FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of August, 2003
Commission File Number 1-15224
Energy Company of Minas Gerais
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(Translation of registrant's name into English)
Avenida Barbacena, 1200
30190-131 Belo Horizonte, Minas Gerais, Brazil
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): _____
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A
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BUSINESS NEWS
IMMEDIATE RELEASE
CEMIG REPORTS SECOND QUARTER 2003 EARNINGS
Belo Horizonte, Brazil, August 4, 2003 - Companhia Energetica de Minas
Gerais - CEMIG - (NYSE: CIG; BOV: CMIG4, CMIG3 and LATIBEX: XCMIG), a leading
fully-integrated electricity company in Brazil and its subsidiaries ("Grupo
CEMIG") today reported net income of R$535,463 in the six-month period ended
June 30, 2003 compared to a net loss of R$894,796 in the six-month period
ended in June 30, 2002.
In the 2003 period, the consolidated income was positively impacted by an
increase in electricity sales and in financial income arising from valuation
of the Brazilian real against the U.S. dollar. In the 2002 period, the result
was negatively impacted by the provision for losses on receivables from Minas
Gerais State Government and financial expenses arising from devaluation of the
Brazilian real against the U.S. dollar.
Djalma Bastos de Morais, CEMIG's CEO, said: "We are continuing the
Company's recovering process after the rationing. The quarterly result, a net
income of R$384 million, shows, a significant improvement compared to the
previous quarters, as a result of the guidance emanated from the Board of
Directors and of the actions taken by the Board of Executive Officers, which
always aim at maximizing shareholder value. We also continued our capital
expenditure that reached R$525 million, which allowed us to not only to
continue our expansion projects, but also to connect new customers, enabling
us to accomplish our goal of connecting all customers within the Minas Gerais
state."
CEMIG's CFO, Flavio Decat de Moura stated that: "despite the difficult
climate we faced last year because of the Real devaluation and the delay of
the financial resources promised in the ambit of the General Agreement of the
Electricity Sector, we are gradually improving CEMIG's financial performance.
We continue to aim towards returning to prior levels. Our indebtedness reached
R$3,173 million compared to R$3,616 at the end of the first quarter, a
reduction of 12.2%, which brought the debt over shareholders' equity ratio to
33%, a very positive level. We still have some pending matters related to the
General Agreement of the Electricity Sector, besides the latest progress.
Nevertheless, we can assure our shareholders that the cost-cutting and capital
expenditure revision actions already taken will result in significant gains in
the next quarters. We have
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confidence that, if the conjuncture remains stable and we would receive all
predicted resources, we will be presenting results that we judge will be very
attractive to investors."
Electricity gross sales were R$3,343,434 in the six-month period ended in
June 30, 2003 compared to R$2,592,824 in the six-month period ended in June
30, 2002, an increase of 28.95%. This result was due to:
o rate average increase of 10.51% starting in April 8, 2002 (full
effect in 2003);
o rate average increase of 31.53% starting in April 8, 2003
o increase in Emergency capacity charge collected in the six-month
period ended in June 30, 2003;
o 1.78% increase in electricity volume sold to final customers.
Electricity gross sales to final customers were R$3,313,687 in the
six-month period ended in June 30, 2003 compared to R$2,543,452 in the
six-month period ended in June 30, 2002, representing an increase of 30.28%.
This increase resulted from the rate increase of 10.51% and 31.53% in April
2002 and 2003, respectively, and a 2.12% rise in electricity sales volume. The
most representative markets, residential and commercial markets increased
6.13% and 4.91% respectively, and industrial market decreased 0.75%.
The increase in electricity gross sales was additionally impacted by Emergency
capacity charge collected in power bills, R$139,228 in the six-month period
ended in June 30, 2003 compared to R$41,237 in the six-month period ended in
June 30, 2002 (this charge started being collected in March 2002). The
significant change between periods is a result of the retroactive amounts
collected in 2003, of part of the Emergency capacity charge related to the
period from July 2, 2002 to October 8, 2002, in the amount of R$46,468, due to
a injunction which did not allow that amount to be collected in the 2002
period.
Operating expenses were R$2,113,422 in the six-month period ended in June
30, 2003 compared to R$1,916,439 in the six-month period ended in June 30,
2002, an increase of 10.28%, mainly due to an increase in Personnel expenses,
Gas purchased for resale and Operating provisions in counterpart of a decrease
in Employee post-retirement benefits. The main variations in expenses are
described below:
Personnel expenses were R$316,324 in the six-month period ended in June
30, 2003 compared to R$265,182 in the six-month period ended in June 30, 2002,
an increase of 19.29%, due mainly to salary increases of
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11.45% in November 2002, an increase of 0.63% in the average number of CEMIG's
employees (11,420 employees in the six-month period ended in June 30, 2003
compared to 11,348 employees in the six-month period ended in June 30, 2002),
and a reduction in Personnel expenses transferred to Construction in progress.
