Endesa Announces 1999 Nine Months Results; Net Income was Pta; 148.95 Billion $959.17 Million, Up 17.2% From the Same Period of 1998.NEW YORK--(BUSINESS WIRE)--Nov. 3, 1999-- -- Accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. earnings per share were Pta.140.7 ($0.90), 11.9% increase from the previous year. -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the domestic business has continued to improve increasing by 8.1% during the quarter. Accumulated increase for the first 9 months reached 10.2%. -- Cash flow generated in the nine months amounted to Pta.600.63 billion ($3.84 billion), 68.2% higher than in the same period in 1998, of which, Pta.494.79 billion ($3.17 billion) correspond to the domestic business and Pta.105.84 billion ($0.68 billion) correspond to the international business. -- International business result has improved compared to the first half of 1999. A practically balanced result for the quarter has kept the accumulated net loss as of September September: see month. 30th practically at the same level than in June June: see month. . Accumulated loss for international activities amounted to Pta.18.40 billion ($118 million) as of September 30th. -- Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. under the cost cutting program has been reduced by Pta.60.0 billion $380 million) since January January: see month. 1st 1997, a 45% of the 2003 target. In homogenous homogenous - homogeneous basis with 1996, cost reductions should reached 55.3% of the 2003 target. Endesa ENDESA Empresa Nacional de Electricidad, S.A. (Spanish electric utility) , S.A. (NYSE NYSE See: New York Stock Exchange :ELE ELE equine leukoencephalomalacia. ) Announced today that in the first nine months of 1999, net income for the Endesa Group amounted to Pta.148.95 billion ($952.77 million), an increase of 17.2% from 1998. Accumulated earnings per share were Pta.140.7 ($0.90), 11.9% increase from the previous year. During the third quarter, Endesa Group's net income was Pta.49.18 billion ($314.6 million), a 14.0% increase over the same period in 1998. The accounts reflect two very significant facts for the Endesa Group which took place during the year: 1. The merger of the Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. electric subsidiaries with and into Endesa, with economic effect since January 1st 1999. 2. The acquisition of controlling stakes in Enersis and Endesa of Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. through Enersis, resulting in these companies being consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: through the global integration method into the Endesa Group since January 1st 1999. However the "Income allocated to minority interests" account takes into account the changes in the interest in these companies during 1999 As far as the third quarter results are concerned, the following facts should be highlighted: 1. During the third quarter operating income for domestic business has continued to improve increasing by 8.1%. Accumulated increase for the first 9 months reached 10.2%. 2. International business result has improved compared to the first half of 1999. A practically balanced result for the quarter has kept the accumulated loss as of September 30th practically at the same level than in June. Accumulated loss for the international activities amounted to Pta. 18.43 billion ($117.9 million) as of September 30th. This has been made possible mainly by the forward operations signed by Enersis since the Endesa tender offers which have enabled the hedge of the losses caused by the depreciation of the Chilean Peso against the US Dollar which was the main cause for the losses in the first half of the year. In the third quarter, international business income before taxes and monorities was a Pta.6.47 billion ($41.4 million) gain. It worth mentioning that changes in the rainfall conditions in Chile and effects of the first initiatives of the Genesis Project are not yet visible in Endesa's international results. Basis for the Presentation of the Financial Information The incorporation of Enersis within Endesa's consolidation perimeter The boundary of a system or network, which defines the inside and outside. It is typically determined by firewalls and addresses. See DMZ. has greatly changed the latter's financial statements making it more difficult to compare current financial statements with those from previous years. For these reasons, and in order to render (1) To make visible; to draw. The term comes from the graphics world where a rendering is an artist's drawing of what a new structure would look like. In computer-aided design (CAD), a rendering is a particular view of a 3D model that has been converted into a realistic image. year-to-year comparisons easier, a pro-forma consolidated profit and loss account is included with Enersis consolidated under the equity method. Additionally the breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of results by activities is accompanied ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. by another, more simple breakdown of activities into domestic and international business. Finally, information is provided on the results for the third quarter 1999 and their comparison with the third quarter 1998 under the basis mentioned above. -0-
