As filed with the Securities and Exchange Commission on September 29, 2014

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Commission file number: 001-14668

COMPANHIA PARANAENSE DE ENERGIA – COPEL

(Exact Name of Registrant as Specified in its Charter)

Energy Company of Paraná (Translation of Registrant’s Name into English)  The Federative Republic of Brazil (Jurisdiction of Incorporation or Organization)

Rua Coronel Dulcídio, 800

80420-170 Curitiba, Paraná, Brazil

(Address of Principal Executive Offices)

Lindolfo Zimmer

+55 41 3222 2027 – ri@copel.com

Rua Coronel Dulcídio, 800, 3rd floor - 80420-170 Curitiba, Paraná, Brazil

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act: 

Title of Each Class	Name of Each Exchange on Which Registered
Preferred Class B Shares, without par value*	New York Stock Exchange
American Depositary Shares (as evidenced by American Depositary Receipts), each representing one Preferred Class B Share	New York Stock Exchange

* Not for trading, but only in connection with the listing of American Depositary Shares on the New York Stock Exchange.

Securities registered or to be registered pursuant to Section 12(g) of the Act:  None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of December 31, 2013:

145,031,080 Common Shares, without par value

381,702 Class A Preferred Shares, without par value

128,242,593 Class B Preferred Shares, without par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x              No ¨ 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ¨             No x 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x             No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):

Large accelerated filer x              Accelerated filer ¨               Non-accelerated filer ¨ 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP              ¨                              IFRS        x                             Other ¨ 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

N/A

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes ¨           No x 

 

EXPLANATORY NOTE

This Amendment No. 1 (“Amendment No. 1”) to the Annual Report on Form 20-F of Companhia Paranaense de Energia – Copel (the “Company”) for the fiscal year ended December 31, 2013 filed on April 29, 2014 (the “Original Form 20-F”) is being filed to correct certain errors in the Consolidated Statement of Comprehensive Income, contained on page F-4 in Item 18 of the Original Form 20-F.

Other than as set forth above, this Amendment No. 1 does not, and does not purport to, amend, update or restate the information in any other item of the Original Form 20-F.  As a result, this Amendment No. 1 does not reflect any events that may have occurred after the Annual Report was filed on April 29, 2014.

2

 

Item 18. Financial Statements

Reference is made to pages F-1 through F-137. 

3

 

Signatures

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Companhia Paranaense De Energia – Copel

By:/s/Lindolfo Zimmer                                     

Name: Lindolfo Zimmer

                                                                                Title: Chief Executive Officer

By:/s/Antonio Sergio de Souza Guetter         

                                                                                Name: Antonio Sergio de Souza Guetter

                                                                                Title: Chief Financial and Investor Relations Officer

Date: September 29, 2014.

4

Exhibit 12.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) AS ADOPTED

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Lindolfo Zimmer, certify that:

1.             I have reviewed this annual report on Form 20-F/A of Companhia Paranaense de Energia – COPEL (the “Company”); 

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.             The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.             The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: September 29, 2014

/s/ Lindolfo Zimmer

Name: Lindolfo Zimmer

Title: Chief Executive Officer

Exhibit 12.2

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) AS ADOPTED

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Antonio Sergio de Souza Guetter, certify that:

1.             I have reviewed this annual report on Form 20-F/A of Companhia Paranaense de Energia – COPEL (the “Company”); 

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.             The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.             The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: September 29, 2014

/s/ Antonio Sergio de Souza Guetter

Name: Antonio Sergio de Souza Guetter

Title: Chief Financial Officer

Exhibit 13.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Companhia Paranaense de Energia - COPEL (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 20-F/A for the year ended December 31, 2013 (the “Form 20-F/A”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F/A fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 29, 2014

/s/ Lindolfo Zimmer

Name: Lindolfo Zimmer

Title: Chief Executive Officer

Exhibit 13.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Companhia Paranaense de Energia - COPEL (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 20-F/A for the year ended December 31, 2013 (the “Form 20-F/A”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F/A fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 29, 2014

/s/ Antonio Sergio de Souza Guetter

Name: Antonio Sergio de Souza Guetter

Title: Chief Financial Officer

 

Companhia Paranaense de Energia - Copel

Consolidated Financial Statements as of

December 31, 2013, 2012 and 2011 and Report

of Independent Registered Public

Accounting Firms

 

KPMG Auditores Independentes Al. Dr. Carlos de Carvalho, 417 - 16º 80410-180 - Curitiba, PR - Brasil Caixa Postal 13533 80420-990 - Curitiba, PR - Brasil Central Tel 55 (41) 3544-4747 Fax 55 (41) 3544-4750 Internet www.kpmg.com.br

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Companhia Paranaense de Energia – COPEL

We have audited the accompanying consolidated statements of financial position of Companhia Paranaense de Energia – COPEL and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2013. We also have audited the Company’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

1

KPMG Auditores Independentes., uma sociedade simples brasileira, de responsabilidade limitada, e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça. KPMG Auditores Independentes, a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in Note 3 to the financial statements, the Company has changed its method of accounting for employee benefits and joint ventures in 2013 due to the adoption of IAS 19 (2011) – Employee Benefits and IFRS 11 – Joint Arrangements.

Curitiba, Brazil

April 29, 2014

/s/ KPMG Auditores Independentes

2

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statements of Financial Position

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

ASSETS	Note
			Restated
		12.31.2013	12.31.2012
CURRENT ASSETS
Cash and cash equivalents	4	1,741,632	1,459,217
Bonds and securities	5	389,222	635,501
Collaterals and escrow accounts	6	1,976	36,808
Trade accounts receivable	7	1,337,628	1,489,173
Dividends receivable	15	9,500	18,064
CRC transferred to the State Government of Paraná	8	85,448	75,930
Accounts receivable related to the concession	9	4,396	5,319
Accounts receivable related to the concession extension	10	352,161	356,085
Other current receivables	11	395,890	234,951
Inventories	12	139,278	124,809
Income Tax and Social Contribution	13.1	133,158	191,544
Other current recoverable taxes	13.3	70,013	49,490
Prepaid expenses	-	19,982	4,801
		4,680,284	4,681,692
NONCURRENT ASSETS
Long Term Assets
Bonds and securities	5	120,536	128,515
Collaterals and escrow accounts	6	45,371	43,246
Trade accounts receivable	7	132,686	26,171
CRC transferred to the State Government of Paraná	8	1,295,106	1,308,354
Judicial deposits	14	675,225	574,371
Accounts receivable related to the concession	9	3,484,268	2,645,826
Accounts receivable related to the concession extension	10	365,645	717,805
Other noncurrent receivables	11	29,435	22,728
Income Tax and Social Contribution	13.1	197,659	19,995
Other noncurrent recoverable taxes	13.3	124,498	120,189
Deferred Income Tax and Social Contribution	13.2	753,413	681,285
Prepaid expenses	-	399	8,832
		7,224,241	6,297,317
Investments	16	1,187,927	568,989
Property, Plant and Equipment, net	17	7,983,632	7,871,753
Intangible Assets	18	2,035,361	1,789,152
		18,431,161	16,527,211
TOTAL ASSETS		23,111,445	21,208,903
Notes are an integral part of these financial statements

F-1

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statements of Financial Position

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

LIABILITIES	Note
			Restated
		12.31.2013	12.31.2012
CURRENT LIABILITIES
Payroll, social charges and accruals	19	239,685	384,008
Suppliers	20	1,092,239	1,131,782
Income Tax and Social Contribution Payable	13.1	297,620	170,189
Other taxes due	13.3	300,731	288,480
Loans and financing	21	957,106	261,290
Debentures	22	57,462	12,719
Dividend payable	-	18,713	204,780
Post employment benefits	23	29,983	25,819
Customer charges due	24	37,994	56,498
Research and Development and Energy Efficiency	25	127,860	159,599
Accounts payable related to concession - Use of Public Property	26	51,481	48,477
Other accounts payable	27	137,011	89,803
		3,347,885	2,833,444
NONCURRENT LIABILITIES
Suppliers	20	50,121	100,908
Other taxes due	13.3	68,402	-
Deferred Income Tax and Social Contribution	13.2	420,501	590,536
Loans and financing	21	2,366,678	1,989,588
Debentures	22	1,150,483	997,958
Post employment benefits	23	937,249	675,230
Research and Development and Energy Efficiency	25	154,721	104,561
Accounts payable related to concession - Use of Public Property	26	420,293	399,080
Other accounts payable	27	233	-
Provision for contingencies	28	1,266,127	1,155,708
		6,834,808	6,013,569
EQUITY	29
Attributable to controlling shareholder's
Capital		6,910,000	6,910,000
Equity valuation adjustments		983,159	1,214,394
Legal reserve		624,849	571,221
Profit retention reserve		3,897,833	3,337,295
Additional proposed dividends		235,498	64,474
		12,651,339	12,097,384
Attributable to non-controlling interest	29.2	277,413	264,506
		12,928,752	12,361,890
TOTAL LIABILITIES & EQUITY		23,111,445	21,208,903
Notes are an integral part of these financial statements

F-2

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statements of  Income

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

CONTINUING OPERATIONS	Note
			Restated	Restated
		12.31.2013	12.31.2012	12.31.2011
OPERATING REVENUES	30	9,180,214	8,493,252	7,776,165
COST OF SALES AND SERVICES PROVIDED	31	(7,037,998)	(6,540,636)	(5,457,015)
GROSS PROFIT		2,142,216	1,952,616	2,319,150
Operational expenses / income
Selling expenses	31	(95,615)	(65,659)	(113,764)
General and administrative expenses	31	(530,104)	(541,913)	(460,375)
Other operational income (expenses)	31	(403,910)	(352,551)	(439,710)
Equity in earnings of investees	16	113,606	6,685	53,253
		(916,023)	(953,438)	(961,596)
PROFIT BEFORE FINANCIAL RESULTS AND TAXES		1,226,193	999,178	1,357,554
Financial results
Financial income	32	652,363	648,321	577,427
Financial expenses	32	(372,052)	(674,971)	(351,065)
		280,311	(26,650)	226,362
Profit Before Income Tax and Social Contribution		1,506,504	972,528	1,583,916
INCOME TAX AND SOCIAL CONTRIBUTION ON PROFIT
Current	13.4	(554,520)	(458,257)	(611,601)
Deferred	13.4	149,451	212,249	204,539
		(405,069)	(246,008)	(407,062)
NET INCOME		1,101,435	726,520	1,176,854
Attributed to controlling shareholders		1,072,560	700,688	1,157,690
Attributed to non-controlling interest	29.2	28,875	25,832	19,164
Basic and diluted net earning per share attributed
To parent company shareholders - in reais
Ordinary shares	29.1	3.74278	2.44350	5.33150
Class "A" Preferred shares	29.1	4.49001	4.17424	4.44350
Class "B" Preferred shares	29.1	4.11741	2.68795	4.03920
Notes are an integral part of these financial statements

F-3

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statement of Comprehensive Income

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Note			Consolidated
			Restated	Restated
		12.31.2013	12.31.2012	12.31.2011
NET INCOME FOR THE YEAR		1,101,435	726,520	1,176,854
Other comprehensive income
Items that will never be reclassified to profit or loss
Losses on actuarial liabilities	29.1.2
Post employment benefits		(216,967)	(207,947)	13,585
Post employment benefits - equity		18,881	-	-
Taxes on other comprehensive income	29.1.2	73,769	63,374	(4,620)
Items that are or may be reclassified to profit or loss
Adjustments related to Financial Assets classified as available for sale:	29.1.2
Financial investments		(6,929)	2,261	2,962
Accounts receivable related to the concession		-	(13,116)	(7,282)
Investments		(306)	406	5,647
Other gains - subsidiary credits		-	3,164	-
Taxes on other comprehensive income	29.1.2	2,460	2,476	(451)
Total other comprehensive income for the year, net of taxes		(129,092)	(149,382)	9,841
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		972,343	577,138	1,186,695
Attributed to controlling shareholders		943,468	550,680	1,167,531
Attributed to non-controlling interests		28,875	26,458	19,164
Notes are an integral part of these financial statements

F-4

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statement of Changes in Equity

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

		Attributable to Parent Company								Attributable
			Equity valuation adjustments		Profit reserves					to
										non
				Other		Profit	Additional			controlling
	Note		Deemed	comprehensive	Legal	retention	proposed	Accumulated	Shareholders’	interests	Equity
		Capital	Cost	income	reserve	reserve	dividends	profit	equity	(Note 29.2)	Consolidated
Balances as of January 1, 2011 - Restated		6,910,000	1,546,053	13,463	478,302	2,056,526	25,779	-	11,030,123	265,703	11,295,826
Net Income for the year		-	-		-	-	-	1,157,690	1,157,690	19,164	1,176,854
Other comprehensive income
Gains on financial assets, net of taxes	29.1.2	-	-	876	-	-	-	-	876	-	876
Actuarial gains, net of taxes	29.1.2	-	-	8,965	-	-	-	-	8,965	-	8,965
Total comprehensive income for the year		-	-	9,841	-	-	-	1,157,690	1,167,531	19,164	1,186,695
Deliberation of additional dividends proposed		-	-		-	-	(25,779)	-	(25,779)	-	(25,779)
Realization of equity valuation adjustments	29.1.2	-	(103,311)		-	-	-	103,311	-	-	-
Reimbursement of advances for future capital increase		-	-	-	-	-	-	-	-	(30,813)	(30,813)
Allocations proposed to GSM
Legal reserve	29.1.3	-	-	-	57,885	-	-	(57,885)	-	-	-
Interest on own capital	29.1.3	-	-	-	-	-	84,875	(421,091)	(336,216)	-	(336,216)
Dividends	29.1.3	-	-	-	-	-	-	-	-	(11,220)	(11,220)
Profit retention reserve		-	-	-	-	782,025	-	(782,025)	-	-	-
Balances as of December 31, 2011 - Restated		6,910,000	1,442,742	23,304	536,187	2,838,551	84,875	-	11,835,659	242,834	12,078,493
Net Income for the year		-	-	-	-	-	-	700,688	700,688	25,832	726,520
Other comprehensive income
Losses on financial assets, net of taxes	29.1.2	-	-	(5,435)	-	-	-	-	(5,435)	626	(4,809)
Actuarial losses, net of taxes	29.1.2	-	-	(144,573)	-	-	-	-	(144,573)	-	(144,573)
Total comprehensive income for the year		-	-	(150,008)	-	-	-	700,688	550,680	26,458	577,138
Deliberation of additional dividends proposed		-	-	-	-	-	(84,875)	-	(84,875)	-	(84,875)
Realization of equity valuation adjustments	29.1.2	-	(101,644)	-	-	-	-	101,644	-	-	-
Allocations proposed to GSM
Legal reserve	29.1.3	-	-	-	35,034	-	-	(35,034)	-	-	-
Interest on own capital	29.1.3	-	-	-	-	-	-	(138,072)	(138,072)	-	(138,072)
Dividends	29.1.3	-	-	-	-	-	64,474	(130,482)	(66,008)	(4,786)	(70,794)
Profit retention reserve		-	-	-	-	498,744	-	(498,744)	-	-	-
Balances as of December 31, 2012 - Restated		6,910,000	1,341,098	(126,704)	571,221	3,337,295	64,474	-	12,097,384	264,506	12,361,890
Net Income for the year		-	-	-	-	-	-	1,072,560	1,072,560	28,875	1,101,435
Other comprehensive income
Losses on financial assets, net of taxes	29.1.2	-	-	(4,775)	-	-	-	-	(4,775)	-	(4,775)
Actuarial losses, net of taxes	29.1.2	-	-	(124,317)	-	-	-	-	(124,317)	-	(124,317)
Total comprehensive income for the year		-	-	(129,092)	-	-	-	1,072,560	943,468	28,875	972,343
Deliberation of additional dividends proposed		-	-	-	-	-	(64,474)	-	(64,474)	-	(64,474)
Realization of equity valuation adjustments	29.1.2	-	(102,143)	-	-	-	-	102,143	-	-	-
Allocations proposed to GSM
Legal reserve	29.1.2	-	-	-	53,628	-	-	(53,628)	-	-	-
Interest on own capital	29.1.2	-	-	-	-	-	-	(180,000)	(180,000)	-	(180,000)
Dividends	29.1.2	-	-	-	-	-	235,498	(380,537)	(145,039)	(15,968)	(161,007)
Profit retention reserve		-	-	-	-	560,538	-	(560,538)	-	-	-
Balances as of December 31, 2013		6,910,000	1,238,955	(255,796)	624,849	3,897,833	235,498	-	12,651,339	277,413	12,928,752
Notes are an integral part of these financial statements

F-5

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statement of Changes in Cash Flows

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Note
			Restated	Restated
		12.31.2013	12.31.2012	12.31.2011
Cash flows from operational activities
Net income for the year		1,101,435	726,520	1,176,854
Adjustments to reconcile net income for the year with cash generated from operating activities
Depreciation	17.3	366,016	331,330	336,033
Amortization of intangible assets - concessions	18	229,804	214,022	214,515
Amortization of investments - authorization and concession rights	18	755	755	755
Amortization of intangible assets - others	18	6,627	3,748	1,132
Unrealized monetary and exchange variations - net		27,600	(90,669)	75,630
Fair value adjustment of the accounts receivable related to concession	9.1	-	401,104	-
Remuneration of accounts receivable related to concession	9.1	(33,974)	(396,168)	(330,217)
Equity in earnings of investees	16.2	(113,606)	(6,685)	(52,253)
Income tax and social contribution	13.4	554,520	458,257	611,601
Deferred income tax and social contribution	13.2.1	(149,451)	(212,249)	(204,539)
Provision (reversal) for losses from accounts receivable	31.5	47,458	22,826	75,556
Provisions (reversals) for losses on taxes recoverable	31.5	274	(3,135)	46,802
Provisions (reversals) for losses with depreciation of investments		(7,887)	-	398
Provision (reversal) for legal claims	28.1	154,178	199,105	166,899
Provision for post employment benefits	23.3	195,673	196,087	158,251
Provision for research and development and energy efficiency	25.2	79,961	74,464	68,048
Write off of accounts receivable related to concession	9.1	45,795	24,313	25,895
Write off of investments		-	-	224
Write off of property, plant and equipment	17.3	9,794	3,871	23,091
Write off of intangible assets	18	18,004	8,325	12,762
Decrease (increase) in assets
Trade accounts receivable		20,614	104,421	(75,867)
Dividends and interest on own capital received		49,009	27,494	20,104
CRC transferred to the Government of the State of Paraná	8.2	163,078	150,864	143,683
Accounts receivable related to the concession extension	10.1	440,656	-	-
Judicial deposits		(100,854)	(143,651)	(30,118)
Other receivables		(168,211)	(79,887)	(1,795)
Inventories		(14,469)	(21,007)	17,622
Income tax and social contribution		(132,071)	22,180	(63,644)
Other current taxes recoverable		(11,902)	(17,853)	(41,126)
Prepaid expenses		(6,366)	(8,855)	1,762
Increase (decrease) in liabilities
Payroll, social charges and accruals		(144,323)	159,932	48,498
Suppliers		(232,915)	187,160	(105,378)
Income tax and social contribution paid		(430,767)	(439,858)	(613,060)
Other taxes		80,567	735	(125,130)
Loans and financing - interest due and paid	21.10	(329,105)	(158,309)	(125,247)
Debentures - interest due and paid	22.1	(90,121)	(2,139)	(69,251)
Post employment benefits	23.3	(146,457)	(136,720)	(97,839)
Customer charges due		(18,504)	(14,013)	14,406
Research and development and energy efficiency	25.2	(76,765)	(76,613)	(81,873)
Payable related to the concession - use of public property	26.2	(48,966)	(44,411)	(41,239)
Other accounts payable		47,209	3,208	15,287
Provisions for legal claims	28.1	(44,702)	(49,136)	(48,518)
Net cash generated from operating activities		1,337,611	1,419,363	1,148,714
(continued)

F-6

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Consolidated Statement of Changes in Cash Flows

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

(continued)
	Note
			Restated	Restated
		12.31.2013	12.31.2012	12.31.2011
Cash flows from investment activities
Financial investments		279,406	(151,287)	(38,332)
Additions - Nova Asa I - Net effect of acquired cash		(6,050)	-	-
Additions - Nova Asa II - Net effect of acquired cash		(6,074)	-	-
Additions - Nova Asa III - Net effect of acquired cash		(6,041)	-	-
Additions - Nova Eurus IV - Net effect of acquired cash		(5,307)	-	-
Additions - Santa Maria - Net effect of acquired cash		(17,762)	-	-
Additions - Santa Helena - Net effect of acquired cash		(17,684)	-	-
Additions - Ventos de Santo Uriel - Net effect of acquired cash		(6,601)	-	-
Additions in investments	16.2	(519,315)	(57,328)	(43,970)
Additions to property, plant and equipment	17.3	(420,227)	(875,509)	(821,919)
Customers contributions - Property, Plant and Equipment	17.3	-	15	-
Additions to intangible assets related to the concession	18	(1,018,057)	(840,119)	(808,687)
Additions to intangible - concession and autorization rights	18	(275,719)	-	-
Customers contributions - Intangible Asset	18	160,614	107,980	94,396
Additions to other intangible assets	18	(5,297)	(11,685)	(11,033)
Disposal of intangible	18	-	191	-
NET CASH GENERATED FROM (USED IN) INVESTING ACTIVITIES		(1,864,114)	(1,827,742)	(1,629,545)
CASH FLOWS FROM FINANCING ACTIVITIES
Reimbursement of advances for future capital increase		-	-	(30,813)
Loans and financing obtained from third parties	21.10	1,239,126	81,723	816,431
Issue of Debentures	22.1	203,000	1,000,000	-
Amortization of principal - loans and financing	21.10	(31,508)	(37,868)	(48,646)
Amortization of principal - debentures	22.2	(10,152)	-	(600,000)
Dividends and interest on own capital paid		(591,548)	(224,705)	(401,105)
NET CASH GENERATED FROM (USED IN) FINANCING ACTIVITIES		808,918	819,150	(264,133)
TOTAL EFFECTS ON CASH AND CASH EQUIVALENTS		282,415	410,771	(744,964)
Cash and cash equivalents at the beginning of the year	4	1,459,217	1,048,446	1,793,410
Cash and cash equivalents at the end of the year	4	1,741,632	1,459,217	1,048,446
CHANGE IN CASH AND CASH EQUIVALENTS		282,415	410,771	(744,964)
Notes are an integral part of these financial statements
Additional information on cash flows
Transactions not involving cash
Acquisition of property with an increase in the balance of suppliers		-	119,590	64,913

F-7

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

1General Information

Companhia Paranaense de Energia - Copel (Copel, the Company or the Parent Company), with headquarters at Rua Coronel Dulcídio, 800, Batel, Curitiba, State of Paraná, is a public company with shares traded on Corporate Governance Level 1 of BM&FBOVESPA’s Special Listings and on stock exchanges in the United States of America and Spain. Copel is a mixed capital company, controlled by the Government of the State of Paraná, engaged, through its subsidiaries, in researching, studying, planning, building, and exploiting the production, transformation, transportation, distribution, and sale of energy, in any form, but mainly electric energy. These activities are regulated by the National Electric Energy Agency (Agência Nacional de Energia Elétrica or ANEEL), which reports to the Ministry of Mines and Energy (Ministério de Minas e Energia or MME). Additionally, Copel takes part in consortiums, private enterprises, or mixed capital companies in order to operate mostly in the areas of energy, telecommunications, natural gas, and water utility.

1.1  Organizational restructuring

The 187th Extraordinary General Meeting - EGM held on October 10, 2013 approved the restructuring of Copel, which now has five executive boards at the holding company and two more wholly-owned subsidiaries; Copel Participações S.A., founded to manage interests in specific purpose entities - SPEs in the energy, gas, telecommunications, sanitation and services sectors, and Copel Renováveis S.A., which will concentrate the investments in renewable power generation sources.

The restructuring are part of the adjustment to market requirements and aim to streamline the structure and lower operational costs.

2Basis of Preparation

2.1  Statement of compliance

The consolidated financial statements were prepared in accordance with International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board - IASB and also in accordance with accounting practices adopted in Brazil.

2.2  Basis of measurement

The financial statements were prepared based on historic cost, except for certain financial instruments which were stated at fair values through profit or loss, financial assets available for sale measured at their fair values.

F-8

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

2.3  Functional currency and presentation currency

The consolidated financial statements are presented in Brazilian reais, which is the functional currency of the Company. All financial information present in Brazilian reais was rounded to the nearest thousand, except when otherwise indicated.

2.4  Use of estimates and judgment

The preparation of the consolidated financial statements in accordance with IFRS requires that the company’s senior management make judgments, estimates and assumptions which affect the application of accounting policies and assets, liabilities, income and expenses reported values. The actual results may divert from these estimates.

Estimates and assumptions are reviewed in a continuous way. Reviews of accounting estimates are recognized in the year that those estimates are reviewed and in any future fiscal years affected.

Information about critical judgment related to accounting policies adopted that present an significant effect over the values recognized in the consolidated financial statements are included in the following notes:

Note 3.7 and 9 - Accounts receivable related to the concession;

Note 10 - Accounts receivable related to the concession extension;

Note 3.9 and 13.2 - Deferred income tax and social contribution;

Note 3.11 and 18 – Intangible assets; and

Note 3.29 - Operating lease.

Information about uncertainty over assumptions and estimates that may present a significant risk of resulting in material adjustments in the next fiscal year is included in the following notes:

Note 3.13 - Impairment value of assets;

Note 3.25.1 - Unbilled revenues;

Note 3.6 - Trade accounts receivable (Allowance for doubtful debts, CCEE and Unbilled revenues);

Note 3.10 and 17 - Property, plant and equipment;

Note 3.11 and 18 - Intangible assets;

Note 3.15 and 23 - Post-Employment benefits;

Note 3.19 and 28 - Provision for contingencies; and

Note 3.4 and 34 - Financial Instruments.

F-9

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3Significant Accounting Policies

3.1  Changes in accounting policies

Starting January 1, 2013, the following revised/new IFRS were adopted: IAS 28 Investments in Associates and Joint Ventures; IFRS 11 Joint Arrangements; IAS 19 Employee Benefits; IFRS 10 Consolidated Financial Statements; and IFRS 12 Disclosure of Interests in Other Entities.

The principal effects arising from the use of new/revised standards on the presentation of consolidated financial statements were the presentation of joint ventures, which used to be proportionally consolidated and are now accounted under the equity method, and the elimination of actuarial gain and loss deferment of private pension fund and health care plans (using the corridor method) now fully recognized in OCI.

3.1.1Effects on statement of financial position as of January 1, 2012

	Stated	Retrospective application - Joint arrangements	Retrospective application - Employee benefits	Restated
ASSETS	18,842,019	(1,505)	(3,359)	18,837,155
CURRENT ASSETS	3,702,013	(2,496)	-	3,699,517
Cash and cash equivalents	1,049,125	(679)	-	1,048,446
Dividends receivable	17,906	(1,419)	-	16,487
Income Tax and Social Contribution	215,381	(376)	-	215,005
Others	2,419,601	(22)	-	2,419,579
NONCURRENT ASSETS	15,140,006	991	(3,359)	15,137,638
Long Term Assets	5,659,868	(128)	(3,359)	5,656,381
Judicial deposits	430,817	(97)	-	430,720
Accounts receivable related to the concession	3,236,474	(31)	-	3,236,443
Deferred Income Tax and Social Contribution	465,536	-	(3,359)	462,177
Others	1,527,041	-	-	1,527,041
Investments	549,158	6,038	-	555,196
Property, Plant and Equipment, net	7,209,123	(6)	-	7,209,117
Intangible Assets	1,721,857	(4,913)	-	1,716,944
LIABILITIES	18,842,019	(1,505)	(3,359)	18,837,155
CURRENT LIABILITIES	2,058,821	(1,036)	-	2,057,785
Payroll, social charges and accruals	224,095	(19)	-	224,076
Suppliers	747,453	(19)	-	747,434
Other taxes due	288,457	(864)	-	287,593
Others	798,816	(134)	-	798,682
NONCURRENT LIABILITIES	4,713,670	(469)	(12,324)	4,700,877
Suppliers	108,462	(466)	-	107,996
Deferred Income Tax and Social Contribution	648,266	-	1,261	649,527
Post employment benefits	432,838	-	(13,585)	419,253
Provision for contingencies	1,000,823	(3)	-	1,000,820
Others	2,523,281	-	-	2,523,281
EQUITY	12,069,528	-	8,965	12,078,493

F-10

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.1.2 Effects on statement of financial position on December 31, 2012

	Stated	Retrospective application - Joint arrangements	Retrospective application - Employee benefits	Restated
ASSETS	21,211,554	(14,577)	11,926	21,208,903
CURRENT ASSETS	4,699,255	(17,563)	-	4,681,692
Cash and cash equivalents	1,483,137	(23,920)	-	1,459,217
Dividends receivable	9,555	8,509	-	18,064
Income Tax and Social Contribution	193,158	(1,614)	-	191,544
Others	3,013,405	(538)	-	3,012,867
NONCURRENT ASSETS	16,512,299	2,986	11,926	16,527,211
Long Term Assets	6,302,904	(39,068)	33,481	6,297,317
Accounts receivable related to the concession	2,684,792	(38,966)	-	2,645,826
Judicial deposits	574,473	(102)	-	574,371
Deferred Income Tax and Social Contribution	647,804	-	33,481	681,285
Others	2,395,835	-	-	2,395,835
Investments	543,036	47,508	(21,555)	568,989
Property, Plant and Equipment, net	7,871,849	(96)	-	7,871,753
Intangible Assets	1,794,510	(5,358)	-	1,789,152
LIABILITIES	21,211,554	(14,577)	11,926	21,208,903
CURRENT LIABILITIES	2,847,818	(14,374)	-	2,833,444
Payroll, social charges and accruals	384,150	(142)	-	384,008
Suppliers	1,136,359	(4,577)	-	1,131,782
Other taxes due	290,896	(2,416)	-	288,480
Other accounts payable	97,042	(7,239)	-	89,803
Others	939,371	-	-	939,371
NONCURRENT LIABILITIES	5,866,238	(203)	147,534	6,013,569
Suppliers	100,996	(88)	-	100,908
Deferred Income Tax and Social Contribution	615,924	(115)	(25,273)	590,536
Post employment benefits	502,423	-	172,807	675,230
Others	4,646,895	-	-	4,646,895
EQUITY	12,497,498	-	(135,608)	12,361,890

3.1.3Effects on statement of income for the period ended on December 31, 2012

	Stated	Retrospective application - Joint arrangements	Restated
CONTINUING OPERATIONS
OPERATING REVENUES	8,532,217	38,965	8,493,252
COST OF SALES AND SERVICES PROVIDED	(6,578,971)	(38,335)	(6,540,636)
GROSS PROFIT	1,953,246	630	1,952,616
Operational expenses / income	(952,727)	711	(953,438)
Selling expenses	(65,659)	-	(65,659)
General and administrative expenses	(544,828)	(2,915)	(541,913)
Other operational income (expenses)	(353,280)	(729)	(352,551)
Equity in earnings of subsidiaries	11,040	4,355	6,685
PROFIT BEFORE FINANCIAL RESULTS AND TAXES	1,000,519	1,341	999,178
Financial results	(27,821)	(1,171)	(26,650)
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	972,698	170	972,528
INCOME TAX AND SOCIAL CONTRIBUTION ON PROFIT	(246,178)	(170)	(246,008)
NET INCOME FOR THE YEAR	726,520	-	726,520

F-11

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.1.4     Effects on statement of income for the period ended on December 31, 2011

	Stated	Retrospective application - Joint arrangements	Restated
CONTINUING OPERATIONS
OPERATING REVENUES	7,776,165	-	7,776,165
COST OF SALES AND SERVICES PROVIDED	(5,457,015)	-	(5,457,015)
GROSS PROFIT	2,319,150	-	2,319,150
Operational expenses / income		-
Selling expenses	(113,764)	-	(113,764)
General and administrative expenses	(461,452)	1,077	(460,375)
Other operational income (expenses)	(440,440)	730	(439,710)
Equity in earnings of subsidiaries	55,654	(3,401)	52,253
	(960,002)	(1,594)	(961,596)
PROFIT BEFORE FINANCIAL RESULTS AND TAXES	1,359,148	(1,594)	1,357,554
Financial results	224,768	1,594	226,362
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	1,583,916	-	1,583,916
INCOME TAX AND SOCIAL CONTRIBUTION ON PROFIT	(407,062)	-	(407,062)
NET INCOME FOR THE YEAR	1,176,854	-	1,176,854

3.1.5Effects on statement of comprehensive income for the period ended on December 31, 2012

	Stated	Retrospective application - Employee benefits	Restated
Net income for the year	726,520	-	726,520
Other comprehensive income
Items that will never be reclassified for profit or loss
Losses on actuarial liabilities - post employment benefits	-	207,947	(207,947)
Taxes on other comprehensive income	-	(63,374)	63,374
Items that are or be or maybe reclassified for profit or loss
Adjustments related to Financial Assets classified as available for sale	(10,449)	-	(10,449)
Other gains - subsidiary credits	3,164	-	3,164
Taxes on other comprehensive income	2,476	-	2,476
Total comprehensive income for the year, before taxes	(4,809)	144,573	(149,382)
Total comprehensive income for the year	721,711	144,573	577,138

3.1.6     Effects on statement of comprehensive income for the period ended on December 31, 2011

	Stated	Retrospective application - Employee benefits	Restated
Net income for the year	1,176,854	-	1,176,854
Other comprehensive income
Items that will never be reclassified for profit or loss
Losses on actuarial liabilities - post employment benefits	-	13,585	13,585
Taxes on other comprehensive income	-	(4,620)	(4,620)
Items that are or be or maybe reclassified for profit or loss
Gains (losses) financial assets available for sale	1,327	-	1,327
Taxes on other comprehensive income	(451)	-	(451)
Total comprehensive income for the year, before taxes	876	8,965	9,841
Total comprehensive income for the year	1,177,730	(8,965)	1,186,695

3.1.7Effects on statements of changes in equity

	12.31.2012	01.01.2012
Stated balance	12,497,498	12,069,528
Actuarial losses on the transition of accounting practices *	(205,466)	13,585
Deferred income tax and social contribution	69,858	(4,620)
Restated balance	12,361,890	12,078,493
(*) Equity in Parent Company, net of taxes

3.1.8Effects on statements of cash flow for the period ended on December 31, 2012

	Stated	Retrospective application - Joint arrangements	Restated
Cash flows from operational activities	1,395,216	24,147	1,419,363
Cash flows from investment activities	(1,780,354)	(47,388)	(1,827,742)
Cash flows from financing activities	819,150	-	819,150
TOTAL EFFECTS ON CASH AND CASH EQUIVALENTS	434,012	(23,241)	410,771
CHANGE IN CASH AND CASH EQUIVALENTS	434,012	(23,241)	410,771

3.1.9      Effects on statements of cash flow for the period ended on December 31, 2011.

	Stated	Retrospective application - Joint arrangements	Restated
Cash flows from operational activities	1,147,896	818	1,148,714
Cash flows from investment activities	(1,629,054)	(491)	(1,629,545)
Cash flows from financing activities	(264,133)	-	(264,133)
TOTAL EFFECTS ON CASH AND CASH EQUIVALENTS	(745,291)	327	(744,964)
CHANGE IN CASH AND CASH EQUIVALENTS	(745,291)	327	(744,964)

F-12

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.2  Basis for consolidation

Payment of dividends decreases the carrying value of investments.

When required, for preparation of consolidated financial statements, the investees' financial statements are adjusted to adapt their policies to the Parent Company's accounting policies.

Joint operations (consortiums) are recorded in proportion to the quotas of assets, liabilities and earnings in the company holding the share.

3.2.1Subsidiaries 

The financial statements of the subsidiaries are included in the consolidated financial statements as from the date on which such control begins up to the date control is lost.

The balances of the subsidiaries' assets and liabilities, and profit or loss, are consolidated line to line. Transactions between consolidated companies are eliminated.

Non-controlling interest is presented in equity, separately from the equity attributable to the Parent Company's shareholders. Profits, losses and other comprehensive income are also allocated separately from the ones allocated to the Parent Company's shareholders, even if this results in non-controlling interest having a deficit balance.

3.2.2Investments in joint ventures and associated companies

Joint ventures are entities over which the Company, subject to an agreement, does not individually exert power regarding financial and operational decisions, irrespective of the percentage of interest in the voting capital. Associated companies are entities over which the Company exerts significant influence, without control.

When the share in losses of an associated company or joint venture equals or exceeds the accounting balance of the Company's equity interest in the investee, the Company should discontinue the recognition of its share in future losses. Additional losses will be considered, and a liability will be recognized, only when the Company incurs legal or constructive liabilities (not formalized), or performs payments on behalf of the investee. Should the investee subsequently determine profits, the Company should resume the recognition of its interest in these profits only subsequent to the point at which the portion to which it is entitled to in these subsequent profits equals its share in unrecognized losses.

