6-K 1 elpitr2q04_6k.htm QUARTERLY INFORMATION - ITR - JUNE 30, 2004 Provided By MZ Data Products
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of September, 2004

Commission File Number 1-14668
 

 
COMPANHIA PARANAENSE DE ENERGIA
(Exact name of registrant as specified in its charter)
 

Energy Company of Paraná
(Translation of Registrant's name into English)
 

Rua Coronel Dulcídio, 800
80420-170 Curitiba, Paraná
Federative Republic of Brazil
(5541) 322-3535
(Address of principal executive offices)
 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____










(A free translation of the original in Portuguese)

Cia Paranaense de Energia -
COPEL
Report of Independent Accountants
on the Limited Review of
Quarterly Information (ITR)
June 30, 2004









(A free translation of the original in Portuguese)

Report of Independent Accountants on
Limited Reviews of Quarterly Information

To the Board of Directors and Stockholders
Cia Paranaense de Energia - COPEL

1

We have carried out limited reviews of the Quarterly Information (ITR) of Companhia Paranaense de Energia - COPEL (parent company and consolidated) for the quarters and period ended June 30 and March 31, 2004. This information is the responsibility of the Company’s management.


2

Our reviews were carried out in conformity with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting Council (CFC), and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Company with regard to the main criteria adopted for the preparation of the quarterly information and (b) a review of the significant information and of the subsequent events which have, or could have, significant effects on the Company’s financial position and operations.


3

Based on our limited reviews, we are not aware of any material modifications that should be made to the quarterly information referred to above in order that such information be stated in conformity with accounting practices adopted in Brazil applicable to the presentation of the quarterly information, consistent with the Brazilian Securities Commission (CVM) regulations.


4

As mentioned in Note 36 to the Quarterly Information, the Company is contesting the calculations made by the Wholesale Energy Market (MAE), which take into consideration the decisions of the National Agency of Electric Energy (ANEEL), contained in ANEEL Dispatch 288/2002 and ANEEL Resolution 395/2002, because it understands that these regulations introduced changes in market regulations prevailing at the time when the transactions occurred. The amount involved is approximately R$ 478,000 thousand, which was not recorded by the Company, based on the opinion of its internal and external legal advisors, that the chances of a favorable outcome for the Company are probable and possible, respectively.


5

We conducted our reviews for the purpose of issuing a report on the Quarterly Information (ITR) referred to in paragraph 1, taken as a whole. The consolidated statement of cash flows for the six-month period ended June 30, 2004, presented together with the Quarterly Information (ITR) to provide supplementary information on the Company, is not required by accounting practices adopted in Brazil. The statement of cash flows was subjected to the review procedures referred to in paragraph 2 and, based on our review, we are not aware of any material modifications that should be made for it to be fairly presented, in all material respects, in relation to the Quarterly Information (ITR), taken as a whole.


6

The Quarterly Information (ITR) referred to in paragraph 1, also includes comparative accounting information relating to the results and the statement of cash flows for the quarter and period ended June 30, 2003. The limited reviews of the Quarterly Information (ITR) for that quarter and period were conducted by other independent accountants, who issued an unqualified opinion thereon dated August 18, 2003, with an emphasis paragraph referring to the matter described in paragraph 4 above.

Curitiba, August 13, 2004

PricewaterhouseCoopers Wander Rodrigues Teles
Auditores Independentes Contador
CRC 2SP000160/O-5 "F" PR CRC 1DF005919/O-3 "S" PR

(A free translation of the original in Portuguese) Unaudited 
FEDERAL GOVERNMENT SERVICE Corporate Legislation 
BRAZILIAN SECURITIES COMMISSION (CVM) June 30, 2004 
QUARTERLY INFORMATION (ITR)
COMMERCIAL, INDUSTRIAL AND OTHER


REGISTRATION WITH THE CVM DOES NOT IMPLY ANY ANALYSIS OF THE COMPANY. MANAGEMENT IS RESPONSIBLE FOR THE ACCURACY OF THE INFORMATION PROVIDED.


01.01 – IDENTIFICATION

1 - CVM CODE
01431-1
2 - COMPANY NAME
Cia Paranaense de Energia - COPEL
3 - Federal Corporate Taxpayers' Registration Number (CNPJ)
76.483.817/0001-20
4 - State Registration Number – NIRE
41300036535

01.02 – HEAD OFFICE

1 – ADDRESS
Rua Coronel Dulcidio, 800
2 – SUBURB OR DISTRICT
Batel
3 – POSTAL CODE
80420-170
4 – MUNICIPALITY
Curitiba
5 – STATE
PR
6 – AREA CODE
041
7 – TELEPHONE
322-3535
8 – TELEPHONE 9 – TELEPHONE 10 – TELEX
11 – AREA CODE
041
12 – FAX
224-4312
13 – FAX 14 – FAX  
15 – E-MAIL
copel@copel.com

01.03 – INVESTOR RELATIONS OFFICER (Company Mail Address)

1 – NAME
Ronald Thadeu Ravedutti
2 – ADDRESS
Rua Coronel Dulcídio, 800
3 – SUBURB OR DISTRICT
Batel
4 – POSTAL CODE
80420-170
5 – MUNICIPALITY
Curitiba
6 – STATE
PR
7 – AREA CODE
041
8 – TELEPHONE
322-3535
9 – TELEPHONE
331-4343
10 – TELEPHONE 11 – TELEX
12 – AREA CODE
041
13 – FAX
331-3136
14 – FAX 15 – FAX  
16 – E-MAIL
ravedutti@copel.com

01.04 –General INFORMATION/INDEPENDENT ACCOUNTANTS

CURRENT YEAR CURRENT QUARTER PRIOR QUARTER
1-BEGINNING 2-END 3-QUARTER 4-BEGINNING 5-END 6-QUARTER 7-BEGINNING 8-END
1/1/2004 12/31/2004 2 4/1/2004 6/30/2004 1 1/1/2004 3/31/2004
9 – INDEPENDENT ACCOUNTANT
PricewaterhouseCoopers Auditores Independentes
10 - CVM CODE
00287-9
11 - PARTNER RESPONSIBLE
Wander Rodrigues Teles
12 - INDIVIDUAL TAXPAYERS' REGISTRATION NUMBER OF THE PARTNER RESPONSIBLE
153.211.501-68

01.05 – CAPITAL COMPOSITION

Number of shares
(Thousand)
Current Quarter
6/30/2004
Prior quarter
3/31/2004
Same quarter in prior year
6/30/2003
Paid-up capital
COMMON 145,031,080,782  145,031,080,782  145,031,080,782 
PREFERRED 128,624,295,488  128,624,295,488  126,624,295,488 
TOTAL 273,655,376,270  273,655,376,270  273,655,376,270 
Treasury stock
COMMON
PREFERRED
TOTAL

01.06 – CHARACTERISTICS OF THE COMPANY

1 – TYPE OF COMPANY
Commercial, industrial and other
2 – SITUATION
Operating
3 – NATURE OF OWNERSHIP
Government-owned holding
4 –ACTIVITY CODE
112 – electric energy
5 – MAIN ACTIVITY
Generation, transmission, sale and distribution of energy
6 – TYPE OF CONSOLIDATION
Partial
7 – TYPE OF REPORT OF THE INDEPENDENT ACCOUNTANT
Unqualified

01.07 – COMPANIES EXCLUDED FROM THE CONSOLIDATED FINANCIAL STATEMENTS

1 – ITEM 2 – CNPJ 3 – NAME

01.08 – DISTRIBUTIONS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER

1 – ITEM

2 – EVENT

3 - DATE OF APPROVAL

4 – DISTRIBUTION TYPE

5 – START OF PAYMENT

6 - TYPE OF SHARE

7 – DISTRIBUTION PER SHARE

01.09 – SUBSCRIBED CAPITAL AND ALTERATIONS IN THE CURRENT YEAR

1 – ITEM 2 – DATE OF ALTERATION 3 – CAPITAL
(IN THOUSANDS OF REAIS)
4 – AMOUNT OF THE ALTERATION
(IN THOUSANDS OF REAIS)
5 – NATURE OF ALTERATION 7 – NUMBER OF SHARES ISSUED
(THOUSAND)
8 – SHARE PRICE ON ISSUE DATE
(IN REAIS)
             

01.10 – INVESTOR RELATIONS OFFICER

1 – DATE 2 – SIGNATURE
   

02.01- Balance Sheet - Assets (in thousands of reais)

Code Description 6/30/2004  3/31/2004 
1 Total assets 6,599,124  6,509,975 
1.01 Current assets 198,356  197,612 
1.01.01 Cash and banks 327  284 
1.01.02 Receivables 198,029  197,328 
1.01.02.03 Dividends receivable 189,844  189,844 
1.01.02.04 Services in progress 1,060  1,250 
1.01.02.06 Taxes and social contributions recoverable 2,701 
1.01.02.09 Other receivables, net 4,424  6,234 
1.01.03 Inventories
1.01.04 Other
1.02 Long-term receivables 1,447,483  1,444,257 
1.02.01 Sundry 224,440  240,150 
1.02.01.03 Taxes and social contributions 143,235  159,022 
1.02.01.04 Judicial deposits 80,885  80,354 
1.02.01.06 Other receivables 320  774 
1.02.02 Related companies 1,223,043  1,204,107 
1.02.02.01 Associated companies 32,327  31,712 
1.02.02.02 Subsidiaries 1,190,716  1,172,395 
1.02.02.03 Other related companies
1.02.03 Other
1.03 Permanent assets 4,953,285  4,868,106 
1.03.01 Investments 4,953,285  4,868,106 
1.03.01.01 In associated companies
1.03.01.02 In subsidiaries 4,948,947  4,863,768 
1.03.01.03 Other investments 4,338  4,338 
1.03.02 Permanent assets
1.03.03 Deferred charges

02.02 - Balance Sheet - Liabilities and Stockholders' Equity (in thousands of reais)

Code Description 6/30/2004  3/31/2004 
2 Total liabilities 6,599,124  6,509,975 
2.01 Current liabilities 735,956  313,871 
2.01.01 Loans and financing 490,026  35,342 
2.01.02 Debentures 124,331  106,242 
2.01.03 Suppliers 455  348 
2.01.04 Taxes and social contributions 108,297  133,055 
2.01.05 Dividends payable 12,682  38,725 
2.01.06 Payroll and labor provisions 56  51 
2.01.07 Related companies
2.01.08 Other 109  108 
2.02 Long-term liabilities 832,186  1,248,163 
2.02.01 Loans and financing 166,457  598,947 
2.02.02 Debentures 434,469  417,956 
2.02.03 Provisions for contingencies 231,260  231,260 
2.02.04 Debts with related parties
2.02.05 Other
2.03 Deferred income
2.05 Shareholder's equity 5,030,982  4,947,941 
2.05.01 Capital 3,480,000  2,900,000 
2.05.02 Capital reserves 817,293  817,293 
2.05.03 Revaluation reserves
2.05.03.01 Own assets
2.05.03.02 Subsidiaries/associated companies
2.05.04 Revenue reserves 560,937  1,140,937 
2.05.04.01 Legal 165,994  165,994 
2.05.04.02 Statutory
2.05.04.03 For contingencies
2.05.04.04 Unrealized revenue
2.05.04.05 Retained profits 394,943  974,943 
2.05.04.06 Special for undistributed dividends
2.05.04.07 Other revenue reserves
2.05.05 Retained earnings 172,752  89,711 

03.01- Statement of Income (in thousands of reais)

Code Description 01/04/2004
a 30/06/2004 
6/30/2004  01/04/2003
a 30/06/2003 
30/06/2003 
3 Statement of Income        
3.01 Gross sales and/or services
3.02 Deductions from operating revenue
3.03 Net sales and/or services
3.04 Cost of sales and/or services (3,564) (5,781) (632) (1,557)
3.04.01 Personnel (1,032) (1,934) (616) (1,266)
3.04.02 Pension and health care plans (23) (40) (20) (20)
3.04.03 Material (2) (27) (1)
3.04.04 Outsourced services (2,010) (2,874) (13) (50)
3.04.10 Other operating expenses (497) (906) 17  (220)
3.05 Gross profit (loss) (3,564) (5,781) (632) (1,557)
3.06 Operating income/expenses 85,871  174,074  281,313  265,572 
3.06.01 Selling
3.06.02 General and administrative
3.06.03 Financial income (expenses) 550  (7,625) (2,300) (4,758)
3.06.03.01 Financial income 2,632  3,839  4,371  9,555 
3.06.03.02 Financial expenses (2,082) (11,464) (6,671) (14,313)
3.06.04 Other operating income
3.06.05 Other operating expenses
3.06.06 Equity in results of investees 85,321  181,699  283,613  270,330 
3.06.06.01 Equity in results 85,179  181,516  283,554  270,269 
3.06.06.02 Investments in other companies 142  183  59  61 
3.07 Operating profit (loss) 82,307  168,293  280,681  264,015 
3.08 Non-operating results (26) (10) (24)
3.08.01 Income
3.08.02 Expenses (26) (10) (24)
3.09 Profit (loss) before taxation/profit sharing 82,307  168,267  280,671  263,991 
3.10 Provision for income tax and social contribution
3.10.01 Income tax
3.10.02 Social contribution
3.11 Deferred income tax 734  4,485  998  2,153 
3.11.01 Income tax 540  3,298  734  1,583 
3.11.02 Social contribution 194  1,187  264  570 
3.12 Statutory profit sharings and contributions
3.12.01 Profit sharings
3.12.02 Contributions
3.13 Reversal of interest on own capital
3.15 Net income for the period 83,041  172,752  281,669  266,144 
  NUMBER OF SHARES, EXCEPT TREASURY (Units) 273,655,376,270  273,655,376,270  273,655,376,270  273,655,376,270 
  NET INCOME PER SHARE 0.00030  0.00063  0.00103  0.00097 
  LOSS PER SHARE


04.01- Notes to the Quarterly Information
(All amounts in thousands of reais unless otherwise indicated)

1. Operations

Companhia Paranaense de Energia - COPEL (COPEL, Company or Parent Company) is a publicly-held, mixed-capital corporation, controlled by the State Government of Paraná, and is engaged, through its subsidiaries, in the research, study, planning, building, and exploitation of the production, transformation, transportation, distribution, and sale of energy, in any of its forms, in particular electricity. These activities are regulated by the National Agency of Electric Energy (ANEEL), which reports to the Ministry of Mines and Energy. Additionally, COPEL is authorized to participate, together with private companies, in consortiums or companies with the objective of developing activities in the energy and telecommunications areas, in conformity with applicable legislation.