Summary of Main Magnitudes
1. Accumulated as of 30/9/99
PROFORMA
ENERSIS Group under equity method
Billion Pesetas
%
1999 1998 Change
Net Sales 723.42 696.38 3.9
EBITDA 389.28 373.65 4.2
Operating Income 248.06 225.05 10.2
Net Income 148.95 127.14 17.2
EPS (Ptas.) 140.7 124.7 11.9
Cash Flow 494.80 357.21 38.5
PROFORMA
ENDESA Group with Enersis under global
integration
Billion Pesetas
%
1999 1998 Change
Net Sales 1,092.35 696.38 56.8
EBITDA 561.02 373.65 50.2
Operating Income 346.65 225.05 54.0
Net Income 148.95 127.14 17.2
EPS (Ptas.) 140.7 125.7 11.9
Cash Flow 600.63 357.21 68.2
2. Third Quarter 1999
Proforma
ENERSIS Group under equity method
Billion Pesetas
%
1999 1998 Change
Net sales 247.04 236.70 4.4
EBITDA 134.93 122.71 10.0
Operating Income 84.99 78.60 8.1
Net Income 49.18 43.14 14.0
EPS (Ptas) 46.5 45.2 2.8
Cash Flow 118.83 122.90 (3.3)
ENDESA Group with Enersis under global
integration
Billion Pesetas
%
1999 1998 Change
Net sales 375.91 236.70 58.8
EBITDA 190.91 122.71 55.6
Operating Income 115.59 78.60 47.1
Net Income 49.18 43.14 14.0
EPS (Ptas) 46.5 45.2 2.8
Cash Flow 178.84 122.89 45.5
-0- Main Events in the Period -- As a consequence of the merger of Endesa's Spanish electric subsidiaries on July July: see month. 16th 1999, Endesa's stock capital has increased by 10.89% with the issuance of 103.94 million new shares with a par value of Pta.20.79 billion ($132.97 million) and a share premium of Pta.228.96 billion ($1.46 billion). Since January 1st, Endesa<180>s outstanding shares are 1.058.7 million. -- Endesa has started the construction of four CCGT CCGT Combined Cycle Gas Turbine CCGT Chicago Center for Green Technology CCGT Combined-Cycle Generating Technology CCGT catalytic combustion gas turbine plants of 400 MW each, of which Endesa will own 800MW and are expected to be in operation in the last quarter 2001 and first quarter 2002. These are the first CCGT plants being constructed in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. . Total investment is expected to amount to Pta.50 billion ($320 million). -- The equity offering of Red Electrica in July 1999 has resulted in Pta.19.81 billion ($126.69 million) capital gains for the Endesa Group. -- As announced last Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , during the third quarter Endesa has completed the plan for optimizing the Enersis Group known as the Genesis Project. This optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. plan targets that, by 2003, Enersis's cost base is expected to be $635 million lower, and annual capital expenditures will be reduced by $210 million, resulting in $845 million improvement in Enersis's cash flow by 2003. Some of the actions already undertaken are: 1. The 3.5 billion dollar debt re-structuring resulting in 75 million dollars annual savings in financial expenses. 2. Approval of the disposal of Aguas Cordillera cor·dil·le·ra n. An extensive chain of mountains or mountain ranges, especially the principal mountain system of a continent. [Spanish, from cordilla, diminutive of cuerda, cord and Infraestructura 200 3. A workforce reduction of 933 employees at Enersis Group workforce in the third quarter 1999. 4. The process of spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of the activities in Manso de Velasco Velasco may refer to:
