##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 Commission file number: 1-13240
 EMPRESA NACIONAL DE ELECTRICIDAD S.A.
  EMPRESA NACIONAL DE ELECTRICIDAD S.A
    
    CHILE(Translation of Registrants name into English)
    
    (Jurisdiction of incorporation or organization)
 Santa Rosa 76, Santiago, Chile
Telephone No. (562) 630-9000   Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Name of each exchange on whichTitle of each class
    
    registeredAmerican Depositary Shares
    
    New York Stock ExchangeShares
    
    New York Stock Exchange*
 *
    
    Listed, not for trading, but only in connection with the registration of American
Depositary Shares, pursuant to the requirements of the Securities and Exchange
Commission. 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:
 $230,000,000
    
    7.875%
    
    Notes due 2027$220,000,000
    
    7.325%
    
    Notes due 2037$200,000,000
    
    8.125%
    
    Notes due 2097$400,000,000
    
    7.750%
    
    Notes due 2008$400,000,000
    
    8.500%
    
    Notes due 2009$400,000,000
    
    8.350%
    
    Notes due 2013$200,000,000
    
    8.625%
    
    Notes due 2015
   þ o
 
 o þ
  þ o
  þ o o
  o þ
  o þ




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TABLE OF CONTENTS
 PageGLOSSARY
    
    
    1INTRODUCTION
    
    
    4Financial Information
    
    
    4Technical Terms
    
    
    5Calculation of Economic Interest
    
    
    5Forward-Looking Statements
    
    
    5PART I
    
    
    7Item 1. Identity of Directors, Senior Management and Advisors
    
    
    7Item 2. Offer Statistics and Expected Timetable
    
    
    7Item 3. Key Information
    
    
    7Item 4. Information on the Company
    
    
    19Item 4A. Unresolved Staff Comments
    
    
    81Item 5. Operating and Financial Review and Prospects
    
    
    81Item 6. Directors, Senior Management and Employees
    
    
    113Item 7. Major Shareholders and Related Party Transactions
    
    
    121Item 8. Financial Information
    
    
    123Item 9. The Offer and Listing
    
    
    126Item 10. Additional Information
    
    
    128Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    142Item 12. Description of Securities other than Equity Securities
    
    
    146PART II
    
    
    147Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    147Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    147Item 15. Controls and Procedures
    
    
    147Item 16. [Reserved]
    
    
    148Item 16A. Audit Committee Financial Expert
    
    
    148Item 16B. Code of Ethics
    
    
    148Item 16C. Principal Accountant Fees and Services
    
    
    149Item 16D. Exemptions from Listing Requirements for Audit Committees
    
    
    150Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Persons
    
    
    150PART III
    
    
    151Item 17. Financial Statements
    
    
    151Item 18. Financial Statements
    
    
    151Item 19. Exhibits
    
    
    151EX-1.1: BY-LAWS AS AMENDEDEX-8.1: LIST OF SUBSIDIARIESEX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONS




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GLOSSARY
 AESGener
    
    AES Gener S.A.
    
    Chilean generation company that competes with Endesa
Chile in Chile, both in the SIC and the SING systems,
also, in Argentina, Brazil and Colombia.AFP
    
    Administradora de Fondos de
Pensiones
    
    Chilean pension funds.Ampla
    
    Ampla Energía e Servicos S.A.
    
    Brazilian distribution company operating in Rio do
Janeiro owned by Endesa Brasil, a subsidiary of
Enersis.ANEEL
    
    Agéncia Nacional de Energia
Elétrica
    
    Brazilian agency for electric energy.Betania
    
    Central Hidroeléctrica de
Betania S.A. E.S.P.
    
    Endesa Chiles Colombian subsidiary which operates a
541 MW hydroelectric facility.Cachoeira Dourada
    
    Centrais Eléctricas
Cachoeira Dourada S.A.
    
    Brazilian company owned by Endesa Brasil, a
subsidiary of Enersis, with a hydroelectric capacity
of 658 MW.CAM
    
    Compañía Americana de
Multiservicios Ltda.
    
    Enersis subsidiary engaged in the electrical parts
procurement business.CAMMESA
    
    Compañía Administradora del
Mercado Mayorista Eléctrico
S.A.
    
    Argentinean company in charge of the operation of the
MEM. CAMMESAs stockholders are generation,
transmission and distribution companies, large users
and the Secretariat of Energy.CCEE
    
    Cámara de Comercialização de
Energia Elétrica
    
    Chamber of Commercialization of Energy in Brazil.CDEC
    
    Centro de Despacho Económico
de Carga
    
    Autonomous entity in each Chilean electric system in
carge of coordinating the efficient operation and
dispatch of units to satisfy the demand at any time.CELTA
    
    Compañía Eléctrica Tarapacá
S.A.
    
    Endesa Chile subsidiary that operates in the SING
with 182 MW in thermal plantsCEMSA
    
    Compañía de Energía del
Mercosur S.A.
    
    Endesa Chiles subsidiary trading company with
operations in Argentina.CGE
    
    Compañía General de
Electricidad S.A
    
    The second largest Chilean distribution company and a
client of Endesa Chile.Chilectra
    
    Chilectra S.A.
    
    Chilean main distribution company owned by Enersis.CIEN
    
    Companhia de Interconexão
Energética S.A.
    
    Brazilian transmission company, wholly owned by
Endesa Brasil, Enersis subsidiary.CNE
    
    Comisión Nacional de Energía
    
    Chilean National Energy Commission; governmental
entity with responsibilities under the Chilean
regulatory framework.Codensa
    
    Codensa S.A. E.S.P.
    
    Colombian distribution company controlled by Enersis.Coelce
    
    Companhia Energética do
Ceará S.A.
    
    Brazilian distribution company operating in the state
of Ceará; Coelce is controlled by Endesa Brasil, a
subsidiary of Enersis.CREG
    
    Comisión de Regulación de
Energía y Gas
    
    Colombian Commission for the Regulation of Energy and
Gas.CTM
    
    Compañía de Transmisión del
Mercosur
    
    Endesa Chiles subsidiary transmission company with
operations in Argentina.




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Edegel
    
    Edegel S.A.A.
    
    Peruvian generation company, subsidiary of Endesa
Chile.Edelnor
    
    Empresa de Distribución
Eléctrica de Lima Norte
S.A.A.
    
    Peruvian distribution company with concession area in
the northern part of Lima.El Chocón
    
    Hidroeléctrica El Chocón S.A.
    
    Endesa-Chiles subsidiary with two hydroelectric
plants, El Chocón (1,200MW) y Arroyito (120MW), both
located in the Limay River, Argentina.Emgesa
    
    Emgesa S.A. E.S.P.
    
    Colombian generation company controlled by Endesa
Chile.Endesa Costanera
    
    Endesa Costanera S.A.
    
    Argentine generation company controlled by Endesa
Chile.Endesa Brasil
    
    Endesa Brasil, S.A.
    
    Brazilian holding company, subsidiary of Enersis,
created in 2005 to improve the positioning of the
Group in this country.Endesa Fortaleza
    
    Central Geradora
Termeléctrica Endesa
Fortaleza S.A.
    
    Endesa Fortaleza owns a 322 MW combined cycle
generating plant, located in the state of Ceará.
Endesa Fortaleza is fully owned by Endesa Brasil,
Enersis subsidiary.Endesa Internacional
    
    Endesa Internacional S.A.
    
    ENDESA, S.A. subsidiary to control operations in
Latin America.ENDESA, S.A.
    
    Endesa, S.A.
    
    The largest electricity generation and distribution
company in Spain; it owned a 60.6% beneficial
interest in Enersis as of December 31, 2006.MEM
    
    Mercado Eléctrico Mayorista
    
    Wholesale Electricity Market. The MEM corresponds to
the Sistema Interconectado Nacionalor National
Interconnected System, or NIS, in Argentina.NIS
    
    Sistema Interconectado
Nacional
    
    National interconnected electric system. There are
NIS in Argentina, Brazil and Colombia.ONS
    
    Operador Nacional do Sistema
Elétricos
    
    Brazilian nonprofit private entity responsible for
the planning and coordination of operations in
interconnected systems.ORSEP
    
    Organismo Responsable de la
Seguridad de las Presas
    
    The entity for safety of dams; ORSEP, in its Spanish
acronym.OSINERG
    
    Organismo Supervisor de la
Inversión en Energía
    
    Peruvian regulatory electricity authority.Pangue
    
    Empresa Eléctrica Pangue S.A.
    
    Chilean electric company, owner of Pangue power
station. Pangue is an Endesa Chiles subsidiary.Pehuenche
    
    Empresa Eléctrica Pehuenche
S.A.
    
    Chilean electric company, owner of three power
stations in the Maule basin. Pehuenche is an Endesa
Chiles subsidiary.San Isidro
    
    Compañía Eléctrica San
Isidro S.A.
    
    Chilean electric company, owner of a thermal power
station. San Isidro is wholly-owned by Endesa Chile.SEF
    
    Superintendencia de
Electricidad y Combustible
    
    Governmental entity in charge of supervising the
Chilean electric industry, including fuels.SEIN
    
    Sistema Eléctrico
Interconectado Nacional
    
    Peruvian electric system.
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SIC
    
    Sistema Interconectado
Central
    
    Chilean central interconnected system.SING
    
    Sistema Interconectado del
Norte Grande
    
    Electric system operating in the northern region of
Chile.SVS
    
    Superintendencia de Valores
y Seguros
    
    Chilean authority in charge of supervising securities.TESA
    
    Transportadora de Energía
del Mercosur S.A.
    
    Endesa Chiles subsidiary transmission company with
operations in Argentina.UTA
    
    Unidad Tributaria Anual
    
    Chilean monetary unit used to define fines, among
other purposes. One UTA equals 12 UTM.UTM
    
    Unidad Tributaria Mensual
    
    Chilean monetary unit used to define fines, among
other purposes.VAD
    
    Valued Added Distribution
    
    Valued Added Distribution component, in the several
countries.VNR
    
    Valor Nuevo de Reemplazo
    
    The net replacement value, in its Spanish acronym.
 3




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INTRODUCTION
 As used in this annual report on Form 20-F , first person personal pronouns such as we, us
or our refer to Empresa Nacional de Electricidad S.A. (Endesa Chile) and its consolidated
subsidiaries unless the context indicates otherwise. Unless otherwise indicated, our interest in
our principal subsidiaries and related companies is expressed in terms of our economic interest as
of December 31, 2006.
 
 Financial Information
  Empresa Nacional de Electricidad S.A. Chilean Superintendencia de Valores y Seguros, Instituto
Nacional de Estadísticas
  
    
    control, directly or indirectly, more than a 50% voting interest in such company; or
    
    nominate or have the power to nominate a majority of the board of directors of such
company if we control 50% or less of the voting interest of that company.
 Hidroeléctrica El Chocón S.A. Endesa Costanera Central Hidroeléctrica de Betania S.A. (E.S.P., Emgesa S.A. E.S.P. Edegel S.A.A.
  4




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Technical Terms
   
    
    subtracting the number of GWh of energy sold from the number of GWh of energy purchased
and generated (which already excludes own energy consumption and losses of the power
plant), within a given period.
 
 Calculation of Economic Interest
  
 Forward-Looking Statements
  
    
    our capital investment program;
    
    trends affecting our financial condition or results from operations;
    
    our dividend policy;
    
    the future impact of competition and regulation;
    
    political and economic conditions in the countries in which we or our related companies
operate or may operate in the future;
    
    any statements preceded by, followed by or that include the words believes, expects,
predicts, anticipates, intends, estimates, should, may or similar expressions;
and
    
    other statements contained or incorporated by reference in this annual report regarding
matters that are not historical facts.
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
    
    changes in the regulatory environment in one or more of the countries in which we
operate;
    
    changes in the environmental regulatory framework in one or more of the countries in
which we operate;
    
    our ability to implement proposed capital expenditures, including our ability to arrange
financing where required;
    
    the nature and extent of future competition in our principal markets;
    
    political, economic and demographic developments in the emerging market countries of
South America where we conduct our business; and
    
    the factors discussed below under Risk Factors.
   6




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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisors
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 A. Selected financial data.
   Centrais Eléctricas Cachoeira Dourada S.A.,
  As of or for the year ended December 31, (in constant millions of Ch$)2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2006(millions ofCh$
    
    Ch$
    
    Ch$
    
    Ch$
    
    Ch$
    
    U.S.$) (1)Chilean GAAP:Revenues from operations
    
    
    1,027,258
    
    
    
    997,768
    
    
    
    1,092,305
    
    
    
    1,146,623
    
    
    
    1,337,121
    
    
    
    2,511.54Cost of operations
    
    
    (608,390
    )
    
    
    (596,794
    )
    
    
    (665,531
    )
    
    
    (704,081
    )
    
    
    (793,260
    )
    
    
    (1,490.00
    )Administrative and
selling expenses
    
    
    (39,738
    )
    
    
    (33,961
    )
    
    
    (36,434
    )
    
    
    (39,388
    )
    
    
    (39,386
    )
    
    
    (73.98
    )Operating income
    
    
    379,130
    
    
    
    367,013
    
    
    
    390,340
    
    
    
    403,154
    
    
    
    504,475
    
    
    
    947.57Equity in income (losses)
of related companies, net
    
    
    9,384
    
    
    
    18,832
    
    
    
    20,312
    
    
    
    13,855
    
    
    
    42,345
    
    
    
    79.54Goodwill amortization
    
    
    (118,880
    )
    
    
    (1,673
    )
    
    
    (1,549
    )
    
    
    (1,395
    )
    
    
    (943
    )
    
    
    (1.77
    )
 7




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As of or for the year ended December 31, (in constant millions of Ch$)2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2006(millions ofCh$
    
    Ch$
    
    Ch$
    
    Ch$
    
    Ch$
    
    U.S.$) (1)Interest (expense)
income, net
    
    
    (222,184
    )
    
    
    (204,777
    )
    
    
    (187,906
    )
    
    
    (166,670
    )
    
    
    (157,101
    )
    
    
    (295.09
    )Price-level
restatement and
foreign currency
translation, net
    
    
    3,894
    
    
    
    10,334
    
    
    
    24,161
    
    
    
    16,560
    
    
    
    5,095
    
    
    
    9.57Other non-operating
income (expense), net
    
    
    (15,429
    )
    
    
    (16,793
    )
    
    
    (29,664
    )
    
    
    (20,732
    )
    
    
    (13,601
    )
    
    
    (25.55
    )Income before income
taxes, minority interest
and negative goodwill
amortization
    
    
    35,915
    
    
    
    172,935
    
    
    
    215,694
    
    
    
    244,769
    
    
    
    380,270
    
    
    
    714.26Income taxes
    
    
    (77,341
    )
    
    
    (29,683
    )
    
    
    (98,823
    )
    
    
    (93,885
    )
    
    
    (130,857
    )
    
    
    (245.79
    )Extraordinary loss
    
    
    (11,968
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    (50,896
    )
    
    
    (75,446
    )
    
    
    (45,274
    )
    
    
    (53,571
    )
    
    
    (65,911
    )
    
    
    (123.80
    )Amortization of negative
goodwill
    
    
    94,084
    
    
    
    16,903
    
    
    
    17,031
    
    
    
    15,632
    
    
    
    6,037
    
    
    
    11.34Net income (loss)
    
    
    (10,206
    )
    
    
    84,710
    
    
    
    88,628
    
    
    
    112,946
    
    
    
    189,541
    
    
    
    356.01Net income (loss) per
share in Ch$/U.S.$
    
    
    1.25
    
    
    
    10.33
    
    
    
    10.80
    
    
    
    13.77
    
    
    
    23.11
    
    
    
    0.04Net income (loss) per ADS
in Ch$/U.S.$ (2)
    
    
    37.33
    
    
    
    309.98
    
    
    
    324.07
    
    
    
    413.20
    
    
    
    693.29
    
    
    
    1.30US GAAP (6):Revenues from operations
    
    
    1,005,548
    
    
    
    997,769
    
    
    
    1,092,305
    
    
    
    1,146,623
    
    
    
    1,337,121
    
    
    
    2,511.54Operating income
    
    
    207,695
    
    
    
    169,643
    
    
    
    410,319
    
    
    
    419,537
    
    
    
    529,354
    
    
    
    994.30Equity in income of
related companies
    
    
    32,229
    
    
    
    48,999
    
    
    
    20,313
    
    
    
    (15,311
    )
    
    
    46,584
    
    
    
    87.50Income taxes
    
    
    (92,651
    )
    
    
    26,529
    
    
    
    (161,068
    )
    
    
    (101,838
    )
    
    
    (138,913
    )
    
    
    (260.92
    )Net Income (loss) from
continuing operations
    
    
    (82,289
    )
    
    
    78,865
    
    
    
    67,213
    
    
    
    102,382
    
    
    
    211,894
    
    
    
    398.01Cumulative effect of
changes in accounting
principles, net of tax
and MI
    
    
    
    
    
    
    (131
    )
    
    
    1,277
    
    
    
    
    
    
    
    
    
    
    
    Income from discontinued
operations, net of tax
and MI
    
    
    301
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (81,986
    )
    
    
    78,859
    
    
    
    68,490
    
    
    
    102,382
    
    
    
    211,894
    
    
    
    398.01Income (loss) from
continuing operations per
share in Ch$/U.S.$
    
    
    (10.03
    )
    
    
    9.73
    
    
    
    8.20
    
    
    
    12.49
    
    
    
    25.83
    
    
    
    0.05Cumulative effect of
changes in accounting
principles
    
    
    
    
    
    
    (0.02
    )
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    US GAAP EPS before
discontinued operations
    
    
    (10.03
    )
    
    
    9.71
    
    
    
    8.35
    
    
    
    12.49
    
    
    
    25.83
    
    
    
    0.05US GAAP EPS from
discontinued operations
    
    
    0.03
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) per
share in Ch$/U.S.$
    
    
    (10.00
    )
    
    
    9.73
    
    
    
    8.35
    
    
    
    12.49
    
    
    
    25.83
    
    
    
    0.05Income (loss)from
continuing operations per
ADS in Ch$/U.S.$
    
    
    (300.82
    )
    
    
    291.90
    
    
    
    246.0
    
    
    
    374.60
    
    
    
    748.30
    
    
    
    1.41
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As of or for the year ended December 31, (in constant millions of Ch$)2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2006(millions ofCh$
    
    Ch$
    
    Ch$
    
    Ch$
    
    Ch$
    
    U.S.$) (1)Income (loss) from
discontinued operations
per ADS in Ch$/U.S.$
    
    
    0.92
    
    
    
    0.61
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) per ADS
in Ch$/U.S.$ (4)
    
    
    (299.9
    )
    
    
    292.51
    
    
    
    246.0
    
    
    
    374.60
    
    
    
    748.30
    
    
    
    1.41Consolidated Balance
Sheet DataChilean GAAP:Total assets
    
    
    7,144,273
    
    
    
    5,925,516
    
    
    
    5,624,786
    
    
    
    4,976,835
    
    
    
    5,284,687
    
    
    
    9,926Long-term liabilities
    
    
    2,695,042
    
    
    
    2,482,423
    
    
    
    2,318,189
    
    
    
    1,807,730
    
    
    
    2,093,571
    
    
    
    3,932Minority interest
    
    
    1,640,625
    
    
    
    1,320,278
    
    
    
    1,192,505
    
    
    
    953,512
    
    
    
    935,188
    
    
    
    1,757Total Shareholders equity
    
    
    1,566,605
    
    
    
    1,618,351
    
    
    
    1,659,511
    
    
    
    1,676,746
    
    
    
    1,794,310
    
    
    
    3,370Capital stock
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    2,139US GAAPTotal assets
    
    
    6,852,743
    
    
    
    5,588,787
    
    
    
    5,281,912
    
    
    
    4,695,425
    
    
    
    4,995,237
    
    
    
    9,382.67Long-term liabilities
    
    
    2,925,940
    
    
    
    2,564,032
    
    
    
    2,442,720
    
    
    
    1,943,603
    
    
    
    2,204,469
    
    
    
    4,140.70Minority interest
    
    
    1,669,846
    
    
    
    1,277,390
    
    
    
    1,100,033
    
    
    
    874,678
    
    
    
    851,234
    
    
    
    1,598.89Total Shareholders equity
    
    
    1,154390
    
    
    
    1,217,997
    
    
    
    1,261,744
    
    
    
    1,309,161
    
    
    
    1,443,984
    
    
    
    2,712.27Capital stock
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    1,138,620
    
    
    
    2,138,70Other Consolidated
Financial DataChilean GAAP:Capital expenditures (5)
    
    
    147,675
    
    
    
    142,182
    
    
    
    101,689
    
    
    
    60,014
    
    
    
    170,085
    
    
    
    319Depreciation and
amortization
    
    
    242,781
    
    
    
    181,149
    
    
    
    166,654
    
    
    
    161,040
    
    
    
    171,320
    
    
    
    322Cash dividends per share
in Ch$/$ (3)
    
    
    
    
    
    
    2.43
    
    
    
    4.37
    
    
    
    5.97
    
    
    
    2.57
    
    
    
    0.0048Cash dividends per ADS in
$ (2)(3)(4)
    
    
    
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.14
    
    
    
    0.14Weighted average shares
outstanding (million)
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202Number of ADS (million)
    
    
    16
    
    
    
    14
    
    
    
    14
    
    
    
    14
    
    
    
    14
    
    
    
    14
 
 (1)
    
    Solely for the convenience of the reader, peso amounts have been translated into dollars at
the rate of Ch$ 532.39 per dollar the Observed Exchange Rate as of December 31, 2006. You
should not construe the translation of currency amounts in this annual report to be a
representation that the peso amounts actually represent current dollar amounts or that you
could convert peso amounts into dollars at the rate indicated or at any other rate.(2)
    
    Per ADS amounts in millions of constant pesos are determined by multiplying per share amounts
by 30 (1 ADS = 30 Shares). Per share amounts in millions of $ are determined by dividing per
ADS amounts by 30.(3)
    
    This chart details dividends payable in any given year, and not necessarily paid that same
year. 2005 dividend was paid in March 30, 2006. The final dividend for 2006 will be paid
after the stockholders meeting held on April 24, 2007.(4)
    
    Dollar amounts are calculated by applying the dollar exchange rate on the dividend payment
date to the nominal peso amount.(5)
    
    Capital expenditures do not include investments in equity investments and capital
expenditures in development stage subsidiaries.(6)
    
    For reconciliation from Chilean GAAP to U.S. GAAP, see Note 32, Differences between Chilean
and United States Generally Accepted Accounting Principles of our Audited Consolidated
Financial Statements. 9




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Exchange Rates
   dólar acuerdo dólar observado
 e.g.
  Observed Exchange Rate (1)(Ch$ per U.S.$)Average
    
    Period-Year
    
    Low (2)
    
    High (2)
    
    (3)
    
    end2002
    
    
    641.75
    
    
    
    756.56
    
    
    
    692.32
    
    
    
    718.612003
    
    
    593.10
    
    
    
    758.21
    
    
    
    686.89
    
    
    
    593.802004
    
    
    557.40
    
    
    
    649.45
    
    
    
    611.11
    
    
    
    557.402005
    
    
    509.70
    
    
    
    592.75
    
    
    
    558.06
    
    
    
    512.502006
    
    
    511.44
    
    
    
    549.63
    
    
    
    529.64
    
    
    
    532.39
 10




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Observed Exchange Rate (1)(Ch$ per U.S.$)Average
    
    Period-Last six months
    
    Low (2)
    
    High (2)
    
    (3)
    
    end2006November
    
    
    523.34
    
    
    
    530.61
    
    
    
    
    
    
    
    527.69December
    
    
    524.78
    
    
    
    534.43
    
    
    
    
    
    
    
    532.392007January
    
    
    534.42
    
    
    
    545.18
    
    
    
    
    
    
    
    544.49February
    
    
    535.29
    
    
    
    548.67
    
    
    
    
    
    
    
    540.07March
    
    
    535.36
    
    
    
    541.95
    
    
    
    
    
    
    
    539.21April
    
    
    525.96
    
    
    
    539.69
    
    
    
    
    
    
    
    525.96
 Source: Chilean Central Bank.
 (1)
    
    Reflects pesos at historical values rather than in constant pesos.(2)
    
    Exchange rates are the actual high and low, on a day-by-day basis, for each period.(3)
    
    The average of the exchange rates on the last day of each month during the period. This is
not applicable to monthly data.
 B.
    
    Capitalization and indebtedness.Not applicable.C.
    
    Reasons for the offer and use of proceeds.Not applicable.D.
    
    Risk Factors.
 Risks Relating to Our Operations in Every Country in Which We Operate
 Since our business depends heavily on hydrological conditions, drought conditions may hurt our profitability.
    Regulatory authorities may impose fines on us.
 Superintendencia de Electricidad y Combustibles,
 11




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Governmental regulations may impose additional operating costs which may reduce our profits.
  force majeure Comisión Nacional de Energía
     12




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Environmental regulations in the countries in which we operate may increase our costs of operations
  Foreign exchange risks may materially affect our results of operations and financial condition adversely.
     We may be subject to refinancing risk.
   13




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We depend in part on payments from our subsidiaries and related companies to meet our payment obligations.
    Dividend Limits and Other Legal Restrictions
 Contractual Constraints
 
    
    prohibitions against dividend distributions by Empresa Eléctrica Pangue S.A., orPangue,
our Chilean generation subsidiary, if it is not in compliance with certain debt to equity
ratios and debt coverage ratios (each as defined in Pangues credit agreements);
    
    prohibitions against dividend distributions, capital reductions, intercompany interest
payments and debt repayment by Endesa Costanera and El Chocón in Argentina, in each case if
not in compliance with certain financial conditions.
 14




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Operating Results of Our Subsidiaries
 Foreign Currency Controls
 The Argentine natural gas crisis has increased the vulnerability of the electricity sector in Chile.
   South American economic fluctuations are likely to affect our results from operations.
   Certain South American economies have been characterized by frequent and occasionally drastic
intervention by governmental authorities which may affect our business adversely.
  15




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Construction of new facilities may be affected adversely by factors associated with new
construction projects.
   We are currently involved in various litigation proceedings.
   There may be potential conflicts of interest with our affiliates which could adversely affect our
business.
     We have outstanding credit facilities with change of control provisions which could result in
acceleration rights on such indebtedness.
   16




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The values of our long-term energy supply contracts are subject to fluctuations in the market
prices of certain commodities.
  Risk Factors Relating to Chile
 Our business is dependent on the Chilean economy and our revenues are sensitive to its
performance.
  Lawsuits against us brought outside of Chile or complaints against us based on foreign legal
concepts may be unsuccessful.
  17




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Foreign exchange risks may affect the dollar amount of dividends payable to holders of our ADSs
adversely.
  The relative illiquidity and volatility of Chilean securities markets could affect the price of
our ADSs and common stock adversely.
  Risk Factors Relating to Argentina
 Electricity shortfalls in Argentina adversely affect the Argentine generation export business to
Brazil.
    Risk Factors Relating to Peru
 We may suffer losses as a result of satisfying non-contractual demand from distribution companies
at the node price instead of the spot price of electricity.
  18




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,
  
 Item 4. Information on the Company
 A. History and Development of the Company.
 Incorporation and Contact Information of the Company
   Main office:
    
    Santa Rosa 76, Santiago, ChileMailing Address:
    
    Casilla 1392, Correo Central, SantiagoTelephone:
    
    (562) 630 9000Fax:
    
    (562) 635 3938
  Main office:
    
    850 Library Avenue, Suite 204, Newark, DelawareMailing Address:
    
    P.O. Box 885, Newark, Delaware, 19711Telephone:
    
    (302) 738-6680Fax:
    
    (302) 738-7210
 Development of the Company
   
    
    we acquired a stake in Endesa Costanera in 1992 and later, in August 1993, we acquired
a controlling equity interest in El Chocón, both in Argentina;
    
    we acquired Edegel in Peru in October 1995;
    
    we acquired Betania and Emgesa, both in Colombia, in December 1996 and in October 1997,
respectively, and we acquired Cachoeira Dourada in Brazil in September 1997.
  Bolsa de Comercio de Santiago, Bolsa de
Valores Bolsa Electrónica de Chile, Bolsa de Valores Bolsa de Corredores, Bolsa de Valores
 19




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Bolsa de Valores Latinoamericanos de
la Bolsa de Madrid
 Investments, Capital Expenditures and Divestitures
   
        20




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CAPITAL EXPENDITURES OF ENDESA CHILE AND ITS SUBSIDIARIES
 (in millions of $) (1)2004
    
    2005
    
    2006
    
    2007-2011Chile
    
    
    119.9
    
    
    
    46.8
    
    
    
    241.3
    
    
    
    1,966.3Argentina
    
    
    22.3
    
    
    
    29.7
    
    
    
    28.3
    
    
    
    115.5Brazil
    
    
    2.8
    
    
    
    1.0
    
    
    
    
    
    
    
    Colombia
    
    
    6.7
    
    
    
    9.2
    
    
    
    36.6
    
    
    
    222.0Peru
    
    
    10.4
    
    
    
    21.6
    
    
    
    94.5
    
    
    
    122.2Total
    
    
    162.1
    
    
    
    108.3
    
    
    
    400.7
    
    
    
    2,426.0
 
 (1)
    
    Figures for 2004-2005 are in historical dollars. Figures for 2006-2011 are expressed in
dollars at the exchange rate as of December 31, 2006.  
    
    on March 27, 2003, Endesa Chile sold Canutillar, a 172 MW reservoir-based hydroelectric
facility, for $ 174 million, at the exchange rate as of the date of the transaction;
    
    on May 30, 2003, Endesa Chile sold its transmission lines in the Northern Interconnected
System (SING). This transaction included the sale by Compañía Eléctrica Tarapacá S.A.,
orCelta, a subsidiary of Endesa Chile, of 285 kilometers of 220 kV line circuits for $ 32
million, at the exchange rate as of the date of the transaction, and a sale of 673
kilometers of 220 kV line circuits for $ 78 million through GasAtacama Generación Limitada,
in which Endesa Chile holds a 50% ownership interest. In both cases, the transaction
included the transfer of the respective substations;
    
    on June 23, 2003, Endesa Chile closed the sale of its 60% ownership share of
Infraestructura 2000, which held highway concession assets to the Spanish company, OHL
Concesiones, S.L., a subsidiary of the Spanish company Obrascón Huarte Lain S.A., for a
total amount of UF 2,305,507, or $ 55 million, at the exchange rate as of the date of the
transaction;
    
    on October 3, 2003, Endesa Chile purchased an additional 16 million Class A Shares and
1.96 million Class B Shares of Endesa Costanera, for a total of $ 4.5 million, at the
exchange rate as of the date of the transaction, thus increasing its ownership of Endesa
Costanera to 64.3% of its outstanding shares of common stock;
    
    on December 17, 2004, Endesa Chile dissolved the subsidiary Endesa Colombia, which had
investments in Central Hidroeléctrica Betania S.A., leaving Endesa Chile and Compañía
Eléctrica Cono Sur S.A.with a direct participation in Betania;
    
    on April 18, 2005, Endesa Chile and its subsidiary Endesa Inversiones Generales S.A.
(ENIGESA), created a new subsidiary Endesa ECO S.A. Endesa Chile has a direct
participation of 99.99% and a 0.01% through its subsidiary ENIGESA (See Item 4.
Information on the CompanyC. Organizational Structure for details on ENIGESA);
    
    On May 24, 2005, the board of Endesa Chile approved the constitution of the holding
company in Brazil with the name of Endesa Brasil S.A., which received the contribution of
existing assets in that country owned by Endesa Internacional, Endesa Chile, Enersis and
Chilectra. As of October 1, 2005, the total participation interest Endesa Chile held in
Cachoeira Dourada, 92.5%), and in Companhia de Interconexao Energética S.A., or CIEN, 45%,
in Compañía de Transmisión del Mercosur S.A.(CTM, 45%) and in Transportadora de Energía
del Mercosur S.A.(TESA 45%) was transferred to this
new entity, which translated into an
economic interest of 37.8% for Endesa Chile in Endesa Brasil as of December 31, 2005. The
purpose of this asset reorganization was to provide greater stability of local cash flows
by being managed centrally, and the optimization of financing costs. It will also improve
financing from third parties and
 21




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strengthen the groups positioning to take advantage of
new investment opportunities, making it the third
integrated private-sector group in Brazil.
 
    
    on August 11, 2005, Endesa Chile acquired full beneficial interest of the partnership
rights in Globeleq Chile Inversiones Eléctricas Limitada(Globeleq Chile Limitada), a
company that became a subsidiary of Endesa Chile under the name of Inversiones Lo Venecia
Limitada; this company is the indirect holder of 25.001% of the share capital of Compañía
Eléctrica San Isidro S.A.(San Isidro), also a subsidiary of Endesa Chile. The sellers
were subsidiaries of the English company CDC Group plc, and the total
sale price was 
$ 21,063,757;
    
    on October 3, 2005, Endesa Chiles Board of Directors approved the dissolution and
liquidation of the investment society Lajas Inversoras S.A., which owned 99.61% of the
Brazilian company Cachoeira Dourada. The assets of this company were distributed between
its shareholders in proportion to their participation in the company;
    
    on November 16, 2005, Gestora del Proyecto GNL S.A. was constituted, a company formed by
Endesa Chile, jointly with ENAP, Colbún, Metrogas and AESGener, to develop the liquified
natural gas project in Chile. On April 1, 2006, Colbún and AESGener announced their
withdrawal from the project, increasing Endesa Chiles share to 33.33% beneficial interest
share in this company.
    
    as of December 13, 2005, Endesa Chile, through its Argentine subsidiaries, El Chocón and
Endesa Costanera, participates in two new companies, Termoeléctrica Manuel Belgrano S.A.
and Termoeléctrica José de San Martín S.A., with a 15.4% and a 5.5% share interest,
respectively, in each new company. The expected start-up date is January 2009, since then
the companies will begin to recover their credits from the cash flows generated by the
project under the 10-year production sales contract with the Mercado Eléctrico Mayorista,
or MEM. (See Item 4. Information on the CompanyB. Business Overview  Operations in
Argentina for details);
    
    as of January 26, 2006, CESA (Capital de Energía S.A.), an investment vehicle for
Endesa Chiles share in Emgesa has ceased to exist, simplifying Endesa Chiles structure
in Colombia.
    
    on June 1, 2006, the merger between Endesa Chiles Peruvian subsidiary, Edegel, and
Etevensa, a subsidiary of Endesa Internacional, was completed. During October, the
combined cycle of the plants second boiler was closed, leaving its final capacity at 457
MW.
    
    Centrales Hidroeléctricas de Aysén S.A., a long-term investment company, was formed on
September 4, 2006. Endesa Chile has a 51% shareholding and Colbún S.A. the remaining 49%.
As of December 1, 2006, the environmental impact study was adjudicated to the
international consortium created by the companies SWECO, POCH Ambiental and EPS. The
total installed capacity of the project is approximately 2,400 MW and the estimated
investment is $2.4 billion, excluding the cost of transmission lines.
 Recent Developments
   22




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B. Business Overview.
   Centro de Despacho Económico de Carga
   ENDESA CHILES CONSOLIDATED HYDRO/THERMAL GENERATION (GWh)(1)
 Year ended December 31,2004
    
    2005
    
    2006(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Hydroelectric generation (2)
    
    
    34,858
    
    
    
    74
    
    
    
    38,068
    
    
    
    76
    
    
    
    38,617
    
    
    
    73Thermal generation
    
    
    12,508
    
    
    
    26
    
    
    
    12,054
    
    
    
    24
    
    
    
    14,332
    
    
    
    27Total generation
    
    
    47,366
    
    
    
    100
    
    
    
    50,122
    
    
    
    100
    
    
    
    52,949
    
    
    
    100
 
 (1)
    
    Generation minus power plant own consumption and technical losses.(2)
    
    Cachoeira Douradas generation consolidated through September, 2005. Ventanillas generation
in Peru consolidated since January 2006 and Cartagenas generation in Colombia consolidated
since March 2006.  23




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ENDESA CHILE PHYSICAL DATA PER COUNTRY
 As of December 31, each year2004
    
    2005
    
    2006ArgentinaNumber of generating facilities (1)
    
    
    5
    
    
    
    5
    
    
    
    5Installed capacity (MW) (2)
    
    
    3,623.0
    
    
    
    3,623.0
    
    
    
    3,638.7Energy generated (GWh) (3)
    
    
    11,289.7
    
    
    
    12,332.5
    
    
    
    13,750.3Energy sales (GWh)
    
    
    11,603.3
    
    
    
    12,578.8
    
    
    
    13,926.3Brazil (4)Number of generating facilities (1)
    
    
    1
    
    
    
    
    
    
    
    Installed capacity (MW) (2)
    
    
    658.0
    
    
    
    
    
    
    
    Energy generated (GWh) (3)
    
    
    3,262.2
    
    
    
    2,644.8
    
    
    
    Energy sales (GWh)
    
    
    3,902.0
    
    
    
    2,897.5
    
    
    
    ChileNumber of generating facilities (1)
    
    
    22
    
    
    
    22
    
    
    
    22Installed capacity (MW) (2)
    
    
    4,476.7
    
    
    
    4,476.7
    
    
    
    4,476.7Energy generated (GWh) (3)
    
    
    16,797.0
    
    
    
    18,763.8
    
    
    
    19,973.2Energy sales (GWh)
    
    
    18,461.0
    
    
    
    20,730.4
    
    
    
    20,922.8ColombiaNumber of generating facilities (1)
    
    
    10
    
    
    
    11
    
    
    
    11Installed capacity (MW) (2)
    
    
    2,608.6
    
    
    
    2,657.2
    
    
    
    2,778.7Energy generated (GWh) (3)
    
    
    11,881.2
    
    
    
    11,864.2
    
    
    
    12,564.0Energy sales (GWh)
    
    
    15,148.8
    
    
    
    15,077.5
    
    
    
    15,326.9PeruNumber of generating facilities (1)
    
    
    8
    
    
    
    8
    
    
    
    9Installed capacity (MW) (2)
    
    
    966.5
    
    
    
    968.5
    
    
    
    1,425.5Energy generated (GWh) (3)
    
    
    4,136.0
    
    
    
    4,516.3
    
    
    
    6,662.0Energy sales (GWh)
    
    
    4,327.6
    
    
    
    4,599.9
    
    
    
    6,766.5
 
 (1)
    
    For details on generation facilities, see Item 4. Information on the CompanyD. Property
Plants and Equipment.(2)
    
    Total installed capacity defined as the maximum MW capacity of generation units, under
specific technical conditions and characteristics, in most cases confirmed by satisfaction
guarantee tests performed by equipment suppliers certified during 2006 by Bureau Veritas
according to the Norm 038 of Endesa Chile related to the Definition of the maximum power in
Hydroelectric and Thermoelectric plants of Endesa Chile. Figures may differ from installed
capacity declared to regulating authorities and customers in each country, according to
criteria defined by each authority and corresponding contractual frameworks.(3)
    
    Energy generated defined as total generation minus own power plant consumption and technical
losses.(4)
    
    We consolidated Cachoeira Douradas generation only through September 2005. Ventanillas
generation in Peru consolidated since January 2006 and Cartagenas generation in Colombia
consolidated since March 2006.  24




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ENDESA CHILE CONSOLIDATED PHYSICAL SALES BY TYPE OF CUSTOMER (GWH)
 Year ended December 312004
    
    2005
    
    2006% ofSales
    
    % of Sales
    
    Sales
    
    % of Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeRegulated customers
    
    
    21,623
    
    
    
    40.5
    
    
    
    21,206
    
    
    
    37.9
    
    
    
    20,146
    
    
    
    35.4Non-regulated customers
    
    
    11,979
    
    
    
    22.4
    
    
    
    12,652
    
    
    
    22.6
    
    
    
    13,735
    
    
    
    24.1Electricity pool market sales
    
    
    19,841
    
    
    
    37.1
    
    
    
    22,026
    
    
    
    39.4
    
    
    
    23,061
    
    
    
    40.5Total electricity sales
    
    
    53,443
    
    
    
    100.0
    
    
    
    55,884
    
    
    
    100.0
    
    
    
    56,942
    
    
    
    100.0
     ENDESA CHILE CONSOLIDATED PHYSICAL SALES PER CUSTOMER PRICE SEGMENT
 (GWh)
 Year ended December 312004
    
    2005
    
    2006% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeContracted sales (1)
    
    
    33,602
    
    
    
    62.9
    
    
    
    33,858
    
    
    
    60.6
    
    
    
    33,881
    
    
    
    59.5Non-contracted sales
    
    
    19,841
    
    
    
    37.1
    
    
    
    22,026
    
    
    
    39.4
    
    
    
    23,061
    
    
    
    40.5Total electricity sales
    
    
    53,443
    
    
    
    100.0
    
    
    
    55,884
    
    
    
    100.0
    
    
    
    56,942
    
    
    
    100.0
 
 (1)
    
    Includes the sales to distribution companies not backed by contracts in Chile and Peru.  25




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CONSOLIDATED PHYSICAL GENERATION AND PURCHASES (GWh)
 Year ended December 312004
    
    2005
    
    2006% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeElectricity generation
    
    
    47,366
    
    
    
    88.0
    
    
    
    50,122
    
    
    
    88.7
    
    
    
    52,949
    
    
    
    91.8Electricity purchases
    
    
    6,474
    
    
    
    12.0
    
    
    
    6,396
    
    
    
    11.3
    
    
    
    4,730
    
    
    
    8.2Total(1)
    
    
    53,840
    
    
    
    100.0
    
    
    
    56,517
    
    
    
    100.0
    
    
    
    57,679
    
    
    
    100.0
 
 (1)
    
    Total energy generation (GWh) plus purchases differs from GWh sales due to technical
transmission losses in Chile and Peru, as the generation figure has already deducted power
plant consumption and technical losses of generation units. Electrogas S.A.
 of Companhia de Interconexão
Energética S.A Comercializadora de Energía del Mercosur S.A.
  26




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TOTAL OPERATING INCOME FROM OPERATIONS IN CHILE
 Year ended December 31,2004
    
    2005
    
    2006(in millions of constant Ch$ as ofDecember 31, 2006)Operating revenues
    
    
    494,589
    
    
    
    559,537
    
    
    
    659,698Operating expenses
    
    
    316,191
    
    
    
    347,440
    
    
    
    348,856Operating income
    
    
    158,365
    
    
    
    192,977
    
    
    
    291,055
  Sistema Interconectado
Central, , and Sistema Interconectado del Norte Grande
  INSTALLED CAPACITY PER SUBSIDIARY IN CHILE (MW) (1)
 2004
    
    2005
    
    2006Endesa
    
    
    2,753.7
    
    
    
    2,753.7
    
    
    
    2,753.7Pehuenche
    
    
    695.0
    
    
    
    695.0
    
    
    
    695.0Pangue
    
    
    467.0
    
    
    
    467.0
    
    
    
    467.0San Isidro
    
    
    379.0
    
    
    
    379.0
    
    
    
    379.0Celta
    
    
    182.0
    
    
    
    182.0
    
    
    
    182.0Total
    
    
    4,476.7
    
    
    
    4,476.7
    
    
    
    4,476.7
 
 (1)
    
    The installed capacity was certified during 2006 by Bureau Veritas according to the Norm No.
038 of Endesa Chile related to the Definition of the maximum power in Hydroelectric and
Thermoelectric plants of Endesa Chile   27




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##### Table of Contents



ELECTRICITY GENERATION IN CHILE (GWh)
 Year ended December 31,2004
    
    2005
    
    2006Endesa
    
    
    8,633
    
    
    
    10,903
    
    
    
    11,642Pehuenche
    
    
    3,464
    
    
    
    4,060
    
    
    
    4,345Pangue
    
    
    1,671
    
    
    
    2,241
    
    
    
    2,432San Isidro
    
    
    2,622
    
    
    
    1,178
    
    
    
    802Celta
    
    
    407
    
    
    
    383
    
    
    
    751Total
    
    
    16,797
    
    
    
    18,764
    
    
    
    19,973
  ENDESA CHILE HYDRO/THERMAL GENERATION IN CHILE (GWh)
 Year ended December 312004
    
    2005
    
    2006Generation
    
    
    
    
    
    Generation
    
    
    
    
    
    Generation(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Hydroelectric generation
    
    
    12,462
    
    
    
    74.2
    
    
    
    15,762
    
    
    
    84.0
    
    
    
    17,148
    
    
    
    85.9Thermal generation
    
    
    4,335
    
    
    
    25.8
    
    
    
    3,003
    
    
    
    16.0
    
    
    
    2,825
    
    
    
    14.1Total generation
    
    
    16,797
    
    
    
    100.0
    
    
    
    18,764
    
    
    
    100.0
    
    
    
    19,973
    
    
    
    100.0
 Electrogas
      28




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##### Table of Contents



PHYSICAL GENERATION AND PURCHASES IN CHILE (GWh)
 Year ended December 312004
    
    2005
    
    2006%
    
    Sales
    
    %
    
    Sales
    
    %(GWh)
    
    of Volume
    
    (GWh)
    
    of Volume
    
    (GWh)
    
    of VolumeElectricity generation
    
    
    16,797
    
    
    
    89.8
    
    
    
    18,764
    
    
    
    89.2
    
    
    
    19,973
    
    
    
    93.8Electricity purchases
    
    
    1,914
    
    
    
    10.2
    
    
    
    2,268
    
    
    
    10.8
    
    
    
    1,317
    
    
    
    6.2Total(1)
    
    
    18,711
    
    
    
    100.0
    
    
    
    21,032
    
    
    
    100.0
    
    
    
    21,290
    
    
    
    100.0
 
 (1)
    
    Total GWh generation plus purchases differs from GWh sales due to transmission losses, as
power plant consumption and technical losses have already been deducted.    ENDESA CHILE PHYSICAL SALES PER CUSTOMER PRICE SEGMENT
 IN CHILE (GWh)
 Year ended December 312004
    
    2005% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeRegulated customers (1)
    
    
    10,387
    
    
    
    56.3
    
    
    
    10,575
    
    
    
    51.0
    
    
    
    10,756
    
    
    
    51.4Non-Regulated customers
    
    
    4,884
    
    
    
    26.5
    
    
    
    4,797
    
    
    
    23.1
    
    
    
    5,176
    
    
    
    24.7Electricity pool market sales
    
    
    3,192
    
    
    
    17.3
    
    
    
    5,358
    
    
    
    25.8
    
    
    
    4,991
    
    
    
    23.9Total electricity sales
    
    
    18,462
    
    
    
    100
    
    
    
    20,731
    
    
    
    100.0
    
    
    
    20,923
    
    
    
    100.0
 
 (1)
    
    Includes the sales to distribution companies related to Resolution 88. Compañía General de Electricidad S.A.
 29




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##### Table of Contents



Energy
    
    Energy
    
    % of energyOffered
    
    Allocated
    
    allocated in
    
    % of the totalCompany
    
    (Gwh)
    
    (Gwh)
    
    respect of each offer
    
    energy allocatedEndesa Chile
    
    
    6,400
    
    
    
    6,395
    
    
    
    99.9
    %
    
    
    58.7
    %Colbún
    
    
    3,000
    
    
    
    2,200
    
    
    
    73.3
    %
    
    
    20.2
    %Gener
    
    
    1,800
    
    
    
    1,389
    
    
    
    77.1
    %
    
    
    12.8
    %Gualcolda
    
    
    1,010
    
    
    
    900
    
    
    
    89.2
    %
    
    
    8.3
    %Total
    
    
    12,210
    
    
    
    10,884
    
    
    
    n.a.
    
    
    
    100.0
    %
 force majeure
  MAIN CUSTOMERS IN CHILE (GWh)
 Year ended December 312004
    
    2005
    
    2006Sales
    
    % of
    
    Sales
    
    % of
    
    Sales
    
    % of(GWh)
    
    Sales
    
    (GWh)
    
    Sales
    
    (GWh)
    
    SalesDistribution companies:Chilectra
    
    
    4,747
    
    
    
    25.7
    
    
    
    4,231
    
    
    
    20.4
    
    
    
    4,190
    
    
    
    20.0CGE
    
    
    3,877
    
    
    
    21.0
    
    
    
    4,154
    
    
    
    20.0
    
    
    
    4,449
    
    
    
    21.3Saesa (1)
    
    
    332
    
    
    
    1.8
    
    
    
    540
    
    
    
    2.6
    
    
    
    665
    
    
    
    3.2Empresa Eléctrica de
la Frontera S.A.
    
    
    611
    
    
    
    3.3
    
    
    
    665
    
    
    
    3.2
    
    
    
    717
    
    
    
    3.4Empresa Eléctrica de
Atacama S.A.
    