The wholly owned, privately held, subsidiaries of COPEL are:

COPEL Geração S.A. – engaged in the exploitation of the energy generation service; it has 18 power plants in operation, being 17 hydroelectric and one thermoelectric power, with a combined installed capacity of 4,549.6 MW.

COPEL Transmissão S.A. – mainly engaged in the exploitation of electric energy transportation and transformation services, in addition to operating part of the national interconnected power system, located in the Southern Region of the country, for the National Electric System Operator (NOS). It has 124 substations, with voltages equal to or higher than 69 kV, and 6,978.9 km of transmission lines;

COPEL Distribuição S.A. – engaged in the exploitation of the distribution and sale of electric energy, fuel and energetic raw materials. It distributes electric energy in 392 of the 399 municipalities of the State of Paraná, serving 98 percent of the State consumers, as well as the municipality of Porto União, in the State of Santa Catarina. Additionally, it serves independent consumers in the State of São Paulo;

COPEL Telecomunicações S.A. – engaged in exploiting and providing telecommunications services and communications services in general;

COPEL Participações S.A. – its objective is to participate as a shareholder in other companies or consortiums.

2. Presentation of the Quarterly Information

The financial statements have been prepared and are presented based on Corporate Law, in conformity with accounting practices adopted in Brazil, together with specific legislation established by ANEEL, and the regulations of the Brazilian Securities Commission (CVM).

As supplemental information we present in form 16.01/ITR the Statement of Cash Flows (Supplementary Table I).

The notes to the financial statements at December 31, 2003, published in the Official Press on April 23, 2004, complement the notes to the quarterly information, published in summary form.

a) Consolidated Quarterly Information

The consolidated quarterly information is being presented in conformity with CVM Instruction 247/1996 and comprise the wholly-owned subsidiaries COPEL Geração, COPEL Transmissão, COPEL Distribuição, COPEL Telecomunicações, and COPEL Participações. The balance sheet and statement of income of each subsidiary are summarized in Note 39.

In the consolidation, the Company’s investments in the net equities of subsidiaries, as well as the assets, liabilities, revenues and expenses arising from intercompany operations have been eliminated so that the consolidated quarterly information effectively represents balances and operations with third parties.

For the purposes of consolidation, operating income of COPEL Participações, recorded in Equity in the results of subsidiaries and associated companies, was reclassified to financial result, according to the structure of the ANEEL chart of accounts.

The subsidiary Companhia Paranaense de Gás – Compagas was not included in the consolidated quarterly information because it does not represent any relevant alteration in the consolidated economic unit.

b) Accounting Practices

The accounting practices adopted for the preparation of this quarterly information are consistent with those adopted in the financial statements at December 31, 2003.

c) Currency Hedge Transactions

Unrealized net gains and losses related to currency hedge transactions, calculated based on contractual rates, are recognized on the accrual basis, and are recorded in long-term liabilities, under Derivatives transactions, with a contra entry to Financial expenses.

3. Cash and Banks


Financial institution    Company     Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Cash and banks 90  52  61,339  112,912 
Financial investments
Federal banks 162  159  272,408  210,388 
Private banks 75  73  30,141  22,037 
  237  232  302,549  232,425 

  327  284  363,888  345,337 

4. Consumers and Resellers


  Falling due Overdue
up to 90 days
Overdue
over 90 days
  Consolidated

  6.30.2004 3.31.2004
Consumers
Residential 69,507  57,224  9,430  136,161  128,172 
Industrial 82,157  12,893  14,473  109,523  99,946 
Commercial 37,484  18,014  4,364  59,862  60,185 
Rural 8,560  3,830  335  12,725  13,317 
Public entities 17,022  6,258  17,556  40,836  35,806 
Public lightning 11,639  771  1,696  14,106  15,138 
Public service 8,108  401  154  8,663  8,442 
Unbilled 111,742  111,742  114,600 
Energy installments - current 79,872  5,910  14,514  100,296  98,602 
Energy installments - long-term 33,350  33,350  35,011 
Emergency capacity charges 10,036  4,925  7,766  22,727  20,207 
Low-income consumers' tariff 10,544  10,544  16,696 
Other receivables 14,875  14,930  34,902  64,707  58,039 
  494,896  125,156  105,190  725,242  704,161 
Resellers
Sales
Short-term sale 650  129  779  2,590 
Sales - MAE (Note 36) 2,163  98  2,261  392 
Generators - current 6,339  6,348  5,115 
Generators - long-term 31,198  31,198  35,754 
Initial contracts 5,847  5,847  5,247 
Bilateral agreements 34,931  34,931  37,507 
  81,128  236  81,364  86,605 
Transmission System
Electric grid 8,812  40  8,852  4,023 
Basic grid 12,077  12,077  13,402 
Connection grid 17  32  58  48 
  20,906  49  32  20,987  17,473 

Total current 532,382  125,205  105,458  763,045  737,474 
Total long-term 64,548  64,548  70,765 

5. Allowance for Doubtful Accounts

The allowance for doubtful accounts was recorded in conformity with ANEEL’s Accounting Manual for the Electric Energy Utilities. After a detailed analysis of overdue receivables, management considered the following amounts as sufficient to cover probable losses on realization of receivables:


  Consolidated Additions (*) Disposals Consolidated

  12.31.2003     6.30.2004
Consumers and resellers
Consumers 15,356  7,069  1,892  24,317 
Sales 788  (264) 524 
Municipal government debt installment plan 4,399  4,399 
Proceeds from distribution 31,027  14,744  (7,324) 38,447 

  51,570  21,549  (5,432) 67,687 

(*)

Net of reversals

6. Services Provided to Third Parties, Net


  Falling due Overdue up
to 90 days
Overdue
over 90 days
  Consolidated

  6.30.2004 3.31.2004
Telecommunication services 186  83  85  354  433 
Services provided to third parties 1,441  289  1,683  3,413  1,657 
Allowance for doubtful accounts (180) (180) (43)

  1,627  372  1,588  3,587  2,047 

7. Dividends Receivable

  Company   Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Dividends receivable
Sercomtel S.A. - Telecomunicações 975 
Sercomtel Celular S.A. 661 
Tradener Ltda. 64  64 
Dominó Holdings S.A. 723  4,548 
Companhia Paranaense de Gás - Compagas 1,064  3,192 
COPEL Geração S.A. 106,872  106,872 
COPEL Transmissão S.A. 59,784  59,784 
COPEL Telecomunicações S.A. 916  916 
COPEL Participações S.A. 22,272  22,272 

  189,844  189,844  1,851  9,440 

Dividends receivable from wholly-owned subsidiaries were calculated at 50 percent of net income, and treated as interest on capital.

8. CRC Passed on to Paraná State Government

Under an agreement signed on August 4, 1994 and the addendum of December 1995, the remaining balance of the Results for Offset (CRC) account was negotiated with the State Government of Paraná to be reimbursed in 240 monthly installments, adjusted based on the General Price Index - Internal Availability (IGP-DI) and annual interest of 6.65%. On October 1, 1997, the balance was renegotiated for payment in the following 330 months, under the price amortization system, the first installment payable on October 30, 1997 and the last on March 30, 2025, the original monetary adjustment and interest clauses being maintained.

Of the balance of R$ 140,503 in current assets, R$ 117,392 refers to installments due from February 2003 to June 2004, restated to the date of the preparation of the financial statements.

On March 19, 2003, the State Government of Paraná filed with the Ministry of Finance a request to federalize the CRC receivables of COPEL. This request was sent to the National Treasury Secretariat for assessment.

The Company is currently negotiating the overdue installments.

9. Taxes and Social Contributions

  Company   Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Current assets
Income tax and social contribution paid in advance and recoverable 2,701  21,036 
Deferred income tax and social contribution (a) 9,249  11,720 
ICMS recoverable (b) 68,732  70,695 
  2,701  99,017  82,415 
Long-term receivables
Deferred income tax and social contribution on: (a)
Pension plan deficit - Plan III 118,981  120,410 
Pension and health care plans - CVM Delib. 371 59,067  57,431 
Temporary additions 132,232  132,232  178,876  170,449 
Income tax and social contribution loss carryforwards 4,494  3,761  159,149  161,107 
Income tax and social contribution paid in advance and recoverable (a) 6,509  23,029  6,509  23,029 
ICMS recoverable (b) 100,028  103,135 
  143,235  159,022  622,610  635,561 
Current liabilities
Income tax and social contribution payable 11,012  3,992 
IRPJ/CSLL on CVA deferral (a) 60,886  14,190 
Withholding income tax 761  780 
ICMS payable 112,534  113,227 
COFINS and PASEP contributions payable 119  12,132  28,159  44,224 
INSS (REFIS), net of payments (*) (c) 107,905  109,658  71,447  74,672 
Other taxes 264  253  1,173  1,197 
  108,297  133,055  274,960  252,282 
Long-term liabilities
IRPJ/CSLL on CVA deferral (a) 68,961  100,643 
  68,961  100,643 

(*)

In consolidated

a) Deferred income tax and social contribution

The Company records deferred income tax, calculated at the rate of 15 percent, plus a surtax of 10 percent, and deferred social contribution recorded at the rate of 9 percent.

The provision for the pension plan deficit is being realized in conformity with the amortization plan of the respective debt and the provision for health care plan as payments of post-employment benefits are made. The other provisions are being realized based on court decisions and the realization of regulatory assets.

Under current tax legislation, the income tax and social contribution loss carryforwards can be offset against annual taxable income up to the limit of 30 percent of this taxable income, and are not subject to any prescription period.

In compliance with CVM Instruction 371, of June 27, 2002, the table below shows the expected generation of taxable income in an amount sufficient to offset the tax credits recorded based on studies submitted for the appreciation of and approval by management:


  Estimated portion of realization Effective portion of realization Consolidated Estimated amount of realization

2003 25,053  25,053 
2004 11,946 
2005 19,092 
2006 22,031 
2007 25,197 
2008 28,900 
After 2008 342,596 

  25,053  25,053  449,762 

These projections of future results will be reviewed by management at the end of 2004.

b) ICMS recoverable

The State Government of Paraná approved in favor of COPEL Distribuição the right to record the previously unused Value Added Tax on Sales and Services (ICMS) credit, originally amounting to R$ 167,485, on the purchase of COPEL permanent assets, which are being offset against ICMS payable within a period of 48 months, consecutive or not, adjusted by the Escalator and Conversion Factor (FCA).

c) Tax Recovery Program (REFIS)

In 2000, the Company included in the Tax Recovery Program (REFIS) created by Law 9.964 of 2000, a total debt of R$ 89,766, for payables to the National Institute of Social Security (INSS), and settled R$ 45,766 referring to interest, using credits deriving from income tax and social contribution loss carryforwards purchased from third parties. Considering that the Federal Revenue Secretariat (SRF) has not yet completed the analysis of this transfer of tax credits, in September 2003, the Company set up a provision of R$ 65,703 restated to June 30, 2004 (R$ 45,766 of interest and R$ 19,937 of monetary restatement).

The Company renegotiated its position in REFIS for payment of the debt in 60 monthly installments but this request has not yet been approved by the authorities and therefore all the debt was recorded in current liabilities. Up to June 30, 2004, COPEL had settled 51 installments. The installments were calculated based on the total debt divided by the installment payment period, adjusted by the Long-term Interest Rate (TJLP).

By the end of the installment payment period, that is 60 months, the Company should settle its entire REFIS debt, which includes the current provision of R$ 65,703.

10. Portion A Offsetting Account

Interministerial Ordinance 25, of 2002, issued by the Ministries of Finance and of Mines and Energy, established the Account for Offsetting Portion A Amounts Variation (CVA), with the intention of recording the variations in costs in the period between the annual tariff adjustments, beginning in 2001, related to the items prescribed in the electric energy distribution concession contracts.


