Celesc Reports 17 Percent Gain In Net Income to $14.5 Million; Net Operating Revenue Up 19 Percent.

SANTA CATARINA, Brazil--(BUSINESS WIRE)--June 12, 1996-- Centrais Eletricas de Santa Catarina S.A. - CELESC - (OTC: CAIBY/Brazil: CLS8) today reported a 17 percent rise in first quarter 1996 net income, inflation adjusted using the IGP-M index, to R$ 14.4 million ($14.5 million) over the first quarter of 1995. Unadjusted, Celesc s net income was R$ 21.2 million ($21.5 million).

Net operating revenue reached R$ 172.3 million ($174.4 million) compared with R$ 144.7 million ($146.5 million), a gain of 19 percent.

Ricardo Moritz, Celesc s Chief Financial Officer, said the increases in net operating revenue and net income were due to a 2.6 percent rise in sales of electricity to final consumers and to the rate increase granted in November 1995 by the Federal Government.

Total energy consumption in Celesc s concession area, the state of Santa Catarina, rose by 2.6 percent to 2,307 gigawatt-hours in the first three months of 1996, up from 2,250 gigawatt-hours in the comparable period last year. On an annualized basis, the volume of electricity sold in the 12-month period ended March 31, 1996 was up by 6.3 percent, with residential and commercial customers recording growth of 12.4 and 12.9 percent, respectively.

Operating expenses for the first quarter increased 12.8 percent principally because of a 37.8 percent rise in personnel expenses. Contributing factors included a 3.7 percent real wage increase, a contribution to CELOS, Celesc s employee pension fund, an item which, in the first quarter of 1995, had been accounted for as in other expenses, a provision for employee benefits which was not recorded in the first quarter of 1995, and labor contingencies.

Celesc s total debt at March 31 was R$ 94.3 million, representing only 7.1 percent of shareholders' equity. Of the total, 78 percent is long term debt. -0-

               CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
                               Statement of Income
        (Expressed in thousands of Reais at March 31, 1996 price levels)

Exchange Rate at March 31, 1996: R$0.9880 = US$1.00

                              Three Months Period Ended March 31,
                                     1996            1995
Operating Revenue
Sales to final consumers           227,400         198,513
Value-added Tax (ICMS)             (48,356)        (47,277)
Sales to other utilities             1,102             986
Other Revenue                        5,817           4,123
PIS and COFINS                      (5,783)         (3,828)
Regulatory charges                  (7,884)         (7,792)
Net Operating Revenue              172,296         144,725
Operating Expenses                (155,171)       (137,605)
Purchases of electricity           (77,164)        (75,385)
Personnel                          (39,820)        (28,895)
Third-party Goods and Services     (15,352)        (14,349)
Depreciation and Amortization      (13,983)        (13,517)
Other Expenses                      (8,852)         (5,459)
Operating Income (loss) before
  Financial Income (expense)        17,125           7,120
Interest Income                     11,918          12,585
Interest expense                    (4,604)         (2,317)
Non-operating income (expense)         (11)          1,046
Income (loss) Before Taxes          24,428          18,434
Provision for taxes:
  Social contribution tax           (3,182)         (2,126)
  Income tax                        (6,875)         (3,983)
Net Income (loss) for the Year      14,371          12,325
Net Income (loss) per thousand
Shares in Reais  (R$)                23.61           20.25

                              Three Month Period Ended March 31,
Financial Indices:                   1996            1995
Net Income (Loss) (R$1,000)         14,371          12,325
Earnings per 1,000 shares (R$)       23.61            20.25
Gross Margin                           9.9%            4.9%
Net Margin                           14.2%            12.7%
Return on Equity                      1.1%             0.9%
Profit Margin                         8.3%             8.5%
EBITDA (R$1,000)                    31,108          20,637

-0-

             CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
                                 Balance Sheet
     (Expressed in thousands of Reais at March 31, 1996 price levels)

                                      Three Month Period Ended March 31,
                                              1996            1995
ASSETS
Current Assets                              203,266         173,328
Cash and Cash equivalents                    23,545          20,874
Accounts Receivable:                        135,938         142,071
Allowance for doubtful accounts              (4,535)         (1,621)
Other current assets                         48,318          12,004
Long-Term Receivables                       362,812         335,742
Receivable from the State Government        336,823         317,779
Other assets                                 25,989          17,963
Permanent Assets                          1,183,231       1,156,151
Investments                                   8,262           4,876
Property, plants and equipment            1,173,440       1,085,366
Deferred charges                              1,529          65,909
Total Assets                              1,749,309       1,665,221

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities                         175,256         119,009
Accounts payable                             65,125          49,367
Loans and interest payable                   21,137           9,644
Taxes and social charges payable             34,355          22,795
Accrued payroll                              37,758          26,317
Other payables and accruals                  16,881          10,886
Long-Term Liabilities                       249,747         155,108
Bank Loans and Financing                     33,790          28,190
Debentures                                   39,397          39,978
Accrued liabilities                          79,411               0
Special obligations                          97,098          84,198
Other                                            51           2,742
Stockholders' Equity                      1,324,306       1,391,104
Paid-in capital                             578,846         578,846
Capital reserves                            722,952         799,232
Retained earnings (deficit)                  14,371          12,325
Funds for capital increase                    8,137             701
Total Liabilities and Stockholders'Equity 1,749,309       1,665,221

                CENTRAIS ELETRICAS DE SANTA CATARINA S.A. - CELESC
                                            Energy Sales (in MWh)

Consumption Class                  1st Quarter 1996 1st Quarter 1995

Residential                                 623,546         568,248
Industrial                                  985,120       1,032,366
Commercial                                  293,662         270,912
Rural                                       228,633         213,022
Public Entities                              51,117          46,539
Public Lighting                              79,761          74,024
Public Service                               42,314          41,388
Own Consumption                               3,339           3,332
TOTAL                                     2,307,492       2,249,831

Other Utilities                              37,360          35,788
TOTAL                                     2,344,852       2,285,619

Date: March 31, 1996
                                           Year ended December 31,
                                               1996           1995
AVERAGE RATES
To Final Consumers (R$/MWh)                   77.59           67.22
Wholesale (R$/MWh)                            29.50           27.55

CONTACT: Irineu Theiss - Asst. to the CFO, CELESC

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or

Jane Valdez - The Anne McBride Company, Inc.

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