15% rates, plus the additional 10% over the taxable
income exceeding R$240 for income tax and 9% over the taxable income for social
contribution on net profit.
Current tax is the expected payable or recoverable tax on the taxable profit or loss of the
year, at tax rates decreed or substantially decreed in the date of presentation of the financial
statements and any adjustments to payable taxes related to previous years.
Deferred tax is recognized regarding temporary differences between book value of assets
and liabilities for accounting purposes and the corresponding values for taxation purposes.
Deferred tax assets and liabilities are offset if there is a legal right to offset current tax assets
and liabilities, and they relate to income taxes charged by the same tax authority on the
same entity subject to taxation.
A deferred income tax and social contribution asset is recognized by tax losses, tax credits
and deductible temporary differences, not used when it is probable that future profits subject
to taxation will be available and against which they shall be used.
Deferred income tax and social contribution assets are reviewed at each closing date and are
reduced as their realization is no longer probable.
As provided in Law no. 11,941/09, the Company uses the Transition Tax Regime (RTT) to
calculate actual profit, so that the changes in the criteria of recognition of revenues, costs
and expenses comprised in the calculation of the net income for of the year do not have
material effect on the calculation of the actual profit of the entity subject to RTT, and for
taxation purposes, the accounting methods and criteria in force in December 31, 2007 shall
be considered.
k) Suppliers – Accounts payable to suppliers are liabilities payable for goods or services
acquired from suppliers in the regular course of business, classified as current liabilities if
the due date is within the period of one year.
30
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
They are initially recorded at fair value and, subsequently, measured at amortized cost, using
the effective interest rate method. Practically, they are usually recorded at the corresponding
invoice value.
l) Loans – Loans are recognized, initially, at fairvalue, net of incurred transaction costs and
are, subsequently, presented at amortized cost. Any difference between the amounts
obtained (net of transaction costs) and the settlement value is recognized in the income
statement during the period in which the loans are outstanding, usind the effective interest
rate method.
All fees paid to establish the loan are recognized as transaction costs of the loan, since it is
probable that part of or the full loan is withdrawn. In this case, the fee is deferred until the
withdrawal takes place. When there are no evidences of probability of withdrawal of part of
or the total loan, the fee is capitalized as an prepayment for liquidity services and it is
amortized during the period to which the loan is related.
m) Provisions – A provision is accounted for in the balance sheet when the Company and its
subsidiaries have a legal or constituted liability resulting from a past event, and it is probable
that an economic resource is required to settle the liability. Provisions are accounted for
based on the best estimates of involved risks. A provision for contingencies is constituted
upon appraisal and quantification of lawsuits, with a loss probability considered to be
probable in the opinion of the Management and its legal advisors.
n) Accounting for transactions of purchase and sale of electric energy in the Electric Energy
Trade Chamber - CCEE - The cost of the electricity purchased and supply revenues are
recorded by competence, based on information disclosed by CCEE, which is responsible for
calculating the amounts and quantities of purchases and sales in its forum, or based on the
Management’s estimates, whenever this information is not available.
o) Capital Stock – Common Shares – Are classified as shareholders’ equity. Additional costs
directly attributable to issuance of shares are registered as deductions in shareholders’ equity,
net of any tax effects.
p) Revenue recognition – Revenues are measured at fair value of the receivable or received
counterpart, less taxes and discounts inherent to them.
 Electricity sales revenues – are recognized when it is probable that the economic
benefit associated to the transactions will flow to the Company and the amount of
revenues can be reasonably measured. Traded electricity is monthly invoiced based on
the electric energy supply, according to amounts disclosed by the Electric Energy
Trade Chamber (CCEE).
 Service Revenues – Revenues from services rendered are recognized in the income
statement based on the stage of completion of services in the date of presentation of the
financial statements. The stage of completion is appraised by reference to research of
works performed.
31
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
 Construction Revenues – ICPC 01 establishes that the concessionary of electric energy
shall register and measure revenues from services rendered according to Technical
Pronouncements CPC 17 – Contruction Contracts (construction or improvement
services) and CPC 30 – Revenues (operating services – electric energy supply), even
when ruled by a single concession contract. Subsidiary Light SESA accounts for
revenues and costs related to construction or improvement services on the
infrastructure used to render electric energy distribution services. The construction
margin adopted is established as being equal to zero, considering that: (i) the activity
of the subsidiary is electric energy distribution; (ii) every construction revenue is
related to the construction of insfrastructure to reach its main activity; and (iii) the
subsidiary hires non-related parties for constructing infrastructure. The totality of
additions to intangible assets in process is monthly recorded in the income statement,
as construction cost.
q) Financial revenues and expenses – Include interest, monetary and exchange changes on
rights and obligations, subject to monetary restatement until the balance sheet date. Foreign
currency assets and liabilities are converted to reais according to the exchange rate disclosed
by Banco Central do Brasil, in the balance sheet date.
r) Earnings per share - Basic earnings per share are calculated through the earnings of the
period attributable to controlling and non-controlling shareholders of the Company and
weighted average of outstanding shares in the respective period. Diluted earnings per share
are calculated through the referred average outstanding shares, adjusted by instruments
potentially convertible in shares, with a diluting effect, in the presented periods.
s) Added value statement – The Company prepared added value statements (DVA) in the terms
of the technical pronouncement CPC 09 – Added Value Statement, which are presented as an
integral part of the financial statements under BRGAAP applicable to publicly-held
companies, whilst they represent, for IFRS, additional financial information.
t) Foreign currency – Transactions in foreign currency are converted to the functional currency
of the Company at the exchange rates in the transaction dates. Monetary assets and
liabilities denominated and calculated in foreign currencies are converted to the functional
currency at the exchange rate in the closing date. Gains and losses resulting from
restatement of these assets and liabilities between the exchange rate in force at the transition
date and year-end dates are recognized as financial revenues or expenses in the income
statement.
u) Segment information – An operating segment is a component of the Company that develops
business activities in which it can obtain revenues and incur in expenses, including revenues
and expenses related to transactions with other components of the Company. All results from
operating segments are frequently reviewed by the Management, in order to make decisions
regarding the resources to be allocated to the segment and to assess their performance, and
for this purpose individual financial information is available.
The segment results reported to the Management include items directly attributable to the
segment, as well as those that may be allocated in reasonable basis.
32
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
v) Distribution of dividends – Distribution of dividends to shareholders of the Company is
recognized as a liability in the year-end financial statements, based on the by-laws of the
Company. Any amounts above the minimum mandatory dividend is only accounted for in
the date they are approved by the shareholders, in a General Meeting.
w) Rules and interpretations not yet adopted – Several IFRS rules, amendments to rules and
interpretations issued by IASB are not yet in force in the year ended in December 31st, 2010,
such as:




Improvements to IFRS 2010.
IFRS 9 Financial Instruments.
Prepayment of a minimum fund requirement (Amendment to IFRIC 14).
Amendments to IAS 32 Classification of rights issues.
CPC did not issued yet pronouncements equivalent to the IFRSs mentioned above, but there
are expectations that it does before the required date to become in force. Anticipated adoption
of IFRSs pronouncements is conditioned to previous approval in normative act by CVM –
Brazilian Securities and Exchange Commission.
Since it did not adopt these standards in anticipation, the Company has not yet appraised the
potential effects of them in its financial statements.
33
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
5. CONSOLIDATION PROCEDURES
The consolidated financial statements include those of Light S.A., its direct subsidiaries and joint
ventures, listed as follows:
Percentage
Interest
2010 (%)
2009 (%)
100
100
100
100
100
100
100
51
51
100
100
100
100
100
100
100
-
Light Serviços de Eletricidade S.A.
Light Energia S.A
Light Esco Prestação de Serviços S.A.
Lightcom Comercializadora de Energia S.A
Light Hidro Ltda.
Instituto Light para o Desenvolvimento Urbano e Social
Itaocara Energia Ltda.
Lightger S.A.
Axxiom Soluções Tecnológicas S.A.
Transactions eliminated in the consolidation
Intragroup balances and transactions, and any revenues or expenditures derived from intragroup
transactions, were eliminated in preparing the consolidated financial statements. Unrealized gains in
transactions with subsidiaries recorded at equity pickup were offset against the relevant investment
proportionate to the parent's interest in the subsidiary Company. Unrealized losses were eliminated
using the same method employed to unrealized gains, however only to the extent that there is no
evidence of any impairment loss.
6. CASH AND CASH EQUIVALENTS
12/31/2010
Cash
Financial investments of immediate liquidity
Certificate of deposit (CDB)
Total
Parent Company
12/31/2009
01/01/2009
12/31/2010
Consolidated
12/31/2009
01/01/2009
386
2.557
50
36.028
27.139
41.029
37.909
38.295
12.027
14.584
40.206
40.256
478.081
514.109
733.174
760.313
507.954
548.983
Financial investments are represented by transactions purchased from organizations trading in the
domestic financial market, at regular market terms and rates. These investments are highly liquid, have
a daily repurchase commitment by the counterparty financial institution (the repurchase rate is
previously agreed upon by the parties), involve low credit exposures, and yield according to the
variation of the interbank deposit rate (CDI).
34
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
7. MARKETABLE SECURITIES
These papers involve bank deposit certificates (CDB) in the amount of R$11,122 (R$68,059 in 2009
and R$41,143 in 2008) forming the underlying assets of certain surety bonds pledged in power
auctions, and also other proceeds from the sale of assets that were held for re-investment in the electric
grid system or have maturies of 3 months or longer.
8. CONSUMERS, CONCESSIONAIRES AND PERMISSIONAIRES (CLIENTS)
12/31/2010
CURRENT
Billed sales
Unbilled sales
Debt payment by installments (a)
Other receivables
Sales within the scope of CCEE
Supply and charges related to the use of electric network
(-) Allowance for doubtful accounts (b)
NON-CURRENT
Debt payment by installments (a)
Other receivables
Consolidated
12/31/2009
01/01/2009
1,912,492
277,339
154,896
489
2,345,216
1,678,167
286,170
153,421
2,117,758
1,729,885
260,361
140,874
2,131,120
5,546
46,444
51,990
1,001
54,946
55,947
613
52,412
53,025
(1,058,502)
1,338,704
(817,851)
1,355,854
(901,290)
1,282,855
276,092
20,169
296,261
297,798
297,798
292,594
292,594
a) The balances of debt repayment facilities were adjusted to their present value, as applicable,
pursuant to Law No. 11,638/07. The present value is determined for each relevant consumer debt
renegotiation (debt repayment facilities) based on such interest rate as will reflect the term and risk
associated with each individual transaction, on average 1% per month.
The balance includes the present value of repayment agreements with installment acceleration
options (these options, once exercised, give customers a discount on any accelerated installment). It
is estimated that an aggregate amount of R$21,007 in options will be exercised in 2011.
b) An allowance for doubtful accounts was set up based on certain premises and in an amount deemed
sufficient to meet any asset realization losses, in accordance with the ANEEL guidelines
summarized as follows:
Customers with significant debts (large accounts):
- Outstanding balances of customer accounts are reviewed on a case-by-base basis and per
consumer class.
35
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
In all other instances:
- Residential consumers – over 90 days past due.
- Commercial consumers – over 180 days past due.
- Industrial, rural, public sector, public lighting, public utility, and other accounts – over 360 days
past due.
Outstanding balances and receivables in connection with invoiced electric power sales and also
debt repayment programs are summarized as follows:
Billed sales and renegotiated debts
Residential
Industrial
Commercial
Rural
Public sector
Public lighting
Public utility
Total - current and non-current
Maturing
balance
240,927
26,905
144,495
671
42,579
4,651
220,761
680,989
Matured balances
Overdue up to Overdue over
90 days
90 days
160,278
11,516
40,629
269
17,174
2,844
1,263
233,973
807,486
163,843
300,284
628
112,970
32,171
11,136
1,428,518
TOTAL
Allowance for bad debts (PCLD)
12/31/2010
12/31/2009
01/01/2009
12/31/2010
1,208,691
202,264
485,408
1,568
172,723
39,666
233,160
2,343,480
1,053,757
216,120
377,087
1,437
160,921
41,045
279,019
2,129,386
1,081,768
241,717
347,212
1,387
141,857
51,028
298,384
2,163,353
(786,940)
(39,993)
(223,836)
(499)
(4,919)
(1,635)
(546)
(1,058,368)
12/31/2009
(565,483)
(37,774)
(205,948)
(431)
(5,224)
(2,088)
(766)
(817,715)
01/01/2009
(743,636)
(32,604)
(114,031)
(286)
(6,481)
(2,718)
(1,400)
(901,156)
In 2010, a total amount of R$14,133 (R$217,391 in 2009) of noncollectable accounts was written off.
9. TAXES AND CONTRIBUTIONS
Parent Company
12/31/2010
CURRENT
Tax credits – IRPJ and CSLL (a)
IRRF (Withholding Income Tax) recoverable
ICMS payable
Prepaid IRPJ/CSLL
Other
TOTAL
1,080
1,080
Assets
12/31/2010
Assets
12/31/2009
703
71
774
12/31/2009
01/01/2009
284
284
12/31/2010
Liabilities
12/31/2009
-
53
53
1
13
17
31
Consolidated
Liabilities
01/01/2009
12/31/2010
01/01/2009
12/31/2009
10
10
01/01/2009
CURRENT
Tax credits – IRPJ and CSLL (a)
IRRF (Withholding Income Tax) recoverable
IRRF (Withholding Income Tax) payable
ICMS recoverable
ICMS payable
Installment Payments - Law 11,941/09 (b)
PIS/COFINS recoverable (c)
PIS/COFINS payable
Prepaid IRPJ/CSLL
Provision for IRPJ/CSLL
Other
TOTAL
6,838
80,080
17,935
156,795
17,237
278,885
102,073
11,522
109,704
6,634
181,364
31,371
442,668
107,818
11,522
123,440
103,945
204,552
14,734
566,011
523
23,833
21,633
61,234
230,408
12,538
350,169
2
5,561
21,684
57,420
188,835
11,678
285,180
2
15,166
10,973
51,112
143,394
9,814
230,461
NON-CURRENT
Installment Payment - PAES
Installment Payment - Law 11,941/09 (b)
IRPJ and CSLL – Unrealized foreign income
ICMS recoverable
TOTAL
57,908
57,908
40,767
40,767
72,807
72,807
177,699
177,699
303,585
303,585
38,406
286,337
324,743
-
-
a) The balance refers to tax credits recoverable arising from negative balance withholdings of
financial investments and government agencies in the amount of R$5,743 and prepaid Income Tax
and Social Contribution credits for 2009 amounting to R$1,095. The variation of the amounts for
36
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
the year arises from the adjustment based on the Selic rate in the amount of R$16,778, including
new credits in the amount of R$172,200, net of offsets in the year, amounting to R$284,213.
b) New REFIS (Tax Recovery Program) - (Law 11,941/09) – Light has been making monthly
minimum payments of one hundred reais as provided for by laws, plus payment of installments
deriving from migration of PAES (Special Installment Payment Program) - Social Security (REFIS
II), in the consolidated annual amount of R$7,010. The installment balance is restated by SELIC
rate and the restatement amount recorded in the year is R$16,908.