    
    580
    
    
    
    3.1
    
    
    
    643
    
    
    
    3.1
    
    
    
    417
    
    
    
    2.0Total sales to five
largest distribution
companies
    
    
    10,147
    
    
    
    55.0
    
    
    
    10,233
    
    
    
    49.4
    
    
    
    10,438
    
    
    
    49.9
 30




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##### Table of Contents



Unregulated customers:
 Year ended December 312004
    
    2005
    
    2006Sales
    
    % of
    
    Sales
    
    % of
    
    Sales
    
    % of(GWh)
    
    Sales
    
    (GWh)
    
    Sales
    
    (GWh)
    
    SalesCodelco (2)
    
    
    711
    
    
    
    3.9
    
    
    
    536
    
    
    
    2.6
    
    
    
    548
    
    
    
    2.6CMPC
    
    
    779
    
    
    
    4.2
    
    
    
    794
    
    
    
    3.8
    
    
    
    937
    
    
    
    4.5Cía. Minera Los Pelambres
    
    
    672
    
    
    
    3.6
    
    
    
    701
    
    
    
    3.4
    
    
    
    738
    
    
    
    3.5Cía. Minera Collahuasi
    
    
    801
    
    
    
    4.3
    
    
    
    813
    
    
    
    3.9
    
    
    
    867
    
    
    
    4.1Cía. Acero del Pacífico
 Huachipato
    
    
    557
    
    
    
    3.0
    
    
    
    528
    
    
    
    2.5
    
    
    
    546
    
    
    
    2.6Total sales to five
largest unregulated
customers
    
    
    3,521
    
    
    
    19.1
    
    
    
    3,372
    
    
    
    16.3
    
    
    
    3,635
    
    
    
    17.4
 
 (1)
    
    We do not have a contract with Sociedad Austral de Electricidad S.A. (Saesa). Sales
respond to a government Resolution 88 that forces the generators of the CDEC-SIC system to
supply distribution companies without contracts. This situation will remain until December
2009, when this Resolution is programmed to expire.(2)
    
    Since 2004, we provided energy to both Codelco, División El Teniente, and Codelco, División
Salvador. Codelco is a state-owned mining company and one of the largest copper producers in
the world. Colbún S.A.
 Electroandina, Empresa Eléctrica del Norte Grande S.A. Norgener S.A.
   Electricity Generation in Chile  Industry Structure and Regulatory Framework
   31




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##### Table of Contents



Sistema Interconectado Central Sistema Interconectado
del Norte Grande Aysén Magallanes
 Centro de Despacho Económico de Carga
       32




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##### Table of Contents



POWER PLANTS IN CHILE (MW) (1)
 InstalledCapacityType (2)
    
    System
    
    (MW)HydroelectricRapel
    
    Reservoir
    
    SIC
    
    
    377Ralco
    
    Reservoir
    
    SIC
    
    
    690Cipreses
    
    Reservoir
    
    SIC
    
    
    106El Toro
    
    Reservoir
    
    SIC
    
    
    450Pehuenche
    
    Reservoir
    
    SIC
    
    
    566Pangue
    
    Reservoir
    
    SIC
    
    
    467Los Molles
    
    Pass Through
    
    SIC
    
    
    18Sauzal
    
    Pass Through
    
    SIC
    
    
    77Sauzalito
    
    Pass Through
    
    SIC
    
    
    12Isla
    
    Pass Through
    
    SIC
    
    
    68Antuco
    
    Pass Through
    
    SIC
    
    
    320Abanico
    
    Pass Through
    
    SIC
    
    
    136Curillinque
    
    Pass Through
    
    SIC
    
    
    89Loma Alta
    
    Pass Through
    
    SIC
    
    
    40Total Hydroelectric
    
    
    
    
    
    
    3,416ThermalHuasco TV
    
    Steam Turbine/Coal
    
    SIC
    
    
    16Bocamina
    
    Steam Turbine/Coal
    
    SIC
    
    
    128Tarapacá TG
    
    Steam Turbine/Diesel Oil
    
    SING
    
    
    24Tarapacá carbón
    
    Steam Turbine /Coal
    
    SING
    
    
    158Diego de Almagro
    
    Gas Turbine/Diesel Oil
    
    SIC
    
    
    47Huasco TG
    
    Gas Turbine/IFO 180 Oil
    
    SIC
    
    
    64San Isidro
    
    Combined Cycle/Natural Gas & Diesel Oil
    
    SIC
    
    
    379Taltal
    
    Gas Turbine/Natural Gas & Diesel Oil
    
    SIC
    
    
    245Total Thermal
    
    
    
    
    
    
    1,061Total Capacity
    
    
    
    
    
    
    4,477
 
 (1)
    
    Total installed capacity defined as the maximum capacity (measured in MW generation
units), under specific technical conditions and characteristics.(2)
    
    Reservoir and pass-through refer to a hydroelectric plant that uses a dam or a river,
respectively, to move the turbines which generate electricity    33




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##### Table of Contents



Chilean Electricity Act
 General
  Sales by Generation Companies
 Sales to Distribution Companies and Regulated Customers
  34




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##### Table of Contents



Firm Capacity
  Sales to Unregulated Customers
 (1)
    
    final customers with a connected capacity equal to or greater than 2000 kW and
consumers with a connected capacity between 500 and 2000 kW who have chosen to be
unregulated customers (as defined in the Short Law Isee below);(2)
    
    temporary customers, and(3)
    
    customers with special quality requirements.
  Transmission
 Distribution
Tariff to Final Customers
 Concessions
 35




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##### Table of Contents



Recent Regulatory Developments
 force majeure
  
    
    Fines. The fines, which could apply to any electricity company supervised by the CNE
and the SEF, range from $ 62 to $ 7.4 million. Companies penalized under the legislation
will have the right to appeal but only after they have made a prepayment equal to 25% of
the fine.
    
    Compensatory Payments By Generation Companies. If the Ministry of Economy issues a
rationing decree, generation companies may be required to reimburse distribution companies
on a pro ratabasis for credits given to final customers in an amount equal to the product
of:
 (1)
    
    the difference between the rationed end-consumer price specified in the
rationing decree and the applicable node price; and(2)
    
    the difference between the consumers actual energy consumption during the
rationing period and during the same period in the prior year, with certain
adjustments.
 
    
    Failure Cost. Chiles Electricity Law calls for a failure cost equal to the amount
that must be paid by deficit generators that cannot meet their contractual commitments to
the surplus generators to deliver electricity during periods when a rationing decree is in
effect.
   Short Law I
  
    
    a new methodology concerning compensation to, and expansion of, transmission systems,
reducing generators transmission costs by transferring part of the cost to final customers;
    
    a reduction of the regulated node price band (called Market Price Band) with respect to
the free customer contract price from 10% to 5% (later modified by Short Law II); and
 36




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##### Table of Contents




    
    a modification of the definition of unregulated customer, defined as a final customer
with a connected capacity equal to or greater than 2000 kW and consumers with a connected
capacity between 500 and 2000 kW who choose to be unregulated consumers (effective in
2006).
 Short Law II
  Environmental Regulation
 Law 18,902 de
la Superintendencia de Servicios Sanitarios 27/01/1990
 Law 19,300 Reglamento 30 del Ministerio Secretaria General de
la Presidencia
 Water Rights
   37




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##### Table of Contents



Operations in Argentina
  TOTAL OPERATING INCOME FROM OPERATIONS IN ARGENTINA
 Year ended December 31,2004
    
    2005
    
    2006(in millions of constant Ch$)Operating Revenues
    
    
    156,864
    
    
    
    160,087
    
    
    
    235,416Operating Expenses
    
    
    117,782
    
    
    
    144,220
    
    
    
    195,691Operating Income
    
    
    36,640
    
    
    
    13,184
    
    
    
    36,554
  Compañía Administradora del Mercado Mayorista Eléctrico
S.A. Sistema patagónico
 Compañía de Transmisión del
Mercosur S.A.
    38




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##### Table of Contents



INSTALLED CAPACITY PER SUBSIDIARY IN ARGENTINA (MW)
 As of December 31,2004
    
    2005
    
    2006 (1)Endesa CostaneraCostanera Steam Turbine
    
    
    1,131
    
    
    
    1,131
    
    
    
    1,138Costanera Combined Cycle II
    
    
    852
    
    
    
    851
    
    
    
    859Central Termoélectrica Buenos Aires Combined Cycle I
    
    
    320
    
    
    
    322
    
    
    
    322El ChóconEl Chócon Hydroelectric
    
    
    1,200
    
    
    
    1,200
    
    
    
    1,200Arroyito Hydroelectric
    
    
    120
    
    
    
    120
    
    
    
    120Total
    
    
    3,623
    
    
    
    3,624
    
    
    
    3,639
 
 (1)
    
    Variations in the installed capacity in 2006 due to the incorporation of the Norma 038 of
Endesa Chile related to the Definition of the maximum power in Hydroelectric and
Thermoelectric plants of Endesa Chilecertified by the consulting firm Bureau Veritas.   ELECTRICITY GENERATION PER SUBSIDIARY IN ARGENTINA (GWh)
 Year Ended December 31,2004
    
    2005
    
    2006Endesa Costanera
    
    
    7,859
    
    
    
    8,402
    
    
    
    8,709El Chocón
    
    
    3,431
    
    
    
    3,931
    
    
    
    5,041Total
    
    
    11,290
    
    
    
    12,333
    
    
    
    13,750
  HYDRO/THERMAL GENERATION IN ARGENTINA (GWh)(1)
 Year Ended December 31,2004
    
    2005
    
    2006(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Hydroelectric generation
    
    
    3,431
    
    
    
    30.4
    
    
    
    3,931
    
    
    
    31.9
    
    
    
    5,041
    
    
    
    36.7Thermal generation
    
    
    7,859
    
    
    
    69.6
    
    
    
    8,402
    
    
    
    68.1
    
    
    
    8,709
    
    
    
    63.3Total generation
    
    
    11,290
    
    
    
    100.0
    
    
    
    12,333
    
    
    
    100.0
    
    
    
    13,750
    
    
    
    100.0
 
 (1)
    
    Generation minus our own power plant consumption and technical losses. 39




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##### Table of Contents



PHYSICAL GENERATION AND PURCHASES IN ARGENTINA (GWh)
 2004
    
    2005
    
    2006(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Electricity generation
    
    
    11,290
    
    
    
    97.3
    
    
    
    12,333
    
    
    
    97.6
    
    
    
    13,750
    
    
    
    98.2Electricity purchases
    
    
    313
    
    
    
    2.7
    
    
    
    308
    
    
    
    2.4
    
    
    
    256
    
    
    
    1.8Total(1)
    
    
    11,602
    
    
    
    100.0
    
    
    
    12,640
    
    
    
    100.0
    
    
    
    14,006
    
    
    
    100.0
 
 (1)
    
    Energy generation plus energy purchases differs from electricity sales in 2005 and 2006
due to 61 GWh and 80 GWh respectively of power plant consumption of electricity that had
been uploaded to the grid, referred to as non -billed electricity consumption.  PHYSICAL SALES PER CUSTOMER SEGMENT IN ARGENTINA (GWh)
 Year Ended December 31,2004
    
    2005
    
    2006% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    
    
    
    
    Sales
    
    
    
    
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeContracted sales
    
    
    1,855
    
    
    
    16.0
    
    
    
    2,328
    
    
    
    18.5
    
    
    
    2,116
    
    
    
    15.2Non-contracted
    
    
    9,749
    
    
    
    84.0
    
    
    
    10,251
    
    
    
    81.5
    
    
    
    11,810
    
    
    
    84.8Total electricity sales
    
    
    11,604
    
    
    
    100.0
    
    
    
    12,579
    
    
    
    100.0
    
    
    
    13,926
    
    
    
    100.0
  PHYSICAL SALES PER SUBSIDIARY IN ARGENTINA (GWh)
 Year Ended December 31,2004
    
    2005
    
    2006Central Costanera
    
    
    7,973
    
    
    
    8,466
    
    
    
    8,736El Chocón
    
    
    3,630
    
    
    
    4,113
    
    
    
    5,191Total
    
    
    11,604
    
    
    
    12,579
    
    
    
    13,926
   40




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##### Table of Contents



ENDESA COSTANERAS MAIN CUSTOMERS (GWh)
 Year ended December 31,2004
    
    
    2005
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesAcindar (Cemsa)
    
    
    0
    
    
    
    0.0
    %
    
    
    59
    
    
    
    5.0
    %
    
    
    102
    
    
    
    13.4
    %Transclor
    
    
    87
    
    
    
    10.0
    %
    
    
    39
    
    
    
    3.3
    %
    
    
    86
    
    
    
    11.3
    %Peugeot
    
    
    55
    
    
    
    6.4
    %
    
    
    63
    
    
    
    5.3
    %
    
    
    79
    
    
    
    10.4
    %Cenco
    
    
    62
    
    
    
    7.2
    %
    
    
    62
    
    
    
    5.3
    %
    
    
    62
    
    
    
    8.2
    %Papelera de la Plata
    
    
    89
    
    
    
    10.3
    %
    
    
    137
    
    
    
    11.6
    %
    
    
    45
    
    
    
    5.9
    %Indupa (Cemsa)
    
    
    254
    
    
    
    29.3
    %
    
    
    195
    
    
    
    16.5
    %
    
    
    0
    
    
    
    0.0
    %Total sales to our
largest non
regulated customers
    
    
    547
    
    
    
    63.2
    %
    
    
    555
    
    
    
    46.9
    %
    
    
    373
    
    
    
    49.2
    %
 
 (1)
    
    Acindar and Indupa do not have contracts with Costanera, but serve them through Cemsa.      41




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El CHOCONS MAIN CUSTOMERS (GWh)
 Year ended December 31,2004
    
    2005
    
    2006% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    contract
    
    Sales
    
    contract
    
    Sales
    
    contract(GWh)
    
    Sales
    
    (GWh)
    
    Sales
    
    (GWh)
    
    SalesMinera Alumbrera
    
    
    483
    
    
    
    48.9
    %
    
    
    482
    
    
    
    42.1
    %
    
    
    496
    
    
    
    36.5
    %Profertil
    
    
    209
    
    
    
    21.2
    %
    
    
    232
    
    
    
    20.3
    %
    
    
    242
    
    
    
    17.8
    %Massuh
    
    
    19
    
    
    
    1.9
    %
    
    
    126
    
    
    
    11.0
    %
    
    
    127
    
    
    
    9.3
    %Chevron
    
    
    0
    
    
    
    0.0
    %
    
    
    0
    
    
    
    0.0
    %
    
    
    107
    
    
    
    7.9
    %Acindar (Cemsa) (1)
    
    
    0
    
    
    
    0.0
    %
    
    
    118
    
    
    
    10.3
    %
    
    
    88
    
    
    
    6.4
    %Petroken (Cemsa) (1)
    
    
    85
    
    
    
    8.6
    %
    
    
    30
    
    
    
    2.6
    %
    
    
    0
    
    
    
    0.0
    %Ensi S.E.
    
    
    134
    
    
    
    13.6
    %
    
    
    27
    
    
    
    2.3
    %
    
    
    40
    
    
    
    2.9
    %Total sales to our
largest non
regulated customers
    
    
    930
    
    
    
    94.1
    %
    
    
    1,014
    
    
    
    88.6
    %
    
    
    1,100
    
    
    
    80.9
    %
 
 (1)
    
    Acindar and Petroken do not have contracts with El Chocón, but are served through Cemsa.  Sociedad Argentina de Energía Piedra del Aguila Central Puerto Petrobras Energía S.A Genelba Pichi Picún Leufú
 Electricity Generation in Argentina  Industry Structure and Regulatory Framework
 Ley Nacional Compañía
 42




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##### Table of Contents



de Transporte de Energía Eléctrica en Alta Tensión S.A.
   
    
    power traders, who market generation capacity and energy demand by entering into
contracts with generators and large consumers;
    
    provinces which can sell the energy received under royalty rights; and
    
    foreign companies that are part of import/export energy contracts.
 Dispatch and Pricing
    43




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##### Table of Contents



Transmission Tariff
  Regulation of Hydroelectric Operations
  Law 23,896
  Emergency Measures
   
 44




---



##### Table of Contents



Electricity
Industry Regulatory Changes since 2002
         45




---



##### Table of Contents



46




---



##### Table of Contents



Export and Import of Electricity
   FONINVEMEM
        47




---



##### Table of Contents




    
    Demand contracted for at least 75% of their electricity consumption.
    
    Energy bidding process to supply the gradual increase in demand of consumers that dont
have access to the MEM, through contracts of new energy generation, with a minimum term of
four years.
    
    Bids for the energy contracted for generation by the Project/s carried out with
FONINVEMEM funds, in order to facilitate their possible financing.
           48




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##### Table of Contents



Energy Plus Service
  Regulation for the promotion of Energy Infrastructure projects
   49




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##### Table of Contents



Environmental Regulation
 Ley Nacional 24,051
  Operations in Colombia
  TOTAL OPERATING INCOME FROM OPERATIONS IN COLOMBIA
 Year ended December 31,2004
    
    2005
    
    2006(in millions of constant Ch$)Operating Revenues
    
    
    265,917
    
    
    
    264,191
    
    
    
    273,825Operating Expenses
    
    
    136,644
    
    
    
    135,822
    
    
    
    147,909Operating Income
    
    
    125,298
    
    
    
    123,080
    
    
    
    121,330
    50




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##### Table of Contents



INSTALLED CAPACITY PER SUBSIDIARY IN COLOMBIA (MW)(1)(2)
 (MW)2004
    
    2005
    
    2006EmgesaGuavio (Hydroelectric)
    
    
    1,150
    
    
    
    1,164
    
    
    
    1,163Cadena Nueva (Hydroelectric)
    
    
    600
    
    
    
    601
    
    
    
    601Termozipa (Thermal)
    
    
    223
    
    
    
    236
    
    
    
    236Cartagena (Thermal)
    
    
    0
    
    
    
    0
    
    
    
    142Minor Plants (Hydroelectric)(3)
    
    
    96
    
    
    
    116
    
    
    
    96BetaniaBetania (Hydroelectric)
    
    
    540
    
    
    
    541
    
    
    
    541Total
    
    
    2,609
    
    
    
    2,657
    
    
    
    2,779
 
 (1)
    
    For 2004, installed capacity corresponds to capacity available for the system, while
for 2005 and 2006 the figure includes the capacity used for power plant consumption.(2)
    
    The installed capacity was certified during 2006 by Bureau Veritas, according to Norm No.
038 of Endesa Chile, Definition of the maximum power in Hydroelectric and Thermoelectric
plants of Endesa Chile.(3)
    
    As of December 31, 2006 Emgesa owned and operated five minor plants: Charquito, El Limonar,
La Tinta, Tequendama and La Junca. On January 1, 2006, San Antonio plant (20 MW) was
withdrawn from the Colombian NIS.   ENERGY GENERATION PER SUBSIDIARY IN COLOMBIA (GWh)(1)
 (GWh)2004
    
    2005
    
    2006Emgesa
    
    
    10,028
    
    
    
    9,763
    
    
    
    10,360Betania
    
    
    1,853
    
    
    
    2,101
    
    
    
    2,204Total
    
    
    11,881
    
    
    
    11,864
    
    
    
    12,564
 
 (1)
    
    Generation minus power plant own consumption and technical losses.  51




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##### Table of Contents



PHYSICAL PRODUCTION AND PURCHASES IN COLOMBIA (GWh)
 Year ended December 31,2004
    
    2005
    
    2006(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Electricity production
    
    
    11,881
    
    
    
    77.9
    
    
    
    11,864
    
    
    
    78.1
    
    
    
    12,564
    
    
    
    81.3Electricity purchases
    
    
    3,368
    
    
    
    22.1
    
    
    
    3,321
    
    
    
    21.9
    
    
    
    2,883
    
    
    
    18.7Total
    
    
    15,249
    
    
    
    100.0
    
    
    
    15,185
    
    
    
    100.0
    
    
    
    15,447
    
    
    
    100.0
    PHYSICAL SALES PER CUSTOMER SEGMENT IN COLOMBIA (GWh)
 Year ended December 31,2004
    
    2005
    
    2006% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeContracted sales
    
    
    9,736
    
    
    
    64.3
    
    
    
    9,800
    
    
    
    65.0
    
    
    
    9,687
    
    
    
    63.2Non-contracted sales
    
    
    5,412
    
    
    
    35.7
    
    
    
    5,277
    
    
    
    35.0
    
    
    
    5,640
    
    
    
    36.8Total electricity sales
    
    
    15,148
    
    
    
    100.0
    
    
    
    15,077
    
    
    
    100.0
    
    
    
    15,327
    
    
    
    100.0
  52




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##### Table of Contents



MAIN DISTRIBUTION AND TRADING CUSTOMERS IN COLOMBIA (GWh)
 Year ended December 31,2004
    
    2005
    
    2006Sales
    
    % of
    
    Sales
    
    % of
    
    Sales
    
    % of(GWh)
    
    Sales
    
    (GWh)
    
    Sales
    
    (GWh)
    
    SalesDistribution companies:Codensa
    
    
    4,413
    
    
    
    45.3
    %
    
    
    3,933
    
    
    
    40.1
    %
    
    
    2,959
    
    
    
    30.5
    %Enertolima
    
    
    125
    
    
    
    1.3
    %
    
    
    800
    
    
    
    8.2
    %
    
    
    811
    
    
    
    8.4
    %Electrocosta
    
    
    253
    
    
    
    2.6
    %
    
    
    426
    
    
    
    4.3
    %
    
    
    610
    
    
    
    6.3
    %Electricaribe
    
    
    510
    
    
    
    5.2
    %
    
    
    341
    
    
    
    3.5
    %
    
    
    469
    
    
    
    4.8
    %EPM
    
    
    66
    
    
    
    0.7
    %
    
    
    136
    
    
    
    1.4
    %
    
    
    436
    
    
    
    4.5
    %Dicel
    
    
    0
    
    
    
    0.0
    %
    
    
    222
    
    
    
    2.3
    %
    
    
    225
    
    
    
    2.3
    %Essa
    
    
    501
    
    
    
    5.1
    %
    
    
    206
    
    
    
    2.1
    %
    
    
    7
    
    
    
    0.1
    %Cens
    
    
    527
    
    
    
    5.4
    %
    
    
    221
    
    
    
    2.3
    %
    
    
    5
    
    
    
    0.0
    %Total sales to our
largest distribution
companies
    
    
    6,395
    
    
    
    65.7
    %
    
    
    6,285
    
    
    
    64.1
    %
    
    
    5,521
    
    
    
    57.0
    %
  Electricity Generation in Colombia  Industry Structure and Regulatory Framework
 Ley 142 Ley 143
   
    
    The Ministry of Mines and Energy which defines the governments policies for
the energy sector.
    
    CREG (Comisión de Regulación de Energía y Gas) is the authority that creates
the regulatory framework (CREG resolutions do not require Congressional approval). The
Colombian Electricity Act sets out the following principles for the electricity industry,
which are implemented in the resolutions promulgated by the CREG and other regulatory
bodies governing the electricity sector: (1) efficiency  the correct allocation and use of
resources and the supply of electricity at minimum cost; (2) quality  compliance with the
technical requirements established in regulations affecting the sector; (3) continuity  a
continuous electricity supply without unjustified interruptions; (4) adaptability  the
incorporation of modern technology and administrative systems to promote quality and
efficiency; (5) neutrality  the impartial treatment of all electricity consumers; (6)
solidarity  the provision of funds by higher income consumers to subsidize the subsistence
consumption of lower income consumers; and (7) equity  an adequate and non-discriminatory
supply of electricity to all regions and sectors of the country.On the other hand, CREG: (1) resolves disputes between participants in the electricity and
gas sectors (arbitration) when the dispute involves the interpretation of operational or
commercial rules; (2) is
 53




---



##### Table of Contents



empowered to issue mandatory regulations governing the technical and commercial operation of
the sector and the setting of charges for regulated activities; (3) establishes the
conditions for the gradual deregulation of the electricity sector toward an open and
competitive market; (4) approves charges for the transmission and distribution networks and
charges for trading to regulated customers; (5) establishes the methodology for calculating
maximum tariffs for supplying the regulated market; (6) establishes the regulations for the
planning and coordination of the operation of the Colombian NIS; (7) establishes technical
requirements for the quality, reliability and security of supply; and (8) protects customers
rights.
    
    SSPD (Superintendencia de Servicios Públicos Domiciliarios) which is in
charge of overseeing and inspecting the utilities.
    
    UPME (Mining and Energy Planning Agency), which is in charge of planning the
expansion and the transmission network among other tasks.
    
    CNO, (National Operation Council) which is in charge of maintaining economic
and safe operation of the electricity sector.
   o
    
    a generator may not own more than 25% of the installed generating capacity in Colombia;
 o
    
    a trader may not account for over 25% of the trading activity in the NIS.
  Generation
   54




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##### Table of Contents



Dispatch and Pricing
    Transmission
  
    
    a connection charge that underwrites the cost of operating the equipment that links the
user to the transmission system, unless the generator is the owner of the connecting
equipment; and
 55




---



##### Table of Contents




    
    a usage charge, applicable only to traders.
  Unidad Planeación Minero-Energética
 Distribution
   Trading
  
    
    general cost formulas given by CREG; and
    
    individual trading costs approved by CREG for each trader.
    56




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##### Table of Contents



Environmental Regulation
   Inspection and Control
  Operations in Brazil
   TOTAL OPERATING INCOME FROM OPERATIONS IN BRAZIL
 2004
    
    2005 (1)Operating Revenues
    
    
    44,432
    
    
    
    42,673Operating Expenses
    
    
    27,450
    
    
    
    20,030Operating Income
    
    
    15,140
    
    
    
    18,960
 
 (1)
    
    Operating results from Brazil included in financials until September 30, 2005.  57




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##### Table of Contents



INSTALLED GENERATION CAPACITY IN BRAZIL (MW)(1)
 (MW)2004
    
    2005Cachoeira Dourada
    
    
    658
    
    
    
    658Total
    
    
    658
    
    
    
    658
 
 (1)
    
    Total installed capacity defined as the maximum MW capacity of generation units, under
specific technical conditions and characteristics.  PHYSICAL GENERATION AND PURCHASES IN BRAZIL (GWh)
 2004 Year ended December 31; 2005 JanuarySeptember2004
    
    2005(GWh)
    
    %
    
    (GWh)
    
    %Electricity Generation
    
    
    3,263
    
    
    
    83.6
    
    
    
    2,645
    
    
    
    91.3Electricity Purchases
    
    
    640
    
    
    
    16.4
    
    
    
    253
    
    
    
    8.7Total(1)
    
    
    3,903
    
    
    
    100
    
    
    
    2,898
    
    
    
    100.0
 
 (1)
    
    Energy production plus energy purchases may differ from electricity sales due to transmission
losses.  PHYSICAL SALES PER CUSTOMER SEGMENT IN BRAZIL (GWh)
 2004 Year ended December 31; 2005 JanuarySeptember2004
    
    2005% of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    VolumeContracted sales
    
    
    3,398.0
    
    
    
    87.1
    
    
    
    2,592.9
    
    
    
    89.5Non-Contracted sales
    
    
    504.0
    
    
    
    12.9
    
    
    
    304.6
    
    
    
    10.5Total
    
    
    3,902.0
    
    
    
    100.0
    
    
    
    2,897.5
    
    
    
    100.0
 Central Geradora Termeléctrica Endesa Fortaleza S.A., or Ampla Energía e Servicos S.A., or
 58




---



##### Table of Contents



force majeure
 Electricity Generation in Brazil  Industry Structure and Regulatory Framework
   
    
    granting and supervising concessions on behalf of the União for electricity generation,
transmission, trading and distribution, including approval of applications for the setting
of tariff rates;
    
    supervising and auditing the concessionaire companies;
    
    issuing regulations for the electricity sector;
    
    granting decisions to solve, as an administrative matter, the differences among
concessionaires, independent producers, consumers and other industry participants;
    
    implementing the criteria to calculate transmission prices;
    
    imposing contractual and regulatory penalties;
    
    implementing public policies (such as low-income programs) pointed out by the Federal Government;
    
    establishing tariff rates for consumers;
    
    managing the process of tariff adjustments;
    
    managing the auction process for the wholesale of energy;
 59




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##### Table of Contents




    
    managing concession contracts; and
    
    terminating a concession, in those cases contemplated in the law and/or a concession agreement.
 Operador Nacional do Sistema Elétrico
  
    
    the planning and coordination of the operations and dispatch of electricity in order to
optimize the electricity produced in the interconnected systems;
    
    the supervision and coordination of the operation centers of the electricity systems; and
    
    the definition of rules for the transmission of energy in the interconnected systems.
  Independent Power Producers and Self-Producers
  
    
    contribute or exchange energy with other self-producers within a consortium;
    
    sell excess energy to the local distribution concessionaire; or
    
    exchange energy with the local distribution concessionaire to allow for consumption by
industrial plants owned by the self-producer and located somewhere other than in the area
of generation.
    60




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##### Table of Contents




    
    maintaining the public service concept for the production and distribution of the
electricity to consumers within our concession area;
    
    restructuring the system planning;
    
    creating transparency in the auction and auction process for public projects;
    
    mitigating the systemic risks;
    
    maintaining centralized and coordinated operations of the Brazilian energy system;
    
    granting universal use and access to electricity services throughout Brazil; and
    
    modifying the auction process of public service concessions.
 Structure of the New Electricity Sector
 Empresa de Pesquisa Energética Câmara de Comercialização de
Energia Elétrica Comitê de Monitoramento do Setor
Elétrico
  61




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Dispatch and Pricing
      (ii
 62




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##### Table of Contents



(iii
  Environmental Regulation
    Operations in Peru
  TOTAL OPERATING INCOME FROM OPERATIONS IN PERU
 Year Ended December 31,2004
    
    2005
    
    2006(1)(in millions of constant Ch$)Operating revenues
    
    
    130,501
    
    
    
    120,134
    
    
    
    168,182Operating expenses
    
    
    67,463
    
    
    
    56,569
    
    
    
    100,804Operating income
    
    
    55,170
    
    
    
    54,954
    
    
    
    55,536
 
 (1)
    
    Includes figures of Etevensa since January 2006.  63




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##### Table of Contents



INSTALLED CAPACITY PER SUBSIDIARY IN PERU (MW)(1)
 Year
ended December 31,2004
    
    2005
    
    2006(MW)Edegel S.A.Huinco (Hydroelectric)
    
    
    247
    
    
    
    247
    
    
    
    247Matucana (Hydroelectric)
    
    
    129
    
    
    
    129
    
    
    
    129Callahuanca (Hydroelectric)
    
    
    75
    
    
    
    75
    
    
    
    75Moyopampa (Hydroelectric)
    
    
    65
    
    
    
    65
    
    
    
    65Huampani (Hydroelectric)
    
    
    30
    
    
    
    30
    
    
    
    30Yanango (Hydroelectric)
    
    
    43
    
    
    
    43
    
    
    
    43Chimay (Hydroelectric)
    
    
    151
    
    
    
    151
    
    
    
    151Santa Rosa (Thermal)
    
    
    228
    
    
    
    229
    
    
    
    229Ventanilla (Thermal)
    
    
    0
    
    
    
    0
    
    
    
    457Total
    
    
    967
    
    
    
    969
    
    
    
    1,426
 
 (1)
    
    The installed capacity was certified during 2006 by Bureau Veritas according to the Norm
038 of Endesa Chile related to the Definition of the maximum power in Hydroelectric and
Thermoelectric plants of Endesa Chile.  HYDRO/THERMAL GENERATION IN PERU (GWh)(1)
 Year ended December 31,2004
    
    2005
    
    2006(2)(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Hydroelectric Generation
    
    
    3,891
    
    
    
    94.1
    
    
    
    4,095
    
    
    
    90.7
    
    
    
    4,197
    
    
    
    63.0Thermal Generation
    
    
    245
    
    
    
    5.9
    
    
    
    422
    
    
    
    9.3
    
    
    
    2,465
    
    
    
    37.0Total Generation
    
    
    4,136
    
    
    
    100.0
    
    
    
    4,516
    
    
    
    100.0
    
    
    
    6,662
    
    
    
    100.0
 
 (1)
    
    Generation minus power plant own consumption and technical losses.(2)
    
    Thermal generation includes Ventanilla-s generation since January 2006.  64




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PHYSICAL GENERATION AND PURCHASES IN PERU (GWh)
 Year ended December 31,2004
    
    2005
    
    2006(2)(GWh)
    
    %
    
    (GWh)
    
    %
    
    (GWh)
    
    %Electricity Generation
    
    
    4,136
    
    
    
    94.5
    
    
    
    4,516
    
    
    
    94.8
    
    
    
    6,662
    
    
    
    96.1Electricity Purchases
    
    
    239
    
    
    
    5.5
    
    
    
    246
    
    
    
    5.2
    
    
    
    274
    
    
    
    3.9Total(1)
    
    
    4,375
    
    
    
    100.0
    
    
    
    4,762
    
    
    
    100.0
    
    
    
    6,935
    
    
    
    100.0
 
 (1)
    
    Total GWh production plus purchases differs from GWh sales due to transmission losses,
given that own power plant consumption and technical losses have already been deducted.(2)
    
    Figures for 2006 include Ventanillas generation and purchases since January 2006. Sistema Electrico Interconectado Nacional
  PHYSICAL SALES PER CUSTOMER SEGMENT IN PERU (GWh)
 Year ended December 31,2004
    
    2005
    
    2006 (2)% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSales
    
    Sales
    
    Sales
    
    Sales
    
    Sales
    
    Sales(GWh)
    
    Volume
    
    (GWh)
    
    Volume
    
    (GWh)
    
    VolumeContracted sales (1)
    
    
    3,344
    
    
    
    77.3
    
    
    
    3,766
    
    
    
    81.9
    
    
    
    6,145
    
    
    
    90.8Non-Contracted sales
    
    
    984
    
    
    
    22.7
    
    
    
    834
    
    
    
    18.1
    
    
    
    621
    
    
    
    9.2Total Electricity sales
    
    
    4,328
    
    
    
    100.0
    
    
    
    4,600
    
    
    
    100.0
    
    
    
    6,766
    
    
    
    100.0
 
 (1)
    
    Includes the sales to distributors without contracts.(2)
    
    Figures for 2006 include Ventanillas sales since January 2006.  MAIN CUSTOMERS IN PERU (GWh)
 Year ended December 31,2004
    
    
    2005
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesElectroperú (1)
    
    
    0
    
    
    
    0.0
    %
    
    
    0
    
    
    
    0.0
    %
    
    
    1620
    
    
    
    26.4
    %Edelnor (Regulated) (2)
    
    
    1110
    
    
    
    29.5
    %
    
    
    1000
    
    
    
    26.6
    %
    
    
    957
    
    
    
    15.6
    %Antamina
    
    
    678
    
    
    
    18.0
    %
    
    
    676
    
    
    
    18.0
    %
    
    
    683
    
    
    
    11.1
    %Refinería
    
    
    538
    
    
    
    14.3
    %
    
    
    507
    
    
    
    13.5
    %
    
    
    569
    
    
    
    9.3
    %
 65




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##### Table of Contents



Year ended December 31,2004
    
    
    2005
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesLuz del Sur (Regulated) (2)
    
    
    479
    
    
    
    12.7
    %
    
    
    440
    
    
    
    11.7
    %
    
    
    441
    
    
    
    7.2
    %Siderperú
    
    
    296
    
    
    
    7.9
    %
    
    
    303
    
    
    
    8.0
    %
    
    
    330
    
    
    
    5.4
    %Total sales to our largest costumers
    
    
    3101
    
    
    
    82.4
    %
    
    
    2,926
    
    
    
    77.8
    %
    
    
    4,600
    
    
    
    75
    %
 
 (1)
    
    Since 2006, Electroperú is a customer of Edegel due to merger with Etevensa. The value
reported is from January to December 2006.(2)
    
    The energy sold by Edegel to Edelnor and Luz del Sur includes only the energy associated to
bilateral contracts with Edegel. The amount assigned to Edegel as not contract related
consumption of these distributors is not included (57 GWh and 329 GWh respectively).  Electricity Generation in Peru  Industry Structure and Regulatory Framework
 Organismo Supervisor de la Inversión en Energía (hereinafter
   Comisión de Tarifas de Energía Gerencia Adjunta de Regulación Tarifaria Comité de Operación Económica del Sistema Usuarios Libres
  66




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Dispatch and Pricing
 Usuario Libre.
         Distribution Pricing
  67




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##### Table of Contents



precios firmes
  Servicio Público de Electricidad
  Concessions
   
    
    a thermoelectric power plant has an installed capacity of 500 kW; or
    
    a hydroelectric or geothermal power plant has an installed capacity between 500 kW and 10 MW.
  Cogeneration Regulation
  Enviromental Regulation
  68




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##### Table of Contents



C. Organizational structure
  Endesa Costanera (Argentina)
 Servicios Eléctricos del Gran Buenos Aires S.A.
 El Chocón (Argentina)
  Pehuenche (Chile)
  Pangue (Chile)
  Celta (Chile)
  San Isidro (Chile)
  Ingendesa (Chile)
  69




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##### Table of Contents



Emgesa (Colombia)
  Betania (Colombia)
  Edegel (Peru)
 Generandes Peru S.A..
 Selected Related Companies
 CEMSA (Argentina)
  Electrogas (Chile)
  GasAtacama (Chile)
  Gasoducto Atacama (Chile)
  70




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##### Table of Contents



GasAtacama Generación (Chile)
  Endesa Brasil (Brazil)
 (
  Hidroaysén (Chile)
  GNL Chile (Chile)
  71




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##### Table of Contents



Percentage of Economic Interest in each Operational Subsidiary and Related Company per Country
 SUBSIDIARIES (as of December 31, 2006)ENGINEERING
    
    INFRASTRUCTUREGENERATION
    
    SERVICES
    
    (1)Argentina
    
    Brazil
    
    Chile
    
    Colombia
    
    Peru
    
    Chile
    
    ChileEndesa Costanera   64.26%
El Chocón   47.44%
    
    
    
    Pehuenche 92.65%
Pangue 94.98% (2)
Celta 100%
San Isidro 100%
    
    Emgesa 23.45%
Betania 99.99%
    
    Edegel 33.06% (4)
    
    Ingendesa 98.75%
    
    El Melón 99.95%Related Companies (all business segments)CEMSA 45%
    
    EndesaBrasil (3)
37.65%
    
    GasAtacama 50%
Electrogas 42.5%
Gasoducto Atacama Chile 50%
Gasoducto Atacama Argentina 50%
Gasoducto Taltal 50%
Transquillota 37.5%
HidroAysén 51%
 
 (1)
    
    On June 23, 2003, Endesa Chile closed the sale of Infraestructura Dos Mil with the Spanish
company OHL Concesiones, S.L., subsidiary of the Spanish company Obrascón Huarte Lain S.A.
Through Infraestructura Dos Mil, Endesa had a 60.04% shareholding in Sociedad Concesionaria
Autopista del Sol and a 58.36% shareholding in Sociedad Concesionaria Autopista Los
Libertadores.(2)
    
    Endesa Internacional, has a 5.01% shareholding in Pangue.(3)
    
    The economic interest in Endesa Brasil declined from 37.85% at Dec. 2005 to 37.65% at Dec 2006
as a consequence of the reduction in the indirect share of Endesa Chile in Edegel due to the merger
of Edegel and Etevansa.(4)
    
    In June 2006, Endesa Chile in Peru achived the merger of Edegel and Empresa de Generacion
Termoelectrica Ventanilla S.A.(Etevensa) a 457 MW thermoelectric generation company.  72




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73




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D. Property, Plant and Equipment
     74




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##### Table of Contents



Country/Company
    
    Power Plant Name
    
    Power Plant Type (4)
    
    2004
    
    2005
    
    2006MW(1)ArgentinaEndesa Costanera
    
    Total
    
    
    
    
    2,303
    
    
    
    2,304
    
    
    
    2,319Costanera Steam Turbine
    
    Steam Turbine/Natural
Gas+ Fuel Oil
    
    
    1,131
    
    
    
    1,131
    
    
    
    1,138
    (2)Costanera Combined
Cycle II
    
    Combined
Cycle/Natural
Gas+Diesel Oil
    
    
    852
    
    
    
    851
    
    
    
    859
    (2)Central Buenos Aires
(CBA)
Combined Cycle I
    
    Combined Cycle/Natural
Gas
    
    
    320
    
    
    
    322
    
    
    
    322El Chocón
    
    Total
    
    
    
    
    1,320
    
    
    
    1,320
    
    
    
    1,320Chocón
    
    Reservoir
    
    
    1,200
    
    
    
    1,200
    
    
    
    1,200Arroyito
    
    Pass Through
    
    
    120
    
    
    
    120
    
    
    
    120Total Capacity in Argentina
    
    
    
    
    
    
    3,623
    
    
    
    3,624
    
    
    
    3,639Brazil (3)Cachoeira Dourada
    
    Cachoeira Dourada
    
    Pass Through
    
    
    658
    
    
    
    
    
    
    Total Capacity in 
Brazil
    
    
    
    
    
    
    658
    
    
    
    
    
    
    ChileEndesa
Chile
    
    Total
    
    
    
    
    2,754
    
    
    
    2,754
    
    
    
    2,754Total Hydroelectric
    
    
    
    
    2,254
    
    
    
    2,254
    
    
    
    2,254Rapel
    
    Reservoir
    
    
    377
    
    
    
    377
    
    
    
    377Cipreses
    
    Reservoir
    
    
    106
    
    
    
    106
    
    
    
    106El Toro
    
    Reservoir
    
    
    450
    
    
    
    450
    
    
    
    450Los Molles
    
    Pass Through
    
    
    18
    
    
    
    18
    
    
    
    18Sauzal
    
    Pass Through
    
    
    77
    
    
    
    77
    
    
    
    77Sauzalito
    
    Pass Through
    
    
    12
    
    
    
    12
    
    
    
    12Isla
    
    Pass Through
    
    
    68
    
    
    
    68
    
    
    
    68Antuco
    
    Pass Through
    
    
    320
    
    
    
    320
    
    
    
    320Abanico
    
    Pass Through
    
    
    136
    
    
    
    136
    
    
    
    136Ralco
    
    Reservoir
    
    
    690
    
    
    
    690
    
    
    
    690Total Thermal
    
    
    
    
    500
    
    
    
    500
    
    
    
    500Huasco
    
    Steam Turbine/Coal
    
    
    16
    
    
    
    16
    
    
    
    16Bocamina
    
    Steam Turbine/Coal
    
    
    128
    
    
    
    128
    
    
    
    128Diego de Almagro (5)
    
    Gas Turbine/Diesel Oil
    
    
    47
    
    
    
    47
    
    
    
    47Huasco
    
    Gas Turbine/IFO 180
Oil
    
    
    64
    
    
    
    64
    
    
    
    64Taltal
    
    Gas Turbine/Natural
Gas/Diesel Oil(6)
    
    
    245
    
    
    
    245
    
    
    
    245Pehuenche
    
    Total
    
    
    
    
    695
    
    
    
    695
    
    
    
    695Pehuenche
    
    Reservoir
    
    
    566
    
    
    
    566
    
    
    
    566Curillinque
    
    Pass Through
    
    
    89
    
    
    
    89
    
    
    
    89Loma Alta
    
    Pass Through
    
    
    40
    
    
    
    40
    
    
    
    40Pangue
    
    Pangue
    
    Reservoir
    
    
    467
    
    
    
    467
    
    
    
    467San Isidro
    
    San Isidro
    
    Combined Cycle
/Natural Gas+Diesel
Oil
    
    
    379
    
    
    
    379
    
    
    
    379Celta
    
    Total
    
    
    
    
    182
    
    
    
    182
    
    
    
    182Tarapacá
    
    Steam Turbine/Coal
    
    
    158
    
    
    
    158
    
    
    
    158Tarapacá
    
    Gas Turbine/Diesel Oil
    
    
    24
    
    
    
    24
    
    
    
    24Total Capacity in
Chile
    
    
    
    
    
    
    4,477
    
    
    
    4,477
    
    
    
    4,477
 75




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Country/Company
    
    Power Plant Name
    
    Power Plant Type (4)
    
    2004
    
    2005
    
    2006MW(1)ColombiaEmgesa
    
    Total
    
    
    
    
    2,069
    
    
    
    2,116
    
    
    
    2,238Guavio (7)
    
    Reservoir
    
    
    1,150
    
    
    
    1,164
    
    
    
    1,163Paraíso
    
    Reservoir
    
    
    276
    
    
    
    276
    
    
    
    276La Guaca
    
    Pass Through (8)
    
    
    324
    
    
    
    325
    
    
    
    325Termozipa
    
    Steam Turbine/Coal
    
    
    223
    
    
    
    235
    
    
    
    236Cartagena (9)
    
    Steam Turbine/Natural
Gas
+ Diesel Oil
    
    
    
    
    
    
    
    
    
    
    142Minor plants (10)
    
    Pass Through
    
    
    96
    
    
    
    116
    
    
    
    96Betania
    
    Betania
    
    Reservoir
    
    
    540
    
    
    
    541
    
    
    
    541Total Capacity in
Colombia
    
    
    
    
    
    
    2,609
    
    
    
    2,657
    
    
    
    2,779PeruEdegel
    
    Total
    
    
    
    
    967
    
    
    
    969
    
    
    
    1,426Huinco
    
    Pass Through
    
    
    247
    
    
    
    247
    
    
    
    247Matucana
    
    Pass Through
    
    
    129
    
    
    
    129
    
    
    
    129Callahuanca
    
    Pass Through
    
    
    75
    
    
    
    75
    
    
    
    75
    (11)Moyopampa
    
    Pass Through
    
    
    65
    
    
    
    65
    
    
    
    65Huampani
    
    Pass Through
    
    
    30
    
    
    
    30
    
    
    
    30Yanango
    
    Pass Through
    
    
    43
    
    
    
    43
    
    
    
    43Chimay
    
    Pass Through
    
    
    151
    
    
    
    151
    
    
    
    151Santa Rosa
    
    Gas Turbine/Natural Gas + Diesel Oil
    
    
    227
    
    
    
    229
    
    
    
    229Ventanilla (12)
    
    Combined Cycle/Natural
Gas
    
    
    
    
    
    
    
    
    
    
    457Total Capacity in Peru
    
    
    
    
    
    
    967
    
    
    
    969
    
    
    
    1,426Total Endesa Chile
    
    
    
    
    
    
    12,334
    
    
    
    11,727
    
    
    
    12,321
 
 (1)
    
    Installed capacity defined as the maximum MW capacity of generation units, under specific
technical conditions and characteristics, in most cases confirmed by satisfaction guarantee
tests performed by equipment suppliers certified during 2006 by Bureau Veritas according to
the Norm 038 of Endesa Chile related to the Definition of the maximum power in
Hydroelectric and Thermoelectric plants of Endesa Chile. Figures may differ from installed
capacity declared to regulating authorities and customers in each country, according to
criteria defined by each authority and corresponding contractual frameworks.(2)
    
    Certified by Bureau Veritas according to Norm 038 of Endesa Chile in 2006.(3)
    
    Cachoeira Dourada was a subsidiary of Endesa Chile until September 30, 2005, when it became a
subsidiary of Endesa Brasil.(4)
    
    Reservoir and pass-through refer to a hydroelectric plant that uses a dam or a river,
respectively, to move the turbines which generate electricity.Steam refers to the technology of a thermal power plant that uses either natural gas, coal,
diesel or fuel oil to produce steam which moves the turbines to generate the electricity.Gas Turbine (TG) or Open Cycle refers to the technology of a thermal power plant that uses
either diesel or natural gas to produce gas that moves the turbines to generate the electricity. Combined Cycle refers to the technology of a thermal power plant that uses either natural gas,
diesel oil or fuel oil to generate gas that moves the turbines to generate electricity then
recuperates the gas that escapes from that process to generate steam to move another turbine.(5)
    
    Includes one additional unit of Diego de Almagro (23 MW), which Endesa Chile has rented from
Codelco since 2001.(6)
    
    One of two generation units of Tal Tal may use diesel oil as an alternative to natural gas.(7)
    
    During 2005, 2 auxiliary units (7MW each) were added to Guavio.(8)
    
    Operates in series with Paraiso.(9)
    
    Purchased in 2006. Figure represents capacity value for units 1 and 3. Unit 2 is under
overhaul and recovery of capacity(10)
    
    Minor plants are registered with a total capacity of 96.1 MW. At December 31, 2006 Emgesa
owned and operated five minor plants: Charquito, El Limonar, La Tinta, Tequendama and La
Junca. On January 1, 2006, the minor plant San Antonio (19.5 MW) was withdrawn from the NIS.(11)
    
    As of December 31, 2006, the recovery of capacity of this plant has yet to be acknowledged by
competent authorities.(12)
    
    During 2006 Edegel and Etevensa merged and Edegel added Ventanilla to its generation assets.
Figure is not final considering further technical efficiencies implemented but yet to be
acknowledged by competent authorities.  76




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Environmental Issues
     Investment Projects Completed during 2006
  i)
    
    Peru. Reconditioning the Callahuanca Power Plant:In 2004, we entered into contracts for the reconditioning of Edegels Callahuanca power
plant in Peru. This project entailed the renovation of control equipment and systems, and
an estimated 7.5 MW capacity increase. The project was completed in February 2006.ii)
    
    Peru. Conversion of UTI (United Technologies International) Turbines:
 77




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##### Table of Contents



On January 17, 2006, the Board of Directors of Edegel authorized the conversion of two
turbines to gas based technology (total installed capacity of 106 MW), located at the Santa
Rosa Power Plant. Due to this conversion, the total installed capacity
of Santa Rosa power plant can use natural gas or as main fuel. They started operations in July 2006.
 Projects under Construction
     
    
    Stage 1 (2007): Operation of the gas turbine as an open cycle using diesel (220 MW).
    
    Stage 2 (2008): Operation of the gas turbine as a combined cycle using diesel (307 MW).
    
    Stage 3 (2009, dependant on the arrival of LNG): Operation of the gas turbine as a
combined cycle using LNG (377 MW).
        Direccion General de Aguas
   78




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Projects under Development
          79




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Major Encumbrances
  Pangue Pangue
 80




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##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 A. Operating results
 General
 The following discussion should be read in conjunction with our audited consolidated financial
statements, included in Item 18 in this annual report, and the Selected Consolidated Financial and
Operating Data, included in Item 3 herein. Our consolidated financial statements are prepared in
accordance with Chilean GAAP, which differs in some important respects from GAAP. See Note 32 to
our audited consolidated financial statements, included in Item 18 herein.
 1. Discussion of Main Factors Affecting Operating Results and Financial Condition of the Company
    a. Hydrological Conditions
   81




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b. Regulatory Developments
       82




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83




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
    
    In January 2002, the Economic Emergency Law was passed. The Argentine peso was devalued
against the dollar from Ar$ 1.00 per $ 1.00 to Ar$ 3.37 per $ 1.00. Prior to 2002, the
Argentine peso had been pegged to the dollar at a rate of 1 Argentine peso to 1 dollar.
Electricity tariffs historically were expressed in dollars at an exchange of Ar$ 1 to$ 1.
After the devaluation, the Argentine government converted electricity tariffs to Argentine
pesos at the old exchange rate of Ar$ 1 to $ 1. As a result of this devaluation and the
tariff conversion rate implemented by the Argentine government, the dollar equivalent of
the Companys Argentine revenues declined significantly. (For further details on the
effects of the Argentine peso devaluation over Endesa Chiles balance sheet, see Item 5.
Operating and Financial Review and Prospects  D. Impairment of Goodwill). The government
has continued to adopt resolutions that interfere with the market-driven reactions of the
industry (See Item 4. Information on the CompanyB. Business OverviewElectricity
Generation in Argentina for details). These resolutions have affected the behavior of the
industry as a whole by affecting spot prices, contract conditions, fuel supply and prices,
accounts receivables, among others. In 2001, prior to the adoption of these resolutions,
the Companys revenues in Argentina were Ch$ 244.3 billion for 12,988 GWh delivered.
Following their adoption, revenues were Ch$ 107.5 billion in 2002, Ch$ 120.7 billion in
2003, Ch$ 156.9 billion in 2004, Ch$ 160.1 billion in 2005 and 235.4 billion for 13,926 GWh
delivered in 2006. Sales in Argentina were 9,259 GWh in 2003, 11,604 GWh in 2004 and 12,579
GWh in 2005. In 2004, the Authority began the process of adjusting the price of natural gas
in its local market and has incorporated these adjustments into the calculation of the
wholesale price of electricity, but has not set the tariff free to adjust according to the
regulatory framework tariff model.
    