-- In diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. , the most relevant facts during the third quarter were the following: a) The acquisition of 10% of Menta For the pistol, see Menta(Pistol) Menta is a sweet mint liquor prepared from natural ingredients like spearmint oil. It is a refreshing drink popular in Bulgaria in the summertime. (Cable i Televisio de Catalunya) from Cableuropa. At the same time Cableuropa has acquired Endesa's holdings in Santander Santander, city (1990 pop. 194,221), capital of Cantabria prov., N Spain, in Cantabria, on the Bay of Biscay. It is a seaport, fishing center, and a popular resort. On the nearby peninsula of Magdalena is a former royal summer palace. de Cable, Sevilla Sevilla English Seville ancient Hispalis City (pop., 2005 est.: city, 704,154; 2001: urban agglom., 1,180,197), capital of Sevilla province and Andalusia autonomous community (comunidad autónoma), Spain. Sistemas de Cable and Jerez de Cable. b) 100 Mw new capacity in wind farms, mini See minicomputer. hydraulic plants and cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. has been put into operation. c) ENDESA Diversificacion has been awarded the project for technical assistance and operation of the water desalination Water desalination The removal of dissolved minerals (including salts) from seawater or brackish water. This may occur naturally as part of the hydrologic cycle, or as an engineered process. plant at Carboneras Carboneras is a municipality of Almería province, in the autonomous community of Andalusia, Spain. Demographics Demographic evolution of Carboneras between 1999 and 2005 1999 2000 2001 2002 2003 2004 2005 for a 25 year period. Daily output for the plant is estimated to be 120,000 m3, to be duplicated in a second phase. Analysis of results 1. Operating Income Operating income as of 30 September 1999 was Pta.346.65 billion ($2.22 billion), 54% higher than the same period last year. In the third quarter operating income rose to Pta.115.59 billion ($739.40 million) with an increase of 47.1% over the third quarter 1998 Of the above Pta.248.06 billion ($1.59 billion) correspond to the domestic and Pta.98.58 billion ($630.61 million) pesetas to the international activities. a) Domestic Business In the third quarter, operating income in Spain increased by 8.1% and the nine months accumulated figure grew by 10.2%. As far as domestic cash flow concerns, in the third quarter went up by 10% and nine months accumulated grew by 4.2%. In the third quarter, electricity consumption in Spain grew by 8.5% over the same period in 1998, yielding a 7.5% accumulated rise in electricity demand for the first 9 months. Endesa Group accumulated electricity generation in Spain went up by 5.9% to 69.478 GWh. The strong demand has not been fully reflected in Endesa's generation due to a 23.3% increase in independent generators production and a 58.8% higher international imports. -0-
3rd quarter Accumulated
% % change
1999 change 1999
Generation Gwh 23,797 0.2 69,478 5.9
Energy sold (Gwh) 20,623 7.3 59,064 7.5
-0- The following table shows data on Endesa's and the industry's generation mix for the third quarters 1998 and 1999 and year to date 1999: -0-
Third quarter
ENDESA Group Total Industry
En % 1999 1998 1999 1998
Nuclear 29.0 29.3 34.2 36.6
Coal 49.6 49.1 44.8 40.4
Hydro 9.5 8.9 11.2 15.2
Fuel Gas 1.9 12.7 9.8 7.8
100.0 100.0 100.0 100.0
Accumulated
ENDESA Group Total Industry
En % 1999 1998 1999 1998
Nuclear 29.2 32.1 32.7 36.2
Coal 49.2 44.0 44.1 34.7
Hydro 11.0 14.3 12.9 23.5
Fuel Gas 10.6 9.6 10.3 5.6
100.0 100.0 100.0 100.0
-0- On the other hand, within an ever more competitive supply market, ENDESA Group's sales to eligible consumers in the third quarter 1999 were 3.562 Gwh giving a total accumulated figure of 8.167 Gwh representing a 44.8% market share. All in all, Endesa's consolidated revenues net from electricity purchased (only way to compare sales as a consequence of the change in the accounting method in sales since January 1st ), increased by 4.4% in the third quarter and by 3.9% for the first nine months. This increase has been achieved in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a 2.5% reduction in tariffs This is a list of tariffs and trade legislation:
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. customers and a significant speed up in the agenda for liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . of the electricity supply. The revenues increase was partially offset by a 20% increase in fuel expenses in the third quarter, and 19.8% accumulated increase as of September, a consequence of a higher generation mostly based on fossil fuel fossil fuel: see energy, sources of; fuel. fossil fuel Any of a class of materials of biologic origin occurring within the Earth's crust that can be used as a source of energy. Fossil fuels include coal, petroleum, and natural gas. plants due to the lower hydro hy·dro adj. Hydroelectric. n. pl. hy·dros 1. Hydroelectric power. 