LIABILITIES
PAES - Social Welfare Employees
COFINS 1%
IRPJ and CSLL LIR/LOI
IRPJ comp. unconfirmed (LIR/LOI)
COFINS comp. unconfirmed (LIR/LOI)
CSLL comp. unconfirmed (LIR/LOI)
CSLL (JCP deduction)
CSLL (enforcement suspended)
CPMF (symbolic foreign exchange)
IRPJ / CSLL Law 8200/91
INSS - quarterly
INSS - joint and several
IRPJ (spontaneous confession)
CSLL (enforcement suspended)
Debt total
included in the
REFIS
(33,503)
(206,970)
(173,202)
(10,602)
(19,626)
(3,982)
(19,332)
(17,606)
(5,314)
(38,176)
(46,011)
(706)
(5,173)
(5,435)
(585,639)
Interest and Fine
Compensation
(tax losses)
16,706
106,853
47,542
3,590
6,926
1,349
12,797
5,478
1,745
26,923
25,779
374
2,781
3,585
262,428
Installment
Amount Law
11.941/09
(16,797)
(100,117)
(125,660)
(7,012)
(12,700)
(2,633)
(6,535)
(12,128)
(3,569)
(11,253)
(20,232)
(332)
(2,392)
(1,850)
(323,211)
Adjustments
for inflation and
Payments in
2009
1,005
(1,001)
(1,258)
(70)
(127)
(26)
(65)
(121)
(36)
(112)
(202)
(3)
(24)
(18)
(2,058)
Balance as of
12/31/2009
(15,792)
(101,118)
(126,918)
(7,082)
(12,827)
(2,659)
(6,600)
(12,249)
(3,605)
(11,365)
(20,434)
(335)
(2,416)
(1,868)
(325,269)
Desistance/
Reversal
126,918
8,917
135,835
Adjustments
for inflation and
Payments in
2010
5,865
(9,180)
(643)
(1,164)
(242)
(600)
(302)
(327)
(1,032)
(1,854)
(31)
(218)
(170)
(9,898)
Balance as of
12/31/2010
(9,927)
(110,298)
(7,725)
(13,991)
(2,901)
(7,200)
(3,634)
(3,932)
(12,397)
(22,288)
(366)
(2,634)
(2,038)
(199,332)
Given that the motion to partially withdraw the matter of assessment timing (cash basis vs. accrual
basis) relative to the incomes of the LIR and LOI businesses from writ of mandamus #
2003.51.01.005514-8 was not accepted by the Treasury attorney nor granted by the competent
court, the Company elected to fully withdraw the foregoing case. As a result, Light SESA
recalculated income earned overseas from 2002 through 2007 (term of the REFIS ) using equity
accounting on an accrual basis, then applied the balance of tax losses accrued over that period to
fully offset the income tax and social contributions payable on its overseas income. Consequently,
the variation seen in the outstanding REFIS balance over the year can be explained by exclusion of
the (restated) amount of R$135,835 relating to the issue of taxation of overseas income, which
amount had been previously included in the repayment program (REFIS), and the amount paid in
connection with the PAES – Previdenciário as described above.
37
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Debts per group of tax repayment programs:
Balance as of
12/31/2009
FEDERAL REVENUE SERVICE
OTHER TAXES
PENSIONS ( PAES )
OFFICE OF THE GENERAL COUNSEL TO THE NATIONAL TREASURY ( PGFN )
OTHER TAXES
PENSIONS
Reversal
Monetary
adjustment
2010
Balance as of
12/31/2010
(284,425)
(15,792)
135,835
-
(13,490)
5,865
(162,079)
(9,927)
(4,283)
(20,769)
(325,269)
135,835
(388)
(1,885)
(9,898)
(4,671)
(22,654)
(199,332)
c) The balance of recoverable PIS and COFINS relates to charges withheld by government agencies
and instrumentalities in connection with service sales.
10. DEFERRED TAXES
ASSETS
12/31/2010
Deferred
Tax Base
tax
Consolidated
12/31/2009
Deferred
Tax Base
tax
01/01/2009
Deferred
Tax Base
tax
Income Tax
Tax Losses
Temporary Differences
844,992
1,786,984
211,248
446,746
1,385,458
1,917,214
346,365
479,304
2,169,381
2,557,953
542,345
639,488
Social Contribution
Negative Base
Temporary Differences
893,800
1,786,984
80,442
160,829
1,303,657
1,917,214
117,329
172,549
2,537,064
2,343,716
228,336
210,934
Total
LIABILITIES
899,265
12/31/2010
Deferred
Tax Base
tax
1,115,546
Consolidated
12/31/2009
Deferred
Tax Base
tax
1,621,104
01/01/2009
Deferred
Tax Base
tax
Income Tax
Temporary Differences
811,043
202,761
885,972
221,493
1,003,271
250,819
Social Contribution
Temporary Differences
811,043
72,994
885,972
79,737
1,003,271
90,294
Total
275,755
301,230
341,113
38
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
In order to substantiate its deferred tax assets, the Company updated the feasibility analysis approved
by the Board of Directors and reviewed by the Fiscal Council considering realizations as of December
2010, which analysis is based on estimations prepared in 2010. The feasibility analysis indicates the
balance will be recovered in up to 5 years. Below is a list of deferred tax asset amounts per relevant
estimated year of realization.
ASSETS
2011
2012
2013
2014
2015
Total – Light S.A. and subsidiaries
211,602
217,625
194,819
264,590
10,629
899,265
The interim difference taxable basis breakdown is as follows:
CSLL
Consolidated
12/31/2009
IR
CSLL
IR
12/31/2010
IR
01/01/2009
CSLL
ASSETS
Allowance for doubtful accounts
Provision for profit sharing
Provision for labor contingencies
Provision for tax contingencies
Provision for civil contingencies
Impacts resulting from the adoption of the new CPCs
Other provisions
1,051,462
19,270
169,886
167,657
196,095
34,754
147,860
1,051,462
19,270
169,886
167,657
196,095
34,754
147,860
808,427
26,223
256,734
163,654
179,490
357,602
125,084
808,427
26,223
256,734
163,654
179,490
357,602
125,084
885,065
33,200
164,725
279,212
456,887
574,676
164,188
885,065
33,200
164,725
279,212
242,650
574,676
164,188
TOTAL - ASSETS
1,786,984
1,786,984
1,917,214
1,917,214
2,557,953
2,343,716
748,637
62,406
811,043
748,637
62,406
811,043
786,000
99,972
885,972
786,000
99,972
885,972
828,754
174,517
1,003,271
828,754
174,517
1,003,271
LIABILITIES
Deemed cost - Light Energia
Other provisions
Reconciliation of effective and nominal rates in the provision for income tax and social contribution:
Earnings before Income tax and Social Contribution
Combined income tax and social contribution rate
Income tax and social contribution at statutory rates
Income tax and social contribution effect on permanent additions and exclusions
Income tax and social contribution effect on equity in the earnings of subsidiaries
Effect of offshore income and social contribution taxation
Deferred tax credits not recognized CVM 371/02 - Light S.A.
Tax incentives
Others
Income tax and social contribution on income
Current IRPJ and CSLL on income
Deferred IRPJ and CSLL on income
Consolidated
12/31/2010
12/31/2009
922.619
960.912
34%
34%
(313.690)
(326.710)
(14.905)
109.409
(87.463)
(25.341)
(52.582)
(1.541)
(18.863)
7.887
4.126
121
86
(347.469)
(371.997)
(103.482)
(243.987)
(347.469)
(168.994)
(203.114)
(372.108)
39
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
11. CONCESSION FINANCIAL ASSETS
Owing to its utility nature, distribution of electric power is governed by certain Utility Concession
Agreements and any subsequent amendments thereto, entered into by the Union (Granting Authority Grantor) and the subsidiary Light Serviços de Eletricidade S.A (Concessionare Operator). These
agreements generally contain provisions governing matters such as follows:
 Which services the Operator must provide and to whom (i.e. consumer classes) such services
must be provided.
 These concession agreements contain a service level clause or provisions establishing
performance standards applicable to utility services, usually addressing quality maintenance
and improvement in connection with any services provided to the public. Additionally, the
Operator is required, upon expiration of the concession, to return infrastructure assets in the
same operating conditions as they were handed over when the agreement was executed. In
order to satisfy and meet these obligations, investments are made on an ongoing basis over the
term of the concession. Therefore, some assets associated with the concession contract may be
replaced a number of times before the concession expires.
 Once the concession expires, infrastructure assets return to the granting authority upon
payment of a certain compensation.
 Concession prices are fixed through a rate methodology set forth in each concession agreement
that is based on a parametric formula (Portions A and B), and includes a review mechanism to
ensure that the tariff will be sufficient to cover any costs, repay investments made and provide
return on the capital invested.
Based on the features of the electric power distribution agreement of the subsidiary, management is of
the opinion that the requirements for application of Accounting Interpretation ICPC 01 - Concession
Contracts, which interpretation provides guidelines addressing how to account for public to private
service concession arrangement, have been successfully met in order to reflect the electric power
distribution business, comprising:
a) An estimated portion of any investments made and not repaid or amortized before the
concession expires, net of special obligations classified as financial assets due to their nature as
an unqualified right to receive cash or any other financial asset directly from the granting
authority.
b) A portion remaining after the financial asset was determined, net of any special obligations
classified as intangible assets because its recovery is contingent upon the utility service being
used.
40
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
The infrastructure handed over or built in connection with the power distribution business, originally
represented by power, plant and equipment and other intangible asset items of the subsidiary, is
recovered through two distinct cash flows, as follows:
a) a portion of the infrastructure is recovered through selling power distribution services to
consumers (monthly billing of power consumed/sold) during the term of the concession; and
b) another portion is recovered by way of the compensation payable for revertible assets upon
expiration of the concession, which compensation will be paid directly by the Granting
Authority or any of its agents.
Management estimates that the compensation payable for the financial assets will be made based on
the not yet amortized portions of investments in revertible concession infrastructure assets, determined
at the cost of acquisition/construction, made for the purpose of ensuring stable, continuously improved
provision of utility services, net of any special obligations. This compensation has been determined at
transition date to be as follows:
Property, Plant
and Equipment
Original balance published on January 1, 2009
Bifurcation of special obligation
Bifurcation of property, plant and equipment and intangible assets - ICPC 01
Recoverable
Assets
(Concession)
162,135
(97,571)
3,084,245
(59,731)
363,960
168,169
3,148,809
304,229
Balance of subsidiaries
1,421,610
118,823
Balance in accordance with ICPC 01 - Consolidated
1,589,779
3,267,632
Balance in accordance with ICPC 01 - Light SESA
3,459,072
(157,302)
(3,133,601)
Intangible
Assets
304,229
Below is a summary of transactions related to the balances of revertible assets (concession assets):
Balance as of January 1, 2009
Additions
Write-offs
Balance as of December 31, 2009
Additions
Write-offs
Balance as of December 31, 2010
304,229
51,743
(1,188)
354,784
114,375
(129)
469,030
41
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
12. OTHER RECEIVABLES
12/31/2010
CURRENT
Advances to suppliers and employees
Property rental
Account receivable from the sale of property
Public lighting fee
Expenditures to refund
Subsidy to low-income segment
Other amounts receivable - LTIP
Other
Total
Parent Company
12/31/2009 01/01/2009
18
23,842
23,860
31
18,634
1,547
20,212
-
-
-
-
-
-
NON-CURRENT
Assets and rights for disposal
Energy - Other
Other
Total
30
137
167
12/31/2010
Consolidated
12/31/2009
01/01/2009
38,065
302
12,130
48,399
8,111
19,584
26,382
152,973
20,395
425
25,119
10,779
15,256
18,634
6,642
97,250
11,835
113
25,740
13,360
49,926
5,695
106,669
7,226
639
7,865
7,229
1,496
8,725
11,597
13,329
1,494
26,420
a) Out of the amount stated, a total of R$5,489 (R$3,373 as of December 31, 2009) was
acknowledged (however yet unpaid) by ANEEL in February 2011, while R$14,095 (R$11,883 as
of December 31, 2009) are pending acknowledgment.
13. INVESTMENTS
12/31/2010
Parent Company
12/31/2009
1/01/2009
12/31/2010
Consolidated
12/31/2009
1/01/2009
Accounted for under the equity method:
Light SESA
Light Energia S.A.
Light Esco Prestação de Serviços S.A.
Lightger S.A. (a)
LightCom
Itaocara Energia (a)
Axxiom Soluções Tecnológicas S.A.
Lighthidro Ltda (a)
Subtotal
2,442,433
815,593
37,787
36,767
2,733
16,067
2,304
50
3,353,734
2,699,254
747,962
27,825
25,772
11,115
50
3,511,978
2,716,401
690,032
17,042
(425)
(2,867)
50
3,420,233
-
-
-
Goodwill from future profitability
Other permanent investments
Subtotal
Total
2,034
1,020
3,054
3,356,788
1,169
1,169
3,513,147
1,533
1,533
3,421,766
17,586
17,586
17,586
20,388
20,388
20,388
13,615
13,615
13,615
(a) Pre-operational Company
42
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
INFORMATION ON SUBSIDIARIES AND JOINT VENTURES
Ownership
interest (%)
12/31/2010
Light SESA
Light Energia
Light Esco
LightCom
Light Hidro
Instituto Light
Itaocara Energia
Light Ger
Axxiom
Paid-up
capital
100
100
100
100
100
100
100
51
51
Ownership
interest (%)
12/31/2009
Light SESA
Light Energia
Light Esco
Light Hidro
Instituto Light
Itaocara Energia
Light Ger
Light SESA
Light Energia
Light Esco
Light Hidro
Instituto Light
Itaocara Energia
Light Ger
100
100
100
100
100
100
100
Dividends
receivable
2,699,254
747,962
27,825
50
11,115
25,772
Paid-up
capital
Dividends
receivable
2,442,433
815,593
37,787
2,733
50
16,067
36,767
2,304
Shareholders'
equity
2,082,365
77,422
7,584
50
300
17,294
23,791
Ownership
interest (%)
01/01/2009
2,082,365
77,422
7,584
1,000
50
300
22,294
35,743
3,672
Paid-up
capital
100
100
100
100
100
100
100
Shareholders'
equity
2,082,362
77,422
7,584
50
300
2,697
2,000
(89,544)
-
Dividends
received
Additional
dividends paid
(481,564)
(18,074)
-
Dividends
receivable
2,716,401
690,032
17,042
50
(2,867)
(425)
Income / loss
for the year
(23,346)
(21,066)
(3,102)
(540)
-
(125,510)
(26,833)
(3,358)
-
Shareholders'
equity
Dividends
received
475,316
88,697
13,064
2,273
(47)
13
78
Income
for the year
(169,729)
-
Dividends
received
(218,064)
(18,074)
-
541,589
84,763
14,141
(617)
4,406
Income
for the year
(350,766)
(41,387)
-
918,164
76,101
6,280
-
Total
Assets
8,037,865
1,538,389
68,161
18,831
67
2
145,003
48,819
4,216
Total
Assets
8,419,932
1,616,010
58,753
69
2
129,530
32,905
Total
Assets
8,679,914
1,547,093
42,933
53
126,583
17,556
CHANGES IN SUBSIDIARIES AND JOINT VENTURES
01/01/2009
Light SESA
Light Energia
Light Esco
LightCom
Light Ger
Light Hidro
Instituto Light
Itaocara Energia
Axxiom
12/31/2009
2,716,401
690,032
17,042
(425)
50
(2,867)
-
2,699,254
747,962
27,825
25,772
50
11,115
-
01/01/2009
Light SESA
Light Energia
Light Esco
Light Ger
Light Hidro
Itaocara Energia
2.716.401
690.032
17.042
(425)
50
(2.866)
Capital
Increase
Sale of
interest
1,000
37,892
5,000
3,672
Capital
increase
3
21.791
14.597
Dividends
received
(28,851)
-
(708,791)
-
Dividends
received
(169.729)
-
Dividends
receivable
(23,346)
(21,066)
(3,102)
(540)
-
Dividends
receivable
(389.010)
(26.833)
(3.358)
-
Equity
method
Other
1,941
(1)
(1,446)
475,316
88,697
13,064
2,273
13
(47)
78
Equity
method
541.589
84.763
14.141
4.406
(616)
12/31/2010
2,442,433
815,593
37,787
2,733
36,767
50
16,067
2,304
12/31/2009
2.699.254
747.962
27.825
25.772
50
11.115
43
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
14. PROPERTY, PLANT AND EQUIPMENT
Consolidated
Historical cost
Generation
Transmission
Distribution
Administration
Commercialization
In service
Generation
Administration
In progress
Total
2,662,063
57,601
47,479
240,265
9,785
3,017,193
185,964
114,993
300,957
3,318,150
12/31/2010
Accumulated
depreciation
(1,436,442)
(41,504)
(36,907)
(166,885)
(7,519)
(1,689,257)
Net value
01/01/2009
Net value
Net value
1,225,621
16,097
10,572
73,380
2,266
1,327,936
1,281,715
16,770
15,336
91,141
2,305
1,407,267
1,341,295
17,455
22,542
103,423
3,479
1,488,194
185,964
114,993
300,957
112,751
80,550
193,301
57,266
44,319
101,585
1,628,893
1,600,568
1,589,779
(1,689,257)
12/31/2009
The statement below summarizes the changes in property, plant and equipment:
Consolidated
Balance as of
12/31/2009
Additions
Write offs
Inter-account
transfers
Balance as of
12/31/2010
PROPERTY, PLANT AND EQUIPMENT IN SERVICE
Cost
Land
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Total Property, Plant and Equipment in Service - Cost
(-) Depreciation
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Total Property, Plant and Equipment in Service - Depreciation
105,803
1,247,913
271,021
1,240,560
32,497
127,130
3,024,924
4,121
222
6,789
65
894
12,091
(777)
(1,331)
(15,289)
(1,403)
(71)
(951)
(19,822)
-
105,026
1,250,703
255,954
1,245,946
32,491
127,073
3,017,193
(734,988)
(147,937)
(616,922)
(24,857)
(92,953)
(1,617,657)
(22,524)
(7,853)
(37,738)
(3,114)
(9,485)
(80,714)
1,331
6,214
576
73
920
9,114
-
(756,181)
(149,576)
(654,084)
(27,898)
(101,518)
(1,689,257)
PROPERTY, PLANT AND EQUIPMENT IN PROGRESS
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Studies and frojects
Total Property, Plant and Equipment in Progress
TOTAL PROPERTY, PLANT AND EQUIPMENT
43,416
29,866
81,300
7,497
14,530
16,692
193,301
34,198
14,645
51,364
2,623
2,081
20,481
125,392
(775)
(775)
(13,874)
(65)
(3,022)
(16,961)
77,614
44,511
118,790
10,055
13,589
36,398
300,957
1,600,568
56,769
(11,483)
(16,961)
1,628,893
44
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Consolidated
Balance as of
01/01/2009
PROPERTY, PLANT AND EQUIPMENT IN SERVICE
Cost
Land
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Total Property, Plant and Equipment in Service - Cost
(-) Depreciation
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Total Prop., Plant and Equip. in Service - Depreciation
Additions
Inter-account
transfers
Write offs
Balance as of
12/31/2009
105,803
1,247,913
271,950
1,248,149
36,732
139,784
3,050,331
12,649
535
13,184
(929)
(20,238)
(4,235)
(13,189)
(38,591)
-
105,803
1,247,913
271,021
1,240,560
32,497
127,130
3,024,924
(711,660)
(140,535)
(593,192)
(24,953)
(91,797)
(1,562,137)
(23,328)
(8,021)
(37,999)
(3,595)
(10,969)
(83,912)
619
14,269
3,691
9,813
28,392
-
(734,988)
(147,937)
(616,922)
(24,857)
(92,953)
(1,617,657)
PROPERTY, PLANT AND EQUIPMENT IN PROGRESS
Reservoir, dams and water mains
Buildings, works and improvements
Machinery and equipment
Vehicles
Fixtures and furnishings
Studies and projects
Total Property, Plant and Equipment in Progress
TOTAL PROPERTY, PLANT AND EQUIPMENT
22,389
15,102
49,737
3,645
6,146
4,566
101,585
21,027
14,764
45,605
3,852
8,756
13,060
107,064
(934)
(934)
(14,042)
(372)
(14,414)
43,416
29,866
81,300
7,497
14,530
16,692
193,301
1,589,779
36,336
(11,133)
(14,414)
1,600,568
(i) Subsidiary Light SESA does not hold any Union-owned resources and rights in its assets.