    Through S.E. resolution 949/04, the Argentine authorities restricted energy exports to
neighboring countries. These resolutions only allow export contracts to be satisfied with
generation units that were previously identified for such purpose, and do not allow the
purchase of any deficits in the wholesale market, notwithstanding any agreements to allow
such purchases set forth in the Interconnection protocol between Argentina and Brazil.
This situation had severe consequences for Endesa Costanera, which in the second quarter of
2005 was forced to comply with the energy export contractual obligations by dispatching
 84




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energy generated through the use of fuel oil. This situation created a significant gap
between the prices in the export contracts and the costs associated with generation due to
the high costs of fuel oil in the international markets. Endesa Costaneras total
generation expenses increased by 68% from 2003 to 2004 and by 28% from 2004 to 2005. The
further increase in generation expenses, which increased by 39% from 2005 to 2006, was
primarily due to the 4% increase in generation output, and the recognition of higher
natural gas prices in the Argentine market for industrial consumers, including generation
companies.
    
    A subsequent routine maintenance procedure prevented Endesa Costanera from fully
complying with its export contracts, which resulted in only partial payments by and CEMSA.
On January 12, 2006, the board of directors of Endesa Costanera resolved to book, as of
December 31, 2005, a provision of approximately Ch$ 15.9 billion to cover the
uncollectibility risk of the accounts receivable of CIEN and CEMSA. Operational income
reached Ch$ 30.1 billion in 2004, a loss of Ch$ 3.7 billion in 2005, and Ch$ 9.8 billion in
2006, evidencing how the Argentine authorities resolutions regarding the export business
have negatively affected Endesa Costaneras operating results. Nevertheless, in
consolidated terms, Endesa Costaneras operating results for 2004, 2005 and 2006 did not
substantially affect Endesa Chiles total consolidated results, as the percentage share of
Endesa Costaneras operations as part of Endesa Chiles total consolidated operating income
in Chilean GAAP, reached 8% in 2004, and 1% in 2006.
 Secretaría de Energía Servicio Energía Plus
 c. Economic Conditions
  Economic Growth and Electricity Demand
  2004
    
    2005
    
    2006Electricity
    
    
    
    
    
    Electricity
    
    
    
    
    
    ElectricityGDP
    
    Demand
    
    GDP
    
    Demand
    
    GDP
    
    DemandGrowth
    
    Growth
    
    Growth
    
    Growth
    
    Growth(1)
    
    Growth(%)
    
    (%)
    
    (%)
    
    (%)
    
    (%)
    
    (%)Chile
    
    
    6.1
    
    
    
    8.0
    
    
    
    6.3
    
    
    
    4.0
    
    
    
    4.2
    
    
    
    6.0Argentina
    
    
    8.3
    
    
    
    6.8
    
    
    
    8.5
    
    
    
    5.8
    
    
    
    8.0
    
    
    
    5.9Colombia
    
    
    3.5
    
    
    
    2.7
    
    
    
    5.3
    
    
    
    3.8
    
    
    
    4.8
    
    
    
    4.1Brazil
    
    
    5.0
    
    
    
    5.4
    
    
    
    2.3
    
    
    
    4.3
    
    
    
    3.6
    
    
    
    3.9Peru
    
    
    5.1
    
    
    
    5.9
    
    
    
    6.4
    
    
    
    5.0
    
    
    
    6.0
    
    
    
    7.7
 
 (1)
    
    Sources: Central Bank of Chile growth estimate for 2006. For Argentina, Colombia,
Brazil and Peru, World Economic Outlook (September 2006) estimate of the International
Monetary Fund, and internal Company physical energy data for 2004-2006. 85




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Local Currency Exchange Rate
    Local Currency U. S. Dollar Exchange Rates2004
    

2005
    

2006Average
    
    Year End
    
    Average
    
    Year End
    
    Average
    
    Year EndChile (peso per dollar)
    
    
    611.11
    
    
    
    557.40
    
    
    
    558.06
    
    
    
    512.50
    
    
    
    529.64
    
    
    
    532.39Argentina (peso per dollar)
    
    
    2.95
    
    
    
    2.97
    
    
    
    2.94
    
    
    
    3.02
    
    
    
    3.08
    
    
    
    3.061Colombia (peso per dollar)
    
    
    2,628.7
    
    
    
    2,344.5
    
    
    
    2,321.6
    
    
    
    2,285.0
    
    
    
    2,358.3
    
    
    
    2,239.0Brazil (reais per dollar)
    
    
    2.93
    
    
    
    2.65
    
    
    
    2.44
    
    
    
    2.34
    
    
    
    2.17
    
    
    
    2.14Peru (sol per dollar)
    
    
    3.41
    
    
    
    3.28
    
    
    
    3.30
    
    
    
    3.42
    
    
    
    3.27
    
    
    
    3.20
  d. Technical Bulletin 64 and Other Critical Accounting Policies
 Technical Bulletin 64
  BT 64Conversion Effect
 86




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BT 64Equity Hedge
 U.S. GAAP Reconciliation
   87




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Chilean GAAP
    
    U.S. GAAP(in millions of constantCh$ as of December 31, 2006)Net income (loss) for the year ended December 31:2004
    
    
    88,628
    
    
    
    68,4902005
    
    
    112,946
    
    
    
    102,3822006
    
    
    189,541
    
    
    
    211,894Shareholders equity as of December 31:2004
    
    
    1,659,511
    
    
    
    1,261,7442005
    
    
    1,676,746
    
    
    
    1,309,1612006
    
    
    1,794,310
    
    
    
    1,443,984
 Critical Accounting Policies Affecting Operating Results
  Revenue Recognition
  Useful lives and impairment of Long-Lived Assets
  
    
    significant underperformance relative to expected historical or projected future
operating results;
    
    significant changes in the manner of use of the acquired assets or the strategy for our
overall business; and
    
    significant negative industry or economic trends.
  88




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Impairment of Goodwill
  Income
Tax and Deferred Taxes
  Derivative Instruments
   89




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Pension and Post-Retirement Benefits Liabilities
   Year ended December 31,2005
    
    2006(increase in millions of Ch$)Projected benefit obligation
    
    
    1,731
    
    
    
    1,788
  Year ended December 31,2005
    
    2006(increase in millions of Ch$)Accumulated post-retirement benefit obligation
    
    
    783
    
    
    
    664
 90




---



##### Table of Contents



2. Overview of Yearly Results
 a. Consolidated Comparative Results for the Period 2004-2006
  .
 
    
    the complicated fuel scenario in the region along with the hydro conditions in the
countries in which we operate,
    
    the growth of electricity demand in the countries in which we operate,
    
    the congruent (although in some cases lagging) reaction of electricity prices to market conditions,
  91




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3.
    
    Country by Country Comparative Analysis of Operating Results and Details of Non-Operating
Figures 2005 vs. 2006
 Revenues from operations
  Year ended December 31,%2005
    
    2006
    
    Change(in millions of constant Ch$ as ofDecember 31, 2006, except percentages)RevenuesChile
    
    
    559,537
    
    
    
    659,698
    
    
    
    17.9Argentina
    
    
    160,087
    
    
    
    235,416
    
    
    
    47.1Colombia
    
    
    264,191
    
    
    
    273,825
    
    
    
    3.6Brazil (1)
    
    
    42,673
    
    
    
    Peru
    
    
    120,134
    
    
    
    168,182
    
    
    
    40.0Total Revenues
    
    
    1,146,623
    
    
    
    1,337,121
    
    
    
    16.6
 Year ended December 31,%2005
    
    2006
    
    Change(GWh)
    
    (GWh)Energy SalesChile
    
    
    20,731
    
    
    
    20,923
    
    
    
    0.9Argentina
    
    
    12,579
    
    
    
    13,926
    
    
    
    10.7Colombia
    
    
    15,077
    
    
    
    15,327
    
    
    
    1.7Brazil(1)
    
    
    2,897
    
    
    
    
    
    
    
    Peru
    
    
    4,600
    
    
    
    6,767
    
    
    
    47.1Total
    
    
    55,884
    
    
    
    56,943
    
    
    
    1.9
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005, when
Endesa Chile contributed its investments in this company to Endesa Brasil. See Item 4.
Information on the CompanyA. History and Development of the Company for details.  92




---



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Operating Expenses
  Year ended December 31,%2005
    
    2006
    
    Change(in millions of constant Ch$ as ofDecember 31, 2006, exceptpercentages)Operating Expenses(1)Chile
    
    
    347,440
    
    
    
    348,856
    
    
    
    0.4Argentina
    
    
    144,220
    
    
    
    195,691
    
    
    
    35.7Colombia
    
    
    135,822
    
    
    
    147,909
    
    
    
    8.9Brazil (2)
    
    
    20,030
    
    
    
    
    
    
    
    Peru
    
    
    56,569
    
    
    
    100,804
    
    
    
    78.2Total
    
    
    704,081
    
    
    
    793,260
    
    
    
    12.7
 
 (1)
    
    excludes SG&A expenses(2)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005,
when Endesa Chile contributed its investments in this company to Endesa Brasil. See Item
4. Information on the CompanyA. History and Development of the Company for details. 93




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,
   Administrative and selling expenses
   94




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Year ended December 31,2005
    
    2006
    
    % Change(in millions of constant Ch$ as orDecember 31, 2006 except percentages)Administrative and Selling ExpensesChile
    
    
    19,119
    
    
    
    19,787
    
    
    
    3.5Argentina
    
    
    2,683
    
    
    
    3,170
    
    
    
    18.2Colombia
    
    
    5,290
    
    
    
    4,586
    
    
    
    (13.3
    )Brazil (1)
    
    
    3,684
    
    
    
    Peru
    
    
    8,611
    
    
    
    11,843
    
    
    
    37.5Total Selling and Administrative Expense
    
    
    39,388
    
    
    
    39,386
    
    
    
    0.0
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005,
when Endesa Chile contributed its investments in this company to Endesa Brasil. See Item 4.
Information on the CompanyA. History and Development of the Company for details.  Operating Margin and Operating Income
  Year ended December 31,2005
    
    2006percentage (based on figures inChilean GAAP as ofDecember 31, 2006)Operating MarginChile
    
    
    34.5
    %
    
    
    44.1
    %Argentina
    
    
    8.2
    %
    
    
    15.5
    %Colombia
    
    
    46.6
    %
    
    
    44.3
    %Brazil(1)
    
    
    
    
    
    
    Peru
    
    
    45.7
    %
    
    
    33.0
    %Total Operating Margin
    
    
    35.2
    %
    
    
    37.7
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005, when
Endesa Chile contributed its investments in this company to Endesa Brasil. See Item 4.
Information on the CompanyA. History and Development of the Company for details.  95




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Year ended December 31,%2005
    
    2006
    
    Change(in millions of constant Ch$ as ofDecember 31, 2006, except percentages)Operating IncomeChile
    
    
    192,977
    
    
    
    291,055
    
    
    
    50.8Argentina
    
    
    13,184
    
    
    
    36,554
    
    
    
    177.3Colombia
    
    
    123,080
    
    
    
    121,330
    
    
    
    (1.4
    )Brazil (1)
    
    
    18,960
    
    
    
    
    
    
    
    Peru
    
    
    54,954
    
    
    
    55,536
    
    
    
    1.1Total Operating Income
    
    
    403,154
    
    
    
    504,475
    
    
    
    25.1
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005, when
Endesa Chile contributed its investments in this company to Endesa Brasil. See Item 4.
Information on the CompanyA. History and Development of the Company for details.     96




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Non-operating Results
  Year ended December 31,2005
    
    2006
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2006, except percentages)Non-operating income:Interest earned
    
    
    15,878
    
    
    
    14,818
    
    
    
    (6.7
    )Equity income of non-consolidated affiliates
    
    
    21,823
    
    
    
    42,470
    
    
    
    94.6Other non-operating income
    
    
    33,979
    
    
    
    29,968
    
    
    
    (11.8
    )Non-operating expenses:Interest expense
    
    
    182,549
    
    
    
    171,919
    
    
    
    (5.8
    )Equity losses of non-consolidated affiliates
    
    
    7,969
    
    
    
    125
    
    
    
    (98.4
    )Goodwill amortization
    
    
    1,395
    
    
    
    943
    
    
    
    (32.4
    )Other non-operating expenses
    
    
    54,711
    
    
    
    43,568
    
    
    
    (20.4
    )Monetary correction:Price level restatement
    
    
    1,346
    
    
    
    1,487
    
    
    
    10.5Foreign Exchange translation
    
    
    15,214
    
    
    
    3,608
    
    
    
    (76.3
    )Non-operating results
    
    
    (158,384
    )
    
    
    (124,204
    )
    
    
    21.6
    %
  
    
    Consolidated interest expense decreased by Ch$ 10.6 billion, from Ch$ 182.5 billion in
2005 to Ch$ 171.9 billion in 2006, or 5.8%, primarily due to reduced financial debt,
average exchange rate appreciation and the higher capitalization of financial expenses
related to investment projects. The de-consolidation of Cachoeira Dourada, partially offset
by increases in average cash balances, were the primary factors behind the reduction in
consolidated interest income of Ch$ 1.1 billion, from Ch$ 15.9 billion to Ch$ 14.8 billion
in 2006.
    
    The net result of investments in related companies increased by Ch$ 28.5 billion in
2006, primarily due to Ch$ 24.2 billion of higher results of Endesa Brasil and the accrued
negative result of Ch$ 7.9 billion of our affiliate company CIEN in 2005, offset in part by
Ch$ 3.5 billion reduction in the result of our affiliate company GasAtacama in 2006
compared to 2005.
    
    Other net non-operating income and expenses produced a better result of Ch$ 7.1 billion,
primarily due to Ch$ 15.7 billion of lower provisions for contingencies, litigations and
other provisions, Ch$ 6.1 million of indemnities and compensations, essentially from the
Chilean public works ministry related to El Melón, offset by Ch$ 12.9 billion of reduced
result from the conversion adjustment in accordance with BT64 arising from our foreign
subsidiaries, principally Betania and Edegel; Ch$ 6.1 billion due to the effect of the
deconsolidation of Cachoeira Dourada and Ch$ 1.7 billion of reduced recoveries of costs and
customer debts.
    
    Net non-operating income and expense were offset by a net negative change of Ch$ 11.5
billion in 2006 compared to the previous year in price-level restatements and exchange
differences showed, originated mainly by the effect of 3.7% depreciation of the peso
against the dollar during 2006, against a 8.8% appreciation during 2005.
 97




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Net income
  Year ended December 31,%2005
    
    2006
    
    Change(in millions of constant Ch$ as ofDecember 31, 2006, except percentages)Operating income
    
    
    403,154
    
    
    
    504,475
    
    
    
    25.1Non-operating income
    
    
    (158,384
    )
    
    
    (124,204
    )
    
    
    21.6Income before taxes, minority
interest and negative goodwill
amortization
    
    
    244,770
    
    
    
    380,271
    
    
    
    55.4Current income taxes
    
    
    (61,403
    )
    
    
    (99,414
    )
    
    
    61.9Deferred income taxes
    
    
    (32,482
    )
    
    
    (31,443
    )
    
    
    (3.2
    )Total income taxes
    
    
    (93,885
    )
    
    
    (130,857
    )
    
    
    39.4Minority interest
    
    
    (53,570
    )
    
    
    (65,911
    )
    
    
    23.0Amortization of negative goodwill
    
    
    15,632
    
    
    
    6,037
    
    
    
    (61.4
    )Extraordinary items
    
    
    0
    
    
    
    0
    
    
    
    n.a.Net income
    
    
    112,946
    
    
    
    189,540
    
    
    
    67.8
 Income Taxes
 Minority Interest
 4.
    
    Country by Country Comparative Analysis of Operating Results and Details of Non Operating
Figures 2005 vs. 2004
 Revenues from operations
  98




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Year ended December 31,%2004
    
    2005
    
    Change(in millions of constant Ch$ as ofDecember 31, 2006, except percentages)RevenuesChile
    
    
    494,589
    
    
    
    559,537
    
    
    
    13.1Argentina
    
    
    156,864
    
    
    
    160,088
    
    
    
    2.1Colombia
    
    
    265,917
    
    
    
    264,192
    
    
    
    (0.6
    )Brazil (*)
    
    
    44,432
    
    
    
    42,673
    
    
    
    4.0Peru
    
    
    130,501
    
    
    
    120,134
    
    
    
    (7.9
    )Total Revenues
    
    
    1,092,304
    
    
    
    1,146,623
    
    
    
    5.0
 Year ended December 31,%2004
    
    2005
    
    Change(GWh)
    
    (GWh)Energy SalesChile
    
    
    18,462
    
    
    
    20,730
    
    
    
    12.3Argentina
    
    
    11,603
    
    
    
    12,579
    
    
    
    8.4Colombia
    
    
    15,148
    
    
    
    15,078
    
    
    
    (0.5
    )Brazil (1)
    
    
    3,902
    
    
    
    2,897
    
    
    
    (25.7
    )Peru
    
    
    4,328
    
    
    
    4,600
    
    
    
    6.3Total
    
    
    53,443
    
    
    
    55,884
    
    
    
    4.6
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005, when
Endesa Chile contributed its investments in this company to Endesa Brasil. See Item 4.
Information on the CompanyA. History and Development of the Company for details.    99




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Operating Expenses
  Year ended December 31,%2004
    
    2005
    
    Change(in millions of constant Ch$ as ofDecember 31, 2005, exceptpercentages)Operating Expenses (1)Chile
    
    
    316,191
    
    
    
    347,440
    
    
    
    9.9Argentina
    
    
    117,783
    
    
    
    144,220
    
    
    
    22.4Colombia
    
    
    136,645
    
    
    
    135,822
    
    
    
    (0.6
    )Brazil
    
    
    27,450
    
    
    
    20,030
    
    
    
    (27.0
    )Peru
    
    
    67,463
    
    
    
    56,569
    
    
    
    (16.1
    )Total
    
    
    665,531
    
    
    
    704,081
    
    
    
    5.8
 
 (1)
    
    Excludes SG&A expenses  100




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Administrative and selling expenses
  101




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Year ended December 31,2004
    
    2005
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2006 except percentages)Administrative and Selling ExpensesChile
    
    
    20,032
    
    
    
    19,119
    
    
    
    (4.6
    )Argentina
    
    
    2,718
    
    
    
    2,683
    
    
    
    (1.3
    )Colombia
    
    
    3,976
    
    
    
    5,290
    
    
    
    33.1Brazil
    
    
    1,842
    
    
    
    3,684
    
    
    
    100.0Peru
    
    
    7,868
    
    
    
    8,611
    
    
    
    9.4Total Selling and Administrative Expense
    
    
    36,435
    
    
    
    39,387
    
    
    
    8.1
  Operating Margin and Operating Income
  Year ended December 31,2004
    
    2005(based on figures inChilean GAAP in millionsof Ch$ as ofDecember 31, 2006)Operating MarginChile
    
    
    32.0
    %
    
    
    34.5
    %Argentina
    
    
    23.2
    %
    
    
    8.2
    %Colombia
    
    
    47.1
    %
    
    
    46.6
    %Brazil
    
    
    34.1
    %
    
    
    44.4
    %Peru
    
    
    42.3
    %
    
    
    45.7
    %Consolidated Operating Margin
    
    
    35.7
    %
    
    
    35.2
    %
  Year ended December 31,%2004
    
    2005
    
    Change(in millions of constant Ch$ as ofDecember 31, 2005, except percentages)Operating IncomeChile
    
    
    158,365
    
    
    
    192,977
    
    
    
    21.9Argentina
    
    
    36,364
    
    
    
    13,184
    
    
    
    (63.7
    )Colombia
    
    
    125,298
    
    
    
    123,080
    
    
    
    (1.8
    )Brazil
    
    
    15,140
    
    
    
    18,960
    
    
    
    25.2Peru
    
    
    55,170
    
    
    
    54,953
    
    
    
    (0.4
    )Total
    
    
    390,337
    
    
    
    403,154
    
    
    
    3.3
 102




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103




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Non-operating Results
  Year ended December 31,2004
    
    2005
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2005, except percentages)Non-operating income:Interest earned
    
    
    15,773
    
    
    
    15,879
    
    
    
    0.7Equity income of non-consolidated affiliates
    
    
    20,404
    
    
    
    21,823
    
    
    
    7.0Other non-operating income
    
    
    54,202
    
    
    
    33,979
    
    
    
    (37.3
    )Non-operating
expenses:Interest expense
    
    
    (203,679
    )
    
    
    (182,549
    )
    
    
    (10.4
    )Equity losses of non-consolidated affiliates
    
    
    (92
    )
    
    
    (7,969
    )
    
    
    8,661.9Goodwill amortization
    
    
    (1,548
    )
    
    
    (1,395
    )
    
    
    (9.9
    )Other non-operating expenses
    
    
    (83,865
    )
    
    
    (54,711
    )
    
    
    (34.8
    )Monetary correction:Price level restatement
    
    
    2,339
    
    
    
    1,346
    
    
    
    (42.5
    )Foreign Exchange translation
    
    
    21,822
    
    
    
    15,214
    
    
    
    (30.3
    )Non-operating
results
    
    
    (174,644
    )
    
    
    (158,384
    )
    
    
    (9.3
    )
  
    
    consolidated interest expenses reduced by Ch$ 21.1 billion, from Ch$ 203.7 billion in
2004 to Ch$ 182.6 billion in 2005, due to reduced debt and the appreciation of the peso
against the dollar. Higher average cash balances also increased interest income by Ch$ 0.1
billion, from Ch$ 15.7 billion to Ch$ 15.8 billion.
    
    net other non-operating income and expenses show an improved result of Ch$ 8.9 billion,
primarily due to Ch$ 25.0 billion of improvement from the conversion adjustment (BT64) of
our foreign subsidiaries, principally the Colombian companies Emgesa and Betania, the
former Brazilian subsidiary Cachoeira Dourada and the Peruvian subsidiary Edegel , and by
Ch$ 13.5 billion of lower provisions for the re-settlement of energy and capacity, which
were partially offset by Ch$ 21.3 billion of higher provisions for contingencies and
litigation and Ch$ 7.4 billion of reduced results from the liquidation of swap contracts.
 Net income
  Year ended December 31,%2004
    
    2005
    
    Change(in millions of constant Ch$ as ofDecember 31, 2005, except percentages)Operating income
    
    
    390,339
    
    
    
    403,154
    
    
    
    3.3Non-operating income
    
    
    (174,644
    )
    
    
    (158,384
    )
    
    
    (9.3
    )Net income before taxes,
minority interest and negative
goodwill amortization
    
    
    215,693
    
    
    
    244,770
    
    
    
    13.5Current Income tax
    
    
    (55,826
    )
    
    
    (61,403
    )
    
    
    9.9Deferred taxes
    
    
    (42,996
    )
    
    
    (32,482
    )
    
    
    (24.5
    )
 104




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Year ended December 31,%2004
    
    2005
    
    Change(in millions of constant Ch$ as ofDecember 31, 2005, except percentages)Total income taxes
    
    
    (98,823
    )
    
    
    (93,885
    )
    
    
    (5.0
    )Minority interest
    
    
    (45,274
    )
    
    
    (53,571
    )
    
    
    18.3Amortization of negative goodwill
    
    
    17,031
    
    
    
    15,632
    
    
    
    (8.2
    )Net income
    
    
    88,628
    
    
    
    112,946
    
    
    
    27.4
 Income Taxes
 Minority Interest
 B. Liquidity and capital resources.
    (Figures in $ million)
    
    2005
    
    2006INITIAL CASH (A)
    
    
    125.8
    
    
    
    23.4SOURCES (B) + (C)
    
    
    1,106.3
    
    
    
    1,622.2Cash Inflows from Chile (B)
    
    
    981.5
    
    
    
    1,238.4Cash Inflows from Operations
    
    
    863.8
    
    
    
    960.2Interest Income from Chilean Subs
    
    
    5.8
    
    
    
    2.1
 105




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(Figures in $ million)
    
    2005
    
    2006Dividend from Chilean Subs
    
    
    66.8
    
    
    
    143.5Amortization of Intercompany loans from Chilean Subs
    
    
    0.0
    
    
    
    92.9Other Income from non Operating Activities
    
    
    45.2
    
    
    
    39.7Cash Inflows from foreign subsidiaries (C)
    
    
    124.7
    
    
    
    383.8Interest Income from foreign Subs
    
    
    11.5
    
    
    
    44.8Dividends from Foreign Subs
    
    
    50.3
    
    
    
    43.7Capital Reductions
    
    
    18.3
    
    
    
    0.0Amortization of Intercompany loans from Foreign Subs
    
    
    42.6
    
    
    
    293.3Management Fee and Others
    
    
    2.0
    
    
    
    2.0USES (D) + (E)
    
    
    1,208.8
    
    
    
    1,542.5Cash Outflows from Operations (D)
    
    
    654.5
    
    
    
    786.9Cash Outflows from Operations
    
    
    594.2
    
    
    
    723.6Taxes
    
    
    60.3
    
    
    
    63.3Cash Outflows from non Operating Activities (E)
    
    
    554.3
    
    
    
    755.6Intercompany Loans
    
    
    41.0
    
    
    
    0.0Interest Expenses and Derivative Contracts
    
    
    215.8
    
    
    
    204.5Dividend Payment
    
    
    60.8
    
    
    
    131.3Net Financial Debt Amortization
    
    
    221.3
    
    
    
    411.4Others
    
    
    15.4
    
    
    
    8.4FINAL CASH (A)+(B)+(C)-(D)-(E)
    
    
    23.4
    
    
    
    103.1
           106




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107




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
   108




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AggregatePrincipalIssuer
    
    Maturity
    
    Coupon
    
    Amount Issued(in U.S.$(as a percentage)
    
    millions)Endesa Chile
    
    July 15, 2008
    
    
    7.750
    
    
    
    400Endesa Chile
    
    April 1, 2009
    
    
    8.500
    
    
    
    400Endesa Chile
    
    August 1,2013
    
    
    8.350
    
    
    
    400Endesa Chile
    
    August 1,2015
    
    
    8.625
    
    
    
    200Endesa Chile
    
    February 1, 2027
    
    
    7.875
    
    
    
    230Endesa Chile (1)
    
    February 1,2037
    
    
    7.325
    
    
    
    220Endesa Chile
    
    February 1, 2097
    
    
    8.125
    
    
    
    200
 
 (1)
    
    Holders of these Yankee Bonds can exercise a put option against Endesa Chile on February 1,
2009.    inter alia
    109




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110




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C. Research and development, patents and licenses, etc.
       
 
  111




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##### Table of Contents




      D. Trend information
   E. Off-balance sheet arrangements
  112




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##### Table of Contents



F.
    
    Tabular disclosures of contractual obligationsThe table below sets forth the Companys cash payment obligations as of December 31, 2006:
 Payment obligations due by period (in U.S.$ million)
Endesa Chile on a consolidated basis
 Jan
    
    
    Jan
    
    
    JanJan
    
    
    2008-
    
    
    2009 -
    
    
    2010 -
    
    
    After2007-
    
    
    Dec
    
    
    Dec
    
    
    Dec
    
    
    DecAs of December 31, 2006
    
    TOTAL
    
    
    Dec 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Bank Debt
    
    
    851
    
    
    
    194
    
    
    
    147
    
    
    
    82
    
    
    
    136
    
    
    
    292Local Bonds
    
    
    947
    
    
    
    60
    
    
    
    32
    
    
    
    184
    
    
    
    236
    
    
    
    435Yankee Bonds (1)
    
    
    1,891
    
    
    
    25
    
    
    
    399
    
    
    
    620
    
    
    
    0
    
    
    
    846Other debt (2)
    
    
    215
    
    
    
    59
    
    
    
    37
    
    
    
    32
    
    
    
    30
    
    
    
    58Interest Expenses
    
    
    2,428
    
    
    
    316
    
    
    
    284
    
    
    
    225
    
    
    
    185
    
    
    
    1,418Pension and postretirement obligations
(3)
    
    
    78
    
    
    
    0
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    63Contractual Operational obligations (4)
    
    
    1,016
    
    
    
    333
    
    
    
    179
    
    
    
    173
    
    
    
    165
    
    
    
    166Operational Leases (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    7,426
    
    
    
    987
    
    
    
    1,083
    
    
    
    1,321
    
    
    
    757
    
    
    
    3,278
 
 (1)
    
    Includes Private Placements of Pehuenche for US$ 25 million. Net of Mark-to-Market
(positive $ 0.6 million) of Cross Currency Swaps associated to $ 400 million Yankee Bond all
of which mature in 2008.(2)
    
    Includes Endesa Chile capital lease obligations for a total of $ 47.7 million and the Mutual
Financing Agreement with Peruana de Energía S.A. (Perené) of $ 8.8 million and includes
Hidroinvests debt for $ 9.6 million. Additionally includes Endesa Costaneras debt with
Mitsubishi Corporation for $ 147.5 million.(3)
    
    All of our pension and postretirement plans are unfunded. Cash flows estimated in the table
are based on future undiscounted payments necessary to meet all of our pension and
post-retirement obligations.(4)
    
    After December 2009 figure corresponds to the expected weighted average yearly obligation.
In addition to the contractual operational obligations set forth above, annual payments of
electricity purchase contacts that correspond to derivative instruments are quantified in Item
11. Market Risks-Commodity Price Risk.(5)
    
    We do not have any material operating lease obligations. G. Safe Harbor
  
 Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
   113




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##### Table of Contents



CurrentPosition
    
    Expiration ofName
    
    Position
    
    Held Since
    
    Current TermDirectorsMario Valcarce D. (1)(3)
    
    Chairman
    
    2006
    
    2007Pedro Larrea P. (1)(5)
    
    Vice Chairman
    
    2006
    
    2007José Fernández O. (1)(4)
    
    Director
    
    2005
    
    2007Leonidas Vial E. (1)
    
    Director
    
    1995
    
    2007Jaime Bauzá B. (2)(3)(4)
    
    Director
    
    1999
    
    2007Carlos Torres V. (1)(5)
    
    Director
    
    2002
    
    2007Héctor López V. (1)(5)
    
    Director
    
    2005
    
    2007Jaime Estévez V. (2)(3)
    
    Director
    
    2006
    
    2007Enrique García A. (1)(4)
    
    Director
    
    2003
    
    2007
 Current PositionName
    
    Position
    
    Held SinceExecutive OfficersRafael Mateo A
    
    Chief Executive Officer
    
    2005Juan Benabarre B
    
    Production & Transmission Officer
    
    2005Rafael Errázuriz R
    
    Energy Planning Officer
    
    2001Renato Fernández B
    
    External Affairs Officer
    
    2003Manuel Irarrázaval A
    
    Chief Financial Officer
    
    2006Claudio Iglesis G
    
    Generation Chile Officer
    
    1999Carlos Martín V
    
    General Counsel
    
    1996Juan Carlos Mundaca A
    
    Human Resources Officer
    
    2000Julio Valbuena S
    
    Planning & Control Officer
    
    2002José Venegas M
    
    Trading & Marketing Officer
    
    2001
 
 (1)
    
    Member designated in representation of Enersis.(2)
    
    Independent member, not designated by any particular shareholder(3)
    
    Member of the Directors Committee.(4)
    
    Member of the Audit Committee.(5)
    
    Executive of ENDESA, S.A.. Directors
 Mario Valcarce D. . Pontificia
Universidad Católica de Valparaíso
 Pedro Larrea P. Endesa Internacional, Nuclenor Apx Universidad Politécnica de Madrid INSEAD
 José Fernández O. Aldeasa TYP (Grupo Pascual Universidad Complutense de
Madrid
 114




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##### Table of Contents



Universidad Politécnica de Madrid Universidad Complutense de Madrid Universidad Politécnica de Madrid
 Leonidas Vial E. Empresas
Santa Carolina S.A., Cía. Industrial El Volcán S.A. Inversiones Industriales Colina S.A.,
Inversiones Industriales Lo Valdés S.A. Las Américas Cía. de Seguros de Vida S.A.
 Jaime Bauzá B. Empresa Eléctrica Pehuenche S.A. Gener S.A. Chilgener S.A. Gener S.A. Pontificia Universidad Católica de Chile
 Carlos Torres V. Auna Operadores de
Telecomunicaciones S.A. Universidad Nacional de Educación a Distancia
 Héctor López V. ICADE
 Jaime Estévez V Universidad de Chile Universidad
de Chile Pontificia Universidad Católica de Chile Università degli Studi di Roma La
Sapienza" BancoEstado AFP Provida AFP Protección El Mercurio, Fundación de Ayuda a la
Cruz Roja Codelco Universidad de
Chile.
 Enrique García A. Distrilec Inversora Edesur Escuela Técnica Superior de ICCP
 Executive Officers
 Rafael Mateo A . Unipede
 115




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##### Table of Contents



Universidad de
Zaragoza Instituto de Estudios Superiores de la Empresa INSEAD
 Juan Benabarre B. Universidad de Chile Universidad Adolfo Ibáñez
 Rafael Errázuriz R. Universidad de Santiago
 Renato Fernández B. Hill & Knowlton Captiva Universidad Gabriela
Mistral
 Manuel Irarrázaval A. Viña Santa Rita, , Pontificia Universidad Católica de Chile Pontificia Universidad Católica de Chile
 Claudio Iglesis G. Universidad de
Chile
 Carlos Martín V. Universidad
Católica de Valparaíso Universidad de Navarra,
 Juan Carlos Mundaca A. Universidad de Santiago
 Julio Valbuena S . Instituto de Estudios Superiores de la Empresa Escuela Técnica Superior de Ingenieros de Caminos, Canales y
Puertos Universidad Politécnica de Madrid
 José Venegas M. Pontificia Universidad Católica de Chile Universidad Adolfo Ibáñez
 B. Compensation
  116




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##### Table of Contents



Year ended December 31, 2006 (In thousands of Ch$)Board
    
    
    BoardCompensation
    
    
    CompensationFrom
    
    
    From
    
    
    DirectorDirector
    
    Endesa Chile
    
    
    Subsidiaries
    
    
    Committee
    
    
    Participation
    
    
    TotalMario Valcarce D
    
    
    8,343
    
    
    
    1,601
    
    
    
    1,322
    
    
    
    
    
    
    
    11,266Luis Rivera N
    
    
    34,348
    
    
    
    
    
    
    
    6,599
    
    
    
    
    
    
    
    40,947Antonio Pareja M
    
    
    20,812
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,812Jaime Bauzá B
    
    
    20,685
    
    
    
    
    
    
    
    9,901
    
    
    
    
    
    
    
    30,586Jaime Estevez V
    
    
    17,343
    
    
    
    
    
    
    
    6,599
    
    
    
    
    
    
    
    23,942Antonio Tuset J
    
    
    3,342
    
    
    
    
    
    
    
    1,984
    
    
    
    
    
    
    
    5,326Leonidas Vial E
    
    
    18,705
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,705Pedro Larrea P
    
    
    6,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,257Carlos Torres V
    
    
    18,044
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,044José Fernández O
    
    
    20,024
    
    
    
    
    
    
    
    2,641
    
    
    
    
    
    
    
    22,665Héctor López V
    
    
    20,685
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,685Enrique García A
    
    
    20,685
    
    
    
    
    
    
    
    2,641
    
    
    
    
    
    
    
    23,326Total
    
    
    209,273
    
    
    
    1,601
    
    
    
    31,687
    
    
    
       
    
    
    
    242,561
   C. Board practices
 Corporate Governance
 estatutos
  117




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##### Table of Contents



estatutos estatutos
  Estatuto del Directivo
 Bases del Gobierno Corporativo
      Compliance with NYSE Listing Standards on Corporate Governance
  Independence and Functions of the Audit Committee
   118




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##### Table of Contents



Comité de Directores Comité de Directores Comité de
Directores Comité de
Directores
 Comité de Directores
 
    
    examination of Annual Report, Financial Statements and the Reports of the External
Auditors and Inspectors of the Accounts;
    
    formulation of the proposal to the Board of Directors for the selection of external
auditors and private rating agencies:
    
    examination of information related to operations by the Company with related parties
and/or related to operations in which the Company board members or relevant executive
officers may have personal interest;
    
    examination of the compensation framework and plans for managers and executive officers;
and
    
    any other function mandated to the committee by the estatutos, the board of directors or
the shareholders of the company.The current members of this Committee are Mario Valcarce D., Jaime Bauzá B. and Jaime
Estévez V.
  Corporate Governance Guidelines
 Bases del Gobierno Corporativo
 D. Employees
  Company
    
    2004
    
    2005
    
    2006In ArgentinaEndesa Costanera
    
    
    262
    
    
    
    262
    
    
    
    267El Chocón
    
    
    49
    
    
    
    49
    
    
    
    49Total personnel in Argentina
    
    
    311
    
    
    
    311
    
    
    
    316In Brazil (1)Cachoeira Dourada
    
    
    53
    
    
    
    0
    
    
    
    0Total personnel in Brazil
    
    
    53
    
    
    
    0
    
    
    
    0In ChileEndesa Chile
    
    
    473
    
    
    
    484
    
    
    
    501Pehuenche
    
    
    3
    
    
    
    3
    
    
    
    3Pangue
    
    
    0
    
    
    
    0
    
    
    
    0San Isidro
    
    
    2
    
    
    
    0
    
    
    
    0
 119




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##### Table of Contents



Company
    
    2004
    
    2005
    
    2006Celta
    
    
    1
    
    
    
    1
    
    
    
    1Ingendesa (2)
    
    
    221
    
    
    
    253
    
    
    
    261Túnel El Melón
    
    
    25
    
    
    
    24
    
    
    
    23Total personnel in Chile
    
    
    725
    
    
    
    765
    
    
    
    789In ColombiaEmgesa
    
    
    285
    
    
    
    292
    
    
    
    341Betania
    
    
    34
    
    
    
    34
    
    
    
    35Total personnel in Colombia
    
    
    319
    
    
    
    326
    
    
    
    376In PeruEdegel
    
    
    154
    
    
    
    158
    
    
    
    200Total personnel in Peru
    
    
    154
    
    
    
    158
    
    
    
    200Total personnel of Endesa Chile and Subsidiaries
    
    
    1,562
    
    
    
    1,560
    
    
    
    1,681
 
 (1)
    
    As of October 1, 2005 Centrais Elétricas Cachoeira Dourada S.A. is no longer a subsidiary of
Endesa Chile. See Item 4. Information on the Company C. Organizational Structure for
details.(2)
    
    Ingendesa figure includes Ingendesa employees located in Peru and employees of Ingendesas
subsidiary in Brazil. The
    
    following table provides the total number of temporary employees of our companies for the
last three fiscal years:
 Company
    
    2004
    
    2005
    
    2006In ArgentinaEndesa Costanera
    
    
    0
    
    
    
    0
    
    
    
    0El Chocón
    
    
    0
    
    
    
    0
    
    
    
    0Total temporary personnel in Argentina
    
    
    0
    
    
    
    0
    
    
    
    0In Brazil (1)Cachoeira Dourada
    
    
    0
    
    
    
    0
    
    
    
    0Total temporary personnel in Brazil
    
    
    0
    
    
    
    0
    
    
    
    0In ChileEndesa Chile
    
    
    9
    
    
    
    3
    
    
    
    10Pehuenche
    
    
    0
    
    
    
    0
    
    
    
    0Pangue
    
    
    0
    
    
    
    0
    
    
    
    0San Isidro
    
    
    0
    
    
    
    0
    
    
    
    0Celta
    
    
    0
    
    
    
    0
    
    
    
    0Ingendesa (2)
    
    
    133
    
    
    
    272
    
    
    
    315Túnel El Melón
    
    
    0
    
    
    
    1
    
    
    
    2Total temporary personnel in Chile
    
    
    142
    
    
    
    276
    
    
    
    327In ColombiaEmgesa
    
    
    0
    
    
    
    0
    
    
    
    0Betania
    
    
    0
    
    
    
    0
    
    
    
    0Total temporary personnel in Colombia
    
    
    0
    
    
    
    0
    
    
    
    0In PeruEdegel
    
    
    3
    
    
    
    9
    
    
    
    20Total temporary personnel in Peru
    
    
    3
    
    
    
    9
    
    
    
    20Total temporary personnel in Endesa Chile and Subsidiaries
    
    
    145
    
    
    
    285
    
    
    
    347
 120




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##### Table of Contents



E. Share ownership.
  
 Item 7. Major Shareholders and Related Party Transactions
 A. Major shareholders.
   As of December 31, 2006Shares
    
    Percentage ofBeneficially
    
    Total SharesOwned
    
    OutstandingEnersis (1)
    
    
    4,919,489,119
    
    
    
    59.98
    %Citibank, N.A.(2)
    
    
    359,594,160
    
    
    
    4.38
    %Directors and executive officers (15 persons)(3)
    
    
    284,035
    
    
    
    0.003
    %
 
 (1)
    
    ENDESA, S.A., as of December 31, 2006, directly or indirectly, owned 60.6% of the share
capital of Enersis, which holds 60.0% of Endesa Chile.(2)
    
    Represents the number of shares held in the form of American Depositary Shares (ADS). The
ADS are evidenced by American Depositary Receipts (ADRs). The ADRs are outstanding under a
Deposit Agreement dated as of August 3, 1994 (the Deposit Agreement) among Endesa Chile,
Citibank N.A. as depositary and the holders from time to time of ADRs issued thereunder.(3)
    
    Excludes shares held by Enersis.  121




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B. Related party transactions
     122




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##### Table of Contents



C. Interests of experts and counsel.
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information
  Legal Proceedings
 Chile
    Proceedings for annulment and other actions presented by Punta de Lobos S.A. against Endesa Chile,
Celta and others
 5
 
 5
    
    In August 2002, Endesa Chile and its
subsidiary Celta were notified of a petition, in which Punta de Lobos S.A.
requested to nullify the concessions, transfers or any other legal actions
undertaken by Endesa Chile for the benefit of Celta concerning the assets that
Endesa Chile holds in its maritime concession in Puerto Patache. Punta de
Lobos also requested the discontinuance of the maritime concession granted to
Endesa Chile by the State of Chile. In 2003, Punta de Lobos initiated another
suit against Endesa Chile, Celta and Terminal Marítimo Minera Patache
S.A., principally requesting to nullify the promise of sale of Puerto Patache
by Endesa Chile and Celta to Terminal Marítimo Minera Patache S.A. agreed
upon in November 2001. In February 2003, Punta de Lobos filed another claim in
order to impede new administrative actions related to the sale of Puerto
Patache. 123




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##### Table of Contents



placed bids for Puerto Patache. After such declaration, Celta and Endesa Chile
initiated private negotiations with Terminal Marítimo Minera Patache that ended in the execution of
a promise of sale agreement subject to certain conditions for the sale of Puerto Patache and the
transfer of the maritime concession.
  Dividend Policy
        124




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##### Table of Contents



Dividends
  Dividends Distributed (1)Year
    
    Ch$ per Share (2)
    
    Ch$ per Share (3)
    
    $ per 30 Shares (ADS) (4)2002
    
    
    
    
    
    
    
    
    
    
    2003
    
    
    2.30000
    
    
    
    2.49630
    
    
    
    0.1412004
    
    
    4.13000
    
    
    
    4.37697
    
    
    
    0.2472005
    
    
    5.82000
    
    
    
    5.94222
    
    
    
    0.3352006(5)
    
    
    13.41
    
    
    
    13.41
    
    
    
    0.447
 
 (1)
    
    This chart details dividends payable in any given year, not necessarily paid that same
year, and do not reflect reduction for any applicable Chilean withholding taxes.(2)
    
    Amounts shown are in historical pesos.(3)
    
    Amounts shown are expressed in constant pesos as of December 31, 2006.(4)
    
    The dollar per ADS amount has been calculated by applying the exchange rate of Ch$ 532.39 =
$ 1.00, the Observed Exchange Rate prevailing on December 31, 2006, to the constant peso
amount.(5)
    
    Dividend approved at the Annual Shareholders Meeting of Endesa Chile held on April 24,
2007. 125




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B. Significant Changes.
  
 Item 9. The Offer and Listing
 A. Offer and listing details.
 Market Price and Volume Information
    126




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Santiago StockExchange (1)(2)
    
    NYSE (1)Ch$ per Share
    
    $ per ADSMost Recent Six Months
    
    High
    
    Low
    
    High
    
    LowApril 2007
    
    
    870.00
    
    
    
    718.50
    
    
    
    49.40
    
    
    
    39.90March 2007
    
    
    734.00
    
    
    
    678.00
    
    
    
    40.78
    
    
    
    37.25February 2007
    
    
    765.00
    
    
    
    680.00
    
    
    
    43.08
    
    
    
    37.05January 2007
    
    
    715.00
    
    
    
    648.50
    
    
    
    40.13
    
    
    
    36.31December 2006
    
    
    656.70
    
    
    
    603.50
    
    
    
    37.32
    
    
    
    34.40November 2006
    
    
    621.00
    
    
    
    562.00
    
    
    
    35.29
    
    
    
    32.202006 Annuallst Quarter
    
    
    565.00
    
    
    
    511.00
    
    
    
    32.19
    
    
    
    29.162nd Quarter
    
    
    542.00
    
    
    
    450.00
    
    
    
    31.00
    
    
    
    24.573rd Quarter
    
    
    543.01
    
    
    
    464.50
    
    
    
    30.55
    
    
    
    25.444th Quarter
    
    
    656.70
    
    
    
    537.00
    
    
    
    37.32
    
    
    
    30.052005 Annual
    
    
    495.50
    
    
    
    429.65
    
    
    
    27.13
    
    
    
    22.07lst Quarter
    
    
    393.00
    
    
    
    313.50
    
    
    
    20.29
    
    
    
    16.162nd Quarter
    
    
    505.00
    
    
    
    428.00
    
    
    
    25.85
    
    
    
    19.503rd Quarter
    
    
    523.00
    
    
    
    465.10
    
    
    
    29.87
    
    
    
    24.104th Quarter
    
    
    561.00
    
    
    
    512.00
    
    
    
    32.50
    
    
    
    28.532004 Annual
    
    
    347.50
    
    
    
    225.00
    
    
    
    18.66
    
    
    
    11.502003 Annual
    
    
    253.00
    
    
    
    172.00
    
    
    
    12.02
    
    
    
    7.022002 Annual
    
    
    236.00
    
    
    
    152.50
    
    
    
    10.73
    
    
    
    6.05
 
 (1)
    
    Sources: Santiago Stock Exchange, Official Quotation Bulletin, NYSE.(2)
    
    Nominal price in pesos per Share at trade date. B. Plan of Distribution
  C. Markets
  Telepregón
  127




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Bolsa de Valores
Latinoamericanos de la Bolsa de Madrid  
 D. Selling shareholders.
  E. Dilution.
  F. Expense of the issue.
  