3.3  Business combinations

The acquisition is analyzed on a case-by-case basis to determine whether the transaction represents a business combination or the purchase of assets.

F-13

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Assets and liabilities acquired in a business combination are recorded by the acquisition method and are recognized at fair value on the acquisition date.

The excess of the acquisition cost over the fair value of net assets acquired (identifiable assets acquired, net and assumed liabilities) is recognized as goodwill in intangible assets. When the value generates a negative amount, the gain on favorable acquisitions is directly recognized in the income statement for the year.

In acquisitions of interests in associated companies and joint ventures, the net assets are also recognized at fair value, although these entities do not constitute a business combination. Goodwill is recorded as part of the initial investment cost.

3.4  Financial instruments

The Company maintains investment funds which operate with derivative financial instruments, with the sole purpose of protecting these funds' portfolios.

Non-derivative financial instruments are recognized on the trading date, i.e. when the obligation or right arises. They are initially recognized at fair value plus or minus any directly attributable transaction costs.

Fair values are determined based on the market quotation for financial instruments traded in active markets and for those with no quotations available on the market, fair values are determined by the present value of expected cash flows method.

After initial recognition, the non-derivative financial instruments are valued as shown below:

Financial assets

3.4.1Financial instruments recorded at fair value through profit and loss

Financial instruments are recorded at fair value through profit and loss if the Company and/or its subsidiaries manage these investments and make purchase or sale decisions based on their fair value in the context of an investment and risk management strategy set by the Company and/or its subsidiaries. After initial recognition, transaction costs and interest attributable, when incurred, are recognized through profit and loss.

3.4.2Loans and receivables

This category only comprises non-derivative assets with fixed or determinable payments which are not quoted in any active markets. They are measured using the amortized cost or effective interest rate methods.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.4.3Instruments available for sale

The initial and subsequent measurement of financial instruments classified as “available for sale” is based on their fair value. The changes in the fair value resulting from the difference between the market interest rates and the effective interest rates is recognized in other comprehensive income. Interest set at the beginning of the agreement, calculated based on the effective interest rate method, as well as any changes in expected cash flows, are recognized directly in income for the period.

At settlement of a financial instrument classified as available for sale, any gains or losses recognized in OCI are reclassified to income for the period.

3.4.4Instruments held to maturity

If the Company and/or its subsidiaries are interested in and capable of holding any financial assets until maturity, they are classified as held to maturity. Investments held to maturity are valued at amortized cost according to the effective interest rate method, minus any reductions in their recoverable value.

Financial liabilities and equity instruments

3.4.5Financial liabilities recorded at fair value through profit and loss

Financial liabilities designated as such upon initial recognition are classified as held for trading.

The net losses or gains recognized in the income statement also include interest paid on the financial liability.

3.4.6Other financial liabilities

Other financial liabilities (including loans) are valued at amortized cost according to the effective interest rate method. The effective interest rate method is used to calculate the amortized cost of financial liabilities and to allocate their interest expenses over their respective terms. The effective interest rate is the rate that deducts the estimated future cash flows (including fees paid or received that are an integral part of the effective interest rate, transaction costs, and other premiums or discounts) throughout the estimated lifespan of the liability.

3.4.7Write-offs of financial liabilities

The Company writes off financial liabilities only when its obligations are eliminated or cancelled or settled. The difference between the book value of the written-off financial liability and the corresponding disbursement made or to be made is recorded to income.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.5  Cash and cash equivalents

They comprise cash balances, bank deposits on demand and highly liquid short-term financial investments that can be redeemed within 90 days from the date of making the investment and which are readily convertible into cash. Temporary short-term investments are recorded at cost at the reporting date, plus earnings accrued. Cash and cash equivalents are subject to an insignificant risk of change in value.

3.6  Trade accounts receivable

Trade accounts receivable are considered financial assets classified as loans and receivables and are recorded based on an accrual basis.

The trade accounts receivable “debt balances paid in instalments” are discounted to present value, taking into consideration the amount to be discounted, the maturity dates, the dates of settlement and the discount rate.

The balance of trade accounts receivable is presented net of the allowance for doubtful accounts.

The allowance for doubtful accounts is recorded in amounts deemed sufficient by Copel’s senior management to cover potential losses on the realization of customer receivables and others whose recovery is considered unlikely.

The allowance for doubtful accounts is recorded considering the parameters recommended by ANEEL, based on amounts receivable from residential class customers overdue more than 90 days, from commercial class customers overdue more than 180 days and from industrial and rural customers, public authorities, public lighting and public utilities overdue more than 360 days in addition to experience with respect to the past history of actual losses. It comprises receivables billed until the reporting date.

3.7  Accounts receivable related to the concession

3.7.1Financial assets – Distribution

These refer to reimbursements set forth in the public power distribution service concession agreements, which the Company understands as an unconditional right to cash payments from the granting authority upon expiration of the concession. These reimbursements are designed to compensate the Company for the investments made in infrastructure which have not been recovered through the collection of tariffs at the end of the concession because of their useful lives being longer than the term of said concession.

Since these financial assets do not have determinable fixed cash flows – as the Company operates under the assumption that the value of the corresponding reimbursements will be based on the replacement cost of the concession assets and as they do not feature the necessary characteristics to be classified under any other category of financial assets – they are classified as “available for sale”. The cash flows related to these assets are determined taking into account the value of the tariff basis named Regulatory Compensation Basis (Base de Remuneração Regulatória or BRR, in Portuguese), defined by the granting authority. The methodology of the BRR is based on the replacement cost of the assets that make up the power distribution infrastructure related to the concession. This tariff basis (BRR) is reviewed every four years taking into account several factors. Its goal is to reflect the variation in the prices of physical assets, including write-offs, depreciation, and additions of assets to the concession infrastructure (physical assets).

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The return on these financial assets is based on the regulatory Weighted Average Cost of Capital or WACC approved by ANEEL in the periodic rate review process every four years, whose amount is included in the composition of the revenues from tariffs charged to customers and collected monthly.

3.7.2Financial assets - Transmission

These refer to receivables in connection with the power transmission concession agreements and include the following amounts: (i) revenues from the construction of transmission infrastructure for use by system users; (ii) the financial return on these revenues guaranteed by the granting authority during the term of the concession.

Revenues under power transmission concession agreements are collected by making infrastructure available to system users, are not subject to demand risk, and are thus considered guaranteed revenues, called Annual Permitted Revenues (Receita Anual Permitida or RAP, in Portuguese) to be collected over the term of the concession. Amounts are billed monthly to the users of this infrastructure, pursuant to reports issued by the National System Operator (Operador Nacional do Sistema or ONS, in Portuguese). Upon expiration of the concession, any uncollected amounts related to the construction of infrastructure shall be received directly from the granting authority, as an unconditional right to cash reimbursement pursuant to the concession agreement, as compensation for investments made and not recovered through tariffs (RAP).

These financial assets do not have an active market, present fixed and determinable cash flows, and are thus classified as “loans and receivables”. They are initially estimated based on the respective fair values and later measured according to the amortized cost calculated under the effective interest rate method.

Specifically to the Concession Agreement 060/2001, the additions subsequently to the extension, which represents expansion, improvement or enhancement of infrastructure, are recognized as a financial asset by virtue of representing the future generation of additional operating cash, according to specific rules from the granting authority.

F-17

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.8  Inventories  

Materials and supplies in inventory, classified under current assets and those assigned for investments, classified under property, plant and equipment, have been recorded at their average acquisition cost. Recorded amounts do not exceed their net realizable value.

3.9  Taxes  

Sales and services revenues are subject to value-added tax (Imposto sobre Circulação de Mercadorias e Serviços or ICMS) and service tax (Imposto sobre Serviços or ISS), at the applicable rates, and to the PIS (Social Integration Program) and COFINS (Contribution for the Financing of Social Security).

Credits resulting from the non-cumulative nature of PIS and COFINS charges are accounted for by deducting such from the operating cost in the statement of income.

Credits resulting from the non-cumulative nature of ICMS, PIS and COFINS related to acquisitions to fixed assets are presented by deducting the cost of their assets.

Advance payments of amounts eligible for offsetting are accounted for in current or noncurrent assets, according to their expected realization.

Income tax comprises corporate income tax and social contribution, which are calculated based on taxable income (adjusted income), at the applicable rates, which are: 15%, plus 10% on any amounts exceeding R$ 240 a year, for corporate income tax, and 9% for social contribution.

For the purpose of calculating taxable income the Transitional Tax Arrangement - RTT was adopted, pursuant to Law 11,941/09, i.e., the accounting credits were taken into account as established by Law 6,404/76 before the amendments introduced by Law 11,638/07.

The tax loss and negative basis of social contribution can be offset against future profits, subject to the limit of 30% of taxable income in the period, and there is no statute of limitations.

Deferred income tax and social contribution are recognized in their entirety on the differences between assets and liabilities recognized for tax purposes and the related amounts recognized in the financial statements.

Deferred income tax and social contribution assets are recognized only to the extent that it is likely that there will be a positive taxable base for which the temporary differences can be used and the tax losses can be offset.

Deferred tax assets and liabilities are offset if there is a legal right to offset current tax liabilities and assets, and they are related to income taxes levied by the same tax authority on the same entity subject to taxation.

F-18

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.10  Property, plant and equipment

These assets are depreciated according to the linear method based on annual rates set forth and reviewed periodically by ANEEL, which are used and accepted by the market as representative of the economic useful life of the assets related to concession's infrastructure, limited to the term of mentioned concession, when after the legal analysis of the right to compensation over the residual assets had not be guaranteed. The estimated useful life, the residual amounts, and depreciation rates are reviewed each reporting date, and the effect of any changes in estimates is recorded prospectively.

Costs directly attributable to construction work as well as interest and financial charges on loans from third-parties during construction are recorded under property, plant and equipment in progress.

3.11  Intangible 

3.11.1Concession agreements – distribution

These comprise the right to access and to commercial operation of infrastructure, built or acquired by the operator or provided to be used by the operator as part of the electric energy public service concession agreement (the right to charge fees to the users of the public service provided by the operator), in compliance IAS 38 – Intangible Assets – Concession agreements.

Intangible assets are determined as the remaining portion after the assessment of the financial assets (residual amount), due to their recovery being conditioned upon the rendering of the corresponding public service, i.e., the consumption of power by customers, subject thus to demand risk.

Intangible assets are recorded at their fair acquisition and construction value, minus accumulated amortization and impairment losses, when applicable.

The amortization of intangible assets reflects the pattern of economic benefits by Copel Distribuição, with amortization during the term of the concession.

3.11.2Intangible assets acquired separately

Intangible assets with definite useful lives acquired separately are recorded at cost, minus accumulated amortization and impairment losses. Amortization is recorded linearly based on the estimated useful lives of the corresponding assets. The estimated useful lives and the amortization method are reviewed at year-end, and the effect of any changes in estimates is recorded prospectively.

F-19

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.11.3Write-off of intangible assets

Intangible assets are written-off upon sale or whenever there are no future economic benefits from use or sale to be received. Any gains or losses resulting from the write-off of intangible assets, measured as the difference between the net sale revenue and the asset's book value, are recorded to income or expense at the time of write-off.

3.12  Intangible assets – concessions and authorizations

Intangible assets acquired through the purchase of businesses that own concession rights are being amortized by their respective remaining period of concession or authorization (acquired with defined useful life).

3.13  Impairment of assets

Property, plant and equipment and intangible assets are assessed annually to detect evidence of impairment or whenever significant events or changes in circumstances indicate that the book value of any such asset may not be recoverable. Whenever there is a loss resulting from situations where an asset’s book value exceeds its recoverable value, defined as the greater between the asset’s value in use and its net sale value, this loss is recorded in the statement of income.

3.14  Dividends and interest on capital

In accordance with the legal and statutory requirements that are effective today, the basis for calculating the minimum mandatory dividends is obtained by taking the net income of the year, less the portion that will fund the legal reserve. However, Management has deliberated to include to this basis the amount related to the realization of the equity valuation adjustments, with the objective to compensate the effects coming from the increase of the depreciation expense arriving from the adoption of the new accounting rules established, as well from IAS 16 – Fixed assets. This procedure reflects the police to distribute dividends to Company´s shareholders, which will be effective during the realization of the entire equity valuation adjustments account.

The distribution of dividends and interest on equity are recorded as a liability in the financial statements of the Company and its subsidiaries at the end of the fiscal year, based on its by-laws.

However, any amounts above the minimum mandatory dividends are only recorded under liabilities on the date they are approved and announced at the General Shareholders’ Meeting (GSM). This amount is held in a specific reserve in shareholders' equity until the final resolution by the GMS, when it is recognized as current liabilities.

The tax benefit of interest on capital is recorded in the statement of income in the moment of its recognition in accounts payable.

F-20

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.15  Post-employment benefits

The Company sponsors benefit plans to its employees, described in detail in Note 23. The amounts of these actuarial obligations (contributions, costs, liabilities, and/or assets) are calculated annually by an independent actuary on the same base date as the end of the fiscal period and are recorded pursuant to the rules set forth in IAS 19.

The adoption of the projected credit unit method adds each year of service as the source of an additional benefit unit, adding up to the calculation of the final liability.

The assets of the benefits plan are measured at fair value (mark-to-market).

Other actuarial assumptions are used which take into account biometric and economic tables in addition to historical data from the benefits plans, obtained from the manager of these plans, Fundação Copel.

Actuarial gains or losses caused by changes in assumptions and/or actuarial adjustments are recognized immediately as other comprehensive income.

3.16  Research and Development Program - R&D - and Energy Efficiency Program – EEP

Concessionaires and permission holder of public services of distribution, generation and transmission of electric energy are required to allocate 1% of their net operating revenues as defined by ANEEL pursuant to Law no. 9,991/00 and ANEEL Resolutions no. 504/12 and 556/13.

3.17  Accounts payable related to concession – use of public property

This item corresponds to the amounts set forth in the concession agreement in connection with the right to explore hydraulic energy potential (onerous concession). These agreements are signed as Use of Public Property (Uso de Bem Público or UBP) agreements. A liability is recorded on the date of signature of the concession agreement, regardless of the schedule of disbursements set forth therein. The initial accrual of the liability (obligation) and the corresponding intangible asset (concession rights) corresponds to the future disbursements at present value (present value of the cash flow from future disbursements).

The financial liability is updated using the method of effective interest rate and reduced by contracted payments.

3.18  Provision for environmental costs and obligations

Environmental liabilities are recognized under liabilities when their occurrence is likely and may be reasonably estimated.

F-21

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

They are recognized as the Company assumes formal obligations before regulatory agencies or becomes aware of potential risks related to socio-environmental issues, which may lead to cash disbursements that are deemed probable and that may be estimated. During the project implementation phase, the provision is recorded against property, plant, and equipment or intangible assets in progress. Once the project enters commercial operation, all costs or expenses incurred with socio-environmental programs related to the project’s operation and maintenance licenses are recorded directly to expense for the corresponding period.

3.19  Provisions 

Provisions are recorded for current liabilities (legal or assumed) resulting from past events, whose amounts may be estimated reliably and whose settlement is likely.

The estimates of outcomes and financial effects are determined in accordance with the judgment of Management, supplemented by experience in similar transactions and, in some cases, reports from independent experts.

When some or all economic benefits required for the settlement of a provision are expected to be recovered from a third party, a corresponding asset (limited to the loss incurred) is recorded if, and only if, this reimbursement is virtually guaranteed and its amount may be reliably determined.

3.20  Capital  

Capital consists of common shares and preferred shares. Each common share entitles its holder to one vote in the general shareholders’ meetings. Preferred shares, which do not carry voting rights, are divided into classes A and B.

Class “A” preferred shares have priority in the reimbursement of capital and in the distribution of mandatory dividends of 10% p.y. (non cumulative), calculated proportionately to the capital represented by the shares of this class.

Class “B” preferred shares have priority in the reimbursement of capital and the right to the distribution of dividends, calculated as 25% of adjusted net income, pursuant to the corporate legislation and to the Company’s by-laws, calculated proportionately to the capital represented by the shares of this class. Class “B” shareholders have priority only over the common shareholders in the distribution of mandatory dividends, which shall only be paid out of the remaining net income after the payment of priority dividends to class “A” shareholders.

According to Article 17 and following paragraphs of Federal Law 6,404/76, dividends paid to preferred shares must be at least 10% higher than those paid to common shares.

F-22

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.21  Equity Valuation Adjustments

The Company and its subsidiaries –recognized the deemed cost of Copel Generation and Transmission assets at the date of the initial adoption of IFRS. A counterpart entry to this adjustment, net of deferred income tax and social contribution, was recorded in the equity valuation adjustments account, under equity. Its realization is periodically reclassified from the retained earnings account, as depreciation and write-off of the property, plant, and equipment fair value adjustment are recorded to income.

This account also includes adjustments resulting from changes in fair value of financial assets classified as available for sale and actuarial gains and losses.

3.22  Legal reserve and profit retention reserve

To the legal reserve 5% of the net income for the year is allocated, before any other allocation, limited to 20% of capital.

The profit retention reserve aims to cover the Company's investment program, pursuant to article 196 of Law 6,404/1976. It is created by retaining the remaining net income for the year, after the legal reserve, interest on shareholders' equity and dividends.

3.23  Earnings per share

Earnings per share are calculated based on the weighted average number of shares outstanding during the reporting period. For all presented periods, the Company has not had any potential instruments equivalent to common shares which could have a diluting effect. Thus the basic earnings per share are equivalent to the diluted earnings per share.

Since holders of preferred and common shares are entitled to different dividends, voting rights, and settlements, basic and diluted earnings per share have been calculated according to the “two-class method". The two-class method is a formula for allocation of earnings which determines earnings per preferred share and per common share according to the declared dividends, pursuant to the Company's by-laws and to the rights to participation in non-distributed earnings calculated in accordance with the right to dividends of each share type.

3.24  Statement of income

Revenues, costs, and expenses are recorded under the accrual method, i.e., when products are delivered and services actually rendered, regardless of receipt or payment.

3.25  Revenue recognition

Operating revenues are recognized when: (i) the amount of the revenue is reliably measurable; (ii) the costs incurred or to be incurred in the transaction are reliably measurable; (iii) it is likely that the economic benefits will be received by the Company; and (iv) the risks and benefits have been fully transferred to the respective buyer.

F-23

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Revenues are valued at the fair value of the payment received or to be received, with the deduction of discounts and/or bonuses granted and charges on sales.

3.25.1Unbilled revenues

Unbilled revenues correspond to revenues from sales of power to final customers which have been delivered but not yet billed and to revenues from the use of the distribution grid not yet billed, both of which are calculated based on estimates covering the period from the last meter reading day to the last day of the month.

3.25.2Income from dividends and interest

Income from dividends/ financial instruments are recognized when the shareholder's right to receive said dividends is established.

Interest income from financial assets is recognized when it is likely that the future economic benefits shall be received by the Company and the amount of these income may be determined reliably. Interest income is recognized using the effective interest method based on the effective time and interest rate applicable to the outstanding principal amount; the effective interest rate is the one which discount with precision the estimated future cash earnings over their estimated lives or terms with regard to the initial net book value of such financial assets.

3.26  Construction revenues and construction costs

IFRIC 12 establish that electric energy utilities should record and measure revenues according to IAS 11 – Construction Contracts and IAS 18 and IFRIC 13 – Revenues and SIC 31, even when governed by a single concession agreement. The Company records construction revenues in connection with the construction services for infrastructure employed in the power transmission and distribution services, according to the stage of completion.

The respective costs are recognized when incurred in the statement of income for the corresponding period, as construction costs.

Given that the Copel Distribuição outsources the construction of power distribution infrastructure to non-related parties and that a large part of the work is carried out over short periods, the construction margin to the Company’s power distribution business is not significant, and may reach amounts close to zero.

The construction margin adopted for the transmission business in 2013 and 2012 is 1.65% and results from a calculation methodology which takes into account the respective business risk.

In the construction of gas distribution infrastructure, similar to Copel Distribuição, revenue is recognized by an amount equal to their cost, given that the construction of the infrastructure is outsorced to non-related parties over short periods of time, thus having a construction margin not significant, reaching amounts close to zero.

F-24

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

3.27  Power purchase and sales transactions in the Spot Market (Electric Energy Trading Chamber - CCEE)

Power purchase and sales transactions in CCEE are recorded on the accrual basis according to the information disclosed by the Trading Chamber or to estimates prepared by Copel’s senior management, when this information is not available on time.

3.28  Operating segments

Operating segments are defined as business activities which may yield revenues and require expenses, whose operational results are regularly reviewed by the entity’s chief decision maker to underpin the decision-making regarding resources to be allocated to the segment and to evaluate its performance, and for which there is available individualized financial information.

3.29  Leases 

Leases are classified as financial whenever the terms of the lease substantially transfer all risks and benefits of property ownership to the lessor. All other leases are classified as operating leases.

3.29.1The Company as a lessor

Lease revenues from operating leases are recognized according to the linear method during the term of each lease.

The lease contracts do not have a purchase option after the end of the lease.

3.29.2The Company as a lessee

Payments under operating leases are recognized as expenses according to the linear method based on the term of the lease, except when other methods are more representative of the time when the economic benefits of the leased asset are consumed.

3.30  New and revised standards and interpretations which have not been adopted yet

New standards, amendments to standards and interpretations will be effective for annual periods beginning after January 01, 2014, and have not been applied in preparing these financial statements. IFRS 9 - Financial Instruments could be material to the Company. The Company is not planning to implement this standard in advance.

F-25

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

4Cash and Cash Equivalents

		Restated
	12.31.2013	12.31.2012
Cash and bank accounts	130,311	94,484
Financial investments with immediate liquidity	1,611,321	1,364,733
	1,741,632	1,459,217

The investments comprise Bank Certificates of Deposit (CDBs) issued by official banks and also financial investments in Government Bonds with repurchase agreements with the issuer banks, in which the Bank has the obligation to repurchase these bonds from Copel on request. These investments have yielded on average 101.43% of the variation of the Interbank Deposit Rate as of December 31, 2013 and 100.75% as of December 31, 2012.

F-26

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

5Bonds and Securities

	Level
Category	Note 34.2	Index	12.31.2013	12.31.2012
Securities available for sale
CDB	2	CDI	36,983	39,845
Committed Operation	2	Fixed rate	26,995	175,792
Quotas in Funds	1	CDI	90	86
NTN - F	1	CDI	1,990	-
LFT	1	Selic	130,369	162,517
LTN	1	Fixed rate	63,663	167,917
LFBB	2	CDI	-	13,661
LF Caixa	2	CDI	-	9,004
			260,090	568,822
Securities held for trading
Quotas in FI	1	CDI	93,529	24,742
Committed Operation	2	Fixed rate	24,164	16,373
CDB	2	CDI	-	3,147
LF	2	CDI	13,375	12,591
LFT	1	Selic	5,011	9,526
LTN	1	Selic	60,800	48,216
DPGE	2	CDI	38,433	61,475
Shares	1	Ibovespa	-	93
Debentures	2	CDI	3,215	3,668
Promissory Notes	2	CDI	-	3,127
Fixed Income Term 3	1	Fixed rate	-	56
			238,527	183,014
Securities held to maturity
LF Caixa - maturing in 11.07.2013		CDI	-	5,540
LF Caixa - maturing in 11.08.2013		CDI	-	6,640
LF Caixa - maturing in 11.12.2015		CDI	11,141	-
			11,141	12,180
			509,758	764,016
		Current	389,222	635,501
		Noncurrent	120,536	128,515

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Copel and its subsidiaries hold bonds and securities with variable interest rates. The maturity of these securities varies between 1 and 60 months, as from the reporting date. None of these assets was overdue or presented recovery problems or impairment losses at the end of the period.

The main amounts invested include exclusive funds and guarantees deposits/investments.

	12.31.2013	12.31.2012
Exclusive funds
Exclusive funds of Copel Geração e Trasmissão at Banco do Brasil	99,843	174,047
Exclusive funds of Copel Distribuição at Banco do Brasil	3	101,056
Exclusive funds of Copel Geração e Transmissão at Caixa Econômica Federal	-	91,807
Exclusive funds of Copel Distribuição at Caixa Econômica Federal	-	50,517
Exclusive funds of UEG Araucária at Banco do Brasil	113,546	78,021
Exclusive funds of UEG Araucária at BNY Mellon Serviços Financeiros DTVM S.A.	124,946	104,961
	338,338	600,409
Guarantee
Guarantee for the ANEEL auction	374	21,427
Guarantee for the Contracts for the Sale of Energy in the Regulated Environment – CCEARS	118,647	72,998
Collaterals for financing facilities to build hydroelectric power plants
HPPs and transmission lines - TLs	16,452	32,144
Guarantee for the compliance with article 17 of law 11,428/2006 and possible authorization by Environmental Institute
of Paraná (Instituto Ambiental do Paraná or IAP), by the Consórcio Energético Cruzeiro do Sul	33,849	31,290
	169,322	157,859

6Collaterals and Escrow Accounts

		Restated
	12.31.2013	12.31.2012
Collaterals and escrow accounts - STN (6.1)	45,371	43,246
Collaterals and escrow accounts - CCEAR	1,068	34,289
Other	908	2,519
	47,347	80,054
Current	1,976	36,808
Noncurrent	45,371	43,246

6.1  Collateral - National Treasury Department - STN

Surety bonds and restricted deposits are offered to secure the repayment of the principal consisting of discount bonds and par bounds when these payments are required on April 11, 2024 (Note 21.1). The amounts are adjusted by applying the weighted average of the percentage variations of the prices of zero-coupon bonds issued by the U.S. Treasury, according to the participation of each series of the instrument in the composition of the collateral portfolio made up to secure the payment of the principal under the Brazilian Financing Plan – 1992.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

7Trade Accounts Receivable

	Balances	Overdue	Overdue for	Total	Total
	falling due	up to 90 days	more than 90 days	12.31.2013	12.31.2012
Customers
Residential	146,604	83,268	32,308	262,180	295,603
Industrial	131,224	21,465	17,631	170,320	166,182
Commercial	108,423	29,038	14,847	152,308	176,668
Rural	20,767	7,526	6,761	35,054	40,499
Public Entities	20,337	22,343	26,282	68,962	49,464
Public lighting	16,240	49	90	16,379	17,778
Public service	15,258	14,041	229	29,528	34,488
Unbilled	274,059	-	-	274,059	330,326
Energy installments plan	64,958	5,495	29,202	99,655	94,425
Low income subsidy - Eletrobras	25,415	-	-	25,415	4,694
State Government "Luz Fraterna" program	65,544	1,801	11,642	78,987	60,259
Other receivables	5,932	24,593	27,854	58,379	41,742
	894,761	209,619	166,846	1,271,226	1,312,128
Concessionaires and Permission holder
Energy supplies
CCEAR - auction	96,756	4,007	5,297	106,060	177,983
Bilateral contracts	79,006	-	25	79,031	30,317
CCEE	45,628	-	14	45,642	2,173
Reimbursement to generators	-	-	1,256	1,256	1,288
	221,390	4,007	6,592	231,989	211,761
Charges from using transmission grid
Transmission grid	13,353	1,396	2,361	17,110	23,505
Basic network and conection grid	10,268	405	3,995	14,668	28,017
	23,621	1,801	6,356	31,778	51,522
.
Telecommunications	15,235	14,988	10,056	40,279	17,928
.
Gas distribution	30,735	1,634	127	32,496	34,767
.
Allowance for doubtful accounts (7.1)	-	-	(137,454)	(137,454)	(112,762)
	1,185,742	232,049	52,523	1,470,314	1,515,344
Current	1,053,056	232,049	52,523	1,337,628	1,489,173
Noncurrent	132,686	-	-	132,686	26,171

F-29

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

7.1  Allowance for doubtful accounts

	Balance as of	Additions /	Reversal	Balance as of	Additions /	Reversal	Balance as of	Additions /	Reversal	Balance as of
	January 1, 2011	(reversals)	of write offs	December 31, 2011	(reversals)	of write offs	December 31, 2012	(reversals)	of write offs	December 31, 2013
Customers, concessionaries
and permission holder
Residential	7,654	30,409	(9,110)	28,953	27,123	(16,847)	39,229	19,197	(12,249)	46,177
Industrial	40,761	(4,206)	(11,392)	25,163	8,568	(2,739)	30,992	9,739	(5,700)	35,031
Commercial	10,880	10,829	(2,243)	19,466	8,026	(3,480)	24,012	5,285	(2,532)	26,765
Rural	69	2,189	(453)	1,805	4,582	(861)	5,526	1,621	(740)	6,407
Public Entities	1,453	906	-	2,359	6,957	-	9,316	3,727	-	13,043
Public lighting	155	(76)	-	79	50	-	129	(48)	-	81
Public service	2	39	-	41	72	-	113	70	-	183
Concessionaries and permission holder	224	37,146	-	37,370	(37,146)	-	224	6,414	(125)	6,513
Telecommunications	921	(52)	(186)	683	3,550	(1,012)	3,221	866	(833)	3,254
	62,119	77,184	(23,384)	115,919	21,782	(24,939)	112,762	46,871	(22,179)	137,454

F-30

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

8CRC Transferred to the State Government of Paraná

By means of a fourth amendment dated January 21, 2005, the Company renegotiated with the Government of Paraná the outstanding CRC (Account for Compensation of Income and Losses) balance as of December 31, 2004, in the amount of R$ 1,197,404, to be paid in 244 installments under the Price amortization system, restated according to the IGP-DI inflation index plus interest of 6.65% p.y., with the first installment due on January 30, 2005 and the others due in subsequent and consecutive months.

The State Government has been in compliance with the payments of the renegotiated installments according to the terms of the fourth amendment to the CRC agreement. Amortizations are secured by resources from dividends.

8.1  Maturity of noncurrent installments

	12.31.2013
2015	91,131
2016	97,192
2017	103,655
2018	110,549
2019	117,901
After 2020	774,678
	1,295,106

8.2  Changes in CRC

	Current	Noncurrent
	Assets	Assets	Total
Balance as of January 1, 2012	65,862	1,280,598	1,346,460
Interest	85,001	-	85,001
Monetary variations	2,621	101,066	103,687
Transfers	73,310	(73,310)	-
Amortizations	(150,864)	-	(150,864)
Balance as of December 31, 2012	75,930	1,308,354	1,384,284
Interest	87,149	-	87,149
Monetary variations	2,522	69,677	72,199
Transfers	82,925	(82,925)	-
Amortizations	(163,078)	-	(163,078)
Balance as of December 31, 2013	85,448	1,295,106	1,380,554

F-31

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

9Accounts receivable related to the concession

9.1  Changes in accounts receivable related to the concession

			Noncurrent assets
	Current		Special
	assets	Assets	liabilities (a)	Total
Balance as of January 01, 2012 - Restated	80,626	4,828,568	(1,592,125)	3,317,069
Capitalization of intangible assets in progress	-	405,521	(57,916)	347,605
Transfers from noncurrent to current	269,163	(269,163)	-	-
Transfers to charges for use of main distributions and transmission grid - customers	(225,275)	-	-	(225,275)
Transfers to accounts receivable related to the concession extension	(119,195)	(934,945)	-	(1,054,140)
Transfer to property, plant and equipment	-	(713)	-	(713)
Transfers of intangible in service - remeasurement
according to Resolution 474/2012 (Note 18)	-	136,658	(53,245)	83,413
Monetary variations	-	276,041	(110,467)	165,574
Remuneration	-	396,168	-	396,168
Construction income	-	59,977	-	59,977
Fair value adjustment	-	(303,084)	(98,020)	(401,104)
Write off	-	(24,313)	-	(24,313)
Adjustment to financial assets classified as available for sale
as available for sale	-	(13,116)	-	(13,116)
Balance as of December 31, 2012 - Restated	5,319	4,557,599	(1,911,773)	2,651,145
Capitalization of intangible assets in progress	-	712,947	(82,878)	630,069
Transfers from noncurrent to current	21,532	(21,532)	-	-
Transfers to charges for use of main distributions and transmission grid - customers	(22,455)	-	-	(22,455)
Transfer to property, plant and equipment	-	(1,562)	-	(1,562)
Transfer to property, plant and equipment - Resolution 367/2009	-	1,082	-	1,082
Transfer to property, plant and equipment is service	-	(2,589)	-	(2,589)
Monetary variations	-	210,310	(102,051)	108,259
Remuneration	-	33,974	-	33,974
Construction income	-	136,536	-	136,536
Write off	-	(28,233)	3,235	(24,998)
Write off - Resolution 367/2009	-	(20,797)	-	(20,797)
Balance as of December 31, 2013	4,396	5,577,735	(2,093,467)	3,488,664
(a)     Note 18.3

9.2  Accounts receivable related to the concession  – Distribution

Based on the characteristics set forth under the power distribution concession agreement, Company management believes the conditions are met for the application of Technical Interpretation IFRIC 12 and SIC 29 – Concession Contracts, which provide guidelines for the accounting of public service concessions by private operators, so that the power distribution business is properly reflected, comprising: (a) Estimated portion of investments made and not amortized or depreciated by the end of the concession for being an unconditional right to reimbursement in cash or other financial assets directly by the granting authority; and (b) Remaining portion after the assessment of the financial asset (residual amount), classified as an intangible asset due to its recovery being conditional upon the rendering of the corresponding public service, i.e., the consumption of power by customers (Note 3.7 and Note 18).

F-32

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

9.3  Electricity rate adjustment at Copel Distribuição

On June 20, 2013 ANEEL (National Electric Energy Agency), issued Resolution 1,541, deciding on the Annual Electricity Rate Adjustment for Copel Distribuição. The authorized average electricity rate adjustment was 14.61%, of which 11.40% consists of an economic annual electricity rate adjustment, 1.68% relates to the financial components of the current electricity rate adjustment year and 1.53% consists of the withdrawal of financial components from the previous electricity rate adjustment year. However, the Company asked ANEEL for a suspension of the authorized electricity rate adjustment, expecting for a deferral of the application of the authorized electricity rate adjustment index.

At the request of the Company, on July 9, 2013 ANEEL approved the deferral of the average adjustment rate of 14.61%, authorizing the application of the average adjustment rate of 9.55% retroactively to June 24, 2013 and, as an exception, the deferral of R$ 255,900, equivalent to the difference between the applied and the authorized adjustment, to be considered as a financial component which will be adjusted according to the IGP-M (General Market Price Index) and included in the calculation of the subsequent electricity rate adjustment. 

9.4  Commitments regarding transmission

Refers to commitments with suppliers of equipment and services related to the following projects:

Transmission Lines and Substations	Value
Contract 010/10 - Transmission Line Araraquara 2 - Taubaté	241,154
Contract 015/10 - Substation Cerquilho III	43,182
Contract 022/12 - TL 230 kV - Foz do Chopim - Salto Osorio C2 and Londrina Figueira	39,517
Contract 002/13 - TL 230 kV Assis - Paraguaçu Paulista	50,624

10Accounts receivable related to the concession extension

Represent receivables stipulated in Provisional Measure no. 579/12, converted into Law no. 12,783/13 due to the Company's option to extend the transmission concession arrangement number 060/2001.

Technical Note 396/12 - SRE/ANEEL states that for assets coming into operation after May 2000, the compensation is being received in 30 monthly installments calculated by the Constant Amortization System (SAC) restated by the Broad Consumer Prices Index - IPCA and remunerated by the Weighted Average Cost of Capital - WACC of 5.59% per annum (real). The Company has been receiving the installment payments according to schedule.

F-33

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Article 1 of ANEEL Normative Resolution no. 589 issued on December 13, 2013 defines the methodology for the purpose of indemnification for assets not depreciated as of May 31, 2000, including the need to contract a third party expert to issue an appraisal report. This resolution was simply limited to recognition of the concession operators' right to indemnification, by defining the meaning of valuation. Management determined the valuation of the assets subject to indemnification, applying the proposed methodology, and concluded that the expected indemnification supports the amount registered at December 31, 2013.

10.1  Changes in the accounts receivable related to the concession extension

	Current Assets	Noncurrent Assets	Total
Balance as of January 1, 2012	-	-	-
Transfers from receivable related to concession - RBNI	-	893,923	893,923
Transfers from receivable related to concession - RBSE	-	160,217	160,217
Transfers from noncurrent to current	352,161	(352,161)	-
Monetary variations	3,924	15,826	19,750
Balance as of December 31, 2012 - Restated	356,085	717,805	1,073,890
Transfers from noncurrent to current	352,160	(352,160)	-
Amortization	(440,656)	-	(440,656)
Monetary variations	43,591	-	43,591
Charges	40,981	-	40,981
Balance as of December 31, 2013	352,161	365,645	717,806

11Other Receivables

		Restated
	12.31.2013	12.31.2012
Advance payments to suppliers (11.1)	122,311	41,442
Services in progress (11.2)	94,000	88,513
Transfer CDE (11.3)	51,067	-
Advance for severance estate	40,403	8,740
Advance payments to employees	27,831	29,788
Partnership in consortiums	25,540	25,540
Decommissioning in progress	10,980	10,514
Rental plant TPP Araucária	6,499	11,894
Other receivables	46,694	41,248
	425,325	257,679
Current assets	395,890	234,951
Noncurrent assets	29,435	22,728

11.1  Advance payments to suppliers

Refers to advances to suppliers provided on contractual clauses.