(ii) Annual depreciation rates:
The schedule below summarizes significant depreciation rates as determined in ANEEL Resolution
No. 367, as of June 2, 2009:
Generation
Busbar
Circuit Breaker
Buildings
Water intake equipment
Water intake structure
Generator
Turbines – generator
Reservoir, dams and water mains
Local communications system
Hydraulic turbine
Average depreciation rate
Generation
( %)
2.5
3.0
4.0
3.7
4.0
3.3
5.9
2.0
6.7
2.5
3.8
Commercialization
Constructions
General equipment
Vehicles
(%)
4.0
10.0
20.0
Average depreciation rate
Commercialization
11.3
Administration
Constructions
General equipment
Vehicles
(%)
4.0
10.0
20.0
Average depreciation rate
Administration
11.3
Transmission
System conductor
General equipment
System structure
Switchgear
(%)
2.5
10.0
2.5
4.3
Average depreciation rate
Transmission
4.8
45
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
15. INTANGIBLE ASSETS
Consolidated
Historic cost
Intangible
Concession right of use
Goodwill from future profitability
Other
In Use
Concession right of use
Other
In progress
TOTAL INTANGIBLE (1)
5,897,129
2,034
450,714
6,349,877
788,111
62,528
850,639
7,200,516
12/31/2010
Accumulated
amortization
(3,218,801)
(367,943)
(3,586,744)
(3,586,744)
Net Value
12/31/2009
01/01/2009
Net Value
Net Value
2,678,328
2,034
82,771
2,763,133
2,667,560
77,070
2,744,630
2,674,501
96,570
2,771,071
788,111
62,528
850,639
489,639
188,711
678,350
329,364
167,197
496,561
3,613,772
3,422,980
3,267,632
(1) Net of special obligations comprising (i) contributions made by the Union, states, municipalities
and consumers, (ii) any unqualified donations (i.e. not subject to any consideration in benefit of
the donor), and assistance intended as investments to be made toward concession of the electric
power distribution utility.
In progress intangible includes inventories of project materials in the amount of R$43,808 as of
December 31, 2010 (R$26,904 as of December 31, 2009), as well as a provision for inventory
devaluation in the amount of R$5,749 (R$5,749 as of December 31, 2009).
A total amount of R$9,183 (R$29,973 in 2009) was carried over to intangible assets in 2010 by way of
interest capitalization and as a counterparty to the financial income.
The infrastructure used by subsidiary Light SESA is associated with the distribution service, and
therefore cannot be removed, disposed of, assigned, conveyed, or encumbered as mortgage collateral
without the prior written authorization of the Granting Authority, which authorization, if given, is
regulated by Resolution ANEEL No. 20/99.
It is the responsibility of ANEEL in its capacity as regulatory agency to determine the estimated
economic useful lives of each piece of distribution infrastructure assets for pricing purposes, as well as
for the purpose of calculating the amount of the relevant compensation payable upon expiration of the
concession term. This estimate is revised from time to time, represents the best estimate concerning
the assets' useful lives, and is accepted in the market as appropriate for accounting and regulatory
purposes.
The management of Light SESA is of the opinion that amortization of intangible assets must be
consistent with the return expected on each infrastructure asset, via the applicable rates. Thus,
intangible assets are amortized over the expected length of such return, limited to the term of the
concession. As a result of this amortization method, the total amount of intangible assets will be
amortized at all times in a non-linear fashion.
Below is a summary of changes in the intangible assets:
46
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
CONSOLIDATED
Balances on
12/31/2009
In Service
Concession right of use
Goodwill from future profitability
Other
Total Intangible in Service
(-) Depreciation
Concession right of use
Other
Total Intangible in Service - Depreciation
In Progress
Concession right of use
Other
Total Intangible in Progress
TOTAL INTANGIBLE ASSETS
Additions
Write offs
Inter-account
transfers
Balances on
12/31/2010
5,691,229
413,090
6,104,319
259,135
2,034
37,624
298,793
(53,235)
(53,235)
-
5,897,129
2,034
450,714
6,349,877
(3,023,643)
(336,184)
(3,359,827)
(240,387)
(31,759)
(272,146)
45,229
45,229
-
(3,218,801)
(367,943)
(3,586,744)
605,289
73,199
678,488
579,084
21,578
600,662
-
(396,262)
(32,249)
(428,511)
788,111
62,528
850,639
3,422,980
627,309
(8,006)
(428,511)
3,613,772
CONSOLIDATED
Balances on
01/01/2009
In Service
Concession right of use
Other
Total Intangible in Service
(-) Depreciation
Concession right of use
Other
Total Intangible in Service - Depreciation
In Progress
Concession right of use
Other
Total Intangible in Progress
TOTAL INTANGIBLE ASSETS
Additions
Write-offs
Inter-account
transfers
Balances on
12/31/2009
5,549,279
397,368
5,946,647
226,674
15,722
242,396
(84,724)
(84,724)
-
5,691,229
413,090
6,104,319
(2,874,778)
(300,975)
(3,175,753)
(224,193)
(35,209)
(259,402)
75,328
75,328
-
(3,023,643)
(336,184)
(3,359,827)
446,947
49,791
496,738
471,293
40,982
512,275
(2,885)
(2,885)
(310,066)
(17,574)
(327,640)
605,289
73,199
678,488
3,267,632
495,269
(12,281)
(327,640)
3,422,980
47
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
16. SUPPLIERS
a) Free Energy – Reimbursement to Power Generation Companies
At a meeting held December 15, 2009, the executive board of ANEEL approved the methodology and
procedures applicable to determining the balances of Free Energy and Revenue Losses incurred by
generation and distribution utility companies following expiration of the Extraordinary Tarift Review
(RTE) applicable to power supply rates. However, Resolution No. 387 as of December 15, 2009,
published January 12, 2010, concluded the process of computing the Revenue Loss and Free Energy
closing balances, and also determined the amounts of any reimbursement operators should pay each
other, as applicable, which amounts were pending validation as of December 31, 2010.
Energy supply, electric network usage grid charge, materials and service balances have an average
settlement period of up to 90 days.
48
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
17. LOANS, FINANCING AND FINANCIAL CHARGES
Financing Entity
TN - Par Bond
TN - Collateral - Par Bond
TN - Discount Bond
TN - Collateral - Discount Bond
TN - C. Bond
TN - Debit. Conv.
TN - Bib
BNDES - Importation
KFW III , IV, and V - Tranche A/B/C
TN - Flirb
TN - New Money
Societe Generale II
TOTAL FOREIGN CURRENCY
Eletrobrás
CCB Bradesco
BNDES - FINEM
BNDES - FINEM direct
BNDES - FINEM + 1
BNDES - FINEM direct PSI
Working capital- Santander
BNDES - PROESCO 1
BNDES - PROESCO 2
BNDES - PROESCO 3
BNDES - PROESCO 4
BNDES - PROESCO 5
RGR
Sundry banking warranties
TOTAL DOMESTIC CURRENCY
SWAP
OVERALL TOTAL
Principal
Current
Non-current
64,848
(38,844)
45,249
(27,276)
5,512
13,780
6,174
3,087
200
401
11,886
61,245
564
82,616
16,973
16,973
8,316
119
230
109
339
793
127,032
2,033
450,000
227,193
135,946
135,946
96,768
80,000
338
768
371
1,694
3,963
1,135,020
-
-
138,918
1,196,265
Consolidated
Charges
Current
Non-current
838
146
330
31
11
1,356
-
12/31/2010
65,686
(38,844)
45,395
(27,276)
19,622
9,292
612
74,487
Total
12/31/2009
68,641
(35,060)
47,443
(24,597)
26,364
16,185
852
446
1,439
101,713
01/01/2009
92,130
(43,507)
63,976
(30,519)
43,247
30,558
1,431
2,397
3,981
1,168
1,151
4,409
170,422
2,598
461,340
311,162
155,265
155,528
105,831
82,646
459
1,002
481
2,051
4,778
246
209
1,283,596
3,809
458,381
394,139
59,806
59,811
35,284
82,601
1,812
246
194
1,096,083
11,052
464,014
433,062
83,919
596
284
992,927
1
11,340
1,353
2,346
2,609
747
2,646
2
4
1
18
22
246
209
21,544
-
4,060
1,235
5,295
5,558
26,960
1,235
1,363,378
1,203,354
1,163,349
The statement below summarizes the contractual terms and conditions applicable to our loans and
borrowings as of December 31, 2010:
Principal Amortization
Financing Entity
TN - Par Bond
TN - Collateral - Par Bond
TN - Discount Bond
TN - Collateral - Discount Bond
TN - C. Bond
TN - Debit. Conv.
TN - Bib
Date of
signature
04/29/1996
04/29/1996
04/29/1996
04/29/1996
04/29/1996
04/29/1996
04/26/1996
Eletrobrás
CCB Bradesco
BNDES - FINEM
BNDES - FINEM direct
BNDES - FINEM + 1
BNDES - FINEM direct PSI
Working capital- Santander
BNDES - PROESCO 1
BNDES - PROESCO 2
BNDES - PROESCO 3
BNDES - PROESCO 4
BNDES - PROESCO 5
Sundry
10/18/2007
11/05/2007
11/30/2009
11/30/2009
11/30/2009
09/03/2010
12/12/2008
6/15/2009
6/15/2010
9/15/2010
12/16/2010
Currency
US$
US$
US$
US$
US$
US$
US$
UFIR
CDI
TJLP
TJLP
TJLP
CDI
TJLP
TJLP
TJLP
TJLP
TJLP
Interest Rate
p.a.
6%
U$ Trandasury
Libor + 13/16
U$ Trandasury
8%
Libor + 7/8
6%
Beginning
2024
2024
2024
2024
2004
2004
1999
5%
CDI + 0.85%
TJLP + 4.3%
TJLP + 2.58%
TJLP + 1% + 2.58%
4.5%
CDI + 1.4%
TJLP + 2.5%
TJLP + 2.51%
TJLP + 2.18% and 4.5%
TJLP + 2.05% and 5.5%
TJLP + 2.05% and 5.5%
2012
2009
2011
2011
2011
2010
2009
2009
2010
2010
2010
Payment
Lump sum
Lump sum
Lump sum
Lump sum
Half-yearly
Half-yearly
Half-yearly
Monthly and quarterly
Yearly
Monthly
Monthly
Monthly
Monthly
Yearly
Monthly
Monthly
Monthly
Monthly
Monthly
Remaining
Installments
1
1
1
1
7
3
6
between 2
and 120
6
45
72
72
101
1
46
53
53
60
60
End
2024
2024
2024
2024
2014
2012
2013
2013 to
2017
2017
2014
2017
2017
2019
2014
2014
2015
2015
2016
2016
The loan with Banco Real (ABN Amro) due in August 2010 in the amount of R$80,000 was renewed
with Banco Santander (new controlling company of Banco Real) maintaining the same amount and
CDI cost + 1.4% p.a., due on September 3rd, 2014.
49
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
In 2010 a total of R$246,942 was drawn down against the finacing signed with BNDES on November
30, 2009 in connection with the investment plan of Light SESA, while R$10,155 were drawn down for
Light Energia in 2009 and 2010.
On September 27, 2010, R$7,322 was directly released to Light Esco through Proesco’s special
financing line to the implementation of the energy efficiency project.
In addition to the collaterals indicated above, loans are guaranteed by receivables in the approximate
amount of R$45,978.
The principal of long-term loans and financing matures as follows (excluding financial charges) on
December 31st, 2010:
2012
2013
2014
2015
after 2015
TOTAL
Local Currency
223,461
223,448
282,556
140,153
265,402
1,135,020
Foreign Currency
8,799
5,712
2,756
43,978
61,245
Total
232,260
229,160
285,312
140,153
309,380
1,196,265
In percentage terms, the variation of major foreign currencies and economic ratios in the period, which
are used to adjust loans, financing and debentures, was as follows in the years:
USD
EUR
UMBNDES
IGP-M
CDI
SELIC
12/31/2010
(4.31)
(11.14)
(3.76)
11.32
9.75
9.78
Variation %
12/31/2009
(25.49)
(22.57)
(25.66)
(1.71)
9.87
9.92
01/01/2009
31.94
24.13
33.86
9.81
12.37
12.48
Covenants
The funding of CCB Bradesco, the loans with Banco Santander and with BNDES FINEM, classified as
current and non-current, requires that the Company maintain certain debt ratios and interest coverage.
In the year ended December 31, 2010, the Company and its subsidiaries are in compliance with all
required debt covenants.
50
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
18. DEBENTURES AND FINANCIAL CHARGES
Principal
Current
Non Current
Financing Entity
Debentures 1st Issue
Debentures 4th Issue
Debentures 5th Issue
Debêntures 6th Issue
-
LOCAL CURRENCY - TOTAL
-
Consolidated
Charges
Current
12/31/2010
19
61,822
298,670
67
727,824
-
17,760
3,061
360,511
727,891
20,821
-
Total
12/31/2009
01/01/2009
86
807,406
301,731
8,057
107
955,598
298,409
24,066
118
982,888
-
1,109,223
1,262,171
1,007,072
Contractual conditions of debentures on December 31, 2010 are as follows:
Financing Entity
Debentures 4th Issue
Debentures 5th Issue
Debentures 6th Issue
Date of
Signature
06/30/2005
01/22/2007
06/01/2009
Currency
TJLP
CDI
CDI
Interest Rate
p.a.