2. A hydroelectric power plant. generation. Cost cutting As far as the rest of the operating expenses concern, excluding amortization and depreciation, went down by Pta.5.54 billion ($36.46 million), or 7.4%, in the third quarter. Accumulated reduction for the nine months was Pta.11.47 billion ($73.36 million) or 5.1%. The cost reduction is based on the personnel expenses and other operating expenses included in the cost cutting program in the domestic business. In order to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. these accounts, it is necessary eliminate the Pta.1.12 billion ($7.13 million) corresponding to a premium for attendance at the AGM AGM annual general meeting AGM n abbr (= annual general meeting) → AG f AGM n abbr (= annual general meeting) → JHV f . Taking this into account, controllable costs were reduced by Pta.12.58 billion ($80.49 million) or 5.5% from 1998. Personnel expenses went down by 12.3% to Pta.113.57 billion ($726 million), mainly due to a workforce reduction of 1,205 employees in the last 12 months, 789 employees since the beginning of 1999. At the end of September, total number of employees in Spain was 18.690. With all the above, controllable costs have been reduced by Pta.60.0 billion ($384 million) vis-a-vis 1 January 1997, representing 45% of the 5 years target set in the last review of the plan. This percentage is 39% higher than the period elapsed e·lapse intr.v. e·lapsed, e·laps·ing, e·laps·es To slip by; pass: Weeks elapsed before we could start renovating. n. to the plan's horizon. . In homogenous basis with 1996, cost reductions should reached 55.3% of the 2003 target. The above has resulted in a 10.0% increase in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become in the third quarter with an accumulated increase of 4.2% for the year. On the other hand, operating income has risen by 8.1% in the third quarter and 10,2% for the first nine months. b) International Business In the third quarter international business operating income was Pta.32.43 billion ($207.5 million), increasing accumulated operating income for the nine months to Pta. 98.58 billion ($630.61 million). International business has been affected by the following factors: 1. In spite of the change in rainfall conditions in Chile since September, the severe drought drought, abnormally long period of insufficient rainfall. Drought cannot be defined in terms of inches of rainfall or number of days without rain, since it is determined by such variable factors as the distribution in time and area of precipitation during and before in this country is still significantly affecting the international results. For the first nine months of 1999, the drought effect on Endesa Chile can be quantified in Pta.7.0 billion ($45 million) billion pesetas lower revenues and Pta.11.50 billion ($73.56 million) higher fuel cost. 2. Electricity demand in the countries where Endesa operates has grown significantly in the first nine months of 1999 in spite of a non favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. environment. Operational data for the international business broken down by country are given below: Generation Total output for the Group to 30 September 1999 has amounted to 29.954 Gwh and broken down: -0-
Accumulated 30/9/99 Change over 1998 %
GWh
Chile 10.160 9.9
Colombia 8,206 -4.1
Argentina 6,542 32.9
Brazil 2,312 14.8
Peru 2,734 7.9
--------------------- --------------------
29.954 9.8
-0- Distribution Total energy sold to 30 September 1999 rose to 34,207 Gwh as per the breakdown below: -0-
Accumulated 30/9/99 % Change over 1998
GWh
Chile 7,094 1.8
Colombia 5,703 -5.5
Argentina 9,024 4.7
Brazil 9,831 6.4
Peru 2,555 0.1
Total 34,207 2.4
-0- The following table gives a breakdown of the operating income by country and activity: -0- GENERATION Ptas.Billion Operating Income Annualized ROI Country 3 Q Accum Fixed Assets 3 Q % Accum % Chile (5.50) (7.69) 562.98 (3.9) (1.8) Colombia 2.98 9.76 324.31 3.7 4.0 Argentina 1.91 8.22 251.17 3.0 4.4 Brazil 1.92 5.78 57.68 13.3 13.4 Peru 3.32 8.27 153.84 8.6 7.2 Total 4.62 24.33 1,349.98 1.4 2.4 DISTRIBUTION AND OTHERS Y OTROS Ptas.billion Operating Income Annualized ROI Country 3 Q Accum Fixed Assets 3 Q% Accum% Chile 9.19 25.91 312.67 11.8 11.1 Colombia 3.03 5.44 215.41 5.6 3.4 Argentina 4.44 16.75 196.36 9.0 11.4 Brazil 8.43 19.85 146.09 23.1 18.1 Peru 2.73 6.30 77.02 14.2 10.9 Total 27.81 74.25 947.55 11.7 10.5 -0- Diversification Domestic diversification activities before goodwill depreciation contributed Pta.14.04 billion ($89.79 million) to the first nine months results, broken down as follows: -0-
Million Pts
----------------------
Telecoms (274)
Water 1,279
Gas 2,414
Cogeneration and renewables 2,274
Other (REPSOL, EASA,...) 8.342
----------------------
14.035