  Principal Amortization Net  Consolidated 
Net 

  6.30.2004 3.31.2004
CVA recoverable, 2003 tariff adjustment
Electricity purchased for resale (Itaipu) 66,690  66,690  66,690 
Transportation of energy purchased (Itaipu) 940  940  940 
Charges on use of transmission system (basic grid) 32,333  32,333  32,333 
Regulatory charges (CDE) 24,372  24,372  24,372 
Charges on use of system services - ESS 17,558  17,558  17,558 
Monetary restatement - SELIC 51,403  51,403  35,163 
  193,296  193,296  177,056 
CVA recoverable, 2004 tariff adjustment
Electricity purchased for resale (Itaipu) 7,730  7,730  3,494 
Transportation of energy purchased (Itaipu) 4,094  4,094  3,344 
Charges on use of transmission system (basic grid) 72,251  72,251  62,306 
Regulatory charges (CDE) 13,745  13,745  9,919 
Charges on use of system services - ESS 26,549  26,549  18,504 
Regulatory charges (CCC) 16,670  16,670  9,762 
Monetary restatement - SELIC 10,989  10,989  7,370 
  152,028  152,028  114,699 
CVA recoverable, 2005 tariff adjustment
Electricity purchased for resale (Itaipu) 4,602  4,602 
Transportation of energy purchased (Itaipu) 576  576 
Charges on use of transmission system (basic grid) 10,996  10,996 
Regulatory charges (CDE) 1,913  1,913 
Charges on use of system services - ESS 2,632  2,632 
Regulatory charges (CCC) 1,974  1,974 
Monetary restatement - SELIC 196  196 
  22,889  22,889 

  368,213  291,755 

Total current   171,832 109,408
Total long term   196,381 182,347

Interministerial Ordinance 116, of April 4, 2003, postponed for 12 months the offset of the balance of the Portion A Offsetting Account for the annual tariff adjustments occurring between April 8, 2003 and April 7, 2004.

The balance of CVA relating to 2003/2004, the offset of which was postponed by Ordinance 116, of April 4, 2003, aggregated to the CVA balance determined in the subsequent twelve months pursuant to Ordinance 25, of January 24, 2002, must be offset in the electric energy supply tariffs of concessionaires in the 24 months subsequent to the annual tariff adjustments that occur in the period April 8, 2004 to April 7, 2005.

Accordingly, in conformity with the Technical Note 146/2004 – ANEEL, of June 21, 2004, in June 2004, the tariff adjustment recognized 50% of the balance of the Portion A Offsetting Accounting relating to 2002/2003 and part of the balance relating to 2003/2004, in the amount of R$ 75,184, of the total amount of R$ 152,629.

The remaining balances of the two periods will be considered in the 2005 adjustment.

Ordinance 116 also established that for electric energy supply tariff adjustment calculation purposes, the CVA Account must also record variations in the collection quota to the Energy Development Account (CDE).

11. Other Receivables, Net


    Company    Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Current assets
Employees 13,134  13,777 
Advance to suppliers 1,130  1,093 
Insurance companies 395  779 
Salaries of loaned employees recoverable 1,450  640 
Advances for judicial deposits 2,143  426  2,631 
Installments of Onda invoices 4,406  4,078  3,836  4,078 
Guarantee deposits 8,292  7,658 
Sale of assets and rights 637  449 
Purchase of fuel for account of CCC 2,737  2,350 
Decommissionings in progress 1,325  903 
Sales in progress 55  2,258 
Prepayments 921  1,936 
Advances for acquisition of shares of Elejor Centrais Elet. Rio Jordão 7,386  7,386 
Other receivables 18  13  5,820  3,789 
Allowance for doubtful accounts (1,740) (1,740)
  4,424  6,234  45,804  47,987 
Long-term receivables
Installments of Onda invoices 320  774  320  774 
Guarantee deposits 25,000  25,000 
Collateral of STN agreement (Note 15.3) 27,865  26,081 
IUEE - Municipalities (Note 22) 7,374  7,374 
Compulsory loans 7,193  7,056 
Assets and rights for sale 1,858  1,858 
Prepayments 4,000  4,058 
Other receivables 244  244 
  320  774  73,854  72,445 

12. Related Companies

The Company records at net amounts, the receivables from the following associated and subsidiary companies:


    Company   Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Consolidated:
COPEL Geração S.A.
Transferred financing (a) 473,573  454,132 
Transfer of Plan III - post-employment benefits (Note 19) (16,028) (16,029)
Current accounts (171,037) (146,162)
  286,508  291,941 
COPEL Transmissão S.A.
Transferred financing (a) 38,203  37,615 
Transfer of Plan III - post-employment benefits (Note 19) (14,571) (14,571)
Current accounts (48,911) (23,274)
  (25,279) (230)
COPEL Distribuição S.A.
Transferred financing (a) 144,707  142,542 
Debentures transferred (a) 558,800  524,198 
Transfer of Plan III - post-employment benefits (Note 19) (39,343) (39,343)
Current accounts 135,295  133,596 
  799,459  760,993 
COPEL Telecomunicações S.A.
Transfer of Plan III - post-employment benefits (Note 19) (2,841) (2,841)
Current accounts 37,177  37,358 
  34,336  34,517 
COPEL Participações S.A.
Transfer of Plan III - post-employment benefits (Note 19) (73) (73)
Current accounts 90,671  79,565 
  90,598  79,492 
Total consolidated 1,185,622  1,166,713 
Unconsolidated:
Loan agreements
Companhia Paranaense de Gás - Compagas 5,094  5,682  5,094  5,682 
Foz do Chopim Energética Ltda. 32,327  31,712  32,327  31,712 
Elejor - Cent. Elet. Rio Jordão 97,141  42,142 
Total unconsolidated 37,421  37,394  134,562  79,536 

  1,223,043  1,204,107  134,562  79,536 

a) Loans, financing and debentures transferred

The Company repassed loans and financing to its wholly-owned subsidiaries when these were formed in 2001. However, the contracts whose transfer to the respective subsidiaries has not yet been formalized are recorded in the Parent Company’s books.

For disclosure purposes, the balances of these loans and financing repassed are separately disclosed as amounts receivable from wholly-owned subsidiaries and as loans and financing payable, totaling R$ 656,483, at June 30, 2004 (Note 15).

The amount of R$ 558,800, was also repassed to COPEL Distribuição, to which the same criterion for recording mentioned in the previous paragraph was applied (Note 16).

13. Investments

Investments comprise the following:


      Company  

  6.30.2004  3.31.2004  6.30.2004 3.31.2004
Wholly-owned subsidiaries (Note 39)
COPEL Geração S.A. 2,406,401  2,375,597 
COPEL Transmissão S.A. 820,530  799,555 
COPEL Distribuição S.A. 1,240,435  1,216,671 
COPEL Telecomunicações S.A. 110,244  110,145 
COPEL Participações S.A. 371,337  361,800 
  4,948,947  4,863,768 
Associated and subsidiaries (a) 446,891  440,748 
Other investments
FINAM (Amazon Investment Fund) - Nova Holanda 7,761  7,761  7,761  7,761 
FINAM 32,285  32,285  32,285  32,285 
FINOR (Northeast Investment Fund) 9,970  9,970  9,870  9,870 
Provision for losses on tax incentives (47,900) (47,900) (47,900) (47,900)
Properties for future service use 8,731  8,731 
Other 2,222  2,222  3,888  3,888 
  4,338  4,338  14,635  14,635 

  4,953,285  4,868,106  461,526  455,383 

a) Associated and subsidiaries


  Net equity       Consolidated
  of investee Holding  Consolidated investment

  6.30.2004 (%)  6.30.2004 3.31.2004
Associated            
Sercomtel S.A. - Telecomunicações 237,428  45.00  106,842  107,401 
Goodwill       16,366  17,423 
Sercomtel Celular S.A. 40,166  45.00  18,490  19,094 
Goodwill       2,253  2,398 
Dominó Holdings S.A. (*) 498,632  15.00  74,795  72,669 
Escoelectric Ltda. (*) 1,846  40.00  739  567 
Copel Amec S/C Ltda. (*) 630  48.00  302  310 
Dona Francisca Energética S.A. (18,854) 23.03 
Carbocampel S.A. (*) 582  49.00  285  289 
Braspower International Engineering S/C Ltda.(*) (732) 49.00 
Advances for future capital increase       247  247 
Centrais Eólicas do Paraná Ltda. (*) 4,489  30.00  1,347  1,292 
Foz do Chopim Energética Ltda. (*) 43,639  35.77  15,610  14,241 
UEG Araucária Ltda. (**) (85,610) 20.00 
Advances for future capital increase       141,899  141,899 
Elejor - Centrais Elétricas do Rio Jordão S.A.
(**) (***) 118,822  20.07  28,028  28,028 
Onda Provedor de Serviços S.A. (*) (792) 24.50 
        407,203  405,858 
 
Subsidiary            
Companhia Paranaense de Gás - Compagas (**) 77,820  51.00  39,688  34,890 
        39,688  34,890 

        446,891  440,748 

(*) Not reviewed (**) Reviewed by other independent accountants (***) Preoperational stage

Investments in Sercomtel S.A. Telecomunicações and Sercomtel Celular S.A. include goodwill of R$ 16,366 and R$ 2,253, respectively, being amortized at the annual rate of 10 percent, which effect in the result of the 1st half of 2004 and 2003 amounted to R$ 2,404 (R$ 2,114 and R$ 290). This goodwill was based on the expected future return to be generated by these investments and the amortization over ten years, at the annual rate of 10 percent, resulted from the evaluation of the return on the investments based on discounted cash flows.

On December 18, 2003, the Company signed a contract with Triunfo Participações e Investimentos S.A. under which Triunfo commits to sell 30 percent of the common shares held in Elejor – Centrais Elétricas Rio de Jordão S.A. Accordingly, the Company will hold 70 percent of the shareholding control of this venture. This operation was approved by ANEEL, in conformity with Resolution 302 of July 27, 2004, published in the Official Daily Government Newspaper of July 28, 2004.

In November 2003, the Company signed with Enercan a commitment for the sale of its shareholding in this company (16.73%). This transaction was submitted for the appreciation of ANEEL and was approved by Resolution 53 of February 17, 2004.

14. Property, Plant and Equipment


  Restated  Accumulated     Consolidated 
  cost  depreciation  Net  Net 

        6.30.2004  3.31.2004 
In use            
Generation 4,194,576  (1,334,139) 2,860,437  2,883,914 
Transmission 1,276,856  (388,837) 888,019  858,124 
Distribution 2,947,000  (1,390,316) 1,556,684  1,562,591 
Telecommunications 251,630  (94,618) 157,012  159,984 
Holdings 409  (189) 220  231 
  8,670,471  (3,208,099) 5,462,372  5,464,844 
Construction in progress            
Generation 178,186  178,186  177,503 
Transmission 72,788  72,788  99,984 
Distribution 196,261  196,261  180,789 
Telecommunications 12,706  12,706  7,835 
  459,941  459,941  466,111 
  9,130,412  (3,208,099) 5,922,313  5,930,955 
Special liabilities (a)            
Transmission       (7,140) (7,140)
Distribution       (688,869) (676,308)
        (696,009) (683,448)

        5,226,304  5,247,507 

Under Articles 63 and 64 of Decree 41.019 of 1957, the assets and installations used in generation, transmission, distribution, and sale activities are restricted to these services and cannot be withdrawn, sold, assigned, or given in mortgage guarantee without prior express authorization of the Regulatory Agency. ANEEL Resolution 20/1999 regulated the disassociation of assets of the concessions of Public Electric Energy Services, granting prior authorization to disassociate assets not of use to the concession, when intended for sale, determining that the sales proceeds are deposited in a restricted bank account for investment in the concession.

The main depreciation rates, as set forth in ANEEL Resolution 44/1999 and Ministry of Communications Ordinance 96 of 1995, are as follows:


 

General equipment 10.0 
Reservoirs, dams and water mains 2.0 
System structure and conductor, and power transformer (transmission) 2.5 
System structure and conductor, and transformer (distribution) 5.0 
Capacitors and distribution switches 6.7 
Energy and transmission equipment (telecommunications) 10.0 
Overhead and underground cables, wiring and private switching center 10.0 

a) Special liabilities

Are the obligations linked to public electric energy services concessions and are the funds provided by the Federal Government and consumers, as well as the donations for which there are no obligations for return to the donors and the subsidies for investments in distribution activities. The maturities of these special liabilities are those established by the Regulatory Agency for transmission and distribution concessions, to be settled at the end of the concessions.

b) Electric Energy Universalization Plans

ANEEL established through Resolution 223 of April 29, 2003, the general conditions for preparing the Electric Energy Universalization Plans intended to supply new consumer households or increase capacity. This Resolution regulates the provisions of Articles 14 and 15 of Law 10.438, of 2002, and defines the responsibilities of the concessionaires and authorized public electricity distribution services. At June 30, 2004, R$ 827 of the R$ 4,083 recorded for refund to consumers, had not yet been distributed.

c) Physical inventory of property, plant and equipment

The Company realizes periodic physical inventories of all its assets, distributed within its concession area.

15. Loans and Financing

As mentioned in Note 12, the loans and financing of the Company refer to obligations with financial institutions passed on to wholly-owned subsidiaries, the transfers of which are being formalized. The balance comprises:


     Current  Long-term     Company 
  Principal  charges  Principal  Total  Total 

           6.30.2004  3.31.2004 
Foreign currency               
Eurobonds (1) 466,125  7,448  473,573  454,132 
National Treasury Department (3) 14,645 1,808 166,457 182,910 180,157

  480,770  9,256  166,457  656,483  634,289 

Consolidated loans and financing comprise:


     Current Long-term    Consolidated
  Principal charges Principal Total  Total 

           6.30.2004  3.31.2004 
Foreign currency               
Eurobonds (1) 466,125  7,448  473,573  454,132 
BID (2) 29,378  4,477  179,303  213,158  198,944 
National Treasury Department (3) 14,645  1,808  166,457  182,910  180,157 
Banco do Brasil (4) 7,074  760  31,832  39,666  38,067 
Eletrobrás (5) 93  95  98 
  517,222  14,495  377,685  909,402  871,398 
Local currency               
Eletrobrás (5) 38,431  354,491  392,929  399,991 
BNDES (6) 5,259  37  2,630  7,926  9,165 
Banestado (7) 430  110  541  865 
Banco do Brasil (4) 77  1,105  1,188  1,177 
  44,197  51  358,336  402,584  411,198 

  561,419  14,546  736,021  1,311,986  1,282,596 

(1) Eurobonds – Issue of Eurobond Notes on May 2, 1997 maturing on May 2, 2005, equivalent to US$150,000, bearing interest of 9.75% p.a. and payable semi-annually as from November 2, 1997. The contract contains the following restrictive clause:

  • The EBITDA/financial expenses ratio (consolidated) must be, at least, 2.5; and the total debt/EBITDA ratio should not exceed 3.25 (consolidated).