TJLP + 4%
CDI + 1,50%
115% of CDI
Beginning
2009
2008
2011
Principal Amortization
Remaining
Payment
Installments
Monthly
54
Quarterly
13
Lump Sum
1
End
2015
2014
2011
Total principal amount is represented net of debentures issue costs, as provided for in CVM Resolution
556/08. These costs are detailed in the table below:
Issue
Debentures 1st Issue
Debentures 4th Issue
Debentures 5th Issue
Debentures 6th Issue
TOTAL
Incurred
value
7,448
7,094
3,961
18,503
12/31/2010
Value to be
recognized
20
5,354
1,330
6,704
Total
Cost
7,468
12,448
5,291
25,207
12/31/2009
Total
Cost
1,070
7,468
12,448
5,291
26,277
01/01/2009
Total
Cost
1,069
7,468
12,457
20,994
Installments related to principal of long-term debentures are due (financial charges not included) on
December 31, 2010:
2012
2013
2014
2015
TOTAL
179,839
243,438
304,606
8
727,891
51
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Covenants
Classified in the current and non-current, the 5th and 6th Issue of Debentures require the maintenance of
indebtedness indexes and coverage of interest rates. In the period ended December 31, 2010, the
Company and its subsidiaries complied with all the covenants required.
19. REGULATORY CHARGES – CONSUMER CONTRIBUTIONS
12/31/2010
CURRENT
Fuel usage account quota – CCC
Energy development account quota – CDE
Reversal global reserve quota – RGR
Incentive Program to Electric Power Alternative Sources – PROINFA
Charges for capacity and emergency acquisition
25,472
17,182
1,394
73,170
117,218
Consolidated
12/31/2009
4,298
17,173
5,359
10,792
73,169
110,791
01/01/2009
24,895
16,638
6,428
5,369
73,403
126,733
Fuel Consumption Account (Conta Consumo de Combustível, or CCC) - This is a charge to the
invoiced revenues derived by distribution operators, intended as a subsidy toward the fuel costs
associated with isolated electric systems so that consumer rates payable in locations within such
systems are similar to those charged in interconnected systems.
Energy Development Account (Conta de Desenvolvimento Energético, or CDE) - This charge is
intended to further energy development in states and increase competitiveness of the energy generated
from alternative sources in those locations served by interconnected grid systems, thus allowing an
universal electric power supply service. The amounts payable are also defined by ANEEL.
Global Reversal Reserve (Reserva Global de Reversão, or RGR) - This is a charge applying to the
Brazilian electric power industry, payable every month by electric power utility operators for the
purpose of funding reversal, expansion and improvement of electric power utility services. The annual
amount of this charge corresponds to 2.5% of an operator's investments in assets employed in the
electric power utility service, subject to a cap of 3.0% of the operator's annual revenue.
Alternative Power Source Stimulus Program (Programa de Incentivo às Fontes Alternativas de Energia
Elétrica, or PROINFA) - Established by Law No. 10,438/2002, the goal of PROINFA is to further
greater participation of renewable sources such as small hydroelectric plants (PCHs), wind farms, and
thermoelectric projects as power sources. All electricity generated under this program is purchased by
Eletrobrás, and the associated costs are shared among all end consumers (both free and dedicated)
within the National Interconnected System (SIN), except low-income consumers with a monthly
power consumption of less than or equal to 80 kilowatts-hour (kWh).
Emergency Capacity Charge and Emergency Acquisition Charge (Encargo de Capacidade Emergencial
e Encargo de Aquisição Emergencial, ECE and EAE) – These charges comprise operating, tax, and
administrative costs incurred by the Comercializadora Brasileira de Energia Emergencial – CBEE
when purchasing generation or power capacities, which costs are prorated among end consumers
served by the NIS based on each individual power consumption pattern.
52
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
20. CONTINGENCIES
The Company and its subsidiaries are party in tax, labor and civil lawsuits and regulatory proceedings
in several courts. Management periodically assesses the risks of contingencies related to these
proceedings, and based on the legal counsel’s opinion it records a provision when unfavorable
decisions are probable and whose amounts are quantifiable. In addition, the Company does not record
assets related to lawsuits with a less-than-probable chance of success, as they are considered uncertain.
The changes of provisions for contingencies are:
CURRENT
Consolidated
Labor
Balance as of January 1, 2009
Write-offs / reversals
Balance as of December 31, 2009
Civil
Tax
Other
1,640
Total
2,237
597
-
-
(597)
-
-
(1,640)
(2,237)
-
-
-
-
-
There were no contingencies recorded under current on December 31st, 2009 and 2010.
NON CURRENT
Balance as of January 1 2009
Additions
Adjustments
Write-offs / payments
Write-offs / reversals
Reversal - Law 11941/09
Consolidated
Labor
164,128
Civil
252,930
Tax
493,823
Other
83,002
Total
993,883
18,399
(16,380)
(2,492)
-
53,352
12,999
(57,875)
(9,257)
-
371
29,281
(357,049)
3,982
3,213
(2,519)
(555)
-
76,104
45,493
(76,774)
(12,304)
(357,049)
163,655
252,149
166,426
87,123
669,353
18,208
(13,371)
(836)
38,909
22,614
(75,852)
(82,238)
36,121
5,398
(26,944)
(53,381)
94,816
44,497
(120,314)
(136,455)
Balance as of December 31 2010
167,656
155,582
180,342
48,317
551,897
Escroe deposits
Balance as of December 31 2010
18,746
26,160
40,354
1,655
86,915
Balance as of December 31 2009
Additions
Adjustments
Write-offs / payments
Write-offs / reversals
1,578
16,485
(4,147)
-
20.1 Labor Contingencies
There are approximately 3,372 labor-related legal proceedings in progress (3,680 on December 31st,
2009) in which the Company and subsidiaries are the defendants. These labor proceedings mainly
involve the following matters: overtime; hazardous work wage premium; equal pay; pain and
suffering; subsidiary/joint liability of employees from outsourced companies; difference of 40% fine of
FGTS (Government Severance Indemnity Fund for Employees) derived from the adjustment due to
understated inflation and overtime.
53
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
20.2 Civil Contingencies
The Company and its subsidiaries are defendants in approximately 37,171 civil legal proceedings
(39,506 on December 31st, 2009), of which 18,138 are in the state and federal courts referring to Civil
Proceedings (14,497 on December 31st, 2009), among which those claims that can be accurately
assessed amounting to R$310,800 (R$747,873 on December 31, 2009) and 19,033 are in Special Civil
Courts (24,559 on December 31 st, 2009), with total claims amounting to R$300,959 (R$377,124 on
December 31 st, 2009).
Civil Contingencies
Accrued Value (probable loss)
12/31/2010
a) Civil proceedings
b) Special civil court
c) "Cruzado" Plan
Total
12/31/2009
01/01/2009
87,842
25,138
42,602
124,576
29,555
98,018
113,303
33,783
105,844
155,582
252,149
252,930
a) The Provision for civil proceedings comprises lawsuits in which Light SESA is the defendant and it
is probable the claim will result in a loss in the opinion of the respective attorneys. The claims
mainly involve alleged moral and property damage due to the Company’s ostensive behavior
fighting irregularities in the network, as well as consumers challenging the amounts paid.
Subsidiary Light SESA is party of 11,831 civil proceedings that Management believes that risk of
loss are less than probable, based on the opinion of its legal counsels. Therefore, no provision was
established. The amount, currently assessed, represented by these claims is R$159,200 (R$480,060
on December 31, 2009).
b) Lawsuits in the Special Civil Court are mostly related to matters regarding consumer relations,
such as improper collection, undue power cut, power cut due to delinquency, network problems,
various irregularities, bill complaints, meter complaints and problems with ownership transfer.
There is a limit of 40 minimum monthly wages for claims under procedural progress at the Special
Civil Court. Accruals are based on the moving average of the last 12 months of condemnation
amount.
c) In the last quarter of 2010, the Company obtained a favorable decision in last resort (High Court of
Justice – STJ) on the final decision on lawsuit #1995.001.073862-2 against CSN in which it was
discussed the legality of the tariff adjustment authorized by the National Department of Water and
Electric Power during the freeze period of prices (“Cruzado Plan”). This decision enabled the
reversal of the accrued amount of R$61,735, as contra-account in item operating expenses.
20.3 Tax Contingencies
The provisions accounted for tax contingencies are as follows:
54
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Tax Contingencies
PIS / COFINS
PIS/COFINS – RGR and CCC
INSS – tax deficiency notice
INSS – quarterly
Law nº 8200/91
ICMS
Social contribution
CIDE
Other
Total
Accrued Value (probable loss)
12/31/2010
12/31/2009
01/01/2009
8,561
40,964
22,579
94,400
4,988
8,850
180,342
8,561
39,291
21,504
88,039
4,792
4,239
166,426
214,237
17,709
37,756
92,677
20,063
76,610
27,076
4,593
3,102
493,823
After the enactment of Law 11,941/2009 that allowed for the payment of federal tax debits in
installments, Light SESA chose to include debits purpose of a few lawsuits and administrative
proceedings in said payment, totaling R$713,000. It is worth pointing out that the adhesion to said
payment in installments was already authorized by the Brazilian Federal Revenue Service, pursuant to
the electronic message sent to the Company on December 12, 2009, and in the moment it awaits the
consolidation of said debits.
Light SESA is parties to tax, regulatory and legal proceedings in which Management, based on the
opinion of its legal counsels, believes the risks of loss are less than probable, and for which no
provision was recorded. Currently, the quantifiable amount of these proceedings is R$858,400
(R$1,156,600 on December 31 st, 2009).
Discussed below are certain tax issues or procedures that were deemed as likely losses and significant
or which had any developments in 2010:
(i) Normative Instruction (NI) No. 86 (2003 through 2005) - This notice of infringement was issued to
assess a fine on the Company for alleged failure to make electronic file submissions, as required by NI.
No. 86/2001, for calendar years 2003 through 2005. The appeal of the Company was dismissed, upon
which an special appeal was filed. The amount involved with this issue as of December 31 st, 2010 was
R$257,800 (R$240,200 as of December 31 st, 2009).
(ii) Contribution for Education Allowance – This issue relates to dis-allowance and subsequent
assessment of deductions made by the Company when withholding contributions for the education
allowance between July 1996 and June 2006. The Company's response to the relevant notice of
infringement was granted in part, and the amount assessed was reduced by R$9,300 to R$624. The
Company nevertheless filed an appeal to discuss the remaining amount.
(iii) Transfer of PIS/COFINS - Up to December 31 st, 2010, subsidiary Light SESA was party in 203
pending lawsuits filed by clients questioning the transfer of PIS and COFINS to the electricity bill,
pleading the refund of the amounts unduly paid. On August 22, 2010, the Superior Court of Justice
judged a leading case of the electricity sector, affirming the legitimacy of transferring the PIS/COFINS
to electricity bills. In view of this case law favorable to the distribution companies, the chances of
losing the case which were possible now become remote.
55
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
(iv) SEPT – This lawsuit was brought by subsidiary Light SESA seeking cancellation of an assessment
of the so-called Single Electric Power Tax (SEPT) in connection with the subsidiary's alleged failure to
invoice the amount of this tax to consumers classified as “government” consumers. The appeal filed by
the subsidiary was granted. The historic (in 2004) amount of this case is R$3,400.
(v) LIR/LOI - IRPJ/CSLL - Income vs. Equity Pickup – Subsidiary Light SESA filed writ of
mandamus No. 2003.51.01.005514-8 to challenge an assessment of corporate income tax (IRPJ) and
social contribution (CSL) on income earned by its subsidiaries LIR e LOI since 1996 that was
allegedly not offered to taxation, as well as the demand for including equity pickup income in the
assessment of the IRPJ and CSL for calendar years up to 2002 and subsequent years. Light SESA
attempted to move for a partial withdrawal in this writ of mandamus to include the tax debts in the
repayment program created by Law No. 11,941/09, and proceed against the assessment in connection
with the equity accounting method. However, the Treasury attorney did not accept this partial
withdrawal, nor did the competent court. As a result, Light SESA withdrew its writ completely and
changed the assessment methodology for the IRPJ/CSLL, which had previously been done based on
the income, to use the equity method of accounting. The tax authorities disallowed this change and
assessed Light SESA in the amount of R$131,550. Light SESA filed a challenge in response to this
assessment.
20.4 Other Contingencies
a) Administrative Regulatory Contingencies
The Company will now discuss regulatory contingencies of its subsidiaries Light SESA and Light
Energia in connection with administrative issues pending with ANEEL.
a.1) Notice of Infringement ANEEL No. 007/2010-SFE – This notice was issued on February 17,
2010 and a fine was imposed in the amount of R$9,544 as a result of an inspection carried out in
December 2009 by ANEEL officials to verify and review the causes of power shortages occurred in
the Operator's underground distribution system. The Company challenged this notice of infringement
on March 5, 2010 and moved for dismissal of any alleged noncompliances, as well as for reduction of
the fines applied. Alternatively, the Company moved that the fine was converted in an memorandum of
agreement (TAC). The executive board of ANEEL did not consent to the TAC and the Company then
filed an internal appeal against this decision by ANEEL. The case is currently pending a decision by
ANEEL on the appeal and the motion for a TAC. A provision was set up in the amount of the fine
imposed.
a.2) Notice of Infringement ANEEL No. 071/2010-SFF – This notice was issued on March 17, 2010,
and a fine was imposed in the amount of R$448 on account of alleged nonconformities determined in
economic, financial and accounting audits performed in subsidiary Light SESA. The subsidiary filed
an appeal on April 1, 2010 and requested the fines were converted in admonitions. This appeal is
currently pending a decision by ANEEL. In Order No. 1665/2010 dated June 10, 2010, ANEEL
reduced the amount of the fine to R$419. The appeal filed is currently pending a decision by ANEEL.
A provision was set up in the amount of the fine imposed.
a.3) Notice of Infringement ANEEL No. 013/2010-SFG – This notice was issued on March 4, 2010,
and a fine was imposed in the amount of R$1,120 on account of alleged failures determined by the
regulator in connection with black-start procedures at the UHE generation plants of Fontes Nova, Nilo
Peçanha e Pereira Passos, which failures occurred in resuming the NIS following the anomaly
56
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
experienced on November 10, 2009. Light Energia appealed the notice on May 9, 2010 to request the
fines were reduced. The Bureau of Generation Service Inspection (SFG) upheld the decision
challenged, and the case is pending a decision by the executive board of ANEEL. A provision was set
up in the amount of the fine imposed.
a.4) Notice of Infringement ANEEL No. 061/2010-SFE – This notice was issued on May 19, 2010, and
a fine was imposed in the amount of R$5,049 on account of alleged nonconformities determined in
economic, financial and accounting audits performed by ANEEL in May 2009. Subsidiary Light SESA
filed an appeal against the notice on June 3, 2010, seeking cancellation of all fines imposed or,
alternatively, that they were reduced. The Bureau of Generation Service Inspection (SFG) upheld the
decision challenged, and the case is pending a decision by the executive board of ANEEL. A provision
was set up in the amount of the fine imposed.
a.5) Notice of Infringement ANEEL No. 082/2010-SFE – This notice was issued on June 18, 2010, and
a fine was imposed in the amount of R$16,052 on account that subsidiary Light SESA allegedly failed
to comply with continuity metrics DEC and FEC for 65 groups during 2009. The incident occurred on
November 10, 2009 (the Furnas Blackout) was taken into consideration for computation of the relevant
metrics. The Company filed an appeal on July 8, 2010, and moved for a mitigation so that the shortage
experienced on November 10, 2009 is not considered for the purpose of computing the DEC and FEC
metrics. Currently this appeal is pending review by ANEEL. A provision in the amount of R$4,110
was set up based on the opinion of the Company's legal counsels, which opinion also indicates that
ANEEL is likely to reduce the amount of the fine imposed based on the subsidiary's allegations that the
Furnas' transmission line downtime should be disregarded in the computation of continuity metrics on
account of their nature as force majeure/act of God events and thus capable of defeating the liability of
Light SESA in the incident.
21. POST-EMPLOYMENT BENEFITS
Light Group’s companies sponsor Fundação de Seguridade Social – BRASLIGHT, a nonprofit closed
pension entity, whose purpose is to provide retirement benefits to the Company’s employees and
pension benefits to their dependents.