Electricity purchased for resale were R$680,338 in the six-month period
ended in June 30, 2003 compared to R$662,237 in the six-month period ended in
June 30, 2002, representing an increase of 2.73%. This variation is a result
of an increase in expenses for energy purchased from Itaipu, R$558,225 in the
six-month period ended in June 30, 2003 compared to R$475,033 in the six-month
period ended in June 30, 2002, partially offset by a decrease in MAE
transaction expenses, R$39,428 in the six-month period ended in June 30, 2003
compared to R$109,966 in the six-month period ended in June 30, 2002. The
higher MAE expenses in the six-month period ended in June 30, 2002 is due to
the significantly higher rates presented during that period, principally in
January and February, months in which the Electricity Rationing Plan was in
force.
Depreciation and amortization expenses were R$280,999 in the six-month
period ended in June 30, 2003 compared to R$270,843 in the six-month period
ended in June 30, 2002, representing an increase of 3.75%, due basically to
the launch of additional distribution network and lines.
Outside services were R$139,112 in the six-month period ended in June 30,
2003 compared to R$111,736 in the six-month period ended in June 30, 2002,
representing an increase of 24.50%, due to the adjustment of service contract
prices, mainly related to delivery of bills to consumers, maintenance of
facilities and electric equipments.
Employee post-retirement benefit expenses were R$23,753 in the six-month
period ended in June 30, 2003 compared to R$108,499 in the six-month period
ended in June 30, 2002, representing a reduction of 78.11%. The decrease in
expenses is due basically to the estimate for 2003 of a lower increase in
projected benefit obligations, compared to a higher profitability expected for
plan assets.
Operating provisions were R$80,213 in the six-month period ended in June
30, 2003 compared to R$8,419 in the six-month period ended in June 30, 2002,
representing an increase of 852.76%. This increase is due to the
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complementary provision for losses on realization of the special rate
adjustment, in the amount of R$20,966, recorded in the six-month period ended
in June 30, 2003 and to the Allowance for doubtful accounts of R$31,160
recorded in the six-month period ended in June 30, 2003 compared to a
reversion of R$3,162 recorded in the six-month period ended in June 30, 2002.
The reversion in Allowance for doubtful accounts recorded in the prior period
is the result of significant overdue amounts collected from an industrial
customer.
Fuel consumption quota expenses were R$157,490 in the six-month period
ended in June 30, 2003 compared to R$160,004 in the six-month period ended in
June 30, 2002, representing a reduction of 1.57%. Fuel consumption quota
refers to operating costs of thermoelectric plants in the Brazilian isolated
and interconnected energy system prorated among electric concessionaires
through ANEEL resolution.
Gas purchased for resale expenses were R$76,746 in the six-month period
ended in June 30, 2003 compared to R$45,059 in the six-month period ended in
June 30, 2002, an increase of 70.32%. These expenses refer to gas purchased by
GASMIG. This variation is a result of a gas price increase, partially offset
by a 10.03% reduction in the volume of gas acquired, in the amount of 199,628
thousand m3 in the six-month period ended in June 30, 2003, compared to
221,876 thousand m3 in the six-month period ended in June 30, 2002, resulting
from lower purchases from thermoelectric plants.
Financial income was impacted by the main factors described as follows:
o Investment income earned in the amount of R$14,953 in the six-month
period ended in June 30, 2003 compared to R$95,095 in the six-month
period ended in June 30, 2002. In the prior period, there was a
higher volume of investments because of debentures issued on
November 2001, whose proceeds were applied in CEMIG's Investment
Plan during the year of 2002, justifying the reduction in revenues.
Additionally, losses from not redeemed financial instruments
denominated in U.S. dollars contributed to the decrease of the
Investment income in the six-month period ended in June 30, 2003, as
the Company recorded an expense in the amount of R$17,747.
