Celesc 1996 Net Income Sets Record On Strong Energy Demand.

SANTA CATARINA, Brazil--(BUSINESS WIRE)--April 2, 1997--Centrais Eletricas de Santa Catarina S.A. - CELESC - (OTC: CAIBY/Brazil: CLS8/Portal: CELEYP) today reported net income of R$62.0 million (US$59.6 million) for the year ended December 31, 1996, compared with a loss of R$80.5 million in 1995.

Celesc's Chief Financial Officer, Oscar Falk, said of the results: "The 1996 financials are the best ever for the Company, and are due primarily to a strong increase in demand for energy and the rate increase granted by the Federal Power Agency (DNAEE) in November 1995." Mr. Falk replaced Ricardo Moritz as the Company's CFO in January.

Electricity consumption rose by 6.1 percent in 1996 over the previous year, reaching 9,495 gigawatt-hours. Residential and commercial consumption lead the increases, with growth rates of 9.0 percent and 8.6 percent, respectively.

Besides the increase in demand, the average sales tariff during 1996 increased 24 percent to R$74.25 per megawatt-hour, net of ICMS tax, as compared with R$59.90 per MWh in 1995.

While net operating revenue increased by 30.8 percent from R$508.7 million to R$665.6 million (US$640.3 million) in 1996, operating expenses increased by 25.5 percent from R$527.5 million in 1995 to R$662.0 million (US$636.9 million) in 1996.

The increase in operating expenses resulted from: (i) a 25 percent increase in purchases of electricity due to the rise in demand and the increase in supply tariffs granted generators in November 1995; (ii) a 24 percent increase in personnel expenses, reflecting the annual salary increase granted in October 1995, the impact on salaries of implementing a new wage table in April 1996, and the additional costs of early retirement and voluntary dismissal programs, and (iii) a 34 percent increase in third-party services and materials caused by costly additional services required by more that 66 thousand new customers connected to the system.

Celesc's significant growth in interest income includes financial charges on past due accounts receivable, monetary correction and interest on the CRC loan to the State Government, while interest expense includes R$14.7 million (US$14.1 million) to be paid to shareholders as interest on paid-in capital.

Mr. Falk said that after seven years without paying dividends, Celesc's Board of Directors will propose distribution of R$14.7 million to shareholders at the Annual General Meeting on April 30.

(The figures in this report are based on accounting practices originating in Brazil's Corporate Law (Legislacao Societaria), which is the accounting methodology required by the Brazilian CVM for corporate reporting and tax purposes. For results under the Constant Currency Method, please see "Supplementary Information in Constant Currency.")

Celesc will host a conference call on Friday, April 4, for both Brazilian and international investors at 11 a.m. US Eastern time. Those wishing to participate may call 1- 800-633-8638 or 1-609-683-4775 (for international callers) approximately 5-10 minutes prior to the call. For an instant replay, please call 1-800-835-2663 or 1-609-896-8185 (for international callers).

Financial Tables Follow -0-

CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
                  Statement of Income
            (Expressed in thousands of Reais)

Exchange Rate at Dec. 31, 1996: R$1.0394 = US$1.00
Exchange Rate at Dec. 31, 1995: R$0.9725 = US$1.00