BRASLIGHT was incorporated in April 1974 and has four plans - A, B, C and D – established in
1975, 1984, 1998 and 2010, respectively, with about 96% of the active participants of plans A and B.
Current plans in effect include defined-benefit- (Plans A and B), mixed-benefit- (Plan C), and definedcontribution plans (Plan D).
a) Below is a summary of the Company's liabilities involving pension plan benefits as stated on its
balance sheet:
Current
Contractual debt with pension fund
Other
Total
95,048
507
95,555
12/31/2010
Non Current
920,630
920,630
Total
1,015,678
507
1,016,185
Current
95,044
95,044
12/31/2009
Non Current
861,386
861,386
Total
956,430
956,430
On October 2rd, 2001 the Bureau of Supplementary Pension Plans approved an agreement for the
purpose of balancing accounting deficits and refinancing of repayable reserves, which began to be paid
57
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
out in 300 monthly as of July 2001. As of December 31, 2010 there were 186 monthly installments
remaining, in a total contract outstanding amount of R$1,015,678.
Until May 2009 the installments were escalated against the variation of the IGP-DI (with one month in
arrears) and actuarial interest at the rate of 6% p.a.. Beginning in June 2009, IPCA replaced IGP-DI as
the applicable escalation index (with one month in arrears).
The agreement is adjusted yearly against the deficit (surplus) reported by Braslight, and as a result the
amounts of outstanding installments may increase or decrease accordingly. This adjustment is
recognized wholly as financial income in the sponsors' income for the year.
The statement below summarizes the changes in agreement liabilities in years 2010 and 2009:
Total
Consolidated
Contractual liabilities on 01/01/2009
Amortization in the period
Restatements in the period
Transfer to current
Contractual liabilities on 12/31/2009
Amortization in the period
Restatements in the period
Transfer to current
Contractual liabilities on 12/31/2010
1,032,161
Current
Non-current
87,744
944,417
(93,928)
18,197
-
(93,928)
64,345
36,883
(46,148)
(36,883)
956,430
95,044
861,386
(93,251)
152,499
-
(93,251)
54,243
39,012
98,256
(39,012)
95,048
920,630
1,015,678
58
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
b) Plan description
Plan A/B - Benefits in these plans are 'defined benefits' and correspond to the difference between
application of certain percentage, between 80% and 100%, of the average of the last 12 and the last 36
salaries, escalated as of the date the benefit began to be paid out, and the amount of the benefit paid by
the INSS, whichever is the highest.
Plan C - During the capitalization phase, elective benefits are 'defined-contribution' benefits not linked
to INSS benefits, and contingent benefits (i.e. sickness allowance, permanent disability pension,
pensions payable upon death of active, disabled, or sick participants), as well as continued income,
once granted, are 'defined' benefits. The assets of the two portions are determined in shares.
For a participant migrating from Plan A/B to Plan C, a settled lifetime income benefit was granted,
revertible into a pension benefit, proportionate to the amount of contributions made to Braslight at
migration time, as of the participant's latest enrollment in the Fundação, which is deferred until the
participant has satisfied a number of qualification requirements. This portion is called the Plan C
Settled Defined Benefit Subplan.
Plan D - This plan was approved by the Ministry of Social Security's National Bureau of
Supplementary Pension (PREVIC/MPS) on March 22rd, 2010, with the first contribution made in April
2010. In this plan, benefits are 'defined contribution' benefits before and after the relevant grant.
The statement below summarizes the amounts determined in an actuarial report as recognized in the
balance sheet:
Consolidated
12/31/2010
Reconciliation of the recognized values in the balance sheet
Fair value of the plan assets
Present value of the actuarial obligation with cover
Net assets (unsecured liabilities)
Net liabilities, CVM nº 600/2009
Balance of the adjusted and recorded contract, in accordance with the Interest Rate Equalization
1,120,960
(2,123,507)
(1,002,547)
(1,002,547)
(1,015,678)
12/31/2009
1,105,523
(2,055,223)
(949,701)
(949,701)
(956,430)
1/1/2009
1,013,384
(1,785,142)
(771,758)
(771,758)
(1,032,161)
The statement below summarizes the changes in plan fair value over the relevant periods:
12/31/2010
Reconciliation of fair value of assets
Fair value of assets at the beginning of the year
Expected returns for the year
Actuarial gains/(losses) in the plan assets
Sponsor's contributions
Participants' contributions
Benefits paid by the plan/company
Fair value of assets at the end of the year
1,105,523
114,886
11,169
94,601
50
(205,269)
1,120,960
12/31/2009
1,013,384
121,732
55,974
95,300
69
(180,937)
1,105,523
The statement below summarizes changes in defined-benefit liabilities over the periods reported:
59
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
12/31/2010
Reconciliation of the value of actuarial liabilities
Fair value of liabilities at the beginning of the year
Gross cost of current service
Interest on actuarial obligations
Transfers of participants' contributions in the year
Actuarial gains/(losses)
Benefits paid in the year
Fair value of liabilities at the end of the year
12/31/2009
(2,055,223)
(1,592)
(212,216)
(50)
(59,695)
205,269
(2,123,507)
(1,785,142)
(1,565)
(210,679)
(69)
(238,705)
180,937
(2,055,223)
Amounts recognized in the statement of income are summarized below:
Amounts recognized in the income statement
Cost of current service
Cost of interest
Expected return on investments
Estimated expected cost
2010
1,592
212,216
(114,886)
98,922
2009
1,565
210,679
(121,732)
90,512
The effective return on plan assets amounted R$114,394 in 2010 (R$141,846 as of December 31,
2009).
Actuarial considerations:
Nominal interest rate (discount) at present value of the actuarial liabilities
Expected rate of return on nominal plan assets
Annual inflation rate
Salary growth rate
Adjustment index of continued benefits
Capacity factor
Revolving rate
General mortality table
Disability (plans A/B)
Disability table (plan C settled)
Mortality table of disabled people
Active participants
Retiree and pensioner participants
(1)
2010
2009
10.66%
10.96%
4.40%
6.49%
4.40%
98.00%
Based on age
AT - 83 (1)
LIGHT - Strong
LIGHT - Strong
IAPB-57
3,454
5,679
10.77%
10.77%
4.50%
6.59%
4.50%
98.00%
Based on age
AT - 83 (1)
LIGHT - Strong
LIGHT - Strong
IAPB-57
3,638
5,727
Table without aggravation
60
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
22. OTHER DEBTS
12/31/2010
CURRENT
Advances from clients
Compensation for use of water resources
Energy Research Company – EPE
National Scientific and Technological Development Fund – FNDCT
Energy Efficiency Program – PEE
Research and Development Program – P&D
Ex-isolated charges
Public lighting fee
Provision for voluntary resignation
Other debits - reimbusements to consumers
Other
Total
Parent Company
12/31/2009 01/01/2009
12/31/2010
Consolidated
12/31/2009
01/01/2009
1,981
1,981
1,524
1,524
1,286
1,286
3,491
4,000
503
1,007
48,925
37,445
10,966
69,243
23,113
37,625
236,318
8,691
4,293
1,038
2,173
76,012
49,090
51,402
11,622
31,707
236,028
3,274
7,404
14,808
77,936
47,031
40,917
46,893
66,735
304,998
-
-
-
14,306
69,933
128,746
13,670
226,655
13,275
69,933
115,651
9,836
208,695
13,136
69,933
117,583
12,682
213,334
NONCURRENT
Provision for success fees
Reserve for reversal
Use of Public Asset - UBP (a)
Other
Total
a) In accordance with Concession Agreement No. 12/2001 dated March 15th, 2001, which governs the
development of the hydroelectric potential of the Paraíba do Sul river in the municipalities of
Itaocara and Aperibé, subsidiary Itaocara Energia Ltda. shall pay to the União, by way of a fee
owing to use of a public asset, as of the start-up date (scheduled for 2013) and until the concession
expires or while the hydroelectric potential is being exploited, monthly installments equal to 1/12
(one twelfth) of the proposed annual payment of R$2,017, duly escalated against the variation of
the IGP-M, or any other index as shall replace the former. The contra-entry to liability escalation is
being recognized as an intangible asset during the construction phase, without any impact on the
income. Following start-up, the escalation will be recognized directly in the income for the year
(see note 13).
b) Contingent fees
The Company set up a provision in the amount of R$14,306 to cover contingent fee liabilities
arising from disputes wherein the likeliness of loss is deemed remote.
23. RELATED-PARTY TRANSACTIONS
Light S.A. belongs to the Controlling Group Companhia Energética de Minas Gerais – CEMIG, Luce
Empreendimentos e Participações S.A. and Rio Minas Energia Participações S.A (RME) – company
controlled by Redentor Energia.
Interest in operating subsidiaries is outlined in the Note 1.
Below, a summary of related-party transactions occurred in the years ended 2010 and 2009:
61
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Contra c ts with the s a me group
C o ns o lida te d
Re la tions hip with Light
S .A.
Ite m
1
(Agre e me nt obje c tive s a nd c ha ra c te ris tic s )
S tra te gic a gre e m e nt
P urc ha s e a gre e m e nt o f e le c tric po we r be twe e n Light
S ES A a nd C EM IG
6
S tra te gic a gre e m e nt
P urc ha s e a gre e m e nt o f e le c tric po we r be twe e n Light
S ES A a nd C EM IG
S tra te gic a gre e m e nt
S a le a gre e m e nt o f e le c tric po we r be twe e n Light Ene rgia
a nd C EM IG
S tra te gic a gre e m e nt
C o lle c tio n o f dis tributio n s ys te m us a ge c ha rge s be twe e n
Light S ES A a nd C EM IG
S tra te gic a gre e m e nt
C o m m itm e nt to the ba s ic e le c tric ne two rk us a ge c ha rge s
be twe e n Light S ES A a nd C EM IG
S tra te gic a gre e m e nt
C o m m itm e nt to the ba s ic e le c tric ne two rk us a ge c ha rge s
be twe e n Light Ene rgia a nd C EM IG
7
Lo a ns
Lo a n with Light S .A., whic h ho lds 50.9% Lightge r, in o rde r
to ho no r fina nc ia l c o m m itm e nts re la te d to the
im pla nta tio n o f the P a ra c a m bi s m a ll hydro e le c tric pla nt
(P HC ).
2
3
4
5
P la no P re vide nc iá rio
8
F unda ç ã o de S e gurida de S o c ia l - B R AS LIGHT
As s e ts
12 / 3 1/ 2 0 10
Lia b ilitie s
12 / 3 1/ 2 0 0 9
12 / 3 1/ 2 0 10
CEMIG (pa rty of the
c ontrolling group)
-
-
8,653
CEMIG (pa rty of the
c ontrolling group)
-
-
CEMIG (pa rty of the
c ontrolling group)
2,561
CEMIG (pa rty of the
c ontrolling group)
CEMIG (pa rty of the
c ontrolling group)
CEMIG (pa rty of the
c ontrolling group)
Re ve n u e
12 / 3 1/ 2 0 0 9
12 / 3 1/ 2 0 10
Exp e n s e s
12 / 3 1/ 2 0 0 9
12 / 3 1/ 2 0 10
12 / 3 1/ 2 0 0 9
8,503
-
-
67,473
166
-
-
-
1,263
-
2,528
-
-
21,769
22,553
-
-
381
180
-
-
2,291
2,059
-
-
-
-
1,634
2,248
-
-
17,264
16,977
-
-
120
115
-
-
-
-
-
115
-
-
-
152,499
10
10
100,237
Light S .A
BRAS LIGHT (pa rty of the
c ontrolling group)
-
-
11,156
-
-
1,016,185
956,430
18,197
62
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Below, a summary of agreements executed with related parties:
Ite m
C o ntra c ts with the s a m e gro up
Re la tions hip with Light
S .A.
Origina l Va lue
Da te
M a turity da te
o r te rm
C o nditio ns fo r
te rm ina tio n o r
e nd
(Agre e m e nt o bje c tive s a nd c ha ra c te ris tic s )
S tra te gic a gre e m e nt
P urc ha s e a gre e m e nt o f e le c tric po we r be twe e n Light
S ES A a nd C EM IG
C EM IG (pa rty o f the
c o ntro lling gro up)
2
S tra te gic a gre e m e nt
P urc ha s e a gre e m e nt o f e le c tric po we r be twe e n Light
S ES A a nd C EM IG
C EM IG (pa rty o f the
c o ntro lling gro up)
5
S tra te gic a gre e m e nt
P urc ha s e a gre e m e nt o f e le c tric po we r be twe e n Light
S ES A a nd C EM IG
S tra te gic a gre e m e nt
C o lle c tio n o f dis tributio n s ys te m us a ge c ha rge s be twe e n
Light S ES A a nd C EM IG
S tra te gic a gre e m e nt
C o m m itm e nt to the ba s ic e le c tric ne two rk us a ge c ha rge s
be twe e n Light Ene rgia a nd C EM IG
S tra te gic a gre e m e nt
C o m m itm e nt to the ba s ic e le c tric ne two rk us a ge c ha rge s
be twe e n Light Ene rgia a nd C EM IG
C EM IG (pa rty o f the
c o ntro lling gro up)
6
Light S .A
7
Lo a ns
Lo a n with Light S .A., whic h ho lds 50.9% Lightge r, in o rde r
to ho no r fina nc ia l c o m m itm e nts re la te d to the
im pla nta tio n o f the P a ra c a m bi s m a ll hydro e le c tric pla nt
(P HC ).
4
Agre e m e nt C o nditio ns
12/31/2010
1
3
R e m a ining
ba la nc e
C EM IG (pa rty o f the
c o ntro lling gro up)
C EM IG (pa rty o f the
c o ntro lling gro up)
C EM IG (pa rty o f the
c o ntro lling gro up)
J a n/2006
De c /2038
614,049
J a n/2010
De c /2039
37,600
156,239
-
30% o f
re m a ining
ba la nc e
450,358
30% o f
re m a ining
ba la nc e
36,348
J a n/2005
De z/2013
N/A
No v/2003
Unde te rm ine d
N/A
De c /2002
Unde te rm ine d
N/A
De c /2002
Unde te rm ine d
N/A
-
P ric e e s ta blis he d in the
re gula te d m a rke t
P ric e e s ta blis he d in the
re gula te d m a rke t
P ric e e s ta blis he d in the
re gula te d m a rke t
54,066
P ric e e s ta blis he d in the
re gula te d m a rke t
381
P ric e e s ta blis he d in the
re gula te d m a rke t
1,634
P ric e e s ta blis he d in the
re gula te d m a rke t
10
Oc t/2010
Oc t/2011
N/A
11,042
C DI + 0,9% p.a .
11,156
P e ns io n P la n
8
F unda ç ã o de S e gurida de S o c ia l (S o c ia l S e c urity
F o unda tio n) - B R AS LIGHT
B R AS LIGHT (pa rty o f the
c o ntro lling gro up)
J un/2001
535,052
J un/2026
N/A
IP C A+ 6% p.a .
1,016,185
Related-party transactions have been executed under usual market conditions.
MANAGEMENT REMUNERATION
The shareholders convened at annual general meeting on March 22, 2010, approved the global
remuneration payable to the members of the Company's Board of Directors and Executive Board, in
the amounts of R$14,506, R$2,060, and R$97, for Light Energia, Light S.A. and Light Energia,
respectively.
Policy regarding remuneration of the Board of Directors, Executive Board, Supervisory Board and
board committees.
(i) Pro-rata share of each component to the aggregate remuneration for 2010.