F-34

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

11.2  Service in progress

This item refers to services currently in progress within the Company, most of which are related to the Research and Development and Energy Efficiency programs, which upon conclusion are offset against the respective liability recorded for this purpose, in compliance with the applicable regulations.

11.3  Transfer CDE

It consists of funds from the Energy Development Account - CDE to be transferred to Eletrobras to cover the discounts granted on electricity rates applicable to users of public distribution services in the amount of R$ 21,042, according to Resolution 1,586 passed on August 13, 2013 and R$ 30,025 to offset costs resulting from exposure in the short-term market and the hydrological risk, ruled by Decree number 7,945 of March 7, 2013.

12Inventories 

Operation/Maintenance	12.31.2013	12.31.2012
Copel Distribuição	96,866	84,995
Copel Geração e Transmissão	31,298	28,299
Copel Telecomunicações	10,046	10,645
Compagas	1,068	870
	139,278	124,809

F-35

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

13Income Tax, Social Contribution and Other Taxes

13.1  Income Tax (IR) and Social Contribution (CSLL)

.
		Restated
	12.31.2013	12.31.2012
Current assets
IR and CSLL paid in advance	375,722	468,791
IR and CSLL to be offset against liability	(242,564)	(272,227)
IR and CSLL to be offset against IRRF on JSCP	-	(5,020)
	133,158	191,544
Noncurrent assets
IR and CSLL paid in advance (a)	197,659	19,995
	197,659	19,995
Current liabilities
IR and CSLL due	540,184	442,416
IR and CSLL to be offset against asset	(242,564)	(272,227)
	297,620	170,189

F-36

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

(a) This amount is related to withholding income tax asset on loans between related parties that were liquidated, which are classified as noncurrent assets considering it long-term nature.

13.2  Deferred Income Tax and Social Contribution

13.2.1Changes in Deferred Income Tax and Social Contribution

.
			Recognized			Recognized
	Balance as of		in other	Balance as of		in other
	January 1, 2012	Recognized	comprehensive	December 31, 2012	Recognized	comprehensive		Balance as of
	Restated	in income	income	Restated	in income	income	Others	December 31, 2013
Noncurrent assets
Tax losses and negative tax basis	2,486	-	-	2,486	7,227	-	-	9,713
Private pension and health plans	154,108	24,204	-	178,312	17,172	-	-	195,484
Effects from applying IFRIC 12	16,142	71,157	-	87,299	(17,717)	-	-	69,582
Effects from applying IAS 19	-	-	58,944	58,944	-	73,579	-	132,523
Effects from applying IAS 39	-	-	-	-	-	579	-	579
Other temporary additions
Provisions for legal claims	287,220	50,808	-	338,028	37,308	-	-	375,336
Voluntary termination Program/retirement	12,355	41,631	-	53,986	(52,670)	-	-	1,316
Provision of Research and Development	28,791	17,999	-	46,790	19,976	-	-	66,766
Allowance for doubtful debts	42,216	(764)	-	41,452	8,230	-	-	49,682
Amortization - concession	36,173	256	-	36,429	257	-	-	36,686
Provision for investment losses	355	-	-	355	-	-	-	355
Provision for tax losses	15,913	(1,066)	-	14,847	93	-	-	14,940
Provision for impact of grid charges	6,922	-	-	6,922	-	-	-	6,922
Provision for financing	4,795	-	-	4,795	(710)	-	-	4,085
Provision for energy purchases	99,568	(2,535)	-	97,033	8,074	-	-	105,107
Provision for profit sharing	15,980	(6,309)	-	9,671	16,882	-	-	26,553
Interest on own capital	16,666	5,043	-	21,709	(21,709)	-	-	-
Social security contributions - injunction on judicial deposit	-	-	-	-	6,773	-	16,483	23,256
Others	5,490	1,354	-	6,844	(791)	-	-	6,053
	745,180	201,778	58,944	1,005,902	28,395	74,158	16,483	1,124,938
(-) Noncurrent liabilities
Effects from applying IAS 16	741,195	(52,035)	-	689,160	(52,619)	-	-	636,541
Effects from applying IFRIC 12	138,712	(134,138)	(4,459)	115	-	-	-	115
Effects from applying IAS 19	4,620	-	(4,430)	190	-	(190)	-	-
Effects from applying IAS 39	11,977	2,158	907	15,042	(5,885)	(1,881)	-	7,276
Other temporary exclusions				-
Capitalization of financial charges	5,357	-	-	5,357	-	-	-	5,357
Deferment of capital gains	-	175,450	-	175,450	(67,916)	-	-	107,534
Provisions for negative goodwill	25,297	-	-	25,297	-	-	-	25,297
Gas supply	5,372	(1,791)	-	3,581	(1,791)	-	-	1,790
Others	-	(115)	1,076	961	7,155	-	-	8,116
	932,530	(10,471)	(6,906)	915,153	(121,056)	(2,071)	-	792,026
Net	(187,350)	212,249	65,850	90,749	149,451	76,229	16,483	332,912
Assets presented in the Statement of Financial Position	462,177			681,285				753,413
(-) Liabilities presented in the Statement of Financial Position	(649,527)			(590,536)				(420,501)
Net	(187,350)			90,749				332,912

13.2.2Realization of deferred tax credits

Tax credits related to the pension and healthcare plans are realized according the movement of the related accrual based on the actuarial valuation conducted annually by an independent actuary.
Deferred taxes on all other provisions will be realized as judicial rulings are issued and regulatory assets are realized.

The Company’s Board of Directors and Fiscal Council have approved and examined, respectively, the technical study prepared by the Chief Finance and Investor Relations, which points out to the realization of deferred taxes.

F-37

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

13.3  Other recoverable taxes and other taxes due

		Restated
	12.31.2013	12.31.2012
Current assets
Recoverable ICMS (VAT)	43,092	38,311
Recoverable PIS/Pasep and Cofins taxes	61,093	54,190
PIS/Pasep and Cofins to be offset against liabilities	(35,596)	(43,378)
Other recoverable taxes	1,424	367
	70,013	49,490
Noncurrent assets
Recoverable ICMS (VAT)	72,347	71,785
PIS/Pasep and Cofins taxes	51,653	48,393
Other recoverable taxes	498	11
	124,498	120,189
Current liabilities
ICMS (VAT) payable	184,369	209,570
PIS/Pasep and Cofins payable	79,291	82,066
PIS/Pasep and Cofins to be offset against assets	(35,596)	(43,378)
IRRF on JSCP	39,440	39,303
IRRF on JSCP to be offset against IR and CSLL asset	-	(5,020)
Other taxes	33,227	5,939
	300,731	288,480
Noncurrent liabilities
Social security contributions - injunction on judicial deposit	68,402	-
	68,402	-

13.4  Reconciliation of the provision for Income Tax (IRPJ) and Social Contribution (CSLL)

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Income before IRPJ and CSLL	1,506,504	972,528	1,583,916
IRPJ and CSLL (34%)	(512,211)	(330,660)	(538,531)
Tax effects on:
Equity in income	32,423	52	11,054
Interest on own capital	61,200	75,802	121,023
Dividends	309	241	1,158
Finam	1,972	-	(270)
Non deductible expenses	(3,130)	(3,331)	(11,892)
Tax benefits Law 11,941/09	-	-	7,087
Tax incentives	10,364	11,688	9,908
Others	4,004	200	(6,599)
Current IRPJ and CSLL	(554,520)	(458,257)	(611,601)
Deferred IRPJ and CSLL	149,451	212,249	204,539
Effective rate - %	26.9%	25.3%	25.7%

F-38

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

14Judicial Deposits

		Restated
	12.31.2013	12.31.2012
Taxes claims	417,570	347,484
Labor claims	118,240	90,479
.
Civil
Suppliers	95,558	95,558
Civil	28,849	26,796
Easements	8,106	7,157
Customers	2,397	2,419
	134,910	131,930
.
Others	4,505	4,478
	675,225	574,371

15Receivable from related parties

		Restated
	12.31.2013	12.31.2012
Associate and Jointly-controlled companies
Dividends and/or interests on own capital
Dona Francisca Energética	85	78
Dominó Holdings	6,311	17,986
Costa Oeste	478	-
Marumbi	403	-
Transmissora Sul Brasileira	360	-
Caiuá	88	-
Integração Maranhense	227	-
Matrinchã	840	-
Guaraciaba	182	-
.	8,974	18,064
Other investments
Dividends and/or interests on own capital
Other investments	526	-
	526	-
	9,500	18,064
Current assets - Dividends receivable	9,500	18,064
Noncurrent assets	-	-

F-39

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

16Investments 

16.1  Business Combinations

On August 1, 2013, the Company acquired from Salus Fundos de Investimento em Participações 100% of the following business enterprises: Nova Asa Branca I Energias Renováveis S.A., Nova Asa Branca II Energias Renováveis S.A., Nova Asa Branca III Energias Renováveis S.A., Nova Eurus IV Energias Renováveis S.A., Santa Maria Energias Renováveis S.A., Santa Helena Energias Renováveis S.A. and Ventos de Santo Uriel S.A.

The acquisition of these wind farming companies fulfills Copel's strategic purpose of increasing its participation in the energy generation industry by adding renewable sources to its energy mix.

The investment totals R$ 342,077 and is supported by the estimated discounted cash flows from the operating activities of the enterprises acquired by Copel.

The acquisition date of net assets fair values were identified and recognized as an investment in the individual parent company's and allocated to the different assets in the consolidated financial statements, including the authorization right. The authorization right acquired will be amortized during the period of authorizations as from the start of commercial operations.

Subsidiaries	Authorization	Net assets	Authorization
08.01.2013	maturity	acquired	rights	Total paid
Nova Asa Branca I Energias Renováveis S.A.	04.25.2046	6,056	51,659	57,715
Nova Asa Branca II Energias Renováveis S.A.	05.31.2046	6,080	51,745	57,825
Nova Asa Branca III Energias Renováveis S.A.	05.31.2046	6,058	49,948	56,006
Nova Eurus IV Energias Renováveis S.A.	04.27.2046	6,043	53,154	59,197
Santa Maria Energias Renováveis S.A.	05.08.2047	17,765	26,813	44,578
Santa Helena Energias Renováveis S.A.	04.09.2047	17,730	28,955	46,685
Ventos de Santo Uriel S.A.	04.09.2047	6,626	13,445	20,071
		66,358	275,719	342,077

To complete the acquisition, the Company should disburse an additional R$ 18,500, according to the conditions of the agreement.

The following data detail the composition of acquired assets and assumed liabilities that were recognized on the acquisition date and that correspond to their fair values on that date.

F-40

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Nova Asa Branca I	Nova Asa Branca II	Nova Asa Branca III	Nova Eurus IV	Santa Maria	Santa Helena	Ventos de Santo Uriel	Total
08.01.2013
ASSETS	6,137	6,161	6,179	6,124	17,775	17,747	6,629	66,752
Current assets	42	41	52	772	21	65	38	1,031
Cash and cash equivalents	6	6	17	736	3	46	25	839
Others current assets	36	35	35	36	18	19	13	192
Noncurrent assets	6,095	6,120	6,127	5,352	17,754	17,682	6,591	65,721
Property, Plant and Equipment, net	6,070	6,095	6,102	5,327	17,715	17,643	6,567	65,519
Others noncurrent assets	25	25	25	25	39	39	24	202
LIABILITIES	6,137	6,161	6,179	6,124	17,775	17,747	6,629	66,752
Current liabilities	23	23	63	23	10	17	3	162
Noncurrent liabilities	58	58	58	58	-	-	-	232
Equity	6,056	6,080	6,058	6,043	17,765	17,730	6,626	66,358

If the new ventures had been consolidated from January 01, 2013, the income statement would have included a loss of R$ 334.

16.2  Changes in investments

	Balance as of		Equity	Investment/	Proposed	Reversal of
	January 1, 2013		valuation	advance for	dividends	provision	Balance as of
	Restated	Equity	adjustments	future capital increase	and JCP	for loss	December 31, 2013
Joint ventures (16.4)
Dominó Holdings	358,114	96,635	18,881	-	(16,927)	-	456,703
Cutia	5,247	(465)	-	843	-	-	5,625
Costa Oeste	1,049	2,409	-	15,720	(478)	-	18,700
Marumbi	2,212	1,969	-	18,018	(402)		21,797
Transmissora Sul Brasileira	9,577	1,516	-	53,065	(361)		63,797
Caiuá	7,747	565	-	32,094	(88)		40,318
Integração Maranhense	9,630	1,016	-	74,959	(227)	-	85,378
Matrinchã	10,130	3,453	-	85,256	(840)		97,999
Guaraciaba	6,963	908	-	31,139	(182)	-	38,828
Paranaíba	-	210	-	17,640	-		17,850
	410,669	108,216	18,881	328,734	(19,505)	-	846,995
Associates (16.5)
Sercomtel	10,567	(13,567)	-	3,000	-	-	-
Dona Francisca	59,753	8,963	-	-	(10,540)	-	58,176
Foz do Chopim	15,872	10,316	-	-	(10,400)	-	15,788
Carbocampel	1,413	(6)	-	-	-	-	1,407
Dois Saltos	300	-	-	420	-	-	720
Copel Amec	180	2	-	-	-	-	182
Escoelectric	-	(318)	-	318	-	-	-
	88,085	5,390	-	3,738	(20,940)	-	76,273
Other investments
Finam	1,323	-	-	-	-	-	1,323
Finor	312	-	(100)	-	-	-	212
Investco S.A.	9,282	-	(72)	-	-	-	9,210
Nova Holanda Agropecuária S.A.	14,868	-	-	-	-	-	14,868
(-) provision for loss - Nova Holanda	(14,868)	-	-	-	-	7,887	(6,981)
Assets for future use	4,290	-	-	-	-	-	4,290
Advance with the purpose of future investment (16.6)	46,631	-	-	186,838	-	-	233,469
Other investments	8,397	-	(134)	5	-	-	8,268
	70,235	-	(306)	186,843	-	7,887	264,659
	568,989	113,606	18,575	519,315	(40,445)	7,887	1,187,927

F-41

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Balance as of		Equity		Proposed		Balance as of
	January 1, 2012		valuation	Investiment /	dividends		December 31, 2012
	Restated	Equity	adjustments	Afac	and JCP	Others	Restated
Joint ventures (16.4)
Dominó Holdings	345,953	50,366	(21,555)	-	(16,650)	-	358,114
Cutia	4,310	(447)	-	1,384	-	-	5,247
Costa Oeste	204	(378)	-	1,243	-	(21)	1,048
Marumbi	8	(274)	-	2,479	-	-	2,213
Transmissora Sul Brasileira	2	1	-	9,574	-	-	9,577
Caiuá	-	(193)	-	7,940	-	-	7,747
Integração Maranhense	-	(59)	-	9,689	-	-	9,630
Matrinchã	-	85	-	10,045	-	-	10,130
Guaraciaba	-	(143)	-	7,106	-	-	6,963
	350,477	48,958	(21,555)	49,460	(16,650)	(21)	410,669
Associates (16.5)
Sercomtel	70,341	(59,774)	-	-	-	-	10,567
Dona Francisca	53,061	8,149	-	-	(1,457)	-	59,753
Foz do Chopim	17,402	9,434	-	-	(10,964)	-	15,872
Carbocampel	1,307	(36)	-	142	-	-	1,413
Dois Saltos	300	-	-	-	-	-	300
Copel Amec	165	15	-	-	-	-	180
Escoelectric	-	(61)	-	61	-	-	-
	142,576	(42,273)	-	203	(12,421)	-	88,085
Other investments
Finam	2,267	-	(944)	-	-	-	1,323
Finor	613	-	(301)	-	-	-	312
Investco S.A.	8,345	-	937	-	-	-	9,282
Assets for future use	4,290	-	-	-	-	-	4,290
Advance with the purpose of future
investment (16.6)	38,945	-	-	7,686	-	-	46,631
Other investments	7,683	-	714	-	-	-	8,397
	62,143	-	406	7,686	-	-	70,235
	555,196	6,685	(21,149)	57,349	(29,071)	(21)	568,989

16.3  Parent Company

Subsidiaries 12.31.2013	Headquarters	Main Activity	Percentage of share capital
			Copel	Copel GeT	Noncontrolling shareholders
Copel Geração e Transmissão S.A. (Copel GeT)	Curitiba/PR	Production and transmission of electricity	100.00	-	-
Copel Distribuição S.A.	Curitiba/PR	Distribution and marketing of electricity	100.00	-	-
Copel Telecomunicações S.A.	Curitiba/PR	Telecommunication and communication services	100.00	-	-
Copel Renováveis S.A.	Curitiba/PR	Production of electricity from wind sources	100.00	-	-
Copel Participações S.A.	Curitiba/PR	Holdings of non-financial institutions	100.00	-	-
Nova Asa Branca I Energias Renováveis S.A. (a)	S. Miguel do Gostoso/RN	Production of electricity from wind sources	100.00	-	-
Nova Asa Branca II Energias Renováveis S.A. (a)	Parazinho/RN	Production of electricity from wind sources	100.00	-	-
Nova Asa Branca III Energias Renováveis S.A. (a)	Parazinho/RN	Production of electricity from wind sources	100.00	-	-
Nova Eurus IV Energias Renováveis S.A. (a)	Touros/RN	Production of electricity from wind sources	100.00	-	-
Santa Maria Energias Renováveis S.A. (a)	Maracanau/CE	Production of electricity from wind sources	100.00	-	-
Santa Helena Energias Renováveis S.A. (a)	Maracanau/CE	Production of electricity from wind sources	100.00	-	-
Ventos de Santo Uriel S.A. (a)	João Câmara/RN	Production of electricity from wind sources	100.00	-	-
Companhia Paranaense de Gás - Compagás	Curitiba/PR	Distribution of pipeline gas	51.00	-	49.00
Elejor - Centrais Elétricas do Rio Jordão S.A.	Curitiba/PR	Production of electricity	70.00	-	30.00
UEG Araucária Ltda.	Curitiba/PR	Production of electricity from natural gas	20.00	60.00	20.00
(a)    Pre-operating stage

F-42

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Management performed the judgments required by IAS 27 - Consolidated Financial Statements, and concluded that the Company has all the required attributes to determine the control over the companies Compagás, Elejor and UEG Araucária, i.e., it is exposed to, or have rights to, variable returns deriving from its involvement in the investees and has the ability of affecting those returns by means of its power over them.

16.3.1Summarized financial statements of subsidiaries with non-controlling interest

	Compagas	Elejor	UEG Araucária
12.31.2013
ASSETS	308,023	766,161	708,088
Current assets	84,017	68,534	270,545
Noncurrent assets	224,006	697,627	437,543
LIABILITIES	308,023	766,161	708,088
Current liabilities	66,935	153,229	6,334
Noncurrent liabilities	5,462	540,913	-
Equity	235,626	72,019	701,754
STATEMENT OF INCOME
Operating revenues	423,014	217,412	106,398
Operating costs and expenses	(402,030)	(67,093)	(81,375)
Financial results	4,443	(86,799)	18,664
Income tax and social contribution	(6,942)	(21,573)	(7,524)
Net income for the year	18,485	41,947	36,163
Total comprehensive income	18,485	41,947	36,163
STATEMENT OF CASH FLOWS
Cash flows from operational activities	44,877	(77,800)	78,543
Cash flows from investiment activities	(41,948)	(4,244)	(74,919)
Cash flows from financing activities	(4,495)	104,346	-
TOTAL EFFECTS ON CASH AND CASH EQUIVALENTS	(1,566)	22,302	3,624
Cash and cash equivalents at the beginning of the year	35,993	25,282	18,219
Cash and cash equivalents at the end of the year	34,427	47,584	21,843
CHANGE IN CASH AND CASH EQUIVALENTS	(1,566)	22,302	3,624

F-43

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

16.4  Joint ventures

Jointly controlled 12.31.2013	Headquarters	Main activity	Equity + Advance	Percentage of share capital %		Book value of share capital
			for future capital increase	Copel	Copel GeT
Dominó Holdings S.A.	Curitiba/PR	Interest in sew age treatment company	1,014,895	45.00	-	456,703
Costa Oeste Transmissora de Energia S.A. (a)	Curitiba/PR	Transmission of electricity	36,667	-	51.00	18,700
Marumbi Transmissora de Energia S.A. (a)	Curitiba/PR	Transmission of electricity	27,246	-	80.00	21,797
Transmissora Sul Brasileira de Energia S.A. (a)	Curitiba/PR	Transmission of electricity	318,983	-	20.00	63,797
Cutia Empreendimentos Eólicos SPE S.A. (a)	São Paulo/SP	Production of electricity from wind sources	11,273	49.90	-	5,625
Caiuá Transmissora de Energia S.A. (a)	Curitiba/PR	Transmission of electricity	82,281	-	49.00	40,318
Integração Maranhense Transmissora de Energia S.A. (a)	Rio de Janeiro/RJ	Transmission of electricity	174,240	-	49.00	85,378
Matrinchã Transmissora de Energia (TP NORTE) S.A. (a)	Curitiba/PR	Transmission of electricity	199,997	-	49.00	97,999
Guaraciaba Transmissora de Energia (TP SUL) S.A. (a)	Curitiba/PR	Transmission of electricity	79,241	-	49.00	38,828
Paranaíba Transmissora de Energia S.A. (a)	Rio de Janeiro/RJ	Transmission of electricity	72,859	-	24.50	17,850
(a)    Pre-operating stage

Management concluded that the Company has joint control of those companies, in cooperation with the other investors.

Joint control result from agreements entered into between shareholders irrespective of the interest ownership interest percentage.

16.4.1Main groups of assets, liabilities and results of joint ventures

	Dominó (a)	Costa Oeste	Marumbi	Sul Brasileira	Cutia	Caiuá	Integração Maranhense	Matrinchã	Guaraciaba	Paranaíba
12.31.2013
.
ASSETS	1,071,264	48,558	35,270	531,454	11,421	139,572	276,643	782,964	324,772	74,815
Current assets	22,670	2,261	4,029	45,351	94	4,370	2,517	239,769	127,239	20,832
Cash and cash equivalents	8,574	2,211	4,019	35,767	76	4,170	2,229	237,029	124,484	20,430
Other current assets	14,096	50	10	9,584	18	200	288	2,740	2,755	402
Noncurrent assets	1,048,594	46,297	31,241	486,103	11,327	135,202	274,126	543,195	197,533	53,983
.
LIABILITIES	1,071,264	48,558	35,270	531,454	11,421	139,572	276,643	782,964	324,772	74,815
Current liabilities	56,369	10,425	7,046	207,156	16	44,638	76,364	575,904	243,170	1,779
Financial liabilities	-	-	-	153,201	-	34,051	50,340	567,125	241,553	-
Other current liabilities	56,369	10,425	7,046	53,955	16	10,587	26,024	8,779	1,617	1,779
Noncurrent liabilities	-	32,290	23,499	113,316	918	64,355	167,791	7,063	2,361	177
Advance for future capital increase	-	30,824	22,521	108,001	786	51,702	141,752	-	-	-
Other noncurrent liabilities	-	1,466	978	5,315	132	12,653	26,039	7,063	2,361	177
Equity	1,014,895	5,843	4,725	210,982	10,487	30,579	32,488	199,997	79,241	72,859
.
STATEMENT OF INCOME
Net operating income	-	41,677	30,378	430,344	-	106,513	231,962	510,855	186,882	53,416
Operating costs and expenses	(6,195)	(35,878)	(27,320)	(417,040)	(936)	(104,302)	(228,386)	(525,463)	(192,713)	(54,401)
Financial results	(36,434)	261	484	(419)	6	86	212	21,655	7,682	2,096
Equity in income of subsidiaries	128,996	-	-	-	-	-	-	-	-	-
Income tax and social contribution	-	(1,336)	(1,081)	(5,104)	-	(1,145)	(1,716)	-	-	(253)
Variation earnings of % from participation	134,040
Profit (loss) for the year	220,407	4,724	2,461	7,781	(930)	1,152	2,072	7,047	1,851	858
.
Total comprehensive income for the year	220,407	4,724	2,461	7,781	(930)	1,152	2,072	7,047	1,851	858
.
(a)    Balances adjusted to accounting practices

F-44

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

16.5  Associates 

Associates	Headquarters	Main activity	Equity + Advance for	Percentage of share capital Copel %	Book value of share capital
12.31.2013			future capital increase
Dona Francisca Energética S.A.	Agudo/RS	Electric Power	252,608	23.03	58,176
Foz do Chopim Energética Ltda.	Curitiba/PR	Electric Power	44,137	35.77	15,788
Carbocampel S.A.	Figueira/PR	Coal exploration	2,872	49.00	1,407
Dois Saltos Empreendimentos de
Geração de Energia Elétrica Ltda. (a)	Curitiba/PR	Electric Power	2,400	30.00	720
Copel Amec S/C Ltda.- em liquidação	Curitiba/PR	Services	379	48.00	182
Escoelectric Ltda.	Curitiba/PR	Services	(1,329)	40.00	-
Sercomtel S.A. Telecomunicações (16.4.2)	Londrina/PR	Telecommunications	-	45.00	-
(a)    Pre-operating stage

16.5.1Main groups of assets, liabilities and results of associates

12.31.2013	Foz do Chopim	Dona Francisca (a)
.
ASSETS	46,181	289,662
Current assets	6,080	104,256
Noncurrent assets	40,101	185,406
.
LIABILITIES	46,181	289,662
Current liabilities	2,044	31,432
Noncurrent liabilities	-	5,622
Equity	44,137	252,608
.
STATEMENT OF INCOME
Net operating income	38,831	104,464
Operating costs and expenses	(8,856)	(54,148)
Financial income (expense)	186	5,091
Income tax and social contribution	(1,325)	(16,493)
Profit (loss) for the year	28,836	38,914
.
Total comprehensive income for the year	28,836	38,914
(a)    Balances adjusted to accounting practices

F-45

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

16.5.2Sercomtel S.A. Telecomunicações

The conclusion of the impairment tests on the Company's assets in 2013, adopting, when applicable, the same assumptions mentioned in the note on property, plant and equipment (NE nº 17.7),  provided an adequate level of security that the assets related to the associated company Sercomtel S.A. Telecomunicações were valued above the recoverable value, resulting in a loss recognized in the income statement for 2013 of R$ 6,538 (R$ 28,858 in 2012), recorded in equity income, reducing the investment in this associated company to zero.

16.6  Advance for future investment

16.6.1São Bento Energia, Investimentos e Participações S.A

In November 2011, the contract for purchase and sale of 49.9% of the representative shares of São Bento Energia, Investimentos e Participações S.A, which controls GE Olho D’Água S.A, GE Boa Vista S.A, GE Farol S.A and GE São Bento do Norte S.A, which holds the concession rights of Centrais Geradoras Eólicas Olho D’Água, Boa Vista, Farol and São Bento do Norte, respectively, was signed. The contract will only be effective after approvals by ANEEL, by the Economic Defense Administrative Council – CADE and by the National Socio-Economic Development Bank – BNDES, which is the bank financing the funds necessary for the investment, construction and operation of the abovementioned wind power generation enterprises held by the subsidiaries.

If the purchase is not completed, the seller is obliged to return the funds provided, which amount to R$ 77,886, adjusted by the variation of the National Prices Index – IGPM. The approvals by ANEEL and Cade were obtained, awaiting the completion of the procedure with BNDES.

In December 2013, the agreement of sale and purchase of 50.1% of the remaining shares of São Bento Energia, in the amount of R$ 109,500, was signed. Until December 31, 2013, R$ 111,396 had been paid referring to the adjusted value of the price negotiated and R$ 20,789 referring to reimbursement of the balance of cash acquired, as stipulated in the contract.

The contract can be terminated if the approvals from ANEEL, CADE and BNDES are not obtained, where seller is obliged to return the amounts contributed, adjusted by the variance of the Broad Consumer Prices Index - IPCA.

F-46

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

16.6.2Cutia Empreendimentos Eólicos SPE S.A.

Copel and Galvão Participações S.A. signed the purchase and sale agreement in December 2013 for 50.1% of the shares in the joint venture Cutia Empreendimentos Eólicos SPE S.A., and all of the 8 wind farms and complexes, all exclusively owned by the seller, for the amount of R$ 38,000. Until December 31, 2013 had been paid: R$ 23,398 for part of the adjusted negotiated amount with an escrow of R$ 15,000 to cover any nonconformities attributable to the projects, as stipulated in the agreement.

The contract can be terminated if the unconditional approvals are not obtained from CADE, where seller is obliged to return the amounts paid, adjusted by the variance of the IPCA price index.

17Property, Plant and Equipment

Under Articles 63 and 64 of Decree no. 41,019, dated February 26, 1957, the assets and facilities used mostly in the generation of power are attached to these services and cannot be withdrawn, sold, assigned, or mortgaged without the prior written consent of the regulatory agency. ANEEL Resolution n° 20/99, however, regulates the release of assets from the concessions of the public Electric energy utilities, granting prior authorization to the release of assets that are deemed useless to the concession, when intended for sale, provided that the proceeds from such transaction be deposited in a special bank account assigned to investment in the concession. For concession contracts of the use of public property (UBP) type, infrastructure usage restrictions are set forth in article 19 of ANEEL Decree no. 2,003/96.

17.1  PP&E by company

		Accumulated			Accumulated	Restated
	Cost	depreciation	12.31.2013	Cost	depreciation	12.31.2012
In service
Copel	5	-	5	-	-	-
Copel Geração e Transmissão	12,483,418	(7,370,317)	5,113,101	11,491,186	(7,101,472)	4,389,714
Copel Telecomunicações	504,115	(312,251)	191,864	498,571	(294,255)	204,316
Elejor	594,856	(140,657)	454,199	591,738	(122,685)	469,053
UEG Araucária	685,801	(263,587)	422,214	666,750	(229,920)	436,830
	14,268,195	(8,086,812)	6,181,383	13,248,245	(7,748,332)	5,499,913
In progress
Copel	24	-	24	-	-	-
Copel Geração e Transmissão	1,475,079	-	1,475,079	2,245,507	-	2,245,507
Copel Telecomunicações	174,113	-	174,113	114,825	-	114,825
Elejor	13,292	-	13,292	11,386	-	11,386
UEG Araucária	478	-	478	137	-	137
Nova Asa Branca I	14,184	-	14,184	-	-	-
Nova Asa Branca II	12,135	-	12,135	-	-	-
Nova Asa Branca III	13,124	-	13,124	-	-	-
Nova Eurus IV	12,496	-	12,496	-	-	-
Santa Maria	36,013	-	36,013	-	-	-
Santa Helena	39,432	-	39,432	-	-	-
Ventos de Santo Uriel	11,894	-	11,894	-	-	-
	1,802,264	-	1,802,264	2,371,855	-	2,371,855
Special liabilities
Copel Geração e Transmissão	(15)	-	(15)	(15)	-	(15)
	(15)	-	(15)	(15)	-	(15)
	16,070,444	(8,086,812)	7,983,632	15,620,085	(7,748,332)	7,871,753

F-47

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

17.2  Asset by type of account – in service and in progress

		Accumulated			Accumulated	Restated
	Cost	depreciation	12.31.2013	Cost	depreciation	12.31.2012
In service
Reservoirs, dams and aqueducts	7,618,902	(4,493,402)	3,125,500	7,108,618	(4,341,971)	2,766,647
Machinery and equipment	4,793,335	(2,551,632)	2,241,703	4,509,319	(2,406,775)	2,102,544
Buildings	1,519,516	(997,021)	522,495	1,379,133	(963,086)	416,047
Land	263,620	(2,481)	261,139	183,024	-	183,024
Vehicles	60,833	(33,884)	26,949	57,474	(28,580)	28,894
Furniture and tools	11,989	(8,392)	3,597	10,677	(7,920)	2,757
	14,268,195	(8,086,812)	6,181,383	13,248,245	(7,748,332)	5,499,913
In progress	1,802,264	-	1,802,264	2,371,855	-	2,371,855
Special liabilities	(15)	-	(15)	(15)	-	(15)
	16,070,444	(8,086,812)	7,983,632	15,620,085	(7,748,332)	7,871,753

17.3  Changes in Property, Plant and Equipment

	In service	In progress	Total
Balance as of January 1, 2012 - Restated	5,745,134	1,463,983	7,209,117
Investment program paid	-	875,509	875,509
Investment program to pay	-	119,590	119,590
Financial participation of costumers	-	(15)	(15)
Provision for contingences	-	3,855	3,855
Fixed assets for projects	88,560	(88,560)	-
Transfers of accounts receivable related to the concession	713	-	713
Depreciation quotas to profit and loss	(331,330)	-	(331,330)
Depreciation quotas - Pasep/Cofins credits	(1,815)	-	(1,815)
Write off	(1,349)	(2,522)	(3,871)
Balance as of December 31, 2012	5,499,913	2,371,840	7,871,753
1st consolidation effect - subsidiaries (Note 16.1)	-	65,519	65,519
Investment program paid	-	420,227	420,227
Fixed assets for projects	1,054,115	(1,054,115)	-
Transfers of accounts receivable related to the concession	1,405	157	1,562
Transfers of accounts receivable related to the concession - Resolution 367/2009	1,742	(2,824)	(1,082)
Transfers of intangible assets	(165)	2,660	2,495
Depreciation quotas to profit and loss	(366,016)	-	(366,016)
Depreciation quotas - Pasep/Cofins credits	(1,032)	-	(1,032)
Write off	(1,262)	(1,215)	(2,477)
Write off - Resolution 367/2009	(7,317)	-	(7,317)
Balance as of December 31, 2013	6,181,383	1,802,249	7,983,632

F-48

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

17.4  Changes in Property, Plant and Equipment by type of account – in service and in progress

	Balance as of					Balance as of
	January 1, 2013	Additions	Depreciation	Write off	Transference	December 31, 2013
Land	310,891	19,952	(2,481)	-	-	328,362
Buildings, civil works and improvements	484,996	80,706	(33,869)	(288)	(1,196)	530,349
Machinery and equipment	2,541,016	287,019	(173,945)	(8,601)	(16,193)	2,629,296
Vehicles	29,834	3,176	(5,663)	-	-	27,347
Furniture and tools	8,161	3,269	(482)	(107)	(2,863)	7,978
Reservoirs, dams and aqueducts	3,024,040	253,350	(150,608)	(11)	38,962	3,165,733
Others	1,472,815	(161,726)	-	(787)	(15,735)	1,294,567
	7,871,753	485,746	(367,048)	(9,794)	2,975	7,983,632

	Balance as of					Balance as of
	January 1, 2012					December 31, 2012
	Restated	Additions	Depreciation	Write off	Transference	Restated
Land	270,096	40,795	-	-	-	310,891
Buildings, civil works and improvements	507,227	7,975	(29,690)	(517)	1	484,996
Machinery and equipment	2,483,488	178,910	(154,232)	(1,948)	34,798	2,541,016
Vehicles	10,625	7,294	(3,829)	(42)	15,786	29,834
Furniture and tools	2,774	5,972	(470)	(8)	(107)	8,161
Reservoirs, dams and aqueducts	3,082,435	86,529	(144,924)	-	-	3,024,040
Others	852,472	671,464	-	(1,356)	(49,765)	1,472,815
	7,209,117	998,939	(333,145)	(3,871)	713	7,871,753

17.5  Effects of Law 12,783/2012 on the property, plant and equipment of Copel Geração

On September 12, 2012, Provisional Measure 579 (MP 579) was published, which governs the extension of the concessions for generation, transmission and distribution of electric power, obtained by Law 9,074 of 1995. Decree 7,805/12 which regulates MP 579 was published on September 17, 2012. In accordance with MP 579/12, the companies which have contracts for concessions for generation, transmission and distribution of power, maturing between 2015 and 2017, have the option of extending the concession terms, at the discretion of the granting authority, once, for a period of up to 30 years, provided that they accept early maturity of their existing contracts for December 2012. This extension is subject to the acceptance of certain conditions established by the granting authority, such as: i) fixed income according to criteria established by ANEEL, ii) agreement to service quality standards set by ANEEL and, iii) agreement with established amounts as compensation for the assets linked to the concession.

The Company has not expressed interest in extending the concessions for generation falling due until 2017 (note 34.2.5) and therefore, the occurrence of MP 579 and subsequent regulations published for these generators, will not affect the cash flow forecast until the end of the current concessions. This is valid for revenue estimates and also for the indemnity expected to be paid by the end of the concession.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

This applies to the forecasts for revenue and also for the expectation of compensation of the assets not depreciated until the end of the concession. Decree 7,805/12 confirms the assumption currently adopted by the Company for impairment tests of assets, as it clarifies the condition of compensation to the new replacement value (VNR) at the discretion of the granting authority, of the residual balance of the assets recorded in each concession.