                                              Year Ended December 31,
                                               1996              1995
Operating Revenue
Sales to final consumers                     893,972            688,455
Value-added Tax (ICMS)                      (193,737)          (155,775)
Sales to other utilities                       4,715              3,447
Other Revenue                                 27,505             16,213
PASEP and COFINS                             (24,002)           (17,254)
Regulatory charges (RGR+CCC)                 (42,848)           (26,371)
Net Operating Revenue                        665,605            508,715
Operating Expenses                          (662,010)          (527,478)
Purchases of electricity                    (313,775)          (250,994)
Personnel                                   (184,299)          (148,484)
Materials                                    (13,213)           (10,326)
Third-party Services                         (56,733)           (41,945)
Depreciation                                 (55,743)           (47,756)
Other Expenses                               (38,247)           (27,973)
Operating Income (loss) before                 3,595            (18,763)
  Financial Income (expense)
Interest Income                              102,413             99,556
Interest expense                             (39,433)           (43,257)
Non-operating income (expense)                  (327)          (108,598)
Income (loss) Before Taxes                    66,248            (71,062)
  And Profit Sharing
  Social contribution tax                    (12,172)            (3,450)
  Income tax                                   2,600             (6,022)
  Profit Sharing                              (7,192)
Reclassification of Interest on Pai           12,500
Net Income (loss) for the year                61,984            (80,534)
Net Income (loss) per thousand
Shares in Reais  (R$)                           80.54           (132.33)


NB: According to accounting practices originating in Brazil's Corporation Law
(Legislacao Societaria).


CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
             Balance Sheet
    (Expressed in thousands of Reais)


                                                     At December 31
                                                  1996              1995
                                                             (Reclassified)

CURRENT ASSETS                                  324,275           209,762

Cash and Cash equivalents                       111,030             7,727
Accounts Receivable                             157,511           126,253
Allowance for doubtful accounts                  (4,604)           (1,669)
Instalment Receivables                           34,506            24,090
Prepaid taxes (ICMS)                                  0            37,545
Inventory                                         8,407             6,833
Other current assets                             17,425             8,983
LONG-TERM RECEIVABLES                           412,615           347,077
Receivable from the State Government            369,338           323,917
Escrow deposits                                  31,594            16,887
Other assets                                     11,683             6,273
PERMANENT ASSETS                              1,187,207         1,143,327
Investments                                       8,985             8,672
Property, plants and equipment                1,176,868         1,133,151
Deferred charges                                  1,354             1,504
TOTAL ASSETS                                  1,924,097         1,700,166

CURRENT LIABILITIES                             205,765           197,154
Accounts payable                                 69,166            71,741
Loans and interest payable                       11,887            47,215
Taxes and social charges payable                 27,283            23,225
Accrued payroll                                   4,844             4,853
Interest on paid-in capital                      16,926                 0
Accounts payable to CELOS                        18,129             9,630
Other payables and accruals                      57,530            40,490
LONG-TERM LIABILITIES                           266,586           236,407
Bank Loans and Financing                         29,074            25,571
Debentures                                       41,950            38,445
Accrued liabilities                              57,687            78,277
Taxes and social charges payable                 25,500                 0
Special obligations                             106,470            91,669
Other long term liabilities                       5,905             2,445

SHAREHOLDERS' EQUITY                          1,451,746         1,266,605
Paid-in capital                                 693,323           561,303
Capital reserves                                706,765           699,412
Retained earnings (deficit)                      47,263                 0
Funds for capital increase                        4,395             5,890
TOTAL LIABILITIES AND SHAREHOLDERS' EQU       1,924,097         1,700,166


CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
                                  Energy Sales (in MWh)
                                                                   Change %
                                         1996             1995    1996/1995

Consumption Class
Residential                           2,390,676        2,193,014       9.0
Industrial                            4,261,650        4,127,141       3.3
Commercial                            1,082,937          997,169       8.6
Rural                                   921,676          851,463       8.3
Public Entities                         193,796          174,528      11.0
Public Lighting                         325,448          303,233       7.3
Public Service Co.                      165,365          162,212       1.9
SUB-TOTAL                             9,341,548        8,808,760       6.0
Sales to other Utilities                153,095          141,882       7.9
TOTAL SALES                           9,494,643        8,950,642       6.1
Own Consumption                          12,842           12,155       5.7

                                            1996             1995

Total Energy Required                   10,356,551         9,668,030
Own Production                             429,944           362,381
Purchases                                9,926,607         9,305,649
Losses                                     849,066           705,233

CONTACT: Irineu Theiss, Asst. to the CFO Jane Valdez

CELESC The Anne McBride Co.

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