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o Foreign net exchange gains in the amount of R$341,191 in the
six-month period ended in June 30, 2003 compared to foreign net
exchange losses of R$314,998 in the six-month period ended in June
30, 2002, which are principally related to loans and financing
denominated in foreign currencies. In the six-month period ended
June 30, 2003, the Brazilian real appreciated 18.72% over the U.S.
dollar, compared to a 22.58% devaluation in the same period of 2002.
o Net revenues from monetary restatement of CVA amounting to R$41,044
in the six-month period ended in June 30, 2003 compared to R$6,031
in the six-month period ended in June 30, 2002. This variation is a
result of higher average balance of CVA, basis to be restated by
SELIC, in the six-month period ended in June 30, 2003 compared to
the same prior period.
o Interest and monetary restatement expenses on loans and financing
amounting to R$182,573 in the six-month period ended in June 30,
2003 compared to R$139,733 in the same prior period. This increase
is due to the higher debt level denominated in local currency and
the raise in its inflationary restatement indexes in the six-month
period ended in June 30, 2003. The Indice Geral de Precos - IGP-M
(General Price Index), main index of these contracts, presented a
variation of 5.89% in the six-month period ended in June 30, 2003
compared to a 3.48% variation in the same prior period.
o Reversion of the provision for valuation marketable securities of
Brazilian National Treasury Notes in the amount of R$45,543 in the
six-month period ended in June 30, 2003 compared to a provision of
R$20,828 in the six-month period ended in June 30, 2002, due to the
lower discount imposed by financial markets on transactions
involving Federal government long-term bonds.
o Interest on capital declared in the six-month period ended in June
30, 2002 in the amount of R$120,000.
Non-operating expenses were R$12,693 in the six-month period ended in
June 30, 2003 compared to R$1,059,172 in the six-month period ended in June
30, 2002. This variation is due to a provision for loss recorded in the prior
period, in the amount of R$1,045,325, related to the Second Amendment of
Credit Assignment Contract for CRC signed with the Minas Gerais State
Government.
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The CEMIG Group recorded income tax expenses of R$313,765 in the
six-month period ended in June 30, 2003, representing 36.98% of pre-tax
income.
In the six-month period ended in June 30, 2002, the income tax expenses
were R$22,360 in relation to a pre-tax loss of R$1,001,091. Basically this
result is due to the provision for loss recorded in the amount of R$1,045,325,
which was considered a not deductible expense for Income and Social
Contribution Tax purposes.
Certain statements and assumptions contained herein are forward-looking
statements based on management's current views and assumptions and involve
known and unknown risks and uncertainties. Actual results could differ
materially from those expressed or implied in such statements.
Contacts:
Luiz Fernando Rolla Eliza Gibbons
Investor Relations Officer CEMIG The Anne McBride Company
Tel. +55-31-3299-3930 Tel. 303-477-1350
Fax +55-31-3299-3933 Fax 212-983-1736
lrolla@cemig.com.br eliza@annemcbride.com
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Chart I
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Statement of Income (consolidated)
Values in million of Reais
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2003 2002
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Year to Date 2nd Q. 1st Q. Year 4th Q. 3rd Q. 2nd Q. 1st Q.
------------------------------- ---------------- ---------- ---------- --------- ---------- ---------- ---------- -----------
Net Revenue 2,544 1,456 1,088 5,119 1,298 1,539 1,043 1,239
Operating Expenses (2,113) (1,148) (965) (4,593) (1,186) (1,490) (954) (963)
EBIT 431 308 123 525 111 49 89 276
EBITDA 712 449 263 1,076 254 187 227 408
Financial Result 431 273 158 (616) 142 (450) (374) 66
Non-Operating Result (13) (4) (9) (27) (7) (6) (7) (7)
Extraordinary loss - - - (1,045) - - (1,045) -
Income tax, social contribution
and deferred income tax (314) (194) (120) (71) (198) 149 93 (115)
Interest on capital reversal - - - 220 100 - 120 -
Minority interest - - - 12 1 2 9 -
Net Income 535 383 152 (1,002) 149 (256) (1,115) 220
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Chart II
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Operating Revenues (consolidated)
Values in million of Reais
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2003 2002
------------------------------------------ -----------------------------------------------------
Year to Date 2nd Q. 1st Q. Year 4th Q. 3rd Q. 2nd Q. 1st Q.
----------------------------- ------------------ ---------- ---------- --------- ---------- ---------- ---------- ----------
Retail Sales 3,314 1,860 1,454 5,458 1,515 1,400 1,402 1,141
Extraordinary Revenues - - - 275 6 8 (54) 315
Wholesale 30 26 4 534 45 439 11 39
Transmission Grid Revenue 123 65 58 185 51 54 42 38
Others 158 90 68 300 129 67 61 43
Deductions (1,081) (585) (496) (1,633) (448) (429) (419) (337)
Net Revenues 2,544 1,456 1,088 5,119 1,298 1,539 1,043 1,239
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Chart III
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Operating Expenses (consolidated)
Values in million of Reais
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2003 2002
------------------------------------------ ----------------------------------------------------
Year to Date 2nd Q. 1st Q. Year 4th Q. 3rd Q. 2nd Q. 1st Q.