-0- Losses in telecoms are mainly due to AMENA AMENA Address Mark Enable after Synchronization , which started its operations this year. Still its performance is very positive having reached 550.000 customers as of 30 September 1999 with a share of 17% of new incorporations in September (12% for the year). RETEVISION counts on 2,810,000 lines with a 15% total market share and 320,000 internet customers with a 25% market share. 2) Financial Results The increase in indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. produced during the year was Pta.1,725.19 billion ($11.07 billion) yielding a total figure of Pta.3,446.48 billion ($22.07billion), of which Pta.1.625.85 billion ($10.43 billion) correspond to the domestic business and Pta.1,820.63 billion ($11.64 billion) to the international activities. Financial results as of 30 September 1999 were Pta.24.99 billion ($159.92 million), Pta.2.25 billion ($14.39 million) higher than 1998. Disregarding dis·re·gard tr.v. dis·re·gard·ed, dis·re·gard·ing, dis·re·gards 1. To pay no attention or heed to; ignore. 2. To treat without proper respect or attentiveness. n. the effect of capital gains Ptas.147.2 billion ($941.6 million) in 1999 and Pta.38.19 billion ($244.35 million) in 1998, they would actually show a drop of Pta.106.76 billion ($682.92 million) mainly as a consequence of net higher financial expenses by Pta.87.94 billion ($562.5 million) and net foreign exchange losses of Pta.25.61 billion ($163.82 million). The above increase in debt resulted in higher financial expenses by Pta.87.94 billion ($562.53 million) broken down as follows: a) The debt attributed to Enersis Group amounts to Pta.1.302 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. ($8.33 billion) with an average interest rate of 6,22% after the refinancing Refinancing An extension and/or increase in amount of existing debt. of the debt taken place in August. This increase implies (logic) implies - (=> or a thin right arrow) A binary Boolean function and logical connective. A => B is true unless A is true and B is false. The truth table is A B | A => B ----+------- F F | T F T | T T F | F T T | T It is surprising at first that A => a raise in financial expenses to Pta.76.43 billion ($488.90 million). b) The decrease in Endesa Group's average cost of the debt in Spain as well as Endesa International's, that lowered from 5.08% in the first nine months of 1998 to 4.08% in the same period of 1999. This decrease has represented savings in financial expenses of Pta. 11.48 billion ($73.43 million). c) The increase of Endesa Espana and Endesa Internacional's debt, that represented Pta.422.68 billion ($ 2.70 billion) in comparison to December December: see month. 31st 1998, has implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. a raise in the financial expenses of Pta.14.18 billion ($90.71 million). Of this increase in the debt, Pta.320.99 billion ($2.05 billion)correspond to the a la financing of the loan provided to Enersis for the acquisition of Endesa Chile. d) As consequence of the higher provisions for pensions and workforce reduction, the accounting of financial expenses in accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. basis has increased by Pta.8.81 billion ($56.36 million). The foreign exchange losses due to the debt in dollars allocated to investments in countries whose currencies are not enough historically correlated cor·re·late v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates v.tr. 1. To put or bring into causal, complementary, parallel, or reciprocal relation. 2. to consider them, in accounting terms, as hedge debt, have amounted to Pta.100.86 billion ($645 million). Of these foreign exchange losses, Pta.92.92 billion ($594 million) correspond to international business. It is necessary to mention that in the financial statements of the Latin-American Latin American n. 1. A native or inhabitant of Latin America. 2. A person of Latin-American descent. Lat subsidiaries used to the consolidation of Endesa Group, the Spanish GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The Spanish accounting criteria criteria (krītēr´ē  ),n. is stricter than the Chilean GAAP in what the hedge debt concerns. This fact results in higher foreign exchange losses and therefore negatively impacting in results. These foreign exchange losses have been partially offset by Pta.75.25 billion ($481.34 million) foreign exchange gains derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from bank accounts in dollars and forward operations for hedge debt signed by Enersis Group after Endesa took control of the company. The forward operations for hedge debt signed by Enersis Group after the acquisition of Endesa Chile have allowed to offset the foreign exchange losses in the third quarter, what helped to balance the international activity results. 