Board of Directors
Fixed Remuneration:
Variable Remuneration:
Board of Executive Officers
Fixed Remuneration:
Variable Remuneration:
Outros
Fiscal Council
Fixed Remuneration:
Variable Remuneration:
100%
41%
43%
16%
100%
-
63
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Remuneration paid by the Company to the Board of Directors, Executive Board, and Fiscal council in
2010:
Consolidated
2010
Board of
Directors
Fiscal
Council
Board of
Executive
Offcers
Total
22
5
7
34
Number of members
Annual fixed remenution
Salary or pro-labore
Direct and indirect benefits
Variable remunution
Bonus
Other (LTIP)
Benefits from the assiognment of office
Total remuneration per body
1,090
1,090
1,090
369
369
369
5,747
4,219
1,529
6,074
5,884
190
2,183
14,004
7,206
5,677
1,529
6,074
5,884
190
2,183
15,463
Average annual compensation due to the Board of Directors, Executive Board, and Fiscal council in
2010:
Parent company
Board of
Fiscal
Executive
Council
Offcers
Board of
Directors
2010
Number of members
22
Highest individual remuneration
Lowest individual remuneration
Average individual remuneration
5
95
47
71
Total
7
74
74
74
34
1,102
455
625
1,270
576
769
24. SHAREHOLDERS’ EQUITY
a) Capital Stock
There are 203,934,060 non-par and book-entry common shares of Light S.A. (203,934,060 on
December 31st, 2009) as of December 31 st, 2010 recorded as Capital Stock in the total amount of
R$2,225,822 (R$2,225,822 on December 31 st, 2009), as follows:
SHAREHOLDERS
Controlling Group
RME Rio Minas Energia Participações S.A.
Lidil Comercial Ltda
Andrade Gutierrez Concessões S.A.
Companhia Energética de Minas Gerais S.A.
Luce Empreendimentos and Participações S.A.
Other
BNDES Participações S.A. - BNDESPAR
EDF International S.A
Public
Treasury Shares
Overall Total
12/31/2010
Number of Shares
106,304,597
26,576,150
53,152,298
26,576,149
97,629,463
30,631,782
66,997,681
203,934,060
12/31/2009
Number of Shares
% Interest
52.12
13.03
26.06
13.03
47.88
15.03
32.85
100
01/01/2009
Number of Shares
% Interest
52.12
26,576,150
26,576,149
26,576,149
26,576,149
13.03
13.03
13.03
13.03
100,719,912
5,584,685
-
49.39
2.73
-
97,629,463
47.88
97,629,181
47.88
49,776,782
47,593,781
258,900
203,934,060
24.41
23.34
0.13
100
106,304,597
% Interest
106,304,597
68,555,918
13,391,345
15,681,918
203,933,778
52.12
33.62
6.57
7.69
100
Light S.A. is authorized to increase its capital up to the limit of R$203,965,072 through resolution of
the Board of Directors, regardless of amendments to the bylaws. However, this increase is to occur
64
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
exclusively upon the exercise of the warrants issued, strictly pursuant to the conditions of the warrants
(Bylaws, Article 5, paragraph 2).
On March 25th, 2010, the Company released a relevant fact concerning a payment in connection with
the acquisition, by CEMIG, of 25,494,500 (twenty-five million, four hundred ninety-four and five
hundred) common shares of the Company, held by AGC, which shares represented 12.50% of the total
voting stock of the Company.On November 18, 2010, the Company made an announcement to the
market in connection with a payment made in connection with the acquisition, by CEMIG, of
1,081,649 (one million, eighty-one thousand six hundred forty-nine) common shares of the Company,
held by AGC, which represented 0.53% of the total voting stock of the Company. Said transactions
were anticipated in the Share Purchase and Sale Agreement entered into December 30th, 2009,
between CEMIG and AGC, as per the material facts released by Light, CEMIG and AGC on that same
date.
b) Capital reserves
Consistent with CVM Resolution No. 562 issued December 17 th, 2008, Light S.A. had recorded the
amount of R$34,406 as capital reserves under its shareholders' equity (R$22,459 as of January 1st,
2009). This amount related to stock options granted to certain officers of the company corresponding
to the vesting period completed until then. These options were fully exercised over the first quarter of
2010.
c) Profit reserve
Light S.A. has two profit reserves, as follows:
- A Statutory Reserve set at the rate of 5% of the net income for the year, pursuant to the applicable
laws.
- A Retained Earnings reserve, which is set against the net income for the year that remains after the
appropriations in a capital budget have been made, as approved by the Company's Board of Directors
subject to shareholder approval at general meeting.
d) Treasury Shares
As per the material fact released November 6th, 2009, the Company approved a plan to repurchase its
own shares as part of the Company's Long-Term Incentive Plan, comprising a Stock Option Plan, in
such way that there will be no further need to issue new shares and consequently dilute shareholder
interests. As of December 31, 2009, the amount of treasury shares was 258,900, or R$6,361. In
January 2010 all treasury shares were delivered to executives entitled to stock options (as mentioned in
note 40), and therefore there is no remaining balance as of December 31, 2010.
65
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
25. DIVIDENDS
The Company's by-laws provides for distribution of a mandatory dividend at the rate of 25% of the net
income for the year, adjusted pursuant to article 202 of Law No. 6,404 dated December 15, 1976. The
dividends proposed at year end were determined as follows:
12/31/2010
Calculation of minimum mandatory dividends
Net income for the year
Legal reserve
Calculation base for minimum mandaory dividends
575,150
(28,757)
546,393
Proposed dividends
Minimum mandaory dividends (25%)
Additional dividends
TOTAL DIVIDENDS
136,598
214,381
350,979
(1) Proposed additional dividends were recorded under a specific item of the shareholders' equity,
pursuant to the standards set forth in the CPC 08.
26. PROFIT SHARING
The Company's Profit Sharing Plan implemented in 1997 spans the whole corporation and is
essentially contingent upon consolidated net income and EBITDA results of the Company. Payment of
the profit-sharing amount comprises two portions, a fixed and a variable one. The Program has evolved
over the years in order to elicit increased employee commitment to improving the Company's and its
subsidiaries' bottom-lines.
As of December 31st, 2010 the balance of the provision for profit sharing was R$15,308, with payment
expected to take place in April 2011.
27. EARNINGS PER SHARE
Pursuant to the requirements of CPC 41 and the IAS 33 (Earnings per Share), the statement below
reconciles the year's earnings per share with the amounts used to determine the basic and diluted
earnings per share.
Consolidated
12/31/2010
12/31/2009
NUMERATOR
Net income for the year (R$)
575,150
588,804
DENOMINATOR
Weighted average number of common shares
203,934,060
203,933,966
DILUTED EARNINGS PER COMMON SHARE
2.820
2.887
There were no significant differences between the basic and diluted earnings per share as of December
66
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
31 st, 2009 and 2010.
28. NET OPERATING REVENUE BREAKDOWN
Consolidated
Supply to consumers/distributors (note 29)
Leases, rentals and other
Revenue from network usage
Revenue from consrtruction
Revenue from services rendered
Taxed servicefee
Other revenue
GROSS REVENUE
Billed supply -ICMS
PIS / COFINS
Other
REVENUE TAXES
Fuel Consumption Account - CCC
Energy Development Account - CDE
Global Reveral Reserve - RGR
Energy Research Company - EPE
National Technological Development Fund - FNDCT
Energy Efficiency Program - PEE
Research and Development -R&D
Other charges
CONSUMER CHARGES
TOTAL DEDUCTIONS
NET REVENUE
2010
2009
8,432,859
36,606
705,309
552,831
71,055
2,186
36,145
9,836,991
8,043,088
48,451
515,713
526,986
31,118
2,675
86,599
9,254,630
(2,219,444)
(535,303)
(3,685)
(2,758,432)
(2,080,591)
(449,125)
(2,553)
(2,532,269)
(220,500)
(206,184)
(57,654)
(6,146)
(12,295)
(27,545)
(14,481)
(25,170)
(569,975)
(177,422)
(206,076)
(77,720)
(5,685)
(11,363)
(25,835)
(11,363)
(515,464)
(3,328,407)
(3,047,733)
6,508,584
6,206,897
67
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
29. ELECTRIC POWER SUPPLY
Consolidated
Number of billed sales (1) (2)
2010
2009
GWh (1)
2010
R$
2009
2010
2009
Residential
Industrial
Commerce, services and other
Rural
Public sector
Public lighting
Public utility
Own consumption
Billed sales
ICMS (State VAT)
Unbilled sales
3,759,911
11,403
275,268
11,185
10,451
726
1,319
328
4,070,591
-
3,688,998
11,749
271,768
11,072
10,177
525
1,300
327
3,995,916
-
8,243
1,717
6,157
51
1,441
677
1,095
78
19,459
-
7,880
1,857
6,074
50
1,410
675
1,071
67
19,084
-
2,746,002
335,307
1,866,809
9,500
449,051
103,316
223,958
5,733,943
2,194,042
(8,830)
2,569,692
405,557
1,852,986
9,357
434,749
100,652
213,616
5,586,609
2,069,067
25,810
TOTAL SUPPLY (3)
4,070,591
3,995,916
19,459
19,084
7,919,155
7,681,486
4,719
1,565
6,284
4,676
853
5,529
429,371
84,333
513,704
332,516
29,086
361,602
25,743
24,613
8,432,859
8,043,088
Electric power auction
Short-term energy
TOTAL SUPPLY
-
OVERALL TOTAL
4,070,591
3,995,916
(1) Not audited by the independent auditors
(2) Number of billed sales in December 2010, with and without consumption
(3) Light SESA
30. OPERATING COSTS AND EXPENSES
Consolidated
Operating Expenses
Cost of Service
Electric Power
Nature of the expense
Personnel and management
Material
Outsourced services
Electricity purchased for resale (Note 31)
Depreciation and amortization
Allowance for doubtful accounts
Provision for contingencies
Cost of Construction
Other
(3,392,464)
(3,392,464)
Operation
(168,302)
(27,452)
(156,965)
(311,224)
(552,831)
(24,603)
(1,241,377)
Selling
(17,646)
(2,187)
(80,267)
(1,163)
(254,785)
(1,444)
(357,492)
General and Adm
(79,806)
(3,851)
(123,194)
(40,075)
37,100
(75,240)
(285,066)
Other Operating
Revenues (Expenses)
9,828
9,828
2010
(265,754)
(33,490)
(360,426)
(3,392,464)
(352,462)
(254,785)
37,100
(552,831)
(91,459)
(5,266,571)
2009
(271,863)
(25,911)
(274,105)
(3,322,637)
(343,557)
(246,076)
(59,969)
(526,986)
(89,952)
(5,161,056)
68
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
31. ENERGY PURCHASED FOR RESALE
Consolidated
GWh
2010
Connection charges
Spot market energy
Network usage charges
UTE Norte Fluminense
Itaipu
National Electric System Operator (O.N.S.)
PROINFA
ESS
Other contracts and electric power auctions
R$
2009
1,068
6,351
5,420
532
14,683
28,054
2010
1,327
6,351
5,649
480
13,627
27,434
2009
(19,968)
(25,234)
(419,401)
(806,846)
(548,741)
(17,752)
(83,501)
(128,976)
(1,342,045)
(3,392,464)
(19,044)
(65,877)
(408,011)
(935,536)
(630,975)
(15,913)
(1,247,281)
(3,322,637)
32. FINANCIAL INCOME
Parent Company
2010
2009
REVENUES
Interest and variation on debts paid by installments
Restatement of tax credits
Income from temporary cash investments
Swap operations
Other
EXPENSES
Adjustment at present value of receivables
Surplus (deficit) adjustment - Braslight
Restatement of tax liabilities
Restatement of provision for contingencies
Banking expenses
Charges and monetary variations with BNDES financing
Charges and monetary variations on actuarial liability of Brasilight
Interest and charges on loans and financing – foreign currency
Interest and charges on loans and financing – domestic currency
Charges on free energy transactions
Credit reversal of IR Debenture 4th Issue
Interest and fines on taxes
Regulatory fines
Installment payment - Reduction in fines and interest rates - Law 11,941 / 09 (REFIS)
Installment payment - other fines and
interest rates Law 11,941/09 - REFIS
Monetary variation – local currency
Exchange variation – foreign currency
Itaipu exchange variation
Swap operations
Other
TOTAL
66
2,003
522
2,591
Consolidated
2010
1,571
27
1,598
2009
75,546
21,449
59,977
298
15,953
173,223
75,944
33,007
61,197
(10,308)
26,905
186,745
(15)
-
(286)
-
(13)
(49,263)
(34)
(44,498)
(16,782)
(53,953)
(109,625)
(7,184)
(184,108)
(11,523)
10,885
(10,805)
-
19,072
48,616
(23,392)
(45,036)
(6,409)
(66,813)
(10,726)
(184,560)
(47,575)
(4,577)
128,921
(50)
(65)
(30)
(316)
3,284
1
12,859
(4,612)
(27,246)
(492,617)
(101,199)
(22)
44,698
(7,554)
(15,118)
(271,674)
(319,394)
(84,929)
2,526
1,282
69
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
33. FINANCIAL INSTRUMENTS
The statement below reconciles the carrying and market values of assets and liabilities related to our
financial instruments:
Parent Company
12/31/2010
12/31/2009
Book value
Market Value
Book value
Market Value
ASSETS
Cash and cash equivalents (note 6 )
Other credits (note 12)
LIABILITIES
Suppliers (Note 16)
38,295
23,860
62,155
38,295
23,860
62,155
14,584
20,212
34,796
14,584
20,212
34,796
280
280
280
280
6,348
6,348
6,348
6,348
Consolidated
12/31/2010
12/31/2009
Book value
Market Value
Book value
Market Value
ASSETS
Cash and cash equivalents (note 6 )
Marketable securities (note 7)
Concessionaires and permissionaires (note 8)
Swaps
Concession financial assets (note 11)
Other credits (note 12)
LIABILITIES
Suppliers (Note 16)
Loans and financing (Note 17)
Debentures (Note 18)
Swaps (Note 17)
514,109
11,122
1,634,965
211
469,030
152,973
2,782,410
514,109
11,122
1,634,965
211
469,030
152,973
2,782,410
760,313
68,059
1,653,652
4
354,784
97,250
2,934,062
760,313
68,059
1,653,652
4
354,784
97,250
2,934,062
658,421
1,335,183
1,088,402
5,295
3,087,301
658,421
1,342,054
1,095,106
5,295
3,100,876
564,181
1,183,003
1,241,675
5,558
2,994,417
564,181
1,195,561
1,241,675
5,558
3,006,975
In compliance with CVM Statement No. 475/2008 and CVM Resolution No. 604/2009, which revoked
Resolution No. 566/2008, the description of accounting balances and market values of financial
instruments stated in the balance sheet as of December 31, 2010 and 2009 are identified as follows:
 Financial investments
Financial investments in bank deposit certificates are measures at their acquisition cost duly
escalated at the balance sheet date, which value is proximate to their market value, as determined
by the management.
 Marketable securities
Financial investments in bank deposit certificates are measures at their acquisition cost duly
escalated at the balance sheet date, which value corresponds to their market value.
 Consumers, concessionaries and permissionaries (clients)
These are classified as “loans and receivables”, being recorded at their original values and subject
to a provision for losses and adjustments to their present values, where applicable.
 Financial concession assets
70
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
These are classified as “loans and receivables”, being recorded at their original values and subject
to a provision for losses and adjustments to their present values, where applicable.
 Suppliers
Accounts payable to suppliers of materials and services required in the operations of the Company
and its subsidiaries, the amounts of which are known or easily determinable, added, where
applicable, of relevant charges, escalation and/or exchange costs incurred as of the balance sheet
date.
These balances are classified as “financial liability not measured at fair value” and were
recognized at their amortized cost, which is not significantly different from their market value.
 Loans, financing and debentures
These are measured by the “restated amortized cost method”. Market values were calculated at
interest rates applicable to instruments with similar nature, maturities and risks, or based on market
quotations of these securities. The market values for BNDES financing are identical to accounting
balances, since there are no similar instruments, with comparable maturities and interest rates. In
case of debentures, book and market values are identical, as there is no liquid trading market for
these debentures as an accurate benchmark in the market calculation. These financial instruments
are classified as “financial liabilities not measured at the fair value”.
 Swaps
These are measured by the “market value”. A the determination of market value used available
information in the market and usual pricing methodology: the face value (notional) evaluation for
long position (in U.S. dollars) until maturity date and discounted at present value of clean coupon
rates, published in bulletins of Securities, Commodities and Futures Exchange – BM&F Bovespa.
It is worth mentioning that estimated market values of financial assets and liabilities were
determined by means of information available on the market and appropriate valuation
methodologies. Nevertheless, meaningful judgment was required when interpreting market data to
produce the most appropriate market value estimate. As a result, estimates used and presented
below do not necessarily indicate the amounts that may be realized in current exchange market.