----------------------------------- ------------------- ---------- ---------- -------- ---------- ---------- ---------- ----------
Energy Purchased 681 389 292 1,733 278 793 302 360
Labor 339 182 157 553 155 133 132 133
Depreciation and amortization 281 141 140 551 142 138 139 132
CCC 157 64 93 345 92 92 91 70
Transmission Grid Charges 157 80 77 298 78 78 77 65
Outsourced Services 139 74 65 265 85 68 60 52
Forluz - Employee post-retirement
benefits 24 17 7 145 (17) 54 54 54
Other Expenses 335 201 134 703 373 134 99 97
Total 2,113 1,148 965 4,593 1,186 1,490 954 963
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Chart IV
Breakdown of electricity sales (consolidated)
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No. of consumers MWh R$ thousand
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June 30th 6 months ending June 30th 6 months ending June 30th
----------------------------------- ------------------------------------- -------------------------------
2003 2002 2003 2002 2003 2002
----------------------- ----------------- ---------------- -------------- -------------------- ------------- ---------------
Residential 4,663,858 4,559,274 3,315,583 3,123,939 1,101,002 835,354
Industrial 68,477 68,110 10,713,332 10,794,168 1,289,312 1,021,778
Commercial, services
and other 518,266 509,599 1,722,015 1,641,481 485,208 377,678
Rural 351,753 329,619 758,441 713,061 138,353 107,251
Others 53,283 51,958 1,227,021 1,096,118 226,771 167,452
Own consumption 1,337 1,364 27,443 24,425 - -
Unbilled supply, net - - - - 73,041 33,939
Wholesale 4 4 103,411 158,412 8,429 10,685
Transaction on the MAE - - - - 21,318 38,687
CONSOLIDATED TOTAL 5,656,978 5,519,928 17,867,246 17,551,604 3,343,434 2,592,824
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Chart V
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Financial Result breakdown (consolidated)
Values in million of Reais
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2003 2002
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Year to Date 2nd Q. 1st Q. Year 4th Q. 3rd Q. 2nd Q. 1st Q.
--------------------------------------- -------------- ----------- ----------- --------- --------- -------- -------- -------
Financial Income
Investment income earned 15 (4) 19 236 39 102 65 30
Charges on overdue bills 26 13 13 43 14 10 11 8
CRC assignment agreement - interest on
arrears and monetary variation 82 17 65 308 128 82 56 42
Monetary restatement of Parcel A costs 224 150 74 199 - 61 76 62
Foreign exchange gains 356 248 108 75 (7) 53 23 6
PASEP and COFINS on financial income (39) (23) (16) (45) (15) (16) (8) (6)
Others 3 (28) 31 51 (52) 87 7 9
667 373 294 867 107 379 230 151
Financial Expenses
Interest on loans and financing (150) (76) (74) (251) (67) (60) (67) (57)
Foreign exchange losses (15) (12) (3) (803) 166 (625) (342) (2)
Monetary restatement losses - Loans and
financing (32) 4 (36) (101) (31) (54) (12) (4)
Financial transaction tax ("CPMF") (16) (7) (9) (28) (9) (7) (7) (5)
Marketable security loss provision 45 19 26 (61) 9 (49) (26) 5
Advance sales of electric energy - - - (10) - (6) (4) -
Others (68) (28) (40) (8) 66 (27) (26) (21)
(236) (100) (136) (1,262) 134 (828) (484) (84)
Interest on capital - - - (220) (100) - (120) -
431 273 158 (615) 142 (450) (374) 67
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Chart VI
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Related party transactions
Values in million of Reais
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06/30/2003 03/31/2003
---------------------------- ------------------------------
State of Minas Gerais State of Minas Gerais
Government Government
------------------------------------------------------------------- ---------------------------- ------------------------------
ASSETS
Current Assets
Customers and distributors 13 10
Tax Recoverable -
State VAT recoverable 23 24
Noncurrent assets
Account receivable from Minas Gerais State Government 837 820
Tax Recoverable -
VAT recoverable 88 79
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Taxes, fees and charges
VAT - ICMS payable 155 128
Interest on capital and Dividends 50 50
Long-term liabilities
Debentures 27 27
2nd QUARTER 2003 2nd QUARTER 2002