3) Goodwill Amortization Goodwill amortization in the third quarter amounted to Pta.11.21 billion ($71.70 million). The accumulated amount for the first nine months is Pta.26.31 billion ($168.27 million). Of the third quarter figure, Pta.3.55 billion ($22.71 million) correspond to domestic diversification and Pta.22.76 billion ($145.56 million) to international activity. Of the last amount Pta.11.08 billion ($70.86 million) correspond to goodwill amortization of Enersis Group and the rest Pta.11.68 billion ($74.70 million) to what Endesa Internacional has in Enersis and in the other direct investments. 4) Extraordinary results Included is Pta.19.80 billion ($126.7 million) additional capital gain obtained according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the sale price of Red Electrica's equity offering by SEPI SEPI Sociedad Estatal de Participaciones Industriales (Spain) SEPI Society for the Exploration of Psychotherapy Integration SEPI Society of Energy Professionals International . Extraordinary results also include Pta.88.52 billion ($566.21 million) of additional allowances to extraordinary provisions already included in 1999 First Half results. 5) Corporate Tax The total expense for this concept amounts to Pta.85.91 billion ($549.55 million), Pta.71.39 billion ($456.69 million) corresponding to domestic business what represents 29.6 % of the profit before taxes, and Pta.14.52 billion ($92.86 million) to international business. The international business shows this expense, regardless Pta.27.44 billion ($176 million) loss before taxes in the international activity, as has not been possible to use part of the financial expenses and foreign exchange losses of Enersis Group as deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). expenses as they are allocated in companies that cannot use its fiscal losses. Information by activity The main components of the financial statements broken down by activities in the third quarter as for the first nine months of 1999 are shown in the tables below: -0-
Accumulated as of September 30th 1999
Pta. billion
Revenues (1) Operating income Net income
Generation 487.78 154.35 86.54
Distribution 640.33 76.50 26.43
Supply 61.05 6.59 4.29
International 506.27 98.58 (18.43)
Diversification 40.54 10.62 107.66
-0- (1) Revenues in generation include Pta.85.75 billion ($548 million) corresponding to internal sales to distribution in offshore utilities. (2) Not including the net effect of Pta.88.52 billion ($566 million) extraordinary provisions. -0-
1999 Third quarter
Pta. billion
Operating
Revenues (3) Income Net Income
Generation 170.60 48.32 28.28
Distribution 223.97 25.17 7.31
Supply 25.71 1.96 1.28
International 159.41 32.43 (0.14)
Diversification 19.08 7.71 12.47
-0- (3) Revenues in generation include Pta. 33.41 billion ($213.7 million) of internal sales to distribution in offshore utilities. Cash Flow and Investments Cash flow for the third quarter was Pta.178.84 billion ($1.14 billion), a 45.5% increase over the first nine months of 1998. Of this figure, Pta.118.83 billion ($760 million) correspond to domestic business and Pta.60.01 billion ($384 million) to international business. Accumulated cash flow for the year amounts to Pta.600.63 billion ($3.84 billion), 68,2% higher than 1998, of which Pta.494.79 billion ($3.17 billion) correspond to domestic business and Pta.105.84 billion ($677 million) to the international business. -0-
Total investments break down as follow:
Pta. billion
3rd quarter Accumulated
Capital 73.43 199.79
expenditures
Financial 44.24 760.46
investment
----------------------- ---------------------
Total 117.66 960.26
-0- Capital expenditures break down as shown below: Pta. billion 3rd quarter ---------------------------------------------- Domestic International Total Generation 5.85 19.95 25.80 Distribution 15.45 19.46 34.91 Others 3.78 8.92 12.72 --------------- --------------- ------------- Total 25.10 48.33 73.43 Pta. billion Accumulated -------------------------------------------- Domestic International Total Generation 20.89 67.75 88.63 Distribution 41.01 32.41 73.42 Others 9.98 27.77 37.75 ------------ ---------------- ------------- Total 71.87 127.92 199.79
-0-
In Financial investments is worth to mention the additional
acquisition of stakes in Enersis by Endesa and in Endesa Chile by
Enersis, that amounts to Pta.557.44 billion ($3.57 billion), as well
the Pta.29.02 billion ($185.63 million) investment to subscribe shares
in REPSOL SA right issue in the third quarter 1999.