71
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
a) Financial Instruments by category:
ASSETS
Cash and cash equivalents (note 6 )
Marketable securities (note 7)
Concessionaries and permissionaries (Clients) (note 8)
Swaps
Concession financial assets (note 11)
Other Credits (note 12)
Loans
and receivables
Parent Company
12/31/2010
Fair value
through profit
and loss
386
23.860
24.246
37.909
37.909
Amortized
Cost
LIABILITIES
Suppliers (Note 16)
Loans and financing (Note 17)
Debentures (Note 18)
Swaps (Note 17)
Fair value
through profit
and loss
280
280
-
Total
38.295
23.860
62.155
Total
280
280
Loans
and receivables
36.028
1.634.965
469.030
152.973
2.292.996
Amortized
Cost
658.421
1.335.183
1.088.402
3.082.006
Consolidated
12/31/2010
Fair value
through profit
and loss
478.081
11.122
211
489.414
Fair value
through profit
and loss
5.295
5.295
Total
514.109
11.122
1.634.965
211
469.030
152.973
2.782.410
Total
658.421
1.335.183
1.088.402
5.295
3.087.301
b) Policy concerning derivative instruments
The Company has a policy of using derivative instruments which has been approved by its Board of
Directors. According to this policy, the debt service (principal plus interest and charges) denominated
in foreign currency maturing within 24 months is to be hedged, except no speculative transaction is
allowed, whether using derivatives or any other risky asset.
In line with the policy standards, the Company and its subsidiaries do not have any forward contracts,
options, swaptions, callable swaps, flexible options, derivatives embedded in other products,
derivative-structured transactions and so-called “exotic derivatives”. Furthermore, the statement above
denotes that the Company and its subsidiaries use cashless exchange rate swaps (US$ vs. CDI), of
which the Notional Contract Value is equal to the amount of the debt service denominated in foreign
currency maturing in 24 months.
Additionally, in October 2010 certain swap transactions were performed for interest rates in
connection with the maturity of the CCB Bradesco.
c) Risk management and goals achieved
Management of derivative instruments is achieved through operating strategies with a view to
liquidity, profitability and safety. Our control policy consists of ongoing enforcement of policy
standards concerning the use of derivative instruments, as well as continued monitoring of agreed upon
rates versus market rates.
72
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
d) Risk Factors
During the normal course of its businesses, the Company and its subsidiaries are exposed to the market
risks related to currency variations and interest rates, as evidenced in the chart below:
Debt breakdown (excluding financial charges):
Consolidated
12/31/2010
USD
Currency Basket (BNDES)
Foreign currency (current and noncurrent)
CDI
TJLP
Other
Local currency (current and noncurrent)
Overall total (current and noncurrent)
R$
73,131
73,131
1,618,316
624,457
107,681
2,350,454
2,423,585
%
3.0
3.0
66.8
25.8
4.4
97.0
100.0
12/31/2009
R$
99,721
444
100,165
1,763,892
521,542
39,079
2,324,513
2,424,678
%
4.1
4.1
72.7
21.5
1.7
95.9
100
On December 31st, 2010, according to the chart above, the foreign currency-denominated debt is
R$73,131, or 3.01% of total debt.
Financial derivative instruments were contracted for the amount of foreign currency-denominated debt
service to expire within 24 months, in the swap modality, whose notional value on December 31 st,
2010 stood at US$19,191, according to the policy for utilization of derivative instruments approved by
the Board of Directors. Thus, if we deduct this amount from total foreign currency-denominated debt,
the foreign exchange exposure represents 1.72% of total debt.
Below we provide a few considerations and analyses on risk factors impacting on business of Grupo
Light companies:
 Currency risk
Considering that a portion of Light SESA’s loans and financing is denominated in foreign currency,
the company uses derivative financial instruments (swap operations) to hedge service associated with
these debts (principal plus interest and commissions) to expire within 24 months in addition to the
swap of previously mentioned rates. Derivative operations resulted in a R$1,134 loss in the fourth
quarter of 2010 (R$1,671 loss in the fourth quarter of 2009) and a R$4,406 loss in the year (a loss of
R$17,862 in 2009). The net amount of swap operations as of December 31, 2010, considering the fair
amount, is a negative R$5,084 (negative by R$5,554 on December 31, 2009), as shown below:
73
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Interest Rate Swaps
Institution
Light's
Receivable
Banco Itau
US$+2,20%
100% CDI
6/18/2009
3/10/2011
Notional
Value
Contracted
(US$
thousand)
69
-
(36)
(36)
Citibank
US$+2,33%
100% CDI
6/18/2009
4/12/2011
5,436
-
(2,846)
(2,846)
Banco Itau
US$+2,30%
100% CDI
9/10/2009
9/12/2011
66
-
(22)
(22)
Banco Itau
US$+2,79%
100% CDI
10/9/2009
10/11/2011
5,273
-
(1,155)
(1,155)
Light's Payable Starting Date Maturity Date
Fair Value
Fair Value
Dec/10
Dec/10
(R$) Assets (R$) Liabilities
Fair Value
Dec/10
(R$) Balance
Citibank
US$+3,20%
100% CDI
3/10/2010
3/12/2012
63
-
(14)
(14)
Banco Itau
US$+2,82%
100% CDI
4/12/2010
4/11/2012
5,010
-
(1,006)
(1,006)
Bradesco
US$+2,50%
100% CDI
9/10/2010
9/10/2012
63
-
(7)
(7)
HSBC
US$+2,20%
100% CDI
10/11/2010
10/9/2012
3,211
-
(209)
(209)
Total
19,191
-
(5,295)
(5,295)
Tax Swap
Institution
HSBC
Light's
Receivable
CDI+0,85%
Light's Payable Starting Date Maturity Date
101,9%CDI
+(TJLP-6%)
10/11/2010
Notional
Value
Contracted
(US$
thousand)
Fair Value
Fair Value
Dec/10
Dec/10
(R$) Assets (R$) Liabilities
Fair Value
Dec/10
(R$) Balance
10/9/2011
150,000
211
-
211
Total
150,000
211
-
211
The amount recorded was measured by its fair value on December 31st, 2010. All operations with
derivative financial instruments are registered in clearing houses for the custody and financial
settlement of securities and there is no margin deposited in guarantee. Operations have no initial cost.
Below, the sensitivity analysis for foreign exchange and interest rates fluctuations, showing eventual
impacts on financial result of the Company and its subsidiaries.
The methodology used in the “Probable Scenario” was to consider that both foreign exchange and
interest rates will maintain the same level verified on December 31, 2010 until the end of 2011,
maintaining steady liabilities, derivatives and temporary cash investments then verified. It is worth
highlighting that, as this refers to a sensitivity analysis of the impact on the 2011 financial result, debt
and investment balances on December 31, 2010 were considered, and charges projection and
compensation on these balances. It is worth mentioning that the behavior of debt and derivatives
balances will observe their respective contracts, and the balance of temporary cash investments will
fluctuate according to the need or available funds of the Company and its subsidiaries.
74
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Risk of Exchange Rate Depreciation:
Operation
Risk
FINANCIAL LIABILITIES
Par Bond
Discount Bond
C. Bond
Debit. Conv.
Bib
USD
USD
USD
USD
USD
DERIVATIVES
USD
Swaps
Scenario (I): Probable
Scenario (III)
(7,418)
(3,891)
(1,612)
(1,543)
(336)
(36)
(26,705)
(10,919)
(6,324)
(6,575)
(2,696)
(191)
(45,993)
(17,947)
(11,035)
(11,608)
(5,057)
(346)
(2,199)
6,161
14,521
+25%
+50%
2.0828
2.4993
Reference for financial assets and liabilities
Financial
R$/US$ exchange rate (end of the period)
R$
Scenario (II)
1.6662
Risk of Exchange Rate Appreciation:
Operation
Risk
FINANCIAL LIABILITIES
Par Bond
Discount Bond
C. Bond
Debit. Conv.
Bib
USD
USD
USD
USD
USD
DERIVATIVES
Swaps
USD
Reference for financial assets and liabilities
Financial
R$/US$ exchange rate (end of the period)
Scenario (I): Probable
R$
Scenario (IV)
Scenario (V)
(7,418)
(3,891)
(1,612)
(1,543)
(336)
(36)
11,869
3,137
3,099
3,489
2,025
119
31,157
10,165
7,811
8,521
4,386
274
(2,199)
(10,559)
(18,919)
-25%
-50%
1.2497
0.8331
1.6662
With the chart above, it is possible to identify that despite partial hedge against foreign currencydenominated debt (only limited to debt service to expire within 24 months), as R$/US$ quote
increases, liabilities financial expense also increases but financial revenues of derivatives also partially
offset this negative impact and vice-versa. Thus, cash is hedged thanks to the derivatives policy of the
Company and its subsidiaries.
 Interest rate risk
This risk derives from impact of interest rates fluctuation not only over financial expense associated
with loans and financing of subsidiaries, but also over financial revenues deriving from temporary cash
investments. The policy for utilization of derivatives approved by the Board of Directors does not
comprise the contracting of instruments against such risk. Nevertheless, the Company and its
subsidiaries continuously monitor interest rates so that to evaluate eventual need of contracting
derivatives to hedge against interest rates volatility risk.
75
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
See below the sensitivity analysis of interest rate risk, evidencing the effects on scenarios variation
results:
Risk of Interest Rate Increase:
Operation
Risk
FINANCIAL ASSETS
Temporary cash investments
CDI
Scenario (I):
Probable
R$
Scenario (II)
Scenario (III)
51,985
64,981
77,977
FINANCIAL LIABILITIES
Debentures 5th issue
CCB Bradesco
CCB Bco ABN Amro Banking S/A
Debentures 4th issue
FINEM BNDES 2006-2008
FINEM BNDES 2009-2010
FINEM BNDES 2009-2010 TJLP+1
PROESCO
Debentures 6th issue
CDI
CDI
CDI
TJLP
TJLP
TJLP
TJLP
TJLP
CDI
(259,363)
(97,782)
(52,171)
(9,751)
(11)
(33,187)
(13,584)
(15,234)
(652)
(36,991)
(314,847)
(119,246)
(64,244)
(11,909)
(13)
(38,107)
(15,977)
(17,651)
(772)
(46,928)
(370,623)
(140,710)
(76,317)
(14,067)
(14)
(43,026)
(18,371)
(20,068)
(893)
(57,157)
DERIVATIVES
Currency swaps
Interest rate swaps
Interest rate swaps
CDI
CDI
TJLP
(2,199)
1,139
1,139
(2,896)
1,093
(1,029)
(3,591)
1,045
(3,197)
Reference for FINANCIAL ASSETS
CDI (% YTD)
10.64%
+25%
13.30%
+50%
15.96%
Reference for FINANCIAL LIABILITIES
CDI (% YTD)
TJLP (% YTD)
10.64%
6.00%
+25%
13.30%
7.50%
+50%
15.96%
9.00%
76
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Risk of Interest Rate Decrease:
Operation
Risk
FINANCIAL ASSETS
Temporary cash investments
CDI
Scenario (I):
Probable
R$
Scenario (IV)
Scenario (V)
51,985
38,988
25,992
FINANCIAL LIABILITIES
Debentures 5th issue
CCB Bradesco
CCB Bco Santander
Debentures 4th issue
FINEM BNDES 2006-2008
FINEM BNDES 2009-2010
FINEM BNDES 2009-2010 TJLP+1
PROESCO
Debentures 6th issue
CDI
CDI
CDI
TJLP
TJLP
TJLP
TJLP
TJLP
CDI
(259,363)
(97,782)
(52,171)
(9,751)
(11)
(33,187)
(13,584)
(15,234)
(652)
(36,991)
(204,163)
(76,318)
(40,098)
(7,593)
(9)
(28,268)
(11,191)
(12,817)
(531)
(27,338)
(149,238)
(54,853)
(28,025)
(5,436)
(8)
(23,349)
(8,797)
(10,400)
(410)
(17,960)
DERIVATIVES
Currency swaps
Interest rate swaps
Interest rate swaps
CDI
CDI
TJLP
(2,199)
1,139
1,139
(1,498)
1,183
3,307
(795)
1,226
5,476
Reference for FINANCIAL ASSETS
CDI (% YTD)
10.64%
-25%
7.98%
-50%
5.32%
Reference for FINANCIAL LIABILITIES
CDI (% YTD)
TJLP (% YTD)
10.64%
6.00%
-25%
7.98%
4.50%
-50%
5.32%
3.00%
 Credit risk
It refers to the Company eventually suffering losses deriving from default of counterparties or
financial institutions depositary of funds or temporary cash investments. To mitigate these risks, the
Company uses all collection tools allowed by the regulatory body, such as disconnection for
delinquency, debit losses and permanent monitoring and negotiation of outstanding positions.
Concerning financial institutions, the Company only carries out operations with low-risk financial
institutions classified by rating agencies.
 Liquidity risk
Liquidity risk relates to the Company's ability to settle its liabilities. In order to determine the
Company's ability to satisfactorily meet its financial liabilities, the streams of maturities for funds
raised and other liabilities are reported with the Company's statements. Further information on the
Company's loans can be found in detail in notes 17 and 18.
The Company has raised funds through its operations, from financial market transactions and from
77
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
affiliate companies. These funds are allocated primarily to support its investment plan and in
managing its cash for working capital and liability management purposes.
Management of financial investments focuses on short-term instruments in an attempt to achieve
maximum liquidity and satisfy our expenditure requirements.
The Company's cash-generation ability and low volatility concerning receivables and accounts payable
over the year provide cash flow stability and thus reduce its liquidity exposure.
The realization flow concerning future liabilities as per the relevant terms and conditions is
summarized in the statement below:
Interest rate instruments
Floating
Loans, financings and debentures
Interest rate instruments
Fixed rate
Loans, financings and debentures
e)
1 to 3
months
74,465
2,181
3 months to 1
year
676,162
57,188
Consolidated
1 to 5 years
1,999,085
108,932
More than
5 years
228,921
185,814
Total
2,978,633
354,115
Capital Management
The Company manages its capital with the purpose of safeguarding its capacity to continuously offer
return to shareholders and benefits to other stakeholders, in addition to maintaining the ideal capital
structure to reduce costs.
In order to maintain or adjust its capital structure, the Company either reviews the dividend payment
policy, returns capital to shareholders or issues new shares and sells assets to reduce the indebtedness
level, for instance.
f)
Hierarchical Fair Value
There are three types of classification levels for the fair value of financial instruments. This
hierarchy prioritizes unadjusted prices quoted in an active market for financial assets or liabilities.
The classification of hierarchical levels can be presented as follows:

Level 1 - Data originating from an active market (unadjusted quoted price) that can be
accessed on a daily basis, including at the date of fair value measurement.
 Level 2 - Different data originating from the active market (unadjusted quoted price) included
in Level 1, extracted from a pricing model based on data observable in the market.
 Level 3 - Data extracted from a pricing model based on data that are not observable in the
market.
78
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
12/31/2010
ASSETS
Cash and cash equivalent (note 6 )
Marketable securities (note 7)
Swaps
LIABILITIES
Loans and financing (Note 17)
Debentures (Note 18)
Swaps (Note 17)
Consolidated
Measurement of Fair Value
Identical
Similar
markets
markets
Level 1
Level 2
Without active
market
Level 3
478,081
11,122
211
489,414
-
478,081
11,122
211
489,414
-
1,335,183
1,088,402
5,295
2,428,880
-
1,335,183
1,088,402
5,295
2,428,880
-
No financial instrument classified as Level 1 or 3 was observed in the analysis period, and there was
no transfer from one level to another in the same period.
34.
INSURANCE
On December 31st, 2010, Grupo Light had insurances covering its main assets, including:
Operational Risk Insurance - it covers material damages caused to buildings, machinery, equipment,
furniture and fixtures as a result of fires, explosions, dumping, floods, earthquakes, machinery
breakdown and electrical damage.
All assets of Grupo Light are insured under the Operational Risks modality, with an “All Risks”
coverage, except for transmission and distribution lines.
Directors and Officers Liability Insurance (D&O) - It has the purpose of protecting Executives from
losses and damages resulting from their activities as Directors, Officers and Managers of the Company.
General and Civil Liability Insurance - focuses on the payment of indemnity if the Company is deemed
civilly liable by a final and unappealable sentence or deal authorized by the insurance company, in
relation to remedies for collateral damage, physical damage to people and/or material damage caused
to third parties and related to pollution, contamination and sudden leakage.
International Transport Insurance – cargo/equipment shipping, Financial Guarantee Insurance – Energy
Trading (8 policies) and Fire Insurance – Leased Properties.