---------------------------- ------------------------------
FINANCIAL
Electricity sales 15 11
Deductions from operating revenues - ICMS (680) (538)
Financial Income-
Monetary restatement and interest on CRC assignment agreement 185 97
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Chart VII
Share ownership
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Number of shares as of June 30, 2003
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Shareholders Common % Preferred % Total %
----------------------------------- -------------------- ------- --------------------- -------- ------------------- --------
State of Minas Gerais 36,119,657,399 51.0 3,030,572,489 3.3 39,150,229,888 24.1
Southern Electric Brasil Part. Ltda. 23,362,956,173 33.0 - - 23,362,956,173 14.4
Other 35,827,856 0.1 131,656,501 0.1 167,484,357 0.1
Local 9,045,406,902 12.8 47,462,819,554 52.0 56,508,226,456 34.8
Foreign 2,310,319,593 3.3 40,654,602,558 44.5 42,964,922,151 26.5
Total 70,874,167,923 100.0 91,279,651,102 100.0 162,153,819,025 100.0
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Chart VIII
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BALANCE SHEETS (consolidated)
ASSETS
Values in million of Reais
---------------------------------------------------------------------------------------------------------------
2003 2002
---------------------------------- ----------------
06/30/2003 03/31/2003 12/31/2002
--------------------------------------------------------- ----------------- --------------- ----------------
CURRENT ASSETS
Cash and cash equivalents 274 278 123
Consumers and Distributors 1,046 861 882
Dealership - Rate adjustment 292 270 258
Dealership - Energy transportation 22 20 18
Dealers - Transactions on the MAE 140 94 83
Tax recoverable 64 76 21
Rationing Bonds and costs 22 27 -
Materials and supplies 21 20 21
Prepaid expenses - CVA 47 2 226
Receivable from Federal Government - Loss revenue related
to low-income customers 87 64 42
Other 96 110 146
2,111 1,822 1,820
NONCURRENT ASSETS
Account receivable from Minas Gerais State Government 837 820 755
Consumers - Rate adjustment 1,116 1,145 1,150
Prepaid expenses - CVA 450 521 195
Tax credits 453 540 541
Marketable securities - Available for sale 75 73 53
Rationing - Bonds and adaptation costs 23 25 52
Dealers - Transactions on the MAE 436 463 463
Recoverable taxes 118 110 82
Escrow account in connection with litigations 68 67 66
Other receivables 79 77 106
3,655 3,841 3,463
PERMANENT ASSETS
Investments 737 686 608
Property, plants and equipment 7,946 7,915 7,898
Deferred charges 23 24 25
8,706 8,625 8,531
TOTAL ASSETS 14,472 14,288 13,814
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BALANCE SHEETS (consolidated)
LIABILITIES AND SHAREHOLDERS' EQUITY
Values in million of Reais
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2003 2002
----------------------------------- ----------------
06/30/2003 03/31/2003 12/31/2002
-------------------------------------------------------------- ----------------- ---------------- ----------------
CURRENT LIABILITIES
Suppliers 1,202 1,085 1,275
Taxes payable 347 277 151
Loan, Financing and Debentures 680 950 834
Payroll and related charges 119 103 108
Interest on capital and dividends 203 204 211
Employee post-retirement benefits 244 177 181
Regulatory charges 182 151 94
Profit Sharing 23 30 26
Other 103 75 81
3,103 3,052 2,961
LONG-TERM LIABILITIES
Loan and Financing 1,626 1,753 1,717
Debentures 868 913 834
Employee post-retirement benefits 1,533 1,604 1,656
Suppliers - wholesale 334 355 334
Taxes, fees and charges 317 331 217
Reserve for contingencies 357 334 315
Other 90 85 70
5,125 5,375 5,143
- - -
PARTICIPATION IN ASSOCIATE COMPANIES 28 28 29
SHAREHOLDERS' EQUITY
Paid-in Capital 1,622 1,622 1,622
Capital reserves 4,032 4,032 4,032
Retained earnings (losses) 535 152 -
6,189 5,806 5,654
Funds for capital increase 27 27 27
6,216 5,833 5,681
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 14,472 14,288 13,814
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMPANHIA ENERGETICA DE MINAS
GERAIS - CEMIG
By: /s/ Flavio Decat de Moura
-------------------------------
Name: Flavio Decat de Moura
Title: Chief Financial Officer
and Investor Relations Officer
Date: August 7, 2003