The Company's management understands it has an assured contractual right with respect to compensation of the assets linked to the end of the public service concessions, using in the calculation of recovery the new replacement value (VNR) methodology, as defined by Law 12,783/12.

17.6  Depreciation Rates

Depreciation rates (%)	12.31.2013	12.31.2012
Generation
General equipment	6.92	6.22
Generators	3.43	2.83
Reservoirs, dams and headrace channel	2.35	1.99
Hidraulic turbines	3.63	2.45
Gas and steam turbines	2.30	2.26
Water cooling and treatment facilities	4.39	4.40
Gas conditioning equipament	4.39	4.40
Central administration
Buildings	3.33	3.33
Office machinery and equipment	6.25	6.26
Furniture and tools	6.25	6.25
Vehicles	14.29	14.29
Telecommunications
Transmission equipment	7.70	7.70
Terminal equipment	10.50	10.50
Infrastructure	6.30	6.30

The average rate for machinery and equipment is 3.56%.

F-50

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Depreciation of the assets which are part of the original project of Mauá and Colíder Hydroelectric Power Plants

The Company has assets from Mauá and Colíder Hydroelectric Power Plants for which the Granting Authority is not expected to provide full guarantee that it will indemnify the Company by the end of the concession period for the residual value of the assets which are part of the original project. This interpretation is grounded in law 8,987/95 and Decree 2,003/96.

Accordingly, from the date these assets start operations they are depreciated at the rates set by ANEEL (Brazilian Electricity Regulatory Agency), limited to the concession period. 

As established on concession agreements, subsequent investments not forecast in the original project, provided that they are approved by the Granting Authority and have not yet been amortized, will be indemnified by the end of concessions. Therefore, these assets will be depreciated at the rates set by ANEEL.

17.7  Impairment of Assets

The main principles underpinning the conclusions of Copel’s impairment tests are listed below:

·lowest level of cash generating unit: concessions are analyzed individually;

·recoverable value: value in use, or an amount equivalent to the discounted cash flows (before taxes) resulting from the continuous use of an asset until the end of its useful life; and

·assessment of value in use: based on future cash flows in constant currency, converted to current value according to a real discount rate, before income taxes.

The respective cash flows are estimated based on actual operational results, on the Company's annual corporate budget, as approved by the Board of Directors, on the resulting multi-year budget, and on future trends in the power sector.

As for the time frame for the analysis, the Company takes into account the expiration date of each concession.

As for market growth, Copel’s projections are consistent with historical data and the Brazilian economy's growth prospects.

The respective cash flows are discounted at average discount rates, obtained through a methodology commonly employed by the market, supported by the regulator and approved by the Company’s senior management.

Management believes it has a contractually guaranteed right to compensation for the assets related to concessions upon their expiration, and it accepts, for purposes of calculation of reimbursement and until further regulation is issued on this matter, that such compensation be valued according to the fair value of replacement of the respective assets. Thus, the principle of valuation of residual assets upon expiration of concessions has been established as the book value of these assets.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Even though there was no evidence that the Company’s operational assets suffered a loss in their recoverable value, the Company performed an impairment test.

Based on the assumptions above, the Company has not identified a need to recognize an impairment provision.

17.8  Colíder Hydroelectric Power Plant (HPP)

On July 30, 2010, at the ANEEL Auction of Power from New Projects 003/10, Copel Geração e Transmissão won the rights to the concession of the Colíder Hydroelectric Power Plant, which will feature 300 MW of installed capacity; the concession is valid for 35 years from the date of signature of Concession Contract no. 001/11-MME-HPP Colíder, which took place on January 17, 2011.

This project is included in the Federal Government’s Growth Acceleration Program (PAC) and will comprise a main powerhouse rated 300 MW, which is enough to supply approximately one million people. The facility will take advantage of the hydroelectric potential discovered on the Teles Pires River, between the towns of Nova Canaã do Norte and Itaúba, in the northern region of the State of Mato Grosso. 

The National Bank for Economic and Social Development (BNDES) approved the classification of the HPP Colíder project for financial support feasibility analysis and the signed financing agreement, amounted to R$ 1,041,155, in December 2013 was released the amount of R$ 840,106 as note 21.5.

The Colíder Hydroelectric Power Plant’s power output was sold at an ANEEL auction at a final price of R$ 103.40/MWh, as of July 1, 2010, adjusted according to the variation of the IPCA inflation index (R$ 126.81/MWh as of December 31, 2013). A total of 125 averages MW were sold, for supply starting in January 2015 for 30 years. The assured power of the project, established in its concession agreement, was 179.6 averages MW, after full motorization.

The expenditures in this venture on December 31, 2013 totaled R$ 1,320,590. 

Total commitments already assumed with suppliers of equipment and services in connection with the Colíder Hydroelectric  Power Plant amounted to R$ 471,340 as of December 31, 2013.

17.9  Consórcio Tapajós

Copel Geração e Transmissão has signed a Technical Cooperation Agreement with eight other companies of the sector to conduct studies on the Tapajós and Jamanxim Rivers, in the North Region of Brazil, comprising an integrated environmental assessment of the Tapajós River Basin and viability and environmental studies of five hydroelectric projects, totaling 10,682 MW of installed capacity.

F-52

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The power stations that are currently under study are Jatobá, with 2,338 MW, and São Luiz do Tapajós, the larger station, with 6,133 MW, both on the Tapajós River. In the future the Cachoeira do Caí (802 MW), Cachoeira dos Patos (528 MW) and Jamanxim (881 MW) power stations on the Jamanxim River will be studied.

The expenditures on this project on December 31, 2013 totaled R$ 9,884.

17.10  Consórcio Empreendedor Baixo Iguaçu

On August 27, 2013 Copel Geração e Transmissão entered into a consortium with Geração Céu Azul S.A., with ownership percentage of 30% and 70%, respectively, to build and operate the Baixo Iguaçu Hydroelectric Power Plant, with a minimum installed capacity of 350.20 MW, located in Rio Iguaçu, between the municipalities of Capanema and Capitão Leônidas Marques, and between HPP Governador José Richa and the Iguaçu National Park, in Paraná State, which runs on 3 Kaplan turbines. This consortium was named "Consórcio Empreendedor Baixo Iguaçu" - CEBI.

The Consortium Member Agreement stipulated that Copel Geração e Transmissão will carry out the Proprietary Engineering services for CEBI, the value of this activity was set at R$ 15,392, which will be considered as a contribution from Copel Geração e Transmissão to the consortium.

As of December 31, 2013 the expenses incurred on this venture amounted to R$ 341.

F-53

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

18Intangible Asset

	Concession		Concession		Right to use
	and autorization rights		contracts		software
		accumulated		accumulated		accumulated
	cost	amortization (a)	cost	amortization (a)	cost	amortization (b)	Other	12.31.2013
In service
Assets with finite useful life
Copel Geração e Transmissão (18.1)	-	-	15,884	(732)	17,734	(6,108)	43	26,821
Copel Distribuição (18.2)	-	-	3,664,119	(3,269,508)	-	-	-	394,611
Copel Distribuição-obrig. especiais (18.3)	-	-	(326,007)	256,417	-	-	-	(69,590)
Copel Telecomunicações	-	-	-	-	22,386	(9,280)	-	13,106
Compagas (18.4)	-	-	239,239	(101,937)	5,221	(3,296)	-	139,227
Elejor (18.5)	-	-	263,920	(69,141)	-	-	6,286	201,065
UEG Araucária	-	-	-	-	373	(206)	-	167
Concession Right - Elejor (18.5)	22,626	(5,847)	-	-	-	-	-	16,779
Autorization Right - Cutia (18.6)	5,809	-	-	-	-	-	-	5,809
Autorization Right - Nova Asa I	51,659	-	-	-	-	-	-	51,659
Autorization Right - Nova Asa II	51,745	-	-	-	-	-	-	51,745
Autorization Right - Nova Asa III	49,948	-	-	-	-	-	-	49,948
Autorization Right - Nova Eurus IV	53,154	-	-	-	-	-	-	53,154
Autorization Right - S. Maria	26,813	-	-	-	-	-	-	26,813
Autorization Right - S. Helena	28,955	-	-	-	-	-	-	28,955
Autorization Right - Ventos S. Uriel	13,445	-	-	-	-	-	-	13,445
	304,154	(5,847)	3,857,155	(3,184,901)	45,714	(18,890)	6,329	1,003,714
Assets with indefinite useful life
Compagas	-	-	-	-	-	-	21	21
	-	-	-	-	-	-	21	21
	304,154	(5,847)	3,857,155	(3,184,901)	45,714	(18,890)	6,350	1,003,735
In progress
Copel Geração e Transmissão (18.1)	-	-	17,209	-	1,940	-	2,531	21,680
Copel Distribuição (18.2)	-	-	1,091,217	-	-	-	-	1,091,217
Copel Distribuição-Special Liabilities (18.3)	-		(154,965)	-	-	-	-	(154,965)
Copel Telecomunicações	-	-	-	-	2,032	-	85	2,117
Compagas	-	-	70,716	-	-	-	-	70,716
Nova Asa Branca I	-	-	-	-	-	-	44	44
Nova Asa Branca II	-	-	-	-	-	-	44	44
Nova Asa Branca III	-	-	-	-	-	-	190	190
Nova Eurus IV	-	-	-	-	-	-	42	42
Santa Maria	-	-	-	-	-	-	447	447
Santa Helena	-	-	-	-	-	-	42	42
Ventos de Santo Uriel	-	-	-	-	-	-	52	52
	-	-	1,024,177	-	3,972	-	3,477	1,031,626
								2,035,361
(a)    Amortization over the concession period
(b)    Annual amortization rate: 20%

F-54

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Concession		Concession		Right to use
	and autorization rights		contracts		software
		accumulated		accumulated		accumulated		Restated
	cost	amortization (a)	cost	amortization (a)	cost	amortization (b)	Other	12.31.2012
In service
Assets with finite useful life
Copel Geração e Transmissão (18.1)	-	-	12,905	(36)	15,158	(3,511)	43	24,559
Copel Distribuição (18.2)	-	-	3,713,620	(3,113,508)	-	-	-	600,112
Copel Distribuição-Special Liabilities (18.3)	-	-	(320,627)	211,651	-	-	-	(108,976)
Copel Telecomunicações	-	-	-	-	25,819	(6,319)	-	19,500
Compagas (18.4)	-	-	217,446	(86,920)	4,070	(2,906)	-	131,690
Elejor (18.5)	-	-	263,920	(60,532)	-	-	5,927	209,315
UEG Araucária	-	-	-	-	360	(145)	-	215
Concession Right - Elejor (18.5)	22,626	(5,092)	-	-	-	-	-	17,534
Autorization Right - Cutia (18.6)	5,809	-	-	-	-	-	-	5,809
	28,435	(5,092)	3,887,264	(3,049,345)	45,407	(12,881)	5,970	899,758
Assets with indefinite useful life
Copel Geração e Transmissão	-	-	-	-	-	-	18	18
Compagas	-	-	-	-	-	-	21	21
	-	-	-	-	-	-	39	39
	28,435	(5,092)	3,887,264	(3,049,345)	45,407	(12,881)	6,009	899,797
In progress
Copel Geração e Transmissão (18.1)	-	-	15,101	-	991	-	4,312	20,404
Copel Distribuição (18.2)	-	-	898,361	-	-	-	-	898,361
Copel Distribuição-Special Liabilities (18.3)	-	-	(83,748)	-	-	-	-	(83,748)
Copel Telecomunicações	-	-	-	-	1,467	-	7	1,474
Compagas	-	-	52,837	-	-	-	-	52,837
Elejor	-	-	-	-	-	-	27	27
	-	-	882,551	-	2,458	-	4,346	889,355
								1,789,152
(a)     Amortization over the concession period
(b)     Annual amortization rate: 20%

Changes in intangible assets

.
	Concession contracts				Concession	Other
	In	In	Special Liabilities		and autorization	In	In
	service	progress	In service	In progress	rights	service	progress
Balance as of January 1, 2012 - Restated	1,224,874	674,591	(200,444)	(40,457)	24,098	4,271	30,011	1,716,944
Investment program	-	840,119	-	-	-	-	11,685	851,804
Customers' financial participation	-	-	-	(107,980)	-	-	-	(107,980)
Aneel concession - use of public assets	-	1,886	-	-	-	-	-	1,886
Transfers to tax liabilities	(8,073)	(301)	-	-	-	-	-	(8,374)
Transfers to accounts receivable related to the concession
- remeasurement Resolution No. 474/2012	(136,658)	-	53,245	-	-	-	-	(83,413)
Transfers to accounts receivable related to the concession	-	(405,521)	-	57,916	-	-	-	(347,605)
Transfers to intangible assets in service	140,889	(140,889)	(6,773)	6,773	-	34,824	(34,824)	-
Amortization of quotas - concession and autorization	(256,731)	-	42,709	-	(755)	(3,748)	-	(218,525)
Amortization of quotas - Pasep/Cofins credits	(12,544)	-	2,287	-	-	24	-	(10,233)
Write off	(4,671)	(3,586)	-	-	-	-	(68)	(8,325)
Disposal	(191)	-	-	-	-	-	-	(191)
Adjustments to financial assets classified as available for sale	-	-	-	-	-	3,164	-	3,164
Balance as of December 31, 2012 - Restated	946,895	966,299	(108,976)	(83,748)	23,343	38,535	6,804	1,789,152
Investment program	-	1,018,057	-	-	275,719	-	5,297	1,299,073
Customers' financial participation	-	-	-	(160,614)	-	-	-	(160,614)
Aneel concession - use of public assets	-	5,087	-	-	-	-	-	5,087
Transfers to accounts receivable related to the concession	-	-	-	-	-	2,589	-	2,589
Transfers to property, plant and equipment, net in progress	-	-	-	-	-	165	(2,660)	(2,495)
Transfers to accounts receivable related to
Transfers to accounts receivable related to the concession (Note 9.1)	-	(712,947)	-	82,878	-	-	-	(630,069)
Transfers to intangible assets in service	87,599	(87,599)	(6,519)	6,519	-	1,697	(1,697)	-
Amortization of quotas - concession and autorization	(272,967)	-	43,163	-	(755)	(6,627)	-	(237,186)
Amortization of quotas - Pasep/Cofins credits	(14,135)	-	2,460	-	-	(497)	-	(12,172)
Write off	(5,443)	(9,755)	282	-	-	(2,669)	(295)	(17,880)
Write off - Resolution 367	(105)	-	-	-	-	(19)	-	(124)
Balance as of December 31, 2013	741,844	1,179,142	(69,590)	(154,965)	298,307	33,174	7,449	2,035,361

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Changes in intangible assets by class of assets

		Concession
	Concession	and autorization
	contracts	rights	Softwares	Others
Balance as of January 1, 2012	1,658,564	24,098	31,468	2,814	1,716,944
Additions	386,420	-	7,309	7,537	401,266
Transfer to accounts receivable related to the concession	(83,413)	-	-	-	(83,413)
Amortization of quotas - concession and autorization	(224,279)	(755)	(3,724)	-	(228,758)
Write off	(8,257)	-	(65)	-	(8,322)
Others	(8,565)	-	-	-	(8,565)
Balance as of December 31, 2012	1,720,470	23,343	34,988	10,351	1,789,152
Additions	232,461	275,719	3,032	2,265	513,477
Transfer to accounts receivable related to the concession	-	-	2,589	-	2,589
Amortization of quotas - concession and autorization	(241,479)	(755)	(7,124)	-	(249,358)
Write off	(15,021)	-	(2,688)	(295)	(18,004)
Others	-	-	-	(2,495)	(2,495)
Balance as of December 31, 2013	1,696,431	298,307	30,797	9,826	2,035,361

18.1  Copel Geração e Transmissão

Intangible assets related to the use of public property (UBP) under an onerous concession. These intangible assets are amortized over the term of the concession contract.

18.2  Copel Distribuição

The intangible asset for the concession represents the right to exploit the construction services and the supply of energy services and will be recovered through consumption and consequent billing to customers.

ANEEL establishes, by Ruling no. 474/2012, the estimated economic useful life of each asset that makes up the energy distribution infrastructure, for purposes of tariff setting and also of assessment of the amount of compensation to be paid for revertible assets at the end of the concession's term. This estimate is reasonable and adequate for accounting and regulatory purposes and represents the best estimate of the assets’ economic useful lives accepted by the industry.

The amortization of intangible assets reflects the pattern of estimated accrual of the corresponding economic benefits by Copel Distribuição, with expectation of amortization during to the term of the concession.

The residual amount of each asset remaining over the term of the concession is allocated as accounts receivables related to the concession (Note 9).

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

18.3  Copel Distribuição - Special liabilities

Special liabilities comprise customers’ contributions, Federal Government budget grants, federal, state, and municipal funds, and special credits assigned to the investments in facilities related to a concession.

Special obligations are not onerous liabilities and are not the shareholder’s credits.

The scheduled date for settlement of these liabilities was the concession expiration date. ANEEL, by means of Regulatory Resolution no. 234/2006, as amended by Resolution no. 338/2008, established the guidelines, the applicable methodologies, and the initial procedures for the conduction of the second cycle of the periodic tariff review involving the Brazilian power distribution utilities, changing the characteristics of these liabilities. Both the outstanding balance and new additions have been amortized as of July 1, 2008, pursuant to ANEEL Ruling no. 3,073/06 and Circular Letter no. 1,314/07. Amortization is calculated based on the same average rate of distribution activity assets.

According to the regulations of ANEEL, special obligations should be recorded in the statement of financial position as an offset to the total intangible and financial assets.  The balance of special obligations reported in intangible assets will be amortized over the concession period.

18.4  Compagas 

These intangible assets are related to the construction of infrastructure and the acquisition of the necessary assets for the operation of gas distribution services and the right to collect from customers for gas supply. The construction of infrastructure and the acquisition of assets are deemed service rendering by the granting authority.

Amortization of intangible assets reflects the current expectation for the future economic benefits of the asset to be consumed by Compagas, with expected average amortization of 7.1% p.y., limited to the concession period, for gas pipelines built until December 31, 2008 and 10% p.y. for other assets.

At the end of the concession, the assets related to gas distribution service, after 2014, shall revert to the granting authority, and Compagas shall be reimbursed for the investments made based on their amortized replacement value, assessed through an independent auditing company, based on the values to be determined then.

18.5  Elejor 

Concession Contract

Intangible assets related to the use of public property (UBP) under an onerous concession. These intangible assets have been amortized over the term of the concession contract, and the corresponding liability has been amortized by payments (Note 26).

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Concession Rights

The acquisition of the Elejor shares held by Triunfo Participações S.A., on December 18, 2003, resulted in total concession intangible asset of R$ 22,626. The straight line method of amortization of the concession intangible asset was economically determined by the expected income from the commercial operation of the concession, which expires in 2036, and its effect on the statements of income as of December 31, 2013 was R$ 755 (R$ 755 in 2012).

18.6  Concession rights - Cutia

The acquisition resulted in concession rights amounting to R$ 5,809, which will be amortized over the concession period, from the start of commercial operation of the project, scheduled for January 1, 2015 for resolutions by ANEEL. The concession period of wind farms is 30 years from the date of publication of authorizing resolutions in the Official Gazette, which occurred on January 05, 2012.

18.7  Recoverable value of intangible asset (definite useful life)

Although there is no indication of impairment, the Company has assessed the recoverable value of its intangible assets based on the present value of the corresponding estimated future cash flows.

The values assigned to the assumptions represent Company management’s evaluation of the energy industry’s future trends and are based both on external sources of information and on historical data.

Cash flows have been estimated based on the Company’s operating results and projections until the end of the concession, under the following main assumptions:

·Organic growth compatible with historical data and the Brazilian economy's growth prospects; and

·The average discount rate obtained through a methodology commonly employed on the market, taking into account the weighted average cost of capital (WACC), as discussed in Note 17.7.

The recoverable value of these assets exceeds their book value, so there are no impairment losses to be recognized.

F-58

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

19Payroll, Social Charges and Accruals

		Restated
	12.31.2013	12.31.2012
Social security liabilities
Taxes and social contribution	39,115	61,312
Social security charges on paid vacation and 13th salary	30,008	34,160
	69,123	95,472
Labor liabilities
Payroll, net	2,524	3,015
Vacation	84,071	96,746
Profit sharing for the year	80,048	29,940
Voluntary redundancy	3,871	158,781
Assignments to third parties	48	54
	170,562	288,536
	239,685	384,008

20Suppliers  

		Restated
	12.31.2013	12.31.2012
Energy supplies	581,968	517,982
Materials and supplies	373,195	471,526
Charges for use of grid system	72,151	82,195
Natural gas for resale	51,502	43,681
Natural gas and supplies for the gas business - renegotiation Petrobras	63,544	117,306
	1,142,360	1,232,690
Current	1,092,239	1,131,782
Noncurrent	50,121	100,908

F-59

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

20.1  Main Power purchase agreements

The power purchase agreements signed in the regulated power trading environment, shown at original value and adjusted annually according to the IPCA inflation index:

.	Supply	Energy purchased	Auction	Average purchase
	period	(annual average MW)	date	price (R$/MWh)
Auction of power from existing facilities
1st Auction - Product 2006	2006 to 2013	812.41	12.07.2004	67.33
1st Auction - Product 2007	2007 to 2014	37.45	12.07.2004	75.46
2nd Auction - Product 2008	2008 to 2015	51.91	04.02.2005	83.13
4th Auction - Product 2009	2009 to 2016	44.76	10.11.2005	94.91
5th Auction - Product 2007	2007 to 2014	54.37	12.14.2006	104.74
8th Auction- Product 2010 Q5	2010 to 2014	0.010	11.30.2009	99.14
8th Auction- Product 2010 D5	2010 to 2014	0.012	11.30.2009	80.00
10th Auction- Product 2012 Q3	2012 to 2014	15.59	11.30.2011	79.99
		1,016.51
Auction of power from new facilities
1st Auction- Product 2008 Hydro	2008 to 2037	3.61	12.16.2005	106.95
1st Auction- Product 2008 Therm	2008 to 2022	25.25	12.16.2005	132.26
1st Auction- Product 2009 Hydro	2009 to 2038	3.54	12.16.2005	114.28
1st Auction- Product 2009 Therm	2009 to 2023	42.37	12.16.2005	129.26
1st Auction- Product 2010 Hydro	2010 to 2039	72.41	12.16.2005	115.04
1st Auction- Product 2010 Therm	2010 to 2024	67.10	12.16.2005	121.81
3th Auction- Product 2011 Hydro	2011 to 2040	57.66	10.10.2006	120.86
3th Auction- Product 2011 Therm	2011 to 2025	54.22	10.10.2006	137.44
4th Auction- Product 2010 Therm	2010 to 2024	15.44	07.26.2007	134.67
5th Auction- Product 2012 Hydro	2012 to 2041	53.24	10.16.2007	129.14
5th Auction- Product 2012 Therm	2012 to 2026	115.38	10.16.2007	128.37
6th Auction- Product 2011 Therm	2011 to 2025	11.99	09.17.2008	128.42
7th Auction- Product 2013 Hydro	2013 to 2042	-	09.30.2008	98.98
7th Auction- Product 2013 Therm	2013 to 2027	139.67	09.30.2008	145.23
8th Auction- Product 2012 Hydro	2012 to 2041	0.01	08.27.2009	144.00
8th Auction- Product 2012 Therm	2012 to 2026	0.14	08.27.2009	144.60
		662.03
Structuring projects auction
Santo Antonio	2012 to 2041	52.55	12.10.2007	78.87
Jirau	2013 to 2042	54.94	05.19.2008	71.37
		107.49

F-60

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21Loans and Financing

				Current liabilities		Noncurrent liabilities
	Principal	Charges	12.31.2013	12.31.2012	12.31.2013	12.31.2012
Foreign currency
STN (21.1)	1,568	586	2,154	3,311	62,661	56,029
Eletrobras	7	-	7	6	-	5
	1,575	586	2,161	3,317	62,661	56,034
Local currency
Banco do Brasil (21.2)	644,182	71,885	716,067	168,624	886,893	1,373,235
Eletrobras (21.3)	49,322	7	49,329	54,204	130,427	178,841
Finep (21.4)	6,869	66	6,935	2,014	33,622	27,511
BNDES (21.5)	19,289	1,487	20,776	18,156	1,104,333	196,699
Banco do Brasil
Transfer BNDES (21.6)	11,369	469	11,838	14,975	148,742	157,268
Promissory Notes (21.7)	150,000	-	150,000	-	-	-
	881,031	73,914	954,945	257,973	2,304,017	1,933,554
	882,606	74,500	957,106	261,290	2,366,678	1,989,588

21.1  Department of the National Treasury - STN

	Number of	Final		Annual rate p.y.
Type of bonus	installment	maturity	Amortization	(interest + commission)	Principal	12.31.2013	12.31.2012
Capitalization Bond	21	04.10.2014	Semi Annual	8.0% + 0.20%	12,225	1,595	4,180
Par Bond	1	04.11.2024	Single installment	6.0% + 0.20%	17,315	37,385	22,548
Discount Bond	1	04.11.2024	Single installment	Libor Semi Annual+0.8125%+0.20%	12,082	25,835	32,612
						64,815	59,340
					Current	2,154	3,311
					Noncurrent	62,661	56,029
Company: Copel
Issue Date: 05.20.1998
Collateral:
Company’s centralized revenues account. For the Discount and Par Bonds, there are collateral deposits of R$ 18,700 and R$ 26,671 as of December 31, 2013 (R$ 17,820 and R$ 25,426 as of December 31, 2012), respectively (Note 6.1).
Note:
The restructuring of medium and long-term debt in connection with the financing received under Law nº 4,131/62.

F-61

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.2  Banco do Brasil S.A.

	Issue	Number of	Final	Annual rate p.y.
Contracts	Date	installment	maturity	(interest + commission)	Principal	12.31.2013	12.31.2012
Law 8,727/93 (a)	03.30.1994	240	03.01.2014	TJLP and IGP-M + 5.098%	28,178	66	298
21/02155-4 (b)	09.10.2010	3	08.15.2015	98.5% of average rate of CDI	350,000	311,286	430,932
21/02248-8 (c)	06.22.2011	1	06.01.2015	99.5% of average rate of CDI	150,000	184,735	170,142
CCB 21/11062X (d)	08.26.2013	3	07.27.2018	106.0% of average rate of CDI	151,000	152,135	-
NC 330600129 (e)	01.31.2007	1	01.31.2014	106.5% of average rate of CDI	29,000	30,156	29,911
NC 330600132 (f)	02.28.2007	1	02.28.2014	106.2% of average rate of CDI	231,000	238,591	236,729
NC 330600151 (g)	07.31.2007	1	07.31.2014	106.5% of average rate of CDI	18,000	18,718	18,565
NC 330600156 (h)	08.28.2007	1	08.28.2014	106.5% of average rate of CDI	14,348	14,821	14,705
NC 330600157 (i)	08.31.2007	1	08.31.2014	106.5% of average rate of CDI	37,252	38,439	38,143
NC 330600609 (j)	08.19.2011	3	07.21.2016	109.41% of average rate of CDI	600,000	614,013	602,434
						1,602,960	1,541,859
					Current	716,067	168,624
					Noncurrent	886,893	1,373,235
Company:
Copel Distribuição: (a) (b) (c) (d)
Parent Company: (e) (f) (g) (h) (i) (j)
Annual installment
Along with the interest in proportion to the installments, the first amount of R$ 116,666, maturing on 08.25.2013 and others of R$ 116,667, maturing on 07.11.2014 and 08.15.2015: (b)
Together with the data is the interest accrued on the installments, in the amount of R$ 50,333, falling due on July 27, 2016, July 27, 2017 and July 27, 2018: (d)
The first amount of R$ 200,000, maturing on 07.21.2014 and other on 07.21.2015 and 07.21.2016: (i)
Destination:
Private Credit Assignment Agreement with the Federal Government: (a)
Working capital: (b) (c) (d)
Only purpose of paying the debts: (e) (f) (g) (h) (i) (j)
Collateral:
Copel’s accounts receivable: (a)
Pledge until 360 days: (b) (c)
Assignment of receivables: (d)

F-62

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.3  Eletrobras - Centrais Elétricas Brasileiras S.A.

	Issue	Number of	Final	Annual rate p.y.
Contracts	Date	installment	maturity	(interest + commission)	Principal	12.31.2013	12.31.2012
1293/94 (a)	09.23.1994	180	06.30.2016	5.5% to 6.5% + 2.0%	307,713	83,362	119,038
980/95 (b)	12.22.1994	80	11.15.2018	8.0%	11	12	16
981/95 (c)	12.22.1994	80	08.15.2019	8.0%	1,169	376	441
982/95 (d)	12.22.1994	80	02.15.2020	8.0%	1,283	142	166
983/95 (e)	12.22.1994	80	11.15.2020	8.0%	11	179	205
984/95 (f)	12.22.1994	80	11.15.2020	8.0%	14	77	87
985/95 (g)	12.22.1994	80	08.15.2021	8.0%	61	47	53
002/04 (h)	06.07.2004	120	07.30.2016	8.0%	30,240	2,846	4,059
142/06 (i)	05.11.2006	120	09.30.2018	5.0% + 1.0%	74,340	17,286	21,333
206/07 (j)	03.03.2008	120	08.30.2020	5.0% + 1.0%	109,642	59,357	69,351
273/09 (k)	02.18.2010	120	12.30.2022	5.0% + 1.0%	63,944	14,798	16,525
2540/06 (l)	05.12.2009	60	10.30.2016	5.0% + 1.5%	2,844	1,274	1,771
						179,756	233,045
					Current	49,329	54,204
					Noncurrent	130,427	178,841
Company:
Copel Geração e Transmissão: (a)
Copel Distribuição: (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
Destination:
Financial cover up to 29.14% of the total project of HPP Governador José Richa Implementation and transmission system: (a)
National Program for Watering - Proni: (b) (c) (d) (e) (f) (g)
Rural Electricity Program - Luz para Todos: (h) (i) (j) (k)
National Program for Efficient Public Lighting - ReLuz: cover 75% of the total cost of the Project for the City of Ponta Grossa:(l)
Collateral:
The guarantee is represented by the income, supported by power of attorney granted by a public instrument, and the issue of promissory notes equal to the number of installments falling due.
Note:
Final Grace Period: 12.30.2012 (k)

F-63

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.4  Finep 

	Issue	Number of	Final	Annual rate p.y.
Contracts	Date	installment	maturity	(interest + commission)	Principal	12.31.2013	12.31.2012
2070791-00 (a)	11.28.2007	49	12.15.2014	0.37% above TJLP	5,078	1,147	2,295
2070790-00 (b)	11.28.2007	49	12.15.2014	0.13% above TJLP	3,535	547	1,618
21120105-00 (c)	05.17.2012	81	10.15.2020	4.0%	35,095	21,223	15,526
21120105-00 (c)	05.17.2012	81	10.15.2020	3.5% + TR	17,103	17,640	10,086
						40,557	29,525
					Current	6,935	2,014
					Noncurrent	33,622	27,511
Company:
Copel Geração e Transmissão: (a) (b)
Copel Telecomunicações: (c)
Destination:
Research and Development Project GER 2007: (a)
Research and Development Project TRA 2007: (b)
BEL project - ultra wide band intranet service (Ultra Wide Band - UWB): (c)
Collateral:
Withhold the amounts from the checking account in which revenues are deposited: (a) (b) (c)
Note:
R$ 414 were returned for not having been executed in the project. (b)
In replacement to the contract 2100567-00, signed on November 29, 2010. Credit of R$ 52,198 to be offered in six parcels.
In contrast, the financed commits to participate in the costs of preparation with the minimum value of R$ 8,324.
Were released three parcels, totaling R$ 38,471 of this amount, R$ 12,664 was released in 2013.
The maturity of the 1st installment is February 15, 2014. (c)

F-64

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.5  BNDES 

	Issue	Number of	Maturity		Annual rate p.y.
Contracts	Date	installment	initial	final	(interest + commission)	Principal	12.31.2013	12.31.2012
820989.1 (a)	03.17.2009	179	02.15.2012	01.15.2028	1.63% above TJLP	169,500	160,572	172,137
1120952.1-A (b)	12.16.2011	168	05.15.2012	04.15.2026	1.82% above TJLP	42,433	37,484	39,568
1120952.1-B (c)	12.16.2011	168	05.15.2012	04.15.2026	1.42% above TJLP	2,290	2,022	3,150
1220768.1 (d)	09.28.2012	192	08.15.2013	07.15.2029	1.36% above TJLP	73,122	67,259	-
13211061 (e)	12.04.2013	192	11.15.2015	10.15.2031	1.49% above TJLP	1,041,155	840,106	-
13210331 (f)	12.03.2013	168	09.15.2014	08.15.2028	1.49% and 1.89% above TJLP	17,644	17,666	-
							1,125,109	214,855
						Current	20,776	18,156
						Noncurrent	1,104,333	196,699
Company:
Copel Geração e Transmissão
Financial charges:
It will be paid monthly after the first payment of the principal amount.
Destination:
Construction of the Mauá Hydroelectric Power Plant and its transmission system: (a)
Implementation of transmission line between substations Foz do Iguaçu and Cascavel Oeste: (b)
Purchase of machinery and equipment: (c)
Implementation of Cavernoso II SHP: (d)
Implementation of HPP Colíder and associated transmission system: (e)
Implementation of the 230/138kV Cerquilho III Substation: (f)
Collateral:
All the revenues from the sale of energy under Agreements for Energy Trade on the Regulated Power Market (“Contracts for the Sale of Energy in the Regulated Environment” or CCEARs) in connection with this project (a) and (d)
Copel Geração e Transmissão has undertaken to assign to the BNDES the rights it holds under Concession Arrangement 027/2009-ANEEL, and to submit as a guarantee to the BNDES the credit rights deriving from the provision of energy transmission services stipulated in the Concession Arrangement (Transmission Services Agreement 09/2010), by Copel Geração e Transmissão and the National Electric System Operator (Operador Nacional do Sistema Elétrico or ONS), the transmission concession operators and the users of the transmission system, including the entire revenue deriving from the transmission services provided: (b) and (c)
Statutory assignment of the rights under Concession Agreement 01/2011MME-HPP Colíder and statutory assignment under the electricity purchase and sale agreement (CCVEE) between Copel and Sadia S.A.: (e)
Statutory assignment of the rights under Public Electricity Transmission Service Concession Agreement 015/2010-ANEEL, between Copel and the federal government: (f)

F-65

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.6  Banco do Brasil - Distribution of Funds from BNDES

	Issue	Number of	Maturity		Annual rate p.y.
Contracts	Date	installment	initial	final	(interest + commission)	Principal	12.31.2013	12.31.2012
21/02000-0	04.16.2009	179	02.15.2012	01.15.2028	2.13% above TJLP	169,500	160,580	172,243
							160,580	172,243
						Current	11,838	14,975
						Noncurrent	148,742	157,268
Company:
Copel Geração e Transmissão
Financial charges:
It will be paid quarterly during the grace period and monthly after the first payment of the principal amount
Destination:
Construction of the Mauá Hydroelectric Power Plant and its transmission system, in consortium with Eletrosul
Collateral:
All the revenues from the sale of energy under Agreements for Energy Trade on the Regulated Power Market (“Contracts for the Sale of Energy in the Regulated Environment” or CCEARs) in connection with this project

21.7  Promissory notes – Wind Power

	Issue	Single	Annual rate p.y.
Company	Date	Maturity	(interest + commission)	Principal	12.31.2013
Nova Asa Branca I (a)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	22,000	22,000
Nova Asa Branca II (a)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	22,000	22,000
Nova Asa Branca III (a)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	22,000	22,000
Nova Eurus IV (a)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	22,000	22,000
Santa Maria (b)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	25,000	25,000
Santa Helena (c)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	24,000	24,000
Ventos de Santo Uriel (d)	12.26.2013	06.24.2014	100% of average rate of CDI + 0.90%	13,000	13,000
					150,000
Features:
Promissory notes issued as follows: 4 notes issued with unit values of R$ 5,500 (a); 5 notes issued with unit values of R$ 5,000 (b) 6 notes issued with unit values of R$ 4,000 (c), and 13 notes issued with unit values from R$ 1,000 (d)
Financial Charges:
Interest paid in full at maturity.
Destination:
Guarantee funds for the investment program with the construction of wind power plants.
Warranty:
Fidejussory
Guarantor:
Copel
Fiduciary agent:
C&D Distribuidora de Títulos e Valores Mobilíarios S.A

F-66

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.8  Breakdown of loans and financing by currency and index

	Index and change in foreign currencies
	accumulated in the period (%)	12.31.2013	%	12.31.2012	%
Foreign currency
U.S. Dolar	14.64	64,822	1.95	59,351	2.64
		64,822	1.95	59,351	2.64
Local currency
TJLP	5.00	1,308,607	39.37	387,111	17.20
IGP-M	5.51	65	-	284	0.01
Ufir	0.00	96,394	2.90	114,006	5.06
Finel	1.07	83,361	2.51	119,040	5.29
CDI	41.59	1,752,895	52.74	1,541,561	68.49
TR	0.19	-	-	13,998	0.62
Without indexer	-	17,640	0.53	15,527	0.69
		3,258,962	98.05	2,191,527	97.36
		3,323,784	100.00	2,250,878	100.00
	Current	957,106		261,290
	Noncurrent	2,366,678		1,989,588

21.9  Maturity of noncurrent installments

12.31.2013	Foreign currency	Local currency	Total
2015	-	632,865	632,865
2016	-	369,456	369,456
2017	-	154,749	154,749
2018	-	153,839	153,839
2019	-	100,379	100,379
After 2020	62,661	892,729	955,390
	62,661	2,304,017	2,366,678

F-67

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

21.10  Changes in loans and financing

		Foreign currency		Local currency
	Current	Noncurrent	Current	Noncurrent	Total
Balance as of January 1, 2012	4,490	53,955	111,997	2,004,030	2,174,472
Funding	-	-	-	81,723	81,723
Charges	2,738	-	133,106	48,507	184,351
Monetary and exchange variations	163	4,712	174	1,460	6,509
Transfers	2,633	(2,633)	202,166	(202,166)	-
Amortization - principal	(2,302)	-	(35,566)	-	(37,868)
Amortization - interest and variation	(4,405)	-	(153,904)	-	(158,309)
Balance as of December 31, 2012	3,317	56,034	257,973	1,933,554	2,250,878
Funding	-	-	150,000	1,089,126	1,239,126
Charges	2,732	-	143,636	38,210	184,578
Monetary and exchange variations	258	7,974	241	1,342	9,815
Transfers	1,347	(1,347)	758,215	(758,215)	-
Amortization - principal	(1,478)	-	(30,030)	-	(31,508)
Amortization - interest and variation	(4,015)	-	(325,090)	-	(329,105)
Balance as of December 31, 2013	2,161	62,661	954,945	2,304,017	3,323,784

21.11  Contracts with clauses for anticipated maturity

The Company and its subsidiaries contracted loans which include clauses requiring that they maintain certain economic-financial indices within previously established parameters, as well as other conditions that have to be observed, such as: no alterations to the investment interest of the Company in the capital of subsidiaries that represents a change in control, without prior notice; specifically for Copel Geração e Transmissão, no dividend distributions or payments for interest on own capital to be made, for which the amount, individually or together, exceeds the minimum compulsory amount, without prior and express authorization. Non compliance with these terms could result in the anticipated maturity of the debts and/or fines.