(2) BID – Loan to the Segredo hydroelectric power plant and Rio Jordão deviation project, released as from January 15, 1991, totaling US$ 135,000. The principal, the first installment payment of which was paid on January 15, 1997, and interest are due semi-annually up to 2011. Interest is based on the BID fund raising rate, which in first quarter 2004 was 4.66% per annum (p.a.). The loan is secured by mortgages and liens, as well as co-guarantee by the Federal Government and there are the following restrictive clauses which are being complied with by the Company:

  • Take appropriate measures to obtain tariffs which can cover all operating costs;

  • The Company is prohibited to buy its own shares and distribute any part of its capital without BID prior authorization;

  • During project execution, the Company cannot raise other long-term funds if the general liquidity ratio is lower than 1.5, without prior authorization of financing institution;

  • Liquidity ratio of 1.2, i.e. the relationship between current assets and the total commercial and bank financing, excluding long-term debts and dividends to be reinvested;

  • Long-term debt to net equity ratio should not exceed 0.9.

(3) National Treasury Department – The rescheduling of medium- and long-term debt, signed on May 20, 1998, comprising financing granted under Law 4.131/62, is shown below:


  Maturity Final  Grace period      
Bond type (years) maturity  (years)    Consolidated

         6.30.2004 3.31.2004
Par Bond (a) 30  4.15.2024  30  49,592  47,105 
Capitalization Bond (b) 20  4.15.2014  10  42,356  42,466 
Debt Conversion Bond (c) 18  4.15.2012  10  37,468  37,480 
Discount Bond (d) 30  4.15.2024  30  34,321  32,307 
El Bond - Interest bonds (e) 12  4.15.2006  6,724  7,910 
New Money Bonds (f) 15  4.15.2009  6,176  6,396 
FLIRB (g) 15  4.15.2009  6,273  6,493 

         182,910  180,157 

The annual interest rates and repayments are as follows:

a) Par Bond – Interest of 4.0% p.a. in the first year and 6.0% p.a. to final maturity, with a single repayment at the contract end.
b) Capitalization Bond – Interest of 4.0% p.a. in the first year and 8.0% p.a. to final maturity, repayable in 21 semi-annual installments, starting April 2004.
c) Debt Conversion Bond – Interest equivalent to semi-annual LIBOR + 7/8 of 1% p.a., repayable in 17 semi-annual installments, starting April 2004.
d) Discount Bond – Interest equivalent to semi-annual LIBOR + 13/16 of 1% p.a., with a single repayment at the end of the agreement.
e) El Bond – Interest Bonds – Interest equivalent to semi-annual LIBOR + 13/16 of 1% p.a., repayable in 19 semi-annual installments, starting April 1997.
f) New Money Bonds – Interest equivalent to semi-annual LIBOR + 7/8 of 1% p.a., repayable in 17 semi-annual installments, starting April 2001.
g) FLIRB – Interest of 4.0% to 5.0% p.a. in the first years and semi-annual LIBOR + 13/16 of 1% p.a. after the 6th year to the end of the agreement, repayable in 13 semi-annual installments, starting April 2003.

As collateral for this contract, the Company assigned and transferred to the Federal Government, conditioned to any nonpayment of a financing installment, the credits that were made to its centralized own revenues account, up to a limit sufficient to cover the payment of installments and other charges payable at each maturity. For Discount Bonds and Par Bonds, there are collateral deposits of R$ 11,499 and R$ 16,366 (R$ 10,762 and R$ 15,319 at March 31, 2004), respectively, recorded in other receivables – long-term (Note 11).

(4) Banco do Brasil – Contracts for resources in Japanese yen, for the gas-insulated substation – Salto Caxias, repayable in 20 semi-annual installments, starting March 7, 2000, bearing interest of 2.8% p.a. The debt is guaranteed by own revenues.

The Private Contract of Credit Assignment with the Federal Government, through Banco do Brasil S.A., signed on March 30, 1994, payable in 240 monthly installments based on the Price system as from April 1, 1994, monthly restated by the TJLP and IGPM and an annual interest rate of 5.098% p.a.

(5) Eletrobrás - Loans originating from resources of the Eletrobrás Financing Fund (FINEL) and the Global Reversal Reserve (RGR) to expand the generation, transmission and distribution systems. Repayment started on June 30, 1996 and the last payment is due in August 2021. Interest of 5.5% to 6.5% p.a. and repayments of principal are in monthly installments, adjusted by the Eletrobrás Financing Rate (FINEL) and the Federal Reference Unit (UFIR) indices. The contract transferred to COPEL Distribuição, using BIRD funds, bears interest at 6.49% p.a. paid semi-annually, and is collateralized by the Federal Government. All contracts with Eletrobrás have the following restrictive clauses, which are being complied with by the Company:

  • Commitment, up to the end of the settlement of all the debt arising from the contract, of not assuming new commitments that exceed 5% of its property, plant and equipment and/or that elevate its indebtedness to levels exceeding 66% of its property, plant and equipment;

  • Commitment to attend to the notification of Eletrobrás within 24 hours to review the guarantees, in case of privatization of the debtor, under penalty of anticipated debt maturity.

(6) BNDES – Loan to finance the construction of the River Jordan deviation, repayable in 99 monthly installments starting October 15, 1997. Remuneration is based on the long-term interest rate (TJLP) (limited to 60 percent) plus a 6% p.a. spread and is collateralized by COPEL revenues.

(7) Banco Banestado S.A. – Urban Development Fund contracts signed on December 2, 1996 and July 23, 1998, repayable in 96 monthly installments under the Price system, with a grace period of 12 months, and monthly adjustments based on the Referential Rate (TR) and interest of 8.5% p.a.

a) Breakdown of loans and financing by type of currency and index rate:

Currency (equivalent in R$) / Index       Consolidated

  6.30.2004  3.31.2004 
Foreign currency            
U.S. dollar 656,578  50.05  634,387  49.45 
Yen 39,666  3.02  38,067  2.97 
BID – currency basket 213,158  16.25  198,944  15.51 
  909,402  69.32  871,398  67.93 
Local currency            
TR – Brazilian Reference Interest Rate 541  0.04  866  0.07 
URBNDES and TJLP- Long-term Interest Rates 8,004  0.61  10,342  0.81 
IGP-M – General Market Price Index 1,110  0.08  0.00 
UFIR – Fiscal Reference Unit 10,626  0.81  11,761  0.92 
FINEL – Eletrobrás Financing Rate 382,303  29.14  388,229  30.27 
  402,584  30.68  411,198  32.07 

  1,311,986  100.00  1,282,596  100.00 

b) Variations in the main foreign currencies and index rates used in the loans and financing:

Currency/index     Change (%)

  1st half of 2004 1st half of 2003 2003 year
U.S. dollar 7.56  (18.72) (18.23)
Yen 5.85  (19.44) (9.30)
BID – currency basket (1.14) 2.23  7.35 
TR 0.76  2.61  4.57 
URBNDES 1.69  2.57  5.26 
IGP-M 6.78  5.90  8.71 
FINEL 1.33  1.16  1.70 

c) Maturity of long-term installments:


  Foreign  Local       
  currency currency    Consolidated

        6.30.2004 3.31.2004 
2005 25,811  21,651  47,462  499,929 
2006 49,939  37,556  87,495  84,488 
2007 48,266  36,214  84,480  81,582 
2008 48,266  35,027  83,293  80,396 
2009 47,027  31,400  78,427  75,637 
2010 38,716  30,191  68,907  66,377 
2011 23,773  30,191  53,964  52,305 
2012 6,501  30,191  36,692  36,051 
2013 4,171  30,191  34,362  33,870 
2014 4,171  30,191  34,362  33,870 
After 2014 81,044  45,533  126,577  120,877 

  377,685  358,336  736,021  1,165,382 

To comply with the 2005 Investments and Debt Service Program, the Company is conducting studies and evaluations in order to raise funds by May 2005 as well as to use own generated funds.

d) Changes in loans and financing:


     Foreign currency    Local currency Consolidated
Balances Current  Long-term  Current  Long-term Total 

At December 31, 2002 70,557  1,027,428  72,421  415,043  1,585,449 
Inflows
Interest capitalized 44  44 
Charges 68,078  37,170  105,248 
Monetary and exchange variations (11,322) (168,127) 1,708  6,776  (170,965)
Transfers 47,985  (47,985) 46,687  (46,687)
Repayments (112,568) (112,217) (224,785)
At December 31, 2003 62,730  811,316  45,769  375,176  1,294,991 

Inflows
Interest capitalized
Charges 31,778  17,168  48,946 
Monetary and exchange variations (602) 60,614  370  4,835  65,217 
Transfers 494,245  (494,245) 21,675  (21,675)
Repayments (56,434) (40,734) (97,168)
At June 30, 2004 531,717  377,685  44,248  358,336  1,311,986 

16. Debentures

The issue of simple debentures was completed on May 9, 2002 with full subscription in the total amount of R$ 500,000, divided into three series (R$ 100,000, R$ 100,000 and R$ 300,000, respectively), effective for five years, maturing on March 1, 2007. The first series was repurchased on February 27, 2004 and the second series has a rescheduling clause to be applied in March 2005.

These book-entry debentures are non-preferred (subordinated liability), jointly and severally collateralized by the wholly-owned subsidiaries of COPEL and not convertible into shares. The funds were used to settle the Euro-Commercial Paper and for application in the 2002-2004 investment program of wholly-owned subsidiaries.

Remuneration of the 1st and 2nd series is equivalent to the Interbank Deposits (DI) rate [calculated and disclosed by the Central System for Custody and Financial Settlement of Securities (Cetip)], expressed as an annual percentage, base 252 days, compounded by a 1.75% p.a. spread. This remuneration will be paid semi-annually on the first business day of March and September. The nominal unit value of the 3rd series will be remunerated as from the issue date, March 1, 2002, based on the IGP-M indice, prorated to the number of business days, plus interest of 13.25% p.a. Interest will be paid annually on the first business day of March and adjusted based on IGP-M, in a single installment, together with the principal.

At June 30, 2004, the composition of debentures was as follows:


  Current  Long-term     Company and 
  Principal / charges  Principal     Consolidated 

        6.30.2004  3.31.2004 
Local currency            
Debentures 124,331  434,469  558,800  524,198 

  124,331  434,469  558,800  524,198 

The Company transferred to COPEL Distribuição R$ 558,800 of the balance held (R$ 524,198 at March 31, 2004), in the same way as the loans and financing (Notes 12 and 39).

17. Suppliers


     Company     Consolidated
  6.30.2004  3.31.2004  6.30.2004 3.31.2004
Charges for use of electricity grid            
Connection 235  235 
Basic grid 34,426  33,670 
Energy transportation 2,448  2,425 
  37,109  36,330 
Electricity suppliers            
ANDE (Paraguay) 4,617  3,895 
Eletrobrás (Itaipu) 73,319  67,951 
Concessionaires - MAE (Note 36) 35,400  5,179 
CIEN 95,537  88,083 
CIEN - Long-term 255,286  263,774 
Itiquira Energética S.A. 5,704  5,894 
Dona Francisca Energética S/A 7,598  3,625 
Other concessionaires 36,191  28,321 
  513,652  466,722 
Materials and services            
Compagas (Note 29) 310,730  248,932 
Other suppliers 455  348  40,572  35,111 
Other suppliers - Long-term 890  889 
  455  348  352,192  284,932 

  455  348  902,953  787,984 

Total current 455  348  646,777  523,321 
Total long-term 256,176  264,663 

Company management is renegotiating contracts, conducting studies, surveys, analyses and audits to improve the currently effective contractual conditions. Accordingly, on February 25, 2003, the Board of Directors authorized suspension of payments on the following contracts:

a) Tradener Ltda. – Intermediation contract signed with COPEL Distribuição and COPEL Geração, related to the sale of electric energy surplus, signed in 1998 and effective for 10 years.

There are legal actions in progress discussing the validity of the contract, as well as the withdrawal of the Company from the partnership. A civil action filed by the Public Prosecution Office challenges the legality of the service agreement between Tradener and COPEL.

Since January 2003, the Company has suspended the payment of commissions and awaits court decisions because it understands that there is no intermediation in any of the energy purchase and sale contracts, and also because the issue is being analyzed as the payment of intermediation commissions on contracts between public energy services concessions is not permitted.

b) UEG Araucária Ltda. – Contract with COPEL for the purchase of assured power, at the nominal value of 484,7 MW, signed on May 31, 2000 and effective for 20 years, as from startup.

Under the contract for the purchase and sale of the assured power, and the operation and maintenance of a natural gas thermal power plant, COPEL and UEG Araucária agreed that the entire initial assured power of the plant of 484.7 MW would be exclusively sold to COPEL.

The monthly amounts paid to December 2002 are advances for future capital increase. Starting January 2003, payments were suspended by the new management because the validity of this contract is being discussed.

On April 1, 2003, UEG Araucária filed a claim against the Company in the Paris Court of Arbitration with the objective of obtaining arbitration regarding the supposed nonperformance of the contract. On April 22, 2003, UEG Araucária sent COPEL a notification rescinding the contract.