In the third quarter also highlights the Pta. 29.02 billion
($189.26 million) investment to subscribe shares in REPSOL, S.A.'s
equity offering.
Y2K
During the first nine months of the year Endesa Group has
undertaken all the actions contained in its Y2K Project for all of its
facilities in Spain.
As of September 30th, current compliance level is above 98%.
Regarding the elements still pending to compliant with year 2000
standards, it has been checked that its adaptation is rigorously
planned, both, temporarily and economically speaking. The delay is due
to either exploitation or planning in the network (framework) causes,
or the solutions availability by the suppliers, without compromising
in any situation the success of the project.
Regarding this subject, a recently published report by the
consultant firm GartnerGroup stated that Endesa Group is one of the
best prepared companies to Y2K.
Endesa has also continued working in the National Electric
Committee for Y2K effect, headed by the Ministry of Industry and with
the participation of the Market Operator, the System Operator (REE),
CSN, UNESA, Nuclear Safety Committee, and the rest of companies of the
sector. The main objectives of the Committee are the follow-up and
supervision of the actions underway as well as of the already finished
Spanish Electric System Contingency Plan. Endesa Group has also
created its own Contingency Plan according to the guidelines given by
the Electric Committee.
Similar projects have been undertaken in participated companies.
It is worth mentioning the significant improvement of Enersis Holding
as of September 30th, having almost finished the adaptation measures
underway as well the Contingency Plans.
Consolidated statements are unaudited and prepared in accordance
with Spanish GAAP. Conversion of pesetas (Pta) into dollars ($) has
been made at the Federal Reserve Bank noon-buying rate on September
30th, 1999, of $1.00 = Pta 156.33
For further information, contact Miguel Temboury, North America
Investor Relations, (212) 750-7200; http://www.endesa.es
FORWARD LOOKING STATEMENTS
This Press Release contains statements that constitute forward
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in a number of
places in this announcement and include statements regarding the
intent, belief or current expectations of Endesa and its management
with respect to, among other things: (1) Endesa's business plans,
including its diversification and international programs; (2) Endesa's
cost-reduction plans; (3) the merger of Endesa and its subsidiaries;
(4) the incorporation of Enersis, S.A. and Endesa-Chile into the
Endesa Group; (5) trends affecting Endesa's financial condition or
results of operations, including market trends in the Spanish
electricity sector; (6) supervision and regulation of the Spanish or
Chilean electricity sector; and (7) the future effect of any changes
in the laws and regulations applicable to Endesa or its affiliates.
Such forward looking statements are not guarantees of future
performance and involve risks and uncertainties. Actual results may
differ materially from those in the forward looking statements as a
result of various factors. These factors include a decline in the
equity capital markets of the United States, Spain or Chile, an
increase in the market rates of interest in the United States, the
United Kingdom or elsewhere, adverse decisions by government
regulators in Spain, Chile or elsewhere and other factors described in
Endesa's Annual Report on Form 20-F. Readers are cautioned not to
place undue reliance on those forward looking statements, which speak
only as of their dates. Endesa undertakes no obligation to release
publicly the result of any revisions to these forward looking
statements which may be made to reflect events or circumstances after
the dates thereof, or to update or revise any of them, whether as a
result of new information, future events or otherwise.
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