At December 31, 2013 all of the terms were analyzed, and it was identified that all contractual covenants had been complied with.

F-68

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

22Debentures 

	Issue	Number of	Maturity		Annual rate p.y.
Debentures	Date	installment	initial	final	(interest)	Principal	12.31.2013	12.31.2012
1st issue (a)	10.30.2012	2	10.30.2016	10.30.2017	DI + Spread 0.99% p.y.	1,000,000	1,015,389	1,010,677
2nd issue (b)	09.26.2013	60	10.26.2013	09.26.2018	DI + Spread 1.00% p.y.	203,000	192,556	-
							1,207,945	1,010,677
						Current	57,462	12,719
						Noncurrent	1,150,483	997,958
Company:
Copel Distribuição: (a)
Elejor: (b)
Characteristics:
Simple debentures, single series, unconvertible, unsecured debenture, was approved for public offering under restricted placement efforts, in the minimum amount of R$ 1,000,000 (a) and R$ 203,000 (b) 100,000 (a) and 20,300 (b) notes were issued with a unit value of R$ 10. The debentures' unit values will not be adjusted for inflation.
Finance charges: Interest paid half-yearly in April and October: (a)
Interest paid monthly: (b)
Allocation:
Working capital or used to make investments in the issuer: (a)
Full settlement of the loan agreement with Copel: (b)
Collaterals:
Personal guarantee (a) and (b)
Guarantor:
Copel: (a)
Copel, at the ratio of 70% and Paineira Participações S.A., at the ratio of 30%: (b)
Trustee:
C&D Distribuidora de Títulos e Valores Mobilíarios S.A. (a) (b)

22.1  Change in debentures

	Current	Noncurrent	Total
Balance as of January 1, 2012	-	-	-
Funding	-	1,000,000	1,000,000
Charges	14,858	(2,042)	12,816
Amortization - interest and variation	(2,139)	-	(2,139)
Balance as of December 31, 2012	12,719	997,958	1,010,677
Funding	40,600	162,400	203,000
Charges	89,282	5,259	94,541
Transfers	15,134	(15,134)	-
Amortization - principal	(10,152)	-	(10,152)
Amortization - interest and variation	(90,121)	-	(90,121)
Balance as of December 31, 2013	57,462	1,150,483	1,207,945

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

22.2  Contracts with clauses for anticipated maturity

Copel Distribuição and Elejor issued debentures that contain covenants that require the maintenance of certain economic and financial indices within previously established parameters with enforceability of compliance with annual and other conditions to be observed, such as changing the shareholding of the Company in the share capital representing a change of control without the prior consent of the Debenture Holders; not making without prior written consent of the Debenture holders, payments of dividends or payments of interest on equity, if they are in arrears regarding compliance with any of their financial obligations or they do not meet the established financial indices. Failure to comply with these conditions may allow early call of the debentures.

At December 31, 2013 all of the terms were analyzed, and it was identified that all contractual covenants had been complied with.

23Post-Employment Benefits

The Company and its subsidiaries sponsor retirement and pension plans (Pension Plans I, II, and III) and a medical and dental care plan (Healthcare Plan) to both current and retired employees and their dependents.

Due to the unification of the regulations for Plans I and II in the final quarter of 2013, the plan was given a new name and is now known as the Unified Plan.

23.1  Benefit Pension Plan

The unified pension plan is a Defined Benefit Plan - BD in which the income is predetermined, according to each individual's salary, and pension plan III is a Defined Contribution Plan - CD.

The costs assumed by the sponsors for these plans are recognized according to the actuarial evaluation prepared annually by independent actuaries in accordance with the rules established by the Technical Pronouncement IAS 19 (R1) and IFRIC 14. The economic and financial assumptions for purposes of the actuarial evaluation are discussed with the independent actuaries and approved by the sponsors’ management.

23.2  Healthcare Plan

The Company and its subsidiaries allocate resources for the coverage of health-care expenses incurred by their employees and their dependents, within rules, limits, and conditions set in specific regulations. Coverage includes periodic medical exams and is extended to all retirees and pensioners for life.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

23.3  Statement of financial position and statement of income

Amounts recognized in the statement of financial position, under Post-Employment Benefits, are summarized below:

Consolidado		Restated
	12.31.2013	12.31.2012
Pension plan	5	989
Healthcare plan	967,227	700,060
	967,232	701,049
Current	29,983	25,819
Noncurrent	937,249	675,230

The Company reviewed its actuarial position established in the last fiscal year on December 31, 2012, which is mainly due to the increase in interest rates and the variation on the actual costs. Therefore, financial assumptions were reviewed together with the Company's independent actuary, considering a new discount rate on December 31, 2013 according to the latest auctions of federal government bonds. The plans' net assets were also reviewed and revalued at their fair values.

The amounts recognized in the statement of income are shown below:

	12.31.2013	12.31.2012	12.31.2011
Pension plan (CD)	51,857	46,345	45,187
Pension plan (CD) - management	988	751	455
Healthcare plan - post employment	76,815	94,456	71,620
Healthcare plan	46,435	41,269	33,542
Healthcare plan - management	101	57	41
	176,196	182,878	150,845

F-71

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Changes in the post-employment benefits

	Current	Noncurrent
	liabilities	liabilities	Total
Balance as of January 1, 2012 - Restated	36,037	419,253	455,290
Appropriation of actuarial calculation	-	94,610	94,610
Pension and healthcare contributions	101,477	-	101,477
Adjustment related to actuarial losses	-	186,392	186,392
Transfers	25,025	(25,025)	-
Amortizations	(136,720)	-	(136,720)
Balance as of December 31, 2012 - Restated	25,819	675,230	701,049
Appropriation of actuarial calculation	-	76,524	76,524
Pension and healthcare contributions	119,149	-	119,149
Adjustment related to actuarial losses	-	216,967	216,967
Transfers	31,472	(31,472)	-
Amortizations	(146,457)	-	(146,457)
Balance as of December 31, 2013	29,983	937,249	967,232

23.4  Actuarial valuation

23.4.1Actuarial assumptions

The actuarial assumptions used to determine the amounts of liabilities and costs for 2013 and 2012 are shown below:

		2013		2012
	Actual	Nominal	Actual	Nominal
Economic
Inflation p.y.	-	5.93%	-	5.35%
Discount rate expected return on plan assets rate p.y.
Pension plan	6.08%	12.37%	3.30%	8.83%
Healthcare plan	6.20%	12.50%	3.84%	9.40%
Compensation increase p.y.	2.00%	8.05%	2.00%	7.46%
Demographic
Mortality table		AT - 2000		AT - 2000
Disabled mortality table		AT - 83		AT - 83
Disability table		Light M		Light M

23.4.2Number of participants and beneficiaries

	Pension plan		Healthcare plan
	12.31.2013	12.31.2012	12.31.2013	12.31.2012
Number of active participants	9,325	9,637	8,824	9,297
Number of inactive participants	7,211	6,734	6,233	5,417
Number of dependent	-	-	24,307	23,949
Total	16,536	16,371	39,364	38,663

F-72

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

23.4.3Life expectancy from the average age – Annuity Table AT-2000 (in years)

	Plan BD	Plan CD
December 31, 2013
Retired Participants	17.72	26.67
Pensioner Participants	18.48	30.12
December 31, 2012
Retired Participants	18.00	25.30
Pensioner Participants	21.30	33.80

The average age of inactive participants of the healthcare and pension plans of the Company is 64.0 years.

23.4.4Actuarial valuation

Based on the review of the assumptions, the values of the pension plan as of December 31, 2013 amounted to a plan surplus of R$ 362,035, while the position at December 31, 2012 was R$ 578,288, as summarized below:

Benefit plan	Pension plan	Healthcare plan	12.31.2013	Restated 12.31.2012
Defined benefit obligation	3,941,108	1,092,697	5,033,805	5,412,342
Fair value of plan's assets	(4,303,143)	(125,470)	(4,428,613)	(5,290,570)
Plan coverage status	(362,035)	967,227	605,192	121,772
Not recognized asset	362,035	-	362,035	578,288
	-	967,227	967,227	700,060

The Company made an adjustment to its assistance liabilities through the actuarial report issued on September 30, 2013, when it recorded R$ 155,314 in other comprehensive income corresponding to the actuarial loss determined by that date. On December 31, 2013 it was recorded an additional amount of R$ 61,653 corresponding to the actuarial loss determined by the actuarial report issued on December 31, 2013.

F-73

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

23.4.5Changes in actuarial liabilities

	Pension plan	Healthcare plan
Present value of liability actuarial net as of January 1, 2011	3,454,626	548,924
Service cost	22,616	6,507
Interest cost	383,499	62,314
Benefits paid	(243,185)	(100,235)
Actuarial (profits) / losses	190,294	46,313
Present value of liability actuarial net as of December 31, 2011	3,807,850	563,823
Service cost	330	2,341
Interest cost	342,636	83,074
Benefits paid	(264,676)	(13,278)
Benefits granted	244	-
Actuarial (profits) / losses	677,202	212,796
Present value of liability actuarial net as of December 31, 2012	4,563,586	848,756
Service cost	1,115	11,852
Interest cost	359,412	62,241
Benefits paid	(249,939)	(46,373)
Benefits granted	(244)	-
Actuarial (profits) / losses	(732,822)	216,221
Present value of liability actuarial net as of December 31, 2013	3,941,108	1,092,697

23.4.6Changes in plan assets

	Pension plan	Healthcare plan
Fair value of plan assets as of January 1, 2011	3,939,606	128,560
Expected return of plan assets	441,922	13,556
Contributions sponsor and employees	24,121	-
Benefits paid	(243,185)	(100,235)
Actuarial gains (losses)	(178,321)	78,909
Fair value of plan assets as of December 31, 2011	3,984,143	120,790
Expected return of plan assets	421,581	13,867
Contributions sponsor and employees	27,027	-
Benefits paid	(264,676)	(13,277)
Benefits granted	244	-
Actuarial gains (losses)	973,555	27,316
Fair value of plan assets as of December 31, 2012	5,141,874	148,696
Expected return of plan assets	438,761	-
Contributions sponsor and employees	2,077	-
Benefits paid	(249,939)	(46,373)
Benefits granted	(244)	-
Actuarial gains (losses)	(1,029,386)	23,147
Fair value of plan assets as of December 31, 2013	4,303,143	125,470

23.4.7Estimated costs

The estimated net periodic plan costs (gains) for 2014, for each plan, are shown below:

	Pension plan	Healthcare plan	2014
Cost of current service	999	8,055	9,054
Cost of estimated interest	405,498	110,900	516,398
Expected return on plan assets	(524,992)	(15,945)	(540,937)
Estimated contributions of employees	(399)	-	(399)
Costs (gains)	(118,894)	103,010	(15,884)

F-74

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

23.4.8Sensitivity Analysis

The following tables feature a sensitivity analysis which shows the effect of a one percent increase or decrease in the assumed rates of variation of pension and healthcare costs on the aggregate service cost and interest cost components of the net periodic post-employment pension and healthcare costs and on the accumulated postemployment pension and healthcare benefit liabilities.

.	Projected scenario
	Present	Increase 1%	Decrease 1%
Sensitivity of the rate of long-term interest
Impacts on the obligations of the pension	6.08%	-7.56%	10.13%
Impacts in thousands of reais - R$		(245,977)	329,550
Impacts on the obligations of health program	6.20%	-17.66%	12.28%
Impacts in thousands of reais - R$		(158,967)	110,499
Sensitivity of the to grow rate of medical costs
Impacts on the obligations of health program	1.00%	4.68%	-12.63%
Impact on cost of service the following year (R$)		58,552	(129,763)
Sensitivity of the service cost
Impacts on the obligations of the pension	1.00%	-0.40%	0.31%
Impacts in thousands of reais - R$		(15,589)	12,323
Impacts on the obligations of health program	1.00%	-1.33%	0.48%
Impacts in thousands of reais - R$		(14,497)	5,217

23.4.9Employee benefits payable

The estimated benefits to be paid by the Company in the next five years and the total benefits for the following fiscal years are shown below:

	Pension plan	Other benefits	Total
2014	421,686	96,050	517,736
2015	436,672	96,431	533,103
2016	449,775	96,928	546,703
2017	460,290	97,668	557,958
2018	949,227	198,411	1,147,638
2020 to 2050	9,888,916	2,603,665	12,492,581

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

23.4.10Asset allocation and investment strategy

The asset allocation for the Company’s pension and healthcare plans at the end of 2013 and the allocation goal for 2014, by asset category, are shown below:

	Goals for 2014	2013
Fixed income	84.2%	85.8%
Variable income	8.8%	10.3%
Loans	1.9%	1.5%
Real Estate	2.0%	1.7%
Structured investments	3.1%	0.7%
	100.0%	100.0%

Below are the limits set by the Fund management:

	Unified Plan (BD)		Plan III (CD)
	goal (%)(*)	minimum (%)	goal (%)(*)	minimum (%)
Fixed income	93.0%	87.0%	67.2%	56.0%
Variable income	1.0%	0.0%	23.8%	10.0%
Loans	1.0%	0.0%	3.5%	2.0%
Real Estate	2.5%	1.0%	1.0%	0.0%
Structured investments	2.5%	0.0%	4.5%	0.0%
(*)     Goal based on the total investment for each plan.
Administration of Copel foundation decided to keep the conservatism related to variable income, in view of the legal limit allowed that is 70%.

On December 31, 2013 and 2012, the pension plan assets included the following securities issued by Copel:

		Defined benefit pension plan
	12.31.2013	12.31.2012
Shares	1,832	1,909
	1,832	1,909

23.4.11Additional information

Copel also sponsors a defined contribution plan for all its employees.

The contributions made in the years ended on December 31, 2013 and 2012 were R$ 70,240, and R$ 59,742, respectively.

F-76

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

24Customer Charges Due

	12.31.2013	12.31.2012
Global Reserval Reserve (RGR)	31,652	15,581
Energy Development Account (CDE)	6,342	23,719
Fuel Consumption Account (CCC)	-	17,198
	37,994	56,498

25Research and Development and Energy Efficiency

25.1  Balances recognized to invest in R&D (Research and Development) and EEP (Energy efficiency program)

.	Applied and	Balance	Balance	Balance as of	Balance as of
	unfinished	to collect	to apply	12.31.2013	12.31.2012
Research and Development - R&D
FNDCT (a)	-	3,771	-	3,771	3,424
MME	-	1,887	-	1,887	1,712
R&D	29,179	-	142,749	171,928	142,384
	29,179	5,658	142,749	177,586	147,520
Energy efficiency program - EEP	40,242	-	64,753	104,995	116,640
	69,421	5,658	207,502	282,581	264,160
			Current	127,860	159,599
			Noncurrent	154,721	104,561
(a)     National Fund for Scientific and Technological Development

F-77

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

25.2  Changes in balances for R&D and EEP

	FNDCT	MME		R&D		EEP
	current	current	current	noncurrent	current	noncurrent
Balance as of January 1, 2012	3,017	1,510	34,910	86,027	117,478	8,622	251,564
Additions	19,296	9,648	842	18,454	-	26,079	74,319
Performance agreement	-	-	-	-	-	145	145
Selic interest rate	-	-	114	9,000	-	5,631	14,745
Transfers	-	-	11,420	(11,420)	37,977	(37,977)	-
Payments	(18,889)	(9,446)	-	-	-	-	(28,335)
Concluded projects	-	-	(6,963)	-	(41,315)	-	(48,278)
Balance as of December 31, 2012	3,424	1,712	40,323	102,061	114,140	2,500	264,160
Additions	21,692	10,847	869	20,825	-	25,109	79,342
Performance agreement	-	-	-	-	-	619	619
Selic interest rate	-	-	111	10,207	-	4,907	15,225
Transfers	-	-	8,121	(8,121)	3,386	(3,386)	-
Payments	(21,345)	(10,672)	-	-	-	-	(32,017)
Concluded projects	-	-	(2,468)	-	(42,280)	-	(44,748)
Balance as of December 31, 2013	3,771	1,887	46,956	124,972	75,246	29,749	282,581

F-78

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

26Accounts Payable related to concession - Use of Public Property

These refer to concession charges for use of public property (UPP).

					Current		Noncurrent
	Grants	Signature	Final	12.31.2013	12.31.2012	12.31.2013	12.31.2012
HHP Mauá (a)	06.29.2007	07.03.2007	07.2042	913	884	12,612	12,083
HHP Colider (b)	12.29.2010	01.17.2011	01.2046	118	-	17,091	15,101
SHP Cavernoso (c)	07.11.2013	07.11.2013	07.2018	35	-	101	-
SHP Apucaraninha (d)	07.11.2013	07.11.2013	07.2018	247	-	702	-
SHP Chopim I (e)	07.11.2013	07.11.2013	07.2015	55	-	26	-
SHP Chaminé (f)	07.11.2013	07.11.2013	07.2018	427	-	1,214	-
Fundão – Santa Clara Hydroelectric
Energy Complex (g)	10.23.2001	10.25.2001	10.2036	49,686	47,593	388,547	371,896
				51,481	48,477	420,293	399,080
Company:
Copel Geração e Transmissão: (a) (b) (c) (d) (e) (f)
Elejor: (g)
Discount rate applied to calculate present value:
Actual net discount rate, in line with the estimated long-term rate. It bears no relationship with the expected project return:
5.65% p.y. (a) 7.74% p.y. (b) (c) (d) (e) (f) 11.00% p.y. (g)
Payment to the federal government:
Monthly installments equivalent to 1/12 of the proposed annual payment of R$ 643 (51% of R$ 1,262), according to clause six of Concession Agreement number 001/07: (a)
Monthly installments equivalent to 1/12 of the proposed annual payment of R$ 1,256, as from the date the hydroelectric power plant starts operations, according to clause six of Concession Agreement number 001/11: (b)
Monthly installments equivalent to 1/12 of the proposed annual payment, according to clause fifth of Concession Agreement number 007/2013,for a period of five years, the values ​​of R$ 34: (c); R$ 240: (d), R$ 53: (e) and R$ 414: (f)
Monthly installments equivalent to 1/12 of the proposed annual payment of R$ 19,000, from the sixth to the thirty-fifth year of concession or while the hydroelectric resources are being explored, according to the bid approval document and clause six of Concession Agreement number 125/01: (g)
Annual adjustment of installments for inflation:
Variation IPCA: (a) (b) (c) (d) (e) (f)
Variation IGP-M: (g)

F-79

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

26.1  Nominal value and present value – use of public property

	Nominal value	Present value
2013	52,392	51,481
2014	53,770	45,954
2015	53,738	41,467
2016	53,738	37,446
After 2016	1,022,841	295,426
	1,236,479	471,774

26.2  Change in Accounts Payable related to concession - Use of Public Property

	Current	Noncurrent
	liabilities	liabilities	Total
Balance as of January 1, 2012	44,656	370,442	415,098
Aneel concession - use of public assets	-	1,886	1,886
Transfers from noncurrent to current liabilities	44,680	(44,680)	-
Payments	(44,411)	-	(44,411)
Monetary variation	3,552	71,432	74,984
Balance as of December 31, 2012	48,477	399,080	447,557
Aneel concession - use of public assets	749	4,338	5,087
Transfers from noncurrent to current liabilities	49,128	(49,128)	-
Payments	(48,966)	-	(48,966)
Monetary variation	2,093	66,003	68,096
Balance as of December 31, 2013	51,481	420,293	471,774

27Other Accounts Payable

		Restated
	12.31.2013	12.31.2012
Financial compensation for use of water resources	22,952	11,786
Public lighting fee collected	21,489	17,852
Reimbursements to customer contributions	19,428	7,650
Customers	18,745	15,661
Pledges in guarantee	14,286	12,109
Consortium partners	3,003	2,063
Other liabilities	37,341	22,682
	137,244	89,803
Current	137,011	89,803
Noncurrent	233	-

F-80

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

28Provision for Contingencies

28.1  Lawsuits with Likelihood of Losses deemed as probable

The Company and its subsidiaries are party to several labor, tax and civil claims filed before different courts. Copel’s management, based on the opinion of its legal counsel, maintains a provision for contingencies in connection with lawsuits with probable chance of an unfavorable outcome.

Change in provision for contingencies

	Balance as of			Construction		Balance as of
	January 1, 2013	Additions	(-) Reversals	cost	Discharges	December 31, 2013
Tax (28.1.1)
Cofins (a)	243,131	-	-	-	-	243,131
Others taxes	51,445	14,096	(21,433)	-	-	44,108
	294,576	14,096	(21,433)	-	-	287,239
Labor (28.1.2)	154,990	53,964	(1,577)	-	(11,323)	196,054
Employee benefits (28.1.3)	78,670	88,359	(45,563)	-	(26,657)	94,809
Civil (28.1.4)
Suppliers (a)	68,630	-	(3,855)	-	-	64,775
Civil and administrative law (b)	176,811	49,210	(21,621)	-	(6,562)	197,838
Easements	5,964	5,771	(953)	-	(143)	10,639
Condemnation and real estate (c)	317,472	35,063	-	943	(17)	353,461
Customers	7,477	3,024	(868)	-	-	9,633
	576,354	93,068	(27,297)	943	(6,722)	636,346
Environmental claims (28.1.5)	193	35	(17)	-	-	211
Regulatory (28.1.6)	50,925	5,328	(4,785)	-	-	51,468
	1,155,708	254,850	(100,672)	943	(44,702)	1,266,127

	Balance as of				Additions to		Balance as of
	January 1, 2012			Construction	fixed assets		December 31, 2012
	Restated	Additions	(-) Reversals	cost	in progress	Discharges	Restated
Tax (28.1.1)
Cofins (a)	234,563	8,568	-	-	-	-	243,131
Others taxes	47,371	20,551	(9,180)	-	-	(7,297)	51,445
	281,934	29,119	(9,180)	-	-	(7,297)	294,576
Labor (28.1.2)	128,505	47,859	(1,893)	-	-	(19,481)	154,990
Employee benefits (28.1.3)	58,089	33,945	(149)	-	-	(13,215)	78,670
Civil (28.1.4)
Suppliers (a)	88,003	2,179	(21,552)	-	-	-	68,630
Civil and administrative law (b)	112,059	92,975	(19,132)	-	-	(9,091)	176,811
Easements	4,839	1,315	(176)	-	-	(14)	5,964
Condemnation and real estate (c)	273,647	38,999	(93)	1,064	3,855	-	317,472
Customers	5,493	4,490	(2,506)	-	-	-	7,477
	484,041	139,958	(43,459)	1,064	3,855	(9,105)	576,354
Environmental claims (28.1.5)	104	89	-	-	-	-	193
Regulatory (28.1.6)	48,147	2,976	(160)	-	-	(38)	50,925
	1,000,820	253,946	(54,841)	1,064	3,855	(49,136)	1,155,708

F-81

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

28.1.1Tax claims

a)Contribution for the Financing of Social Security - COFINS

Lawsuit no. 10980.004398/2010-09 – Curitiba Federal Revenue Service Office

This is a tax administrative proceeding (assessment of deficiency) whereby the Brazilian Federal Revenue Service intends to collect COFINS (Tax for Social Security Financing) for the period from August 1995 to December 1996, as a result of the final and non-appealable decision rendered on lawsuit 2000.04.01.100266-9 filed by the federal government, overturning the ruling in lawsuit no. 95.0011037-7 which had recognized the Company’s immunity from payment of COFINS tax.

Given the opinion of the federal tax authorities, the lack of case law precedent, the complexity and specifics of both facts and legal matter involved, the principal of R$ 48,814 was rated as a probable loss and the interest and fine are subject to another proceeding (11453.720001/20011-23) and at December 31, 2013 amount to R$ 122,542, was classified as a possible risk of defeat, as the cases of defense are different for the principal and the charges.

Lawsuit no. 10980.720458/2011-15 – Curitiba Federal Revenue Service Office

This is a tax administrative proceeding (assessment of deficiency) whereby the Brazilian Federal Revenue Service intends to collect COFINS (Tax for Social Security Financing) for the period from October 1998 to June 2001, as a result of the final and non-appealable decision rendered on lawsuit 2000.04.01.100266-9 filed by the federal government, overturning the ruling in lawsuit no. 95.0011037-7 which had recognized the Company’s immunity from payment of COFINS tax.

The Federal Revenue Services understands that the sentence for the Rescission Claim had suspended the liability period for constituting the aforementioned tax credit.

Given the lack of law precedent, the complexity and specifics of both facts and legal matter involved, the principal of R$ 194,317 was rated as a probable loss and the interest and fine on said tax liability at December 31, 2013 amount to R$ 616,284, was classified as a possible risk of defeat, as the cases of defense are different for the principal and the charges.

28.1.2Labor claims

Labor claims comprise claims filed by former employees of Copel in connection with the payment of overtime, hazardous working conditions, transfer bonuses, salary equality/reclassification, and other matters, and also claims by former employees of contractors and third-parties (secondary responsibility) involving indemnity and other matters.

28.1.3Employee benefits

These are labor claims by retired Copel employees against the Fundação Copel, which will consequently reflect on the Company as additional contributions are required.

F-82

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

28.1.4Civil claims

a)Suppliers 

Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A.

The companies Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A. required the filing of an arbitration proceeding with the Chamber of Arbitrage of the Fundação Getúlio Vargas, through which they plead the payment of the overdue instalment values, as well as cancellation fines, related to the electric energy purchase and sale agreements signed with Copel Distribuição. The arbitrage proceedings were judged to be valid and, consequently, Copel Distribuição was sentenced to pay the claimed amounts plus the attorney’s fees. The Company has filed for a court order at the Superior Court of Justice making the arbitration ruling void.

Given that both companies have identified the pledged amounts (R$ 35,913 on June 17, 2010, R$ 22,823 on October 1, 2009 and R$ 11,833 on February 03, 2010), the legal directors have continued to classify the action as representing a probable loss, highlighting that the same bank bond letters were presented as guarantee for the amounts identified. In addition to the legal discussion, at the end of 2011 the remaining balance of R$ 27,438 was executed and as a result a bank account was blocked. This execution was challenged by Copel Distribuição, which is the reason why management decided to record a financial provision for the legal claims, for the original value of the debts monetary adjusted to December 31, 2013, which amounts to R$ 89,025. Of this amount, R$ 24,250 has been recorded to suppliers.

The judge of the 3^rd Public Finance Court ruled the amount of R$ 22,162 is outstanding, and released the amounts of R$ 12,790 and R$ 9,372 to the enforcement creditors on 04.12.2012, via a bank guarantee. The matter is still under consideration and has been subject to an appeal.

b)Civil and administrative claims

Tradener Ltda.

Lawsuits involving Tradener Ltda, where it is reported that it signed a contract for sale of power, with Copel on December 1, 1998 in which the plaintiff undertook to “sell” under the best conditions to Copel, all the surplus of purchase and all the surplus of assured power with the effective prices, quantities and conditions to be stipulated in the agreements for purchase and sale of electric power.

Aiming at a declaration of nullity of this contract the following lawsuits were filed:

- Popular Action (case record 37879/0000 of the 1^st Court of the Public Treasury of Curitiba)

- Popular Action (case record 720/2001 of the 1^st Court of the Public Treasury of Curitiba)

F-83

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

- Public Civil Action (case record 421/2003 of the 2nd Court of the Public Treasury of Curitiba)

- Nullifying Declaratory Action (case record 1583/2005 of the 1st Court of the Public Treasury of Curitiba)

- Nullifying Declaratory and Condemnatory Action (case record 0000659-69.2006.8.16.0004 of the 2nd Court of the Public Treasury of Curitiba)

In the above lawsuits values were not discussed, only the validity or otherwise of the contract of sale entered into between Tradener and Copel and of the contracts for sale of electricity in which Tradener figured as broker. The possibility of annulment of the contracts is remote considering decisions already handed down in some of the processes above.

In light of an injunction issued in case record 421/2003 of the Public Civil Action, the execution of the contract was suspended, however, recently there was the revocation of the injunction.

Accordingly, Tradener filed the following lawsuits for collection, aiming at receiving its commissions:

- case record 0005990-22.2012.8.16.0004 - 1st Court of the Treasury of Curitiba - the lawsuit was brought to collect the commissions owed ​​by Copel to Tradener because of the intermediation by the latter in the agreements for sales of power entered into by Copel with the company - Centrais Elétricas de Santa Catarina (Celesc). In this lawsuit, after the financial and commercial checking of the values​​, only the principal amount of R$ 43,133 was considered likely as the charging of monetary restatement in the amount of R$ 19,918 is being challenged, considering that the execution of the contract was suspended by an injunction and therefore this adjustment would not be charged, and it is classified as possible.

- case record 05550-26.2012.8.16.0004 - 4th Court of the Treasury of Curitiba - the lawsuit was brought to collect the commissions owed - by Copel to Tradener because of the intermediation by the latter in the agreements for sale of power entered into by Copel with the companies - Carbocloro S.A. Indústrias Químicas, Companhia Luz e Força Santa Cruz, Elektro Eletricidade e Serviços S.A., Opp Polietilenos S.A, and Enron Comercializadora de Energia Ltda. In this lawsuit, after the financial and commercial checking of the values, only the principal amount of R$ 21,687 was considered likely as the charging of monetary restatement in the amount of R$ 16,507 is being challenged, considering that the execution of the contract was suspended by an injunction and therefore this adjustment would not be charged, and it is classified as possible.

F-84

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

c)Easements, condemnation and real estate

Ivaí Engenharia de Obras S.A.

In a lawsuit filed before the 1st Fiscal Court of Curitiba, Ivaí Engenharia de Obras S.A. won the right to receive credits from Copel Geração e Transmissão in connection with the execution of contract D-01, which comprised the Jordão River diversion works. These credits were a compensation for a supposed economic and financial imbalance in the contract. Based on this ruling, Ivaí filed a separate collection lawsuit before the 4th Fiscal Court of Curitiba and obtained a ruling ordering Copel to pay the amount of R$ 180,917, as of October 31, 2005, plus restatement by the average between the INPC and IGP-DI inflation indicators, delinquent interest of 1% a month, and 3.2% as legal fees.

The appeal claim, currently in progress in the Superior Court of Justice (Superior Tribunal de Justiça or STJ), covers the absence of economic and financial imbalance in the contract, as well as the nullity of the calculation performed by the judicial expert, who used wrong parameters to obtain the value of condemnation, causing interest rates to be applied in duplicity (Selic rate + interest rate). Although the Justice Court has dismissed the duplicity in the incidence of interest from the elaboration of the expert report, it did not examine the appeal reasoning that showed that the calculation contained within the expert report was wrong.

In June 2013 the writ of certiorari number 1,096,906 was granted and Judge Castro Meira, followed by Judges Humberto Martins and Mauro Campbell Marques reviewed the prior decision against Copel and refused to change it, while Judge Herman Benjamin, defeated, considered Copel's appeal to be groundful.

The decision was published on September 27, 2013. Copel filed a motion for clarification of judgment, highlighting that the defeated vote given by Judge Herman Benjamin should prevail, in addition to pointing that the accumulated SELIC (Central Bank overnight rate) was not addressed and debated by the Judging Panel and the appeal is awaiting judgment by the reporting judge, Judge Og Fernandes.

Until the conclusion of judgment and in view of the unfavourable vote and of the analysis of previous decisions ruled by the other Ministers that participated in the trial, the Company’s senior management, proceeded to a detailed review of the process course over the last months of 2011 and decided to remeasure the value to be provisioned, from R$ 125,000, which represented the original value of the debt in question, adjusted with legal interest and restated by inflation indexes, to R$ 312,816, once considered the form of adjustment of the debt, which is still under discussion, only dismissing the incidence of interest in the expert’s calculation, and maintaining the charge of Selic rate, and, from that point, restating the value based on the parameters fixed on the judgment by the Justice Court of the State of Paraná – TJPR (interest + monetary restatement). Thus, the value provisioned reflects the expectation of the Company in the event of an unfavorable closure to this claim.

F-85

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The accumulation of interest, in this case, Selic interest rate plus interest on arrears is a situation rejected by the Judiciary Power, and it was already denied by the Supreme Justice Court (STJ) in numerous precedents. For this reason, it is also an appropriate approach to consider as a possible risk the loss of the difference in the value deemed as probable and the eventual total value of the condemnation, which is R$ 259,534, as of December 31, 2013. In such case, the Company considers that the likelihood of a favorable outcome is higher than 50% given the prior decisions rendered by the Superior Court of Justice (STJ) about the issue and the fact that the Court of Justice of the State of Parana and the STJ neither addressed the issue nor expressly dismissed Copel's request for the non-cumulative levy of the tax. This ensures that, when the issue is thoroughly analyzed, the understanding consolidated by the Superior Court of Justice will prevail.

The publication of the decision on the special appell review by the Superior Court of Justice showed that the thesis about the improper accrual of interest has not been properly addressed by the plenary body, to the extent that it only refers to the illegal accrual of interest as from the preparation of the expert report. Accordingly, the Company expects that the issue is directly addressed, thoroughly analyzed and corrected when the motion for clarification of judgment is judged and that the accrual as from the issue of the expert report is ruled out.

Provisional enforcement was filed by Ivaí, so Copel filed a preliminary injunction before the STJ which was awarded by Judge Castro Meira, thereby staying said enforcement. After the Special Appeal had been heard for the collection proceedings, Ivaí requested the injunction be overturned, which was contested by Copel, meaning the stay would remain until final judgment of the subsequent appeals. The STJ ruled the case had lost its grounds, meaning Copel filed a special appeal, which was rejected. Copel's motion for clarification is now pending judgment. vaí has resumed the demand for temporary court enforcement of the debt, Copel challenged Ivaí's claims and according to a decision published on February 28, 2014, the judge found the challenge to have no grounds and established a period of 30 days for the defendant to deposit the full execution amount of R$ 538,209, in other words, by March 28, 2014.

The unfavorable decision in the Special Appeal in the Cancelation Claim, overseen by Judge Arnaldo Esteves Lima, in which Copel is seeking the recognition of the debt due to the lack of its right to claim differences as a result of the performance of full settlement and transaction agreements, and a decision against which the Company has filed two motions for clarification, which were partially accepted, and filed an extraordinary appeal before the Federal Supreme  Court, the analysis of which was denied, meaning a special appeal was subsequently filed, which is still pending judgment.

F-86

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

28.1.5Environmental claims

Environmental claims involving Copel and its subsidiaries usually comprise class entity suits whose goal is to stop the environmental licensing process for new projects or the recovery of permanent protection areas around electricity plant reservoirs which have been illegally used by individuals. Copel estimates that unfavourable outcomes would result only in the cost of new environmental studies and of the recovery of Company-owned land.