On June 22, 2003, COPEL filed in the Paraná State courts a declaratory action for the annulment of the arbitration clause and obtained an injunction suspending the arbitration proceeding, or otherwise subjecting the other party to a daily fine.

Based on the Legal Opinion of the Civil Law Institute (IDC), prepared by renowned jurists, management understands that this contract is null and void from a legal standpoint because it was not approved by ANEEL. Based on this definition and on the contract termination notification sent by UEG Araucária, COPEL is no longer liable for the unsettled monthly payments, whether prior or subsequent to the rescission date.

Also, the opinion mentions that the payment of the value of the plant claimed in the arbitration request cannot be considered due before there is a final decision on the litigation by the Brazilian courts.

Management, based on this legal opinion and on the understanding that the contract signed by the parties is null and void, opted to reverse on June 30, 2003 the provisions set up for monthly billings of the UEG Araucária contract.

On August 14, 2003, the Company filed another legal process against UEG Araucária, called Anticipated Evidence Injunction, notified under No. 24.546/2003 with the 3rd District Tax Court of Curitiba, and currently in the installation and inspection stage. The Company intends, in this way, to constitute evidence in its favor that it is technically impossible to operate the plant in a continuous, safe and permanent manner. A judicial inspection will be made by an expert appointed by the court based on prerequisites presented by the Company and UEG Araucária, who will issue a technical report containing the conclusions. The Company and UEG Araucária will count on their technical assistants to accompany the inspection who will, like the expert, issue their conclusions on the same prerequisites.

The preliminary hearing at the Arbitration Court, CCI, in Paris, was held on February 22, 2004 but it was adjourned to April 15, 2004. On that occasion, COPEL reaffirmed expressively its position that it does not accept arbitration and affirming that there is a judicial decision in Brazil suspending the validity of the arbitration clause that would be giving support to the Paris proceedings. In July 2004, there was a hearing in Paris, continuing the arbitration procedure, when COPEL reaffirmed its previous position.

c) Companhia de Interconexão Energética – CIEN – On December 13, 1999, COPEL and CIEN reached a firm energy purchase commitment via two contracts of 400 MW each totaling 800 MW of firm power and of associated energy, to be made available by CIEN at the 525 kV circuit of Substation Itá (Santa Catarina).

In order to resolve the pending issues, on August 18, 2003, COPEL and CIEN renegotiated and signed the Memorandum of Understanding in which the parties determined the guidelines for the addenda to contracts 001/99 and 002/99.

These addenda include the following amendments to the original contracts which merit emphasis: decrease in the contracted energy price; annual escalator based on criteria defined by the concession granting authority; decrease of the contract period to 13 years from 20 years, with an option in 2005 to reduce contract termination to 2009, where this option would be free of charge for COPEL and burdensome for CIEN; reduction of the amounts of each contract by 50 percent; guarantees of receivables separate from the collection portfolio.

The addenda to formalize the agreement were signed on December 10, 2003 and approved by ANEEL on December 23, 2003.

d) Usina Hidrelétrica de Itiquira – Contract signed in 1999 by COPEL Distribuição, with the intermediation of Tradener Ltda., related to the sale through Tradener of assured power owned by Itiquira and not sold in the context of MAE, effective for 10 years.

In July 2003, the Company signed an addendum to this contract – already approved by ANEEL – changing substantially the initial contractual conditions. The amount agreed was reduced, Tradener was excluded as the consenting party, and the arbitration clause was also excluded and collateral changed.

e) Compagas – Contract for sale of natural gas, signed in 2000, intended exclusively to be consumed by UEG Araucária to generate electric energy for a 20-year period starting on the date of the first supply (2002).

Because of the litigation initiated with UEG Araucária and the fact that the energy purchase contract signed by the Company with UEG was not approved by ANEEL, the Company suspended the payments related to the natural gas purchase contract (which would be necessary as the fuel of the power plant that is currently idle and with no perspective as to when and if it will operate again).

The amount recorded in this account refers to the provision for the natural gas volume guaranteed in the contract signed by the parties even if there is no consumption (take or pay basis). The contract also prescribes that the amount paid can be recovered over a seven-year period, linked to the equivalent gas consumption. Therefore, effective recovery depends on the outcome of the discussions of the Company with the other shareholders of UEG Araucária, as mentioned in item “b” of this Note.

18. Payroll and Labor Provisions

    Company   Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Payroll
Payroll, net 328  16,327 
Taxes and social contributions 56  51  9,947  9,923 
Payments to third parties 18 
  56  51  10,275  26,268 
Labor accruals
Vacation pay and 13th month salary 43,476  35,248 
Social charges on vacation pay and 13th month salary 15,546  12,123 
  59,022  47,371 

  56  51  69,297  73,639 


19. Post-Employment Benefits

The Company’s subsidiaries sponsor Fundação Copel which administers supplementary retirement and pension plans (Pension Plan) and medical and dental assistance plans (Health Care Plan) offered to current and former employees and their dependants. Both the sponsors and the beneficiaries make contributions to the plans based on actuarial calculations prepared by independent actuaries according to the current regulations applicable to closed-end supplementary pension entities in order to raise sufficient funds to cover obligations for future benefits.

With the formation of the wholly-owned subsidiaries in 2001, the balance of the debt related to the change in plan (Pension Plan III) in 1998, restated to that date, was transferred to them, being financed in 210 monthly installments, indexed to the INPC and with annual interest of 6% p.a., beginning August 1, 2001. As guarantee of these contracts, the sponsors authorized Fundação Copel to block the bank current accounts held by them and, furthermore, the Company was appointed as co-guarantor of any deficit arising from the benefits granted.

The Company adopts the accounting practices set forth by CVM Deliberation 371, of 2000, to record the costs of the pension and health care plans, as well as the charges on the debt assumed with Plan III (Note 27). The recording of the change in plan was carried out in 2001, directly in shareholders’ equity.


  Pension
plan 
Health
care plan
Consolidated
Total 

        2004 
Cost of current service 3,938  6,119  10,057 
Estimated interest cost 216,992  34,041  251,033 
Expected return on plan assets (180,700) (2,340) (183,040)
Estimated employee contributions (404) (404)
Gains and losses amortization 2,876  2,876 

Total estimated 39,826  40,696  80,522 


20. Regulatory Charges

    Consolidated

  6.30.2004 3.31.2004
Current liabilities
Global Reversal Reserve (RGR) 4,686  5,538 
RGR - 2001 differences 3,673 
RGR - 2002 differences 2,760 
Financial compensation - water resources 10,008  9,218 
Fuel Consumption Account (CCC) 16,512  15,541 
Energy Development Account (CDE) 8,110  8,110 
Inspection fee - ANEEL 795  592 
Taxes - FUST and FUNTEL 13  13 
Emergency capacity charges 29,722  28,416 
  72,606  71,101 
Long-term liabilities
RGR - 2003 differences 1,588  1,588 
  1,588  1,588 


21. Other Payables

    Company    Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Public lighting charge collected 19,099  19,962 
Energy presale 103  105 
Low-income consumers 502  603 
Advances from customers - ICMS credit 49 
Consumers - other 1,850  1,955 
Guarantees 240  3,210 
Compulsory loan - Eletrobrás 831  1,747 
Other liabilities 100  99  1,162  2,508 

  109  108  23,836  30,092 


22. Provisions for Contingencies

The Company is a party to various legal processes of a labor, tax, and civil nature filed at different courts and instances. Management, based on the opinion of its legal advisors, decided to maintain provisions for contingencies relating to causes where the chances of unfavorable outcomes are probable.

Considering the position of the legal area to introduce a new structure to analyze the processes, management decided to maintain the provisions already constituted.


  Judicial deposits (Assets-long-
term)
Consolidated
Provisions
(Liabilities-
long-term)
Consolidated

  6.30.2004 3.31.2004 6.30.2004 3.31.2004
Labor 33,143  29,867  88,114  88,114 
Civil:
Consumers 15,788  17,264 
Land expropriation 5,714  5,337  53,127  53,127 
IUEE - municipalities 7,374  7,374 
Tax:
COFINS (a) 197,550  197,549 
PASEP 33,493  33,493  33,711  33,711 
INSS (b) 47,392  46,861  11,165  11,165 
Other judicial deposits 6,230  6,244 

  125,979  121,809  406,829  408,304 


a) COFINS

On August 18, 1998, the Federal Court of Appeals (TRF), 4th Region issued a decision granting COPEL immunity from the COFINS social contribution on electric energy operations. On August 10, 2000, the Federal Government filed a claim to annul this decision. The Company was subpoenaed on November 21, 2000, which started the discussion as to whether this claim could be filed. On December 14, 2000, the process was sent to the relater with an objection by COPEL based on conclusive opinions of renowned jurists on the lack of basis for the claim to annul the decision. Conservatively, management decided to maintain the provision only for the amount of the principal being discussed, without interest.

This provision was not included in REFIS because the Company considers that there are probable chances of a favorable outcome, based on the opinion of various jurists.

b) INSS

The Social Security (INSS) deposits, besides those related to provisioned third-party payments, include other processes involving the Company that are being challenged and supported by appeal deposits.

23. Capital

At June 30, 2004, capital amounted to R$ 3,480,000 and the shares (without nominal value) are held by the main shareholders as follows:


              Thousands of shares
Shareholders Common Preferred "A" Preferred "B" Total

             
State of Paraná 85,028,464  58.6  85,028,464  31.1 
Paraná Investimentos S.A. 134  13,639  13,773 
Eletrobrás 1,530,775  1.1  1,530,775  0.6 
BNDESPAR 38,298,775  26.4  28,210,943  22.0  66,509,718  24.3 
Custody in SE (Brazil) 18,691,676  12.9  121,968  30.1  59,696,978  46.6  78,510,622  28.6 
Custody in SE (ADR's) 872,301  0.6  40,158,894  31.3  41,031,195  15.0 
Municipalities 184,295  0.1  14,715  3.6  199,010  0.1 
Other 424,661  0.3  268,729  66.3  138,429  0.1  831,819  0.3 

  145,031,081  100.0  405,412  100.0  128,218,883  100.0  273,655,376  100.0 


Each common share entitles its holder to one vote in General Meetings.

Class “A” preferred shares do not have voting rights, but have priority in the reimbursement of capital and the right to receive annual, non-cumulative, dividends of 10 percent calculated on the capital represented by these class shares.

Class “B” preferred shares do not have voting rights, but have priority in the receipt of minimum dividends, calculated based on 25 percent of net income adjusted as prescribed by corporate legislation and the Company’s by-laws. The dividends that are assured to these shares have priority only over common shares and only paid out of the remaining net income after payment of preferred dividends to class “A”preferred shares.

Under Article 17 and paragraphs of Law 6.404/1976, dividends attributed to preferred shares must be at least 10 percent higher than those attributed to common shares.

24. Gross Sales and Services

Consolidated

  6.30.2004  6.30.2003 
Consumers
Residential 795,644  653,392 
Industrial 686,066  587,956 
Commercial 432,824  353,463 
Rural 105,060  82,358 
Public entities 65,784  53,671 
Public lighting 61,964  52,249 
Public service 49,105  41,679 
  2,196,447  1,824,768 
Electric energy sales
Initial contracts 1,904  15,398 
Bilateral agreements 193,961  57,629 
Sales - MAE (Note 36) 8,967  14,875 
  204,832  87,902 
Grid availability revenues
Electric grid 24,747  207 
Basic grid 60,723  42,672 
Connection grid 79  66 
  85,549  42,945 
Telecommunications revenues
Data communications and telecommunications services 19,267  15,984 
  19,267  15,984 
Other operating revenue
Services rendered 8,085  12,266 
Leasings and rents 14,183  13,883 
Subsidy - CCC 5,916  5,279 
Service charge 3,569  3,391 
Other 532  1,703 
  32,285  36,522 

  2,538,380  2,008,121 


25. Deductions from Gross Revenue

Consolidated

  6.30.2004 6.30.2003
Taxes and contributions on revenue
COFINS 111,987  72,818 
PASEP 25,528  12,200 
ICMS 538,853  442,610 
ISSQN 606  590 
  676,974  528,218 
Consumer charges
RGR quota 35,135  36,732 
Emergency capacity charges 77,022  46,085 
  112,157  82,817 

  789,131  611,035 


26. Personnel Expenses

    Company   Consolidated

  6.30.2004 6.30.2003 6.30.2004 6.30.2003
Wages and salaries 1,558  1,003  150,401  123,466 
Payroll charges 376  263  53,118  43,937 
Food and education allowances 14,231  11,233 
Labor and severance indemnities 253  10,134 
(-) Transfers to construction in progress (15,242) (15,060)

  1,934  1,266  202,761  173,710 


27. Pension and Health Care Plans

In the first half of 2004 the expenses incurred were:


  Pension Health
care 
   Consolidated

        6.30.2004 6.30.2003
Post-employment period 37,157  21,720  58,877  46,298 
Active employees 9,439  9,439  5,778 

  37,157  31,159  68,316  52,076 

28. Material


    Company   Consolidated

  6.30.2004 6.30.2003 6.30.2004 6.30.2003
Material used in the electric system 6,465  5,472 
Fuel and vehicle parts 8,378  7,825 
Information Technology material 1,547  529 
Other materials 27  6,705  5,976 

  27  23,095  19,802 

29. Raw Material and Inputs Used in Energy Generation

    Consolidated

  6.30.2004 6.30.2003
Purchase of gas - Compagás 118,840  87,482 
Fuel for electric energy generation 6,144  5,976 
Other inputs 117  710 
  125,101  94,168 