 Item 10. Additional Information
 A. Share capital.
  B. Memorandum and Articles of Association.
 Description of Share Capital
  General
 Ley de Sociedades Anónimas 18,046
 Superintendencia de Valores y
Seguros Ley de Mercado de
Valores 18,045
 128




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##### Table of Contents



Reporting Requirements Regarding Acquisition or Sale of Shares
  
    
    any direct or indirect acquisition or sale of shares made by a holder that owns directly
or indirectly, 10% or more of a publicly held limited liability companys subscribed
capital;
    
    any direct or indirect acquisition or sale of shares made by a holder that, due to an
acquisition of shares of such publicly held company, results in the holder acquiring
directly or indirectly of 10% or more of a publicly held companys subscribed capital; and
    
    any direct or indirect acquisition or sale of shares in any amount, made by a director,
receiver, principal executive, general manager or manager of a publicly held company.
  Norma de Carácter General
  Register
  Corporate Object and Purpose
  Board of Directors
     129




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Certain Powers of the Board of Directors
  
    
    the directors power, in the absence of an independent quorum, to vote compensation to
themselves or any members of their body;
    
    borrowing powers exercisable by the directors and how such borrowing powers can be varied;
    
    retirement or non-retirement of directors under an age limit requirement; or
    
    number of shares, if any, required for directors qualification.
 Certain Provisions Regarding Shareholder Rights
   
    
    redemption provisions;
    
    sinking funds; or
    
    liability to further capital calls by the Company.
  Capitalization
 pro rata
  130




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##### Table of Contents



Preemptive Rights and Increases of Share Capital
   Shareholders Meetings and Voting Rights
 El Mercurio de Santiago
  
    
    a transformation of the company into a form other than a sociedad anónima abierta (a
publicly held limited liability company) under the Chilean Companies Act, a merger or
division of the company;
    
    an amendment to the term of duration or early dissolution;
    
    a change in the corporations domicile;
    
    a decrease of corporate capital;
    
    approval of capital contributions in kind and assessment of assets that do not consist of money;
    
    modification of the authority reserved to shareholders or limitations on the board of directors;
    
    reduction in the number of members of the board of directors;
    
    disposition of 50% or more of the assets of the corporation, whether it includes
disposition of liabilities or not, as well as the approval or the amendment of the business
plan which contemplates the disposition of assets for such amount;
    
    the form of distributing corporate benefits;
    
    issue of guarantees for third parties liabilities which exceed 50% of the assets, but
if the third party is a subsidiary of the company, the approval of the board of directors
is sufficient;
    
    the purchase of the corporations own shares; or
 131




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##### Table of Contents




    
    certain remedies for the nullification of the corporate by-laws.
       Dividends and Liquidation Rights
  132




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##### Table of Contents



Approval of Financial Statements
  Change of Control
 Norma de Carácter General
 Acquisition of Shares
  Right of Dissenting Shareholders to Tender Their Shares
   133




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##### Table of Contents




    
    the transformation of the company into an entity which is not a sociedad anónima abierta
governed by Chilean Companies Act;
    
    the merger of the company with another company;
    
    disposition of 50% or more of the assets of the corporation, whether it includes
disposition of liabilities or not, as well as any business plan which contemplates the
disposition of assets for an amount greater than such percentage;
    
    issue of guarantees for third parties liabilities which exceed 50% of the assets, but
if the third party is a subsidiary of the company, the approval of the board of directors
is sufficient;
    
    the creation of preferential rights for a class of shares or an amendment to the
existing ones. In this case the right to withdraw only accrues to the dissenting
shareholders of the class or classes of shares adversely affected;
    
    certain remedies for the nullification of the corporate by-laws; and
    
    such other causes as may be established by the law and by the companys by-laws.
 Investments by AFPs
 Administradoras de Fondos y Pensiones
  Registrations and Transfers
 Depósito
Central de Valores S.A. Depósito de Valores
 Foreign Investment Contract and Chapter XXVI
  134




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##### Table of Contents




    
    cash dividends;
    
    proceeds from the sale in Chile of Withdrawn Shares subject to receipt by the Central
Bank of a certificate from the holder of the Withdrawn Shares (or from an institution
authorized by the Central Bank) that such holders residence and domicile are outside Chile
and a certificate from a Chilean stock exchange (or from a brokerage or securities firm
established in Chile) that such Withdrawn Shares were sold on a Chilean stock exchange;
    
    proceeds from the sale in Chile of rights to subscribe for additional shares of Common Stock;
    
    proceeds from the liquidation, merger or consolidation of our company; and
    
    other distributions, including without limitation those resulting from any
recapitalization, as a result of holding shares of Common Stock represented by ADSs or
Withdrawn Shares.
    135




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The Compendium and International Bond Issuances
  encaje encaje encaje encaje
 C. Material contracts.
 None.
 D. Exchange controls.
     136




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##### Table of Contents




    
    the prior Central Bank authorization requirement for the entry of capital associated
with foreign loans, investments, capital contributions, bonds and ADRs;
    
    the prior Central Bank authorization for capital remittances associated with returns of
capital, dividends, and other benefits related to capital contributions, investments and
prepayment of foreign loans;
    
    the prior Central Bank authorization for the return of capital, profits and other
benefits associated with investments made by Chilean residents abroad;
    
    the limitations to the special prepayment and acceleration clauses contained in foreign loans;
    
    the restrictions of minimum risk classification and the weighted duration for the issuance of bonds;
    
    the limitations with respect to the currencies in which external debt can be issued or contracted;
    
    the restrictions to the issue of ADRs; and
    
    the reserve requirement on funds coming from abroad (which was already 0%).
 E. Taxation.
 Chilean Tax Considerations
    
    
    in the case of an individual, a person who is not a resident in Chile; for purposes of
Chilean taxation, an individual holder is resident in Chile if he or she has resided in
Chile for more than six months in one calendar year, or a total of more than six months in
two consecutive fiscal years; or
    
    in the case of a legal entity, an entity that is not organized under the laws of Chile,
unless the shares or ADSs are assigned to a branch, agent, representative or permanent
establishment of such entity in Chile.
 Taxation of Shares and ADSs
 Taxation of Cash Dividends and Property Distributions
  137




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##### Table of Contents



Company taxable income
    
    
    100.0Chilean corporate income tax (17% of Ch$100)
    
    
    (17
    )Net distributable income
    
    
    83Dividend distributed (50% of net distributable income)
    
    
    41.5Withholding tax (35% of the sum of Ch$41.5 dividend plus Ch$8.5)
    
    
    (17.5
    )Credit for 50% of Chilean corporate income tax
    
    
    8.5Net withholding tax
    
    
    (9
    )Net dividend received
    
    
    32.5Effective dividend withholding rate
    
    
    21.69
    %
  Effective Dividend
    
    (Withholding tax rate)  (Chilean corporate income tax rate)Withholding Tax Rate
    
    1  (Chilean corporate income tax rate)
   Taxation on Sale or Exchange of Shares or ADSs
  Taxation on shares acquired on or before April 19, 2001
  
    
    has held the shares for less than one year since exchanging ADSs for the shares; or
    
    acquired and disposed of the shares in the ordinary course of its business or as an
habitual trader of shares.
  Taxation on shares acquired after April 19, 2001
  138




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##### Table of Contents



Taxation of Rights and ADS Rights
  Other Chilean Taxes
  United States Tax Considerations
   
    
    certain financial institutions;
    
    a dealer in securities or foreign currencies;
    
    a trader in securities that elects to use a mark-to-market method of accounting for your
securities holdings;
    
    an insurance company;
    
    a tax-exempt entity;
    
    a person subject to the alternative minimum tax;
    
    partnerships or other entities classified as partnerships for federal income tax purposes;
    
    a person who will hold our ADSs or shares as part of a straddle, hedging transaction,
conversion transaction or other integrated transaction;
    
    a person that has a principal place of business or tax home outside the United States,
or a person whose functional currency is not the dollar;
 139




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##### Table of Contents




    
    a person who acquired our ADSs pursuant to the exercise of an employee stock option or
otherwise as compensation; and
    
    a person owning directly, indirectly or by attribution 10% or more of our capital stock.
    Taxation of Distributions
   Effect of Chilean withholding taxes
   140




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##### Table of Contents



Sale or other disposition
  Passive Foreign Investment Company rules
   Backup withholding and other reporting requirements
  F. Dividends and paying agents.
  G. Statement by experts.
  H. Documents on display.
 http://www.sec.gov
 141




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##### Table of Contents



I. Subsidiary Information.
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
   Commodity Price Risk
      142




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##### Table of Contents



FairValue [in2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    $ millions]CHILEENDESA CHILEPurchase of
Electricity
    
    GWh
    
    
    720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    720
    
    
    
    (14.52
    )Weighted Average
Price
    
    $/MWh
    
    
    55.97
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BRAZILCIENSale of Electricity
    
    GWh
    
    
    1,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,392
    
    
    
    6.02Weighted Average
Price
    
    $/MWh
    
    
    38.16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38.16Purchase of
Electricity
    
    GWh
    
    
    1,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,392Weighted Average
Price
    
    $/MWh
    
    
    33.77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33.77ARGENTINACEMSASale of Electricity
    
    GWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted Average
Price
    
    $/MWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of
Electricity
    
    GWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted Average
Price
    
    $/MWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    COSTANERA-CBASale of Electricity
    
    GWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted Average
Price
    
    $/MWh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Interest Rate Risk
   143




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##### Table of Contents



As of December 31, 2006Fair2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    value(in millions of constant Ch$)Debt:Fixed rate:Ch$  and UF-denominated
    
    
    836
    
    
    
    550
    
    
    
    550
    
    
    
    77,710
    
    
    
    4,364
    
    
    
    91,022
    
    
    
    175,031
    
    
    
    201,390Weighted average interest rate
    
    
    8.15
    %
    
    
    8.15
    %
    
    
    8.15
    %
    
    
    8.45
    %
    
    
    8.45
    %
    
    
    
    
    
    
    8.24
    %
    
    
    $ denominated
    
    
    76,970
    
    
    
    233,305
    
    
    
    354,972
    
    
    
    62,118
    
    
    
    19,369
    
    
    
    484,889
    
    
    
    1,231,624
    
    
    
    1,439,518Weighted average interest rate
    
    
    8.09
    %
    
    
    8.16
    %
    
    
    8.02
    %
    
    
    8.21
    %
    
    
    8.27
    %
    
    
    
    
    
    
    8.14
    %
    
    
    Other currencies
    
    
    13,934
    
    
    
    43,670
    
    
    
    19,914
    
    
    
    50,062
    
    
    
    63,079
    
    
    
    63,614
    
    
    
    254,273
    
    
    
    268,693Weighted average interest rate
    
    
    8.43
    %
    
    
    9.03
    %
    
    
    8.97
    %
    
    
    9.08
    %
    
    
    8.88
    %
    
    
    6.19
    %
    
    
    8.83
    %
    
    
    Variable rateCh$  and UF-denominatedWeighted average interest rate$ denominated
    
    
    23,696
    
    
    
    46,102
    
    
    
    44,378
    
    
    
    24,450
    
    
    
    30,433
    
    
    
    39,059
    
    
    
    208,119
    
    
    
    205,795Weighted average interest rate
    
    
    8.77
    %
    
    
    8.42
    %
    
    
    8.28
    %
    
    
    8.45
    %
    
    
    9.82
    %
    
    
    
    
    
    
    8.68
    %Other currencies
    
    
    64,403
    
    
    
    3,854
    
    
    
    68,921
    
    
    
    
    
    
    
    
    
    
    
    72,532
    
    
    
    209,711
    
    
    
    204,713Weighted average interest rate
    
    
    11.42
    %
    
    
    11.70
    %
    
    
    11.10
    %
    
    
    11.10
    %
    
    
    11.10
    %
    
    
    
    
    
    
    11.37
    %Total
    
    
    179,839
    
    
    
    327,481
    
    
    
    488,736
    
    
    
    214,340
    
    
    
    117,246
    
    
    
    751,116
    
    
    
    2,078,758
    
    
    
    2,320,108
  As of December 31, 2005Fair2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    value(in millions of constant Ch$)Debt:Fixed rate:Ch$  and UF-denominated
    
    
    147,279
    
    
    
    822
    
    
    
    540
    
    
    
    540
    
    
    
    76,256
    
    
    
    93,602
    
    
    
    319,038
    
    
    
    349,576Weighted average interest rate
    
    
    9.60
    %
    
    
    9.58
    %
    
    
    9.58
    %
    
    
    9.58
    %
    
    
    9.90
    %
    
    
    
    
    
    
    9.62
    %
    
    
    $ denominated
    
    
    119,810
    
    
    
    70,132
    
    
    
    225,085
    
    
    
    335,552
    
    
    
    62,156
    
    
    
    477,629
    
    
    
    1,290,364
    
    
    
    1,406,925Weighted average interest rate
    
    
    8.08
    %
    
    
    8.06
    %
    
    
    8.10
    %
    
    
    7.94
    %
    
    
    8.24
    %
    
    
    
    
    
    
    8.08
    %
    
    
    Other currencies
    
    
    56,582
    
    
    
    17,330
    
    
    
    16,402
    
    
    
    17,881
    
    
    
    34,036
    
    
    
    88,738
    
    
    
    230,967
    
    
    
    257,011Weighted average interest rate
    
    
    9.78
    %
    
    
    9.54
    %
    
    
    9.94
    %
    
    
    9.96
    %
    
    
    9.89
    %
    
    
    
    
    
    
    9.79
    %
    
    
    Variable rateCh$  and UF-denominatedWeighted average interest rate$ denominated (1)
    
    
    -13,602
    
    
    
    3,009
    
    
    
    5,871
    
    
    
    15,389
    
    
    
    18,677
    
    
    
    7,445
    
    
    
    36,788
    
    
    
    37,340Weighted average interest
rate (2)
    
    
    6.51
    %
    
    
    6.57
    %
    
    
    6.26
    %
    
    
    5.10
    %
    
    
    4.55
    %
    
    
    
    
    
    
    6.39
    %Other currencies
    
    
    22,088
    
    
    
    13,138
    
    
    
    
    
    
    
    65,277
    
    
    
    
    
    
    
    
    
    
    
    100,503
    
    
    
    107,892Weighted average interest rate
    
    
    13.75
    %
    
    
    13.20
    %
    
    
    12.80
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.71
    %Total
    
    
    332,155
    
    
    
    104,431
    
    
    
    247,898
    
    
    
    434,639
    
    
    
    191,124
    
    
    
    667,413
    
    
    
    1,977,661
    
    
    
    2,158,744
 
 (1)
    
    During 2006 the negative value of the $ denominated variable rate debt maturity is explained
due to the maturity of the asset part of the Libor  UF
cross-currency swap. 144




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##### Table of Contents



Foreign Currency Risk
     As of December 31, 2006Fair2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    value(in millions of constant Ch$) (1)Debt:Fixed rate$ denominated
    
    
    76,970
    
    
    
    233,305
    
    
    
    354,972
    
    
    
    62,118
    
    
    
    19,369
    
    
    
    484,889
    
    
    
    1,231,624
    
    
    
    1,439,518Other currencies
    
    
    14,769
    
    
    
    44,220
    
    
    
    20,464
    
    
    
    127,772
    
    
    
    67,444
    
    
    
    154,636
    
    
    
    429,304
    
    
    
    470,083Variable rate$ denominated
    
    
    23,696
    
    
    
    46,102
    
    
    
    44,378
    
    
    
    24,450
    
    
    
    30,433
    
    
    
    39,059
    
    
    
    208,119
    
    
    
    205,795Other currencies
    
    
    64,403
    
    
    
    3,854
    
    
    
    68,921
    
    
    
    
    
    
    
    
    
    
    
    72,532
    
    
    
    209,711
    
    
    
    204,713 Other
Instruments (2)$ denominated
    
    
    37,818
    
    
    
    90,524
    
    
    
    2,049
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,391
    
    
    
    130,391Other currencies
    
    
    351,315
    
    
    
    3,221
    
    
    
    8,573
    
    
    
    7,629
    
    
    
    5,967
    
    
    
    41,629
    
    
    
    418,334
    
    
    
    418,334Forward contracts
(receive $ /pay Ch$
- UF)Other foreign
currency
derivatives
    
    
    
    
    
    
    66,549
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,549
    
    
    
    184
 
 (1)
    
    Calculated based on the Observed Exchange Rate as of December 31, 2006, which was Ch $ 532.39
= $ 1.00.(2)
    
    Other instruments include cash, time deposits and short-term accounts receivables.(3)
    
    Fair values were calculated based on the discounted value of future cash flows expected to be
paid (or received), considering current discount rates that reflect the different risks
involved.  145




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##### Table of Contents



As of December 31, 2005FairValue2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    (3)(in millions of constant Ch$) (1)Debt:Fixed rate:$ denominated
    
    
    119,810
    
    
    
    70,132
    
    
    
    225,085
    
    
    
    335,552
    
    
    
    62,156
    
    
    
    477,629
    
    
    
    1,290,364
    
    
    
    1,406,925Other currencies
    
    
    203,860
    
    
    
    18,152
    
    
    
    16,942
    
    
    
    18,421
    
    
    
    110,292
    
    
    
    182,339
    
    
    
    550,006
    
    
    
    606,587Variable rate$ denominated
    
    
    -13,602
    
    
    
    3,009
    
    
    
    5,871
    
    
    
    15,389
    
    
    
    18,677
    
    
    
    7,445
    
    
    
    36,788
    
    
    
    37,340Other currencies
    
    
    22,088
    
    
    
    13,138
    
    
    
    
    
    
    
    65,277
    
    
    
    
    
    
    
    
    
    
    
    100,503
    
    
    
    107,892 Other
Instruments(2)$ denominated
    
    
    32,565
    
    
    
    91,879
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,444
    
    
    
    124,444Other currencies
    
    
    136,001
    
    
    
    308
    
    
    
    2,307
    
    
    
    2,307
    
    
    
    2,307
    
    
    
    16,144
    
    
    
    159,374
    
    
    
    159,374Forward contracts
(receive $ /pay Ch$
- UF)Other foreign
currency
derivatives
    
    
    25,625
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,625
    
    
    
    -12,990
 
 (1)
    
    Calculated based on the Observed Exchange Rate as of December 31, 2005, which was Ch $ 512.50
= $ 1.00.(2)
    
    Other instruments include cash, time deposits and short-term accounts receivables.(3)
    
    Fair values were calculated based on the discounted value of future cash flows expected to be
paid (or received), considering current discount rates that reflect the different risks
involved. D. Safe Harbor
  
 Item 12. Description of Securities other than Equity Securities
  146




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##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  E. Use of proceeds.
  
 Item 15. Controls and Procedures
 (a) Disclosure Controls and Procedures
  (b) Managements Annual Report on Internal Control Over Financial Reporting
    Ernst & Young Ltda.,
 147




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##### Table of Contents



(c) Changes in internal control
  
 Item 16. [Reserved]
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
          www.endesa.cl
 148




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##### Table of Contents



Item 16C. Principal Accountant Fees and Services
  ServicesRendered
    
    2005
    
    
    2006(millions of $)Audit Fees
    
    
    0.64
    
    
    
    0.94Audit-Related Fees (1)
    
    
    0.01
    
    
    
    Tax Fees (2)
    
    
    0.10
    
    
    
    0.04Total
    
    
    0.75
    
    
    
    0.98
 
 (1)
    
    During 2006 and 2005, no significant audit related services were rendered by our external
auditor(2)
    
    During 2006, no significant tax related services were rendered by our external auditor.
Figure for 2005, includes fees paid for tax consultancy work in Peru and Chile (amounted to
USD 99,000 and USD 600, respectively).   Audit committee Pre-Appoval Policies and Procedures
      
    
    The business unit that has requested the service and the audit firm requested to
perform the service must request that the corporate audit manager review the nature of
the service to be provided.
 149




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##### Table of Contents




    
    At that point, the corporate audit department analyzes the request and requires the
audit firm that has been requested to provide the service to issue a certificate signed
by the partner responsible for the audit of our consolidated financial statementes
confirming such audit firms independence.
    
    Finally, the proposal is submitted to the audit and Control Committee for approval
or denial.
   
 Item 16D. Exemptions from Listing Requirements for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Persons
  150




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##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
 Endesa Chile and Subsidiaries
 Index to the Audited Consolidated Financial Statements
 Reports of Independent Registered Public Accounting Firms:Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A.
(Endesa-Chile) 2004, 2005 and 2006
    
    
    F  1Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A.
(Endesa-Chile) about the management assessment of internal control and about the effectiveness of
internal control 2006
    
    
    F - 2Report of Independent Registered Public Accounting Firm  Endesa Argentina S.A. 2004, 2005 and 2006
    
    
    F - 3Report of Independent Registered Public Accounting Firm  Central Hidroeléctrica de Betania S.A.
E.S.P. 2004, 2005 and 2006
    
    
    F  4Report of Independent Registered Public Accounting Firm  Endesa Brasil S.A. 2005 and 2006
    
    
    F - 5Report of Independent Registered Public Accounting Firm  Companhia de Interconexao Energética S.A.
2005
    
    
    F  6Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2005
    
    
    F  7Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2005
    
    
    F  8Report of Independent Registered Public Accounting Firm  Companhia de Interconexao Energética S.A.
2006
    
    
    F - 9Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2006
    
    
    F - 10Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2006
    
    
    F - 11Report of Independent Registered Public Accounting Firm  Transportadora de Energía S.A. 2006
    
    
    F  12Report of Independent Registered Public Accounting Firm  Compañía de Transmisión del Mercosur S.A.
2006
    
    
    F  13Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2005 and 2006
    
    
    F - 14Consolidated Statements of Income for the years ended December 31, 2004, 2005 and 2006
    
    
    F - 16Consolidated Statements of Shareholders Equity for the years ended December 31, 2004, 2005 and 2006
    
    
    F  17Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006
    
    
    F  19Notes to the Consolidated Financial Statements
    
    
    F - 21Schedule I  Condensed financial information of Empresa Nacional de Electricidad S.A. (Endesa-Chile)
    
    
    G - 1
 
 Item 19. Exhibits
 Exhibit
    
    Description1.1
    
    By-laws (Estatutos) of Empress Nacional de Electricidad S.A., as amended (English translation).8.1
    
    List of Subsidiaries.12.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.12.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.13.1
    
    Certification of Chief Executive
Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
  151




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##### Table of Contents



SIGNATURES
  EMPRESA NACIONAL DE ELECTRICIDAD S.ABy:
    
    /s/ Rafael Mateo A.Name: Rafael Mateo A.Title: Chief Executive Officer
  152




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##### Table of Contents



Endesa-Chile and Subsidiaries
 Index to the Audited Consolidated Financial Statements
 Reports of Independent Registerted Public Accounting Firms:Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A.
(Endesa-Chile) 2004, 2005 and 2006
    
    
    F  1Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A.
(Endesa-Chile) about the management assessment of internal control and about the effectiveness of
internal control 2006
    
    
    F - 2Report of Independent Registered Public Accounting Firm  Endesa Argentina S.A. 2004, 2005 and 2006
    
    
    F - 3Report of Independent Registered Public Accounting Firm  Central Hidroeléctrica de Betania S.A.
E.S.P. 2004, 2005 and 2006
    
    
    F  4Report of Independent Registered Public Accounting Firm  Endesa Brasil S.A. 2005 and 2006
    
    
    F - 5Report of Independent Registered Public Accounting Firm  Companhia de Interconexao Energética S.A.
2005
    
    
    F  6Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2005
    
    
    F  7Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2005
    
    
    F  8Report of Independent Registered Public Accounting Firm  Companhia de Interconexao Energética S.A.
2006
    
    
    F - 9Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2006
    
    
    F - 10Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2006
    
    
    F - 11Report of Independent Registered Public Accounting Firm  Transportadora de Energía S.A. 2006
    
    
    F  12Report of Independent Registered Public Accounting Firm  Compañía de Transmisión del Mercosur S.A.
2006
    
    
    F  13Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2005 and 2006
    
    
    F - 14Consolidated Statements of Income for the years ended December 31, 2004, 2005 and 2006
    
    
    F - 16Consolidated Statements of Shareholders Equity for the years ended December 31, 2004, 2005 and 2006
    
    
    F  17Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006
    
    
    F  19Notes to the Consolidated Financial Statements
    
    
    F - 21Schedule I  Condensed financial information of Empresa Nacional de Electricidad S.A. (Endesa-Chile)
    
    
    G - 1
 Ch$
    
    -
    
    Chilean pesosUS$
    
    -
    
    United States dollarsUF
    
    -
    
    The UF is a Chilean inflation-indexed, peso-denominated
monetary unit that is set daily in advance based on the
previous months inflation rate (see Note 2 (b)).ThCh$
    
    -
    
    Thousands of Chilean pesosThUS$
    
    -
    
    Thousands of United States dollars
 Application of Constant Chilean Pesos




---



##### Table of Contents



§
    
    Huérfanos 770,
5° Piso
    
    §
    
    Teléfono
    
    :
    

(56-2)
676 1000Santiago, Chile
    
    
    
    Fax
    
    :
    

(56-2) 676 1010Casilla
    
    :
    
    2823
 
 Report of Independent Registered Public Accounting Firm
 
       
  F-1




---



##### Table of Contents



§
    
    Huérfanos 770,
5° Piso
    
    §
    
    Teléfono
    
    :
    

(56-2)
676 1000Santiago, Chile
    
    
    
    Fax
    
    :
    

(56-2) 676 1010Casilla
    
    :
    
    2823
 
 Report of Independent Registered Public Accounting Firm
 
       /s/ Ernst & Young  
  F-2




---



##### Table of Contents



Deloitte & Co. S.R.L.Florida 234, Piso 5°C1005AAFCiudad Autónomade Buenos AiresArgentinaTel: (54-11) 4320-2700Fax: (54-11) 4325-8081/4326-7340www.deloitte.com
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Endesa Argentina S.A.:
     DELOITTE & Co. S.R.L.
  
 F-3




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##### Table of Contents



Deloitte & Touche Ltda.Cra.  7 N° 74 - 09A.A. 075874Nit. 860.005.813-4Bogotá D.C.ColombiaTel   +57(1)  5461810 - 5461815Fax +57(1)2178088www.deloitte.com.co
 
 Report of Independent Registered Public Accounting Firm
 
      
 Auditoría.
Impuestos. Consultoría Finanzas Corporativas.
    
    Una firma membro de Deloitte Touche Tohmatsu
 F-4




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##### Table of Contents



Deloitte & ToucheSociedad de Auditores y Consultores Ltda.RUT: 80.276.200-3Av. Providencia 1760Pisos 6, 7, 8 y 9Providencia, SantiagoChileFono: (56-2) 270 3000Fax: (56-2) 374 9177e-mail: deloittechile@deloitte.comwww.deloitte.cl
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 Una firma miembro deDeloitte Touche Tohmatsu
 F-5




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##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    Praia de Botafogo, 300 -
13o andar
    
    §
    Fone: (55) (21) 2109-140022250-040  Rio de Janeiro, RJ, Brasil
    
    
    Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 CIEN-Companhia de Interconexão Energética
     
  
 F-6




---



##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    
    Praia de Botafogo, 300 - 13° andar
22250-040  Rio de Janeiro, RJ, Brasil
    
    §
    
    Fone: (55) (21) 2109-1400
Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Centrais Elétricas Cachoeira Dourada S.A.  CDSA
     
  
 F-7




---



##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    
    Praia de Botafogo, 300 - 13° andar
22250-040  Rio de Janeiro, RJ, Brasil
    
    §
    
    Fone: (55) (21) 2109-1400
Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Central Geradora Termelétrica Fortaleza  CGTF
     
  
 F-8




---



##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    
    Praia de Botafogo, 300 - 13° andar
22250-040  Rio de Janeiro, RJ, Brasil
    
    §
    
    Fone: (55) (21) 2109-1400
Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 CIEN  Companhia de Interconexao Energetica
     
  
 F-9




---



##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    
    Praia de Botafogo, 300 - 13° andar
22250-040  Rio de Janeiro, RJ, Brasil
    
    §
    
    Fone: (55) (21) 2109-1400
Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Centrais Elétricas Cachoeira Dourada  CDSA
     
  
 F-10




---



##### Table of Contents



(ERNST & YOUNG LOGO)
    
    §
    
    Praia de Botafogo, 300 - 13° andar
22250-040  Rio de Janeiro, RJ, Brasil
    
    §
    
    Fone: (55) (21) 2109-1400
Fax: (55) (21) 2109-1600www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Central Geradora Termeletrica Fortaleza  CGTF
     
  
 F-11




---



##### Table of Contents



Deloitte & Co. S.R.L.Florida 234, Piso 5°C1005AAFCiudad Autónomade Buenos AiresArgentinaTel: (54-11) 4320-2700Fax: (54-11) 4325-8081/4326-7340www.deloitte.com
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Transportadora de Energía S.A.:
     DELOITTE & Co. S.R.L.
  
 F-12




---



##### Table of Contents



Deloitte & Co. S.R.L.Florida 234, Piso 5°C1005AAFCiudad Autónomade Buenos AiresArgentinaTel: (54-11) 4320-2700Fax: (54-11) 4325-8081/4326-7340www.deloitte.com
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Compañía de Transmisión del Mercosur S.A.:
     DELOITTE & Co. S.R.L.
  
 F-13




---



##### Table of Contents



Endesa-Chile and Subsidiaries
 
 Audited Consolidated Balance Sheets
 Translation of financial statements originally issued in Spanish-See Note 2 (a)
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 As of December 31,Note
    
    2005
    
    2006
    
    2006ThCh$
    
    ThCh$
    
    ThUS$(Note 2 (b))AssetsCurrent assets:Cash
    
    
    
    
    
    
    10,233,607
    
    
    
    21,356,149
    
    
    
    40,114Time deposits
    
    
    4
    
    
    
    61,738,121
    
    
    
    92,305,965
    
    
    
    173,380Marketable Securities, net
    
    
    
    
    
    
    1,910,279
    
    
    
    5,231,667
    
    
    
    9,827Accounts receivable, net
    
    
    5a
    
    
    
    101,630,637
    
    
    
    146,854,403
    
    
    
    275,840Other accounts receivable, net
    
    
    5a
    
    
    
    37,425,026
    
    
    
    53,868,866
    
    
    
    101,182Accounts receivable from related companies
    
    
    6a
    
    
    
    36,126,926
    
    
    
    32,891,940
    
    
    
    61,782Inventories
    
    
    
    
    
    
    22,498,562
    
    
    
    20,407,340
    
    
    
    38,332Taxes receivables
    
    
    7a
    
    
    
    5,759,221
    
    
    
    2,343,399
    
    
    
    4,402Prepaid expenses
    
    
    
    
    
    
    1,645,822
    
    
    
    4,095,085
    
    
    
    7,692Deferred income taxes
    
    
    7b
    
    
    
    2,533,680
    
    
    
    2,127,187
    
    
    
    3,996Other current assets
    
    
    8
    
    
    
    9,416,353
    
    
    
    36,842,914
    
    
    
    69,202Total current assets
    
    
    
    
    
    
    290,918,234
    
    
    
    418,324,915
    
    
    
    785,749Property, plant and equipment, net
    
    
    9
    
    
    
    3,992,211,914
    
    
    
    4,150,576,272
    
    
    
    7,796,120Other assets:Investments in related companies
    
    
    10a
    
    
    
    479,933,142
    
    
    
    523,266,785
    
    
    
    982,864Investments in other companies
    
    
    11
    
    
    
    19,462,024
    
    
    
    3,900,249
    
    
    
    7,326Long-term receivables
    
    
    5a
    
    
    
    26,991,972
    
    
    
    69,067,592
    
    
    
    129,731Goodwill, net
    
    
    12a
    
    
    
    17,384,151
    
    
    
    11,093,901
    
    
    
    20,838Negative goodwill, net
    
    
    12b
    
    
    
    (36,882,274
    )
    
    
    (36,568,652
    )
    
    
    (68,688
    )Accounts receivable from related companies
    
    
    6a
    
    
    
    91,713,736
    
    
    
    90,524,359
    
    
    
    170,034Other intangibles
    
    
    13
    
    
    
    26,442,886
    
    
    
    25,684,788
    
    
    
    48,244Accumulated amortization of other intangibles
    
    
    13
    
    
    
    (9,087,225
    )
    
    
    (8,954,127
    )
    
    
    (16,819
    )Other assets
    
    
    14
    
    
    
    77,746,196
    
    
    
    37,770,705
    
    
    
    70,946Total other assets
    
    
    
    
    
    
    693,704,608
    
    
    
    715,785,600
    
    
    
    1,344,476Total assets
    
    
    
    
    
    
    4,976,834,756
    
    
    
    5,284,686,787
    
    
    
    9,926,345
  F-14




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##### Table of Contents



Endesa-Chile and Subsidiaries
Audited Consolidated Balance Sheets
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 As of December 31,Note
    
    2005
    
    2006
    
    2006ThCh$
    
    ThCh$
    
    ThUS$(Note 2 (b))Liabilities and Shareholders equityCurrent liabilities:Short-term debt due to banks and financial institutions
    
    
    15a
    
    
    
    12,590,825
    
    
    
    56,543,139
    
    
    
    106,206Current portion of long-term debt due to banks and
financial institutions
    
    
    15b
    
    
    
    29,493,362
    
    
    
    60,732,303
    
    
    
    114,075Current portion of bonds payable
    
    
    16a
    
    
    
    309,820,243
    
    
    
    70,488,209
    
    
    
    132,400Current portion of long-term notes payable
    
    
    16d
    
    
    
    28,286,001
    
    
    
    31,263,006
    
    
    
    58,722Dividends payable
    
    
    
    
    
    
    4,788,644
    
    
    
    25,954,958
    
    
    
    48,752Accounts payable
    
    
    
    
    
    
    57,110,493
    
    
    
    87,751,397
    
    
    
    164,825Miscellaneous payables
    
    
    
    
    
    
    27,168,606
    
    
    
    35,429,198
    
    
    
    66,547Accounts payable to related companies
    
    
    6b
    
    
    
    7,320,939
    
    
    
    8,230,557
    
    
    
    15,460Accrued liabilities
    
    
    17
    
    
    
    23,326,157
    
    
    
    24,774,981
    
    
    
    46,535Employee withholdings
    
    
    
    
    
    
    8,222,715
    
    
    
    12,096,518
    
    
    
    22,721Income taxes payable
    
    
    7a
    
    
    
    16,525,424
    
    
    
    47,246,571
    
    
    
    88,744Deferred revenue
    
    
    
    
    
    
    691,751
    
    
    
    414,853
    
    
    
    779Other current liabilities
    
    
    
    
    
    
    13,502,419
    
    
    
    691,709
    
    
    
    1,301Total current liabilities
    
    
    
    
    
    
    538,847,579
    
    
    
    461,617,399
    
    
    
    867,067Long-term liabilities:Long-term debt due to banks and financial institutions
    
    
    15c
    
    
    
    166,029,465
    
    
    
    286,480,126
    
    
    
    538,102Bonds payable
    
    
    16b
    
    
    
    1,423,185,268
    
    
    
    1,465,956,032
    
    
    
    2,753,538Long-term notes payable
    
    
    16d
    
    
    
    53,796,618
    
    
    
    57,143,548
    
    
    
    107,334Miscellaneous payables
    
    
    
    
    
    
    30,088,858
    
    
    
    95,114,715
    
    
    
    178,656Accrued liabilities
    
    
    17
    
    
    
    29,167,853
    
    
    
    30,001,755
    
    
    
    56,353Deferred income taxes
    
    
    7b
    
    
    
    101,563,955
    
    
    
    136,564,317
    
    
    
    256,512Other long-term liabilities
    
    
    
    
    
    
    3,897,303
    
    
    
    22,310,601
    
    
    
    41,906Total long-term liabilities
    
    
    
    
    
    
    1,807,729,320
    
    
    
    2,093,571,094
    
    
    
    3,932,401Commitments and contingencies
    
    
    26Minority interest
    
    
    18a
    
    
    
    953,511,592
    
    
    
    935,188,443
    
    
    
    1,756,585Shareholders equity:
    
    
    19Paid-in capital, no par value
    
    
    
    
    
    
    1,138,620,063
    
    
    
    1,138,620,063
    
    
    
    2,138,695Additional paid-in capital  share premium
    
    
    
    
    
    
    223,354,457
    
    
    
    223,354,457
    
    
    
    419,532Other reserves
    
    
    19d
    
    
    
    (35,233,126
    )
    
    
    (36,943,924
    )
    
    
    (69,393
    )Retained earnings
    
    
    
    
    
    
    237,058,795
    
    
    
    280,040,952
    
    
    
    526,007Net income
    
    
    
    
    
    
    112,946,076
    
    
    
    189,541,318
    
    
    
    356,020Reserve defecit from development stage companies
    
    
    
    
    
    
    
    
    
    
    (303,015
    )
    
    
    (569
    )Total Shareholders equity
    
    
    
    
    
    
    1,676,746,265
    
    
    
    1,794,309,851
    
    
    
    3,370,292Total
Liabilities and
Shareholders
equity
    
    
    
    
    
    
    4,976,834,756
    
    
    
    5,284,686,787
    
    
    
    9,926,345
  F-15




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##### Table of Contents



Endesa-Chile and Subsidiaries
 
 Audited Consolidated Statements of Income
 Translation of financial statements originally issued in Spanish-See Note 2 (a)
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 For the year ended December 31,Note
    
    2004
    
    2005
    
    2006
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThUS$(Note 2 (b))Operating income:Sales
    
    
    
    
    
    
    1,092,304,515
    
    
    
    1,146,622,685
    
    
    
    1,337,120,927
    
    
    
    2,511,544Cost of sales
    
    
    
    
    
    
    (665,531,005
    )
    
    
    (704,080,979
    )
    
    
    (793,260,032
    )
    
    
    (1,489,998
    )Gross profit
    
    
    
    
    
    
    426,773,510
    
    
    
    442,541,706
    
    
    
    543,860,895
    
    
    
    1,021,546Administrative and Selling expenses
    
    
    
    
    
    
    (36,434,922
    )
    
    
    (39,387,634
    )
    
    
    (39,385,780
    )
    
    
    (73,979
    )Operating income
    
    
    
    
    
    
    390,338,588
    
    
    
    403,154,072
    
    
    
    504,475,115
    
    
    
    947,567Non-operating income and expense:Interest income
    
    
    
    
    
    
    15,773,380
    
    
    
    15,878,356
    
    
    
    14,817,725
    
    
    
    27,832Equity participation in income of related companies
    
    
    10a
    
    
    
    20,403,440
    
    
    
    21,822,874
    
    
    
    42,470,166
    
    
    
    79,773Other non-operating income
    
    
    20a
    
    
    
    54,201,367
    
    
    
    33,979,022
    
    
    
    29,967,647
    
    
    
    56,289Equity participation in losses of related companies
    
    
    10a
    
    
    
    (91,327
    )
    
    
    (7,968,413
    )
    
    
    (125,208
    )
    
    
    (235
    )Goodwill amortization
    
    
    12a
    
    
    
    (1,548,033
    )
    
    
    (1,395,070
    )
    
    
    (942,823
    )
    
    
    (1,771
    )Interest expense
    
    
    
    
    
    
    (203,679,492
    )
    
    
    (182,548,712
    )
    
    
    (171,918,963
    )
    
    
    (322,920
    )Other non-operating expenses
    
    
    20b
    
    
    
    (83,865,176
    )
    
    
    (54,711,669
    )
    
    
    (43,567,721
    )
    
    
    (81,834
    )Price-level restatement, net
    
    
    21
    
    
    
    2,339,060
    
    
    
    1,345,633
    
    
    
    1,487,491
    
    
    
    2,794Foreign currency translation, net
    
    
    22
    
    
    
    21,821,832
    
    
    
    15,213,875
    
    
    
    3,607,972
    
    
    
    6,777Non-operating loss
    
    
    
    
    
    
    (174,644,949
    )
    
    
    (158,384,104
    )
    
    
    (124,203,714
    )
    
    
    (233,295
    )Income before income taxes
    
    
    
    
    
    
    215,693,639
    
    
    
    244,769,968
    
    
    
    380,271,401
    
    
    
    714,272Income taxes
    
    
    7c
    
    
    
    (98,822,752
    )
    
    
    (93,885,428
    )
    
    
    (130,856,751
    )
    
    
    (245,791
    )Income before minority interest
    
    
    
    
    
    
    116,870,887
    
    
    
    150,884,540
    
    
    
    249,414,650
    
    
    
    468,481Minority interest
    
    
    18b
    
    
    
    (45,274,365
    )
    
    
    (53,570,412
    )
    
    
    (65,910,792
    )
    
    
    (123,802
    )Income before amortization of negative goodwill
    
    
    
    
    
    
    71,596,522
    
    
    
    97,314,128
    
    
    
    183,503,858
    
    
    
    344,679Amortization of negative goodwill
    
    
    12b
    
    
    
    17,031,537
    
    
    
    15,631,948
    
    
    
    6,037,460
    
    
    
    11,341Net income
    
    
    
    
    
    
    88,628,059
    
    
    
    112,946,076
    
    
    
    189,541,318
    
    
    
    356,020
  F-16




---



##### Table of Contents



Endesa-Chile and Subsidiaries
 
 Audited Consolidated Statements of Shareholders Equity
 Translation of financial statements originally issued in Spanish-See Note 2 (a)
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 DeficitdevelopmentAdditional paid-
    
    stage
    
    OtherNumber of shares
    
    Paid-in capital
    
    in capital
    
    companies
    
    reserves
    
    Retained earnings
    
    Net income
    
    Total(In thousands)
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$As of January 1, 2004
    
    
    8,201,755
    
    
    
    1,050,193,846
    
    
    
    206,008,557
    
    
    
    
    
    
    
    49,184,422
    
    
    
    109,151,303
    
    
    
    78,130,912
    
    
    
    1,492,669,040Reclassification of prior year net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,130,912
    
    
    
    (78,130,912
    )
    
    
    Price-level restatement of capital
    
    
    
    
    
    
    26,254,846
    
    
    
    5,150,214
    
    
    
    
    
    
    
    1,187,406
    
    
    
    4,158,338
    
    
    
    
    
    
    
    36,750,804Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,864,036
    )
    
    
    
    
    
    
    (18,864,036
    )Income from subsidiaries in the development stage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,688,185
    )
    
    
    1,688,185
    
    
    
    
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,446,583
    )
    
    
    
    
    
    
    
    
    
    
    (25,446,583
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,788,756
    
    
    
    83,788,756As of December 31, 2004
    
    
    8,201,755
    
    
    
    1,076,448,692
    
    
    
    211,158,771
    
    
    
    
    
    
    
    23,237,060
    
    
    
    174,264,702
    
    
    
    83,788,756
    
    
    
    1,568,897,981As of December 31, 2004 (1)
    
    
    
    
    
    
    1,138,620,063
    
    
    
    223,354,457
    
    
    
    
    
    
    
    24,579,139
    
    
    
    184,329,534
    
    
    
    88,628,059
    
    
    
    1,659,511,252As of January 1, 2005
    
    
    8,201,755
    
    
    
    1,076,448,692
    
    
    
    211,158,771
    
    
    
    
    
    
    
    23,237,060
    
    
    
    174,264,702
    
    
    
    83,788,756
    
    
    
    1,568,897,981Reclassification of prior year net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,788,756
    
    
    
    (83,788,756
    )
    
    
    Price-level restatement of capital
    
    
    
    
    
    
    38,752,153
    
    
    
    7,601,716
    
    
    
    
    
    
    
    836,534
    
    
    
    8,002,741
    
    
    
    
    
    
    
    55,193,144Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,873,246
    )
    
    
    
    
    
    
    (33,873,246
    )Reorganization of entities under common control (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,694,515
    )
    
    
    
    
    
    
    
    
    
    
    (33,694,515
    )Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,887,528
    )
    
    
    
    
    
    
    
    
    
    
    (24,887,528
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,622,993
    
    
    
    110,622,993As of December 31, 2005
    
    
    8,201,755
    
    
    
    1,115,200,845
    
    
    
    218,760,487
    
    
    
    
    
    
    
    (34,508,449
    )
    
    
    232,182,953
    
    
    
    110,622,993
    
    
    
    1,642,258,829As of December 31, 2005 (1)
    
    
    
    
    
    
    1,138,620,063
    
    
    
    223,354,457
    
    
    
    
    
    
    
    (35,233,126
    )
    
    
    237,058,795
    
    
    
    112,946,076
    
    
    
    1,676,746,265As of January 1, 2006
    
    
    8,201,755
    
    
    
    1,115,200,845
    
    
    
    218,760,487
    
    
    
    
    
    
    
    (34,508,449
    )
    
    
    232,182,953
    
    
    
    110,622,993
    
    
    
    1,642,258,829Reclassification of prior year net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,622,993
    
    
    
    (110,622,993
    )Price-level restatement of capital
    
    
    
    
    
    
    23,419,218
    
    
    
    4,593,970
    
    
    
    
    
    
    
    (724,677
    )
    
    
    6,047,727
    
    
    
    
    
    
    
    33,336,238Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,734,212
    )
    
    
    
    
    
    
    (47,734,212
    )Reorganization of entities under common control (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,410,324
    )
    
    
    
    
    
    
    
    
    
    
    (6,410,324
    )Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,699,526
    
    
    
    
    
    
    
    
    
    
    
    4,699,526Accumulated defecit of development stage companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,015
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,015
    )Provisional dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,078,509
    )
    
    
    (21,078,509
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,541,318
    
    
    
    189,541,318As of December 31, 2006
    
    
    8,201,755
    
    
    
    1,138,620,063
    
    
    
    223,354,457
    
    
    
    (303,015
    )
    
    
    (36,943,924
    )
    
    
    301,119,461
    
    
    
    168,462,809
    
    
    
    1,794,309,851
  F-17




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Audited Consolidated Statements of Shareholders Equity
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 
 (1)
    
    Restated in thousands of constant Chilean pesos as of December 31, 2006(2)
    
    As a result of a reorganization of entities under common control the movements in other
reserves accounted for in a manner similar to the pooling-of-interest method are as follows: 2005
    
    2006Transaction
    
    ThCh$
    
    ThCh$(historic)Creation of Endesa Brasil (Note 10 c. (i))
    
    
    (33,694,515
    )
    
    
    Merger Edegel- Etevensa (Note 10 d. (iii))
    
    
    
    
    
    
    (9,599,504
    )Liquidation of CESA (Note 10 e. (v))
    
    
    
    
    
    
    3,189,180Total
    
    
    (33,694,515
    )
    
    
    (6,410,324
    )
  F-18




---



##### Table of Contents



Endesa-Chile and Subsidiaries
 
 Audited Consolidated Statements of Cash Flows
 Translation of financial statements originally issued in Spanish-See Note 2 (a)
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 Years Ended December 31,2004
    
    2005
    
    2006
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThUS$(Note 2 (b))Cash flows from operating activities:Charges (credits) to income which do not represent cash flows:Net income
    
    
    88,628,059
    
    
    
    112,946,076
    
    
    
    189,541,318
    
    
    
    356,020(Gain) loss on sales of property, plant and equipment
    
    
    (6,669,000
    )
    
    
    (3,759,670
    )
    
    
    (3,151,353
    )
    
    
    (5,919
    )(Gain) loss on sales of other assets
    
    
    (27,120
    )
    
    
    
    
    
    
    
    
    
    
    Depreciation
    
    
    180,654,460
    
    
    
    174,051,934
    
    
    
    175,306,509
    
    
    
    329,282Amortization of intangibles
    
    
    1,482,461
    
    
    
    1,224,929
    
    
    
    1,107,842
    
    
    
    2,081Write-offs and Provisions
    
    
    
    
    
    
    2,381,701
    
    
    
    26,119
    
    
    
    49Equity participation in income of related companies
    
    
    (20,403,440
    )
    
    
    (21,822,874
    )
    
    
    (42,470,166
    )
    
    
    (79,773
    )Equity participation in losses of related companies
    
    
    91,327
    
    
    
    7,968,413
    
    
    
    125,208
    
    
    
    235Amortization of goodwill
    
    
    1,548,033
    
    
    
    1,395,070
    
    
    
    942,823
    
    
    
    1,771Amortization of negative goodwill
    
    
    (17,031,537
    )
    
    
    (15,631,948
    )
    
    
    (6,037,460
    )
    
    
    (11,341
    )Price-level restatement, net
    
    
    (2,339,060
    )
    
    
    (1,345,633
    )
    
    
    (1,487,491
    )
    
    
    (2,794
    )Foreign currency translation, net
    
    
    (21,821,832
    )
    
    
    (15,213,875
    )
    
    
    (3,607,972
    )
    
    
    (6,777
    )Other credits to income which do not represent cash flows
    
    
    (6,698,013
    )
    
    
    (10,995,989
    )
    
    
    (604,515
    )
    
    
    (1,135
    )Other charges to income which do not represent cash flows
    
    
    45,740,347
    
    
    
    25,835,771
    
    
    
    23,878,584
    
    
    
    44,851Changes in assets which affect cash flows:Increase in trade receivables
    
    
    (8,218,215
    )
    
    
    (15,896,100
    )
    
    
    (96,008,886
    )
    
    
    (180,335
    )Decrease (increase) in inventory
    
    
    (4,165,771
    )
    
    
    (9,208,658
    )
    
    
    4,362,769
    
    
    
    8,195Decrease (increase) in other assets
    
    
    31,841,655
    
    
    
    (5,204,954
    )
    
    
    (15,539,350
    )
    
    
    (29,188
    )Changes in liabilities which affect cash flows:Increase (decrease) in accounts payable associated with
operating results
    
    
    (45,320,539
    )
    
    
    (52,577,911
    )
    
    
    57,663,231
    
    
    
    108,310Increase (decrease) in interest payable
    
    
    8,264,423
    
    
    
    1,615,799
    
    
    
    (1,648,023
    )
    
    
    (3,096
    )Increase (decrease) in income tax payable
    
    
    10,991,848
    
    
    
    34,821,128
    
    
    
    60,951,465
    
    
    
    114,487Increase (decrease) in other accounts payable associated
with non- operating
results
    
    
    (29,119,305
    )
    
    
    41,004,192
    
    
    
    3,232,305
    
    
    
    6,071Net (decrease) increase in value added tax and other
accounts payable
    
    
    14,132,137
    
    
    
    (28,540,730
    )
    
    
    7,607,023
    
    
    
    14,288Income attributable to minority interest
    
    
    45,274,364
    
    
    
    53,570,412
    
    
    
    65,910,792
    
    
    
    123,802Net cash flows provided by operating activities
    
    
    266,835,282
    
    
    
    276,617,083
    
    
    
    420,100,772
    
    
    
    789,084
  F-19




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Audited Consolidated Statements of Cash Flows
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 Years Ended December 31,2004
    
    2005
    
    2006
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThUS$(Note 2 (b))Cash flows from financing activities:Proceeds from the issuance of debt
    
    
    273,804,660
    
    
    
    87,280,481
    
    
    
    533,509,671
    
    
    
    1,002,103Proceeds from bond issuances
    
    
    100,115,328
    
    
    
    81,097,423
    
    
    
    46,524,338
    
    
    
    87,388Proceeds from loans obtained from related companies
    
    
    3,240,200
    
    
    
    40,989,242
    
    
    
    33,717,574
    
    
    
    63,332Other sources of financing
    
    
    10,722,910
    
    
    
    
    
    
    
    
    
    
    
    Dividends paid
    
    
    (78,097,523
    )
    
    
    (85,956,593
    )
    
    
    (114,307,804
    )
    
    
    (214,707
    )Distributions of capital by foreign subsidiaries
    
    
    (10,574,589
    )
    
    
    (82,654,369
    )
    
    
    
    
    
    
    Repayment of debt
    
    
    (370,312,659
    )
    
    
    (325,231,364
    )
    
    
    (359,693,635
    )
    
    
    (675,621
    )RepPayment of bonds
    
    
    (32,906,043
    )
    
    
    (46,799,299
    )
    
    
    (269,476,648
    )
    
    
    (506,164
    )Payment of loans obtained from related companies
    
    
    (3,326,515
    )
    
    
    (39,626,771
    )
    
    
    (5,267,991
    )
    
    
    (9,895
    )Payment of bond issuance costs
    
    
    (502,240
    )
    
    
    
    
    
    
    
    
    
    
    Other disbursements for financing
    
    
    (8,621,616
    )
    
    
    (3,870,708
    )
    
    
    (1,171,986
    )
    
    
    (2,201
    )Net cash used in financing activities
    
    
    (116,458,087
    )
    
    
    (374,771,958
    )
    
    
    (136,166,481
    )
    
    
    (255,765
    )Cash flows from investing activities:Proceeds from sales of property, plant and equipment
    
    
    14,183,343
    
    
    
    4,317,050
    
    
    
    18,324,063
    
    
    
    34,418Payments received on loans to related companies
    
    
    86,764,915
    
    
    
    33,772,919
    
    
    
    12,816,512
    
    
    
    24,074Other receipts from investments
    
    
    42,917,773
    
    
    
    6,594,626
    
    
    
    1,036,326
    
    
    
    1,947Additions to property, plant and equipment
    
    
    (101,687,981
    )
    
    
    (60,014,716
    )
    
    
    (170,084,895
    )
    
    
    (319,474
    )Long-term investments
    
    
    
    
    
    
    (15,436,763
    )
    
    
    (21,012,999
    )
    
    
    (39,469
    )Sales of long-term investments
    
    
    2,705,467
    
    
    
    
    
    
    
    49,392
    
    
    
    93Liquidation of subsidiary (1)
    
    
    
    
    
    
    
    
    
    
    (4,120,940
    )
    
    
    (7,741
    )Other loans granted to related companies
    
    
    (119,903,982
    )
    
    
    (25,508,210
    )
    
    
    (41,510,509
    )
    
    
    (77,970
    )Net cash used in investing activities
    
    
    (75,020,465
    )
    
    
    (56,275,094
    )
    
    
    (204,503,050
    )
    
    
    (384,122
    )Net cash flow for the year
    
    
    75,356,730
    
    
    
    (154,429,969
    )
    
    
    79,431,241
    
    
    
    149,197Effect of price-level restatement on cash and cash equivalents
    
    
    (9,627,540
    )
    
    
    (5,651,512
    )
    
    
    (6,991,458
    )
    
    
    (13,132
    )Net increase in cash and cash equivalents
    
    
    65,729,190
    
    
    
    (160,081,481
    )
    
    
    72,439,783
    
    
    
    136,065Cash and cash equivalents  Beginning of year
    
    
    177,425,713
    
    
    
    243,154,903
    
    
    
    83,073,422
    
    
    
    156,039Cash and cash equivalents  End of year
    
    
    243,154,903
    
    
    
    83,073,422
    
    
    
    155,513,205
    
    
    
    292,104
 
 (1)
    
    See Note 10 d. (iv). As a result of the liquidation of CESA, cash amounting to ThCh$ 4,120,940
was transferred to CESA other shareholder, Endesa Internacional S.A..  F-20




---



##### Table of Contents



Endesa-Chile and Subsidiaries
 
 Notes to the Audited Consolidated Financial Statements
 Translation of financial statements originally issued in Spanish-See Note 2 (a)
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 1. Description of Business:
    2. Summary of Significant Accounting Policies:
       F-21




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
 Percentage participation in voting rights as of December 31,Company name
    
    2004
    
    2005
    
    2006Total
    
    Total
    
    Direct
    
    Indirect
    
    TotalEnigesa S.A. (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.51
    
    
    
    0.49
    
    
    
    100.00Ingendesa S.A. (1) (Chile)
    
    
    97.64
    
    
    
    100.00
    
    
    
    98.75
    
    
    
    1.25
    
    
    
    100.00Pehuenche S.A. (Chile)
    
    
    92.65
    
    
    
    92.65
    
    
    
    92.65
    
    
    
    
    
    
    
    92.65Endesa Argentina S.A (Argentina)
    
    
    99.99
    
    
    
    99.99
    
    
    
    97.99
    
    
    
    2.00
    
    
    
    99.99Endesa-Chile Internacional (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Pangue S.A.(2) (Chile)
    
    
    94.99
    
    
    
    94.99
    
    
    
    94.98
    
    
    
    0.01
    
    
    
    94.99Hidroinvest S.A. (Argentina)
    
    
    69.93
    
    
    
    69.93
    
    
    
    
    
    
    
    69.93
    
    
    
    69.93Hidroeléctrica El Chocón S.A. (Argentina)
    
    
    65.19
    
    
    
    65.19
    
    
    
    
    
    
    
    65.19
    
    
    
    65.19Endesa Costanera S.A. (Argentina)
    
    
    64.26
    
    
    
    64.26
    
    
    
    12.33
    
    
    
    51.93
    
    
    
    64.26Endesa Brasil Participacoes Ltda. (Brasil)
    
    
    100.00
    
    
    
    100.00
    
    
    
    5.00
    
    
    
    95.00
    
    
    
    100.00Túnel El Melón S.A. (Chile)
    
    
    99.96
    
    
    
    99.96
    
    
    
    99.96
    
    
    
    
    
    
    
    99.96Compañía Eléctrica Cono Sur S.A. (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Central Hidroeléctrica Betania S.A. (3)(Colombia)
    
    
    85.62
    
    
    
    85.62
    
    
    
    5.01
    
    
    
    94.98
    
    
    
    99.99Lajas Inversora S.A. (4) (Brasil)
    
    
    100.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cachoeira Dourada S.A. (4), (5) (Brasil)
    
    
    99.61
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital de Energía S.A. (6) (Colombia)
    
    
    51.00
    
    
    
    51.00
    
    
    
    
    
    
    
    
    
    
    
    Emgesa S.A (7), (9) (Colombia)
    
    
    51.32
    
    
    
    51.32
    
    
    
    
    
    
    
    23.45
    
    
    
    23.45Edegel S.A. (10) (Perú)
    
    
    63.56
    
    
    
    63.56
    
    
    
    
    
    
    
    55.44
    
    
    
    55.44Generandes Perú S.A. (Perú)
    
    
    59.63
    
    
    
    59.63
    
    
    
    
    
    
    
    59.63
    
    
    
    59.63Compañía Eléctrica San Isidro S.A. (8) (Chile)
    
    
    75.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Compañía Eléctrica Tarapacá S.A. (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.94
    
    
    
    0.06
    
    
    
    100.00Inversiones Endesa Norte S.A. (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00Ingendesa Do Brasil Limitada (Brasil)
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    100.00Endesa Eco S.A. (Chile) (11)
    
    
    
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00
 
 (1)
    
    See Note 10 (c) (ii.).(2)
    
    See Note 10 (d) (ii.).(3)
    
    See Note 10 (d) (iv.), Note 10 (e) (iv.)(4)
    
    See Note 10 (e) (i.).(5)
    
    Subsequent to October 1, 2005, the Companys subsidiary Cachoeira Dourada S.A. was not
included in the consolidated financial statements of Endesa Chile any more due to the
restructuring process of the Brazilian operations. (See Note 10 (c) (i))(6)
    
    See Note 10 (e) (iv.)(7)
    
    Endesa Chile exercises control over this company pursuant to a shareholders agreement(8)
    
    See Note 10 (d) (i.), Note 10 (c) (iii.)(9)
    
    See Note 10 (e) (iv.)(10)
    
    See Note 10 (d) (iii.)(11)
    
    See Note 10 (b) (i.) F-22




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
  Percentage of economic participation as of December 31,2004
    
    2005
    
    2006%
    
    %
    
    %Lajas Inversora S.A (1)
    
    
    92.88
    
    
    
    
    
    
    
    Cachoeira Dourada S.A. (1)
    
    
    92.51
    
    
    
    
    
    
    
    Emgesa S.A. (2)
    
    
    22.36
    
    
    
    22.36
    
    
    
    23.45Edegel S.A. (3)
    
    
    37.90
    
    
    
    37.90
    
    
    
    33.06Capital de Energía S.A. (4)
    
    
    43.68
    
    
    
    43.59
    
    
    
    Hidroeléctrica El Chocón S.A.
    