The assumptions of risks adopted, given their nature, are not included in the scope of an audit firm,
accordingly, they were not audited by independent auditors.
Insurance coverage as of December 31, 2010 is considered sufficient by Management, as summarized
below:
RISKS
Directors & Officers (D&O)
Civil and general liabilities
Operating risks*
Effective Term
From
To
08/10/2010
09/25/2010
10/31/2010
08/10/2010
09/25/2010
10/31/2011
Amount
Insured
Premium
US$20.000
R$20,000
R$ 3,664,000
US$ 76
R$448
R$1,482
79
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
35. ENVIRONMENTAL ISSUES
Amongst the most relevant initiatives taken by the Company to ensure environmental quality, the
following stand out:
 Greenhouse Gas (GHG) Emissions (1): The Company started a survey on greenhouse gas emissions
related to its activities in 2006. Based on this survey, the Company established an annual target for
GHG emission reduction, which has been reached and even surpassed in view of the efforts to make
processes more efficient (with lower waste and gas generation).
 Waste Management (1): Specialized companies are contracted to ensure the correct destination of
the waste generated by the Company, including hazardous and recyclable waste. In the maintenance
of Power Station plants, for example, there is an agreement with a company specialized in providing
washable and reusable towels to replace rags and cloths, resulting in a reduction of up to 60%. As for
the activities of the Distribution Station, the Company has an agreement that guarantees the reuse of
unused equipment removed from the electric power network, allowing for a significant reduction in
the consumption of natural resources and waste generation.
 Environmental Management System (EMS) and Integrated Management System (IMS) (1): The
Company currently has 247 sites certified by ISO 14001, a standard that establishes Environmental
Management criteria. Light Energia has a triple certification – Quality, Health & Safety and
Environment for the whole Generation Estate in operation. The undertakings certified under the
Environmental Management System (EMS) include electric power sub-stations, 138-kV overhead
distribution lines, commercial agencies, hydropower plants, among others. The Company's EMS
allows for the management of environmental aspects and impacts deriving from the activities listed,
as well as compliance with the applicable legal requirements, awareness and environmental training
of employees, among others. The maintenance of such a system requires various investments to avoid
possible non-compliance.
 Macrophyte Handling (1): The water vegetation formed in the reservoirs can cause significant
problems in power generation, in the control of floods and the multiple uses of water, which requires
large investments to control their population growth.
 Macrophyte Handling (1): The water vegetation formed in the reservoirs can cause significant
problems in power generation, in the control of floods and the multiple uses of water, which requires
large investments to control their population growth.
 Program for the Recovery of Rivers and Reservoirs (1): The Company took on a commitment with
the Environmental Department of the Rio de Janeiro State to recover the fish fauna of the Paraíba do
Sul river. The project elaborated by the State Environmental Institute [Instituto Estadual do Ambiente
– INEA] provides for the release of 1 million alevins, of which 200,000 will be provided by Light.
 Social-environmental responsibility (1): The Company takes education very seriously, and for many
years it has been financing primary and technical environmental education projects and schools in
cities of its concession area. The Social-environmental inclusion project is one of these initiatives, in
a partnership with the Education Department of Piraí-RJ and researchers from UNESP, UNIRIO,
UFRRJ, FIOCRUZ and CETAS/IBAMA (Seropédica-RJ), aiming to provide teachers, students and
80
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
employees of the Escola de Lajes school, Company employees and the community with opportunities
to learn about local environmental resources available, as well as qualify multipliers of sustainable
initiatives, focusing on the necessary environmental care to prevent water pollution and global
warming.
 These initiatives have helped Light remain listed in Bovespa's corporate sustainability index (ISE)
since 2007.
In 2010, investments in the aforementioned projects, among others, amounted to R$4,976.
(1) Unaudited.
81
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
36. INFORMATION BY SEGMENT
Segment reporting was prepared according to CPC 22 (Information by Segment), equivalent to IFRS
8, and is reported in relation to the business of the Company and its subsidiaries, identified based on
their management structure and internal management information.
The Company's Management considers the following segments: power distribution, power generation,
power trading and others (including the holding). The Company is segmented according to its
operation, which has different risks and compensation.
Segment information for the years ended December 31st, 2010 and December 31 st, 2009 are presented
below:
Distribution
Current assets
Non-current assets
Investments
Property, plant and equipment
Intangible assets
Current liabilities
Non-current liabilities
Shareholders' equity
2,200,937
2,152,886
16,374
189,015
3,478,653
1,954,713
3,640,719
2,442,433
Distribution
Current assets
Non-current assets
Investments
Property, plant and equipment
Intangible assets
Current liabilities
Non-current liabilities
Shareholders' equity
2,592,400
2,324,417
16,448
180,658
3,306,009
1,632,313
4,088,365
2,699,254
Generation
166,428
1,017
149
1,433,849
131,766
217,644
647,138
868,427
Generation
241,920
668
150
1,414,844
116,971
256,089
733,617
784,847
Trading
61,605
20,409
5,039
39,398
7,134
40,521
Trading
49,947
1,889
2,581
4,336
29,473
1,455
27,825
Other
114,245
195
3,356,792
990
1,319
140,045
1,038
3,332,458
Other
191,464
68
3,514,356
730
151,750
19
3,553,680
Eliminations
(165,047)
(218,002)
(3,355,729)
2,034
(165,047)
(218,002)
(3,353,695)
Eliminations
(288,818)
(307,244)
(3,513,147)
(288,818)
(307,244)
(3,511,978)
Consolidated
2010
2,378,168
1,956,505
17,586
1,628,893
3,613,772
2,186,753
4,078,027
3,330,144
Consolidated
2009
restated
2,786,913
2,019,798
20,388
1,600,568
3,422,980
1,780,807
4,516,212
3,553,628
82
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
Income segment reporting:
Consolidated
Distribution
Generation
Trading
Other
Eliminations
Consolidated
2009
2010
Re-presented
9,347,209
365,018
303,668
-
(178,904)
9,836,991
9,254,630
7,927,985
-
-
-
-
7,927,985
7,655,676
Unbilled supplies
(8,830)
-
-
-
-
(8,830)
25,810
Supply - Electric Power
66,446
359,050
249,872
-
(161,664)
513,704
361,602
Construction revenue
552,831
-
-
-
-
552,831
526,986
Other
808,777
5,968
53,796
-
(17,240)
851,301
684,556
(3,250,106)
OPERATIONAL REVENUE
Billed supplies
DEDUCTIONS TO REVENUE
Billed sales - ICMS (State VAT)
Consumer charges
PIS (Tax on Revenues)
COFINS (Tax on Revenues)
Other
NET OPERATIONAL REVENUE
OPERATING EXPENSES AND COSTS
Personnel
Material
Outsourced services
(45,077)
(33,224)
-
-
(3,328,407)
(3,047,733)
(2,194,042)
-
(25,402)
-
-
(2,219,444)
(2,080,591)
(556,347)
(13,628)
-
-
-
(569,975)
(515,464)
(89,735)
(5,606)
(1,098)
-
-
(96,439)
(81,702)
(407,984)
(25,830)
(5,050)
-
-
(438,864)
(367,423)
(1,998)
(13)
(1,674)
-
-
(3,685)
(2,553)
6,097,103
319,941
270,444
-
(178,904)
6,508,584
6,206,897
(5,037,251)
(152,913)
(248,539)
(6,772)
178,904
(5,266,571)
(5,161,056)
(238,196)
(20,683)
(3,165)
(3,710)
-
(265,754)
(271,863)
(22,674)
(814)
(9,996)
(6)
-
(33,490)
(25,911)
(317,603)
(15,832)
(24,575)
(2,416)
-
(360,426)
(274,105)
(3,344,010)
(17,701)
(209,297)
-
178,544
(3,392,464)
(3,322,637)
Depreciation
(290,232)
(61,618)
(612)
-
-
(352,462)
(343,557)
Provisions
(208,357)
(9,328)
-
-
-
(217,685)
(306,045)
Construction cost
(552,831)
-
-
-
-
(552,831)
(526,986)
(63,348)
(26,937)
(894)
(640)
360
(91,459)
(89,952)
-
-
-
579,394
(579,394)
-
-
(289,098)
(33,869)
967
2,606
-
(319,394)
(84,929)
194,356
6,993
1,493
2,671
(32,290)
173,223
186,745
(483,454)
(40,862)
(526)
(65)
32,290
(492,617)
(271,674)
(579,394)
Energy purchased
Other
Equity in the earnings of subsidiaries
FINANCIAL INCOME
Financial revenue
Financial expenses
INCOME BEFORE TAXES
Social Contribution
Income tax
NET INCOME
770,754
133,159
22,872
575,228
922,619
960,912
(77,440)
(15,751)
(1,926)
-
-
(95,117)
(168,994)
(217,998)
(28,745)
(5,609)
-
-
(252,352)
(203,114)
475,316
88,663
15,337
575,228
575,150
588,804
(579,394)
37. TARIFF ADJUSTMENT
In a public meeting of the board of executive officers held on November 3, 2010, ANEEL (Brazilian
Electricity Regulatory Agency) approved the average adjustment of tariff charged by Light Serviços
de Eletricidade S.A. (Light SESA) by 6.99% for a period of 12 months as of November 7, 2010.
The tariff adjustment index has two components: a Structural component of 8.31%, which is now part
of the tariff, and a Financial component of -1.32%, exclusively applied to the next 12 months.
Tariff Adjustment - Light 2010
IRT Structural
Additional Financial Charges
Total
%
8.31
(1.32)
6.99
It is worth pointing out that the tariff incorporate the effects of the new methodology proposed in the
Addendum approved by ANEEL at the meeting of the board of executive officers held on February
2rd, 2010.
Pursuant to the concession contract, the concessionaire's revenue is divided into two portions. “Portion
A” involves the so-called “non-manageable costs” related to the electric power distribution activity,
and are only transferred to the power tariff, regardless of the concessionaire's management. “Portion
83
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
B” comprises the remaining revenue amount, therefore involving the so-called "manageable costs", i.e.
costs managed by the concessionaire itself. This portion includes operating and maintenance expenses,
depreciation and investment compensation.
The purpose of the tariff adjustment is to reestablish the purchasing power of the concessionaire's
revenue, according to a formula provided in the concession contract. The tariff is adjusted on an
annual basis at the contract anniversary date, except in the tariff revision year. To apply the formula,
all of the distributor's non-manageable costs are calculated (“Portion A”). Other manageable costs
included in “Portion B” are restated by the IGP-M index established by Fundação Getúlio Vargas. The
restatement of “Portion B” still depends on the X factor, an index established by ANEEL at the time of
adjustment. Its function is to share with the consumer the concessionaire's productivity gains deriving
from the growth in the number of consuming units and the increase in consumption in the existing
market, which contributes to a moderate tariff.
The 8.34% variation in manageable costs (“Portion A”) is mainly due to the increase in Sector
Charges, deriving from the recently approved Law no. 12,111, which increased the costs of the Fuel
Consumption Account (FCA) and Research and Development account (R&D), and from the increase
in System Service Charges (SSC), which results from the inclusion of the forecast of costs associated
to thermal power dispatch, outside the merit order, due to power safety by order of the CMSE.
“Portion B”, which corresponds to manageable costs, reflects the 8.81% IGP-M variation accumulated
in the period of November 2009 to October 2010, with deduction of the 0.86% X Factor, resulting in
the final percentage of 7.95%.
The consumers of Light SESA observed an average increase of 2.20% in their energy bills since
November 7th, 2010.
38. LONG-TERM INCENTIVE PLAN
a) Stock Option Incentive Plan
On November 6th, 2009, the executives entitled to the long-term incentive plan were dismissed from
their positions. Item 10 of the plan provided that, in case of termination of the employment contract
before the end of the grace period, the beneficiaries were allowed to exercise a percentage of up to
95% of the options granted, depending on the contract termination date in relation to the vesting
period.
The options granted totaled 6,917,733 shares, and the executives were entitled to 95% of them, which
was equivalent to 6,571,846 shares.
On December 31st, 2010, all options had already been exercised.
In order to exercise the obligation deriving from the option exercise by the executives, the Company
bought shares in the market, holding them in treasury until the settlement of all obligations.
b) Incentive Plan in “Phantom Options”
84
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
The “phantom Options” modality was offered to eligible executives appointed by the Board of
Directors and is directly linked to Light's value creation, measured by the variation in Light's Value
Unit (LVU). The calculation of LVU is based on the weighing of the following factors:
1. Market value of shares issued by Light S.A;
2. Economic value (a multiple of EBITDA);
3. Amount of dividends distributed.
The difference between the LVU provided in the Program for the grant year and the LVU verified in
the exercise year multiplied by the amount of shares exercised by the participant will amount to the
total long-term bonus to be paid to each participant.
The Company established a provision in the amount of R$10,669 (R$4,132 on December 31, 2009) for
the vesting period incurred in 2010, with an offsetting entry under personnel expenses.
39. LONG-TERM CONTRACTS
a) Use of distribution system agreements (CUSD)
All plants of subsidiary Light Energia are conected to the distribution network and are valid until the
termination date of concessions. On December 31st, 2010, the remaining balance of agreements is
R$243,319 (R$244,470 on December 31st, 2009).
b) Electric power sale agreements
On December 31st, 2010, Light Energia had power sale commitments positioned in average MW, as
shown in the chart below:
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Contracted Energy
TOTAL (avg.MW)
523,2
521,2
510,1
510,2
479,9
479,9
479,9
479,9
479,9
449,6
449,6
449,6
449,6
449,6
449,6
449,6
c) Electric power purchase agreements
85
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
On December 31st, 2010 the Company had power purchase commitments, as follows:
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
avg.MW
Bilateral Contracts
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
1,341
616
-
avg.MW
Energy Auctions
1816
1883
1505
949
883
865
934
939
939
939
939
939
919
877
681
634
avg.MW
Total Contracts
3,157
3,224
2,846
2,290
2,223
2,206
2,275
2,280
2,280
2,280
2,280
2,280
2,260
2,218
1,297
634
86
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
BOARD OF DIRECTORS
MEMBERS
ALTERNATES
Aldo Floris
Lauro Alberto de Luca
Ana Marta Horta Veloso
João Procópio Loures Vale
Djalma Bastos de Morais
Vacant
João Márcio Lignani Siqueira
Fernando Henrique Schuffner Neto
Firmino Ferreira Sampaio Neto
Carlos Augusto Leone Piani
Luiz Carlos Costeira Urquiza
Paulo Roberto Reckziegel Guedes
Carlos Roberto Teixeira Junger
Ricardo Simonsen
Sérgio Alair Barroso
Luiz Fernando Rolla
Maria Silvia Bastos Marques
Almir José dos Santos
Carlos Alberto da Cruz
Carmen Lúcia Claussen Kanter
Elvio Lima Gaspar
Joaquim Dias de Castro
FISCAL COUNCIL
MEMBERS
ALTERNATES
Eduardo Grande Bittencourt
(Chairman)
Ricardo Genton Peixoto
Isabel da Silva Ramos Kemmelmeier
(Member)
Ronald Gastão Andrade Reis
Ari Barcelos da Silva
(Member)
Eduardo Gomes Santos
Maurício Wanderley Estanislau da Costa
(Member)
Márcio Cunha Cavour Pereira de Almeida
Aristóteles Luiz Menezes Vasconcellos Drummond
(Member)
Aliomar Silva Lima
87
NOTES TO THE FINANCIAL STATEMENTS
ON DECEMBER 31, 2010 AND 2009
(Amounts in thousands of Brazilian reais)
BOARD OF EXECUTIVE OFFICERS
Jerson Kelman
Chief Executive Officer
João Batista Zolini Carneiro
Chief Financial and Investor Relations Officer
Evandro Leite Vasconcelos
Energy Officer
Paulo Carvalho Filho
Corporate Management Officer
Ana Silvia Corso Matte
Personnel Officer
José Humberto Castro
Distribution Officer
Paulo Roberto Ribeiro Pinto
New Business and Institutional Officer
CONTROLLERSHIP SUPERINTENDENCE
Luciana Maximino Maia
Controllership Superintendent
CPF 144.021.098-50
CRC-RJ 091476/O-0
Suzanne Lloyd Gasparini
Accountant – Accounting Manager
CPF 081.425.517-56
CRC-RJ 107359-0
88