  125,101  94,168 

30. Electric Energy Purchased for Resale

    Consolidated

  6.30.2004 6.30.2003
 
ANDE (Paraguay) 5,723  5,696 
Eletrobrás (Itaipu) 203,943  194,103 
CIEN 159,080  107,570 
Dona Francisca Energética S.A. 21,831  10,972 
Itiquira Energética S.A. 33,393  7,952 
MAE 49,689  25,363 
Other concessionaires 13,169  13,939 

  486,828  365,595 


31. Regulatory Charges

    Consolidated

  6.30.2004 6.30.2003
Fuel Consumption Account (CCC) 76,678  71,507 
Amortization of CVA deferral 2,046 
Financial compensation - water resources 27,167  24,837 
Inspection fee - ANEEL 3,753  3,230 
Energy Development Account (CDE) 38,946  12,583 
Taxes - FUST and FUNTEL 79  87 

  146,623  114,290 


32. Other Operating Expenses

    Company   Consolidated

  6.30.2004 6.30.2003 6.30.2004 6.30.2003
Research and development and energy efficiency 5,304  5,588 
Leasings and rents 56  7,296  6,529 
Insurance 2,174  13,286 
Taxes 208  4,237  4,836 
Donations, contributions and subsidies 56  1,196 
Provision for contingencies 237  2,830 
Allowance for doubtful accounts - cons. and resellers (Note 5) 21,549  18,400 
Allowance for doubtful accounts - services to third parties (819) 61 
Advertisements - special campaigns 800  6,910  14 
Own consumption of electric energy 466  1,824 
Indemnities 895  1,028 
Expense recoveries (221) (17) (13,665) (8,711)
General expenses 2,566  3,965 

  906  220  38,109  49,651 


33. Equity in Results of Investees

Equity in the results of subsidiaries and associated companies in first half of 2004 was as follows:


    Company   Consolidated

  6.30.2004 6.30.2003 6.30.2004 6.30.2003
 
Equity in results of investees
COPEL Geração S.A. 38,828  151,966 
COPEL Transmissão S.A. 47,409  48,368 
COPEL Distribuição S.A. 77,284  59,871 
COPEL Telecomunicações S.A. 241  2,287 
COPEL Participações S.A. 17,754  7,777 
Subsidiary and associated companies (a) 16,354  10,477 
 
  181,516  270,269  16,354  10,477 
 
Dividends 183  61  183  61 
 
Goodwill amortization
Sercomtel S.A. Telecomunicações (2,114) (2,114)
Sercomtel Celular S.A. (290) (290)
  (2,404) (2,404)

  181,699  270,330  14,133  8,134 


a) Equity in results of investees – Subsidiaries and associated companies


  Investee
net income
(loss)
Holding   Consolidated
Equity in results of
investees

  6.30.2004    (%)  6.30.2004 6.30.2003
 
Sercomtel S.A. - Telecomunicações 482  45.00  (2,428) (1,712)
Sercomtel Celular S.A. 2,138  45.00  962  815 
Dominó Holdings S.A. 37,375  15.00  5,606  8,505 
Escoelectric Ltda. (484) 40.00  (194) 222 
Copel Amec S/C Ltda. (19) 48.00  (9)
Dona Francisca Energética S.A. (9) 23.03  1,919 
Carbocampel S.A. (14) 49.00  (7) (33)
Braspower S/C Ltda. (207) 49.00  (92)
Centrais Eólicas do Paraná Ltda. 387  30.00  116  73 
Foz do Chopim Energética Ltda. 7,757  35.77  2,775  1,706 
UEG Araucária Ltda. (44,321) 20.00  (7,443)
Onda Provedor de Serviços S.A. (484) 24.50  (197)
Companhia Paranaense de Gás - Compagas 18,702  51.00  9,533  6,710 

       16,354  10,477 


The Directors of the Company authorized subsidiary COPEL Participações to adopt the measures required to sell its holding in Tradener. Therefore, this investment is recorded in the long-term assets and rights for sale account (Note 11).

The Company has been recording the result of the evaluation of investments using the equity method, limited to the amount of its participation in each investment.

At December 31, 2003, the equity in results of investee Sercomtel S.A. – Telecomunicações was calculated based on a preliminary balance sheet. Consequently, the equity in results was understated by R$ 2,645, which was regularized in the first quarter of 2004.

34. Financial Income (Expenses)

     Company     Consolidated

  6.30.2004 6.30.2003 6.30.2004 6.30.2003
Financial income
Income on financial investments 21  4,660  21,303  24,227 
Interest and commissions 2,391  3,465  51,021  34,655 
Monetary variances (3) 66,005  45,363 
Arrears charges on energy bills 27,506  15,144 
( - ) Taxes and social contributions on financial income (387) (466) (10,459) (6,541)
Monetary restatement - CVA 22,138  32,039 
Interest on taxes recoverable 1,747  1,816  2,066  10,882 
Other financial income 67  83  6,229  1,566 
  3,839  9,555  185,809  157,335 
(-) Financial expenses
Interest on loans and financing 2,878  12,671  88,971  107,705 
Monetary and exchange variances 91,261  (158,359)
Interest on tax installments 1,499  1,083  1,499  1,083 
Charges on derivative transactions (8,045)
CPMF and IOF 823  14,575  10,048 
Contractual fines - Compagas 29,957 
Sanctions, tax and contractual fines 5,022  14,422  230 
Other financial expenses 1,242  550  1,941  3,597 
  11,464  14,313  234,581  (35,696)

  (7,625) (4,758) (48,772) 193,031 


35. Tariff Adjustments

a) Annual tariff adjustment

Through Resolution 284 of June 23, 2003, ANEEL approved the electric energy tariffs chargeable to the Company’s end consumers, established the annual revenue of the connection installations, and fixed the annual amount of the electric energy services inspection fee and the tariffs for use of the distribution systems.

The tariff increase applies from June 24, 2003 with an average increase of 25.27%.

As disclosed in the Relevant Event published on June 27, 2003, in order to mitigate the impacts of this increase for the Paraná consumers and to avoid a possible drop in consumption, reduce default, reward prompt payments by consumers that pay their bills on time, and attract new consumers, especially industrial, the Directors of the Company analyzed, during the 60th Extraordinary Meeting held on August 26, 2003 and the 102nd Ordinary Meeting, on December 9, 2003, the granting of a discount on energy bills in the same amount of the increase authorized by ANEEL to performing consumers, a measure also analyzed at the 159th Extraordinary General Meeting, of October 3, 2003, re-ratified by the 160th Extraordinary General Meeting, of November 13, 2003.

Starting January 2004, the Company decided to reduce the percentage of the discount offered to performing consumers. This decision resulted in an average increase of 15 percent in the total amount of energy bills.

b) Periodic tariff review

Public electric energy distribution concession contracts establish that ANEEL will periodically review regulated tariffs to increase or decrease them because of changes in the cost structure and the market of the concessionaire, the tariffs charged by similar local and foreign companies, incentives to stimulate investments, efficiency, and the type of tariffs.

With the approval of ANEEL Resolution 284/2003, in effect as from June 24, 2003, the Company was authorized to adjust its tariff by 25.27%, on average. This adjustment was applied to all consumers, with discount of exactly the same amount, for bills paid on time.

As from January 1, 2004, the Company decreased the discount to consumers who paid bills on time by an average of 8.2%.

On June 24, 2004, ANEEL published in the Official Daily Government Newspaper the Resolution 146, with the final result of the periodical tariff review of COPEL. Based on this resolution, the average readjustment was 14.43% on the tariffs approved by Resolution 284/2003. This adjustment comprises 9.17%, relating to the rate determined by the process of tariff review, and 5.26%, relating to costs recovery already realized (CVA).

In order to control the levels of default and encourage the consumption of energy in the State of Paraná, the Company decided to continue granting a discount to performing consumers. Accordingly, on the amount of Resolution 146/2004 (which includes the adjustment of 25.27% relating to 2003 and 14.43% relating to 2004), the Company granted an average discount of 12.5%.

Accordingly, the average increase repassed to performing consumers, starting June 24, 2004, was approximately 9%.

36. Wholesale Energy Market (MAE)

COPEL Distribuição electric energy sales data, considered in the MAE accounting, were not recognized by the Company as effective and definite for 2000, 2001 and first quarter 2002. This data was calculated based on criteria and amounts set forth in ANEEL Dispatch 288/2002 and ANEEL Resolution 395/2002. The Company contested the decisions at the administrative level and in court.

The Company’s claim is substantially based on the fact that the Dispatch and Resolution were applied retroactively to the date of the operations, especially as regards the partial sale of its quota of energy from Itaipú in the Southern and Southeastern submarkets to meet independent electricity supply bilateral agreements during the rationing period in 2001, when there was a significant discrepancy in spot market energy prices. At June 30, 2004, the estimated amount of the calculation differences is approximately R$ 478,000, not recognized by the Company in current payables for spot market energy.

On August 27, 2002, the Company obtained a favorable injunction issued by the 1st Federal Regional Court, intended to suspend the settlement of the amount determined by ANEEL Dispatch 288 and Resolution 395.

Management, based on the opinion of its legal advisors, considers that there are probable chances of a favorable outcome for these legal proceedings.

The accumulated balances related to transactions realized by the Company are as follows:


  COPEL
Geração S.A.
COPEL
Distribuição S.A.
Total Consolidated
Total

       6.30.2004 3.31.2004
Current assets (Note 4)
Up to December 2003 98  98  98 
From January to March 2004 294 
From April to June 2004 2,163  2,163 
  98  2,163  2,261  392 
Current liabilities (Note 17)
From January to March 2004 5,179 
From April to June 2004 2,598  32,802  35,400 
 
  2,598  32,802  35,400  5,179 


Changes in spot-market energy amounts (MAE) in the second quarter of 2004 are presented as follows:


  Amount to be
settled
Settlement Appropriation Consolidated
Amount to be
settled

  3.31.2004       6.30.2004
Current assets (Note 4)
Up to December 2003 98  98 
From January to March 2004 294  (294)
From April to June 2004 (12) 2,175  2,163 
  392  (306) 2,175  2,261 
Current liabilities (Note 17)
From January to March 2004 5,179  (5,179)
From April to June 2004 (2,357) 37,757  35,400 
  5,179  (7,536) 37,757  35,400 

  (4,787) 7,230  (35,582) (33,139)


On June 24, 2003, after completion of the audit work, MAE issued a communication approving the new schedule for financial settlement of the remaining 50 percent for transactions realized from December 2000 to December 2002. Settlement was on July 3, 2003, and the previously agreed dates for the settlement of transactions realized in October, November, and December 2002 were maintained, i.e., July 7, 2003, July 10, 2003, and July 17, 2003, respectively.

The long-term energy amounts could be subject to modifications depending on the decision of the ongoing legal processes filed by some companies of the sector and COPEL about the interpretation of the current market regulations. These companies, not included in the rationing area, obtained an injunction that nullifies ANEEL Dispatch 288 of May 16, 2002, the purpose of which was to clarify to companies of the sector the treatment and the form of application of certain MAE accounting procedures included in the General Electricity Sector Agreement.

37. Financial Instruments

Based on a derivatives policy, management carries out currency hedge transactions for protection against the effects of foreign exchange differences on US dollar-denominated liabilities.

At June 30, 2004 the nominal outstanding amount of derivatives was R$ 444,383, where the Company has an asset position corresponding to exchange variances and a liability position in relation to the percentage variation of the Interbank Deposit Certificate (CDI).

The book value of these financial instruments is restated according to contractual rates. The unrealized loss on these transactions which were intended to minimize the exposure to foreign exchange differences, in the amount of R$ 25,678, is recorded in results (R$ 33,724 in 2003 and -R$ 8,046 in the first half of 2004).

38. Related-Party Transactions

COPEL carried out a variety of transactions with unconsolidated related parties, including the sale of electric energy. Tariffs used were those approved by ANEEL and the amounts billed are not considered material for disclosure purposes. All other transactions were carried out under terms and conditions similar to the market.

Related party Nature of the transaction Note

 
Sercomtel S.A. Telecomunicações Shareholding in Onda Provedor de Serviços S.A. (COPEL PAR) 13 
Dominó Holdings S.A. Shareholding in Sanepar (COPEL PAR) 13 
Escoelectric Ltda. Services and implementation of transmission lines and substations contracts (COPEL DIS) 13 
Copel Amec S/C Ltda. Technical consulting services to Foz do Chopim Energética (COPEL GER) 13 
  Loan of employees (COPEL GER) 13 
Dona Francisca Energética S.A. Shares pledged as collateral for loans (COPEL PAR) 13 and 30 
Carbocampel S.A. Reactivation of Figueira power plant (COPEL GER) 13 
Braspower I.Engineering S/C Ltda. Participation in investment 13 
Centrais Eólicas do Paraná Ltda. Power purchase agreement (COPEL DIS) 13 
Foz do Chopim Energética Ltda. Loan for construction of power plant and transmission system 12 
  Participation in investment 13 
UEG Araucária Ltda. Purchase of assured energy (COPEL GER) 13 and 17 
Onda Provedor de Serviços S.A. Installment payment of billings 11 
Companhia Paranaense de Gás Loan agreement 12 
  Participation in investment 13 
  Gas purchase agreement (COPEL GER) 17 and 29 
Governo do Estado do Paraná Transfer of CRC (COPEL DIS)
Eletrobrás Loans and financing 15 
Eletrobrás (Itaipu) Purchase of electricity for resale 17 and 30 
Fundação Copel Pension and health care plan contributions 19 


The balances of transactions between the Company and its wholly-owned subsidiaries are presented in Note 12.

The Company provided guarantees to its indirect associated company Dona Francisca Energética S.A., for the loans from the Interamerican Development Bank (IDB) (guaranteed by shares of the associated company held by the Company) and the National Economic and Social Development Bank (BNDES) (joint debtor), in the amounts of US$ 40,700 and R$ 47,300, respectively.