28.1.6Regulatory claims

The Company is disputing, both administratively and judicially, notifications issued by the regulatory agency in connection with supposed regulatory violations, including the charge of R$ 40,425 in lawsuits involving Companhia Estadual de Energia Elétrica - CEEE and Dona Francisca Energética S.A., in which ANEEL Ruling no. 288/2002 is being disputed. The probable success in these lawsuits will result in changes in CCEE (Spot Market) accounting, which would require the recording of a provision for these amounts, since Copel would be required to pay off the amounts due.

28.2  Main lawsuits with losses deemed as possible

	12.31.2013	12.31.2012
Tax (28.2.1)	1,384,115	1,227,536
Labor	342,887	257,382
Employee benefits	97,979	41,390
Civil (28.2.2)	1,006,786	810,764
Regulatory	56,193	19,200
	2,887,960	2,356,272

Detailing the main claims

28.2.1Tax claims

·Administrative Proceeding 11453.720001/2011-23 deriving from the Tax for Social Security Financing (Cofins) Cancelation Action 2000.04.01.100266.9, refers to Cofins interest and fine for the period 95/96, and, owing to strong arguments presented for the defense of these charges, its classification has been assessed as possible. This debt's principal, however, was assessed as probable and is the subject matter of discussion in the Tax Foreclosure 5015930-53.2010.404.7000 filed by the Union, in progress at the 2^nd. Federal Circuit Court, appealed by Copel (case records of appeal lodged against Foreclosure 5022933-59.2012.404.7000). Administrative Proceeding 10980720458/2011-15, also arising from 2000.04.01.100266.9 regarding Cofins, in the total amount of R$ 738,826, as of December 31, 2013. Additional information on this action has been described in Item 28.1.1;

·Fiscal requirements according to Fiscal Notification of Debt Record – NFLD no. 35.273.870-7, with approximate value of R$ 181,014 on December 31, 2013, authored by the National Institute of Social Security – INSS, against Copel, and related to the fiscal execution of social contribution; and

F-87

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

·Fiscal requirements according to NFLD no. 35.273.876-6, with approximate value of R$ 76,162  on December 31, 2013, authored by the INSS, against Copel, and related to the fiscal execution of social contribution levied upon labor transfer.

28.2.2Civil claim

·Civil claim related to the indemnification lawsuit no. 166-53.2011.8.16.0122, authored by Mineradora Tibagiana Ltda, and whose defendant is the Consórcio Energético Cruzeiro do Sul – CECS, which Copel Geração e Transmissão detains 51%. The author claims being the owner of a mining decree issued by the National Department of Mineral Production – DNPM, and defends that with the mining decree, it is the legitimate holder of ownership and control of the area around Tibagi River. The indemnification claimed refers to alleged losses in the Company’s mining operations due to the construction work of the Mauá Hydroelectric Power Plant. In the course of the proceeding Mineradora Tibagiana partially withdrew its initial petition, which led to a new initial indemnification amount of R$ 260,197, restated on December 31, 2013 and classified as possible. The case is now pending an opening order.

·Ivaí Engenharia de Obras S.A – Lawsuit which consists on the claim for compensation for an alleged imbalance in the financial economical equation in the contract signed with Copel. The Company’s senior management classified as a risk of possible loss for this lawsuit the value of R$ 259,534 on December 31, 2013. Additional information of this process is described in Note no. 28.1.4-c.

·Filing of 5 individual claims as a result of the 5 franchise contracts for Copel branches/stores, with the main petition claiming an extension of the term of the contract and secondary petition to recognize the existence of a subconcession, with transfer of the services provided and full pass-through of the fees, amongst other amounts. In the case filed regarding the franchise of the Faxinal branch, the judge of the 4th Federal Court of Curitiba deemed the secondary petition to have grounds. Copel appealed against the award of the Federal Regional Court of Region 4 - TRF4, which was ruled in favor of the Company in full on July 25, 2012. The plaintiff filed a special and extraordinary appeal, which was entertained by TRF4. Company Management rated the amount of R$ 6,500 as a possible risk (corresponding to O&M and restated commercial charges). This plaintiff also filed a complaint before the STF, the entertainment of which was denied by Judge Marco Aurélio de Mello. The plaintiff filed a special appeal against the decision, which was denied, and then filed a motion for clarification, which is pending judgment.

      In the case filed regarding the franchise of the São José dos Pinhais, branch, the judge of the 4th Federal Court of Curitiba deemed the secondary petition to have grounds. Copel filed a motion for clarification, which is pending judgment. Company management rated the case as a possible risk of defeat, amounting to R$ 21,175 (corresponding to O&M and restated commercial charges).

F-88

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

29Equity 

29.1  Equity attributable to Parent Company

29.1.1Capital 

As of December 31, 2013 (and December 31, 2012), Copel’s paid-in share capital was R$ 6,910,000. The different classes of shares (with no par value) and main shareholders are detailed below:

								Number of shares in units
Shareholders	Common		Classe A Preferred		Classe B Preferred		Total
	in share	%	in share	%	in share	%	in share	%
State of Paraná	85,028,598	58.63	-	-	13,639	0.01	85,042,237	31.08
BNDESPAR	38,298,775	26.41	-	-	27,282,006	21.27	65,580,781	23.96
Eletrobras	1,530,774	1.06	-	-	-	-	1,530,774	0.56
Free Float:
BM&FBOVESPA (a)	19,785,122	13.64	129,427	33.91	66,922,146	52.18	86,836,695	31.73
NYSE (b)	92,021	0.06	-	-	33,923,506	26.45	34,015,527	12.43
Latibex (c)	-	-	-	-	58,984	0.05	58,984	0.02
Municipalities	178,393	0.12	9,326	2.44	3,471	-	191,190	0.07
Other shareholders	117,397	0.08	242,949	63.65	38,841	0.04	399,187	0.15
	145,031,080	100.00	381,702	100.00	128,242,593	100.00	273,655,375	100.00
(a)     São Paulo Stock, Commodities, and Futures Exchange (b)     New York Stock Exchange (c)     Latin American Exchange in Euros, related to the Madrid Exchange

The market value of Company stock as of December 31, 2013, is shown below:

	Number of shares in units	Market Value
Common shares	145,031,080	3,234,148
Class "A" preferred shares	381,702	11,451
Class "B" preferred shares	128,242,593	3,923,793
	273,655,375	7,169,392

F-89

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

29.1.2Equity Valuation Adjustments

Changes in the equity valuation adjustments

	Equity Valuation Adjustments	Accumulated Other Comprehensive Income	Total
Balance as of January 1, 2011 - Restated	1,546,053	13,463	1,559,516
Adjustment related to financial assets classified as available for sale:
Financial investments	-	2,962	2,962
Taxes on gains on financial assets	-	(1,007)	(1,007)
Accounts receivable related to the concession - Copel Distribuição	-	(7,282)	(7,282)
Taxes on gains on financial assets	-	2,476	2,476
Financial investments Held for Sale	-	5,647	5,647
Taxes on gains on financial assets	-	(1,920)	(1,920)
Adjustments for actuarial liabilities
Post-employment benefits	-	13,585	13,585
Taxes on making adjustments	-	(4,620)	(4,620)
Realization of equity evaluation adjustments:
Deemed cost of fixed asstes	(156,532)	-	(156,532)
Taxes on making adjustments	53,221	-	53,221
Balance as of December 31, 2011 - Restated	1,442,742	23,304	1,466,046
Adjustment related to financial assets classified as available for sale:
Financial investments	-	2,261	2,261
Taxes on gains on financial assets	-	(768)	(768)
Accounts receivable related to the concession - Copel Distribuição	-	(13,116)	(13,116)
Taxes on gains on financial assets	-	4,459	4,459
Financial investments Held for Sale	-	406	406
Taxes on gains on financial assets	-	(139)	(139)
Other Gains:
Other gains - credit from parent company	-	3,164	3,164
Taxes on gains on financial assets	-	(1,076)	(1,076)
Adjustments for actuarial liabilities
Post-employment benefits	-	(207,947)	(207,947)
Taxes on making adjustments	-	63,374	63,374
Realization of equity evaluation adjustments:
Deemed cost of fixed asstes	(154,006)	-	(154,006)
Taxes on making adjustments	52,362	-	52,362
Attributable to non-controlling interest	-	(626)	(626)
Balance as of December 31, 2012 - Restated	1,341,098	(126,704)	1,214,394
Adjustment related to financial assets classified as available for sale:
Financial investments	-	(6,929)	(6,929)
Taxes on gains on financial assets	-	2,356	2,356
Financial investments Held for Sale	-	(306)	(306)
Taxes on gains on financial assets	-	104	104
Adjustments for actuarial liabilities
Post-employment benefits	-	(216,967)	(216,967)
Taxes on making adjustments	-	73,769	73,769
Post-employment benefits	-	18,881	18,881
Realization of equity evaluation adjustments:
Deemed cost of fixed asstes	(154,763)	-	(154,763)
Taxes on making adjustments	52,620	-	52,620
Balance as of December 31, 2013	1,238,955	(255,796)	983,159

F-90

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

29.1.3Proposed dividends distribution

	12.31.2013	12.31.2012
Calculation of the minimum dividend (25%) - (1)
Net income	1,072,560	700,688
Legal reserves (5%)	(53,628)	(35,034)
Realization of equity valuation adjustment	102,143	101,644
Basis for calculating minimum dividend	1,121,075	767,298
	280,269	191,824
Total proposed distribution - (2) (3+5)	560,537	268,554
Proposed dividends, gross - (3)	180,000	138,072
IRRF tax interest on equity	(16,107)	(12,256)
Proposed dividends, net - (4)	163,893	125,816
Proposed dividends - (5)	380,537	130,482
Total proposed distribution, net - (6) (4+5)	544,430	256,298
Additional proposed dividends (7) (6-1)	264,161	64,474
Anticipated payments proposed at 119th GSM - (8)	308,932	-
Interest on own capital, net	163,893	-
Dividends	145,039	-
Advanced payment exceeding minimum dividend - (9) (8-1)	28,663	-
Additional proposed dividends adjusted (10) (7-9)	235,498	-
Gross dividend per share:
Common shares	1.95572	0.93527
Class "A" preferred shares	2.52507	2.52507
Class "B" preferred shares	2.15165	1.02889
Gross amount of dividends per share classes:
Common shares	283,640	135,643
Class "A" preferred shares	964	964
Class "B" preferred shares	275,933	131,947

F-91

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

29.1.4Basic and diluted earnings per share

	12.31.2013	12.31.2012	12.31.2011
Basic and diluted numerator
Basic and diluted net income per share category, attributable
to parent company
Common shares	542,819	354,383	585,809
Class "A" preferred shares	1,714	1,600	2,064
Class "B" preferred shares	528,027	344,705	569,817
	1,072,560	700,688	1,157,690
Basic and diluted denominator
Weighted average number of shares (in thousands)
Common shares	145,031,080	145,031,080	145,031,080
Class "A" preferred shares	381,737	383,303	387,134
Class "B" preferred shares	128,242,558	128,240,992	128,237,161
	273,655,375	273,655,375	273,655,375
Basic and diluted earning per share attributable to
Parent Company
Common shares	3.74278	2.44350	4.03920
Class "A" preferred shares	4.49001	4.17424	5.33150
Class "B" preferred shares	4.11741	2.68795	4.44350

29.2  Change in equity attributable to non-controlling interest

Percentage of share capital	Compagas: 49%	Elejor: 30%	UEG Araucária: 20%	Consolidated
Balance as of January 1, 2011	95,393	41,464	128,846	265,703
Refund of advance for future capital increase	-	(30,813)	-	(30,813)
Proposed dividends	(10,109)	(1,111)	-	(11,220)
Results for the year	15,891	4,675	(1,402)	19,164
Balance as of December 31, 2011	101,175	14,215	127,444	242,834
Proposed dividends	(2,415)	(2,371)	-	(4,786)
Equity Valuation Adjustment	-	626	-	626
Results for the year	10,170	9,989	5,673	25,832
Balance as of December 31, 2012	108,930	22,459	133,117	264,506
Proposed dividends	(2,531)	(13,437)	-	(15,968)
Results for the year	9,058	12,584	7,233	28,875
Balance as of December 31, 2013	115,457	21,606	140,350	277,413

F-92

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

30Operating Revenues

	Gross	PIS/Pasep		Regulatory	Service tax	Net revenues
	revenues	& Cofins taxes	ICMS (VAT)	charges (30.5)	(ISSQN )	12.31.2013
Electricity sales to final customers (30.1)	5,111,048	(447,215)	(1,279,446)	(39,738)	-	3,344,649
Electricity sales to distributors (30.2)	2,188,092	(188,282)	-	(67,548)	-	1,932,262
Use of the main transmission grid (30.3)	3,296,753	(309,979)	(830,890)	(126,908)	-	2,028,976
Construction revenues	1,076,141	-	-	-	-	1,076,141
Revenues from telecommunications	183,695	(9,430)	(32,548)	-	(402)	141,315
Distribution of piped gas	467,750	(42,993)	(56,137)	-	-	368,620
Other operating revenues (30.4)	345,680	(55,715)	-	-	(1,714)	288,251
12,669,159		(1,053,614)	(2,199,021)	(234,194)	(2,116)	9,180,214
	Gross	PIS/Pasep		Regulatory	Service tax	Net revenues
	revenues	& Cofins taxes	ICMS (VAT)	charges (30.5)	(ISSQN )	12.31.2012
						Restated
Electricity sales to final customers (30.1)	4,226,962	(391,587)	(1,170,153)	(39,713)	-	2,625,509
Electricity sales to distributors (30.2)	1,865,708	(178,943)	(195)	(63,063)	-	1,623,507
Charges for the use of the main transmission grid (30.3)	5,177,834	(467,475)	(1,205,203)	(674,523)	-	2,830,633
Construction revenues	749,763	-	-	-	-	749,763
Revenues from telecommunications	163,961	(8,701)	(29,244)	-	(451)	125,565
Distribution of piped gas	413,012	(37,969)	(50,031)	-	-	325,012
Other operating revenues (30.4)	240,863	(26,140)	-	-	(1,460)	213,263
12,838,103		(1,110,815)	(2,454,826)	(777,299)	(1,911)	8,493,252
	Gross	PIS/Pasep		Regulatory	Service tax	Net revenues
	revenues	& Cofins taxes	ICMS (VAT)	charges (30.5)	(ISSQN )	12.31.2011
Electricity sales to final customers (30.1)	3,673,054	(340,261)	(972,849)	(29,116)	-	2,330,828
Electricity sales to distributors (30.2)	1,659,996	(158,771)	(399)	(60,995)	-	1,439,831
Charges for the use of the main transmission grid (30.3)	5,201,169	(472,181)	(1,278,736)	(687,884)	-	2,762,368
Construction revenues	741,726	-	-	-	-	741,726
Revenues from telecommunications	152,117	(9,144)	(25,285)	-	(562)	117,126
Distribution of piped gas	349,801	(31,934)	(43,926)	-	(8)	273,933
Other operating revenues (30.4)	133,473	(12,858)	(1)	(9,213)	(1,048)	110,353
11,911,336		(1,025,149)	(2,321,196)	(787,208)	(1,618)	7,776,165

30.1  Electricity sales to final customers by category

	Gross income					Net income
	12.31.2013	12.31.2012	12.31.2011	12.31.2013	12.31.2012	12.31.2011
Residential	1,605,604	1,302,177	1,223,657	1,074,119	782,292	771,674
Industrial	1,956,127	1,493,166	1,224,103	1,263,068	926,562	757,293
Commercial, services and other activities	1,022,977	950,689	807,489	626,881	573,831	498,948
Rural	194,085	177,083	158,644	165,078	148,869	134,124
Public agencies	118,263	114,038	104,218	83,811	79,149	73,870
Public lighting	97,565	92,450	77,049	60,070	56,242	47,062
Public services	116,427	97,359	77,894	71,622	58,564	47,857
	5,111,048	4,226,962	3,673,054	3,344,649	2,625,509	2,330,828

F-93

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

30.2  Electricity sales to distributors 

			Gross income
	12.31.2013	12.31.2012	12.31.2011
Agreements for Power Trade on the Regulated Market - CCEAR (auction)	775,924	1,335,263	1,280,176
Bilateral contracts	863,244	295,049	237,279
Electric Energy Trading Chamber - CCEE	548,073	235,396	142,541
Sale of electric power in the short-term	851	-	-
	2,188,092	1,865,708	1,659,996

30.3  Use of the main transmission grid  

			Gross income			Net income
	12.31.2013	12.31.2012	12.31.2011	12.31.2013	12.31.2012	12.31.2011
		Restated	Restated		Restated	Restated
Residential	1,232,186	1,657,936	1,606,837	720,321	830,282	785,887
Industrial	632,508	1,222,544	1,413,901	357,094	576,406	670,214
Commercial, services and other activities	755,869	1,104,355	1,106,635	445,273	564,262	541,595
Rural	167,640	230,829	217,114	136,798	165,591	154,700
Public agencies	99,147	143,238	142,898	66,815	83,875	82,594
Public lighting	87,666	110,562	110,302	51,198	53,448	53,118
Public services	58,574	102,408	106,806	34,025	50,700	51,809
Free customers	140,135	204,768	197,789	121,705	156,469	150,725
Basic Network, BN connections, and connection grid	1,109	2,520	2,367	963	1,925	1,804
Operation and maintenance (O&M) revenues	90,385	52,048	44,584	68,029	46,693	40,584
Effective interest revenues	31,534	346,626	251,936	26,755	300,982	229,338
	3,296,753	5,177,834	5,201,169	2,028,976	2,830,633	2,762,368

30.4  Other operating revenues

			Gross income
	12.31.2013	12.31.2012	12.31.2011
Leases and rentals (Note 30.4.1)	180,128	162,989	88,909
Reimbursement for unavailability of electricity generation	77,527	12,068	-
Revenues from services	63,209	53,085	37,975
Charged service	9,082	8,214	5,306
Other revenues	15,734	4,507	1,283
	345,680	240,863	133,473

30.4.1Revenue from leases and rentals

	12.31.2013	12.31.2012	12.31.2011
Araucária Thermal Power Plant	101,628	95,253	32,804
Equipment and facilities	77,241	66,177	54,442
Real estate	603	714	862
Facilities sharing	656	845	801
	180,128	162,989	88,909

The Company has not identified any operating lease receivables which are non cancellable.

F-94

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

30.5  Regulatory Charges

	12.31.2013	12.31.2012	12.31.2011
Energy Development Account (CDE)	79,994	282,683	249,799
Research and Development and Energy Efficiency Programs - R&D and EEP	79,342	74,319	68,048
Global Reversal Reserve (RGR)	57,050	114,949	107,105
Fuel Consumptuon Account (CCC)	17,808	289,686	348,374
Other charges	-	15,662	13,882
	234,194	777,299	787,208

31Operating Costs and Expenses

	Costs of		General and	Other
Nature of costs and expenses	goods and/or	Sales	administrative	rev. (exp.),
	services	expenses	expenses	net	12.31.2013
Electricity purchased for resale (31.1)	(3,336,359)	-	-	-	(3,336,359)
Charge for the use of main distribution and transmission grid (31.2)	(407,317)	-	-	-	(407,317)
Personnel and management (31.3)	(844,491)	(9,879)	(241,977)	-	(1,096,347)
Pension and healthcare plans (Note 23)	(136,907)	(1,113)	(38,176)	-	(176,196)
Materials and supplies	(62,380)	(935)	(7,163)	-	(70,478)
Materials and supplies for power	(27,187)	-	-	-	(27,187)
Natural gas and supplies for the gas business	(295,671)	-	-	-	(295,671)
Third-party services (31.4)	(293,505)	(41,276)	(88,678)	-	(423,459)
Depreciation and amortization	(551,301)	(44)	(51,103)	(755)	(603,203)
Accruals and provisions (31.5)	-	(47,457)	-	(152,098)	(199,555)
Construction cost (31.6)	(1,088,275)	-	-	-	(1,088,275)
Other costs and expenses (31.7)	5,395	5,089	(103,007)	(251,057)	(343,580)
	(7,037,998)	(95,615)	(530,104)	(403,910)	(8,067,627)

	Costs of		General and	Other
Nature of costs and expenses	goods and/or	Sales	administrative	rev. (exp.),	Restated
	services	expenses	expenses	net	12.31.2012
Electricity purchased for resale (31.1)	(2,807,735)	-	-	-	(2,807,735)
Use of main distribution and transmission grid (31.2)	(772,361)	-	-	-	(772,361)
Personnel and management (31.3)	(944,913)	(8,910)	(291,828)	-	(1,245,651)
Pension and healthcare plans (Note 23)	(141,368)	(996)	(40,514)	-	(182,878)
Materials and supplies	(60,798)	(716)	(8,273)	-	(69,787)
Materials and supplies for power	(25,511)	-	-	-	(25,511)
Natural gas and supplies for the gas business	(247,770)	-	-	-	(247,770)
Third-party services (31.4)	(291,048)	(38,614)	(79,216)	-	(408,878)
Depreciation and amortization	(508,887)	(42)	(40,172)	(754)	(549,855)
Accruals and provisions (31.5)	-	(22,826)	-	(195,970)	(218,796)
Construction cost (31.6)	(733,577)	-	-	-	(733,577)
Other costs and expenses (31.7)	(6,668)	6,445	(81,910)	(155,827)	(237,960)
	(6,540,636)	(65,659)	(541,913)	(352,551)	(7,500,759)

F-95

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Costs of		General and	Other
Nature of costs and expenses	goods and/or	Sales	administrative	rev. (exp.),	Restated
	services	expenses	expenses	net	12.31.2011
Electricity purchased for resale (31.1)	(2,152,545)	-	-	-	(2,152,545)
Use of main distribution and transmission grid (31.2)	(632,518)	-	-	-	(632,518)
Personnel and management (31.3)	(753,022)	(7,747)	(221,858)	-	(982,627)
Pension and healthcare plans (Note 23)	(117,460)	(804)	(32,581)	-	(150,845)
Materials and supplies	(76,213)	(594)	(8,802)	-	(85,609)
Materials and supplies for power	(25,031)	-	-	-	(25,031)
Natural gas and supplies for the gas business	(186,931)	-	-	-	(186,931)
Third-party services (31.4)	(267,603)	(32,882)	(90,198)	-	(390,683)
Depreciation and amortization	(519,536)	(41)	(32,104)	(754)	(552,435)
Accruals and provisions (31.5)	-	(75,556)	-	(214,099)	(289,655)
Construction cost (31.6)	(731,443)	-	-	-	(731,443)
Other costs and expenses (31.7)	5,287	3,860	(74,832)	(224,857)	(290,542)
	(5,457,015)	(113,764)	(460,375)	(439,710)	(6,470,864)

31.1  Electricity purchased for resale

	12.31.2013	12.31.2012	12.31.2011
Contracts for the Sale of Energy in the Regulated Environment - CCEAR	2,305,809	1,927,903	1,585,932
Electric Energy Trading Chamber - CCEE	663,936	312,125	43,947
(-) Transfer CDE - CCEE -Decree 7,945 / 2013	(294,085)	-	-
Itaipu Binational	610,404	503,335	459,649
Bilateral contracts	217,069	203,115	192,082
Program for incentive to alternative energy sources - Proinfa	166,653	143,587	102,638
(-) PIS/Pasep/Cofins taxes on electricity purchased for resale	(333,427)	(282,330)	(231,703)
	3,336,359	2,807,735	2,152,545

31.2  Charges for use of the main transmission grid

	12.31.2013	12.31.2012	12.31.2011
System Service Charges - ESS	308,864	75,485	10,988
(-) Transfer CDE - ESS - Decree 7,945 / 2013	(319,624)	-	-
System usage charges – distribution	216,683	544,597	412,383
System usage charges – basic network and connection	177,846	145,099	221,655
Itaipu transportation charges	51,188	45,217	42,109
Charge reserve energy - EER	16,672	49,228	16,456
(-) PIS/Pasep/Cofins taxes on charges for use of power grid	(44,312)	(87,265)	(71,073)
	407,317	772,361	632,518

F-96

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

31.3  Personnel and Management Expenses

.
		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Personnel
Wages and salaries	663,636	711,470	606,847
Social charges on payroll	210,993	239,267	186,864
Provisions for profit sharing (31.3.1)	80,048	29,940	48,068
Meal assistance and education allowance	86,916	81,593	64,905
Compensation - Voluntary termination Program/retirement	37,925	168,822	64,442
	1,079,518	1,231,092	971,126
Management
Wages and salaries	13,044	11,385	9,538
Social charges on payroll	3,642	3,083	1,871
Other expenses	143	91	92
	16,829	14,559	11,501
	1,096,347	1,245,651	982,627

31.3.1Profit sharing

The Company has carried out an employee profit sharing program, which is paid according to Federal Law – 10,101/2000, the State Decree 1978/2007 and State Law 16,560/2010.

31.3.2Provision for compensation for voluntary redundancy and retirement

Copel established the program for succession and voluntary layoff (PSDV) on March 29, 2011, by Circular Letter no. 031/2011 and amended Circular Letters 049/2011 and 090/2011, on June 22, 2011 and December 06, 2011, respectively, as well as the program for training potential leaders (MBA) as a way of establishing procedures to ensure the retention of the Company’s knowledge in a planned and structured way, to encourage the preparation of its staff for exercising leadership.

However, given the changes that have occurred in the Brazilian scenario, especially with PM 579/2012, and its developments, which have greatly affected the Company’s finances, Management demanded, among other measures, the extinction of the program for succession and voluntary redundancy (PSDV) by Circular Letter 068/2012, from January 01, 2013 and the publication of a new incentivized layoff program, with different rules, through Circular Letter 065/2013 and 069/2013.

F-97

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

31.4  Third-party services

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Maintenance of electrical system	106,175	104,966	90,536
Maintenance of facilities	79,309	73,831	67,321
Communication, processing and transmission of data	51,534	48,921	55,274
Meter reading and bill delivery	35,930	35,744	29,898
Authorized and registered agents	33,801	32,201	27,108
Consulting and audit	15,972	25,805	24,026
(-) PIS/Pasep/Cofins taxes on services from third-parties	(6,063)	(9,190)	(11,347)
Other services	106,801	96,600	107,867
	423,459	408,878	390,683

31.5  Accruals and provisions

	12.31.2013	12.31.2012	12.31.2011
Provisions for doubtful accounts	47,458	22,826	75,556
.
Provisions (reversals) for losses on taxes recoverable	274	(3,135)	46,802
Provisão para desvalorização de participações societárias	-	-	398
Reserve (reversals) for risks
Tax	(7,337)	19,939	(38,689)
Labor	52,387	45,966	2,611
Employee benefits	42,796	33,796	21,289
Civil	63,454	96,499	172,326
Environmental	18	89	62
Regulatory	505	2,816	9,300
	151,823	199,105	166,899
	199,555	218,796	289,655

31.6  Construction cost

		Restated
	12.31.2013	12.31.2012	12.31.2011
Materials and supplies	518,504	371,593	415,098
Third-party services	360,234	248,265	205,757
Personnel and management	118,641	81,942	80,825
Other	90,896	31,777	29,763
	1,088,275	733,577	731,443

F-98

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

31.7  Other costs and expenses

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Financial compensation for use of water resources	131,582	94,550	125,343
Losses in the decommissioning and disposal of assets	71,864	6,147	54,285
Leases and rents (31.7.1)	31,095	27,285	18,377
Indemnities	26,113	28,001	35,880
Advertising	25,902	9,853	4,767
Taxes	25,687	27,735	18,071
ANEEL inspection fee	20,885	21,938	20,125
Sports incentives, Rouanet Law and fund for the rights of children and teenagers - FIA	9,464	12,081	15,420
Recovery of costs and expenses	(49,389)	(61,902)	(40,175)
Other costs and expenses, net	50,377	72,272	38,449
	343,580	237,960	290,542

31.7.1Costs and expenses of leases and rents

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Real estate	25,165	21,846	17,701
Photocopiers	889	1,082	1,521
Others	6,832	5,891	719
(-) Pis and Cofins tax credits	(1,791)	(1,534)	(1,564)
	31,095	27,285	18,377

Copel’s estimate for expenses for the next fiscal years is basically the same as 2013, plus contractual monetary restatement rates, and there are no risks in connection with contract rescission.

The Company has not identified any operating lease commitments which are non cancellable.

F-99

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

32Financial Results

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Financial income
Monetary variation of CRC transfer (Note 8)	159,348	188,688	148,950
Return on financial investments held for trading	118,499	74,553	210,162
Monetary variation of accounts receivable related to the concession extension	108,259	165,574	100,381
Penalties on overdue bills	105,314	126,904	63,652
Monetary variation of accounts receivable related to the concession	84,572	-	-
Return on financial investments held for sale	38,336	37,948	15,660
Return on financial investments held until maturity	827	1,099	2,808
Other financial income	37,208	53,555	35,814
	652,363	648,321	577,427
(-) Financial expenses
Debt charges	233,417	133,385	141,327
Monetary variation of accounts payable related to the concession - use of public property	68,096	74,984	71,383
PIS/Pasep/Cofins taxes on interest on capital	26,352	22,837	43,740
Monetary and exchange variations	15,838	13,819	17,821
Interest on R&D and EEP	15,225	14,745	16,967
Fair value adjustment in accounts receivable related to the concession	-	401,104	-
Other financial expenses	13,124	14,097	59,827
	372,052	674,971	351,065
Net	280,311	(26,650)	226,362

The costs of loans and financing capitalized during the year of 2013 amounted to R$ 54,936, at an average rate of 9.39% p.y.

33Operating Segment

33.1  Products and services which generate revenues for the reportable segments

The Company operates in five reportable segments identified by management, through the Chief Executive Office and the chief offices of each business area, taking into consideration the regulatory environments, the strategic business units, and the different products and services. These segments are managed separately, since each business and each company requires different technologies and strategies.

In the periods of 2013 and 2012 all sales were made within Brazilian territory.

We have not identified any customer who individually accounts for more than 10% of total net revenues during the year ended December 31, 2013.

The Company evaluates the performance of each segment based on information derived from accounting records.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies and record transactions between segments as transactions with third-parties, i.e., at current market prices.

F-100

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

33.2  The Company’s reporting segments

Power generation and transmission (GeT) - this segment comprises the generation of electric energy from hydraulic, wind, and thermal projects, the transport and transformation of the power generated by the Company, and the construction, operation, and maintenance of all power transmission substations and lines. This segment operates through Copel Geração e Transmissão, Elejor, UEG Araucária, Nova Asa Branca I, Nova Asa Branca II, Nova Asa Branca III, Nova Eurus IV, Santa Maria, Santa Helena and Ventos de Santo Uriel;

Power distribution and sales (DIS) - this segment comprises the distribution and sale of electric energy, the operation and maintenance of the distribution infrastructure, and related services. It operates through Copel Distribuição;

Telecommunications (TEL) - this segment comprises telecommunications and general communications services. It operates through Copel Telecomunicações;

Gas - this segment comprises the public service of piped natural gas distribution. It operates through Compagas; and

Holding Company (HOL) - this segment comprises participation in other companies. It operates through Copel, Copel Participações and Copel Renováveis.

F-101

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

33.3  Assets per reporting segment

ASSETS	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2013
ASSETS	12,422,458	7,760,564	480,851	308,023	14,473,384	(12,333,835)	23,111,445
CURRENT ASSETS	2,754,802	2,142,654	62,466	84,017	524,778	(888,433)	4,680,284
Cash and cash equivalents	1,438,269	247,045	10,481	34,427	11,410	-	1,741,632
Bonds and securities	388,659	377	-	-	186	-	389,222
Collaterals and escrow accounts	-	1,072	-	904	-	-	1,976
Trade accounts receivable	311,191	1,005,703	27,983	37,804	-	(45,053)	1,337,628
Dividends receivable	2,578	-	-	-	381,371	(374,449)	9,500
CRC tranferred to State Government of Paraná	-	-	-	-	85,448	-	85,448
Accounts receivable related to the concession	4,396	-	-	-	-	-	4,396
Accounts receivable related to the concession
extension	352,161	-	-	-	-	-	352,161
Other receivables	208,428	180,963	2,799	445	3,869	(614)	395,890
Inventories	31,298	96,866	10,046	1,068	-	-	139,278
Income tax and social contribution	3,121	77,288	6,936	3,319	42,494	-	133,158
Other current recoverable taxes	11,745	48,609	3,869	5,790	-	-	70,013
Prepaid expenses	2,956	16,414	352	260	-	-	19,982
Receivable from other related parties	-	468,317	-	-	-	(468,317)	-
NONCURRENT ASSETS	9,667,656	5,617,910	418,385	224,006	13,948,606	(11,445,402)	18,431,161
Long term assets	992,246	4,352,625	37,185	14,042	1,892,958	(64,815)	7,224,241
Bonds and securities	66,265	54,271	-	-	-	-	120,536
Collaterals and escrow accounts	-	45,371	-	-	-	-	45,371
Trade accounts receivable	5,692	115,020	11,974	-	-	-	132,686
CRC tranferred to State Government of Paraná	-	-	-	-	1,295,106	-	1,295,106
Judicial deposits	42,087	356,393	4,289	341	272,115	-	675,225
Accounts receivable related to the concession	408,473	3,075,795	-	-	-	-	3,484,268
Accounts receivable related to the concession
extension	365,645	-	-	-	-	-	365,645
Advances to suppliers	-	-	-	13,504	-	-	13,504
Other noncurrent receivables	5,132	10,799	-	-	-	-	15,931
Income tax and social contribution	14,975	12,967	-	-	169,717	-	197,659
Other noncurrent recoverable taxes	54,747	64,752	4,999	-	-	-	124,498
Deferred Income tax and social contribution	29,028	617,257	15,923	-	91,205	-	753,413
Prepaid expenses	202	-	-	197	-	-	399
Receivable from other related parties	-	-	-	-	64,815	(64,815)	-
Investments	807,190	4,012	-	-	12,055,619	(11,678,894)	1,187,927
Property, plant and equipment, net	7,617,626	-	365,977	-	29	-	7,983,632
Intangible assets	250,594	1,261,273	15,223	209,964	-	298,307	2,035,361

F-102

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

ASSETS	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2012 - Restated
ASSETS	10,967,453	8,846,871	427,629	289,363	13,629,100	(12,951,513)	21,208,903
CURRENT ASSETS	1,508,828	2,876,268	64,848	86,793	1,218,801	(1,073,846)	4,681,692
Cash and cash equivalents	240,710	1,126,361	26,689	35,993	29,464	-	1,459,217
Bonds and securities	476,488	158,837	-	-	176	-	635,501
Collaterals and escrow accounts	1,429	34,293	-	1,086	-	-	36,808
Trade accounts receivable	283,750	1,200,251	18,649	40,092	-	(53,569)	1,489,173
Dividends receivable	-	-	-	-	1,038,664	(1,020,600)	18,064
CRC tranferred to State Government of Paraná	-	75,930	-	-	-	-	75,930
Accounts receivable related to the concession	5,319	-	-	-	-	-	5,319
Accounts receivable related to the concession extension	356,085	-	-	-	-	-	356,085
Other receivables	104,786	126,686	2,437	716	3	323	234,951
Inventories	28,299	84,995	10,645	870	-	-	124,809
Income tax and social contribution	1,780	35,868	3,413	-	150,483	-	191,544
Other current recoverable taxes	7,480	31,460	2,671	7,868	11	-	49,490
Prepaid expenses	2,702	1,587	344	168	-	-	4,801
NONCURRENT ASSETS	9,458,625	5,970,603	362,781	202,570	12,410,299	(11,877,667)	16,527,211
Long term assets	1,203,345	4,660,842	22,666	18,022	1,540,940	(1,148,498)	6,297,317
Bonds and securities	92,827	35,688	-	-	-	-	128,515
Collaterals and escrow accounts	-	43,246	-	-	-	-	43,246
Trade accounts receivable	-	26,172	-	5,266	-	(5,267)	26,171
CRC tranferred to State Government of Paraná	-	1,308,354	-	-	-	-	1,308,354
Judicial deposits	24,634	276,541	1,036	302	271,858	-	574,371
Accounts receivable related to the concession	262,564	2,383,262	-	-	-	-	2,645,826
Accounts receivable related to the concession extension	717,805	-	-	-	-	-	717,805
Advances to suppliers	-	-	-	12,279	-	-	12,279
Other noncurrent receivables	6,413	4,036	-	-	-	-	10,449
Income tax and social contribution	19,995	-	-	-	-	-	19,995
Other noncurrent recoverable taxes	50,794	60,663	8,732	-	-	-	120,189
Deferred Income tax and social contribution	28,313	522,880	12,898	-	117,194	-	681,285
Prepaid expenses	-	-	-	175	-	8,657	8,832
Receivable from other related parties	-	-	-	-	1,151,888	(1,151,888)	-
Investments	448,130	4,012	-	-	10,869,359	(10,752,512)	568,989
Property, plant and equipment, net	7,552,612	-	319,141	-	-	-	7,871,753
Intangible assets	254,538	1,305,749	20,974	184,548	-	23,343	1,789,152