    
    47.45
    
    
    
    47.45
    
    
    
    47.45
 
 (1)
    
    See note 10 (e) (i.).(2)
    
    See note 10 (e) (iv.)(3)
    
    See note 10 (d) (iii.)(4)
    
    See note 10 (e) (iv.) F-23




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
        Change over PreviousIndex
    
    November 30,November 30, 2004
    
    
    100.00
    
    
    
    2.5
    %November 30, 2005
    
    
    103.62
    
    
    
    3.6
    %November 30, 2006
    
    
    105.80
    
    
    
    2.1
    %
  Change over PreviousIndex
    
    December 31,December 31, 2004
    
    
    100.00
    
    
    
    2.4
    %December 31, 2005
    
    
    103.67
    
    
    
    3.7
    %December 31, 2006
    
    
    106.36
    
    
    
    2.6
    %
 F-24




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
  Index-linked assets and liabilities
 Unidad de Fomento
 Ch$December 31, 2004
    
    
    17,317.05December 31, 2005
    
    
    17,974.81December 31, 2006
    
    
    18,336.38
 Comparative financial statements
  Year
    
    Change in Index2004
    
    
    5.8
    %(1)2005
    
    
    2.1
    %(2)
 
 (1)
    
    Equivalent to the amounts for 2004 multiplied by the change in the CPI for 2005, then by the
change in the CPI for 2006.(2)
    
    Equivalent to the amounts for 2005 multiplied by the change in the CPI for 2006.  Convenience translation to US dollars
  F-25




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
   Currency
    
    Symbol used
    
    2004
    
    2005
    
    2006Ch$
    
    Ch$
    
    Ch$United States dollar (observed)
    
    US$
    
    
    557.40
    
    
    
    512.50
    
    
    
    532.39British pound sterling
    
    £
    
    
    
    
    1,073.37
    
    
    
    880.43
    
    
    
    1,041.86Colombian peso
    
    $Col
    
    
    0.23
    
    
    
    0.22
    
    
    
    0.24New Peruvian sol
    
    Soles
    
    
    169.84
    
    
    
    149.42
    
    
    
    166.58Brazilian real
    
    Rs
    
    
    209.99
    
    
    
    219.02
    
    
    
    249.01Japanese yen
    

    ¥
    
    
    
    

    5.41
    
    
    
    4.34
    
    
    
    4.47Euro
    
    
    
    
    
    
    760.13
    
    
    
    606.08
    
    
    
    702.08Argentine peso
    
    $Arg
    
    
    187.65
    
    
    
    181.92
    
    
    
    173.87
 Index
    
    Symbol used
    
    2004
    
    2005
    
    2006Ch$
    
    Ch$
    
    Ch$Unidad de Fomento (UF)
    
    UF
    
    
    17,317.05
    
    
    
    17,974.81
    
    
    
    18,336.38Annual Tax Unit
    
    UTA
    
    
    363,696
    
    
    
    378,852
    
    
    
    386,472
 F-26




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
             F-27




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
        
       F-28




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
            F-29




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
   As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    31,350,043
    
    
    
    10,233,607
    
    
    
    21,356,149Time deposits
    
    
    197,430,802
    
    
    
    61,738,121
    
    
    
    92,305,965Repurchase agreements
    
    
    13,653,010
    
    
    
    9,191,415
    
    
    
    36,623,573Marketable securities
    
    
    721,048
    
    
    
    1,910,279
    
    
    
    5,227,518Total cash and cash equivalents
    
    
    243,154,903
    
    
    
    83,073,422
    
    
    
    155,513,205
         F-30




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 2. Summary of Significant Accounting Policies, continued:
       3. Change in accounting policy
  F-31




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 4.
    
    Time deposits:
  AnnualizedInterest
    
    ScheduledFinancial Institution
    
    Rates
    
    Maturity
    
    As of December 31,2005
    
    2006%
    
    
    
    
    
    ThCh $
    
    ThCh$Banco Boston
    
    
    3.34
    %
    
    January 2, 2007
    
    
    1,769,150
    
    
    
    13,040Banco Continental
    
    
    4.97
    %
    
    January 2, 2007
    
    
    5,427,374
    
    
    
    8,409,664Banco Correval
    
    
    
    
    
    
    
    
    
    1,415,787
    
    
    
    Banco de Crédito
    
    
    
    
    
    
    
    
    
    1,525,102
    
    
    
    Banco Frances
    
    
    9.65
    %
    
    January 2, 2007
    
    
    5,651,785
    
    
    
    893,660Banco Galicia
    
    
    6.34
    %
    
    January 2, 2007
    
    
    874,372
    
    
    
    1,899,867Banco Itau Corp Plus
    
    
    3.34
    %
    
    January 2, 2007
    
    
    855,388
    
    
    
    470,318Banco Nationale de Paris
    
    
    3.34
    %
    
    January 2, 2007
    
    
    345,388
    
    
    
    59,116Banco Río de la Plata
    
    
    8.03
    %
    
    January 2, 2007
    
    
    1,878,843
    
    
    
    7,177,698Banco Santander
    
    
    1.20
    %
    
    January 2, 2007
    
    
    64,798
    
    
    
    112,638Banco Santander
    
    
    
    
    
    
    
    
    
    5,326,851
    
    
    
    Banco Wiese Sudameris
    
    
    
    
    
    
    
    
    
    1,143,826
    
    
    
    Bank of America
    
    
    4.76
    %
    
    January 2, 2007
    
    
    7,667,815
    
    
    
    10,068,547BBVA Colombia
    
    
    
    
    
    
    
    
    
    1,354,992
    
    
    
    CDT Otros
    
    
    8.68
    %
    
    January 2, 2007
    
    
    1,604
    
    
    
    241,517Citibank
    
    
    5.02
    %
    
    January 2, 2007
    
    
    10,707,099
    
    
    
    19,910,493Citibank N.A. (Overnight)
    
    
    
    
    
    
    
    
    
    187,801
    
    
    
    Citibank New York
    
    
    4.73
    %
    
    January 2, 2007
    
    
    2,007,759
    
    
    
    3,274,876Corficolombiana
Multiplicar
    
    
    6.95
    %
    
    January 2, 2007
    
    
    
    
    
    
    3,128,703Corficolombiana Valor
Plus
    
    
    6.18
    %
    
    January 2, 2007
    
    
    
    
    
    
    8,335,933Credit Bank
    
    
    
    
    
    
    
    
    
    1,916,263
    
    
    
    FAM Fondo Ganadero
    
    
    6.86
    %
    
    January 2, 2007
    
    
    691
    
    
    
    716FCE efectivo BBVA
    
    
    7.45
    %
    
    January 2, 2007
    
    
    
    
    
    
    105,144FCO sumar
    
    
    6.48
    %
    
    January 2, 2007
    
    
    
    
    
    
    223,214Fidubogota
    
    
    
    
    
    
    
    
    
    1,211
    
    
    
    Fiduciaria del Valle
    
    
    
    
    
    
    
    
    
    1,453,103
    
    
    
    Fiducolombia
    
    
    6.80
    %
    
    January 2, 2007
    
    
    1,443
    
    
    
    6,630,055Subtotal
    
    
    
    
    
    
    
    
    
    
    51,578,445
    
    
    
    70,955,199
 F-32




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 AnnualizedInterest
    
    ScheduledFinancial Institution
    
    Rates
    
    Maturity
    
    As of December 31,2005
    
    2006%
    
    
    
    
    
    ThCh $
    
    ThCh$Subtotal (from previous page)
    
    
    
    
    
    
    
    
    
    
    51,578,445
    
    
    
    70,955,199Fiduoccidente
    
    
    5.93
    %
    
    January 2, 2007
    
    
    750,145
    
    
    
    231,720Fiduvalle Multiplicar
    
    
    
    
    
    
    
    
    
    3,235,306
    
    
    
    Fondeos
    
    
    7.32
    %
    
    January 2, 2007
    
    
    
    
    
    
    16,268,513Pension Fund C. Fidunion
    
    
    
    
    
    
    
    
    
    2,275
    
    
    
    Pension fund Porvenir
    
    
    
    
    
    
    
    
    
    515,766
    
    
    
    Pension Fund Correval
    
    
    5.91
    %
    
    January 2, 2007
    
    
    
    
    
    
    5,876Fund Surenta
    
    
    6.90
    %
    
    January 2, 2007
    
    
    
    
    
    
    2,622,708Fund Surgir
    
    
    5.09
    %
    
    January 2, 2007
    
    
    
    
    
    
    2,194,030HSBC Argentina
    
    
    3.34
    %
    
    January 2, 2007
    
    
    666,788
    
    
    
    25,733Serfinco
    
    
    5.81
    %
    
    January 2, 2007
    
    
    155,497
    
    
    
    2,186Other time deposits
    
    
    
    
    
    
    
    
    
    4,833,899
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    61,738,121
    
    
    
    92,305,965
 5. Accounts receivable and other receivables:
 a.
    
    Current accounts receivable, other receivables and related allowances
for doubtful accounts as of December 31, 2005 and 2006 are as follows:
 As of
    December 31,2005
    
    2006Under 90
    
    91 days
    
    
    
    
    
    
    
    
    
    Under 90
    
    91 days toAccount
    
    days
    
    to 1 year
    
    Allowance
    
    Total
    
    Days
    
    1 year
    
    Allowance
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Accounts Receivable
    
    
    102,218,114
    
    
    
    1,781,275
    
    
    
    (2,368,752
    )
    
    
    101,630,637
    
    
    
    145,795,502
    
    
    
    2,741,243
    
    
    
    (1,682,342
    )
    
    
    146,854,403Other Receivables (1)
    
    
    20,492,339
    
    
    
    17,806,414
    
    
    
    (873,727
    )
    
    
    37,425,026
    
    
    
    44,276,781
    
    
    
    10,525,132
    
    
    
    (933,047
    )
    
    
    53,868,866Total
    
    
    122,710,453
    
    
    
    19,587,689
    
    
    
    (3,242,479
    )
    
    
    139,055,663
    
    
    
    190,072,283
    
    
    
    13,266,375
    
    
    
    (2,615,389
    )
    
    
    200,723,269
  
 (1)
    
    As of December 31, 2005 and 2006 the balances include amounts of ThCh$ 19,709,125 and ThCh$
29,089,378
respectively that will be reimbursed to Endesa and its subsidiaries for transmission line use.
The balance of the
receivables was recognized as a result of Energy Law changes in Chile in 2004. F-33




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 5. Accounts receivable and other receivables, continued:
 b.
    
    Current and long-term accounts receivable, net of Allowances for
Doubtful Accounts, by country as of December 31, 2005 and 2006 are as follows:
 As of December 31,Country
    
    2005
    
    2006ThCh$
    
    %
    
    ThCh$
    
    %Chile
    
    
    66,173,094
    
    
    
    39.86
    %
    
    
    105,676,505
    
    
    
    39.17
    %Peru
    
    
    17,241,627
    
    
    
    10.38
    %
    
    
    29,194,782
    
    
    
    10.82
    %Argentina
    
    
    42,602,989
    
    
    
    25.66
    %
    
    
    88,070,081
    
    
    
    32.64
    %Colombia
    
    
    35,140,940
    
    
    
    21.16
    %
    
    
    41,406,712
    
    
    
    15.35
    %Panama
    
    
    4,888,985
    
    
    
    2.94
    %
    
    
    5,442,781
    
    
    
    2.02
    %Total
    
    
    166,047,635
    
    
    
    100.00
    %
    
    
    269,790,861
    
    
    
    100.00
    %
 c.
    
    Changes in the allowance for doubtful accounts are as follows:
 Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Beginning balance
    
    
    3,988,668
    
    
    
    3,554,022
    
    
    
    3,242,479Charged to expense
    
    
    572,030
    
    
    
    171,027
    
    
    
    370,198Deductions
    
    
    (1,183,590
    )
    
    
    (136,853
    )
    
    
    (516,125
    )Price-level restatement and
conversion adjustment
    
    
    176,914
    
    
    
    (345,717
    )
    
    
    (481,163
    )Ending balance
    
    
    3,554,022
    
    
    
    3,242,479
    
    
    
    2,615,389
 d.
    
    Sales recorded but not invoiced are ThCh$ 81,983,969, ThCh$ 75,771,018 and ThCh$
95,427,633 as of December 31, 2004, 2005 and 2006, respectively.
 F-34




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 6. Transactions with Related Companies:
  a.
    
    Notes and accounts receivable from related companies:
 As of December 31,Short-term
    
    Long-termCompany Name
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Transmisora Eléctrica de Quillota Ltda.
    
    
    324,740
    
    
    
    2,884
    
    
    
    
    
    
    
    Atacama Finance Co. (1)
    
    
    21,654
    
    
    
    61,561
    
    
    
    91,713,359
    
    
    
    90,523,990Cía de
Energía del Mercosur S.A.
    
    
    807,996
    
    
    
    1,214,855
    
    
    
    
    
    
    
    Chilectra
S.A.
    
    
    13,983,325
    
    
    
    16,086,746
    
    
    
    377
    
    
    
    369Cía.
Interconexión Energética S.A.
    
    
    164,750
    
    
    
    830,055
    
    
    
    
    
    
    
    Codensa S.A.
    
    
    15,597,938
    
    
    
    13,798,604
    
    
    
    
    
    
    
    Edelnor S.A.
    
    
    4,133,387
    
    
    
    3,325
    
    
    
    
    
    
    
    Empresa
Eléctrica Piura S.A.
    
    
    2,240
    
    
    
    107,578
    
    
    
    
    
    
    
    Enersis S.A.
    
    
    540,943
    
    
    
    89,005
    
    
    
    
    
    
    
    Etevensa S.A.
    
    
    74,759
    
    
    
    
    
    
    
    
    
    
    
    Gasoducto Tal Ltda.
    
    
    32,847
    
    
    
    1,973
    
    
    
    
    
    
    
    Gas Atacama Generación Ltda.
    
    
    21,026
    
    
    
    61,365
    
    
    
    
    
    
    
    Gas Atacama
S.A.
    
    
    179,951
    
    
    
    
    
    
    
    
    
    
    
    Cachoeira
Dourada S.A.
    
    
    910
    
    
    
    143
    
    
    
    
    
    
    
    Central Generadora Termoeléctrica de
Fortaleza S.A.
    
    
    28,327
    
    
    
    91,335
    
    
    
    
    
    
    
    Cam Colombia Ltda.
    
    
    106,955
    
    
    
    64,078
    
    
    
    
    
    
    
    Synapsis Soluciones y Servicios IT Ltda.
    
    
    9,502
    
    
    
    12,741
    
    
    
    
    
    
    
    Endesa
Internacional S.A.
    
    
    
    
    
    
    26,369
    
    
    
    
    
    
    
    Consorcio Ingendesa  Minmetal Ltda.
    
    
    8,511
    
    
    
    
    
    
    
    
    
    
    
    Gasoducto
Atacama Chile S.A.
    
    
    
    
    
    
    283,820
    
    
    
    
    
    
    
    Consorcio Ara  Ingendesa Ltda.
    
    
    69,704
    
    
    
    147,575
    
    
    
    
    
    
    
    Sociedad Consorcio Ingendesa Ara Ltda.
    
    
    17,461
    
    
    
    7,928
    
    
    
    
    
    
    
    Total
    
    
    36,126,926
    
    
    
    32,891,940
    
    
    
    91,713,736
    
    
    
    90,524,359
 b.
    
    The receivables from Atacama Finance Co. correspond to loans given by Compañía
Eléctrica Cono Sur S.A. originally for the purpose of financing construction works
of Gasoducto Atacama Argentina S.A., Gasoducto Atacama Chile S.A. and Gas Atacama
Generación S.A. The loans are denominated in US dollars, bear weighted average
interest of 7.5% and mature in September 2008.
 F-35




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 6. Transactions with Related Companies, continued:
 b.
    
    Notes and accounts payable due to related companies:
 As of December 31,Short-term
    
    Long-termCompany Name
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Cachoeira
Dourada S.A.
    
    
    23,422
    
    
    
    13,615
    
    
    
    
    
    
    
    Compañía de Energía del Mercosur S.A.
    
    
    7,944
    
    
    
    14,431
    
    
    
    
    
    
    
    Compañía de Transmisión del Mercosur S.A.
    
    
    164,750
    
    
    
    830,055
    
    
    
    
    
    
    
    Chilectra
S.A.
    
    
    1,674,662
    
    
    
    45,997
    
    
    
    
    
    
    
    Codensa S.A.
    
    
    3,088,929
    
    
    
    3,410,454
    
    
    
    
    
    
    
    Enersis S.A. (c).
    
    
    747,271
    
    
    
    242,903
    
    
    
    
    
    
    
    Synapsis Soluciones y Servicios IT Ltda.
    
    
    648,878
    
    
    
    760,823
    
    
    
    
    
    
    
    Transmisora Eléctrica de Quillota Ltda.
    
    
    24,870
    
    
    
    
    
    
    
    
    
    
    
    Compañía Americana de Multiservicios
Ltda.
    
    
    1,323
    
    
    
    417
    
    
    
    
    
    
    
    Electrogas
S.A.
    
    
    204,122
    
    
    
    223,051
    
    
    
    
    
    
    
    Cam Colombia Ltda.
    
    
    584,296
    
    
    
    437,756
    
    
    
    
    
    
    
    Synapsis
Perú S.A.
    
    
    122,311
    
    
    
    326,560
    
    
    
    
    
    
    
    Synapsis
Colombia S.A.
    
    
    12,147
    
    
    
    122,666
    
    
    
    
    
    
    
    Gas Atacama
Generación S.A.
    
    
    
    
    
    
    644,376Consorcio Ingendesa Minmetal Ltda.
    
    
    1,582
    
    
    
    153,015
    
    
    
    
    
    
    
    Edelnor S.A.
    
    
    12,068
    
    
    
    9,698
    
    
    
    
    
    
    
    Cam Perú
    
    
    2,364
    
    
    
    56,201
    
    
    
    
    
    
    
    Empresa
Eléctrica Piura S.A.
    
    
    
    
    
    
    938,539Total
    
    
    7,320,939
    
    
    
    8,230,557
    
    
    
    
    
    
    
    
  c.
    
    The accounts payable to Enersis S.A. for both years result mainly from
financing operations. They are denominated in US dollars and bear interest at
market rates according to Libor (London
Interbank Offer Rate) + 0.955%.
  F-36




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 6. Transactions with Related Companies, continued:
 d.
    
    The most significant transactions and their effects in income (expense)
for each year ended December 31 are as follows:
 Nature of
    
    Income (expense)Company
    
    Transaction
    
    2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Atacama Finance Co.
    
    Interest
    
    
    6,776,671
    
    
    
    4,924,252
    
    
    
    6,495,898Price-level restatement
    
    
    3,154,701
    
    
    
    3,863,870
    
    
    
    1,886,303Foreign currency translation
    
    
    (10,869,996
    )
    
    
    (12,609,487
    )
    
    
    1,643,119Cia. Americana
Multiservicios Ltda.
    
    Services provided
    
    
    
    
    
    
    640
    
    
    
    Cen. Gen. Termoeléctrica
de Fortaleza S.A.
    
    Services provided
    
    
    297,878
    
    
    
    37,642
    
    
    
    232,562Com. De Energía del
Mercosur S.A.
    
    Sales of energy
    
    
    20,613,357
    
    
    
    11,260,086
    
    
    
    5,843,513Purchases of energy
    
    
    (770,599
    )
    
    
    (880,128
    )
    
    
    (41,526
    )Codensa S.A.
    
    Purchases of energy
    
    
    (14,567,053
    )
    
    
    (16,566,188
    )
    
    
    (18,138,527
    )Sales of energy
    
    
    79,476,683
    
    
    
    65,315,588
    
    
    
    51,416,097Services provided
    
    
    59,911
    
    
    
    65,266
    
    
    
    60,692Services received
    
    
    (616,124
    )
    
    
    (937,341
    )
    
    
    (703,296
    )Interest
    
    
    (3,180,855
    )
    
    
    
    
    
    
    1,029,642Cía. Transmisión del
Mercosur S.A.
    
    Purchases of energy
    
    
    (2,291,749
    )
    
    
    (2,045,956
    )
    
    
    (662,293
    )Cía. Interconexión
Energética S.A.
    
    Sales of energy
    
    
    20,307,358
    
    
    
    5,241,923
    
    
    
    662,293Foreign currency translation
    
    
    
    
    
    
    160,333
    
    
    
    657,059Chilectra S.A.
    
    Sales of energy
    
    
    136,487,509
    
    
    
    144,807,300
    
    
    
    151,711,430Services provided
    
    
    2,353,453
    
    
    
    2,494,882
    
    
    
    2,488,217Services received
    
    
    (6,860
    )
    
    
    (87,293
    )
    
    
    (99,328
    )Gas Atacama Generación
S.A.
    
    Services provided
    
    
    1,827
    
    
    
    147,268
    
    
    
    970,233Gas Atacama S.A.
    
    Foreign currency translation
    
    
    (134,983
    )
    
    
    
    
    
    
    Empresa Eléctrica Piura
S.A.
    
    Sales of energy
    
    
    133,090
    
    
    
    722,645
    
    
    
    678,308Services provided
    
    
    
    
    
    
    2,576
    
    
    
    93,113Enersis S.A.
    
    Interest
    
    
    (2,047,346
    )
    
    
    (405,541
    )
    
    
    (183,980
    )Services provided
    
    
    242,156
    
    
    
    317,112
    
    
    
    131,952Foreign currency translation
    
    
    (2,743,976
    )
    
    
    696,076
    
    
    
    101,922Price-level restatement
    
    
    (231,094
    )
    
    
    
    
    
    
    Endesa Internacional S.A.
    
    Services received
    
    
    
    
    
    
    
    
    
    
    (4,122,187
    )Interest
    
    
    
    
    
    
    
    
    
    
    (75,054
    )Price-level restatement
    
    
    
    
    
    
    
    
    
    
    (60,276
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    (12,693
    )Ingendesa do
Brasil Ltda.
    
    Services received
    
    
    
    
    
    
    (4,710
    )
    
    
    Consorcio Ingendesa ARA
Ltda.
    
    Services provided
    
    
    
    
    
    
    219,092
    
    
    
    164,767Etevensa S.A.
    
    Sales of energy
    
    
    1,607,929
    
    
    
    1,026,031
    
    
    
    Services provided
    
    
    322,509
    
    
    
    547,344
    
    
    
    
 F-37




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 e.
    
    Transactions with Related Companies, continued:
 c.
    
    The most significant transactions and their effects in income (expense) for each year ended
December 31, continued:
 Nature of
    
    Income (expense)Company
    
    Transaction
    
    2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Electrogas S.A.
    
    Purchases of gas
    
    
    (2,828,872
    )
    
    
    (1,585,550
    )
    
    
    (1,967,300
    )Endesa Brasil S.A.
    
    Services provided
    
    
    
    
    
    
    68,806
    
    
    
    181,764Edelnor S.A.
    
    Sales of energy
    
    
    33,302,221
    
    
    
    27,007,867
    
    
    
    25,218,836Endesa España
    
    Services provided
    
    
    
    
    
    
    40,041
    
    
    
    Endesa Servicios Generales
    
    Services received
    
    
    
    
    
    
    
    
    
    
    Cam Colombia Ltda.
    
    Services received
    
    
    (254,661
    )
    
    
    (353,766
    )
    
    
    (498,655
    )Cam Perú S.A.
    
    Services received
    
    
    
    
    
    
    (43,142
    )
    
    
    (326,561
    )Elesur S.A.
    
    Services provided
    
    
    6,357
    
    
    
    
    
    
    
    Synapsis Sol y Serv. IT Ltda.
    
    Services received
    
    
    (1,853,164
    )
    
    
    (1,867,086
    )
    
    
    (1,969,348
    )Synapsis Colombia
    
    Services received
    
    
    (486,037
    )
    
    
    (451,912
    )
    
    
    (488,919
    )Synapsis Brasil S.A.
    
    Services received
    
    
    
    
    
    
    (88,224
    )
    
    
    1,722Synapsis Perú S.A.
    
    Services received
    
    
    
    
    
    
    (280,020
    )
    
    
    (277,318
    )Consorcio ARA  Ingendesa Ltda.
    
    Services provided
    
    
    2,720,759
    
    
    
    1,926,343
    
    
    
    800,048Cachoeira Dourada S.A.
    
    Services provided
    
    
    
    
    
    
    32,440
    
    
    
    8,620Transmisora Eléc. De Quillota Ltda.
    
    Interest
    
    
    85,789
    
    
    
    61,924
    
    
    
    26,889Services provided
    
    
    90,234
    
    
    
    4,901
    
    
    
    5,118Price-level restatement
    
    
    60,615
    
    
    
    
    
    
    
    Ampla Energía y Servicios S.A.
    
    Services provided
    
    
    
    
    
    
    80,290
    
    
    
    Sociedad Agrícola Pastos Verdes
    
    Services provided
    
    
    919
    
    
    
    
    
    
    
    8,981Consorcio Ingendesa Minmetal Ltda.
    
    Services provided
    
    
    64,672
    
    
    
    106,440
    
    
    
    63,059
   F-38




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 7. Income taxes
 a.
    
    Taxes recoverable (payable) as of each year-end are as follows:
 As of December 31,2005
    
    2006ThCh$
    
    ThCh$Income tax payable
    
    
    (16,525,424
    )
    
    
    (47,246,571
    )Income tax recoverable
    
    
    3,427,005
    
    
    
    7,187,649VAT recoverable (payable)
    
    
    2,332,216
    
    
    
    (4,844,250
    )Net
    
    
    (10,766,203
    )
    
    
    (44,903,172
    )
 b.
    
    In accordance with BT No. 60 and complementary bulletins thereto of the Chilean Association
of Accountants, and applicable circulars issued by the SVS, the Company and its subsidiaries
have recorded consolidated deferred income taxes as of December 31, 2005 and 2006 as follows:
 As of December 31, 2005
    
    As of December 31, 2006Asset
    
    Liability
    
    Asset
    
    LiabilityShort-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-termThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Allowance for doubtful accounts
    
    
    5,650
    
    
    
    5,544,228
    
    
    
    
    
    
    
    
    
    
    
    1,252
    
    
    
    8,830,945
    
    
    
    
    
    
    
    Deferred income
    
    
    116,519
    
    
    
    1,000,798
    
    
    
    
    
    
    
    
    
    
    
    69,163
    
    
    
    921,096
    
    
    
    
    
    
    
    Vacation accrual
    
    
    421,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485,550
    
    
    
    
    
    
    
    
    
    
    
    Assets in leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    560,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    464,611Depreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    246,340,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266,050,630Severance indemnities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,143,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,029,663Other events
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,253
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,118,097Deferred Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,163,741
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    778,163Deferred finance costs
    
    
    
    
    
    
    102,542
    
    
    
    
    
    
    
    13,254,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,738,128Tax losses
    
    
    
    
    
    
    33,136,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,221,891
    
    
    
    
    
    
    
    Contingencies
    
    
    1,226,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    997,329
    
    
    
    1,316,906
    
    
    
    
    
    
    
    Imputed interest on construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,148,807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,756,520Costs of studies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,498,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,420,626Spare parts used
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    857,794
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    811,521Accrued liabilities
    
    
    395,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94,313
    
    
    
    
    
    
    
    
    
    
    
    Bonds discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    420,912
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    334,190Construction in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    468,814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419,071Recoverable contributions to
assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485,414
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    390,970Provision for obsolete spare parts
    
    
    
    
    
    
    1,530,717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,621,780
    
    
    
    
    
    
    
    Pension benefits
    
    
    367,335
    
    
    
    1,189,189
    
    
    
    
    
    
    
    
    
    
    
    479,580
    
    
    
    923,959
    
    
    
    
    
    
    
    Tax for external credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    959,303
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    897,409Commission for external credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,399
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,472Complementary accounts, net
    
    
    
    
    
    
    (4,680,446
    )
    
    
    
    
    
    
    (142,823,949
    )
    
    
    
    
    
    
    (4,383,113
    )
    
    
    
    
    
    
    (135,435,865
    )Valuation allowance
    
    
    
    
    
    
    (3,776,478
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,157,575
    )
    
    
    
    
    
    
    Total
    
    
    2,533,680
    
    
    
    34,046,762
    
    
    
    
    
    
    
    135,610,717
    
    
    
    2,127,187
    
    
    
    26,295,889
    
    
    
    
    
    
    
    162,860,206Net deferred tax balance
    
    
    2,533,680
    
    
    
    
    
    
    
    
    
    
    
    (101,563,955
    )
    
    
    2,127,187
    
    
    
    
    
    
    
    
    
    
    
    (136,564,317
    )
 F-39




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 7. Income taxes, continued:
 c.
    
    Income tax expense for the years ended December 31, 2004, 2005 and 2006 is as follows:
 As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Current income tax (expense) benefitIncome tax provision
    
    
    (55,718,812
    )
    
    
    (61,403,295
    )
    
    
    (103,628,980
    )Adjustment for non tax deductible
expenses from prior periods
    
    
    
    
    
    
    
    
    
    
    4,214,796Non-deductible expense tax Art. 21
    
    
    (107,567
    )
    
    
    
    
    
    
    Deferred tax (expense) benefitDeferred taxes
    
    
    (35,075,962
    )
    
    
    (27,319,344
    )
    
    
    (25,573,664
    )Amortization of complementary
accounts
    
    
    (9,129,169
    )
    
    
    (3,246,860
    )
    
    
    (5,776,845
    )Change in valuation allowance
    
    
    (41,137
    )
    
    
    (915,714
    )
    
    
    (108,562
    )Other charges or credits
    
    
    1,249,895
    
    
    
    (1,000,215
    )
    
    
    16,504Total
    
    
    (98,822,752
    )
    
    
    (93,885,428
    )
    
    
    (130,856,751
    )
 8. Other current assets:
  As of December 31,2005
    
    
    2006ThCh$
    
    
    ThCh$Deposits related to payments to suppliers
    
    
    136,631
    
    
    
    133,821Repurchase agreements
    
    
    9,191,415
    
    
    
    36,623,573Other
    
    
    88,307
    
    
    
    85,520Total
    
    
    9,416,353
    
    
    
    36,842,914
 F-40




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 9. Property, plant and equipment:
  As of December 31,Estimated yearsof useful lives
    
    2005
    
    2006ThCh$
    
    ThCh$Land
    
    
    
    
    50,607,097
    
    
    
    52,038,451Buildings and infrastructure
    
    35  40
    
    
    5,357,043,075
    
    
    
    5,525,269,263Distribution and transmission lines and public lighting
    
    35
    
    
    28,413,986
    
    
    
    22,433,866Machinery and equipment
    
    10  40
    
    
    1,030,224,699
    
    
    
    1,175,291,899Construction in progress
    
    
    
    
    32,909,368
    
    
    
    53,847,972Property, plant and equipment in leasing (1)
    
    
    
    
    28,233,205
    
    
    
    99,127,980Furniture and fixtures, tools, software and IT equipment
    
    3  10
    
    
    23,840,937
    
    
    
    21,720,908Vehicles
    
    6  10
    
    
    1,885,083
    
    
    
    1,811,415Other assets
    
    3  8
    
    
    5,831,779
    
    
    
    4,253,043Sub-total
    
    
    
    
    92,700,372
    
    
    
    180,761,318Technical appraisal
    
    
    
    
    65,363,502
    
    
    
    66,304,521Total Property, plant and equipment
    
    
    
    
    6,624,352,731
    
    
    
    7,022,099,318Less: Accumulated depreciation
    
    
    
    
    (2,632,140,817
    )
    
    
    (2,871,523,046
    )Total Property, plant and equipment, net
    
    
    
    
    3,992,211,914
    
    
    
    4,150,576,272
 
 (1)
    
    Refers to leasing contracts listed below. (i)
    
    A leasing contract exists between the Company and Abengoa Chile S.A. for transmission
lines and the related technical installations. This contract has a duration of 20 years and
the annual interest rate per year is 6.5%. As of December 31, 2006, the total leasing
obligation amounts to ThCh$ 29,363,992, which respective parts are presented in other
current liabilities and other long-term liabilities.(ii)
    
    For the Peruvian subsidiary, Edegel S.A,. ThCh$ 69,763,988 corresponds to a contract
to remodel of a power plant (ex Etevensa). The project is being carried out by the Company
and the financial institutions: Bancó de Crédito del Perú, BBVA, Banco Continental, and
Citibank. This contract is for 8 years and bears an annual interest rate of Libor + 3.65%
  F-41




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 f.
    
    Property, plant and equipment, continued:
 Recoverability of property, plant and equipment
  Reclassifications in the Balance Sheet:
  Amount ThCh$ Credit
    
    
    
    Amount ThCh$ CreditFrom Account
    
    (Debit)
    
    To Account
    
    (Debit)Technical revaluation of fixed assets
    
    
    (368,441,249
    )
    
    Land
    
    
    4,158,060Buildings and Infrastructure
    
    
    265,229,616Machinery and Equipment
    
    
    98,857,837Other Assets
    
    
    195,736
 F-42




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investment in related companies:
  As ofDecember31, 2005
    
    As of December 31, 2006
    
    Carrying Value
    
    Equity in Net Earnings (Losses)Percentage
    
    Number
    
    Percentage
    
    RelatedRelated Companies
    
    Owned
    
    of Shares
    
    Owned
    
    Equity
    
    2005
    
    2006
    
    2004
    
    2005
    
    2006%
    
    
    
    
    
    %
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Comp. De Interconexión Energética S.A. (1)
    
    
    45.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,816,788
    
    
    
    (7,873,702
    )
    
    
    Gas Atacama Generación S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.05
    %
    
    
    25,992,826
    
    
    
    20,350
    
    
    
    12,996
    
    
    
    (695
    )
    
    
    (5,143
    )
    
    
    (7,709
    )Gasoducto Atacama Argentina S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.05
    %
    
    
    73,302,051
    
    
    
    30,872
    
    
    
    36,651
    
    
    
    2,833
    
    
    
    4,324
    
    
    
    5,272Gasoducto Atacama Chile S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.05
    %
    
    
    80,930,367
    
    
    
    34,185
    
    
    
    40,465
    
    
    
    6,100
    
    
    
    6,101
    
    
    
    5,652Centrales Hidroeléctricas de Aysen
S.A.(5)
    
    
    
    
    
    
    1,020,000
    
    
    
    51.00
    %
    
    
    19,972,020
    
    
    
    
    
    
    
    10,185,730
    
    
    
    
    
    
    
    
    
    
    
    Inversiones Eléctricas Quillota S.A. (2)
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,754,585
    
    
    
    
    
    
    
    Inversiones Electrogas S.A.
    
    
    42.50
    %
    
    
    425
    
    
    
    42.50
    %
    
    
    17,159,888
    
    
    
    7,624,447
    
    
    
    7,292,952
    
    
    
    2,207,363
    
    
    
    1,786,525
    
    
    
    1,867,161Inversiones Gas Atacama Holding Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    178,505,773
    
    
    
    84,888,897
    
    
    
    89,252,887
    
    
    
    6,603,716
    
    
    
    6,348,622
    
    
    
    2,843,246Comerc. Energía del Mercosur S.A. (3)
    
    
    45.00
    %
    
    
    6,305,400
    
    
    
    45.00
    %
    
    
    8,257,640
    
    
    
    3,651,457
    
    
    
    3,715,938
    
    
    
    612,648
    
    
    
    50,867
    
    
    
    787Transmisora Eléctrica de Quillota Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    6,901,090
    
    
    
    3,234,453
    
    
    
    3,450,545
    
    
    
    136,128
    
    
    
    175,192
    
    
    
    214,112Endesa Brasil S.A. (1)
    
    
    40.45
    %
    
    
    67,256,360
    
    
    
    40.45
    %
    
    
    1,005,342,841
    
    
    
    377,442,846
    
    
    
    406,690,954
    
    
    
    
    
    
    
    13,127,993
    
    
    
    37,307,648Gas Atacama S.A.
    
    
    0.001
    %
    
    
    1,147
    
    
    
    0.001
    %
    
    
    179,364,050
    
    
    
    1,950
    
    
    
    2,057
    
    
    
    151
    
    
    
    142
    
    
    
    73Electrogas S.A.
    
    
    0.02
    %
    
    
    85
    
    
    
    0.02
    %
    
    
    15,853,446
    
    
    
    3,511
    
    
    
    3,369
    
    
    
    1,130
    
    
    
    917
    
    
    
    963Distrilec Inversora S.A.
    
    
    0.89
    %
    
    
    4,416,141
    
    
    
    0.89
    %
    
    
    258,305,995
    
    
    
    2,368,564
    
    
    
    2,292,378
    
    
    
    (90,632
    )
    
    
    (89,568
    )
    
    
    (117,499
    )Consorcio ARA  Ingendesa Ltda. (4)
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    323,546
    
    
    
    431,822
    
    
    
    161,773
    
    
    
    214,514
    
    
    
    149,655
    
    
    
    93,071Sociedad Consorcio Ingendesa ARA Ltda. (4)
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    154,620
    
    
    
    68,432
    
    
    
    77,310
    
    
    
    5,144
    
    
    
    62,757
    
    
    
    58,680Consorcio Ingendesa  Minmetal Ltda (4)
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    29,154
    
    
    
    91,588
    
    
    
    14,577
    
    
    
    42,340
    
    
    
    109,779
    
    
    
    73,501Central Térmica San Martín S.A. (5)
    
    
    23.13
    %
    
    
    500,006
    
    
    
    23.13
    %
    
    
    78,364
    
    
    
    19,884
    
    
    
    18,102
    
    
    
    
    
    
    
    
    
    
    
    Central Térmica Manuel Belgrano S.A. (5)
    
    
    23.13
    %
    
    
    500,006
    
    
    
    23.13
    %
    
    
    78,359
    
    
    
    19,884
    
    
    
    18,101
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479,933,142
    
    
    
    523,266,785
    
    
    
    20,312,113
    
    
    
    13,854,461
    
    
    
    42,344,958
 
 (1)
    
    See Note 10 (c) (iii.)(2)
    
    On November 29, 2005, the Company transferred the assets of Inversiones Eléctricas Quillota S.A to Endesa Chile (individual entity) through
the dissolution of Inversiones Eléctricas Quillota S.A.. See Note 10 (e) (iii.)(3)
    
    This company is an unconsolidated equity investee of the subsidiary Endesa Argentina(4)
    
    These companies are unconsolidated equity investee of the subsidiary Ingendesa(5)
    
    See Note 10 (b) (ii) F-43




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investment in related companies, continued:
  (i.)
    
    On April 18, 2005, Endesa-Chile and its subsidiary Enigesa formally constituted a new
subsidiary which was named Endesa Eco S.A., whose main objective is to promote and develop
projects of renewable energy. The shareholders equity of the new subsidiary is ThCh$
580,000 divided in 5,800,000 nominative shares without nominal value. Endesa-Chile
subscribed 5,799,420 shares which represent 99.99% of the paid-in capital and effectively
paid 1,799,820 shares for the sum of ThCh$ 179,982; the companys subsidiary Enigesa
subscribed 580 shares representative of 0.01% of the paid-in capital and paid 180 shares
for a sum of ThCh$ 18. The unpaid balance will be paid proportionally by each shareholder
within three years from the constitution date.(ii)
    
    On September 4, 2006, Endesa-Chile and its subsidiary, Endesa Inversiones Generales
S.A., formally constituted a new subsidiary named Centrales Hidroeléctricas de Aysén S.A.,
whose main objective is the development, financing, ownership, and exploitation of a
hydroelectric project in the Region XI in Aysén, Chile. The shareholders equity of the new
subsidiary is ThCh$ 1,000, divided in 100 nominative shares, all of the same unique series,
of equal value and without nominal value. Endesa-Chile subscribed 99 shares, representing
99% of the paid-in capital and effectively paid ThCh$ 990 for all 99 shares; Endesa
Inversiones Generales S.A. subscribed 1 share, representing 1% of the paid-in capital and
effectively paid ThCh$10 for 1 share.On September 21, 2006 Centrales Hidroelectricas de Aysén S. A. celebrated its First General
Shareholders Meeting and approved a capital increase of ThCh$ 20,000,000 divided into
2,000,000 nominative shares, all of the same unique series, of equal value and without par
value. All of which will be subscribed to and effectively paid within three years from the
date of the First General Shareholders Meeting. Accordingly, of the 1,999,000 shares
corresponding to the capital increase, Endesa-Chile will subscribe to 1,019,900 shares,
representing 51% of the capital increase and 50.99995% of current shareholders equity,
while the new shareholder, Colbún S.A., is subscribing to 980,000 shares representing 49% of
the capital increase. Endesa Inversiones Generales S.A. will not exercise its preferential
right to subscribe to shares. Therefore, its participation in the current shareholders
equity will be 0.00005%As of October 10, 2006, Endesa-Chile subscribed to and effectively paid Ch$ 10,158,194,040
for 1,019,899 shares, which corresponds to Ch$ 10,000 per share. This amount is equal to
the placement price agreed to in Centrales Hidroelectricas de Aysén S.A.s First General
Shareholders Meeting. In the same transaction, the Company subscribed to and effectively
paid Ch$ 10,000 for 1 share, an amount that is equal to the placement price agreed to in
Centrales Hidroeléctricas de Aysén S.A.s First General Shareholders Meeting. The payment
of the subscribed share was made in conformity with the terms established in the public deed
Payment of Acquired Shares by Transfer of Bare Property and the Granting of Usufruct of
Groundwater Rights, which has been subscribed to by all parties to date with the sum of Ch$
9,955 paid in cash and through contribution of the bare property of the groundwater rights
that are described in the aforementioned deed and are valued at Ch$ 5.
 F-44




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
  (i.)
    
    Endesa Brasil S.A. was formed on June 10, 2005 as part of a reorganization of entities
under common control. Its main objective is to be the holding company of other companies
and societies that are direct or indirect participants in the electric sector, including
transmission, distribution, generation and commercialization of electric energy in Brazil
and offshore. Endesa Brasil was created as an energy holding concentrating all the electric
assets of Endesa S.A.s group in Brazil.Endesa Brasil holds shares in the following companies: Companhia de Interconexão Energética
  CIEN, Central Geradora Termelétrica Fortaleza  CGTF, Companhia de Energética do Ceará -
COELCE, Ampla Energia e Serviços S.A., Ampla Investimentos e Serviços S.A., Investluz S.A.
and Centrais Elétricas Cachoeira Dourada S.A.  CDSA.With respect to the above mentioned companies, all the shares formerly controlled by
companies belonging to the Endesa-Chile S.A. group were transferred to Endesa Brasil S.A.
The contributions were made by Enersis, Endesa-Chile, Chilectra and Endesa Internacional.
Endesa-Chile, through its subsidiaries Edegel S.A. and Compañía Eléctrica Cono Sur S.A.
contributed their investments in Cachoeira Dourada S.A. (99.61%) and CIEN (45%), in exchange
for participation in Endesa Brasil as follows: Edegel S.A. 4.18% and Compañía Eléctrica Cono
Sur S.A. 36.27%.
The economic participation of the Company in Endesa Brasil S.A. is 37.85%.(ii.)
    
    On September 6, 2005, the Company acquired 189,000 shares of Ingendesa S.A. for ThCh$
60,606 (historic value), increasing its direct participation in that company to 98.75%.(iii.)
    
    On November 22, 2005, the Company sold 1 share of Compañía Eléctrica San Isidro S.A. to
Endesa Inversiones Generales S.A., for the historical amount of ThCh$ 14.
  F-45




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
  (i.)
    
    On August 11, 2005, the Company and its subsidiary Endesa Inversiones Generales S.A.
acquired 99.999% and 0.001% of Inversiones Lo Venecia Ltda., for historical amounts of
ThCh$ 8,360,472 and ThCh$ 82, (historic values) respectively. Lo Venecia Ltda was the
owner of 25.001% of the paid-in capital of Compañía Eléctrica San Isidro S.A. As a result,
Endesa-Chile now directly and indirectly owns 100% of the shares of Compañía Eléctrica San
Isidro S.A.In accordance with Technical Bulletin No.72 of Chilean Association of Accountants and the
standards established in the Circular No.1697 of the Chilean Superintendency of Securities
and Insurance, the Company recorded the acquisition under the purchase method, valuing the
proportion of all assets and liabilities acquired of Compañía Eléctrica San Isidro S.A. from
third parties as of July 31, 2005 at their respective fair values.The difference determined by the Company between the fair value and the carrying value of
Compañía Eléctrica San Isidro S.A. shareholders equity as of the acquisition date amounted
to ThCh$ 6,645,776, and it is due to the higher economic value of property, plant and
equipment compared to their carrying value. This amount assigned to the property, plant and
equipment will be depreciated over 18 years, which was the estimated remaining useful life
of these assets at the time of acquisition.(ii)
    
    On January 13, 2006 the Company acquired 5,500 shares in Empresa Eléctrica Pangue S.A.
for the sum of ThCh$ 5,638, increasing its participation in said company to 94.973981%.On July 20, 2006, the Company acquired 3,500 shares in Empresa Eléctrica Pangue S.A. for the
sum of ThCh$ 3,514, increasing its participation to 94.98 % (94.97% as of December 31,
2005).(iii)
    
    On June 1, 2006 a merger occurred in Peru through the absorption of Empresa de
Generación Termoeléctrica Ventanilla S.A. (Etevensa) by the Companys indirect subsidiary
Edegel S.A.In accordance with Technical Bulletin No. 72 of the Chilean Association of Accountants, this
reorganization of companies under common control is accounted for using the pooling of
interests method. As a result of the merger, which materialized through stock issued by the
Companys indirect subsidiary Edegel, the Company decreased its indirect participation in
Edegel, held through its investment vehicle Generandes Perú S.A. to 55.44% (63.56% as of
December 31, 2005) and a decrease in equity was recognized in other reserves amounting to
ThCh$ 9,599,504.
 F-46




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
 (iv)
    
    On October 5, 2004, Corporación Financiera del Valle (Corfivalle) committed to
withdrawing as a shareholder of Central Hidroeléctrica de Betania S.A.E.S.P., through an
exchange of assets between Corfivalle and Endesa-Chile, which was to take place as soon as
the legal processes defined by both parties was to be settled. On December 29, 2006, the
transaction was legally formalized and effective.As a result of the finalized transaction, Endesa-Chile through its indirect subsidiary
Betania transferred a transformer station previously owned by Betania and 3.81%
participation in Empresa de Energía de Bogotá S.A. E.S.P. to Corfivalle in exchange for
14.3% participation in Central Hidroélectrica de Betania S.A. E.S.P. which, prior to the
formalization of the transaction was owned by Corfivalle. Consequently, the Company
increased its participation in Central Hidroeléctrica de Betania S.A. E.S.P. from 85.62% to
99.99%.In accordance with Technical Bulletin No. 72 of the Chilean Association of Accountants and
Circular No. 1697 of the Superintendency of Securities and Insurance, the Company accounted
for the purchase of minority interest in Betania under the purchase method and consequently
valued the assets and liabilities acquired from Central Hidroeléctrica de Betania S.A., at
their respective fair values. As a result of this evaluation, it was concluded that the fair
values do not significantly differ from the book values.Consequently, the aforementioned purchase of minority interest was recorded in conformity
with Technical Bulletin No. 72 of the Chilean Association of Accounts and resulted in a
negative goodwill amounting to ThCh$ 7,314,475.
  (i.)
    