39. Wholly-Owned Subsidiaries

The financial statements for the period ended June 30, 2004 of the wholly-owned subsidiaries COPEL Geração (GER), COPEL Transmissão (TRA), COPEL Distribuição (DIS), COPEL Telecomunicações (TELECOM) and COPEL Participações (PAR) are summarized as follows:


ASSETS GER  TRA  DIS  TELECOM  PAR 

 
Current assets
Cash and banks 251,118  35,510  71,551  3,744  1,638 
Consumers and resellers, net 350,802  36,247  647,006 
Services provided to third parties, net 1,835  59  1,442  2,647 
Dividends receivable 1,851 
Services in progress 718  1,879  457  231 
CRC passed on to Paraná State Gov. 140,503 
Taxes and contributions recoverable 10,142  19,877  117,886  3,403  334 
Inventories 80  6,286  18,037  3,613 
Portion A offsetting account 171,832 
Other receivables 11,594  4,004  17,945  709  7,508 
  626,289  103,862  1,186,659  14,116  11,562 
Long-term receivables
Consumers and resellers 31,197  33,350 
CRC passed on to Paraná State Gov. 963,579 
Taxes and social contributions 45,787  40,093  376,753  11,484  5,259 
Judicial deposits 4,190  9,895  30,791  218 
Associated companies, subsidiaries and parent company 321,267  80,288  97,142 
Portion A offsetting account 196,381 
Other receivables 4,046  5,871  61,923  1,694 
 
  406,487  136,147  1,662,777  11,702  104,095 
Permanent assets
 
Investments 6,045  2,273  413  448,457 
Property, plant and equipment 3,038,623  960,807  1,752,944  169,718  220 
( - ) Special liabilities (7,140) (688,869)
 
  3,044,668  955,940  1,064,488  169,718  448,677 
 
 
Total assets 4,077,444  1,195,949  3,913,924  195,536  564,334 



LIABILITIES AND SHAREHOLDERS' EQUITY GER  TRA  DIS  TELECOM  PAR 

 
Current liabilities
Loans and financing 539,366  19,657  16,943 
Debentures 124,331 
Suppliers 337,492  3,356  642,842  4,094  12 
Taxes and social contributions 6,446  19,142  194,961  943  498 
Interest on own capital 106,872  59,784  916  22,272 
Payroll and labor provisions 12,175  11,033  41,926  3,464  643 
Post-employment benefits 22,264  21,287  44,954  3,124  135 
Regulatory charges 12,897  2,792  56,904  13 
Other payables 191  52  23,443  41 
  1,037,703  137,103  1,146,304  12,595  23,560 
Long-term liabilities
Loans and financing 473,986  121,911  140,124 
Debentures 434,469 
Suppliers 889  255,286 
Post-employment benefits 106,081  95,825  345,811  22,153  751 
Derivative transactions 25,678 
Taxes and social contributions 68,961 
Associated companies, subsidiaries and parent company 153,073  50,134  168,686 
Provisions for contingencies 25,118  20,580  129,461  410 
Regulatory charges 1,588 
  633,340  238,316  1,527,185  72,697  169,437 
Shareholders' equity
Capital 2,338,932  751,989  1,607,168  120,650  330,718 
Capital reserves 701 
Revenue reserves 28,641  21,132  107  22,865 
Retained earnings (accumulated deficit) 38,828  47,409  (366,733) (11,214) 17,754 
  2,406,401  820,530  1,240,435  110,244  371,337 
 
Total liabilities and shareholders' equity 4,077,444  1,195,949  3,913,924  195,536  564,334 



STATEMENT OF INCOME GER  TRA  DIS  TELECOM  PAR 

Operating revenue
Electricity supply 18,688  2,179,100 
Electricity sales to distributors 520,854  81,907 
Use of transmission grid 169,619  24,747 
Revenues from telecommunications 33,531 
Equity in the results of investees 13,950 
Other operating revenues 8,093  1,092  23,479 
Deductions from operating revenue (40,266) (19,296) (724,657) (4,911)
Net operating revenue 507,369  151,415  1,584,576  28,622  13,950 
Operating expenses
Personnel and pension and health care plans 43,506  38,277  173,812  11,812  1,696 
Material 2,964  2,300  17,344  456 
Raw material and inputs for the production of energy 125,101 
Outsourced services 23,276  5,566  69,719  2,889  314 
Electric energy purchased for resale 44,234  840,524 
Charges for use of transmission grid 25,828  194,148 
Depreciation and amortization 50,565  18,269  70,584  11,882  22 
Regulatory charges 30,796  320  115,428  79 
Other operating expenses 287  3,188  32,749  1,042  (105)
  346,557  67,920  1,514,308  28,160  1,931 
Gross profit 160,812  83,495  70,268  462  12,019 
Financial income (expenses), including exchange variances
Financial income 18,113  4,081  152,626  667  7,737 
Financial expenses (116,471) (12,174) (94,143) (297) (1,287)
  (98,358) (8,093) 58,483  370  6,450 
Operating profit 62,454  75,402  128,751  832  18,469 
Non-operating results 374  (250) (1,520) (44)
Profit before taxation 62,828  75,152  127,231  788  18,469 
Income tax and social contribution (24,000) (27,743) (49,947) (547) (715)
Net income for the period 38,828  47,409  77,284  241  17,754 


05.01 – Comments on Company Performance during the Quarter

The comment on the Company Performance during the Quarter is presented in the comment on Consolidated Performance.


06.01 – Consolidated Balance Sheet - Assets (in thousands of reais)


Code Description 6/30/2004  3/31/2004 
1 Total assets 9,423,543  9,221,326 
1.01 Current assets 1,554,200  1,423,273 
1.01.01 Cash and banks 363,888  345,337 
1.01.02 Receivables 1,162,297  1,054,069 
1.01.02.01 Consumers and resellers 763,045  737,474 
1.01.02.02 Allowance for doubtful accounts (67,687) (51,522)
1.01.02.03 Outsourced services, net 3,587  2,047 
1.01.02.04 Dividends receivable 1,851  9,440 
1.01.02.05 Services in progress 4,345  4,467 
1.01.02.06 CRC passed on to Paraná State Government 140,503  112,353 
1.01.02.07 Taxes and social contributions recoverable 99,017  82,415 
1.01.02.08 Portion A offsetting account 171,832  109,408 
1.01.02.09 Other receivables, net 45,804  47,987 
1.01.03 Inventories 28,015  23,867 
1.01.04 Other
1.02 Long-term receivables 2,181,513  2,095,163 
1.02.01 Sundry 2,046,951  2,015,627 
1.02.01.01 Consumers and resellers 64,548  70,765 
1.02.01.02 CRC passed on to Paraná State Government 963,579  932,700 
1.02.01.03 Taxes and social contributions 622,610  635,561 
1.02.01.04 Judicial deposits 125,979  121,809 
1.02.01.05 Portion A offsetting account 196,381  182,347 
1.02.01.06 Other receivables 73,854  72,445 
1.02.02 Related companies 134,562  79,536 
1.02.02.01 Associated companies 129,468  73,854 
1.02.02.02 Subsidiaries 5,094  5,682 
1.02.02.03 Other related companies
1.02.03 Other
1.03 Permanent assets 5,687,830  5,702,890 
1.03.01 Investments 461,526  455,383 
1.03.01.01 In associated companies 407,203  405,858 
1.03.01.02 In subsidiaries 39,688  34,890 
1.03.01.03 Other investments 14,635  14,635 
1.03.02 Permanent assets 5,226,304  5,247,507 
1.03.02.01 Property, plant and equipment in use 5,462,372  5,464,844 
1.03.02.03 Construction in progress 459,941  466,111 
1.03.02.04 Special liabilities (696,009) (683,448)
1.03.03 Deferred charges

06.02 – Consolidated Balance Sheet - Liabilities and Stockholders' Equity (in thousands of reais)


Code Description 6/30/2004  3/31/2004 
2 Total liabilities 9,423,543  9,221,326 
2.01 Current liabilities 1,892,219  1,302,653 
2.01.01 Loans and financing 575,965  117,214 
2.01.02 Debentures 124,331  106,242 
2.01.03 Suppliers 646,777  523,321 
2.01.04 Taxes and social contributions 274,960  252,282 
2.01.05 Dividends payable 12,682  38,725 
2.01.06 Payroll and labor provisions 69,297  73,639 
2.01.07 Related companies
2.01.08 Other 188,207  191,230 
2.01.08.01 Post-employment benefits 91,765  90,037 
2.01.08.02 Regulatory charges 72,606  71,101 
2.01.08.03 Other payables 23,836  30,092 
2.02 Long-term liabilities 2,500,342  2,970,732 
2.02.01 Loans and financing 736,021  1,165,382 
2.02.02 Debentures 434,469  417,956 
2.02.03 Provisions for contingencies 406,829  408,304 
2.02.04 Debts with related parties
2.02.05 Other 923,023  979,090 
2.02.05.01 Suppliers 256,176  264,663 
2.02.05.02 Post-employment benefits 570,620  570,191 
2.02.05.03 Taxes and social contributions 68,961  100,643 
2.02.05.04 Regulatory charges 1,588  1,588 
2.02.05.05 Derivative transactions 25,678  42,005 
2.03 Deferred income
2.04 Minority interest
2.05 Shareholder's equity 5,030,982  4,947,941 
2.05.01 Capital 3,480,000  2,900,000 
2.05.02 Capital reserves 817,293  817,293 
2.05.03 Revaluation reserves
2.05.03.01 Own assets
2.05.03.02 Subsidiaries/associated companies
2.05.04 Revenue reserves 560,937  1,140,937 
2.05.04.01 Legal 165,994  165,994 
2.05.04.02 Statutory
2.05.04.03 For contingencies
2.05.04.04 Unrealized profit
2.05.04.05 Retained profits 394,943  974,943 
2.05.04.06 Special for undistributed dividends
2.05.04.07 Other revenue reserves
2.05.05 Retained earnings 172,752  89,711 

07.01 – Consolidated Statement of Income (in thousands of reais)


Code Description 04/01/2004
a 6/30/2004
01/01/2004
a 6/30/2004
01/04/2003
a 6/30/2003
01/01/2003
a 6/30/2003
3 Statement of Income        
3.01 Gross sales and/or services 1,263,410  2,538,380  996,672  2,008,121 
3.01.01 Electricity supply 1,094,169  2,196,447  913,234  1,824,768 
3.01.02 Electricity sales to distributors 100,406  204,832  44,042  87,902 
3.01.03 Use of transmission grid 41,989  85,549  16,520  42,945 
3.01.04 Revenue from telecommunications 9,767  19,267  8,144  15,984 
3.01.05 Other operating revenue 17,079  32,285  14,732  36,522 
3.02 Deductions from operating revenue (393,737) (789,131) (313,342) (611,035)
3.03 Net sales and/or services 869,673  1,749,249  683,330  1,397,086 
3.04 Cost of sales and/or services 723,831  1,441,925  391,939  1,182,277 
3.04.01 Personnel 106,412  202,761  89,347  173,710 
3.04.02 Pension and health care plans 34,184  68,316  26,163  52,076 
3.04.03 Material 11,763  23,095  9,538  19,802 
3.04.04 Material and inputs used in energy generation 46,855  125,101  (23,055) 94,168 
3.04.05 Outsourced services 44,076  88,610  38,618  76,895 
3.04.06 Electric energy purchased for resale 255,561  486,828  55,824  365,595 
3.04.07 Transportation of electricity 889  5,054  4,611  8,743 
3.04.08 Charges on use of transmission system 54,168  106,105  30,538  82,234 
3.04.09 Depreciation and amortization 75,717  151,323  72,379  145,113 
3.04.10 Regulatory charges 65,834  146,623  57,054  114,290 
3.04.11 Other operating expenses 28,372  38,109  30,922  49,651 
3.05 Gross profit (loss) 145,842  307,324  291,391  214,809 
3.06 Operating income/expenses (15,188) (34,639) 144,575  201,165 
3.06.01 Selling
3.06.02 General and administrative
3.06.03 Financial income (expenses) (22,303) (48,772) 146,541  193,031 
3.06.03.01 Financial income 108,817  185,809  63,764  157,335 
3.06.03.02 Financial expenses (131,120) (234,581) 82,777  35,696 
3.06.04 Other operating income
3.06.05 Other operating expenses
3.06.06 Equity in results of investees 7,115  14,133  (1,966) 8,134 
3.06.06.01 Equity in results 8,175  16,354  (823) 10,477 
3.06.06.02 Investments in other companies (1,060) (2,221) (1,143) (2,343)
3.07 Operating profit (loss) 130,654  272,685  435,966  415,974 
3.08 Non-operating results (586) (1,466) (1,474) (2,974)
3.08.01 Income 4,946  5,922  487  1,786 
3.08.02 Expenses (5,532) (7,388) (1,961) (4,760)
3.09 Profit (loss) before taxation/profit sharing 130,068  271,219  434,492  413,000 
3.10 Provision for income tax and social contribution (56,486) (103,353) (143,528) (158,724)
3.10.01 Income tax (40,959) (75,387) (106,365) (117,530)
3.10.02 Social contribution (15,527) (27,966) (37,163) (41,194)
3.11 Deferred income tax 9,459  4,886  (9,295) 11,868 
3.11.01 Income tax 6,658  3,296  (5,991) 9,570 
3.11.02 Social contribution 2,801  1,590  (3,304) 2,298 
3.12 Statutory profit sharings/contributions
3.12.01 Profit sharings
3.12.02 Contributions
3.13 Reversal of interest on own capital
3.14 Net income/loss for the period
3.15 Net income for the period 83,041  172,752  281,669  266,144 
  NUMBER OF SHARES, EXCEPT TREASURY (Units) 273,655,376,270  273,655,376,270  273,655,376,270  273,655,376,270 
  PROFIT PER SHARE 0.00030  0.00063  0.00103  0.00097 
  LOSS PER SHARE

08.01 – Comments on Consolidated Performance during the Quarter
(All amounts in thousands of reais unless otherwise indicated

Distribution

Connection of consumers: From January to June 2004, 38,843 new connections were made.