F-103

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

33.4  Liabilities per reporting segment

LIABILITIES	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2013
TOTAL LIABILITIES	12,422,458	7,760,564	480,851	308,023	14,473,384	(12,333,835)	23,111,445
CURRENT LIABILITIES	1,485,556	1,545,217	56,340	66,935	1,084,423	(890,586)	3,347,885
Payroll, social charges and accruals	59,902	155,337	14,105	5,214	5,127	-	239,685
Payable from other related parties	-	-	-	-	468,317	(468,317)	-
Suppliers	301,768	771,815	8,120	52,881	3,211	(45,556)	1,092,239
Income tax and social contribution	297,620	-	-	-	-	-	297,620
Other taxes	66,899	200,767	5,467	2,227	25,481	(110)	300,731
Loans and financing	217,736	173,482	5,241	-	562,801	(2,154)	957,106
Debentures	40,490	16,972	-	-	-	-	57,462
Minimum dividends payable	362,932	-	21,585	5,598	3,047	(374,449)	18,713
Post-employment benefits	7,886	21,043	1,047	-	7	-	29,983
Regulatory charges	26,920	11,074	-	-	-	-	37,994
Research and Development and Energy Efficiency	20,116	107,744	-	-	-	-	127,860
Accounts payable related to concession - use of public property	51,481	-	-	-	-	-	51,481
Other accounts payable	31,806	86,983	775	1,015	16,432	-	137,011
NON CURRENT LIABILITIES	3,299,960	2,848,662	71,572	5,462	736,808	(127,656)	6,834,808
Associated and subsidiary companies	64,995	-	-	-	-	(64,995)	-
Suppliers	22,187	27,934	-	-	-	-	50,121
Other taxes	15,153	50,354	2,855	-	40	-	68,402
Deferred Income tax and social contribution	418,426	-	-	2,075	-	-	420,501
Loans and financing	1,303,009	635,956	33,622	-	456,752	(62,661)	2,366,678
Debentures	152,066	998,417	-	-	-	-	1,150,483
Post-employment benefits	292,968	608,391	31,222	2,499	2,169	-	937,249
Research and Development and Energy Efficiency	55,599	99,122	-	-	-	-	154,721
Accounts payable related to concession - use of public property	420,293	-	-	-	-	-	420,293
Other accounts payable	233	-	-	-	-	-	233
Provisions for contingences	555,031	428,488	3,873	888	277,847	-	1,266,127
EQUITY	7,636,942	3,366,685	352,939	235,626	12,652,153	(11,315,593)	12,928,752
Attributable to controlling interest	7,636,942	3,366,685	352,939	235,626	12,652,153	(11,593,006)	12,651,339
Capital	4,317,997	2,624,841	240,398	135,943	6,911,678	(7,320,857)	6,910,000
Equity valuation adjustments	1,141,672	(155,096)	(5,795)	-	983,159	(980,781)	983,159
Legal reserve	301,729	135,294	9,093	18,220	624,849	(464,336)	624,849
Profit retention reserve	1,730,944	761,646	109,243	77,987	3,897,833	(2,683,296)	3,894,357
Unrealized income reserve	-	-	-	3,476	-	-	3,476
Additional proposed dividend	153,180	-	-	-	235,498	(153,180)	235,498
Accumulated income (losses)	(8,580)	-	-	-	(864)	9,444	-
Attributable to non controlling interest						277,413	277,413

F-104

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

LIABILITIES	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2012 - Restated
TOTAL LIABILITIES	10,967,453	8,846,871	427,629	289,363	13,629,100	(12,951,513)	21,208,903
CURRENT LIABILITIES	1,568,371	1,970,456	53,612	60,464	257,700	(1,077,159)	2,833,444
Payroll, social charges and accruals	110,509	243,128	25,393	4,333	645	-	384,008
Suppliers	428,046	694,903	14,481	45,873	1,616	(53,137)	1,131,782
Income Tax and Social Contribution Payable	163,724	-	-	3,214	3,251	-	170,189
Other taxes due	54,763	205,330	4,492	1,934	22,072	(111)	288,480
Loans and financing	71,654	164,788	53	-	28,106	(3,311)	261,290
Debentures	-	12,719	-	-	-	-	12,719
Minimum compulsory dividend payable	639,420	371,863	7,982	4,929	201,186	(1,020,600)	204,780
Post employment benefits	6,908	18,004	903	-	4	-	25,819
Customer charges due	7,236	49,262	-	-	-	-	56,498
Research and Development and Energy Efficiency	16,663	142,936	-	-	-	-	159,599
Accounts payable related to concession - Use of Public Property	48,477	-	-	-	-	-	48,477
Other accounts payable	20,971	67,523	308	181	820	-	89,803
NONCURRENT LIABILITIES	2,491,247	3,341,027	45,872	6,594	1,274,016	(1,145,187)	6,013,569
Payable from related parties	232,654	851,237	-	-	-	(1,083,891)	-
Suppliers	106,175	-	-	-	-	(5,267)	100,908
Deferred Income Tax and Social Contribution	587,597	-	-	2,939	-	-	590,536
Loans and financing	438,396	609,941	25,559	-	971,721	(56,029)	1,989,588
Debentures	-	997,958	-	-	-	-	997,958
Post employment benefits	209,295	443,784	19,344	2,807	-	-	675,230
Research and Development and Energy Efficiency	43,350	61,211	-	-	-	-	104,561
Accounts payable related to concession - Use of Public Property	399,080	-	-	-	-	-	399,080
Provision for contingencies	474,700	376,896	969	848	302,295	-	1,155,708
EQUITY	6,907,835	3,535,388	328,145	222,305	12,097,384	(10,729,167)	12,361,890
Capital	4,248,937	2,624,841	240,398	135,943	6,910,000	(7,250,119)	6,910,000
Equity valuation adjustments	1,293,027	(64,902)	1,139	-	1,214,394	(1,229,264)	1,214,394
Legal reserve	249,578	135,294	6,706	17,295	571,221	(408,873)	571,221
Profit retention reserve	1,158,142	840,155	79,902	62,115	3,337,295	(2,147,266)	3,330,343
Unrealized revenue reserve	-	-	-	6,952	-	-	6,952
Additional proposed dividend	-	-	-	-	64,474	-	64,474
Accumulated income (losses)	(41,849)	-	-	-	-	41,849	-
Attributable to non-controlling interest						264,506	264,506

F-105

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

33.5  Statement of income per reporting segment

STATEMENT OF INCOME	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2013
Gross profit	3,044,399	5,961,575	187,792	423,014	-	(436,566)	9,180,214
Electricity sales to final customers - third-parties	460,845	2,883,804	-	-	-	-	3,344,649
Electricity sales to final customers - between segments	-	2,193	-	-	-	(2,193)	-
Electricity sales to distributors - third-parties	1,832,207	100,055	-	-	-	-	1,932,262
Electricity sales to distributors - between segments	311,242	-	-	-	-	(311,242)	-
Use of the main transmission grid - third-parties	94,785	1,934,191	-	-	-	-	2,028,976
Use of the main transmission grid - between segments	57,090	13,115	-	-	-	(70,205)	-
Construction revenues	136,536	898,606	-	40,999	-	-	1,076,141
Telecommunications services to third-parties	-	-	141,315	-	-	-	141,315
Telecommunications services between segments	-	-	39,895	-	-	(39,895)	-
Distribution of piped gas	-	-	-	368,620	-	-	368,620
Other operating revenues from third-parties	144,908	128,278	1,670	13,395	-	-	288,251
Other operating revenues between segments	6,786	1,333	4,912	-	-	(13,031)	-
Operational expenses	(1,649,753)	(6,304,797)	(127,264)	(402,030)	(20,303)	436,520	(8,067,627)
Electricity purchased for resale	(128,736)	(3,518,865)	-	-	-	311,242	(3,336,359)
Charges for the use of the main distribution and transmission grid	(227,325)	(249,465)	-	-	-	69,473	(407,317)
Personnel and management	(274,526)	(723,734)	(57,703)	(21,366)	(19,018)	-	(1,096,347)
Pension and healthcare plans	(47,478)	(118,211)	(7,738)	(1,387)	(1,382)	-	(176,196)
Materials and supplies	(16,346)	(50,531)	(1,312)	(2,268)	(21)	-	(70,478)
Materials and supplies for generation	(27,187)	-	-	-	-	-	(27,187)
Natural gas and supplies for gas business	-	-	-	(295,671)	-	-	(295,671)
Third party services	(146,185)	(292,644)	(18,437)	(17,439)	(4,815)	56,061	(423,459)
Depreciation and amortization	(353,590)	(205,110)	(27,968)	(15,780)	(755)	-	(603,203)
Provisions and reversals	(104,127)	(118,233)	(3,920)	(40)	26,765	-	(199,555)
Construction cost	(148,670)	(898,606)	-	(40,999)	-	-	(1,088,275)
Other operating costs and expenses	(175,583)	(129,398)	(10,186)	(7,080)	(21,077)	(256)	(343,580)
EQUITY IN RESULTS SUBSIDIARIES	33,744	-	-	-	1,116,830	(1,036,968)	113,606
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	1,428,390	(343,222)	60,528	20,984	1,096,527	(1,037,014)	1,226,193
Financial income (expenses)	41,804	228,938	3,078	4,443	2,000	48	280,311
OPERATING INCOME (LOSSES)	1,470,194	(114,284)	63,606	25,427	1,098,527	(1,036,966)	1,506,504
Income tax and social contribution	(532,053)	-	(14,661)	(7,806)	-	-	(554,520)
Deferred income tax and social contribution	140,856	35,775	(1,213)	864	(26,831)	-	149,451
NET INCOME (LOSSES) FOR THE YEAR	1,078,997	(78,509)	47,732	18,485	1,071,696	(1,036,966)	1,101,435

F-106

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

STATEMENT OF INCOME	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2012 - Restated
Gross profit	2,540,885	5,892,171	172,445	359,090	-	(471,339)	8,493,252
Electricity sales to final customers - third-parties	137,990	2,487,519	-	-	-	-	2,625,509
Electricity sales to final customers - between segments	-	3,119	-	-	-	(3,119)	-
Electricity sales to distributors - third-parties	1,468,044	155,463	-	-	-	-	1,623,507
Electricity sales to distributors - between segments	302,583	-	-	-	-	(302,583)	-
Use of the main transmission grid - third-parties	347,674	2,482,959	-	-	-	-	2,830,633
Use of the main transmission grid - between segments	96,979	17,116	-	-	-	(114,095)	-
Construction revenues	59,977	665,601	-	24,185	-	-	749,763
Telecommunications services to third-parties	-	-	125,565	-	-	-	125,565
Telecommunications services between segments	-	-	41,148	-	-	(41,148)	-
Distribution of piped gas	-	-	-	325,012	-	-	325,012
Other operating revenues from third-parties	121,675	80,394	1,301	9,893	-	-	213,263
Other operating revenues between segments	5,963	-	4,431	-	-	(10,394)	-
Operational expenses	(1,494,623)	(5,968,827)	(139,403)	(332,128)	(37,162)	471,384	(7,500,759)
Electricity purchased for resale	(170,806)	(2,939,447)	-	-	-	302,518	(2,807,735)
Charges for the use of the main distribution and transmission grid	(233,983)	(648,501)	-	-	-	110,123	(772,361)
Personnel and management	(321,253)	(824,102)	(70,253)	(19,891)	(10,152)	-	(1,245,651)
Pension and healthcare plans	(44,315)	(126,187)	(8,591)	(3,039)	(746)	-	(182,878)
Materials and supplies	(18,245)	(48,296)	(1,800)	(1,413)	(33)	-	(69,787)
Materials and supplies for generation	(25,511)	-	-	-	-	-	(25,511)
Natural gas and supplies for gas business	-	-	-	(247,770)	-	-	(247,770)
Third party services	(110,890)	(320,135)	(17,280)	(14,206)	(3,863)	57,496	(408,878)
Depreciation and amortization	(314,968)	(192,344)	(28,019)	(13,769)	(755)	-	(549,855)
Provisions and reversals	(80,212)	(118,986)	(4,316)	(1,086)	(14,196)	-	(218,796)
Construction cost	(43,791)	(665,601)	-	(24,185)	-	-	(733,577)
Other operating costs and expenses	(130,649)	(85,228)	(9,144)	(6,769)	(7,417)	1,247	(237,960)
EQUITY IN RESULTS SUBSIDIARIES	16,041	-	-	-	732,313	(741,669)	6,685
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	1,062,303	(76,656)	33,042	26,962	695,151	(741,624)	999,178
Financial income (expenses)	(41,513)	5,644	3,444	4,769	1,051	(45)	(26,650)
OPERATING INCOME (LOSSES)	1,020,790	(71,012)	36,486	31,731	696,202	(741,669)	972,528
Income tax and social contribution	(302,291)	(124,691)	(13,653)	(13,155)	(4,467)	-	(458,257)
Deferred income tax and social contribution	43,661	152,283	5,174	2,178	8,953	-	212,249
NET INCOME (LOSSES) FOR THE YEAR	762,160	(43,420)	28,007	20,754	700,688	(741,669)	726,520

STATEMENT OF INCOME	GET	DIS	TEL	GAS	HOL	Eliminations	Consolidated
12.31.2011 - Restated
Gross profit	2,265,696	5,490,064	157,803	291,376	-	(428,774)	7,776,165
Electricity sales to final customers - third-parties	102,934	2,227,894	-	-	-	-	2,330,828
Electricity sales to final customers - between segments	-	5,441	-	-	-	(5,441)	-
Electricity sales to distributors - third-parties	1,348,042	91,789	-	-	-	-	1,439,831
Electricity sales to distributors - between segments	286,132	-	-	-	-	(286,132)	-
Use of the the main transimission grid - third-parties	269,924	2,492,444	-	-	-	-	2,762,368
Use of the main transmission grid - between segments	76,331	13,055	-	-		(89,386)	-
Construction revenues	118,816	606,620	-	16,290	-	-	741,726
Telecommunications services to third-parties	-	-	117,126	-	-	-	117,126
Telecommunications services between segments	-	-	40,677	-		(40,677)	-
Distribution of piped gas	-	-	-	273,933	-	-	273,933
Other operating revenues from third-parties	57,600	51,600	-	1,153	-	-	110,353
Other operating revenues between segments	5,917	1,221	-	-	-	(7,138)	-
Operational expenses	(1,477,544)	(5,038,081)	(114,437)	(248,001)	(21,575)	428,774	(6,470,864)
Electricity purchased for resale	(73,090)	(2,365,587)	-	-	-	286,132	(2,152,545)
Charges for the use of the mais distribution and transmission grid	(216,035)	(505,869)	-	-	-	89,386	(632,518)
Personnel and management	(243,769)	(657,382)	(58,341)	(15,096)	(8,039)	-	(982,627)
Pension and healthcare plans	(37,860)	(104,234)	(7,113)	(1,142)	(496)	-	(150,845)
Materials and supplies	(16,678)	(66,018)	(1,730)	(1,102)	(81)	-	(85,609)
Materials and supplies for generation	(25,031)	-	-	-	-	-	(25,031)
Natural gas and supplies for gas business	-	-	-	(186,931)	-	-	(186,931)
Third party services	(100,399)	(307,494)	(17,769)	(12,120)	(4,996)	52,095	(390,683)
Depreciation and amortization	(320,541)	(193,969)	(24,523)	(12,648)	(754)	-	(552,435)
Provisions and reversals	(170,312)	(122,332)	734	65	2,190	-	(289,655)
Construction cost	(108,533)	(606,620)	-	(16,290)	-	-	(731,443)
Other operating costs and expenses	(165,296)	(108,576)	(5,695)	(2,737)	(9,399)	1,161	(290,542)
EQUITY IN RESULTS SUBSIDIARIES	(3,487)	-	-	-	1,249,114	(1,193,374)	52,253
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	784,665	451,983	43,366	43,375	1,227,539	(1,193,374)	1,357,554
Financial income (expenses)	16,316	256,721	2,923	6,136	(55,734)	-	226,362
OPERATING INCOME (LOSSES)	800,981	708,704	46,289	49,511	1,171,805	(1,193,374)	1,583,916
Income tax and social contribution	(278,227)	(297,653)	(12,472)	(18,294)	(4,955)	-	(611,601)
Deferred income tax and social contribution	85,767	124,835	1,883	1,214	(9,160)	-	204,539
NET INCOME (LOSSES) FOR THE YEAR	608,521	535,886	35,700	32,431	1,157,690	(1,193,374)	1,176,854

F-107

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

34Financial Instruments

34.1  Category and value of financial instruments

						Restated
				12.31.2013	12.31.2012
	Note	Level	Book value	Fair value	Book value	Fair value
Financial assets
Held for trading
Cash and cash equivalent (a)	4	1	1,741,632	1,741,632	1,459,217	1,459,217
Bonds and securities (b)	5	1	159,340	159,340	82,633	82,633
Bonds and securities (b)	5	2	79,187	79,187	100,381	100,381
			1,980,159	1,980,159	1,642,231	1,642,231
Loans and receivables
Collaterals and escrow accounts STN (c)	6	1	45,371	32,415	43,246	42,627
Collaterals and escrow accounts (a)	6	1	1,976	1,976	36,808	36,808
Trade accounts receivable (a)	7	1	1,470,314	1,470,314	1,515,344	1,515,344
CRC transferred to state of Paraná (d)	8	1	1,380,554	1,369,599	1,384,284	1,633,076
Receivables related to concession (e)	9	1	412,869	412,869	267,883	267,883
Receivables related to the concession extension (f)	10	1	557,589	563,052	913,673	960,436
			3,868,673	3,850,225	4,161,238	4,456,174
Available for sale
Receivables related to concession (e)	9	3	3,075,795	3,075,795	2,383,262	2,383,262
Receivables related to the concession extension (g)	10	3	160,217	160,217	160,217	160,217
Bonds and securities (b)	5	1	196,112	196,112	330,520	330,520
Bonds and securities (b)	5	2	63,978	63,978	238,302	238,302
Other investments (h)	16.2	1	25,708	25,708	18,127	18,127
			3,521,810	3,521,810	3,130,428	3,130,428
Held to maturity
Bonds and securities (b)	5	2	11,141	11,141	12,180	12,180
			11,141	11,141	12,180	12,180
Financial assets total			9,381,783	9,363,335	8,946,077	9,241,013
Financial liabilities
Fair value through profit or loss
Other liabilities - derivatives (b)		1	85	85	40	40
			85	85	40	40
Other financial liabilities
Suppliers (a)	20	1	1,142,360	1,142,360	1,232,690	1,232,690
Loans and financing (c)	21	1	3,323,784	2,922,867	2,250,878	2,233,244
Debentures (i)	22	1	1,207,945	1,207,945	1,010,677	1,010,677
Payable related to concession - use of public property (j)	26	1	471,774	578,409	447,557	554,408
			6,145,863	5,851,581	4,941,802	5,031,019
Financial liabilities total			6,145,948	5,851,666	4,941,842	5,031,059
The different levels have been defined as follows:
Level 1: obtained from prices quoted (not adjusted) on active markets for identical assets or liabilities
Level 2: obtained from other variables other than prices quoted included in level 1, which can be observed for assets or liabilities
Level 3: obtained through evaluation techniques that include variables for the asset or liability, but are not based on observable market data

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Determining fair values:

a)Financial assets that have fair values equivalent to their respective carrying values due to their nature and terms of realization.

b)Calculated according to information made available by the financial agents and to the market values of the bonds issued by the Brazilian government.

c)Calculated based on the cost of the last issue by the Company, of 106% p.y.

d)The Company based its calculation on the comparison with a noncurrent, variable interest rate National Treasury bond (NTN-B), which yields approximately 6.82% p.y. plus the IPCA inflation index, on December 31, 2013.

e)Criteria and assumptions disclosed on note 3.7.1.

Balance as of December 31, 2012	2,383,262
Capitalization of intangible assets	630,069
Monetry variations	108,259
Write off	(24,998)
Write off - Resolution 367/2009	(20,797)
Balance as of December 31, 2013	3,075,795

f)The accounts receivable related to concession extension, related to the assets which started operations after May 2000, the expected flow of cash entries was discounted at the Selic rate, the best short-term rate available for

comparison for determination of its market value.

g)These accounts receivable are related to assets existing as of May 31, 2000, equivalent to their book values, due to the fact that the expert report to be analyzed by Aneel has not yet been completed. 

h)Calculated according to price quotes published in an active market or by applying the interest percentage over shareholders' equity for assets with no active market.

i)Calculated according to the Unit Price Quotation (PU) as of December 31, 2013, obtained from the National Association of Financial Market Institutions (Anbima), net of the financial cost of R$ 1,015.

j)Considering as a premise for the calculation the rate of return for the last venture sold at auction by ANEEL, won by the Company.

F-109

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

34.2  Risk Factors

The Company has a Corporate Risk Management Committee in charge of formulating and tracking risk management policies and assisting the Audit Committee to ensure a good management of resources and the protection and appreciation of its assets.

The Company's business activities are exposed to the following risks arising from financial instruments:

34.2.1Credit risk

Credit risk is defined as the possibility of the occurrence of losses related to non-compliance by a client or counterpart to a financial instrument with their respective obligations under the terms agreed on.

		Restated
Exposure to credit risk	12.31.2013	12.31.2012
Cash and cash equivalents (a)	1,741,632	1,459,217
Bonds and securities (a)	509,758	764,016
Collaterals and escrow accounts (a)	47,347	80,054
Trade accounts receivable (b)	1,470,314	1,515,344
CRC transferred to the State Government of Paraná (c)	1,380,554	1,384,284
Accounts receivable related to the concession (d)	3,488,664	2,651,145
Accounts receivable related to the concession extension (e)	557,589	913,673
Accounts receivable related to the concession extension (f)	160,217	160,217
	9,356,075	8,927,950

a)Company management manages the credit risk of its assets in accordance with the Group's policy of investing virtually all of its funds in federal banking institutions. As a result of legal and/or regulatory requirements, in exceptional circumstances the Company may invest funds in prime private banks.

b)The risk arises from the possibility of the Company incurring losses resulting from problems in receiving amounts invoiced to its clients, customers, concession operators and licensees. This risk is closely related to internal and external factors of Copel. To mitigate this type of risk the Company manages its accounts receivable, detecting customer groups that pose the greatest risk of default, cutting off energy supplies and implementing specific collection policies, supported by guarantees whenever possible.

Doubtful accounts are adequately covered by an allowance to cover any realization losses.

c)Company management believes the CRC poses a minimal credit risk, as the amortizations are guaranteed by dividends, and the State Government is paying the renegotiated amounts in accordance with the fourth amendment.

d)Based on the Company's understanding that the signed agreements establish the unconditional right to receive cash at the end of the concession, from the concession authority, for the investments made in assets that have not been recovered through rates by the end of the concession and specifically regarding energy transmission, as RAP is guaranteed revenue, and therefore not subject to the risk of demand.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

e)Management considers the credit risk on the indemnity approved for the assets which started operations after May 2000 to be reduced, given that the realization and compensation rules have already been established by the Granting Authority and has been received on schedule.

f)For value of existing assets on May 31, 2000, ANEEL published Resolution no. 589/2013, which addresses the definition criteria for calculating the New Replacement Value (VNR) for the indemnification purpose. For these assets Management considers the credit risk as reduced since the rules for compensation are set and there is an going survey of information required by the granting authority.

34.2.2Liquidity risk

The Company's liquidity risk consists of the possibility of insufficient funds, cash or other financial asset to settle obligations on scheduled dates.

The Company manages liquidity risk relying on a set of methodologies, procedures and instruments applied for a permanent control over financial processes to ensure a proper management of risks.

Investments are financed by incurring medium and long term debt to financial institutions and capital markets.

Short-term, medium-term and long-term business projections are made and submitted to management bodies for evaluation. The budget for the next fiscal year is annually approved.

Medium and long-term business projections cover monthly periods over the next five years. Short-term projections consider daily periods covering only the next 90 days.

The Company permanently monitors the volume of funds to be settled by controlling cash flows to reduce funding costs, the risk involved in the renewal of loan agreements and compliance with the financial investment policy, while at the same time keeping minimum cash levels.

The table below shows the expected settlement amounts within each time range. Projections were based on financial indicators linked to the related financial instruments and forecast according to average market expectations as disclosed on the Central Bank of Brazil's Focus Report, which provides the average expectations of market analysts for these indicators for the current year and the following year.  As from 2014, 2013 indicators are repeated through the forecast period, except for the US dollar, which follows the US inflation rate.

F-111

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Interest (a)	Less than	1 to 3	3 month	1 to 5	More than
Liabilities		1 month	month	to 1 year	years	5 years	Total
12.31.2013
Loans and financing	Note 21	44,546	312,844	773,467	1,853,937	1,488,871	4,473,665
Debentures	Note 22	5,182	10,324	160,669	1,499,400	-	1,675,575
Derivative	Future DI	85					85
Payables related to concession -	Rate of return +
use of public asset	IGP-M and IPCA	4,282	8,564	39,272	246,196	2,103,155	2,401,469
Eletrobras - Itaipu	Dollar	-	124,286	575,224	3,606,457	5,517,175	9,823,142
Petrobras - Compagas	100% of CDI	5,295	10,738	51,243	-	-	67,276
Other suppliers	-	645,392	144,718	196,518	92,271	-	1,078,899
Post employment benefits	8.05%	43,145	86,289	388,302	2,785,404	12,492,581	15,795,721
Purchase liabilities	IGP-M and IPCA	-	605,310	2,818,490	12,216,247	80,198,892	95,838,939
		747,927	1,303,073	5,003,185	22,299,912	101,800,674	131,154,771
12.31.2012
Loans and financing	Note 21	17,022	50,158	289,708	1,977,774	515,760	2,850,422
Debentures	Note 22	-	-	78,618	1,284,897	-	1,363,515
Derivative	Future DI	40	-	-	-	-	40
Payables related to concession -	Rate of return +
use of public asset	IGP-M and IPCA	4,040	8,080	36,858	225,955	2,043,351	2,318,284
Eletrobras - Itaipu	Dollar	-	92,864	417,886	2,677,260	4,777,443	7,965,453
Petrobras - Compagas	100% of CDI	4,892	9,874	45,969	65,690	-	126,425
Other suppliers	-	756,890	152,854	875	35,126	-	945,745
Post employment benefits	7.30%	28,945	57,891	260,509	1,523,133	9,097,947	10,968,425
Purchase liabilities	IGP-M and IPCA	-	452,633	2,188,186	8,865,291	46,201,543	57,707,653
		811,829	824,354	3,318,609	16,655,126	62,636,044	84,245,962
(a) Effective interest rate - weighted average

As disclosed in notes 21.11 and 22.2, the Company and its subsidiaries have loan and financing agreements and debentures with covenants that if breached may require have its payment accelerated.

The main guarantees put up for maintaining business and investing activities are invested in securities and cash.

34.2.3Market risk

Market risk is the risk that the fair value or future cash flows of the financial instrument fluctuate due to changes in market prices, such as exchange rates, interest rates and share prices. The purpose of risk management is to control exposures within acceptable limits, while optimizing return.

a)Foreign currency risk (US Dollar)

This risk comprises the possibility of losses due to fluctuations in exchange rates, which may reduce assets or increase liabilities denominated in foreign currencies.

The Company’s foreign currency indebtedness is not significant and it is not exposed to foreign exchange derivatives. The Company monitors all relevant exchange rates.

The effect of the exchange rate variation resulting from the power purchase agreement with Eletrobras (Itaipu) is passed on to customers in Copel Distribuição's next rate review.

F-112

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The exchange rate variation resulting from the purchase of gas from Petrobras by Compagas has a direct impact on the Company's results; Compagas continually negotiates with its customers, trying whenever possible to pass these costs on to them.

Sensitivity analysis of foreign currency risk

The Company has developed a sensitivity analysis in order to measure the impact of the devaluation of the U.S. dollar on its loans and financing subject to exchange risk.

The baseline takes into account the existing balances in each account as of December 31, 2013 and the likely scenario takes into account the balances subject to the exchange rate variations – end of period (R$/US$ 2.47) estimated as market average projections for 2014 according to the Focus Report issued by the Brazilian Central Bank as of February 7, 2014. For the adverse and remote scenarios, deteriorations of 25% and 50%, respectively, were considered for the main risk factor for financial instruments compared to the rate used for the likely scenario.

.		Baseline	Projected scenarios - Dec.2014
Foreign currency risks	Risk	12.31.2013	Probable	Adverse	Remote
.
Financial assets
Collaterals and escrow accounts - STN	USD depreciation	45,371	2,467	(9,492)	(21,452)
.		45,371	2,467	(9,492)	(21,452)
Financial liabilities
Loans and financing
STN	USD appreciation	(64,815)	(3,525)	(20,610)	(37,695)
Eletrobras	USD appreciation	(7)	-	(2)	(4)
		(64,822)	(3,525)	(20,612)	(37,699)
Suppliers
Eletrobras (Itaipu)	USD appreciation	(107,222)	(5,831)	(34,094)	(62,358)
Petrobras (acquisiton of gas by Compagas)	USD appreciation	(51,502)	(2,801)	(16,377)	(29,952)
		(158,724)	(8,632)	(50,471)	(92,310)

In addition, the Company evaluates its financial instruments considering the possible effects on profit and loss and equity of the risks evaluated by Company management on the reporting date for the financial instruments, as recommended by IFRS 7. Based on the equity position and the notional value of the financial instruments held as of December 31, 2013, it is estimated that these effects will approximate the amounts stated in the above table in the column for the forecast probable scenario, since the assumptions used by the Company are similar to those previously described.

b)Interest rate and monetary variation risk

This risk comprises the possibility of losses due to fluctuations in interest rates or other indicators, which may reduce financial revenues or increase financial expenses in connection with assets and liabilities on the market.

F-113

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The Company has not engaged in transactions with derivatives to cover this risk, except for the exclusive investment funds, but it has continually monitored interest rates and market indicators, in order to assess the potential need for such transactions for protection for interest rate risks.

Sensitivity analysis of interest rate and monetary variation risk

The Company has developed a sensitivity analysis in order to measure the impact of variable interest rates and monetary variations on its financial assets and liabilities subject to these risks.

The baseline takes into account the existing balances in each account as of December 31, 2013 and the likely scenario takes into account the indicators (BM&F-LTN of 10.65%, CDI/Selic of 11.25%, IPCA of 5.89%, IGP-DI of 5.85%, IGP-M of 5.89% and TJLP of 5.00%) estimated as market average projections for 2014 according to the Focus Report issued by the Brazilian Central Bank as of February 7, 2014 and variation of the BM&FBOVESPA notional rate for National Treasury Bills (LTN) maturing on January 2, 2015. For the adverse and remote scenarios, deteriorations of 25% and 50%, respectively, were considered for the main risk factor for the financial instrument compared to the rate used in the likely scenario.

.		Baseline	Projected scenarios - Dec.2014
Interest rate and monetary variation risk	Risk	12.31.2013	Probable	Adverse	Remote
.
Financial assets
Financial investments - cash equivalents	Low CDI/SELIC	1,611,321	172,323	129,275	86,232
Bonds and securities	Low CDI/SELIC	509,758	54,516	40,897	27,281
Collaterals and escrow accounts	Low CDI/SELIC	1,976	212	159	105
CRC transferred to the State Government of Paraná	Low IGP-DI	1,380,554	80,762	60,572	40,381
Accounts receivable related to the concession	Low IGP-M	3,488,664	203,582	152,686	101,791
Accounts receivable related to the concession extension - RBNI	Low IPCA	557,589	32,842	24,631	16,421
Accounts receivable related to the concession extension	Undefined (a)	160,217	-	-	-
		7,710,079	544,237	408,220	272,211
Financial liabilities
Loans and financing
Banco do Brasil	High CDI	(1,602,960)	(180,333)	(225,416)	(270,499)
Eletrobras - Finel	High IGP-M	(83,362)	(982)	(1,228)	(1,473)
Eletrobras - RGR	No Risk (b)	(96,394)	-	-	-
Finep	High TJLP	(40,557)	(2,028)	(2,535)	(3,042)
BNDES - Copel Geração e Transmissão	High TJLP	(1,125,109)	(56,255)	(70,319)	(84,383)
Banco do Brasil – Transfer BNDES funds	High TJLP	(160,580)	(8,029)	(10,036)	(12,044)
Banco do Brasil	High CDI	(150,000)	(16,875)	(21,094)	(25,313)
Debentures	High CDI	(1,207,945)	(135,894)	(169,867)	(203,841)
		(4,466,907)	(400,396)	(500,495)	(600,595)
(a)     Risk assessment still requires ruling by the Granting Authority. (b)     Loan indexed to UFIR

F-114

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

In addition, the Company evaluates its financial instruments considering the possible effects on profit and loss and equity of the risks evaluated by Company management on the reporting date for the financial instruments, as recommended by IFRS 7. Based on the equity position and the notional value of the financial instruments held as of December 31, 2013, it is estimated that these effects will approximate the amounts stated in the above table in the column for the forecast probable scenario, since the assumptions used by the Company are similar to those previously described.

c)Derivative financial instruments risk

The Company employs derivative financial instruments with the sole purpose of protecting itself against variable interest rate volatility.

In order to protect against the effects of volatility on long exposures (DI interest rates) of bonds and securities, the Company hired future DI rate operations, negotiated at BM&FBOVESPA and registered at CETIP, whose nominal balances and conditions are as follows:

·For the year ended December 31, 2013, the result of operations with derivative financial instruments on the futures market was a gain of R$ 5,885 (loss of R$ 5,884 on December 2012)

·Contracts are adjusted daily in accordance with the future DI rates published by BM&FBOVESPA. The reference (notional) values of these outstanding contracts as of December 31, 2013 corresponded to R$ 109,792 (R$ 192,900 as of December 31, 2012)

·On December 31, 2013, a share of the Company’s federal bonds in the amount of R$ 6,712 (R$ 9,560 as of December 31, 2012), was deposited as collateral for transactions at BM&FBOVESPA S.A.

Sensitivity analysis of derivative financial instruments risk

In order to measure the effects of the variations in the indices and rates tied to the derivative operations, which includes a scenario considered probable by Company management, a situation considered adverse of at least a 25% deterioration in the variables used and a situation considered remote, with a deterioration of at least 50% in the risk variables. The base scenario took into account the existing balances and the probable scenario for balances with changes in the BM&FBOVESPA preferential rate for LTN (National Treasury Bills) maturing on January 02, 2015.

.		Baseline	Projected scenarios - Dec.2014
Risk of derivative	Risk	12.31.2013	Probable	Adverse	Remote
.
Financial assets (liabilities)
Derivative – liabilities	Decrease in DI rate	(85)	(717)	(2,786)	(4,854)
		(85)	(717)	(2,786)	(4,854)
Expected effect in the result			(632)	(2,701)	(4,769)

F-115

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

34.2.4Power shortage risk

This risk results from the possibility of periods with low levels of rainfall, since Brazil relies heavily on hydroelectric sources, which depend on the water levels in their reservoirs to operate.

A long period of drought may reduce the water levels in power plant reservoirs and result in losses due to reduced revenues if a new rationing program is implemented.

According to the Annual Plan for Electricity Operation - PEN 2013, published annually on the website: www.ons.org.br, probability assessments of energy service conditions, based on energy deficit risks for the Benchmarking Scenario show the appropriateness of the supply criteria set by the National Energy Policy Council - CNPE (deficit risk not higher than 5%) for all subsystems within the period from 2013 to 2017. Deficit risks reach maximum levels 3.0% in the Southern subsystem and 2.5% in the Southeastern/Center Western system and lower than 1.0% in the Northern and Northeastern subsystems within the whole assessment period.

Due to amendments introduced by the replacement of energy contracts originally maturing on December 31, 2012 through energy quotas, with nonperformance of the amount necessary and the failure of several thermal power plants to come into operation, contracted by the 7th new energy auction and other technical and climatic factors, in 2013, the Company was subcontracted on 112.54 MW and therefore exposed to the short-term energy market.

34.2.5Risk of non-renewal of concessions

Law 12,783/2013 published on January 14, 2013 ruled the extension of energy generation, transmission and distribution concessions covered by articles 17, 19 and 22 of Law 9,074/2015.  However, extension depends on full acceptance of the conditions set by that law.

Four power plants have been affected by Law 12,783/2013: Rio dos Patos with 1.8 MW, Mourão with 8.2 MW, Chopim with 1.8 MW and Usina Governador Pedro Viriato Parigot de Souza with 260 MW of installed capacity.

In order to maintain the Company's current profitability levels, the concessions for these plants have not been extended, given that studies have shown that the conditions imposed by the Concession Authority make the plants not economically feasible. By the end of the concession agreement, these power plants will be put up for auction, and the Company has no guarantee that it will be the winning bidder.