    As of October 3, 2005 Sociedad Lajas Inversoras S.A., owner of 99.61% of the Brazilian
company Cachoeira Dourada S.A. was dissolved and liquidated. The assets of the company were
allocated among all shareholders proportionally to their participation, meaning that the
Companys indirect subsidiary Edegel S.A. received 11.47% of these assets and the Companys
subsidiary Compañía Eléctrica Cono Sur S.A. received 88.53% of these assets.(ii.)
    
    On November 29, 2005, the Company acquired 0.001% of Inversiones Lo Venecia Ltda. (see
Note 10 d. (i)) for the amount of ThCh$ 83. As a result of this purchase, Inversiones Lo
Venecia Ltda. ceased to exist as a separate legal entity, given that the Company already
owned the remaining 99.999% of its shares. All assets and liabilities owned by Lo Venecia
Ltda. were transferred to Endesa Chile S.A..(iii.)
    
    On November 29, 2005, the Company transferred the assets of Inversiones Eléctricas
Quillota S.A. to Endesa Chile S.A. (individual entity) through the dissolution of
Inversiones Eléctricas Quillota
 F-47




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
 (iv)
    
    As a result of a reconciliation agreement signed on October 5, 2004, Corporación
Financiera del Valle (Corfivalle) will withdraw its participation in Central Hidroeléctrica
de Betania S.A. E.S.P. through an exchange of assets between Grupo Corfivalle and the
Company. This agreement will be formalized during 2006 when the legal processes defined by
both parts are completed. Afterwards, the assets will be transferred.In this transaction, the Company was to transfer Betania S.A. E.S.P.s electric substation as
well as 3.81% of its participation in Empresa de Energía de Bogotá S.A. E.S.P. to Corfivalle
in exchange for Corfivalles 14.3% participation in Central Hidroeléctrica de Betania S.A.
E.S.P.The parties, understanding that the measures necessary to complete the asset transfer would
occur gradually, have granted usufruct of political and economic rights of the aforementioned
assets, which was exchanged on January 1, 2004. Hence, the Companys 3.81% participation
in Empresa Eléctrica de Bogotá S.A., which was subject to complete execution of this
agreement, was shown under other assets.As a first step of the transaction, on January 30, 2006, Capital Energía S.A. (Cesa) was
dissolved and liquidated. Cesa owned 48.48% of Emgesa S.A.. Central Hidroeléctrica Betania
S.A. controlled Cesa with 51.00% participation.In accordance with Technical Bulletin No. 72 of the Chilean Association of Accountants, this
transaction performed by companies under common control was accounted for using the pooling
of interests method. As a result of the transaction, the Company increased its indirect
participation in Emgesa to 23.45%. (22.36% as of December 31, 2005). In addition, an increase
in equity was recognized in other reserves amounting to ThCh$3,189,180.
 F-48




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
   As of December 31, 2006Country of
    
    
    
    
    
    Reporting
    
    AssociatedCompany
    
    Origin
    
    Investment
    
    Currency
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Central Hidroeléctrica Betania S.A.
    
    Colombia
    
    
    331,103,269
    
    
    US$
    
    
    244,249,312Endesa Brasil S.A.
    
    Brazil
    
    
    364,622,736
    
    
    US$
    
    
    370,553,280Edegel S.A.
    
    Peru
    
    
    140,498,360
    
    
    US$
    
    
    112,553,841Hidroeléctrica El Chocón S.A.
    
    Argentina
    
    
    176,190,422
    
    
    US$
    
    
    78,476,027Comercializadora de Energia del
Mercosur S.A.
    
    Argentina
    
    
    3,715,938
    
    
    US$
    
    
    2,490,419Endesa Costanera S.A.
    
    Argentina
    
    
    82,724,307
    
    
    US$
    
    
    48,643,241Distrilec Inversora S.A.
    
    Argentina
    
    
    2,292,378
    
    
    US$
    
    
    1,203,372Total
    
    
    
    
    
    
    1,101,147,410
    
    
    
    
    
    
    
    858,169,492
 As of December 31, 2005Country of
    
    
    
    
    
    Reporting
    
    AssociatedCompany
    
    Origin
    
    Investment
    
    Currency
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Central Hidroeléctrica Betania S.A.
    
    Colombia
    
    
    319,463,341
    
    
    US$
    
    
    240,501,705Endesa Brasil S.A.
    
    Brazil
    
    
    338,400,058
    
    
    US$
    
    
    370,536,087Edegel S.A.
    
    Peru
    
    
    153,272,201
    
    
    US$
    
    
    117,491,638Hidroeléctrica El Chocón S.A.
    
    Argentina
    
    
    159,724,269
    
    
    US$
    
    
    74,213,758Comercializadora de Energia del
Mercosur S.A.
    
    Argentina
    
    
    3,651,457
    
    
    US$
    
    
    2,581,450Endesa Costanera S.A.
    
    Argentina
    
    
    82,679,287
    
    
    US$
    
    
    52,664,511Distrilec Inversora S.A.
    
    Argentina
    
    
    2,368,564
    
    
    US$
    
    
    1,182,741Total
    
    
    
    
    
    
    1,059,559,177
    
    
    
    
    
    
    
    859,171,890
 F-49




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 10. Investments in related companies, continued:
 As of December 31, 2004Country of
    
    
    
    
    
    Reporting
    
    AssociatedCompany
    
    Origin
    
    Investment
    
    Currency
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Central Hidroeléctrica Betania S.A.
    
    Colombia
    
    
    351,719,201
    
    
    US$
    
    
    268,701,723Central Hidroeléctrica Cachoeira Dourada
S.A.
    
    Brazil
    
    
    353,165,254
    
    
    US$
    
    
    345,177,246Edegel S.A.
    
    Peru
    
    
    174,651,803
    
    
    US$
    
    
    102,852,001Compañía de Interconexión Energética S.A.
    
    Brazil
    
    
    55,880,257
    
    
    US$
    
    
    42,565,097Hidroeléctrica El Chocón S.A.
    
    Argentina
    
    
    177,684,337
    
    
    US$
    
    
    82,290,548Comercializadora de Energia del Mercosur
S.A.
    
    Argentina
    
    
    4,057,014
    
    
    US$
    
    
    2,659,954Endesa Costanera S.A.
    
    Argentina
    
    
    98,304,635
    
    
    US$
    
    
    59,271,598Distrilec Inversora S.A.
    
    Argentina
    
    
    2,769,732
    
    
    US$
    
    
    1,332,668Total
    
    
    
    
    
    
    1,218,232,233
    
    
    
    
    
    
    
    904,850,835
 F-50




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 11. Investments in other companies:
  As of December 31,Number of
    
    PercentageCompany
    
    shares
    
    owned
    
    2005
    
    2006%
    
    ThCh$
    
    ThCh$Club de la Banca y Comercio
    
    
    1
    
    
    
    
    
    
    
    1,893
    
    
    
    2,060Club Empresarial
    
    
    1
    
    
    
    1.00
    %
    
    
    5,365
    
    
    
    23,044Empresa Eléctrica de Aysen S.A.
    
    
    2,516,231
    
    
    
    
    
    
    
    2,168,431
    
    
    
    2,158,061Cooperativa Eléctrica de Chillán Ltda.
    
    
    
    
    
    
    
    
    
    
    14,135
    
    
    
    14,135CDEC-SIC Ltda.
    
    
    
    
    
    
    14.84
    %
    
    
    226,107
    
    
    
    136,234CDEC-SING Ltda.
    
    
    
    
    
    
    7.83
    %
    
    
    109,131
    
    
    
    152,709Empresa Eléctrica de Bogotá S.A (1)
    
    
    
    
    
    
    1.69
    %
    
    
    15,555,025
    
    
    
    Financiera Eléctrica Nacional S.A.
    
    
    4,098
    
    
    
    0.10
    %
    
    
    108,609
    
    
    
    110,256Electrificadora de la Costa S.A.
    
    
    6,795,148
    
    
    
    0.19
    %
    
    
    23,330
    
    
    
    91,500Electrificadora del Caribe S.A.
    
    
    42,784,058
    
    
    
    0.71
    %
    
    
    1,249,998
    
    
    
    1,212,250Total
    
    
    
    
    
    
    
    
    
    
    19,462,024
    
    
    
    3,900,249
 
 (1)
    
    See Note 10 (d) (iv), note 10 (e) (iv.) F-51




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 12. Goodwill and Negative Goodwill:
  As of December 31,Amortization
    
    Net BalanceCompany
    
    2004
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Emgesa S.A.
    
    
    1,325,994
    
    
    
    1,176,818
    
    
    
    724,050
    
    
    
    13,924,538
    
    
    
    7,846,896Gasoducto Atacama Chile Ltda.
    
    
    5,226
    
    
    
    5,226
    
    
    
    5,226
    
    
    
    68,809
    
    
    
    63,583Edegel S.A.
    
    
    33,656
    
    
    
    29,869
    
    
    
    30,390
    
    
    
    353,449
    
    
    
    329,224Pangue S.A.
    
    
    183,157
    
    
    
    183,157
    
    
    
    183,157
    
    
    
    3,037,355
    
    
    
    2,854,198Total
    
    
    1,548,033
    
    
    
    1,395,070
    
    
    
    942,823
    
    
    
    17,384,151
    
    
    
    11,093,901
  As of December 31,Amortization
    
    Net BalanceCompany
    
    2004
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Edegel S.A.
    
    
    8,445,981
    
    
    
    7,495,788
    
    
    
    1,693,940
    
    
    
    23,447,324
    
    
    
    22,162,386Endesa Costanera S.A.
    
    
    2,855,914
    
    
    
    2,534,616
    
    
    
    2,578,829
    
    
    
    9,504,823
    
    
    
    7,091,791Central Hidroeléctrica Betania S.A (see note 10 d. (iv))
    
    
    5,520,336
    
    
    
    5,415,785
    
    
    
    1,681,106
    
    
    
    1,703,645
    
    
    
    7,314,475Emgesa S.A. (see note 10 d. (iv))
    
    
    209,306
    
    
    
    185,759
    
    
    
    83,585
    
    
    
    2,226,482
    
    
    
    Total
    
    
    17,031,537
    
    
    
    15,631,948
    
    
    
    6,037,460
    
    
    
    36,882,274
    
    
    
    36,568,652
 F-52




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 13. Other intangibles:
  As of December 31,Estimated
    
    2005
    2006Useful
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    Accumulatedlife
    
    Total
    
    Amortization
    
    Net Balance
    
    Total
    
    Amortization
    
    Net BalanceMonths
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Easements
    
    24
    
    
    2,740,113
    
    
    
    (1,986,941
    )
    
    
    753,172
    
    
    
    2,886,422
    
    
    
    (2,161,870
    )
    
    
    724,552Water rights
    
    1,440
    
    
    13,729,674
    
    
    
    (1,545,384
    )
    
    
    12,184,290
    
    
    
    13,969,167
    
    
    
    (1,951,614
    )
    
    
    12,017,553Salex-fourth line Comahue
    
    60
    
    
    8,559,528
    
    
    
    (4,499,535
    )
    
    
    4,059,993
    
    
    
    6,946,625
    
    
    
    (3,280,587
    )
    
    
    3,666,038Software
    
    36
    
    
    824,538
    
    
    
    (712,103
    )
    
    
    112,435
    
    
    
    1,528,627
    
    
    
    (1,228,469
    )
    
    
    300,158Other
    
    
    
    
    589,033
    
    
    
    (343,262
    )
    
    
    245,771
    
    
    
    353,947
    
    
    
    (331,587
    )
    
    
    22,360Total
    
    
    
    
    26,442,886
    
    
    
    (9,087,225
    )
    
    
    17,355,661
    
    
    
    25,684,788
    
    
    
    (8,954,127
    )
    
    
    16,730,661
  14. Other assets:
  As of December 31,2005
    
    2006ThCh$
    
    ThCh$Bond discount
    
    
    11,385,954
    
    
    
    8,938,877Reimbursable contributions
    
    
    2,855,377
    
    
    
    2,299,823Deferred commissions on loans and lines of credit
    
    
    7,010,249
    
    
    
    7,142,213Minimum tax on productive assets (Argentina)
    
    
    10,906,483
    
    
    
    12,632,641Bond issuance costs
    
    
    4,822,041
    
    
    
    4,244,621Unrealized loss on derivative contracts
    
    
    137,687
    
    
    
    1,239,618Investment Empresa Eléctrica de Bogotá (1), (2)
    
    
    39,598,937
    
    
    
    Other
    
    
    1,029,468
    
    
    
    1,272,912Total
    
    
    77,746,196
    
    
    
    37,770,705
 
 (1)
    
    See Note 10 e (iv)(2)
    
    As a result of a reconciliation agreement signed on October 5, 2004, Corporación
Financiera del Valle (Corfivalle) will withdraw its participation in Central Hidroelécrica de
Betania S.A. E.S.P. through an exchange of assets between Grupo Corfivalle and the Company.
This agreement was formalized during 2006 when the legal processes defined by both parts are
completed. Afterwards, the assets were transferred.In this transaction, the Company will transfer Betania S.A. E.S.P.s electric substation as
well as 3.81% of its participation in Empresa de Energía de Bogotá S.A. E.S.P. to Corfivalle
in exchange for Corfivalles 14.3% participation in Central Hidroeléctrica de Betania S.A.
E.S.P.The parties, understanding that the measures necessary to complete the asset transfer will
occur gradually, have granted usufruct of political and economic rights of the aforementioned
assets, which was exchanged on January 1, 2004. Hence, the Companys 3.81% participation
in Empresa Eléctrica de Bogotá S.A., which is subject to complete execution of this
agreement, is shown under other assets. F-53




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 15. Debt due to banks and financial institutions:
  Foreign Currency
    
    Local Currency
    
    TotalUS$
    
    Other Foreign Currencies
    
    Ch$Financial Institution
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Banco BBVA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    Banco Barings
    
    
    605,415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    605,415
    
    
    
    Banco Continental
    
    
    2,355,647
    
    
    
    2,184
    
    
    
    
    
    
    
    5,069,490
    
    
    
    
    
    
    
    
    
    
    
    2,355,647
    
    
    
    5,071,674Banco Ciudad de
Buenos Aires
    
    
    
    
    
    
    
    
    
    
    2,116,073
    
    
    
    2,102,568
    
    
    
    
    
    
    
    
    
    
    
    2,116,073
    
    
    
    2,102,568Banco de Crédito e
Inversiones Perú
    
    
    
    
    
    
    
    
    
    
    568,943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    568,943
    
    
    
    Banco de Galicia y
Buenos Aires
    
    
    570,880
    
    
    
    591,097
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    570,880
    
    
    
    591,097Banco de Bogotá
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,712,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,712,308Banco Itau
    
    
    1,217,109
    
    
    
    864,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,217,109
    
    
    
    864,585AVVillas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,857,004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,857,004Banco Provincia de
Buenos Aires
    
    
    1,241,702
    
    
    
    1,347,575
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,241,702
    
    
    
    1,347,575Banco Santander
    
    
    
    
    
    
    
    
    
    
    2,955,910
    
    
    
    4,566,626
    
    
    
    
    
    
    
    
    
    
    
    2,955,910
    
    
    
    4,566,626Citibank
    
    
    
    
    
    
    
    
    
    
    343,784
    
    
    
    4,926,327
    
    
    
    
    
    
    
    
    
    
    
    343,784
    
    
    
    4,926,327Banco Bladex
    
    
    615,357
    
    
    
    2,439,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    615,357
    
    
    
    2,439,560Bancolombia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,063,815
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,063,815Total
    
    
    6,606,110
    
    
    
    5,245,001
    
    
    
    5,984,710
    
    
    
    51,298,138
    
    
    
    5
    
    
    
    
    
    
    
    12,590,825
    
    
    
    56,543,139Total principal
    
    
    6,501,853
    
    
    
    4,377,268
    
    
    
    5,578,405
    
    
    
    51,208,360
    
    
    
    
    
    
    
    
    
    
    
    12,080,258
    
    
    
    55,585,628Weighted average
    
    
    5.85
    %
    
    
    6.94
    %
    
    
    8.71
    %
    
    
    7.94
    %
    
    
    1.00
    %
    
    
    
    
    
    
    7.21
    %
    
    
    7.85
    %
 F-54




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 15. Debt due to banks and financial institutions, continued:
 As of December 31,2005
    
    2006%
    
    %Percentage of debt in foreign currency
    
    
    100.00
    %
    
    
    100.00
    %Percentage of debt Chilean Peso
    
    
    
    
    
    
    Total
    
    
    100.00
    %
    
    
    100.00
    %
 b.
    
    Current portion of long-term debt due to banks and financial institutions were denominated
as follows:
 Foreign Currency
    
    Local Currency
    
    TotalUS$
    
    Other Foreign Currencies
    
    Ch$Financial Institution
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Bancafe
    
    
    
    
    
    
    
    
    
    
    1,203,288
    
    
    
    1,224,653
    
    
    
    
    
    
    
    
    
    
    
    1,203,288
    
    
    
    1,224,653Bancolombia
    
    
    
    
    
    
    
    
    
    
    3,208,770
    
    
    
    4,456,393
    
    
    
    
    
    
    
    
    
    
    
    3,208,770
    
    
    
    4,456,393Banesto
    
    
    4,391,906
    
    
    
    4,413,387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,391,906
    
    
    
    4,413,387Banco Continental
    
    
    
    
    
    
    1,326,929
    
    
    
    3,937
    
    
    
    9,829,342
    
    
    
    
    
    
    
    
    
    
    
    3,937
    
    
    
    11,156,271Banco Bilbao Vizcaya
Argentaria S.A.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,012,536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,012,536Banco Estado
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,825,596
    
    
    
    386,869
    
    
    
    1,825,596
    
    
    
    386,869Banco de Crédito
    
    
    
    
    
    
    
    
    
    
    3,034
    
    
    
    10,125
    
    
    
    
    
    
    
    
    
    
    
    3,034
    
    
    
    10,125Banco Mediocredito Italiano
    
    
    
    
    
    
    
    
    
    
    1,841,361
    
    
    
    2,028,368
    
    
    
    
    
    
    
    
    
    
    
    1,841,361
    
    
    
    2,028,368Banco Nationale París
    
    
    3,493,889
    
    
    
    3,508,128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,493,889
    
    
    
    3,508,128Banco Santander Central
Hispano
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,152,921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,152,921Caja Madrid Miami Agency
    
    
    18,541
    
    
    
    14,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,541
    
    
    
    14,456Conavi
    
    
    
    
    
    
    
    
    
    
    2,005,482
    
    
    
    2,041,089
    
    
    
    
    
    
    
    
    
    
    
    2,005,482
    
    
    
    2,041,089Colpatria
    
    
    
    
    
    
    
    
    
    
    802,193
    
    
    
    816,521
    
    
    
    
    
    
    
    
    
    
    
    802,193
    
    
    
    816,521Corfinsura
    
    
    
    
    
    
    
    
    
    
    3,208,770
    
    
    
    3,265,742
    
    
    
    
    
    
    
    
    
    
    
    3,208,770
    
    
    
    3,265,742Granahorrar
    
    
    
    
    
    
    
    
    
    
    1,203,288
    
    
    
    1,224,653
    
    
    
    
    
    
    
    
    
    
    
    1,203,288
    
    
    
    1,224,653Davivienda
    
    
    
    
    
    
    
    
    
    
    2,419,275
    
    
    
    2,836,477
    
    
    
    
    
    
    
    
    
    
    
    2,419,275
    
    
    
    2,836,477Export Development
Corporation
    
    
    1,733,770
    
    
    
    1,800,708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,733,770
    
    
    
    1,800,708J.P. Morgan Chase Bank
    
    
    93,751
    
    
    
    13,405,136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,751
    
    
    
    13,405,136Citibank
    
    
    
    
    
    
    2,134,696
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,134,696Kreditanstalt für
Wiederaufbau
    
    
    298,660
    
    
    
    300,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,660
    
    
    
    300,064Credit Suisse First Boston
    
    
    
    
    
    
    11,218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,218Skandinaviska Enskilda
Banken
    
    
    1,737,851
    
    
    
    882,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,737,851
    
    
    
    882,607Deutsche Bank
    
    
    
    
    
    
    123,514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,514Standard Bank
    
    
    
    
    
    
    123,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,515The Bank of
Tokyo-Mitsubishi, Ltd.New
York Branch
    
    
    
    
    
    
    2,517
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,517WestLB AG, New York Branch
    
    
    
    
    
    
    2,308,262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,308,262Scotiabank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,477
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,477Total
    
    
    11,768,368
    
    
    
    30,355,137
    
    
    
    15,899,398
    
    
    
    29,990,297
    
    
    
    1,825,596
    
    
    
    386,869
    
    
    
    29,493,362
    
    
    
    60,732,303Total Principal
    
    
    10,941,478
    
    
    
    29,412,041
    
    
    
    13,514,489
    
    
    
    29,819,999
    
    
    
    1,825,596
    
    
    
    386,869
    
    
    
    26,281,563
    
    
    
    59,618,909
 F-55




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 15. Debt due to banks and financial institutions, continued:
  As of December 31,2005
    
    2006%
    
    %Percentage of debt in foreign currency
    
    
    93.81
    %
    
    
    99.36
    %Percentage of debt in Chilean Peso
    
    
    6.19
    %
    
    
    0.64
    %Total
    
    
    100.00
    %
    
    
    100.00
    %
 F-56




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 15. Debt due to banks and financial institutions, continued:
  As ofDecember31, 2005
    
    As of December 31, 2006After 1
    
    After 2
    
    After 3
    
    After 5year but
    
    years but
    
    years but
    
    years but
    
    
    
    
    
    Total long-
    
    AnnualLong-term
    
    within 2
    
    within 3
    
    within 5
    
    within 10
    
    After 10
    
    term
    
    interestFinancial Institution
    
    Currency
    
    portion
    
    years
    
    years
    
    years
    
    years
    
    years
    
    portion
    
    rateThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    %ABN Amro Bank
    
    US$
    
    
    2,834,338
    
    
    
    
    
    
    
    
    
    
    
    1,885,548
    
    
    
    
    
    
    
    
    
    
    
    1,885,548
    
    
    
    5.71
    %Instituto de Crédito Oficial
    
    US$
    
    
    2,834,338
    
    
    
    
    
    
    
    
    
    
    
    2,684,134
    
    
    
    
    
    
    
    
    
    
    
    2,684,134
    
    
    
    5.71
    %Bancafe
    
    $ Colom
    
    
    1,145,384
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bancolombia
    
    $ Colom
    
    
    3,054,360
    
    
    
    
    
    
    
    23,071,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,071,588
    
    
    
    9.07
    %Banesto
    
    US$
    
    
    6,393,772
    
    
    
    2,168,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,168,434
    
    
    
    6.83
    %Banco Bilbao Viscaya
Argentaria
    
    US$
    
    
    8,503,016
    
    
    
    
    
    
    
    
    
    
    
    5,656,644
    
    
    
    
    
    
    
    
    
    
    
    5,656,644
    
    
    
    5.71
    %Banco Bilbao Viscaya
Argentaria
    
    $ Colom
    
    
    
    
    
    
    
    
    
    
    19,620,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,620,308
    
    
    
    9.07
    %Banco Estado
    
    $ Readj.
    
    
    971,845
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Estado
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    549,027
    
    
    
    
    
    
    
    
    
    
    
    549,027
    
    
    
    5.71
    %Banco Nationales de Paris
    
    US$
    
    
    6,499,168
    
    
    
    2,430,049
    
    
    
    1,752,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,182,488
    
    
    
    5.78
    %Banco Nationales de Paris
    
    US$
    
    
    7,704,858
    
    
    
    871,028
    
    
    
    871,028
    
    
    
    1,742,056
    
    
    
    3,484,113
    
    
    
    
    
    
    
    6,968,225
    
    
    
    5.98
    %Banco Medio Crédito
    
    $ Arg
    
    
    8,209,989
    
    
    
    2,022,063
    
    
    
    2,022,063
    
    
    
    3,033,467
    
    
    
    
    
    
    
    
    
    
    
    7,077,593
    
    
    
    1.75
    %Banco Santander Central
Hispano
    
    US$
    
    
    8,503,016
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    5.71
    %Banco Santander Central
Hispano
    
    $ Colom
    
    
    
    
    
    
    
    
    
    
    22,337,554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,337,554
    
    
    
    9.07
    %Bank Of Tokio Mitsubishi Ltda
    
    US$
    
    
    6,802,413
    
    
    
    
    
    
    
    
    
    
    
    5,872,925
    
    
    
    
    
    
    
    
    
    
    
    5,872,925
    
    
    
    5.71
    %Caja Madrid, Miami Agency
    
    US$
    
    
    4,421,568
    
    
    
    
    
    
    
    
    
    
    
    2,941,455
    
    
    
    
    
    
    
    
    
    
    
    2,941,455
    
    
    
    5.71
    %Citibank N.A.
    
    US$
    
    
    8,503,016
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    5.71
    %Citibank
    
    US$
    
    
    
    
    
    
    
    
    
    
    10,647,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,647,800
    
    
    
    6.00
    %Colpatria
    
    $ Colom
    
    
    763,591
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conavi
    
    $ Colom
    
    
    1,908,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corfinsura
    
    $ Colom
    
    
    3,054,361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Davivienda
    
    $ Colom
    
    
    2,290,771
    
    
    
    
    
    
    
    7,502,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,502,299
    
    
    
    9.07
    %Export Development
Corporation Loan
    
    US$
    
    
    5,993,254
    
    
    
    762,225
    
    
    
    762,225
    
    
    
    1,524,450
    
    
    
    2,286,675
    
    
    
    
    
    
    
    5,335,575
    
    
    
    6.61
    %Export Development
Corporation Loan
    
    US$
    
    
    2,659,373
    
    
    
    773,075
    
    
    
    773,075
    
    
    
    386,537
    
    
    
    
    
    
    
    
    
    
    
    1,932,687
    
    
    
    6.25
    %Export Development Canada
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    998,231
    
    
    
    
    
    
    
    
    
    
    
    998,231
    
    
    
    5.71
    %Granahorrar
    
    $ Colom
    
    
    1,145,405
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kreditanstalt für Wiederaufbau
    
    US$
    
    
    715,607
    
    
    
    436,853
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    436,853
    
    
    
    4.85
    %JP Morgan Chase Bank
    
    US$
    
    
    13,081,563
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WestLB AG, New York Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    8,518,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,518,240
    
    
    
    6.45
    %Banco de Crédito
    
    Soles
    
    
    6,329,174
    
    
    
    16,990,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,990,017
    
    
    
    5.00
    %Banco Continental
    
    Soles
    
    
    8,998,102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Continental
    
    US$
    
    
    
    
    
    
    
    
    
    
    10,257,565
    
    
    
    8,656,800
    
    
    
    
    
    
    
    
    
    
    
    18,914,365
    
    
    
    5.00
    %Skandinaviska Enskilda Banken
    
    US$
    
    
    864,649
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit Suisse First Boston
    
    US$
    
    
    15,697,875
    
    
    
    4,565,624
    
    
    
    9,126,686
    
    
    
    2,279,390
    
    
    
    
    
    
    
    
    
    
    
    15,971,700
    
    
    
    11.12
    %Banco Provincia de Buenos
Aires
    
    US$
    
    
    523,263
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deutsche Bank AG, New
York Branch
    
    US$
    
    
    2,267,470
    
    
    
    
    
    
    
    
    
    
    
    1,508,438
    
    
    
    
    
    
    
    
    
    
    
    1,508,438
    
    
    
    5.71
    %Deutsche Bank AG, New
York Branch
    
    US$
    
    
    
    
    
    
    3,105,607
    
    
    
    6,211,218
    
    
    
    17,302,675
    
    
    
    
    
    
    
    
    
    
    
    26,619,500
    
    
    
    8.89
    %Scotiabank
    
    Soles
    
    
    
    
    
    
    8,326,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,326,400
    
    
    
    6.75
    %ING Bank N.V., Curacao Branch
    
    US$
    
    
    10,883,860
    
    
    
    
    
    
    
    
    
    
    
    7,240,504
    
    
    
    
    
    
    
    
    
    
    
    7,240,504
    
    
    
    5.71
    %San Paolo
    
    US$
    
    
    6,802,413
    
    
    
    
    
    
    
    
    
    
    
    4,525,315
    
    
    
    
    
    
    
    
    
    
    
    4,525,315
    
    
    
    5.71
    %HSBC
    
    US$
    
    
    5,668,677
    
    
    
    
    
    
    
    
    
    
    
    3,771,096
    
    
    
    
    
    
    
    
    
    
    
    3,771,096
    
    
    
    5.71
    %The Royal Bank of Scotland PLC
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    5.71
    %B.N.P. Paribas Panama Branco
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    798,585
    
    
    
    
    
    
    
    
    
    
    
    798,585
    
    
    
    5.71
    %Banesto N.Y. Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    5.71
    %Standard Bank
    
    US$
    
    
    
    
    
    
    3,105,607
    
    
    
    6,211,218
    
    
    
    17,302,675
    
    
    
    
    
    
    
    
    
    
    
    26,619,500
    
    
    
    8.89
    %Total
    
    
    
    
    166,029,465
    
    
    
    45,556,982
    
    
    
    129,685,306
    
    
    
    105,467,050
    
    
    
    5,770,788
    
    
    
    
    
    
    
    286,480,126
 F-57




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 15. Debt due to banks and financial institutions, continued:
 As of December 31,2005
    
    2006%
    
    %Percentage of debt in foreign currency
    
    
    99.44
    %
    
    
    100.00
    %Percentage of debt in Chilean Peso
    
    
    0.56
    %
    
    
    0.00
    %Total
    
    
    100.00
    %
    
    
    100.00
    %
   F-58




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable
  Par ValueFace Value
    
    Interest
    
    Maturity
    
    ThCh$
    
    ThCh$Issuer
    
    Series
    
    Currency
    
    Outstanding
    
    rate
    
    Date
    
    2005
    
    2006Endesa-Chile
    
    1
    
    US$
    
    
    230,000,000
    
    
    
    7.88
    %
    
    
    02-01-2027
    
    
    
    3,537,645
    
    
    
    3,604,972Endesa-Chile
    
    2
    
    US$
    
    
    220,000,000
    
    
    
    7.33
    %
    
    
    02-01-2037
    
    
    
    3,513,491
    
    
    
    3,574,778Endesa-Chile
    
    3
    
    US$
    
    
    200,000,000
    
    
    
    8.13
    %
    
    
    02-01-2097
    
    
    
    734,801
    
    
    
    785,969Endesa-Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    7.75
    %
    
    
    07-15-2008
    
    
    
    7,434,687
    
    
    
    7,564,374Endesa-Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    8.50
    %
    
    
    04-01-2009
    
    
    
    4,447,731
    
    
    
    4,525,315Endesa-Chile
    
    E-1 and E-2
    
    U.F.
    
    
    6,000,000
    
    
    
    6.20
    %
    
    
    08-01-2006
    
    
    
    112,915,513
    
    
    
    Endesa-Chile
    
    F
    
    U.F.
    
    
    1,500,000
    
    
    
    6.20
    %
    
    
    08-01-2022
    
    
    
    700,457
    
    
    
    699,850Endesa-Chile
    
    144A
    
    US$
    
    
    400,000,000
    
    
    
    8.35
    %
    
    
    08-01-2013
    
    
    
    7,282,070
    
    
    
    7,409,094Endesa-Chile
    
    144A
    
    US$
    
    
    200,000,000
    
    
    
    8.63
    %
    
    
    08-01-2015
    
    
    
    3,760,949
    
    
    
    3,826,553Endesa-Chile
    
    G
    
    U.F.
    
    
    4,000,000
    
    
    
    4.80
    %
    
    
    10-15-2010
    
    
    
    725,487
    
    
    
    724,858Endesa-Chile
    
    H
    
    U.F.
    
    
    4,000,000
    
    
    
    6.20
    %
    
    
    10-15-2008
    
    
    
    933,940
    
    
    
    933,132Betania
    
    B
    
    $ Col.
    
    
    400,000,000,000
    
    
    
    10.70
    %
    
    
    11-10-2011
    
    
    
    1,115,596
    
    
    
    1,401,250Edegel-Peru
    
    1
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    %
    
    
    06-03-2006
    
    
    
    15,806,229
    
    
    
    Edegel-Peru
    
    2
    
    US$
    
    
    30,000,000
    
    
    
    8.41
    %
    
    
    02-14-2007
    
    
    
    503,052
    
    
    
    16,480,993Edegel-Peru
    
    3
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    %
    
    
    06-13-2007
    
    
    
    71,032
    
    
    
    16,042,565Edegel-Peru
    
    3A
    
    Soles
    
    
    50,000,000
    
    
    
    4.13
    %
    
    
    09-04-2006
    
    
    
    7,726,866
    
    
    
    Edegel-Peru
    
    3B
    
    Soles
    
    
    50,000,000
    
    
    
    4.88
    %
    
    
    10-30-2006
    
    
    
    7,687,466
    
    
    
    Edegel-Peru
    
    4A
    
    Soles
    
    
    50,000,000
    
    
    
    4.75
    %
    
    
    12-12-2006
    
    
    
    7,643,621
    
    
    
    Edegel-Peru
    
    5 A
    
    US$
    
    
    10,000,000
    
    
    
    3.75
    %
    
    
    01-26-2009
    
    
    
    83,940
    
    
    
    85,404Edegel-Peru
    
    6 A
    
    Soles
    
    
    30,000,000
    
    
    
    5.88
    %
    
    
    02-27-2008
    
    
    
    91,840
    
    
    
    100,281Edegel-Peru
    
    6 B
    
    Soles
    
    
    20,000,000
    
    
    
    5.88
    %
    
    
    06-18-2008
    
    
    
    9,362
    
    
    
    10,223Edegel-Peru
    
    7 A
    
    US$
    
    
    10,000,000
    
    
    
    7.33
    %
    
    
    01-26-2007
    
    
    
    126,819
    
    
    
    167,150Edegel-Peru
    
    8 A
    
    Soles
    
    
    22,370,000
    
    
    
    6.00
    %
    
    
    02-23-2007
    
    
    
    62,547
    
    
    
    68,296Edegel-Peru
    
    8 B
    
    Soles
    
    
    25,700,000
    
    
    
    6.47
    %
    
    
    03-30-2008
    
    
    
    63,386
    
    
    
    69,212Edegel-Peru
    
    9 A
    
    Soles
    
    
    70,000,000
    
    
    
    6.91
    %
    
    
    06-1-2009
    
    
    
    61,441
    
    
    
    67,088Edegel-Peru
    
    10 A
    
    Soles
    
    
    35,000,000
    
    
    
    6.72
    %
    
    
    10-21-2010
    
    
    
    68,739
    
    
    
    75,057Edegel-Peru
    
    11 A
    
    US$
    
    
    20,000,000
    
    
    
    3.71
    %
    
    
    11-18-2012
    
    
    
    73,979
    
    
    
    75,311Edegel-Peru
    
    13 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.47
    %
    
    
    10-20-2013
    
    
    
    
    
    
    
    52,365Edegel-Peru
    
    14 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.09
    %
    
    
    10-27-2010
    
    
    
    
    
    
    
    44,397Edegel-Peru
    
    15 A
    
    Soles
    
    
    30,000,000
    
    
    
    6.16
    %
    
    
    11-27-2011
    
    
    
    
    
    
    
    28,193Emgesa-Colombia
    
    A-1
    
    $ Col.
    
    
    15,000,000,000
    
    
    
    9.36
    %
    
    
    01-26-2007
    
    
    
    54,716
    
    
    
    190,202Emgesa-Colombia
    
    B-7
    
    $ Col.
    
    
    19,500,000,000
    
    
    
    9.13
    %
    
    
    02-23-2006
    
    
    
    3,529,370
    
    
    
    Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    229,825,000,000
    
    
    
    10.30
    %
    
    
    10-09-2009
    
    
    
    1,136,232
    
    
    
    Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    60,000,000,000
    
    
    
    9.87
    %
    
    
    11-10-2009
    
    
    
    182,356
    
    
    
    94,157Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    8,928,433,000
    
    
    
    10.25
    %
    
    
    10-09-2009
    
    
    
    85,905
    
    
    
    50,992Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    15,889,565,000
    
    
    
    10.62
    %
    
    
    10-08-2009
    
    
    
    46,530
    
    
    
    1,156,693Emgesa-Colombia
    
    B-1
    
    $ Col.
    
    
    50,000,000,000
    
    
    
    12.43
    %
    
    
    07-26-2006
    
    
    
    12,707,360
    
    
    
    Emgesa-Colombia
    
    B-1
    
    $ Col.
    
    
    85,000,000,000
    
    
    
    12.43
    %
    
    
    07-26-2006
    
    
    
    1,054,346
    
    
    
    Emgesa-Colombia
    
    A-10
    
    $ Col.
    
    
    210,000,000,000
    
    
    
    10.33
    %
    
    
    02-23-2015
    
    
    
    4,467,004
    
    
    
    579,485Emgesa-Colombia
    
    A1
    
    $Col
    
    
    15,000,000,000
    
    
    
    8.68
    %
    
    
    07-26-2006
    
    
    
    19,471,553
    
    
    
    Endesa Chile
Internacional
    
    Only
    
    US$
    
    
    150,000,000
    
    
    
    7.20
    %
    
    
    04-01-2006
    
    
    
    79,902,183
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    309,820,243
    
    
    
    70,488,209
 F-59




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
  Par ValueFace Value
    
    Interest
    
    Maturity
    
    2005
    
    2006Issuer
    
    Series
    
    Currency
    
    Outstanding
    
    Rate
    
    Date
    
    ThCh$
    
    ThCh$Endesa-Chile
    
    1
    
    US$
    
    
    230,000,000
    
    
    
    7.88
    %
    
    
    02-01-2027
    
    
    
    107,729,806
    
    
    
    109,608,986Endesa-Chile
    
    2
    
    US$
    
    
    220,000,000
    
    
    
    7.33
    %
    
    
    02-01-2037
    
    
    
    115,117,750
    
    
    
    117,125,800Endesa-Chile
    
    3
    
    US$
    
    
    200,000,000
    
    
    
    8.13
    %
    
    
    02-01-2097
    
    
    
    21,148,177
    
    
    
    21,517,074Endesa-Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    7.75
    %
    
    
    07-15-2008
    
    
    
    209,305,000
    
    
    
    212,956,000Endesa-Chile
    
    Only
    
    US$
    
    
    400,000,000
    
    
    
    8.50
    %
    
    
    04-01-2009
    
    
    
    209,305,000
    
    
    
    212,956,000Endesa-Chile
    
    F
    
    U.F.
    
    
    1,500,000
    
    
    
    6.20
    %
    
    
    08-01-2022
    
    
    
    27,528,422
    
    
    
    27,504,570Endesa-Chile
    
    144A
    
    US$
    
    
    400,000,000
    
    
    
    8.35
    %
    
    
    08-01-2013
    
    
    
    209,305,000
    
    
    
    212,956,000Endesa-Chile
    
    144A
    
    US$
    
    
    200,000,000
    
    
    
    8.63
    %
    
    
    08-01-2015
    
    
    
    104,652,500
    
    
    
    106,478,000Endesa-Chile
    
    G
    
    U.F.
    
    
    4,000,000
    
    
    
    4.80
    %
    
    
    10-15-2010
    
    
    
    73,409,124
    
    
    
    73,345,520Endesa-Chile
    
    H
    
    U.F.
    
    
    4,000,000
    
    
    
    6.20
    %
    
    
    10-15-2008
    
    
    
    73,409,124
    
    
    
    73,345,520Betania
    
    B
    
    $ Col.
    
    
    400,000,000,000
    
    
    
    10.70
    %
    
    
    11-10-2011
    
    
    
    68,723,204
    
    
    
    95,121,057Edegel-Peru
    
    2
    
    US$
    
    
    30,000,000
    
    
    
    8.41
    %
    
    
    2-14-2007
    
    
    
    15,697,875
    
    
    
    Edegel-Peru
    
    3
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    %
    
    
    6-13-2007
    
    
    
    15,697,875
    
    
    
    Edegel-Peru
    
    5A
    
    US$
    
    
    10,000,000
    
    
    
    3.75
    %
    
    
    1-26-2009
    
    
    
    5,232,625
    
    
    
    5,323,900Edegel-Peru
    
    6 A
    
    Soles
    
    
    30,000,000
    
    
    
    5.88
    %
    
    
    2-27-2008
    
    
    
    4,575,306
    
    
    
    4,995,840Edegel-Peru
    
    6 B
    
    Soles
    
    
    20,000,000
    
    
    
    5.88
    %
    
    
    6-18-2008
    
    
    
    3,050,204
    
    
    
    3,330,560Edegel-Peru
    
    7 A
    
    US$
    
    
    10,000,000
    
    
    
    8.50
    %
    
    
    7-26-2009
    
    
    
    5,232,625
    
    
    
    5,323,900Edegel-Peru
    
    8 A
    
    Soles
    
    
    22,370,000
    
    
    
    6.00
    %
    
    
    03-10-2008
    
    
    
    3,411,653
    
    
    
    3,725,230Edegel-Peru
    
    8 B
    
    Soles
    
    
    25,700,000
    
    
    
    6.47
    %
    
    
    03-30-2008
    
    
    
    3,919,512
    
    
    
    4,279,769Edegel-Peru
    
    9A
    
    Soles
    
    
    70,000,000
    
    
    
    6.91
    %
    
    
    06-01-2009
    
    
    
    10,675,714
    
    
    
    11,656,960Edegel-Peru
    
    10A
    
    Soles
    
    
    35,000,000
    
    
    
    6.72
    %
    
    
    10-21-2010
    
    
    
    5,337,857
    
    
    
    5,828,480Edegel-Peru
    
    11A
    
    US$
    
    
    20,000,000
    
    
    
    3.71
    %
    
    
    11-18-2012
    
    
    
    10,465,250
    
    
    
    10,647,800Edegel-Peru
    
    13 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.47
    %
    
    
    10-20-2013
    
    
    
    
    
    
    
    4,163,200Edegel-Peru
    
    14 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.09
    %
    
    
    10-27-2010
    
    
    
    
    
    
    
    4,163,200Edegel-Peru
    
    15 A
    
    Soles
    
    
    30,000,000
    
    
    
    6.16
    %
    
    
    11-27-2011
    
    
    
    
    
    
    
    4,995,840Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    229,825,000,000
    
    
    
    10.30
    %
    
    
    10-09-2009
    
    
    
    52,647,645
    
    
    
    54,652,729Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    60,000,000,000
    
    
    
    9.87
    %
    
    
    11-10-2009
    
    
    
    13,744,473
    
    
    
    14,268,154Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    8,928,433,000
    
    
    
    10.25
    %
    
    
    10-09-2009
    
    
    
    3,686,110
    
    
    
    2,243,172Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    15,889,565,000
    
    
    
    10.62
    %
    
    
    10-09-2009
    
    
    
    2,071,243
    
    
    
    3,992,085Emgesa-Colombia
    
    A-10
    
    $ Col.
    
    
    250,000,000,000
    
    
    
    10.33
    %
    
    
    02-23-2015
    
    
    
    48,106,194
    
    
    
    59,450,686Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,423,185,268
    
    
    
    1,465,956,032
 F-60




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
  Endesa-Chile (individual legal entity):
  Rating Entity
    
    CategoryFeller  Comisión Clasificadora de Riesgo Ltda.
    
    A+Comisión Clasificadora de Riesgo
    
    A+Fitch Chile Clasificadora de Riesgo Ltda.
    
    A+
 Fourth Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Bearer bonds in local currency, denominated in Unidades de FomentoIssuance Value
    
    Seven and a half million (UF 7,500,000) divided into:Series E-1: 1000 bonds at UF 1,000 each.Series E-2: 500 bonds at UF 10,000 each.Series F: 150 bonds at UF 10,000 each.Indexation
    
    Based on variations in Unidad de Fomento indexAmortization period
    
    Series E-1 and E-2: August 1, 2006.Series F: August 1, 2022.Early Redemption
    
    Only in the case of Series F, beginning February 1, 2012.Nominal interest rate
    
    6.2% annually, compounded on outstanding capital, readjusted by the value of the
Unidad de Fomento. The interest rate applied semi-annually will be equal to
3.0534%.Placement period
    
    36 months from the registration date in the Chilean Securities Register of the SVS.Guarantee
    
    There is no specific guarantee; however, there is a general guarantee over the
issuers assets.Interest payments
    
    Interest will be paid semi-annually each August 1 and February 1, starting August
1, 2001. Accrued interest as of December 31, 2006 amounted to ThCh$ 699,850
(ThCh$ 3,502,284 in 2005) and is presented under current liabilities.
 F-61




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Fifth Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Bearer bonds in local currency, denominated in Unidades de FomentoIssuance Value
    
    Eight million (UF 8,000,000) divided into:Series G: 4,000 bonds at UF 1,000 each.Series H: 4,000 bonds at UF 1,000 each.Indexation
    
    Based on variations in Unidad de Fomento indexAmortization period
    
    Series G: October 15, 2010.Series H: in semi-annual installments from April 15, 2010.Early Redemption
    
    Only in the case of Series G, beginning October 16, 2004.Nominal interest rate
    
    Series G: 4.8% annually, in semi-annual installments, compounded on outstanding
capital, readjusted by the value of the Unidad de Fomento. The interest rate
applied semi-annually will be equal to 2.3719%.Series H: 6.2% annually, in semi-annual installments, compounded on outstanding
capital, readjusted by the value of the Unidad de Fomento. The interest rate
applied semi-annually will be equal to 3.0534%.Placement period
    
    36 months from the registration date in the Chilean Securities Register of the SVS.Guarantee
    
    There is no specific guarantee; however, there is a general guarantee over the
issuers assets.Interest payments
    
    Interest will be paid semi-annually each April 15 and October 15, starting April
15, 2004. Accrued interest as of December 31, 2006 amounted to ThCh$ 1,657,990
(ThCh$ 1,659,429 in 2005) and is presented under current liabilities.
 
    
    The Company has issued and placed four public offerings of bonds in the
international market as follows:
  Rating Entity
    
    CategoryStandard & Poors 
Moodys Investors Services 
Fitch
    
    BBB-
Baa3
BBB
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 First Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Marketable securities denominated in US$(Yankee bonds) in the US market.Issuance Value
    
    Six hundred and fifty million US Dollars (US$ 650,000,000) divided into:Series 1: US$230,000,000Series 2: US$220,000,000Series 3: US$200,000,000Indexation
    
    Variation of the US DollarCapital Amortization
    
    Series 1 full expiration on February 1, 2027Series 2 full expiration on February 1, 2037 (Put Option on February 1,
2009, on which date the holders may redeem 100% of the securities plus
accrued interest).Series 3 full expiration on February 1, 2097Nominal interest rate
    
    Series 1: 7.875% annuallySeries 2: 7.325% annuallySeries 3: 8.125% annuallyInterest Payments
    
    Interest will be paid semi-annually each February 1 and August 1
annually, starting January 27, 1997. Accrued interest as of
December 31, 2006 amounts to ThCh$ 11,197,384 (ThCh$ 11,005,411 in
2005), which is shown under current liabilities.
 Second Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Marketable securities denominated in US$(Yankee bonds) in the US market.Issuance Value
    
    Four hundred million US Dollars (US$ 400,000,000)Indexation
    
    Variation in the US DollarCapital amortization
    
    Series 1 full expiration on July 15, 2008Nominal interest rate
    
    Series 1: 7.75% annuallyInterest Payments
    
    Interest will be paid semi-annually each January 15 and July 15
annually, starting January 15, 1999. Accrued interest as of
December 31, 2006 amounts to ThCh$ 7,564,374 (ThCh$ 7,434,687 in
2005), which is shown under current liabilities.
 Third Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Marketable securities denominated in US$(Yankee bonds) in the US market.Issuance Value
    
    Four hundred million US Dollars (US$ 400,000,000)Indexation
    
    Variation in the US DollarCapital amortization
    
    Series 1 full expiration on April 1, 2009Nominal interest rate
    
    Series 1: 8.50% annuallyInterest Payments
    
    Interest will be paid semi-annually each October 1 and April 1 annually,
starting October, 1 1999. Accrued interest as of December 31,
2006 amounts to ThCh$ 4,525,315 (ThCh$ 4,447,731 in 2005),
which is shown under current liabilities.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Fourth Issuance
    
    Issuance TermsIssuer
    
    Empresa Nacional de Electricidad S.ASecurities issued
    
    Marketable electronic securities denominated in US$(Yankee bonds) in
the US and European market under the Rule 144-A.Issuance Value
    
    Six hundred million US Dollars (US$ 600,000,000) divided in two series.Indexation
    
    Variation in the US DollarCapital amortization
    
    Series 1: expiration on August 1, 2013: US Dollars 400,000,000;Series 2: expiration on August 1, 2015: US Dollars 200,000,000Nominal interest rate
    
    Series 1: 8.35% annuallySeries 2: 8.625% annuallyInterest Payments
    
    Interest will be paid semi-annually each February 1 and August 1
annually, starting July 23, 2003. Accrued interest as of
December 31, 2006 amounts to ThCh$ 11,235,647 (ThCh$ 11,043,019
in 2005), which is shown under current liabilities.
   