Compact networks – COPEL has been implementing compact networks in urban areas with an increased degree of tree planting near the distribution networks. This technology avoids tree cutting and pruning and improves the quality of supply because it reduces the number of disconnections. In June 2004, the total compact networks installed was 1,360 km.

Market behavior – COPEL’S generation of energy from January to June 2004 was 8,448 GWh, the energy purchased from Itaipu was 2,829 GWh and from CIEN was 1,718 GWh, as shown in the chart below:

Direct distribution by class of consumption (GWh) – In the table below, the performance of the consumption by class of consumer from January to June 2004 is:


 
Class     In GWh

  6.30.2004 6.30.2003 Change
 
Residential 2,235  2,204  1.4%
Industrial 3,502  3,537  -1.0%
Commercial 1,522  1,442  5.5%
Rural 682  636  7.2%
Other 859  836  2.8%
Subtotal 8,800  8,655  1.7%
Free (industrial) consumers outside the State of Paraná 602  627  -4.0%

  9,402  9,282  1.3%


Industrial consumption by activity (GWh) – The electric energy consumptions of the main industry activities were as follows:

Industry     In GWh

  6.30.2004 6.30.2003 Change
Food products and drinks 980  903  8.5%
Paper, cardboard and pulp 338  620  -45.5%
Wood 428  393  8.9%
Chemical 301  253  19.0%
Rubber and plastic 229  193  18.7%
Non-metallic minerals 228  258  -11.6%
Automotive vehicles 211  203  3.9%
Other 787  714  10.2%

  3,502  3,537  -1.0%


Number of consumers – The number of consumers billed in June 2004 was 3,134,341, which represented a growth of 2.6% as compared to the same month of the prior year.


 
Class       Consumers

  6.30.2004  6.30.2003  Change
Residential 2,458,544  2,396,760  2.6%
Industrial 50,167  47,307  6.0%
Commercial 261,150  253,212  3.1%
Rural 324,615  318,503  1.9%
Other 39,865  37,989  4.9%

  3,134,341  3,053,771  2.6%


Management

Personnel – There were 6,695 employees at the end of second quarter of 2004, distributed among the wholly-owned subsidiaries as follows: COPEL Geração, 811; COPEL Transmissão, 840; COPEL Distribuição, 4.770; COPEL Telecomunicações, 249 and COPEL Participações 25 employees.

Relations with the Market

In first half of 2004, nominative common shares (ON) of COPEL were present in 100% of the São Paulo Stock Exchange (BOVESPA) trading days, class “A” nominative preferred shares (PNA) in 2%, and class “B”nominative preferred shares (PNB) in 100%.

In the New York Stock Exchange (NYSE) the PNB shares are negotiated as ADSs, which were present in 100% of the trading days of that Stock Exchange.

In LATIBEX (the Latin-American Securities Market in Euros), linked to the Madrid Stock Exchange, the PNB shares are also traded, using the XCOP symbol. They were present in 99% of the trading days of that Stock Exchange.

In Bovespa, the ON shares at the end of the period were quoted at R$ 7.35 per thousand shares, and the PNB shares, at R$ 10.05. In the NYSE, ADSs ended the period quoted at US$ 3.24. In LATIBEX, XCOPs ended the period at 2.92 euros.

Share Performance    ON     PNB 

  Total  Daily average  Total  Daily average
Bovespa
Trades 5,792  47  56,060  452 
Number (thousand) 12,790,000  103,145  98,954,800  798,023 
Volume (R$ thousand) 96,750  780  1,087,669  8,772 
Presence 124      100%  124    100% 
Nyse
Trades          ND     ND 
Number (thousand)       49,108,000  396,032 
Volume (US$ thousand)       181,868  1,467 
Presence       124    100% 
Latibex
Trades          ND     ND 
Number (thousand)       634,406  5,075 
Volume (€ thousand)       1,885  15 
Presence       125     99%


Finances

Tariffs – On June 24, 2004, ANEEL published in the Daily Official Government Journal the Resolution 146, of June 21, 2004, with the final result of the periodical tariff review of COPEL. According to this Resolution, the average adjustment of COPEL was 14.43% on the tariffs approved by Resolution 284/03. Therefore, COPEL granted discounts, so that the average increase for consumers who pay on time became approximately 9%.

Based on Decree 4.667/03, the tariff adjustments of the national distribution concessionaires shall be applied in differentiated manners, by type, to gradually eliminate the existing subsidies among consumption groups.

In June 2004, the average tariff reached R$ 175.20/MWh, an increase of 19.0% compared to the average tariff of June in the prior year. The average ITAIPU tariff of June 2004 increased by 10.9% on the average tariff of June in the prior year.

ANEEL Resolution 71, of June 30, 2004, establishes that the tariff for the distribution of the energy from ITAIPU Binacional will be R$ 2,971.18/MW (increase of 7.0%). This resolution also redefined the tariff for the use of energy transmission installations, components of the Basic Grid of the Interconnected Electrical System, which, as from July 2004, will be R$ 7,684.61/MW (increase of 10.8%).


 
Tariffs       R$/MWh 

  6.30.2004 6.30.2003 Change 
 
Supply 175.20  147.19  19.0%
Initial contracts (*) 75.03  63.29  18.5%
Itaipu (purchase) (**) 101.75  91.77  10.9%

(*)

Includes Furnas tariff


16.01 – Other Information the Company Considers Relevant

Statement of Cash Flows
(Periods Ended June 30, 2004 and 2003)
(In thousands of reais)


  2004  Company
2003 
2004  Consolidated
2003 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period 172,752  266,144  172,752  266,144 
 
Expenses (income) not affecting cash:
Allowance for doubtful accounts 20,730  18,461 
Depreciation and amortization 151,323  145,113 
Monetary and exchange variations on long-term items - net (2,226) (2,666) (9,989) (228,969)
Equity in results of investees (181,516) (270,269) (16,354) (10,477)
Deferred income tax and social contribution 12,035  (23,245) 1,213  35,222 
Provisions in long-term liabilities:
Post-employment benefits 58,855  65,490 
Labor contingencies 237  8,186 
Tax contingencies 3,758 
Disposals:
Judicial deposits and realizable items 1,918  2,574 
Investments 228 
Property, plant and equipment in use 4,971  3,854 
Amortization of goodwill on investments 2,404  2,404 
Gain from sale of investments
  (171,707) (295,943) 215,074  45,844 
Changes in current assets
Consumers and resellers (86,407) (66,978)
Services to third parties, net 24,466  (6,656)
Services in progress 190  (107) 6,065 
CRC passed on to Paraná State Government (5,108) (30,191)
Taxes and social contributions recoverable (2,701) 19,000  (3,571) 118,719 
Inventories (826) 4,248 
Portion A offsetting account (19,842) 57,850 
Other receivables 2,095  2,309  50,330  14,333 
  (416) 21,309  (41,065) 97,390 
Changes in current liabilities
Suppliers (30) 191  229,079  162,339 
Taxes and social contributions (14,806) (1,566) (45,077) 11,923 
Payroll and labor provisions (95) (2,460) 11,029 
Post-employment benefits (54,536) (66,639)
Regulatory charges 22,500  18,258 
Consumers and other payables (15) (23) (2,148) (5,008)
  (14,946) (1,398) 147,358  131,902 
Applied in long-term receivables
Consumers and resellers - reclassified from current assets (1,217) (37,090)
Loan agreements (60,400)
Taxes and social contributions deferred and recoverable (2,477) (415)
Judicial deposits (6,434) (2,881) (15,514) (11,197)
Subsidiaries and associated companies (24,697)
Portion A offsetting account (89,100) (44,713)
Portion A offsetting account - reclassified from current assets (78,846)
Other long-term receivables (4,233)
  (6,434) (27,578) (168,708) (176,494)
Increase in long-term receivables
Suppliers 889 
Subsidiaries and associated companies 191,406 
  191,406  889 
Total cash from operating activities 170,655  (37,466) 325,411  365,675 


    Company   Consolidated

  2004  2003  2004  2003 
 
CASH USED IN INVESTING ACTIVITIES
Corporate interests:
UEG Araucária Ltda (1,460)
Campos Novos Energia S.A. (9,873)
Centrais Elétricas do Rio Jordão S.A. - Elejor (14,997)
Other investees (4) (90) (137)
Dividends receivable 8,099  1,492 
Interest on own capital proposed by investees 830  458 
Property, plant and equipment:
Usina de Salto Caxias (1,170) (2,154)
Other generation works (4,016) (2,735)
Transmission works (25,251) (23,737)
Distribution works (79,600) (62,454)
Telecommunications works (15,170) (5,715)
General installations     (2)
Consumer contributions 18,486  23,898 
Donations and subsidies received
Total cash used in investing activities (97,884) (97,410)
 
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Loans and financing (8,793) (6,456) (48,455) (79,063)
Debentures (133,528) (23,088) (133,528) (23,088)
Interest on own capital (30,537) (5) (30,537) (5)
Total cash used in financing activities (172,858) (29,549) (212,520) (102,156)
 
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,203) (67,015) 15,007  166,109 
 
Opening balance 2,530  85,152  348,881  199,919 
Closing balance 327  18,137  363,888  366,028 
Increase (decrease) in cash and cash equivalents (2,203) (67,015) 15,007  166,109 


17.01 - Report on Limited Review – Unqualified

To the Board of Directors and Stockholders
Cia Paranaense de Energia - COPEL

1

We have carried out limited reviews of the Quarterly Information (ITR) of Companhia Paranaense de Energia - COPEL (parent company and consolidated) for the quarters and period ended June 30 and March 31, 2004. This information is the responsibility of the Company’s management.


2

Our reviews were carried out in conformity with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting Council (CFC), and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Company with regard to the main criteria adopted for the preparation of the quarterly information and (b) a review of the significant information and of the subsequent events which have, or could have, significant effects on the Company’s financial position and operations.


3

Based on our limited reviews, we are not aware of any material modifications that should be made to the quarterly information referred to above in order that such information be stated in conformity with accounting practices adopted in Brazil applicable to the presentation of the quarterly information, consistent with the Brazilian Securities Commission (CVM) regulations.


4

As mentioned in Note 36 to the Quarterly Information, the Company is contesting the calculations made by the Wholesale Energy Market (MAE), which take into consideration the decisions of the National Agency of Electric Energy (ANEEL), contained in ANEEL Dispatch 288/2002 and ANEEL Resolution 395/2002, because it understands that these regulations introduced changes in market regulations prevailing at the time when the transactions occurred. The amount involved is approximately R$ 478,000 thousand, which was not recorded by the Company, based on the opinion of its internal and external legal advisors, that the chances of a favorable outcome for the Company are probable and possible, respectively.


5

We conducted our reviews for the purpose of issuing a report on the Quarterly Information (ITR) referred to in paragraph 1, taken as a whole. The consolidated statement of cash flows for the six-month period ended June 30, 2004, presented together with the Quarterly Information (ITR) to provide supplementary information on the Company, is not required by accounting practices adopted in Brazil. The statement of cash flows was subjected to the review procedures referred to in paragraph 2 and, based on our review, we are not aware of any material modifications that should be made for it to be fairly presented, in all material respects, in relation to the Quarterly Information (ITR), taken as a whole.


6

The Quarterly Information (ITR) referred to in paragraph 1, also includes comparative accounting information relating to the results and the statement of cash flows for the quarter and period ended June 30, 2003. The limited reviews of the Quarterly Information (ITR) for that quarter and period were conducted by other independent accountants, who issued an unqualified opinion thereon dated August 18, 2003, with an emphasis paragraph referring to the matter described in paragraph 4 above.


Curitiba, August 13, 2004

PricewaterhouseCoopers Wander Rodrigues Teles
Auditores Independentes Contador
CRC 2SP000160/O-5 "F" PR CRC 1DF005919/O-3 "S" PR

CONTENTS

GROUP EXHIBIT DESCRIPTION PAGE
01 01 Identification 1
01 02 Head office 1
01 03 Investor relations officer (Company mail address) 1
01 04 General information/Independent accountants 1
01 05 Capital composition 2
01 06 Characteristics of the company 2
01 07 Companies excluded from the consolidated financial statements 2
01 08 Distributions approved and/or paid during and after the quarter 2
01 09 Subscribed capital and alterations in the current year 3
01 10 Investor relations officer 3
02 01 Balance sheet – assets 4
02 02 Balance sheet – liabilities and stockholders' equity 5
03 01 Statement of income 6
04 01 Notes to the quarterly information 8
05 01 Comments on company performance during the quarter 27
06 01 Consolidated balance sheet – assets 28
06 02 Consolidated balance sheet – liabilities and stockholders’ equity 29
07 01 Consolidated statement of income 31
08 01 Comments on consolidated performance during the quarter 33
17 01 Report on limited reviews – Unqualified 40

 


 

 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 14, 2004

 
COMPANHIA PARANAENSE DE ENERGIA — COPEL
By:
/S/  Ronald Thadeu Ravedutti

 
Ronald Thadeu Ravedutti
Principal Financial Officer
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.