Concession Agreement number 060/2001, which sets rules about transmission facilities, has been extended for 30 more years, according to the conditions established by Law 12,783/2013.  In this case the conditions for making investments arising from contingencies, modernization, renovation and refurbishment of structures and equipment have been kept. These investments will actually be made upon ANEEL's recognition and authorization. The guarantee that the regulatory body will reimburse the Company for the works rules out the possibility of financial losses and keeps the Company's current profitability levels.

F-116

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

For the distribution services, the Company has issued a favorable opinion on the extension of Concession Agreement number 046/1999, pursuant to Law 12,783/2013, through a concession amendment request sent to Aneel on May 31, 2012. The Company is waiting for the decision by the Concession Authority on the extension. If the conditions set by the Concession Authority ensure the Company's expected profitability levels, the Company will sign the concession agreement or amendment for an additional period of 30 years. Even considering that the regulatory overall scene is uncertain, the Company believes on the possibility of the concession amendment, although it does not have sufficient information to guarantee that the contract for the distribution services will be renewed on favorable terms.

F-117

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Copel Geração e Transmissão
Concessions/authorizations Contracts	Maturity date
Hydroelectric Power Plants
Generation Concession - 045/1999
Governador Bento Munhoz da Rocha Netto (Foz do Areia)	05.23.2023
Governador Ney Aminthas de Barros Braga (Segredo)	11.15.2029
Governador José Richa (Caxias)	05.04.2030
Governador Pedro Viriato Parigot de Souza (a) (b)	07.07.2015
Guaricana	08.16.2026
Mourão (a) (b)	07.07.2015
Marumbi (c)	-
São Jorge	12.03.2024
Rio dos Patos (a) (b)	02.14.2014
Melissa (d)	-
Salto do Vau (d)	-
Pitangui (d)	-
Generation Concession - Use of Public Property - 007/2013
Chaminé (e)	08.16.2026
Apucaraninha (e)	10.12.2025
Derivação do Rio Jordão (e)	11.15.2029
Chopim I (a) (b) (e)	07.07.2015
Cavernoso (e)	01.07.2031
Generation Concession - 001/2007 - Mauá - 51% of Copel	07.02.2042
Generation Concession - 001/2011 - Colíder (f)	01.16.2046
Authorization - Cavernoso II	02.27.2046
Thermal Power Plant
Generation Concession - 045/1999 - Figueira	03.26.2019
Wind Power Plant
Authorization - Palmas	09.28.2029
Authorization - Asa Branca I (f) (g)	04.25.2046
Authorization - Asa Branca II (f) (g)	05.31.2046
Authorization - Asa Branca III (f) (g)	05.31.2046
Authorization - Eurus IV (f) (g)	04.27.2046
Authorization - Santa Maria (f) (g)	05.08.2047
Authorization - Santa Helena (f) (g)	04.09.2047
Authorization - Ventos de Santo Uriel (f) (g)	04.09.2047
(a)     Plant not renewed pursuant to Executive Act 579/2012 - Concessionaire's prerogative
(b)     By the end of the concession the project will be offered for competitive bidding
(c)     In progress for homologation from ANEEL
(d)     At plants with capacity of less than 1 MW, only register with ANEEL
(e)     Power plants that underwent change in the exploration system from a Public Service regime to an Independent Producer Regime
(f)     Enterprise under construction
(g)     Power plants taken over as from August 1, 2013

F-118

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

Copel Geração e Transmissão
Concessions Contracts	Maturity date
Transmission Lines and Substations
Contract 060/01 - Transmission facilities (a)	12.05.2042
Contract 075/01 - Transmission line Bateias - Jaguariaíva	08.16.2031
Contract 006/08 - Transmission line Bateias - Pilarzinho	03.16.2038
Contract 027/09 - Transmission line Foz do Iguaçu - Cascavel Oeste	11.18.2039
Contract 010/10 - Transmission line Araraquara 2 - Taubaté (b)	10.05.2040
Contract 015/10 - Substation Cerquilho III (b)	10.05.2040
Contract 001/12 - Transmission line Cascavel Oeste - Umuarama - 51% Copel GeT (b)	01.11.2042
Contract 004/12 - Transmission line Nova Santa Rita - Camaquã 3 - 20% Copel GeT (b)	05.09.2042
Contract 007/12 - Transmission line Umuarama - Guaira - 49% Copel GeT (b)	05.09.2042
Contract 008/12 - Transmission line Curitiba - Curitiba Leste - 80% Copel GeT (b)	05.09.2042
Contract 011/12 - Transmission line Açailândia - Miranda II - 49% Copel GeT (b)	05.09.2042
Contract 012/12 - Transmission line Paranaíta - Ribeirãozinho - 49% Copel GeT (b)	05.09.2042
Contract 013/12 - Transmission line Ribeirãozinho - Marimbondo II - 49% Copel GeT (b)	05.09.2042
Contract 022/12 - Transmission line - Foz do Chopim - Salto Osorio C2 (b)	08.26.2042
Contract 002/13 - Transmission line - Assis - Paraguaçu Paulista II (b)	02.24.2043
Contract 007/13 - Transmission line - Barreiras II - Pirapora 2 - 24.5% Copel GeT (b)	05.01.2043
(a) Concession renewed pursuant to Executive Act 579/2012
(b) Enterprise under construction

Concessions/authorizations Contracts	Maturity date
Copel Distribuição - Contract 046/99 - Distribution Facilities (a)	07.07.2015
Elejor - Contract 125/2001 - HPP Fundão e Santa Clara	10.24.2036
Elejor - Authorization contract - SHP Fundão I and SHP Santa Clara I	12.18.2032
Dona Francisca Energética - Contract 188/1998 - HPP Dona Francisca	08.27.2033
UEG Araucária - authorization contract - TPP Araucária	12.22.2029
Foz do Chopim - authorization contract - SHP Foz do Chopim	04.23.2030
Compagas - concession gas distribution contract	07.06.2024
(a)     Sent on May 31, 2012 requesting extension of concession and sent on October 11, 2012 ratification of the requestingextension of concession (MP 579/2012)

34.2.6Gas shortage risk

This risk involves potential periods of shortage of natural gas supply to meet the Company’s gas distribution and thermal generation business requirements.

Long periods of gas shortage could result in losses due to lower revenues by subsidiaries Compagas and UEG Araucária.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

34.3  Management of capital

The Company always seeks to maintain a strong capital base to maintain the trust of investors, creditors and market and ensure the future development of the business. It seeks to maintain a balance between the highest possible returns with more adequate levels of loans and the advantages and security provided by a healthy capital position. Thus, it maximizes the return for all interested parties in its operations, optimizing the balance of debts and equity.

The Group’s capital structure is composed of:

a)net indebtedness, defined as total loans, financing and debentures, net of cash and cash equivalents and short term bonds and securities; and

b)own capital, defined as total equity.

		Restated
Debt	12.31.2013	12.31.2012
Loans and financing	3,323,784	2,250,878
Debentures	1,207,945	1,010,677
(-) Cash and cash equivalents	1,741,632	1,459,217
(-) Bonds and securities	389,222	635,501
Net indebtedness	2,400,875	1,166,837
Shareholder's	12,928,752	12,361,890
Net indebtedness ratio	0.19	0.09

35Related Party Transactions

The balances of transactions between the Company and its associates and subsidiaries are shown in Note 8, Note 15 and Note 16.

The amounts resulting from the operating activities of Copel Distribuição involving related parties are billed at the rates approved by ANEEL.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

		Assets		Liabilities		Results
		Restated		Restated		Restated
Related parties / Nature of operation	12.31.2013	12.31.2012	12.31.2013	12.31.2012	12.31.2013	12.31.2012
Controlling shareholders
State of Paraná
Dividends payable (a)	-	-	-	79,539	-	-
"Luz Fraterna" program (b)	78,987	60,259	-	-	-	-
Remuneration and employ social security charges assigned (c)	1,880	1,640	-	-	-	-
CRC (Note 8)	1,380,554	1,384,284	-	-	159,348	188,688
ICMS (Note 13.3)	115,439	110,096	252,771	209,570	-	-
.
Entities with significant influence
BNDES e BNDESPAR (d)
Financing (Note 21.5)	-	-	1,125,109	214,855	(15,647)	(2,525)
Dividends payable (d)	-	-	-	63,890	-	-
Petrobras (e)
Rental plant TPP Araucária	6,499	11,894	-	-	101,628	95,253
Supply and transport of gas (f)	374	293	-	-	23,912	18,494
Acquisition of gas for resale (f)	-	-	51,502	43,681	(295,494)	(247,673)
Advances to suppliers of Compagas (g)	13,504	12,666	-	-	-	-
Dividends payable by Compagas	-	-	1,076	1,208	-	-
.
Mitsui Gás e Energia do Brasil Ltda. (h)	-	-	2,283	1,208	-	-
.
Paineira Participações S.A. (i)	-	-	11,985	1,179	-	-
Jointly-controlled
Costa Oeste Transmissora de Energia (j)	190	357	-	-	2,113	487
Marumbi Transmissora de Energia (k)	184	174	-	-	2,042	510
Caiuá Transmissora de Energia (l)	221	-	-	-	478	345
Associates
Dona Francisca Energética S.A. (m)	-	-	6,320	6,045	(71,950)	(67,354)
.
Foz do Chopim Energética Ltda. (n)	201	135	-	-	1,725	1,602
Sercomtel S.A. Telecomunicações (o)	192	179	-	-	2,287	2,142
.
Key management personnel
Fees and related charges (Note 31.3)	-	-	-	-	(16,829)	(14,559)
Pension plans and health care (Note 23)	-	-	-	-	(1,089)	(808)
Other related parties
Fundação Copel
Rental of administrative real estate	-	-	-	-	(12,270)	(10,694)
Private pension and health plans (Note 23)	-	-	967,232	701,049	-	-
.
Lactec (p)	27,229	18,742	587	303	(5,060)	(5,896)

a)In 2013, out of the total dividends proposed to the Government for the State of Paraná for the amounts of R$ 166,321, there was advance on December 2013 of R$ 96,470. The remaining amount will be distributed after the approval at the General Shareholders’ Meeting (GSM).

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

b)The Luz Fraterna Program, created under Law no. 491, dated September 11, 2003, allows the State Government to pay for the electricity bills of low income families in Paraná – which have duly applied for the program – provided their consumption does not exceed 100 kWh a month. This benefit is available to residential customers with single phase connections, rural customers with single phase connections or two phase connections with circuit breakers of up to 50 amperes. Applicants must not have more than one electricity bill under their names and must not have any pending debts to Copel.

c)Reimbursement of wages and social charges for employees transferred to the Paraná State Government. The Company recognized an impairment allowance in the amount of R$ 1,614 as of December 31, 2013 and R$ 1,466 as of December 31, 2012.

d)BNDES is the parent company of BNDES Participações SA (BNDESPAR) that holds 23.96% of the share capital of the Company (26.41% of the common shares and 21.27% of preferred shares). Of the total proposed dividends to BNDESPAR, for fiscal year 2013, in the amount of R$ 133,603 (R$ 127,166 net of IRRF), was paid in advance during December 2013 the net amount of R$ 71,055. The remaining amount will be distributed after the approval at the General Shareholders’ Meeting (GSM).

e)Petrobras holds 20% of the share capital of UEG Araucária and 24.5% of the share capital of Compagas.

f)The supply and transport of piped gas and the purchase of gas for resale by Compagas.

g)Advance payments to suppliers of Compagas refer to the gas purchase contract covering guaranteed volumes and transport capacity, higher than those actually consumed and used, which contains a future compensation clause. Compagas has the right to receive unused gas in subsequent months, and it may offset amounts under contract but not consumed over a period of up to 10 years. In light of the prospects of increased consumption by the market, Compagas management believes it will consume the accumulated gas volumes as of December 31, 2013 in the next fiscal years.

h)Mitsui Gás e Energia do Brasil Ltda. holds 24.5% of Compagas’ share capital. The balances refer to dividends payable by Compagas.

i)Paineira Participações S.A. holds 30% of Elejor share capital. The balances refer to dividends payable by Elejor.

j)Engineering services agreement, signed with Copel Geração e Transmissão, expiring on October 10, 2015.

k)Engineering services agreement, signed with Copel Geração e Transmissão, expiring on September 30, 2015.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

l)Specific environmental management services agreement, signed with Copel Geração e Transmissão, expiring on March 14, 2015.

m)Power purchase and sale agreement signed by Dona Francisca Energética and Copel Geração e Transmissão, expiring on March 31, 2015.

n)Operation and maintenance services agreement, signed between Foz do Chopim Energética Ltda. and Copel Geração e Transmissão, expiring on May 24, 2015.

o)Light pole sharing agreement, signed between Sercomtel S.A Telecomunicações and Copel Distribuição.

p)The Institute of Technology for Development (Lactec) was constituted on February 6, 1997 as a not for profit organization whose goal is to promote economic, scientific, technological, and social development and the sustainable conservation of the environment. In 2000, it was qualified by the Ministry of Justice, based on Law no. 9,790, as a Public Interest Civil Society Organization (OSCIP), which allows it, among other things, to enter partnerships with government agencies with no need for competitive bidding. Its members are: Copel, the Federal University of Paraná (UFPR), the Engineering Institute of Paraná (IEP), the Paraná Federation of Industries (FIEP), and the Commercial Association of Paraná (ACP)

Lactec has service and R&D contracts with Copel Geração e Transmissão and Copel Distribuição, which are subject to prior or later control and approval by ANEEL

The asset balances refer to Energy Efficiency and R&D programs, recorded under current assets, in service in progress, until the respective projects are concluded, pursuant to ANEEL.

35.1  Guarantees and endorsements awarded to related parties

35.1.1Granted by Parent Company

The Parent Company granted the following guarantees and endorsements:

a)endorsements for loans secured by its subsidiaries Nova Asa Branca I, Nova Asa Branca II, Nova Asa Branca III, Nova Eurus, Santa Maria, Santa Helena and Ventos de Santo Uriel, pursuant to Note 21.7.

b)bank guarantee for the equity interest of 70% in the debentures issued by the subsidiary Elejor on September 26, 2013, pursuant to Note 22.

c)endorsements for its equity interest of 23.03% to its associated company Dona Francisca Energética S.A., in 2002, in financing secured from the BNDES (joint endorsement) and Bradesco (joint endorsement), for settlement by 2015. As of December 31, 2013 the restated outstanding balances amounted to R$ 9,393 with BNDES and R$ 5,402 with Bradesco.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

35.1.2Granted by Copel Geração e Transmissão

Ventures		Date	Final	Amount	Total	%	Balance as of
joint subsidiaries	Financing	issued	Maturity	approved	issued	endorsement	December 31,2013
Transmissora Sul Brasileira (a)	Debentures	09.27.2013	09.22.2014	150,000	150,000	20%	153,202
Caiuá Transmissora (b)	Promissory notes	10.30.2013	04.28.2014	42,000	21,000	49%	34,051
		12.05.2013			12,600
Integração Maranhense (c)	Promissory notes	10.30.2013	04.28.2014	71,000	28,400	49%	50,341
		12.05.2013			21,300
Matrinchã Transmissora (d)	Debentures	06.20.2013	12.20.2014	800,000	540,000	49%	567,126
Guaraciaba Transmissora (e)	Debentures	06.20.2013	12.20.2014	400,000	230,000	49%	241,553
Financier:
Banco Bradesco BBI S.A.: (a) (b) (c)
HSBC Corretora de Títulos e Valores Mobiliários S.A. e Banco Santander (Brasil) S.A.: (d) (e)
Allocation:
“Bridge loan" for financing operation to be secured from BNDES (a) (b) (c)
Working capital: (d) (e)

36Insurance 

Details by risk type and effectiveness date of the main policies can be seen below.

Policy	Termination	Insured
Specified risks (36.1)	08.24.2014	1,727,388
Fire - Company-owned and rented facilities (36.2)	08.24.2014	521,633
Civil liability - Copel (36.3)	08.24.2014	12,000
Civil liability - Compagas (36.3)	10.29.2014	3,600
Engineering risks - Copel (36.4)	08.24.2014	dependant on each event
Domestic and international transport - export and import (36.5)	08.24.2014	dependant on each event
Multi-risk - Compagas (36.6)	12.18.2014	13,300
Multi-risk - Elejor (36.6)	03.25.2014	446,691
Vehicles (36.7)	08.20.2014	market value
Miscellaneous risks (36.8)	08.24.2014	810
Operational risks - Elejor (36.9)	06.06.2014	500
Operational risks - UEG Araucária (36.10) (a)	05.31.2015	844,991
Court guarantee - Compagas (36.11)	02.03.2014	56,938
Performance bond - Copel (36.12)	07.14.2014	12,500
Performance bond - Copel (36.12)	01.15.2014	2,200
Performance bond - Copel (36.12)	07.30.2015	44,319
Performance bond - Copel (36.12)	12.27.2014	1,850
Operational risks - HPP Mauá - Consórcio Energético Cruzeiro do Sul (36.13)	11.23.2014	342,139
Liability for directors and administrators - D&O (36.14) (a)	06.30.2014	58,565
(a)     The values of the sums insured Operational Risk - UEG Araucaria and liability for directors and officers have been converted to real U.S. dollars with the rate of the day 12.31.2013, R$ 2.3426.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

36.1  Insurance against specified risks

This policy covers substations and power plants, listing their main equipment and respective insured amounts. It provides basic coverage against fire, lightning strikes, explosions of any kind, and additional coverage against potential electrical damage, miscellaneous risks, and risk to electronics and computers.

36.2  Fire insurance

This policy covers both Company-owned and rented facilities and part of their contents. It ensures payment of reparations to the insurance holder or property owner for the damages resulting from basic fire hazards, lightning strikes, and explosions of any kind, plus additional coverage against windstorms, hurricane, cyclone, tornado, hail and smoke.

36.3  Civil liability insurance

This insurance provides coverage against liability for involuntary damages, bodily and/or material and/or moral, caused to third-parties as a result of the Company and its subsidiaries’s commercial and/or industrial operations. It also has additional coverage for services on third-party sites and employer liability.

36.4  Insurance against engineering risks - Copel

This insurance provides coverage against risks of installation, assembly, disassembly, and testing of new equipment, particularly at substations and power plants. Policies are purchased before each risk event, according to the occurrence and need for coverage against risks of carrying out engineering services.

36.5  Transport insurance

This insurance provides coverage against losses and damages caused to products transported by any appropriate means within both the domestic and foreign market and during import and export operations to and from foreign markets. Policies are purchased before each risk event, and are basically used to cover the transport of electrical, electronic, and telecommunications equipment.

36.6  Multi-risk insurance

This policy comprises the assets of the Company and provides coverage against potential damages caused by fire, lighting strikes, explosions, electrical malfunctions, risks to electronic equipment, recovery of records and documents, windstorms, smoke, and theft or aggravated larceny.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

36.7  Vehicle insurance

This insurance covers the payment of reparations of damage suffered and expenses incurred as a result of risks to which Compagas’ 33 insured vehicles are subject. It provides basic coverage for the vehicles and additional and optional civil liability coverage against material, bodily, and moral damages caused to third-parties. Coverage limits for damages to third-parties are R$ 150 for material damages and R$ 300 for bodily damages, for each vehicle.

36.8  Insurance against miscellaneous risks

This insurance covers losses and material damage caused to the assets listed in the policy by any accidents with an external cause, including transport risks.

This type of insurance covers mobile and/or stationary electric equipment, computers, and electronics, whether in use at the Company's facilities or leased or loaned to third-parties.

36.9  Insurance against operational risks - Elejor

This insurance covers sudden, unforeseen, and accidental losses and material damage to Elejor buildings, merchandise, raw materials, unfinished and finished products, packages, machinery, tools, furniture, and other devices and facilities which are part of the insured establishment, in addition to loss of profits.

36.10  Insurance against operational risks – UEG Araucária

This policy provides coverage against all risks (all legally insurable risks), including machinery failure, for all the facilities of the Araucária Thermoelectric Power Plant.

36.11  Court guarantee - Compagas

This insurance covers the settlement of final rulings in lawsuits against Compagas. It has the same standing as a judicial bond, replacing judicial deposits in cash, attachment of assets, and bank guarantees.

36.12  Contract Performance Bond

It guarantees the liabilities assumed by Copel in the concession agreements signed with ANEEL.

This type of insurance is designed to guarantee full performance of a contract. It does not cover damages but rather liabilities for breach of contract, and it is a form of contractual guarantee provided by Brazilian law, which may replace bank guarantees, cash bonds, or government bonds.

36.13  Operating risks HPP Mauá - Consórcio Energético Cruzeiro do Sul

It is defined by the "All Risks" type coverage, covering all losses or material damage caused to the insured assets, except those formally considered as excluded in its conditions.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

The generating units, substations, power houses, dams, spillways and tunnels are covered by the policy.

As well as coverage for material damage, there is the additional coverage for rescue and containment of accidents, floods and flooding, removal of debris, minor engineering works, theft, strikes and rioting, expert fees and extraordinary expenses. It does not include coverage for lost profits.

36.14  Civil Responsibilities for Senior Management and Officers (D&O)

Insurance of civil responsibility of commercial companies to advisors, officers and management D&O – Directors & Officers, with coverage for all National territory and abroad as hired by the Company.

This insurance has a goal to cover for payment of financial losses and legal fees resulting from judicial claims against insured personnel related to their activities in the company’s management.

The personnel covered by this insurance are advisors, officers and senior management of Copel and also other personnel appointed by Copel to hold equivalent positions in the subsidiaries. 

37Compensation Account for “Part A”

As a result of adopting IFRS, the Company no longer recognizes regulatory assets and liabilities, and unrecognized the existing balances.

These assets and liabilities continue to be recognized in the regulatory records, introduced by ANEEL Normative Resolution 396.

The Compensation Account for Variations in Items from “Part A” - CVA accompanies the variations reported between the amounts homologated for tariff adjustments, and the amounts actually incurred during the tariff period, from the following cost components of “Part A”: Purchase of electric power (Bilateral, Itaipu and Auctions), Energy Transmission Cost (Transmission from Itaipu and the Basic Grid) and Sector Charges (Energy Development Account - CDE; System Service Charges - ESS and Incentive Program for Alternative Energy Sources – Proinfa, Research and Development and Energy Efficiency, and others).

ANEEL authorized Copel Distribuição, through Homologatory Resolution 1,541, of June 20, 2013, to adjust its supply tariffs as from June 24, 2013, by an average rate of 13.08%, with 11.40% that refers to the tariff adjustment index and 1.68% for the pertinent financial components, of which, CVA, represents a total of R$ 21,967, consisting of 2 parts: CVA being processed, for the tariff year 2012-2013, for the amount of R$ 15,780, and the balance to compensate for CVA from prior years for the amount of R$ 6,187. After the withdrawal of regulatory assets (CVA) granted in the previous year and deferring partial adjustment, the effect of this adjustment was an average decrease of 9.55% in customer tariffs, as Homologatory Resolution 1,565, of July 09, 2013.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

If the regulatory assets and liabilities had been recognized, the Company would have reported the following balances in its financial statements:

Composition of balances for CVA

	Current Assets		Noncurrent Assets
	12.31.2013	12.31.2012	12.31.2013	12.31.2012
CVA recoverable tariff adjustment 2012
Charges for use of transmission system (basic grid)	-	14,181	-	-
CDE	-	5,856	-	-
Proinfa	-	5,565	-	-
Transport of energy purchased (Itaipu)	-	1,356	-	-
Other financial components	-	17,312	-	-
	-	44,270	-	-
CVA recoverable tariff adjustment 2013
CCC	3,779	1,626	-	1,626
Charges for use of transmission system (basic grid)	917	22,047	-	22,047
Electricity purchased for resale (Itaipu)	5	-	-	-
ESS	-	35,860	-	35,860
CDE	-	3,261	-	3,261
Proinfa	5,534	1,037	-	1,037
Electricity purchased for resale (CVA Energ)	4,614	-	-	-
Transport of energy purchased (Itaipu)	-	1,297	-	1,297
Other financial components	45,146	35,249	-	35,250
	59,995	100,377	-	100,378
CVA recoverable tariff adjustment 2014
Charges for use of transmission system (basic grid)	18,587	-	18,587	-
Proinfa	154	-	154	-
Electricity purchased for resale (CVA Energ)	71,335	-	71,335	-
Other financial components	137,728	-	137,728	-
	227,804	-	227,804	-
	287,799	144,647	227,804	100,378

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	Current liabilities		Noncurrent liabilities
	12.31.2013	12.31.2012	12.31.2013	12.31.2012
CVA compensable tariff adjustment 2012
CCC	-	363	-	-
Energy purchased for resale (Itaipu)	-	17,871	-	-
ESS	-	18,982	-	-
Energy purchased for resale (CVA Energ)	-	9,679	-	-
Other financial components	-	24,465	-	-
	-	71,360	-	-
CVA compensable tariff adjustment 2013
Energy purchased for resale (Itaipu)	-	10,062	-	10,062
ESS	684	-	-	-
CDE	2,851	-	-	-
Energy purchased for resale (CVA Energ)	-	41,828	-	41,828
Transport of energy purchased (Itaipu)	661	-	-	-
Other financial components	2,616	22,902	-	22,902
	6,812	74,792	-	74,792
CVA compensable tariff adjustment 2014
Energy purchased for resale (Itaipu)	3,753	-	3,753	-
ESS	39,610	-	39,610	-
CDE	87	-	87	-
Transport of energy purchased (Itaipu)	20	-	20	-
Other financial components	1,804	-	1,804	-
	45,274	-	45,274	-
	52,086	146,152	45,274	74,792

Changes in CVA

.	Balance as of					Balance as of
	January 01, 2013	Differ.	Amortiz.	Correction	Transf.	December 31, 2013
Assets
CCC	3,252	4,130	(3,948)	345	-	3,779
Charges for use of transmission system (basic grid)	58,275	(3,828)	(15,791)	(565)	-	38,091
Energy purchased for resale	-	11	(6)	-	-	5
ESS	71,720	(71,165)	-	(555)	-	-
CDE	12,378	(6,267)	(6,109)	(2)	-	-
Proinfa	7,639	9,083	(11,575)	695	-	5,842
Energy purchased for resale (CVA Energ)	-	147,229	(4,614)	4,669	-	147,284
Transport of energy purchased (Itaipu)	3,950	(2,539)	(1,415)	4	-	-
Other financial components	87,811	289,650	(62,458)	5,599	-	320,602
	245,025	366,304	(105,916)	10,190	-	515,603
Current	144,647	22,489	(105,913)	3,761	222,815	287,799
Noncurrent	100,378	343,815	(3)	6,429	(222,815)	227,804
Liabilities
CCC	363	-	(376)	13	-	-
Energy purchased for resale (Itaipu)	37,995	(12,970)	(18,643)	1,124	-	7,506
ESS	18,982	83,075	(20,484)	(1,669)	-	79,904
CDE	-	6,059	(2,983)	(51)	-	3,025
Energy purchased for resale (CVA Energ)	93,335	(83,475)	(10,105)	245	-	-
Transport of energy purchased (Itaipu)	-	1,336	(692)	57	-	701
Other financial components	70,269	(36,222)	(27,082)	(741)	-	6,224
	220,944	(42,197)	(80,365)	(1,022)	-	97,360
Current	146,152	(101,466)	(80,365)	34	87,731	52,086
Noncurrent	74,792	59,269	-	(1,056)	(87,731)	45,274

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

38Provisional Measure no. 627/13

Management initially evaluated the effects of the provisions contained in Provisional Measure no. 627 - MP 627, issued on November 11, 2013 and Normative Instruction no. 1,397 issued September 16, 2013, as amended by Normative Instruction no. 1,422 issued December 19, 2013 - IN 1,397.

Although MP 627 is effective from January 01, 2015, it is possible to (irrevocably) apply it from January 01, 2014. Management does not intend to opt for early adoption, although it is waiting for MP 627 to be enacted as a law and the regulation of several matters by the federal tax authorities, for a deeper and more conclusive analysis, as the provisional measure has a material number of proposed amendments, meaning a number of its provisions could be amended and/or clarified.

Management's preliminary analyses did not identify any material impacts resulting from the distribution of profits in the last five years, the deduction limit for interest on shareholders' equity and the amount exceeding the tax exemption limit for the equity income in the financial statements of the financial year ended December 31, 2013.

Management's conclusions use the best interpretation of the current text of MP 627, which could undergo changes when enacted as a law meaning Management's interpretation should be revised based on the new wording.

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COMPANHIA PARANAENSE DE ENERGIA – COPEL
Notes to the Consolidated Financial Statements
All amounts expressed in thousands of Brazilian reais, unless otherwise stated

39Condensed unconsolidated financial information of Companhia Paranaense de Energia – COPEL

Since the condensed unconsolidated financial information required by Rule 12-04 of Regulation S-X is not required under IFRS issued by the International Accounting Standards Board - IASB, such information was not included in the original financial statements filed with the Brazilian Securities and Exchange Commissions – CVM in March, 17, 2014. In order to attend the specific requirements of the Securities and Exchange Commission (the “SEC”), Management has incorporated the condensed unconsolidated information in these financial statements as part of the Form 20-F. The condensed unconsolidated financial information of Companhia Paranaense de Energia - Copel, as of December 31, 2013 and 2012 and for each of the two years in the period ending on December 31, 2013, presented herein were prepared considering the same accounting policies as described in Note 2 and 3 to Company’s consolidated financial statements, except for the fact that the investment caption presented in Company’s unconsolidated condensed balance sheet were measured under the equity method, instead of being measured at fair value or at cost, as required by International Financial Reporting Standards - IFRSs issued by the IASB.

F-131

COMPANHIA PARANAENSE DE ENERGIA – COPEL
Notes to the Consolidated Financial Statements
All amounts expressed in thousands of Brazilian reais, unless otherwise stated

(a) Condensed statements of financial position

ASSETS		Restated
	12.31.2013	12.31.2012
Current assets
Cash and cash equivalents	10,410	29,464
Bonds and securities	186	176
Dividends receivables	381,371	1,038,664
CRC transferred to the State Government of Paraná	85,448
Other current receivables	3,869	3
Income tax and social contribution	42,494	150,483
Other current recoverable taxes	-	11
	523,778	1,218,801
Noncurrent assets
CRC transferred to the State Government of Paraná	1,295,106	-
Judicial deposits	272,115	271,858
Income Tax and Social Contribution	169,717	-
Deferred tax assets	91,205	117,194
Receivables from related parties	64,815	1,151,888
	1,892,958	1,540,940
Investments	12,055,619	10,869,359
Property, Plant and Equipment, net	29	-
	12,055,648	10,869,359
Total assets	14,472,384	13,629,100

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COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

LIABILITIES		Restated
	12.31.2013	12.31.2012
Current liabilities
Payroll, social charges and accruals	4,946	645
Payable to subsidiary	468,317	-
Suppliers	3,211	1,616
Income tax and social contribution	-	3,251
Other taxes payable	25,481	22,072
Loans and financing	562,801	28,106
Dividends payable	3,047	201,186
Other accounts payable	16,434	824
	1,084,237	257,700
Noncurrent liabilities
Other taxes due	40	-
Loans and financing	456,752	971,721
Post employment benefits	2,169	-
Provision for contingencies	277,847	302,295
	736,808	1,274,016
Equity	12,651,339	12,097,384
Share capital	6,910,000	6,910,000
Equity valuation adjustments	983,159	1,214,394
Legal reserves	624,849	571,221
Retained earnings	3,897,833	3,337,295
Additional proposed dividends	235,498	64,474
Total liabilities and equity	14,472,384	13,629,100

F-133

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

(b) Condensed statement of income

CONTINUING OPERATIONS
	12.31.2013	12.31.2012	12.31.2011
Other operating revenues (expenses)
General and administrative expenses	(47,772)	(23,235)	(23,675)
Other revenues (expenses), net	28,333	(13,927)	2,100
Result of equity in investees	1,116,830	732,313	1,249,114
	1,097,391	695,151	1,227,539
Operating income before financial results	1,097,391	695,151	1,227,539
Financial income (expenses)
Financial revenues	114,524	110,317	121,459
Financial expenses	(112,524)	(109,266)	(177,193)
	2,000	1,051	(55,734)
Operating income	1,099,391	696,202	1,171,805
Income tax and social contribution
Income tax and social contribution	-	(4,467)	(4,955)
Deferred income tax and social contribution	(26,831)	8,953	(9,160)
	(26,831)	4,486	(14,115)
Net income for the period	1,072,560	700,688	1,157,690
Basic and diluted net earning per share attributed do parent company shareholders - in reais
Class A preferred shares	4.4900	4.1742	4.4435
Class B preferred shares	4.1174	2.6879	4.0392
Common shares	3.7428	2.4435	5.3315

(c) Condensed statements of cash flows

		Restated	Restated
	12.31.2013	12.31.2012	12.31.2011
Net cash generated (used) by operating activities	954,960	116,845	298,735
Cash flow from investing activities
Bonds and securities	(10)	(11)	10
Loans to related parties	-	(808,972)	-
Reimbursement of loans to related parties	213,847	920,836	29,906
Redemption of investment in Ceolpar	-	910	-
Additions to investments	(600,170)	(9,273)	(664)
Additions to property, plant and equipment	(29)	-	-
Net cash generated by investing activities	(386,362)	103,490	29,252
Cash flow from financing activities
Loans and financing with third parties	-	-	600,000
Payment of the principal amount of debentures	-	-	(600,000)
Dividends and interest on capital paid	(587,652)	(218,628)	(390,052)
Net cash used in financing activities	(587,652)	(218,628)	(390,052)
Decrease in cash and cash equivalents	(19,054)	1,707	(62,065)
Cash and cash equivalents at the beginning of the period	29,464	27,757	89,822
Cash and cash equivalents at the end of the period	10,410	29,464	27,757
Variation in cash and cash equivalents	(19,054)	1,707	(62,065)

F-134

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

During the years ended December 31, 2013 and 2012, we received R$1,067,400 and R$378,115, respectively, from dividends and interest on own capital paid by our investees. Additional disclosures relating to Companhia Paranaense de Energia - Copel unconsolidated condensed financial information presented above are as follows:

• Recoverable Taxes: As of December 31, 2013 and 2012, Companhia Paranaense de Energia – Copel recorded part of the tax credits referring to tax loss carryforwards, based on expectations of future taxable income for income tax and social contribution up to a period of 10 years.

• Related Parties: The Company has the following balances outstanding with related parties:

	12.31.2013	12.31.2012
Noncurrent assets
Copel Distribuição	64,815	919,234
Elejor	-	232,654
Total	64,815	1,151,888

• Investments:  As of December 31, 2013 and 2012, investments in subsidiaries are comprised as follows:

		Restated
	12.31.2013	12.31.2012
Copel Geração e Transmissão	6,796,817	6,167,382
Copel Distribuição	3,366,685	3,535,388
Dominó Holdings	456,703	358,114
Copel Telecomunicações	352,939	328,145
Other investments	747,025	327,487
	11,720,169	10,716,516

F-135

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

• Dividends receivable: The dividends receivable are comprised as follows:

	12.31.2013	12.31.2012
Investees and subsidiaries
Copel Geração e Transmissão	321,902	635,489
Copel Distribuição	-	371,863
Copel Telecomunicações	21,585	7,982
Compagas	2,239	2,514
Dominó Holdings	6,311	17,986
Elejor	28,718	2,752
Ventos de Santo Uriel	5	-
Associated
Dona Francisca Energética	85	78
Other investments
Other investments	526	-
	381,371	1,038,664

• Provision for contingencies: Companhia Paranaense de Energia - Copel recorded reserves for risks mainly related to Cofins and PIS/PASEP. The provisions for risks are shown below:

	12.31.2013	12.31.2012
Regulatory	12,310	11,667
Civil	390	17,694
Tax Claim	265,147	272,934
	277,847	302,295

Restriction of transfer of funds from subsidiaries - The subsidiaries described below qualify as either concessionaires of public services or independent power producers. As such, any transfer of funds to the respective parent company, in the form of loans or advances, requires approval by ANEEL. This regulatory restriction does not apply to cash dividends determined in accordance with the Brazilian Corporate Law.

In addition, Copel G&T has certain financing agreements with the Brazilian National Development Bank (“BNDES”) under which BNDES approval is required for Copel G&T to pay cash dividends exceeding 30% of its net profit. Since BNDES has always approved Copel G&T’s requests to pay cash dividends in excess of 30% of its net profit and this restriction has not affected Copel G&T’s ability to pay cash dividends or parent company’s ability to meet its cash obligations, management deemed it to be a perfunctory clause.

As of December 31, 2013, total restricted subsidiaries net assets amount to R$ 11,003,627 composed as follows:

F-136

 

COMPANHIA PARANAENSE DE ENERGIA – COPEL

Notes to the Consolidated Financial Statements

All amounts expressed in thousands of Brazilian reais, unless otherwise stated

	12.31.2013
Copel Geração e Transmissão S.A.	6,796,817
Copel Distribuição S.A.	3,366,685
UEG Araucária Ltda.	701,754
Centrais Elétricas Rio Jordão - Elejor	72,019
Wind Power Plants	66,352
Total	11,003,627

***

F-137