  F-64




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Endesa-Chile Internacional
  Rating Entity
    
    CategoryStandard & Poors 
Moodys Investors Services
    
    BBB-
Baa3
 First Issuance
    
    Issuance TermsIssuer
    
    Endesa-Chile InternacionalSecurities issued
    
    Marketable securities denominated in US$(150,000 bonds).Issuance Value
    
    One hundred and fifty million Dollars (US$ 150,000,000)Readjustment
    
    Variation in the US DollarCapital amortization
    
    Full expiration as of April 1, 2006Nominal interest rate
    
    7.2 % annually until expirationInterest Payments
    
    Interest is to be paid semi-annually, beginning on
October 1, 1996. Accrued interest as of December 31,
2006 amounts to ThCh$ 0 (ThCh$ 1,412,809 in 2005), which
is shown under current liabilities.Guarantee
    
    As of December 31, 2006 this emission is totally paid.
 Edegel S.A.
  Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in US$(110,000 bonds).Issuance Value
    
    One hundred and ten million US dollars (US$ 110,000,000)Capital amortization
    
    Full expiration as of June 3, 2006, February 14, 2007, and June 13, 2007, respectively.Nominal interest rate
    
    8.75%, 8.41%, 8.75%, and 8.44% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of December 31, 2006 amounts
to ThCh$ 708,922 (ThCh$ 682,437 in 2005) and is shown under other current liabilities.
 F-65




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in Peruvian Soles (10,000 bonds).Issuance Value
    
    Fifty million Peruvian Soles (Peruvian Soles 50,000,000)Capital amortization
    
    Full expiration as of September 4, 2006Nominal interest rate
    
    4.13% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 0 (ThCh$ 101,356 in 2005) and
is shown under other current liabilities. As of December 31, 2006
this issuance has been paid-in-full.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in Peruvian Soles (10,000 bonds).Issuance Value
    
    Fifty million Peruvian Soles (Peruvian Soles 50,000,000)Capital amortization
    
    Full expiration as of October 30, 2006.Nominal interest rate
    
    4.875% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 0 (ThCh$ 61,956 in 2005) and is
shown under other current liabilities. As of December 31, 2006
this issuance has been paid-in-full.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in Peruvian Soles (10,000 bonds).Issuance Value
    
    Fifty million Peruvian Soles (Peruvian Soles 50,000,000)Capital amortization
    
    Full expiration as of December 12, 2006.Nominal interest rate
    
    4.75% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 0 (ThCh$ 18,110 in 2005) and is
shown under other current liabilities. As of December 31, 2006
this issuance has been paid-in-full.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in US Dollar (10,000 bonds).Issuance Value
    
    Ten million US Dollar (US$ 10,000,000)Capital amortization
    
    Full expiration as of January 26, 2009.Nominal interest rate
    
    3.75% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 85,404 (ThCh$ 83,940 in
2005) and is shown under other current liabilities.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in Peruvian Soles (6,000 bonds).Issuance Value
    
    Thirty million Peruvian Soles (Peruvian Soles 30,000,000)Capital amortization
    
    Full expiration as of September 27, 2008.Nominal interest rate
    
    5.875% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 100,281 (ThCh$ 91,840 in 2005)
and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in Peruvian Soles (4,000 bonds).Issuance Value
    
    Twenty million Peruvian Soles (Peruvian Soles 20,000,000)Capital amortization
    
    Full expiration as of June 18, 2008.Nominal interest rate
    
    5.88% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 10,223 (ThCh$ 9,363 in 2005)
and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated in US$(10,000 bonds).Issuance Value
    
    Ten million US$(US$ 10,000,000)Capital amortization
    
    Full expiration as of July 26, 2009.Nominal interest rate
    
    7.33% annuallyInterest Payments
    
    Interest will be paid semi-annually. Accrued interest
as of December 31, 2006 amounts to ThCh$ 167,150 (ThCh$
126,819 in 2005) and is shown under other current
liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (4,474 bonds).Issuance Value
    
    Twenty two million, three hundred seventy thousand Peruvian Soles
(Peruvian Soles 22,370,000)Capital amortization
    
    Full expiration as of March 10, 2008.Nominal interest rate
    
    6.00% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 68,296 (ThCh$ 62,547 in 2005)
and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (5,140 bonds).Issuance Value
    
    Twenty five million, seven hundred thousand Peruvian Soles
(Peruvian Soles 25,700,000)Capital amortization
    
    Full expiration as of March 30, 2008.Nominal interest rate
    
    6.47% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 69,212 (ThCh$ 63,386 in
2005) and is shown under other current liabilities.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (14,000 bonds).Issuance Value
    
    Seventy million Peruvian Soles (Peruvian Soles 70,000,000)Capital amortization
    
    Full expiration as of June 01, 2009.Nominal interest rate
    
    6.91% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 67,088 (ThCh$ 61,441 in
2005) and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (7,000 bonds).Issuance Value
    
    Thirty five million Peruvian Soles (Peruvian Soles 35,000,000)Capital amortization
    
    Full expiration as of October 21, 2010.Nominal interest rate
    
    6.72% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 75,057 (ThCh$ 68,739 in
2005) and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated US Dollars (20,000 bonds).Issuance Value
    
    Twenty million US Dollars (US$ 20,000,000)Capital amortization
    
    Full expiration as of November 18, 2012.Nominal interest rate
    
    3.71% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as
of December 31, 2006 amounts to ThCh$ 75,311 (ThCh$ 73,979
in 2005) and is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (5,000 bonds).Issuance Value
    
    Twenty five million Peruvian Soles (Peruvian Soles 25,000,000)Capital amortization
    
    Full expiration as of October 20, 2013.Nominal interest rate
    
    6.47% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 52,365 and is shown under
other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (5,000 bonds).Issuance Value
    
    Twenty five million Peruvian Soles (Peruvian Soles 25,000,000)Capital amortization
    
    Full expiration as of October 27, 2010.Nominal interest rate
    
    6.09% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 44,397 and is shown under
other current liabilities.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (6,000 bonds).Issuance Value
    
    Thirty million Peruvian Soles (Peruvian Soles 30,000,000)Capital amortization
    
    Full expiration as of November 27, 2011.Nominal interest rate
    
    6.16% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 28,193 and is shown under
other current liabilities.
 Emgesa S.A.
  First Issuance
    
    Issuance TermsIssuer
    
    Emgesa S.A.Securities issued
    
    Marketable securities denominated in Colombian pesosIssuance Value
    
    Five hundred and thirty billion Colombian pesos ($Col 530,000,000,000)Capital amortization
    
    Full expiration between 2004 and 2009 at the amount of $Col 449,554,880Nominal interest rate
    
    8.97% annual average rateInterest Payments
    
    Interest will be paid quarterly and annually. Accrued interest as of
December 31, 2006 amounts to ThCh$ 1,492,044 (ThCh$ 1,598,953 in 2005)
and is shown under current liabilities.
 Second Issuance
    
    Issuance TermsIssuer
    
    Emgesa S.A.Securities issued
    
    Marketable securities denominated in Colombian pesosIssuance Value
    
    Fifty billion Colombian pesos ($Col 50,000,000,000)Capital amortization
    
    Full expiration on July 26, 2006Nominal interest rate
    
    12.43% average annual rateInterest Payments
    
    Interest will be paid annually. Accrued interest as
of December 31, 2006 amounts to ThCh$ 0 (ThCh$
1,784,508 in 2005) and is shown under current
liabilities. As of December 31, 2006 this bond has
been paid-in-full.
 Third Issuance
    
    Issuance TermsIssuer
    
    Emgesa S.A.Securities issued
    
    Marketable securities denominated in Colombian pesosIssuance Value
    
    Two hundred and fifty billion of Colombian pesos ($Col 250,000,000,000)Capital amortization
    
    Full expiration on February 23, 2015Nominal interest rate
    
    IPC + 5.04% (10.33%) quarterlyInterest Payments
    
    Interest will be paid annually. Accrued interest as of December 31,
2006 amounts to ThCh$ 579,485 (ThCh$ 523,342 in 2005) and is shown
under current liabilities.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 16. Bonds and notes payable, continued:
 Central Hidroeléctrica de Betania S.A.
  First Issuance
    
    Issuance TermsIssuer
    
    Central Hidroeléctrica de Betania S.A. E.S.P.Securities issued
    
    Ordinary bonds denominated in Colombian pesosIssuance Value
    
    Four hundred billion Colombian pesos ($Col 400,000,000,000)Capital amortization
    
    Expiration between 2009 and 2011 at the amount of $Col 400,000,000,000Nominal interest rate
    
    IPC+6.29% (10.70%) effective annual rateInterest Payments
    
    Interest will be paid quarterly. Accrued interest as of December 31,
2006 amounts to ThCh$ 1,401,205 (ThCh$ 1,115,596 in 2005) and is
shown under current liabilities.
    Short-term
    
    Long-termAs of December 31,
    
    As of December 31,2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Mitsubishi Corporation
    
    
    28,286,512
    
    
    
    31,263,006
    
    
    
    53,796,618
    
    
    
    57,143,548Total
    
    
    28,286,512
    
    
    
    31,263,006
    
    
    
    53,796,618
    
    
    
    57,143,548
 Balance includes financing arrangements provided by the supplier of electrical
installations and equipment for San Isidro and Endesa Costanera plants.
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 17. Accrued liabilities:
  Short-term
    
    Long-termAs of December 31,
    
    As of December 31,2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Employee salaries
    
    
    9,333,113
    
    
    
    10,041,838
    
    
    
    
    
    
    
    Provision for contingences, lawsuits, and
others
    
    
    8,874,402
    
    
    
    5,676,933
    
    
    
    
    
    
    
    Provision for expenses, costs and investments
    
    
    3,306,365
    
    
    
    8,808,123
    
    
    
    
    
    
    
    Post retirement benefits
    
    
    
    
    
    
    
    
    
    
    4,231,387
    
    
    
    4,241,073Employee severance indemnities (1)
    
    
    123,681
    
    
    
    58,902
    
    
    
    5,301,605
    
    
    
    5,942,464Pensions and post-retirement benefits of
foreign subsidiaries
    
    
    
    
    
    
    
    
    
    
    19,239,708
    
    
    
    19,818,218Accrued purchases of energy and power
    
    
    822,448
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    866,148
    
    
    
    189,185
    
    
    
    395,153
    
    
    
    Total
    
    
    23,326,157
    
    
    
    24,774,981
    
    
    
    29,167,853
    
    
    
    30,001,755
 
 (1)
    
    Long-term accruals include severance indemnities to personnel, calculated in accordance
with the policy described in Note 2 (p), and an analysis of the changes in the accrual in each
year is as follows: As of December 31,2005
    
    
    2006ThCh$
    
    
    ThCh$Opening balance as of January 1
    
    
    4,488,763
    
    
    
    5,301,605Net increase in accrual
    
    
    1,057,749
    
    
    
    1,884,341Net transfers to short-term accrual
    
    
    (244,907
    )
    
    
    (1,243,482
    )Total
    
    
    5,301,605
    
    
    
    5,942,464
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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 18. Minority interest:
  a.
    
    Minority shareholders participation in the shareholders equity of the Companys
subsidiaries as of each year-end is as follows:
 As of December 31, 2005
    
    As of December 31, 2006Company
    
    Equity
    
    Participation
    
    Total
    
    Equity
    
    Participation
    
    TotalThCh$
    
    %
    
    ThCh$
    
    ThCh$
    
    %
    
    ThCh$Capital de Energía S.A.
    
    
    360,943,855
    
    
    
    49.00
    %
    
    
    176,862,489
    
    
    
    
    
    
    
    
    
    
    
    Central
Hidroeléctrica Betania S.A.
    
    
    374,886,708
    
    
    
    14.38
    %
    
    
    53,900,461
    
    
    
    338,438,193
    
    
    
    0.01
    %
    
    
    20,448Endesa Costanera S.A.
    
    
    143,443,519
    
    
    
    35.74
    %
    
    
    51,259,409
    
    
    
    139,758,763
    
    
    
    35.74
    %
    
    
    49,942,665Edegel S.A.
    
    
    440,365,430
    
    
    
    36.44
    %
    
    
    160,485,896
    
    
    
    464,027,142
    
    
    
    44.56
    %
    
    
    206,758,769Emgesa S.A. (1)
    
    
    595,283,825
    
    
    
    51.52
    %
    
    
    306,671,774
    
    
    
    618,289,529
    
    
    
    76.55
    %
    
    
    473,281,467Empresa Eléctrica Pangue S.A.
    
    
    97,690,887
    
    
    
    5.02
    %
    
    
    4,900,370
    
    
    
    116,788,312
    
    
    
    5.00
    %
    
    
    5,858,335Endesa Argentina S.A.
    
    
    41,485,034
    
    
    
    0.01
    %
    
    
    4,148
    
    
    
    39,793,197
    
    
    
    0.01
    %
    
    
    3,979Generandes Perú S.A.
    
    
    256,441,790
    
    
    
    40.37
    %
    
    
    103,523,037
    
    
    
    235,060,927
    
    
    
    40.37
    %
    
    
    94,891,793Hidroeléctrica El Chocón S.A.
    
    
    171,383,120
    
    
    
    34.81
    %
    
    
    59,658,465
    
    
    
    188,190,814
    
    
    
    34.81
    %
    
    
    65,509,222Hidroinvest S.A.
    
    
    68,639,517
    
    
    
    30.07
    %
    
    
    20,639,903
    
    
    
    76,517,705
    
    
    
    30.07
    %
    
    
    23,008,874Pehuenche S.A.
    
    
    212,394,646
    
    
    
    7.35
    %
    
    
    15,611,006
    
    
    
    216,562,914
    
    
    
    7.35
    %
    
    
    15,917,374Túnel El Melón S.A.
    
    
    (10,732,330
    )
    
    
    0.05
    %
    
    
    (5,366
    )
    
    
    (8,966,075
    )
    
    
    0.05
    %
    
    
    (4,483
    )Total
    
    
    
    
    
    
    
    
    
    
    953,511,592
    
    
    
    
    
    
    
    
    
    
    
    935,188,443
 
 (1)
    
    The Company exercises control over Emgesa pursuant to a shareholders agreement F-72




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 18. Minority interest, continued:
 b.
    
    Minority shareholders equity participation in the results from operations of the Companys
subsidiaries for each year is as follows:
 Year-ended December 31, 2004
    
    Year-ended December 31, 2005
    
    Year-ended December 31, 2006Net
    
    Partici-
    
    
    
    
    
    Net
    
    Partici-
    
    
    
    
    
    Net
    
    Partici-Company
    
    Income
    
    pation
    
    Total
    
    Income
    
    pation
    
    Total
    
    Income
    
    pation
    
    TotalThCh$
    
    
    
    
    
    ThCh$
    
    ThCh$
    
    
    
    
    
    ThCh$
    
    ThCh$
    
    
    
    
    
    ThCh$Capital de Energía S.A.
    
    
    14,145,520
    
    
    
    49.00
    %
    
    
    6,931,305
    
    
    
    19,783,507
    
    
    
    49.00
    %
    
    
    9,693,918
    
    
    
    
    
    
    
    
    
    
    
    Central Hidroeléctrica
Betania S.A.
    
    
    (4,907,185
    )
    
    
    14.38
    %
    
    
    (705,546
    )
    
    
    2,480,263
    
    
    
    14.38
    %
    
    
    356,608
    
    
    
    1,013,673
    
    
    
    0.01
    %
    
    
    61Central Cachoeira
Dourada S.A. (1)
    
    
    15,674,335
    
    
    
    0.39
    %
    
    
    61,777
    
    
    
    23,461,480
    
    
    
    0.39
    %
    
    
    92,466
    
    
    
    
    
    
    
    
    
    
    
    Endesa Costanera S.A.
    
    
    5,792,753
    
    
    
    35.74
    %
    
    
    2,070,035
    
    
    
    (11,048,688
    )
    
    
    35.74
    %
    
    
    (3,948,239
    )
    
    
    (6,186,904
    )
    
    
    35.74
    %
    
    
    (2,210,884
    )Compañía Eléctrica San
Isidro S.A.
    
    
    15,033,990
    
    
    
    50.00
    %
    
    
    7,516,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inversiones Eléctricas
Quillota S.A.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,268,767
    )
    
    
    50.00
    %
    
    
    (5,134,383
    )
    
    
    
    
    
    
    
    
    
    
    Edegel S.A.
    
    
    18,820,383
    
    
    
    36.44
    %
    
    
    6,858,861
    
    
    
    35,247,397
    
    
    
    36.44
    %
    
    
    12,845,492
    
    
    
    8,637,978
    
    
    
    44.56
    %
    
    
    3,848,865Emgesa S.A.
    
    
    29,782,712
    
    
    
    51.52
    %
    
    
    15,343,131
    
    
    
    41,236,222
    
    
    
    51.52
    %
    
    
    21,243,623
    
    
    
    62,646,331
    
    
    
    76.55
    %
    
    
    47,953,824Empresa Eléctrica
Pangue S.A.
    
    
    5,119,494
    
    
    
    5.02
    %
    
    
    256,804
    
    
    
    19,783,241
    
    
    
    5.02
    %
    
    
    992,367
    
    
    
    38,948,354
    
    
    
    5.00
    %
    
    
    1,953,727Endesa Argentina S.A.
    
    
    (478,942
    )
    
    
    0.01
    %
    
    
    (48
    )
    
    
    (9,716,647
    )
    
    
    0.01
    %
    
    
    (972
    )
    
    
    (2,413,625
    )
    
    
    0.01
    %
    
    
    (241
    )Generandes Perú S.A.
    
    
    20,283,264
    
    
    
    40.37
    %
    
    
    8,188,155
    
    
    
    29,805,937
    
    
    
    40.37
    %
    
    
    12,032,365
    
    
    
    6,372,945
    
    
    
    40.37
    %
    
    
    2,572,695Hidroeléctrica El
Chocón S.A.
    
    
    (3,693,801
    )
    
    
    34.81
    %
    
    
    (1,285,813
    )
    
    
    2,638,290
    
    
    
    34.81
    %
    
    
    918,388
    
    
    
    13,818,182
    
    
    
    34.81
    %
    
    
    4,810,109Hidroinvest S.A.
    
    
    (7,152,882
    )
    
    
    30.07
    %
    
    
    (2,150,871
    )
    
    
    (122,186
    )
    
    
    30.07
    %
    
    
    (36,742
    )
    
    
    6,679,741
    
    
    
    30.07
    %
    
    
    2,008,598Ingendesa S.A.
    
    
    1,002,491
    
    
    
    2.36
    %
    
    
    23,684
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pehuenche S.A.
    
    
    29,480,337
    
    
    
    7.35
    %
    
    
    2,166,806
    
    
    
    61,448,069
    
    
    
    7.35
    %
    
    
    4,516,433
    
    
    
    67,661,976
    
    
    
    7.35
    %
    
    
    4,973,155Túnel El Melón S.A.
    
    
    (1,818,508
    )
    
    
    0.05
    %
    
    
    (910
    )
    
    
    (1,823,705
    )
    
    
    0.05
    %
    
    
    (912
    )
    
    
    1,766,256
    
    
    
    0.05
    %
    
    
    883Total
    
    
    
    
    
    
    
    
    
    
    45,274,365
    
    
    
    
    
    
    
    
    
    
    
    53,570,412
    
    
    
    
    
    
    
    
    
    
    
    65,910,792
 
 (1)
    
    See Note 10 (c) (i.). F-73




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 19. Shareholders equity:
 a.
    
    Dividends
  Historical valuePayment date
    
    Ch$ per share
    
    Type of dividend
    
    Related YearApril 2004
    
    2.30000
    
    Final
    
    2003April 2005
    
    4.13000
    
    Final
    
    2004March 2006
    
    5.82000
    
    Final
    
    2005December 2006
    
    2.57000
    
    Provisional
    
    2006
 b.
    
    Number of shares
 .
 c.
    
    Subscribed and paid-in capital
  F-74




---



##### Table of Contents



19. Shareholders equity, continued:
 d.
    
    Other reserves
  As of December 31,2005
    
    2006ThCh$
    
    ThCh$Accumulated capital revaluation
    
    
    1,808,270
    
    
    
    1,808,270Revaluation of property, plant and equipment under Decree Law No. 4
    
    
    1,239,755
    
    
    
    1,239,755Other revaluations
    
    
    80,675
    
    
    
    80,675Reserve for technical revaluation of property, plant and equipment (Circulars 550 and 566)
    
    
    31,013,499
    
    
    
    31,013,499Reserve for technical revaluation of investments in subsidiaries subsequently sold
(Circulars 550 and 566)
    
    
    26,080,021
    
    
    
    26,080,021Equity adjustment of unconsolidated subsidiaries
    
    
    (353,377
    )
    
    
    (353,377
    )Reserve for reorganization of entities under common control
    
    
    (34,402,100
    )
    
    
    (40,812,424
    )Reduction of capital in foreign subsidiaries
    
    
    (6,582,538
    )
    
    
    (6,582,538
    )Accumulated translation adjustment of Chilean entities reporting in foreign currency
    
    
    (18,692,665
    )
    
    
    (17,002,234
    )Accumulated foreign currency translation adjustment related to foreign subsidiaries, net (1)
    
    
    (35,424,666
    )
    
    
    (32,415,571
    )Total
    
    
    (35,233,126
    )
    
    
    (36,943,924
    )
 
 (1)
    
    The detail of the net cumulative translation adjustment for foreign currency gains and
losses on liabilities and net investments measured in currencies other than the Chilean peso
as of December 31, of each year are as follows: As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Endesa Argentina S.A.
    
    
    7,267
    
    
    
    (5,288,515
    )
    
    
    (4,581,235
    )Endesa Chile
Internacional
    
    
    1,782,975
    
    
    
    1,782,975
    
    
    
    1,782,975Distrilec Inversora S.A.
    
    
    31,560
    
    
    
    (130,113
    )
    
    
    (109,428
    )Cesa S.A.
    
    
    (15,067
    )
    
    
    (38,497
    )
    
    
    C.H. Betania S.A. (Endesa
Colombia S.A. in 2003)
    
    
    122,677
    
    
    
    122,677
    
    
    
    (180,647
    )Ingendesa Do Brasil Ltda.
    
    
    (126,018
    )
    
    
    (250,622
    )
    
    
    (232,166
    )Cono Sur S.A.
    
    
    (21,235,350
    )
    
    
    (30,190,654
    )
    
    
    (27,805,935
    )Endesa Costanera S.A.
    
    
    (542,872
    )
    
    
    (1,431,917
    )
    
    
    (1,289,135
    )Total
    
    
    (19,974,828
    )
    
    
    (35,424,666
    )
    
    
    (32,415,571
    )
 F-75




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 20. Other income and expenses:
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Effect of application of BT 64
    
    
    6,186,425
    
    
    
    10,986,369
    
    
    
    34,557Gain on sale of property, plant and equipment
    
    
    7,214,042
    
    
    
    4,158,843
    
    
    
    3,324,949Gain on sale of other assets
    
    
    27,121
    
    
    
    
    
    
    
    Energy and power contract settlement
    
    
    12,743,603
    
    
    
    7,695,386
    
    
    
    5,082,701Dividends Empresa Eléctrica de Bogotá
    
    
    1,508,665
    
    
    
    932,684
    
    
    
    Indemnities and commissions
    
    
    10,261
    
    
    
    1,876,636
    
    
    
    7,981,564Gains on service and other contracts
    
    
    274,827
    
    
    
    788,079
    
    
    
    545,478Gain on sale of derivative instruments
    
    
    7,314,872
    
    
    
    
    
    
    
    Recovery of expenses and clients portfolio
    
    
    1,242,825
    
    
    
    2,344,640
    
    
    
    878,268Reversal of contingency provision
    
    
    13,920,112
    
    
    
    1,084,015
    
    
    
    8,691,946Other
    
    
    3,758,614
    
    
    
    4,112,370
    
    
    
    3,428,184Total
    
    
    54,201,367
    
    
    
    33,979,022
    
    
    
    29,967,647
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Effect of application of BT 64
    
    
    33,506,580
    
    
    
    13,544,648
    
    
    
    15,692,016Adjustment of Investments in Related Companies
    
    
    1,546,905
    
    
    
    4,228,429
    
    
    
    1,051,646Loss on sale of property, plant and equipment
    
    
    545,042
    
    
    
    399,173
    
    
    
    173,596Costs of sales of property, plant and equipment
    
    
    223,480
    
    
    
    228,100
    
    
    
    557,828Retirement benefits and severance indemnities
    
    
    
    
    
    
    867,703
    
    
    
    1,074,377Board of directors compensation
    
    
    232,022
    
    
    
    233,471
    
    
    
    240,962Contingencies and litigation
    
    
    7,870,383
    
    
    
    16,332,763
    
    
    
    8,215,354Energy and power settlement (1)
    
    
    27,180,199
    
    
    
    8,686,575
    
    
    
    6,566,564Provision for obsolescence fixed assets
    
    
    114,271
    
    
    
    
    
    
    
    Tax penalties
    
    
    3,374,614
    
    
    
    1,888,764
    
    
    
    2,988,948Tax on equity, Colombia
    
    
    2,702,086
    
    
    
    3,456,142
    
    
    
    2,976,641Other
    
    
    6,569,594
    
    
    
    4,845,901
    
    
    
    4,029,789Total
    
    
    83,865,176
    
    
    
    54,711,669
    
    
    
    43,567,721
 
 (1)
    
    The amount recorded in 2004 corresponds to the result of recalculating the balances of
power from the period April 2000-March 2004. In 2005, the amount recorded corresponds to the
period of April 2004  December 2004. In 2006, the amount recorded corresponds to the period
of January 2005  December 2005. F-76




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 21. Price-level restatement:
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$AssetsCurrent assets
    
    
    3,504,372
    
    
    
    9,760,657
    
    
    
    5,758,423Accounts receivable from subsidiaries
    
    
    3,215,316
    
    
    
    3,863,870
    
    
    
    1,826,027Property, plant and equipment
    
    
    45,983,062
    
    
    
    67,357,017
    
    
    
    38,197,648Investment in subsidiaries
    
    
    4,376,568
    
    
    
    6,140,135
    
    
    
    9,871,299Goodwill and negative goodwill
    
    
    (1,480,119
    )
    
    
    (1,475,290
    )
    
    
    (476,918
    )Other assets
    
    
    54,362,422
    
    
    
    56,461,399
    
    
    
    16,724,750Net gain from asset accounts
    
    
    109,961,621
    
    
    
    142,107,788
    
    
    
    71,901,229Liabilities and Shareholders equityShareholders equity
    
    
    (38,873,383
    )
    
    
    (56,352,200
    )
    
    
    (33,336,238
    )Current and long-term liabilities
    
    
    (61,058,905
    )
    
    
    (73,626,076
    )
    
    
    (30,804,815
    )Minority interest
    
    
    (4,227,127
    )
    
    
    (5,255,833
    )
    
    
    (2,826,309
    )Accounts payable to subsidiaries
    
    
    (231,094
    )
    
    
    
    
    
    
    Net loss from Liabilities and Shareholders equity accounts
    
    
    (104,390,509
    )
    
    
    (135,234,109
    )
    
    
    (66,967,362
    )Net gain from price-level restatement of balance
sheet accounts
    
    
    5,571,112
    
    
    
    6,873,679
    
    
    
    4,933,867Net loss from price-level restatement of income
statement
    
    
    (3,232,052
    )
    
    
    (5,528,046
    )
    
    
    (3,446,376
    )Net gain from price-level restatement
    
    
    2,339,060
    
    
    
    1,345,633
    
    
    
    1,487,491
 F-77




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 22. Foreign currency translation:
  Assets
 As of December 31,Current assets
    
    Currency
    
    2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    US$
    
    
    (106,830
    )
    
    
    1,371,950
    
    
    
    421,960Other
    
    
    748
    
    
    
    
    
    
    
    (2,576
    )Time deposits
    
    US$
    
    
    (2,291,341
    )
    
    
    2,182,287
    
    
    
    (452,269
    )Other
    
    
    3,847
    
    
    
    (234,743
    )
    
    
    Other accounts receivable, net
    
    US$
    
    
    (6,633
    )
    
    
    (22,532
    )
    
    
    2,567UC
    
    
    (62,727
    )
    
    
    
    
    
    
    11,599Other
    
    
    (402,568
    )
    
    
    (22,397
    )
    
    
    (9,060
    )Other current assets
    
    US$
    
    
    (557,951
    )
    
    
    (2,629,570
    )
    
    
    574Other
    
    
    (142,179
    )
    
    
    (29,208
    )
    
    
    (2,472
    )Accounts due from related companies
    
    US$
    
    
    (13,748,970
    )
    
    
    (516,627
    )
    
    
    143,672Prepaid expenses
    
    US$
    
    
    6,974
    
    
    
    
    
    
    
    Non-current assetsLong-term receivables
    
    US$
    
    
    898,790
    
    
    
    
    
    
    
    UC
    
    
    7,486
    
    
    
    
    
    
    
    Accounts due from related companies
    
    US$
    
    
    
    
    
    
    (12,458,654
    )
    
    
    2,258,428Forward contracts
    
    US$
    
    
    1,191,874
    
    
    
    
    
    
    
    36,854Other non-current assets
    
    US$
    
    
    (50,846,136
    )
    
    
    (38,085,884
    )
    
    
    10,186,104Subtotal foreign currency translation
    
    
    
    
    (66,055,616
    )
    
    
    (50,445,378
    )
    
    
    12,595,381
 Liabilities
 As of December 31,Current liabilities
    
    Currency
    
    2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Short-term debt due to banks and financial institutions
    
    US$
    
    
    (470,271
    )
    
    
    
    
    
    
    Current portion of long-term
    
    US$
    
    
    2,350,588
    
    
    
    (3,245,814
    )
    
    
    20,093debt due to banks and financial institutions
    
    ¥
    
    
    15,502
    
    
    
    (51,283
    )
    
    
    Euro
    
    
    1,275
    
    
    
    1,264
    
    
    
    Pounds
    
    
    (106,754
    )
    
    
    (30,922
    )
    
    
    Current portion of bonds payable
    
    US$
    
    
    225,776
    
    
    
    9,949,604
    
    
    
    (3,577,144
    )Current portion of long-term
    
    US$
    
    
    547,970
    
    
    
    (498,415
    )
    
    
    Accounts payable to related companies
    
    US$
    
    
    
    
    
    
    1,222,203
    
    
    
    Dividends payable
    
    Other
    
    
    52
    
    
    
    
    
    
    
    Accrued liabilities
    
    US$
    
    
    192,685
    
    
    
    16,215
    
    
    
    Other
    
    
    1,849
    
    
    
    (2,072,405
    )
    
    
    Accounts payable
    
    US$
    
    
    (77,032
    )
    
    
    
    
    
    
    6,908Other
    
    
    767
    
    
    
    
    
    
    
    1,852Miscellaneous payables
    
    US$
    
    
    (1
    )
    
    
    
    
    
    
    (211,446
    )Other current liabilities
    
    US$
    
    
    55,451
    
    
    
    1,273,268
    
    
    
    (309,080
    )Other
    
    
    
    
    
    
    
    
    
    
    105Long-term liabilitiesDebt due to banks and financial Institutions
    
    US$
    
    
    21,281,230
    
    
    
    24,221,686
    
    
    
    1,344,795¥
    
    
    3,965
    
    
    
    65,769
    
    
    
    Euro
    
    
    476
    
    
    
    5,390
    
    
    
    UP
    
    
    957,398
    
    
    
    42,099
    
    
    
    Bonds payable
    
    US$
    
    
    62,637,419
    
    
    
    36,444,978
    
    
    
    (5,775,803
    )Long-term notes payables
    
    US$
    
    
    1,643,908
    
    
    
    
    
    
    
    Accounts payable
    
    US$
    
    
    1,776,508
    
    
    
    3,448,597
    
    
    
    Other long-term liabilities
    
    US$
    
    
    (3,161,313
    )
    
    
    (1,100,657
    )
    
    
    (474,996
    )Accounts payable to related
Companies
    
    US$
    
    
    
    
    
    
    
    
    
    
    (12,693
    )Forwards
    
    US$
    
    
    
    
    
    
    (4,032,324
    )
    
    
    Subtotal foreign currency translation
    
    
    
    
    87,877,448
    
    
    
    65,659,253
    
    
    
    (8,987,409
    )Net effect on income
    
    
    
    
    21,821,832
    
    
    
    15,213,875
    
    
    
    3,607,972
 F-78




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 23. Bond issuance costs:
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Consulting fees
    
    
    403,120
    
    
    
    
    
    
    
    Other
    
    
    99,120
    
    
    
    
    
    
    
    Total
    
    
    502,240
    
    
    
    
    
    
    
    
  24. Other cash-flow items:
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Realization of forward contracts
    
    
    (4,413,442
    )
    
    
    (3,870,707
    )
    
    
    (533,184
    )Revolving Facility Mitsubishi Fees
    
    
    
    
    
    
    
    
    
    
    (570,450
    )Santander Leasing
    
    
    (2,124,445
    )
    
    
    
    
    
    
    Cost of debt Jumbo 1,2,3
    
    
    (2,050,514
    )
    
    
    
    
    
    
    Other
    
    
    (33,215
    )
    
    
    
    
    
    
    (68,352
    )Total cash-outflow
    
    
    (8,621,616
    )
    
    
    (3,870,707
    )
    
    
    (1,171,986
    )
  As of December, 312004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Payment to OHL for the sale of Infraestructura 2000 S.A.
    
    
    40,778,880
    
    
    
    
    
    
    
    Receipt of Loans granted to former subsidiaries of
Infraestructura 2000 S.A.
    
    
    1,862,197
    
    
    
    2,106,789
    
    
    
    542,842Return of capital investment from related company (Empresa de
Energía de Bogotá S.A.)
    
    
    
    
    
    
    4,487,837
    
    
    
    Others
    
    
    276,696
    
    
    
    
    
    
    
    493,484Total Cash flows related to other receipts from investments
    
    
    42,917,773
    
    
    
    6,594,626
    
    
    
    1,036,326
 F-79




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 25. Financial derivatives:
  As of December 31, 2006Nominal
    
    Period
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hedged
    
    FairType
    
    amount
    
    Of
    
    
    
    
    
    Sales (S)/
    
    Hedged
    
    Amount
    
    Value(1)
    
    US$
    
    Maturity
    
    Item
    
    Purchase (P)
    
    Item
    
    ThCh$
    
    ThCh$S
    
    
    
    125,000,000
    
    
    3rd Quarter 2008
    
    Exchange rate
    
    P
    
    
    
    Bonds
    
    
    66,548,750
    
    
    
    184,062EO
    
    
    40,000,000
    
    
    3rd Quarter 2010
    
    Interest rate
    
    P
    /S
    
    
    Bank-debt
    
    
    21,295,600
    
    
    
    (43,242
    )EO
    
    
    60,000,000
    
    
    3rd Quarter 2009
    
    Interest rate
    
    P
    /S
    
    
    Bank-debt
    
    
    31,943,400
    
    
    
    17,528
 
 (1)
    
    EO = European Option or S = Swap 26. Commitments and contingencies:
   As of December 31, 2006Book value of encumbered assets and schedule to be releasedGuarantee
    
    Subsidiary
    
    2006
    
    2007-2009
    
    After 2009
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Bancos Acreedores
    
    Panque S.A.
    
    
    4,403,734
    
    
    
    
    
    
    
    
    
    
    
    Banco Estado
    
    Tunel el Melón
    
    
    386,869
    
    
    
    
    
    
    
    
    
    
    
    Soc. De Energía of
República of Argentina
    
    Endesa Argentina,Endesa Costanera
    
    
    9,105,961
    
    
    
    
    
    
    
    
    
    
    
    Mitsubishi, Credit
Suisse First Boston
    
    Endesa Costanera
    
    
    51,425,680
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
    
    Endesa Matriz
    
    
    5,610,319
    
    
    
    
    
    
    
    
    
    
    
    Miscelllaneous
    
    Edegel
    
    
    84,298,633
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    155,231,196
    
    
    
    
    
    
    
    
    
    
    
    
  As of December 31, 2006Schedule of balance payable of related debtGuarantee
    
    Subsidiary
    
    2006
    
    2007-2009
    
    After 2009
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Compañía Vestas
    
    Endesa Eco S.A.
    
    
    
    
    
    
    6,601,636
    
    
    
    
    
    
    
    6,601,636Vestas Eólica S.A.
    
    Endesa Eco S.A.
    
    
    
    
    
    
    5,439,682
    
    
    
    
    
    
    
    5,439,682Juzgado Civil de Quillota
    
    San Isidro
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    10,000Banco Español de Crédito
    
    Compaña Eléctrica Tarapacá S.A.
    
    
    
    
    
    
    6,581,821
    
    
    
    
    
    
    
    6,581,821Total
    
    
    
    
    
    
    
    
    18,633,139
    
    
    
    
    
    
    
    18,633,139
 F-80




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
    Endesa-Chile
 
 
 th
  
 F-81




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 
 th
 
 th
 th
 F-82




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 th
 
 
 
 
 
 
 F-83




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:  th
 
 th
 
 th
 
 
 
 th
 
 F-84




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
  th
 
 nd
 
 
 
 
 
 F-85




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 Pangue S.A.
 
 
 nd
 
 
 
 
 
 F-86




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
  26. Commitments and contingencies, continued:
 
 
 th
 
 
 
 Pehuenche S.A.
 
 
 F-87




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 
 
 
 
 th
 
 
 
 F-88




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 San Isidro S.A.
 
 
 th
 
 
 
 F-89




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 Edegel S.A.A. (Perú)
 
 
 
 
 
 
 
 
 
 
 F-90




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 
 Generandes Perú S.A. (Perú)
 
 
 Central Hidroeléctrica de Betanía S.A. ESP (Colombia)
 
 
 
 
 F-91




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 rd th      rd  th
 st
 
 Emgesa S.A. (Colombia)
 
 
 F-92




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 st th th
 
 th     nd nd
 
 F-93
    Table of Contents   Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 Hidroelectrica El Chocón S.A. (Argentina)
 
 
 
 
 F-94




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
 
 
 Hidroinvest S.A. (Argentina)
 
 Endesa Costanera S.A. (Argentina)
  F-95




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##### Table of Contents





Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)


26. Commitments and contingencies, continued:






















F-96




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
  26. Commitments and contingencies, continued:
     Endesa S.A. (Parent company)
  -
    
    Ratio of debt to cash flows for four quarters for Endesa S.A. and its Chilean subsidiaries
does not exceed 9.25 for 2006, which decreases to 7.50 in 2010;-
    
    The ratio of consolidated debt to EBITDA for four consolidated quarters, does not exceed 5.90
for 2006, decreasing to 4.20 in 2010;-
    
    The ratio of Endesa-Chile and its Chilean subsidiaries cash flows to financial expenses for
four quarters, no less than 1.50 for 2006, increasing to 2.00 in 2010;-
    
    The consolidated debt to shareholders equity plus minority interest does not exceed 107.0%
for 2006, decreasing to 100% in 2010;-
    
    No less than 50% of the total consolidated assets of Endesa-Chile should belong to companies
involved in generation, transmission and trade of electric energy;-
    
    Minimum shareholders equity at least equal to UF 45,000,000.
  Pehuenche S.A.
  Endesa Costanera S.A.
 F-97




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
    -
    
    The long-term debt with third parties cannot exceed US$ 215 million (excluding short-term
debt, commercial debt, intercompany loans, and debt with Italian Government (see above));
short term debt of less than 180 days cannot exceed US$ 10 million;-
    
    Clauses that restrict change of control of the Company;-
    
    Clauses that restrict payments to shareholders, including subordination of the debt
associated with certain financial indicators.
 El Chocón
  
 Edegel S.A.
 
 Hidroeléctrica Betania S.A.
  
 Cross-Default Provisions:
  F-98




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 26. Commitments and contingencies, continued:
   27. Sureties obtained from third parties:
 Endesa S.A.
  Compañía Eléctrica de Tarapacá S.A.
  Enigesa S.A.
  F-99




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies:
   As of December 31,2005
    
    2006Account
    
    Currency
    
    ThCh$
    
    ThCh$Cash
    
    Ch$
    
    
    1,046,141
    
    
    
    393,297US$
    
    
    334,444
    
    
    
    2,190,450$Col
    
    
    7,005,432
    
    
    
    12,785,306Soles
    
    
    969,057
    
    
    
    5,091,925$Arg
    
    
    785,599
    
    
    
    807,347Reales
    
    
    92,934
    
    
    
    87,824Time deposits
    
    US$
    
    
    26,744,564
    
    
    
    32,394,826$Col
    
    
    15,962,802
    
    
    
    40,921,625Soles
    
    
    6,481,684
    
    
    
    8,409,664$Arg
    
    
    12,484,273
    
    
    
    10,467,212Reales
    
    
    64,798
    
    
    
    112,638Accounts receivables, net
    
    Ch$
    
    
    42,183,041
    
    
    
    58,702,977US$
    
    
    4,871,415
    
    
    
    1,727,283$Col
    
    
    28,966,765
    
    
    
    35,451,850Soles
    
    
    6,578,357
    
    
    
    22,212,586$Arg
    
    
    19,031,059
    
    
    
    28,759,707Other accounts receivable, net
    
    UF
    
    
    560,913
    
    
    
    Ch$
    
    
    22,373,023
    
    
    
    39,240,313US$
    
    
    30,448
    
    
    
    263,319$Col
    
    
    6,177,002
    
    
    
    5,954,862Soles
    
    
    3,374,855
    
    
    
    2,965,813$Arg
    
    
    22,501
    
    
    
    1,596Reales
    
    
    4,886,283
    
    
    
    5,442,963Accounts receivables from
related companies
    
    Ch$
    
    
    15,209,664
    
    
    
    16,755,598US$
    
    
    
    
    
    
    1,241,224$Col
    
    
    19,838,280
    
    
    
    13,862,682Soles
    
    
    77,000
    
    
    
    110,903$Arg
    
    
    807,996
    
    
    
    Reales
    
    
    193,986
    
    
    
    921,533
 F-100




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  As of December 31,2005
    
    2006Account
    
    Currency
    
    ThCh$
    
    ThCh$Inventory, net
    
    Ch$
    
    
    13,363,570
    
    
    
    6,300,428US$
    
    
    3,112,365
    
    
    
    1,821,376$Col
    
    
    2,919,805
    
    
    
    2,272,241Soles
    
    
    3,102,822
    
    
    
    8,472,026$Arg
    
    
    
    
    
    
    1,541,269Income taxes recoverable
    
    Ch$
    
    
    1,341,393
    
    
    
    1,709,270US$
    
    
    1,267,866
    
    
    
    612,350Reales
    
    
    
    
    
    
    17,710Soles
    
    
    
    
    
    
    4,069$Arg
    
    
    3,149,962
    
    
    
    Prepayments
    
    UF
    
    
    10,481
    
    
    
    Ch$
    
    
    257,219
    
    
    
    628,837US$
    
    
    613,336
    
    
    
    632,737$Col
    
    
    38,721
    
    
    
    595,212Soles
    
    
    353,502
    
    
    
    1,589,173$Arg
    
    
    372,563
    
    
    
    649,126Reales
    
    
    
    
    
    
    Deferred income tax
    
    Ch$
    
    
    2,137,047
    
    
    
    2,032,874$Col
    
    
    396,633
    
    
    
    94,313Other current assets
    
    Ch$
    
    
    9,367,438
    
    
    
    36,792,234US$
    
    
    
    
    
    
    248$Col.
    
    
    1,047
    
    
    
    4,394,879Soles
    
    
    1,907,653
    
    
    
    833,734$Arg
    
    
    50,362
    
    
    
    53,096Reales
    
    
    132
    
    
    
    390Total current assets
    
    
    
    
    
    
    290,918,234
    
    
    
    418,324,915
 F-101




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  As of December 31,2005
    
    2006Fixed assets
    
    Currency
    
    ThCh$
    
    ThCh$Land
    
    Ch$
    
    
    30,930,615
    
    
    
    31,333,035$Col
    
    
    10,300,423
    
    
    
    11,532,632Soles
    
    
    4,368,437
    
    
    
    4,077,812$Arg
    
    
    5,007,622
    
    
    
    5,094,972Construction in progress
    
    Ch$
    
    
    3,226,883,844
    
    
    
    3,324,372,214$Col
    
    
    1,400,996,100
    
    
    
    1,442,501,663Soles
    
    
    510,998,036
    
    
    
    529,948,983$Arg
    
    
    246,579,081
    
    
    
    250,880,269Reales
    
    
    
    
    
    
    Machinery and equipment
    
    Ch$
    
    
    12,816,940
    
    
    
    13,105,441$Col
    
    
    12,969,062
    
    
    
    13,266,626Soles
    
    
    423,122,991
    
    
    
    542,484,250$Arg
    
    
    581,280,277
    
    
    
    606,391,678Reales
    
    
    35,429
    
    
    
    43,904Other fixed assets
    
    Ch$
    
    
    57,490,728
    
    
    
    73,688,031$Col
    
    
    15,265,137
    
    
    
    8,100,846Soles
    
    
    12,970,160
    
    
    
    91,787,436$Arg
    
    
    6,970,904
    
    
    
    7,179,812Reales
    
    
    3,443
    
    
    
    5,193
 F-102




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##### Table of Contents



28. Foreign currencies, continued:
  As of December 31,2005
    
    
    2006Fixed assets
    
    Currency
    
    
    ThCh$
    
    
    ThCh$Technical appraisal
    
    Ch$
    
    
    11,912,238
    
    
    
    11,920,882$Col
    
    
    53,451,264
    
    
    
    54,383,639Soles
    
    
    
    
    
    
    Reales
    
    
    
    
    
    
    Accumulated depreciation
    
    Ch$
    
    
    (1,468,886,626
    )
    
    
    (1,547,302,974
    )$Col
    
    
    (381,016,206
    )
    
    
    (420,555,624
    )Soles
    
    
    (377,108,665
    )
    
    
    (457,390,526
    )$Arg
    
    
    (405,114,014
    )
    
    
    (446,258,349
    )Reales
    
    
    (15,306
    )
    
    
    (15,573
    )Total fixed assets
    
    
    
    
    
    
    3,992,211,914
    
    
    
    4,150,576,272
 As of December 31,2005
    
    2006Other assets
    
    Currency
    
    ThCh$
    
    ThCh$Investments in related
    
    Ch$
    
    
    96,345,100
    
    
    
    110,441,200companies
    
    US$         3
    
    
    83,548,274
    
    
    
    412,825,585Arg$
    
    
    39,768
    
    
    
    Investments in other
    
    Ch$
    
    
    2,478,037
    
    
    
    2,469,093companies
    
    $Col
    
    
    16,936,962
    
    
    
    1,406,052Soles
    
    
    7,257
    
    
    
    25,104$Arg
    
    
    39,768
    
    
    
    Goodwill
    
    Ch$
    
    
    3,106,163
    
    
    
    2,917,781US$
    
    
    353,449
    
    
    
    329,224$Col
    
    
    13,924,539
    
    
    
    7,846,896Negative goodwill
    
    Ch$
    
    
    (9,504,823
    )
    
    
    (14,406,266
    )US$
    
    
    (1,703,645
    )
    
    
    $Col
    
    
    (2,226,482
    )
    
    
    Soles
    
    
    (23,447,324
    )
    
    
    (22,162,386
    )
 F-103




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  As of December 31,2005
    
    2006Other assets
    
    Currency
    
    ThCh$
    
    ThCh$Long-term receivables
    
    UF
    
    
    
    
    
    
    6,795,037Ch$
    
    
    1,032,540
    
    
    
    887,532US$
    
    
    2,095,347
    
    
    
    2,049,292Soles
    
    
    314,656
    
    
    
    26,953$Arg
    
    
    23,549,429
    
    
    
    59,308,778Reales
    
    
    
    
    
    
    Receivables from
    
    Ch$
    
    
    23,230,340
    
    
    
    369Related companies
    
    US$
    
    
    68,483,396
    
    
    
    90,523,990Other long-term assets
    
    Ch$
    
    
    25,823,976
    
    
    
    22,614,828US$
    
    
    29,658
    
    
    
    25,714$Col
    
    
    53,011,201
    
    
    
    13,492,392$Arg
    
    
    15,456,650
    
    
    
    17,228,673Soles
    
    
    780,372
    
    
    
    1,139,759Reales
    
    
    
    
    
    
    Total other assets
    
    
    
    
    
    
    693,704,608
    
    
    
    715,785,600
 As of December 31,2005
    
    2006Total assets by currency
    
    Currency
    
    ThCh$
    
    ThCh$UF
    
    
    571,395
    
    
    
    6,795,037Ch$
    
    
    2,120,937,608
    
    
    
    2,194,596,994US$
    
    
    489,780,917
    
    
    
    546,637,618$Col
    
    
    1,274,918,487
    
    
    
    1,248,308,092Soles
    
    
    574,850,850
    
    
    
    739,627,278$Arg
    
    
    510,513,800
    
    
    
    542,105,186Reales
    
    
    5,261,699
    
    
    
    6,616,582Total assets
    
    
    
    
    
    
    4,976,834,756
    
    
    
    5,284,686,787
 F-104




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  Within 90 days
    
    91 days to 1 yearAs of December 31, 2005
    
    As of December 31, 2006
    
    As of December 31, 2005
    
    As of December 31, 2006Average
    
    
    
    
    
    Average
    
    
    
    
    
    Average
    
    
    
    
     
   AverageAccount
    
    Currency
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$Short-term
debt due to banks and financial Institutions
    
    UF
    
    
    5
    
    
    
    0.30
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    3,068,854
    
    
    
    4.49
    %
    
    
    3,827,406
    
    
    
    6.94
    %
    
    
    3,537,256
    
    
    
    6.1
    %
    
    
    1,417,595
    
    
    
    6.94
    %$Col
    
    
    3,299,694
    
    
    
    8.94
    %
    
    
    44,126,080
    
    
    
    8.24
    %
    
    
    
    
    
    
    9.5
    %
    
    
    Soles
    
    
    568,943
    
    
    
    5.00
    %
    
    
    5,069,490
    
    
    
    5.01
    %
    
    
    
    
    
    
    Arg.
    
    
    
    
    
    
    
    
    
    
    16,128
    
    
    
    8.72
    %
    
    
    2,116,073
    
    
    
    
    
    
    
    2,086,440
    
    
    
    8.72
    %Current
portion of long-term debt due to banks and financial institutions
    
    UF
    
    
    1,825,596
    
    
    
    9.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    386,869
    
    
    
    9.00
    %US$
    
    
    93,032
    
    
    
    3.00
    %
    
    
    10,531,672
    
    
    
    6.61
    %
    
    
    11,675,336
    
    
    
    5.45
    %
    
    
    19,823,465
    
    
    
    7.6
    %Euro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    6,971
    
    
    
    4.41
    %
    
    
    9,930,944
    
    
    
    5.00
    %
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    929,120
    
    
    
    1.75
    %
    
    
    
    
    
    
    
    
    
    
    912,241
    
    
    
    1.75
    %
    
    
    2,028,368
    
    
    
    1.75
    %Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.P.
    
    
    
    
    
    
    
    
    
    
    
    18,030,985
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.85
    %
    
    
    14,051,066
    
    
    
    12.00
    %
    
    
    £
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Current
portion of bonds payable
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,275,3998
    
    
    
    6.19
    %
    
    
    2,357,840
    
    
    
    5.61
    %US$
    
    
    16,665,051
    
    
    
    7.00
    %
    
    
    32,851,423
    
    
    
    5.00
    %
    
    
    110,613,557
    
    
    
    7.48
    %
    
    
    31,291,055
    
    
    
    8.22
    %$Col
    
    
    43,850,968
    
    
    
    11.14
    %
    
    
    3,472,779
    
    
    
    10.31
    %
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    23,415,268
    
    
    
    5.00
    %
    
    
    515,112
    
    
    
    5.00
    %
    
    
    
    
    
    
    
    
    
    
    Current
portion of long term payables
    
    US$
    
    
    13,477,672
    
    
    
    7.42
    %
    
    
    20,404,380
    
    
    
    7.42
    %
    
    
    14,808,329
    
    
    
    7.42
    %
    
    
    10,858,626
    
    
    
    7.42
    %$Arg
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends payable
    
    Ch$
    
    
    1,101,476
    
    
    
    
    
    
    
    1,240,210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col.
    
    
    3,629,889
    
    
    
    
    
    
    
    24,630,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    56,650
    
    
    
    
    
    
    
    83,544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    629
    
    
    
    
    
    
    
    633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous payables
    
    Ch$
    
    
    7,838,183
    
    
    
    
    
    
    
    2,484,470
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    13,845,880
    
    
    
    
    
    
    
    9,023,224
    
    
    
    
    
    
    
    779,663$Col.
    
    
    2,539,916
    
    
    
    
    
    
    
    2,734,887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    7,767,157
    
    
    
    
    
    
    
    15,580,222
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    52
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    74
    
    
    
    
    
    
    
    4,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable
    
    UF
    
    
    27,379
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    
    
    21,690,259
    
    
    
    
    
    
    
    41,950,102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    3,042,727
    
    
    
    
    
    
    
    5,923,329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Euro
    
    
    177,845
    
    
    
    
    
    
    
    510,511
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col.
    
    
    7,076,603
    
    
    
    
    
    
    
    3,183,692
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    6,676,737
    
    
    
    
    
    
    
    12,946,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    18,418,421
    
    
    
    
    
    
    
    23,226,042
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    522
    
    
    
    
    
    
    
    11,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts
payable to related companies
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172,694
    
    
    
    
    
    
    
    Ch$
    
    
    3,325,958
    
    
    
    
    
    
    
    2,070,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    23,422
    
    
    
    
    
    
    
    858,101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col
    
    
    3,666,246
    
    
    
    
    
    
    
    3,970,876
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    124,675
    
    
    
    
    
    
    
    1,330,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    7,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-105




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  Scheduled MaturitiesWithin 90 days
    
    
    
    91 days to 1 yearAs of December 31, 2005
    
    
    

    As of December 31, 2006
    

    
    
    As of December 31, 2005
    
    
    
    As of December 31, 2006Amount
    
    
    
    Amount
    
    
    
    Amount
    
    
    
    AmountAccrued income
    
    Ch$
    
    
    6,350
    
    
    
    
    
    
    
    
    
    685,401
    
    
    
    
    414,853Accrued liabilities
    
    UF
    
    
    
    
    
    
    
    Ch$
    
    
    3,176,410
    
    
    
    
    1,951,203
    
    
    
    
    13,043,020
    
    
    
    
    11,376,489US$
    
    
    
        
    
    3,460
    
    
    
    
    
    
    
    
    
    $Col
    
    
    4,764,306
    
    
    
    
    8,584,256
    
    
    
    
    
    
    
    
    
    Soles
    
    
    207,749
    
    
    
    
    1,846,197
    
    
    
    
    1,577,692
    
    
    
    
    $Arg
    
    
    554,659
    
    
    
    
    1,008,346
    
    
    
    
    
    
    
    
    
    Reales
    
    
    
    
    
    
    
    
    
    
    
    
    2,321
    
    
    
    
    5,030Withholdings
    
    Ch$
    
    
    2,385,860
    
    
    
    
    3,651,250
    
    
    
    
    
    
    
    
    
    $Col
    
    
    564,601
    
    
    
    
    728,310
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,833,002
    
    
    
    
    3,212,557
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    3,431,164
    
    
    
    
    4,499,114
    
    
    
    
    3,055
    
    
    
    
    Reales
    
    
    5,033
    
    
    
    
    5,287
    
    
    
    
    
    
    
    
    
    Income tax payables
    
    Ch$
    
    
    
    
    
    
    
    11,057
    
    
    
    
    
    
    
    
    
    32,571,130$Col
    
    
    10,791,256
    
    
    
    
    10,810,435
    
    
    
    
    
    
    
    
    
    Soles
    
    
    4,806,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    927,953
    
    
    
    
    3,140,368
    
    
    
    
    
    
    
    
    
    707,546Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,035Other current liabilities
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    13,262,750
    
    
    
    
    61,309Ch$
    
    
    
    
    
    
    
    
    
    
    
    
    96,806
    
    
    
    
    48,676US$
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    $Arg
    
    
    142,851
    
    
    
    
    110,204
    
    
    
    
    
    
    
    
    
    Soles
    
    
    
    
    
    
    
    471,520
    
    
    
    
    
    
    
    
    
    Total
current liabilities per currency
    
    UF
    
    
    1,852,980
    
    
    
    
    
    
    
    
    
    128,538,149
    
    
    
    
    2,806,018Ch$
    
    
    39,524,496
    
    
    
    
    53,358,874
    
    
    
    
    13,825,227
    
    
    
    
    44,411,148US$
    
    
    36,347,336
    
    
    
    
    87,387,550
    
    
    
    
    149,830,408
    
    
    
    
    64,170,404Euro
    
    
    177,845
    
    
    
    
    510,511
    
    
    
    
    
    
    
    
    
    Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col
    
    
    80,183,479
    
    
    
    
    120,272,871
    
    
    
    
    14,051,066
    
    
    
    
    Soles
    
    
    45,463,367
    
    
    
    
    50,986,924
    
    
    
    
    1,577,692
    
    
    
    
    $Arg
    
    
    24,412,793
    
    
    
    
    32,000,887
    
    
    
    
    3,031,369
    
    
    
    
    4,822,354Reales
    
    
    29,051
    
    
    
    
    878,793
    
    
    
    
    2,321
    
    
    
    
    11,065£
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current liabilities
    
    
    
    
    
    
    227,991,347
    
    
    
    
    345,396,410
    
    
    
    
    310,856,232
    
    
    
    
    116,220,989
 F-106




---



##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  Scheduled maturity1 to 3 years
    
    3 to 5 years
    
    5 to 10 years
    
    More than 10 yearsAverage
    
    
    
    
    
    Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageAccount
    
    Currency
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$Long-term debt due to
banks and financial
institutions
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    73,349,996
    
    
    
    7.62
    %
    
    
    102,433,583
    
    
    
    6.86
    %
    
    
    5,770,788
    
    
    
    6.23
    %
    
    
    Soles
    
    
    25,316,417
    
    
    
    5.58
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    4,044,126
    
    
    
    1.75
    %
    
    
    3,033,467
    
    
    
    1.75
    %
    
    
    
    
    
    
    
    
    
    
    $Col.
    
    
    72,531,749
    
    
    
    9.07
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    UF
    
    
    
    
    
    
    
    
    
    
    73,345,520
    
    
    
    4.80
    %
    
    
    
    
    
    
    
    
    
    
    100,850,090
    
    
    
    6.20
    %US$
    
    
    436,559,800
    
    
    
    8.08
    %
    
    
    
    
    
    
    
    
    
    
    330,081,800
    
    
    
    8.29
    %
    
    
    248,251,860
    
    
    
    7.64
    %$Col.
    
    
    
    
    
    
    
    
    
    
    75,156,140
    
    
    
    10.23
    %
    
    
    154,571,743
    
    
    
    10.56
    %
    
    
    Soles
    
    
    27,988,359
    
    
    
    6.41
    %
    
    
    5,828,480
    
    
    
    6.72
    %
    
    
    13,322,240
    
    
    
    6.23
    %
    
    
    Long-term notes payable
    
    US$
    
    
    29,803,192
    
    
    
    7.42
    %
    
    
    23,455,926
    
    
    
    7.42
    %
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    3,884,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,779Ch$
    
    
    7,677,797
    
    
    
    
    
    
    
    36,413,334
    
    
    
    
    
    
    
    6,081,981
    
    
    
    
    
    
    
    14,115,249US$
    
    
    30,695,575
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued expenses
    
    Ch$
    
    
    908,601
    
    
    
    
    
    
    
    808,854
    
    
    
    
    
    
    
    8,466,082
    
    
    
    
    
    
    
    $Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,818,218
    
    
    
    
    
    
    
    Deferred Taxes
    
    Ch$
    
    
    27,411,348
    
    
    
    
    
    
    
    4,046,312
    
    
    
    
    
    
    
    23,364,195
    
    
    
    
    
    
    
    36,558,670Soles
    
    
    
    
    
    
    
    
    
    
    44,230,281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    953,511
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    UF
    
    
    2,309,258
    
    
    
    
    
    
    
    1,539,918
    
    
    
    
    
    
    
    3,400,637
    
    
    
    
    
    
    
    Ch$
    
    
    338,365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg.
    
    
    8,394,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col
    
    
    5,512,899
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    222,305
    
    
    
    
    
    
    
    592,493
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
long-term liabilities per currency
    
    UF
    
    
    2,309,258
    
    
    
    
    
    
    
    74,885,438
    
    
    
    
    
    
    
    3,400,637
    
    
    
    
    
    
    
    100,980,869Ch$
    
    
    36,336,111
    
    
    
    
    
    
    
    41,268,500
    
    
    
    
    
    
    
    37,912,258
    
    
    
    
    
    
    
    50,673,919US$
    
    
    570,630,868
    
    
    
    
    
    
    
    126,482,002
    
    
    
    
    
    
    
    335,852,588
    
    
    
    
    
    
    
    248,251,860$Col
    
    
    78,044,648
    
    
    
    
    
    
    
    75,156,140
    
    
    
    
    
    
    
    174,389,961
    
    
    
    
    
    
    
    Soles
    
    
    53,304,776
    
    
    
    
    
    
    
    50,058,761
    
    
    
    
    
    
    
    13,322,240
    
    
    
    
    
    
    
    $Arg.
    
    
    17,276,793
    
    
    
    
    
    
    
    3,033,467
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    757,902,454
    
    
    
    
    
    
    
    370,884,308
    
    
    
    
    
    
    
    564,877,684
    
    
    
    
    
    
    
    399,906,648
 F-107




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 28. Foreign currencies, continued:
  Schedule Maturities1 to 3 years
    
    3 to 5 years
    
    5 to 10 years
    
    More than 10 yearsAverage
    
    
    
    
    
    Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageAccount
    
    Currency
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$
    
    
    
    
    
    ThCh$Debt due to
banks and financial institutions
    
    UF
    
    
    971,845
    
    
    
    9.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    31,060,803
    
    
    
    7.33
    %
    
    
    21,415,563
    
    
    
    8.56
    %
    
    
    75,681,139
    
    
    
    6.00
    %
    
    
    Soles
    
    
    15,327,276
    
    
    
    5.52
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    3,648,965
    
    
    
    1.75
    %
    
    
    3,648,964
    
    
    
    1.75
    %
    
    
    912,060
    
    
    
    1.75
    %
    
    
    $Col.
    
    
    
    
    
    
    
    
    
    
    13,362,850
    
    
    
    12.00
    %
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    UF
    
    
    73,409,124
    
    
    
    6.20
    %
    
    
    73,409,124
    
    
    
    4.80
    %
    
    
    
    
    
    
    
    
    
    
    27,528,422
    
    
    
    6.20
    %US$
    
    
    240,700,751
    
    
    
    7.86
    %
    
    
    219,770,250
    
    
    
    8.39
    %
    
    
    324,422,750
    
    
    
    8.29
    %
    
    
    243,995,733
    
    
    
    7.64
    %$Col
    
    
    13,744,473
    
    
    
    9.31
    %
    
    
    58,404,999
    
    
    
    10.98
    %
    
    
    116,829,396
    
    
    
    10.92
    %
    
    
    Soles
    
    
    14,956,675
    
    
    
    6.06
    %
    
    
    16,013,571
    
    
    
    6.85
    %
    
    
    
    
    
    
    
    
    
    
    Notes
payableMiscellaneous
    
    US$
    
    
    44,445,917
    
    
    
    7.42
    %
    
    
    
    
    
    
    
    
    
    
    9,350,701
    
    
    
    7.42
    %
    
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,717Ch$
    
    
    181,080
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    7,166,487
    
    
    
    
    
    
    
    1,794,801
    
    
    
    
    
    
    
    5,612,872
    
    
    
    
    
    
    
    15,223,901Accrued liabilities
    
    Ch$
    
    
    1,220,926
    
    
    
    
    
    
    
    737,397
    
    
    
    
    
    
    
    1,789,338
    
    
    
    
    
    
    
    6,122,794US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Col
    
    
    18,991,813
    
    
    
    
    
    
    
    305,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    Ch$
    
    
    24,706,300
    
    
    
    
    
    
    
    3,592,292
    
    
    
    
    
    
    
    16,060,433
    
    
    
    
    
    
    
    27,233,896$Arg.
    
    
    3,759,618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    29,971,034
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US
    
    
    137,685
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
long-term liabilities per currency
    
    UF
    
    
    74,380,969
    
    
    
    
    
    
    
    73,409,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,638,139Ch$
    
    
    26,108,306
    
    
    
    
    
    
    
    4,329,689
    
    
    
    
    
    
    
    17,849,771
    
    
    
    
    
    
    
    33,356,690US$
    
    
    323,511,643
    
    
    
    
    
    
    
    242,980,614
    
    
    
    
    
    
    
    415,067,462
    
    
    
    
    
    
    
    259,219,634$Col
    
    
    32,736,286
    
    
    
    
    
    
    
    72,073,434
    
    
    
    
    
    
    
    116,829,396
    
    
    
    
    
    
    
    Soles
    
    
    30,283,951
    
    
    
    
    
    
    
    45,984,605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $Arg
    
    
    7,408,583
    
    
    
    
    
    
    
    3,648,964
    
    
    
    
    
    
    
    912,060
    
    
    
    
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    494,429,738
    
    
    
    
    
    
    
    442,426,430
    
    
    
    
    
    
    
    550,658,689
    
    
    
    
    
    
    
    320,214,463
 29. Sanctions:
  F-108




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 30. Subsequent events:
       F-109




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 31. Environment:
     
    
    Central El Toro  Investments related with certification under ISO 14.001
    
    San Isidro  Certification of CO2 cylinders and maintenance,
 
    
    Tarapacá  Repair and modification of area of acid and leach tanks, as well as
modification of water plants neutralization system.
    
    Central Bocamina  Design and implementation of an environment management system
 
    
    Huasco  Construction of anti-leak system for fuel
 F-110




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles:
  I. Differences in Measurement Methods
         F-111




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
  a.
    
    A deferred tax liability or asset is recognized for the estimated future tax
effects attributable to temporary differences and tax loss carry forwards.b.
    
    The measurement of deferred tax liabilities and assets is based on the provisions
of the enacted tax law. The effects of future changes in tax laws or rates are not
anticipated.c.
    
    The measurement of deferred tax assets are reduced by a valuation allowance, if
based on the weight of available evidence, it is more likely than not that some portion
of the deferred tax assets will not be realized.
   (i.) Provisions(ii.) Net operating loss-carry forwards(iii.) Accelerated depreciation methods(iv.) The reversal of the complementary assets and liabilities recorded as a
transitional provision for unrecorded deferred taxes as of January 1, 2000 and their
corresponding amortization into income, and(v.) Accounting for deferred tax differences related to US GAAP adjustments.
    F-112




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
       F-113




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
  
  (i)
    
    The recording of deferred taxes in accordance with SFAS 109 (see
paragraph c).(ii)
    
    Adjustment related to pensions and other post-retirement benefits (see paragraph e).(iii)
    
    Adjustment related to negative goodwill (see paragraph h).(iv)
    
    Adjustment related to capitalized foreign currency exchange differences (see paragraph i).(v)
    
    Adjustment related to capitalized general and administration expenses
(see paragraph l).(vi)
    
    The recording of derivative instruments in accordance with SFAS 133 (see paragraph p).(vii)
    
    Adjustment related to capitalized interests. (A)(viii)
    
    Adjustment related to regulated assets (B)(ix)
    
    The deferred income tax effects of adjustments (i) to (viii).
   F-114




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 g)
    
    Goodwill
 (i)
    
    Under Chilean GAAP, for acquisitions that occurred until December 31, 2003 assets acquired
and liabilities assumed were recorded at their carrying value and the excess of the purchase
price over the carrying value is recorded as goodwill. Circular No. 1358, dated December 3,
1997 issued by the SVS, extended the maximum amortization period of goodwill to 20 years from
the previous 10 years.Under US GAAP, assets acquired and liabilities assumed are recorded at their estimated fair
values, and the excess of the purchase price over the estimated fair value of the net
identifiable assets and liabilities acquired are recorded as goodwill. Prior to January 1,
2002 under US GAAP, the Company amortized goodwill on a straight-line basis over the estimated
useful lives of the assets, ranging from 20 to 40 years.Technical Bulletin No. 72 issued by Chilean Association of Accountants requires using fair
value of acquired assets and liabilities for the accounting for all acquisitions after January
1, 2004, and consequently after that date difference in accounting treatment related to the
recognition of assets acquired and liabilities assumed between Chilean GAAP and US GAAP no
longer exists.
 (ii)
    
    Under Chilean GAAP, the Company evaluates the carrying amount of goodwill for impairment. The
Company determines the impairment losses using a discounted cash flow approach and recent
comparable transactions in the market. In order to estimate recoverable value, the Company
makes assumptions about future events that are highly uncertain at the time of estimation. The
results of this analysis showed no impairment of goodwill for the years ended December 31,
2005 and 2006.The following effects are included in the net income and shareholders equity reconciliation
to US GAAP under paragraph (v) below:
 (i)
    
    differences in the amount of the impairment under US GAAP related to
basis differences in the original determination and subsequent amortization
methodology between Chilean GAAP and US GAAP;(ii)
    
    the reversal of negative goodwill impairment under Chilean GAAP, as
under US GAAP negative goodwill is treated as an adjustment to the net book value
of the related fixed assets to their fair value;(iii)
    
    the reversal of goodwill amortization recorded under Chilean GAAP.
 F-115




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:A summary of the changes in the Companys goodwill under US GAAP during the years ended
December 31, 2005 and 2006, by country of operation is as follows:
 Goodwill under US GAAPCumulativeTranslation
    
    
    
    
    
    December 31,January 1, 2005
    
    Acquisitions
    
    Adjustment
    
    Impairment
    
    2005ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    5,292,779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,292,779Peru
    
    
    17,451,476
    
    
    
    
    
    
    
    (1,962,919
    )
    
    
    
    
    
    
    15,488,557Colombia
    
    
    23,754,905
    
    
    
    
    
    
    
    (2,672,486
    )
    
    
    
    
    
    
    21,082,419Total
    
    
    46,499,160
    
    
    
    
    
    
    
    (4,635,405
    )
    
    
    
    
    
    
    41,863,755
 Goodwill under US GAAPCumulativeTranslation
    
    Reclassification
    
    December 31,January 1, 2006
    
    Acquisitions
    
    Adjustment
    
    (1)
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    5,292,779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,292,779Peru
    
    
    15,488,557
    
    
    
    3,194,340
    
    
    
    270,175
    
    
    
    
    
    
    
    18,953,072Colombia
    
    
    21,082,419
    
    
    
    
    
    
    
    367,750
    
    
    
    (8,473,153
    )
    
    
    12,977,016Total
    
    
    41,863,755
    
    
    
    3,194,340
    
    
    
    637,925
    
    
    
    (8,473,153
    )
    
    
    37,222,867
 
 (1)
    
    See Note 10 (e) (iv.)    F-116




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
  h-1:
    
    The reversal of negative goodwill amortization and write-offs described in
paragraph (g) above, which did not meet the US GAAP impairment criteria for long-lived
assets under SFAS 144 and the reversal of negative goodwill amortization recorded under
Chilean GAAP;h-2:
    
    The effects of reducing depreciation expense, due to the proportionate allocation
of the excess purchase price to property, plant and equipment and other effects on
income.
    i-1:
    
    Adjustment to net income related to foreign currency exchange differences;i-2:
    
    Adjustment to depreciation of property, plant and equipment.
     F-117




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
    l-1:
    
    The elimination of the capitalized administrative and selling expenses from
property, plant and equipment and the effect on depreciation expense for the year;l-2:
    
    The elimination of the capitalized administrative and selling expenses from other
assets and the effect on income for the year.
     F-118




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
   
    
    Monetary assets and liabilities are translated at year-end rates
of exchange between the US dollar and the local currency;
 
    
    All non-monetary assets and liabilities and shareholders equity
are translated at historical rates of exchange between the US
dollar and the local currency;
 
    
    Income and expense accounts are translated at average rates of
exchange between the US dollar and local currency;
 
    
    The effects of any exchange rate fluctuations between the local
currency and the US dollar are included in the results of
operations for the period.
      F-119




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
            F-120




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
    s-1:
    
    The effects of amortizing the deferred costs of the asset retirement obligation are
reflected as depreciation expense;s-2:
    
    The effects of re-measuring the liability due to the passage of time during the
year ended December 31, 2004, 2005 and 2006 are reflected as accretion expense.
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Balance as of January 1
    
    
    479,349
    
    
    
    1,124,979
    
    
    
    957,151Cumulative translation adjustment
    
    
    (40,360
    )
    
    
    (54,078
    )
    
    
    8,092Liabilities incurred in the period
    
    
    573,815
    
    
    
    
    
    
    
    819,317Accretion expense
    
    
    112,175
    
    
    
    (113,750
    )
    
    
    331,521Balance as of December 31
    
    
    1,124,979
    
    
    
    957,151
    
    
    
    2,116,081
 F-121




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
     F-122




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 v)
    
    Effects of conforming to US GAAP:
 (i)
    
    The reconciliation of reported net income required to conform to US GAAP is as
follows:
 Years Ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Net income in accordance with Chilean GAAP
    
    
    88,628,059
    
    
    
    112,946,076
    
    
    
    189,541,318Reversal of revaluation of Property, plant and equipment (paragraph b)
    
    
    1,070,088
    
    
    
    371,119
    
    
    
    319,807Deferred income taxes (paragraph c)
    
    
    (62,244,678
    )
    
    
    (7,952,552
    )
    
    
    (8,055,938
    )Staff severance indemnities (paragraph d)
    
    
    1,011,235
    
    
    
    
    
    
    
    Pension and post-retirement benefits (paragraph e)
    
    
    754,711
    
    
    
    
    
    
    
    Investments in related companies (paragraph f)
    
    
    1,549
    
    
    
    (29,165,640
    )
    
    
    4,542,360Goodwill (paragraph g)
    
    
    1,548,033
    
    
    
    1,395,070
    
    
    
    942,823Negative goodwill (paragraph h):h-1: Amortization of negative goodwill
    
    
    (17,031,537
    )
    
    
    (15,631,948
    )
    
    
    (6,037,460
    )h-2: Depreciation of Property, plant and equipment
    
    
    14,523,619
    
    
    
    10,574,121
    
    
    
    17,648,845Capitalized exchange differences (paragraph i):i-1: Foreign exchange differences
    
    
    (6,182,167
    )
    
    
    
    
    
    
    i-2: Depreciation of Property, plant and equipment
    
    
    261,423
    
    
    
    493,599
    
    
    
    495,731Accumulated deficit during the development stage (paragraph j)
    
    
    
    
    
    
    
    
    
    
    (303,015
    )Capitalized general and administrative expenses (paragraph l):l-1: Depreciation of Property, plant and equipment
    
    
    1,956,387
    
    
    
    501,808
    
    
    
    (225,733
    )l-2: Other operating results
    
    
    996,730
    
    
    
    967,050
    
    
    
    971,134Involuntary employee termination benefits (paragraph m)
    
    
    (1,769
    )
    
    
    (17,380
    )
    
    
    (21,295
    )Derivative instruments (paragraph p)Operating
    
    
    (13,142,753
    )
    
    
    27,669,761
    
    
    
    4,593,434Non-operating
    
    
    2,449,379
    
    
    
    687,719
    
    
    
    137,686Reorganization of subsidiaries (paragraph q)
    
    
    (262,369
    )
    
    
    (232,853
    )
    
    
    (236,914
    )Amortization of bond discount and deferred debt issuance costs (paragraph r)
    
    
    
    
    
    
    
    
    
    
    1,736,759Accounting for asset retirement obligations (paragraph s)s-1: Depreciation expense
    
    
    (306
    )
    
    
    (39,192
    )
    
    
    (14,472
    )s-2: Accretion expense
    
    
    (112,175
    )
    
    
    113,750
    
    
    
    (1,150,838
    )Effects of minority interest on the US GAAP adjustments (paragraph t)
    
    
    52,989,458
    
    
    
    (298,686
    )
    
    
    7,009,651Income in accordance with US GAAP before cumulative effect of changes in
accounting principles
    
    
    67,212,917
    
    
    
    102,381,822
    
    
    
    211,893,883Cumulative effect of changes in accounting principles, net of taxes (ThCh$
261,599) and minority interest (paragraph d and t)
    
    
    1,277,218
    
    
    
    
    
    
    
    Net income in accordance with US GAAP
    
    
    68,490,135
    
    
    
    102,381,822
    
    
    
    211,893,883Other comprehensive income (loss):(Loss)/gain on hedge of the foreign currency exposure of net investment in
foreign operations, net of income tax of ThCh$0
    
    
    (19,379,821
    )
    
    
    (15,449,838
    )
    
    
    3,009,095Fair value change of hedging instruments used in cash flow hedges (paragraph
p), net of tax (ThCh$28, 201 and ThCh$4,371 as of December 31, 2005 and
2006, respectively)
    
    
    
    
    
    
    (137,687
    )
    
    
    (21,343
    )Cumulative translation adjustment, net of income tax ( ThCh$0)
    
    
    10,518,198
    
    
    
    14,558,412
    
    
    
    (2,912,682
    )Comprehensive income in accordance with US GAAP
    
    
    59,628,512
    
    
    
    101,352,709
    
    
    
    211,968,953
 F-123




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 (v)
    
    Effects of conforming to US GAAP:
 (ii)
    
    The reconciliation to conform shareholders equity amounts to US GAAP is as follows:
 As of December 31,2005
    
    2006ThCh$
    
    ThCh$Shareholders equity in accordance with Chilean GAAP
    
    
    1,676,746,265
    
    
    
    1,794,309,851Reversal of revaluation of Property, plant and equipment (paragraph b):Property, plant and equipment
    
    
    (11,912,236
    )
    
    
    (11,920,882
    )Accumulated depreciation
    
    
    6,884,892
    
    
    
    7,213,343Deferred income taxes (paragraph c)
    
    
    (95,120,173
    )
    
    
    (103,432,534
    )Investments in related companies (paragraph f)
    
    
    (20,496,345
    )
    
    
    (13,320,023
    )Goodwill (paragraph g):Goodwill
    
    
    18,981,044
    
    
    
    22,428,696Accumulated amortization
    
    
    5,498,559
    
    
    
    3,700,270Negative goodwill (paragraph h):h-1: Negative goodwill
    
    
    367,302,934
    
    
    
    366,229,780h-1 Accumulated amortization of negative goodwill
    
    
    (330,420,661
    )
    
    
    (329,661,128
    )h-2: Property, plant and equipment
    
    
    (522,715,395
    )
    
    
    (514,978,765
    )h-2: Accumulated depreciation of Property, plant and equipment
    
    
    195,648,638
    
    
    
    197,282,746Capitalized exchange differences (paragraph i):Property, plant and equipment
    
    
    (20,965,189
    )
    
    
    (21,071,696
    )Accumulated depreciation of Property, plant and equipment
    
    
    1,166,948
    
    
    
    1,674,395Minimum dividend (paragraph k)
    
    
    (29,194,238
    )
    
    
    (33,972,648
    )Capitalized general and administrative expenses (paragraph l):l-1: Property, plant and equipment
    
    
    (30,136,853
    )
    
    
    (30,020,685
    )l-1: Accumulated depreciation of Property, plant and equipment
    
    
    9,345,587
    
    
    
    10,093,571l-2: Other assets
    
    
    (1,227,574
    )
    
    
    (1,474,720
    )Involuntary employee termination benefits (paragraph m)
    
    
    59,128
    
    
    
    38,864Derivative instruments (paragraph p)
    
    
    7,573,890
    
    
    
    12,146,711Reorganization of subsidiaries (paragraph q)
    
    
    3,721,443
    
    
    
    4,614,224Amortization of bond discount and deferred debt issuance costs (paragraph r)
    
    
    
    
    
    
    1,736,759Accounting for asset retirement obligations, net (paragraph s)
    
    
    (413,551
    )
    
    
    (1,586,910
    )Effects of minority interest on the US GAAP adjustments (paragraph t)
    
    
    78,833,357
    
    
    
    83,955,086Shareholders equity in accordance with US GAAP
    
    
    1,309,160,470
    
    
    
    1,443,984,305
 F-124




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Shareholders equity in accordance with US GAAP  January 1,
    
    
    1,217,996,077
    
    
    
    1,261,742,875
    
    
    
    1,309,160,470Dividends paid during the year
    
    
    (19,953,545
    )
    
    
    (34,584,584
    )
    
    
    (68,812,721
    )Reversal of dividends payable as of previous balance sheet date
    
    
    25,550,788
    
    
    
    21,478,958
    
    
    
    29,194,238Minimum dividend (paragraph k)
    
    
    (21,478,958
    )
    
    
    (29,194,238
    )
    
    
    (33,972,648
    )Cumulative translation adjustment
    
    
    10,518,198
    
    
    
    14,558,412
    
    
    
    (2,912,682
    )Reorganization under common control
    
    
    
    
    
    
    (11,635,250
    )
    
    
    (6,425,471
    )Gain (loss) on hedge of the foreign currency exposure of net
investment in foreign operations
    
    
    (19,379,821
    )
    
    
    (15,449,838
    )
    
    
    3,009,095Fair value change of hedging instruments used in cash flow hedges
    
    
    
    
    
    
    (137,687
    )
    
    
    (21,343
    )Application of FAS 158 Endesa Brasil
    
    
    
    
    
    
    
    
    
    
    2,871,484Net income in accordance with US GAAP for the year
    
    
    68,490,135
    
    
    
    102,381,822
    
    
    
    211,893,883Shareholders equity in accordance with US GAAP  December 31,
    
    
    1,261,742,875
    
    
    
    1,309,160,470
    
    
    
    1,443,984,305
 F-125




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 II.
    
    Additional Disclosure Requirements:a)
    
    Basic and diluted earnings per share:
 Year ended December 31,2004
    
    2005
    
    2006Ch$
    
    Ch$
    
    Ch$Chilean GAAP earnings per share
    
    
    10.58
    
    
    
    13.49
    
    
    
    23.11US GAAP basic and diluted earnings per share:US GAAP earnings per share from continuing
operations before cumulative effect of changes in
accounting principles
    
    
    8.03
    
    
    
    12.23
    
    
    
    25.83Cumulative effect of changes in accounting principles
    
    
    0.15
    
    
    
    
    
    
    
    US GAAP basic and diluted earnings per share
    
    
    8.18
    
    
    
    12.23
    
    
    
    25.83Weighted average number of common shares outstanding
(000s)
    
    
    8,201,755
    
    
    
    8,201,755
    
    
    
    8,201,755
  F-126




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 b) Income taxes:
  2004Chile
    
    Argentina
    
    Brazil
    
    Peru
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under Chilean GAAP:Current income tax as determined under Chilean GAAP
    
    
    (887,612
    )
    
    
    
    
    
    
    (1,966,292
    )
    
    
    (14,950,789
    )
    
    
    (38,021,686
    )
    
    
    (55,826,379
    )Deferred income taxes as determined under Chilean GAAP
    
    
    (15,614,144
    )
    
    
    (14,838,881
    )
    
    
    
    
    
    
    (11,341,167
    )
    
    
    (1,202,181
    )
    
    
    (42,996,373
    )Total income tax provision under Chilean GAAP
    
    
    (16,501,756
    )
    
    
    (14,838,881
    )
    
    
    (1,966,292
    )
    
    
    (26,291,956
    )
    
    
    (39,223,867
    )
    
    
    (98,822,752
    )US GAAP adjustmentsDeferred tax effect of applying SFAS 109
    
    
    1,837,476
    
    
    
    8,667,020
    
    
    
    688,645
    
    
    
    1,892,824
    
    
    
    
    
    
    
    13,085,965Deferred tax effect of adjustment to US GAAP
    
    
    3,170,040
    
    
    
    871,483
    
    
    
    
    
    
    
    (79,276,913
    )
    
    
    (95,253
    )
    
    
    (75,330,643
    )Total US GAAP adjustments
    
    
    5,007,516
    
    
    
    9,538,503
    
    
    
    688,645
    
    
    
    (77,384,089
    )
    
    
    (95,253
    )
    
    
    (62,244,678
    )US GAAP reclassifications (1)
    
    
    (261,600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (261,600
    )Total income tax provision under US GAAP
    
    
    (11,755,840
    )
    
    
    (5,300,378
    )
    
    
    (1,277,648
    )
    
    
    (103,676,045
    )
    
    
    (39,319,119
    )
    
    
    (161,329,030
    )
 2005Chile
    
    Argentina
    
    Brazil
    
    Peru
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under Chilean GAAP:Current income tax as determined under Chilean GAAP
    
    
    (1,822,548
    )
    
    
    
    
    
    
    (2,836,644
    )
    
    
    (17,272,319
    )
    
    
    (39,471,784
    )
    
    
    (61,403,295
    )Deferred income taxes as determined under Chilean GAAP
    
    
    (28,812,619
    )
    
    
    (5,749,608
    )
    
    
    
    
    
    
    1,606,541
    
    
    
    473,553
    
    
    
    (32,482,133
    )Total income tax provision under Chilean GAAP
    
    
    (30,635,167
    )
    
    
    (5,749,608
    )
    
    
    (2,836,644
    )
    
    
    (15,665,778
    )
    
    
    (38,998,231
    )
    
    
    (93,885,428
    )US GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    (474,920
    )
    
    
    
    
    
    
    (289,753
    )
    
    
    4,122,517
    
    
    
    
    
    
    
    3,357,844Deferred tax effect of adjustment to US GAAP
    
    
    (8,713,432
    )
    
    
    (290,838
    )
    
    
    
    
    
    
    (2,367,101
    )
    
    
    60,975
    
    
    
    (11,310,396
    )Total US GAAP adjustments
    
    
    (9,188,352
    )
    
    
    (290,838
    )
    
    
    (289,753
    )
    
    
    1,755,416
    
    
    
    60,975
    
    
    
    (7,952,552
    )Total income tax provision under US GAAP
    
    
    (39,823,519
    )
    
    
    (6,040,446
    )
    
    
    (3,126,397
    )
    
    
    (13,910,362
    )
    
    
    (38,937,256
    )
    
    
    (101,837,980
    )
 F-127




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 2006Chile
    
    Argentina
    
    Peru
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under Chilean GAAP:Current income tax as determined under Chilean GAAP
    
    
    (40,117,634
    )
    
    
    (4,055,215
    )
    
    
    (16,618,038
    )
    
    
    (38,623,297
    )
    
    
    (99,414,184
    )Deferred income taxes as determined under Chilean
GAAP
    
    
    (23,769,024
    )
    
    
    (9,423,835
    )
    
    
    (11,309,767
    )
    
    
    13,060,059
    
    
    
    (31,442,567
    )Total income tax provision under Chilean GAAP
    
    
    (63,886,658
    )
    
    
    (13,479,050
    )
    
    
    (27,927,805
    )
    
    
    (25,563,238
    )
    
    
    (130,856,751
    )US GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    5,787,394
    
    
    
    
    
    
    
    (2,231,999
    )
    
    
    
    
    
    
    3,555,395Deferred tax effect of adjustment to US GAAP
    
    
    (6,312,610
    )
    
    
    (2,801,188
    )
    
    
    (892,095
    )
    
    
    (1,605,440
    )
    
    
    (11,611,333
    )Total US GAAP adjustments
    
    
    (525,216
    )
    
    
    (2,801,188
    )
    
    
    (3,124,094
    )
    
    
    (1,605,440
    )
    
    
    (8,055,938
    )Total income tax provision under US GAAP
    
    
    (64,411,874
    )
    
    
    (16,280,238
    )
    
    
    (31,051,899
    )
    
    
    (27,168,678
    )
    
    
    (138,912,689
    )
 F-128




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  As of December 31,2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Short-term
    
    Long-term
    
    Short-term
    
    Long-termDeferred income tax assetsProperty, plant and equipment
    
    
    
    
    
    
    122,835,713
    
    
    
    
    
    
    
    112,748,582Prepaid income
    
    
    116,519
    
    
    
    1,000,798
    
    
    
    69,163
    
    
    
    921,096Derivative contracts
    
    
    
    
    
    
    2,889,043
    
    
    
    
    
    
    
    Vacation accrual
    
    
    421,541
    
    
    
    
    
    
    
    485,550
    
    
    
    Tax losses (1)
    
    
    
    
    
    
    55,363,678
    
    
    
    
    
    
    
    45,221,891Contingencies
    
    
    1,226,686
    
    
    
    
    
    
    
    997,329
    
    
    
    1,316,906Allowance for doubtful accounts
    
    
    5,650
    
    
    
    5,544,228
    
    
    
    1,252
    
    
    
    8,830,945Provision for employee obligations
    
    
    367,335
    
    
    
    1,189,189
    
    
    
    479,580
    
    
    
    923,959Provision for obsolete materials
    
    
    
    
    
    
    1,530,717
    
    
    
    
    
    
    
    1,621,780Other
    
    
    395,949
    
    
    
    200,112
    
    
    
    94,313
    
    
    
    584,428Valuation allowance
    
    
    
    
    
    
    (29,327,253
    )
    
    
    
    
    
    
    (29,262,196
    )Total deferred income tax assets
    
    
    2,533,680
    
    
    
    161,226,225
    
    
    
    2,127,187
    
    
    
    142,907,391Deferred income tax liabilitiesProperty, plant and equipment
    
    
    
    
    
    
    (320,479,391
    )
    
    
    
    
    
    
    (348,298,611
    )Severance indemnities
    
    
    
    
    
    
    (1,143,220
    )
    
    
    
    
    
    
    (1,029,663
    )Derivative contracts
    
    
    
    
    
    
    (2,804,480
    )
    
    
    
    
    
    
    (2,064,941
    )Finance costs
    
    
    
    
    
    
    (13,254,965
    )
    
    
    
    
    
    
    (13,738,128
    )Capitalized interest on construction
    
    
    
    
    
    
    (4,148,807
    )
    
    
    
    
    
    
    (3,756,520
    )Capitalized cost of studies
    
    
    
    
    
    
    (8,498,040
    )
    
    
    
    
    
    
    (8,420,626
    )Capitalized spare parts used
    
    
    
    
    
    
    (857,794
    )
    
    
    
    
    
    
    (811,521
    )Bonds discount
    
    
    
    
    
    
    (420,912
    )
    
    
    
    
    
    
    (629,439
    )Leasing
    
    
    
    
    
    
    (560,949
    )
    
    
    
    
    
    
    (464,611
    )Investment in Argentina
    
    
    
    
    
    
    (468,814
    )
    
    
    
    
    
    
    (419,071
    )Other
    
    
    
    
    
    
    (2,741,110
    )
    
    
    
    
    
    
    (3,271,111
    )Total deferred income tax
liabilities
    
    
    
    
    
    
    (355,378,482
    )
    
    
    
    
    
    
    (382,904,242
    )Net deferred tax balance
    
    
    2,533,680
    
    
    
    (194,152,257
    )
    
    
    2,127,187
    
    
    
    (239,996,851
    )
  As of December 31,2005
    
    2006ThCh$
    
    ThCh$Balance as of January 1,
    
    
    (33,857,264
    )
    
    
    (29,327,253
    )Cumulative translation adjustment
    
    
    5,445,725
    
    
    
    332,388Increase of valuation allowance
    
    
    (915,714
    )
    
    
    (267,331
    )Balance as of December 31,
    
    
    (29,327,253
    )
    
    
    (29,262,196
    )
 F-129




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  December 31, 2005
    
    December 31, 2006Amount
    
    Year of expiration
    
    Amount
    
    Year of expirationThCh$
    
    
    
    
    
    ThCh$Chile
    
    
    107,601,719
    
    
    Do not expire
    
    
    106,129,758
    
    
    Do not expireArgentina (A)
    
    
    35,602,647
    
    
    
    2007
    
    
    
    7,811,304
    
    
    
    2007Colombia (B)
    
    
    70,315,390
    
    
    
    2007
    
    
    
    71,899,632
    
    
    
    2007Total
    
    
    213,519,756
    
    
    
    
    
    
    
    185,840,694
 
 (A)
    
    All tax losses were created in 2002 expire in 2007.(B)
    
    Management does not expect that the subsidiaries in Colombia will be able to recover
deferred tax assets related to tax loss carry forwards. Thus, as of December 31, 2004, 2005
and 2006, a valuation allowance has been recorded, which covers the whole amount of the
deferred tax asset related to tax loss carryforwards.  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    30,946,778
    
    
    
    56,199,983
    
    
    
    1,471,961Argentina
    
    
    35,127,114
    
    
    
    41,046,206
    
    
    
    28,033,813Colombia
    
    
    42,023,273
    
    
    
    
    
    
    
    1,159,581Total
    
    
    108,097,165
    
    
    
    97,246,189
    
    
    
    30,665,355
 F-130




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  2004Chile
    
    Argentina
    
    Peru
    
    Brazil
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$At Chilean statutory income tax rate (17%)
    
    
    (23,737,853
    )
    
    
    747,527
    
    
    
    (16,605,462
    )
    
    
    (5,973,667
    )
    
    
    (9,018,747
    )
    
    
    (54,588,202
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    791,501
    
    
    
    (16,117,066
    )
    
    
    4,696,019
    
    
    
    (11,406,064
    )
    
    
    (22,035,610
    )Price-level restatement not accepted for
tax purposes
    
    
    1,048,719
    
    
    
    (3,260,306
    )
    
    
    (5,162,356
    )
    
    
    
    
    
    
    (7,798,630
    )
    
    
    (15,172,573
    )Non-deductible items
    
    
    (117,329
    )
    
    
    (429,481
    )
    
    
    (84,142,259
    )
    
    
    
    
    
    
    (13,192,221
    )
    
    
    (97,881,290
    )Non-taxable items
    
    
    11,885,162
    
    
    
    
    
    
    
    1,745,672
    
    
    
    
    
    
    
    6,389,216
    
    
    
    20,020,050Prior years income tax
    
    
    (1,280,114
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,280,114
    )Others
    
    
    707,175
    
    
    
    (3,149,619
    )
    
    
    16,605,426
    
    
    
    
    
    
    
    (4,292,673
    )
    
    
    9,870,309Tax benefit (expense) at effective tax rate
    
    
    (11,494,240
    )
    
    
    (5,300,378
    )
    
    
    (103,676,045
    )
    
    
    (1,277,648
    )
    
    
    (39,319,119
    )
    
    
    (161,067,430
    )Income tax related to cumulative change in
accounting principles
    
    
    (261,600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (261,600
    )Total income tax under US GAAP
    
    
    (11,755,840
    )
    
    
    (5,300,378
    )
    
    
    (103,676,045
    )
    
    
    (1,277,648
    )
    
    
    (39,319,119
    )
    
    
    (161,329,030
    )
 F-131




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 2005Chile
    
    Argentina
    
    Peru
    
    Brazil
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$At Chilean statutory income tax rate (17%)
    
    
    (21,864,926
    )
    
    
    4,437,065
    
    
    
    (9,194,237
    )
    
    
    (4,725,854
    )
    
    
    (12,527,161
    )
    
    
    (43,875,113
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    4,698,068
    
    
    
    (8,923,818
    )
    
    
    (4,725,854
    )
    
    
    (13,264,054
    )
    
    
    (22,215,658
    )Increase (decrease) in rates resulting from:Price-level restatement not accepted for tax purposes
    
    
    4,832,668
    
    
    
    (6,680,885
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,848,217
    )Non-taxable items
    
    
    6,019,267
    
    
    
    
    
    
    
    6,546,172
    
    
    
    6,325,311
    
    
    
    
    
    
    
    18,890,750Non-deductable items
    
    
    (29,302,954
    )
    
    
    (7,006,077
    )
    
    
    (997,263
    )
    
    
    
    
    
    
    (10,898,714
    )
    
    
    (48,205,008
    )Effect of change in valuation allowance
    
    
    (627,216
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,348,200
    
    
    
    720,984Other
    
    
    1,119,642
    
    
    
    (1,488,617
    )
    
    
    (1,341,216
    )
    
    
    
    
    
    
    (3,595,527
    )
    
    
    (5,305,718
    )Total income tax under US GAAP
    
    
    (39,823,519
    )
    
    
    (6,040,446
    )
    
    
    (13,910,362
    )
    
    
    (3,126,397
    )
    
    
    (38,937,256
    )
    
    
    (101,837,980
    )
 F-132




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 2006Chile
    
    Argentina
    
    Peru
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$At Chilean statutory income tax rate (17%)
    
    
    (45,333,218
    )
    
    
    (4,934,495
    )
    
    
    (6,650,170
    )
    
    
    (12,732,262
    )
    
    
    (69,650,145
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    (5,224,760
    )
    
    
    (6,454,577
    )
    
    
    (16,102,566
    )
    
    
    (27,781,903
    )Increase (decrease) in rates resulting from:Price-level restatement not accepted for tax purposes
    
    
    (3,598,589
    )
    
    
    (6,090,435
    )
    
    
    
    
    
    
    12,725,452
    
    
    
    3,036,428Non-taxable items
    
    
    14,776,564
    
    
    
    2,748,314
    
    
    
    1,604,352
    
    
    
    683,514
    
    
    
    19,812,744Non-deductable items
    
    
    (34,615,742
    )
    
    
    (1,934,271
    )
    
    
    (17,985,553
    )
    
    
    (12,646,317
    )
    
    
    (67,181,883
    )Prior year income tax
    
    
    4,214,796
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,214,796Effect of change in valuation allowance
    
    
    (209,176
    )
    
    
    
    
    
    
    
    
    
    
    (58,155
    )
    
    
    (267,331
    )Other
    
    
    353,491
    
    
    
    (844,591
    )
    
    
    (1,565,951
    )
    
    
    961,656
    
    
    
    (1,095,395
    )Tax benefit (expense) at effective tax rate
    
    
    (64,411,874
    )
    
    
    (16,280,238
    )
    
    
    (31,051,899
    )
    
    
    (27,168,678
    )
    
    
    (138,912,689
    )Total income tax under US GAAP
    
    
    (64,411,874
    )
    
    
    (16,280,238
    )
    
    
    (31,051,899
    )
    
    
    (27,168,678
    )
    
    
    (138,912,689
    )
 F-133




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    83,084,924
    
    
    
    74,748,107
    
    
    
    254,395,463Argentina
    
    
    (4,397,231
    )
    
    
    (26,100,381
    )
    
    
    21,292,040Peru
    
    
    62,679,190
    
    
    
    54,083,745
    
    
    
    44,622,483Brazil
(1)
    
    
    35,139,228
    
    
    
    27,799,146
    
    
    
    Colombia
    
    
    53,051,454
    
    
    
    73,689,185
    
    
    
    30,496,586Total
    
    
    229,557,565
    
    
    
    204,219,802
    
    
    
    350,806,572
 
 (1)
    
    As described in note 10 c. (i), as a result of the reorganization of the
Brazilian subsidiaries, the Company discontinued the consolidation of its former
subsidiaries Cachoeira Dourada and CIEN during 2005. Segment disclosure
  
    
    Electricity
 
    
    Public works and concessions
   
    
    Electricity
  F-134




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 
    
    Public works and concessions
   Revenues
    
    Long-lived assetsYear ended December 31,
    
    As of December 31,2004
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    494,588,926
    
    
    
    559,317,855
    
    
    
    659,698,097
    
    
    
    2,303,800,652
    
    
    
    2,376,514,956Argentina
    
    
    156,864,807
    
    
    
    160,087,454
    
    
    
    235,415,937
    
    
    
    442,475,089
    
    
    
    430,742,764Brazil (1)
    
    
    44,432,332
    
    
    
    42,672,856
    
    
    
    
    
    
    
    
    
    
    
    Colombia
    
    
    265,917,707
    
    
    
    264,410,301
    
    
    
    273,824,681
    
    
    
    1,153,061,771
    
    
    
    1,130,670,191Peru
    
    
    130,500,743
    
    
    
    120,134,219
    
    
    
    168,182,212
    
    
    
    590,127,107
    
    
    
    731,071,305Total
    
    
    1,092,304,515
    
    
    
    1,146,622,685
    
    
    
    1,337,120,927
    
    
    
    4,489,464,619
    
    
    
    4,668,999,216
 
 (1)
    
    With the deconsolidation of Brazilian subsidiary Cachoeira Dourada, the equity method
in CIEN and the change in accounting methods for Endesa Brasil (Note 10 (c) (iii.)) as of
October 1, 2005, the Company no longer consolidates the long-lived assets of these
subsidiaries. d) Concentration of risk:
   F-135




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 e) Schedule of debt maturity:
  As ofDecember 31,2006ThCh$2007
    
    
    219,026,6572008
    
    
    300,920,5262009
    
    
    365,656,3272010
    
    
    167,338,2902011
    
    
    161,505,4862012 and thereafter
    
    
    814,159,077Total
    
    
    2,028,606,363
 f) Disclosure regarding interest capitalization under US GAAP:
 Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Interest cost incurred
    
    
    203,679,491
    
    
    
    182,548,712
    
    
    
    160,316,158Interest capitalized
    
    
    7,619,740
    
    
    
    
    
    
    
    5,532,243
 F-136




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 g) Cash flow information
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Operating cash flow Chile GAAP and US GAAP
    
    
    266,835,282
    
    
    
    276,617,083
    
    
    
    420,100,772Cash flow investing activities Chile GAAP
    
    
    (75,020,465
    )
    
    
    (56,275,094
    )
    
    
    (204,503,050
    )Differences between Chilean GAAP and US GAAP:Purchase of marketable securities during period
    
    
    (721,048
    )
    
    
    (1,910,279
    )
    
    
    (5,227,518
    )Sale of marketable securities during period
    
    
    1,292,018
    
    
    
    721,048
    
    
    
    1,910,279Cash flow investing activities US GAAP
    
    
    (74,449,495
    )
    
    
    (57,464,325
    )
    
    
    (207,820,289
    )Cash flow financing activities US GAAP
    
    
    (116,458,087
    )
    
    
    (374,771,958
    )
    
    
    (136,166,481
    )Net cash flow
    
    
    75,927,700
    
    
    
    (155,619,200
    )
    
    
    76,114,002Effect inflation and foreign exchange
differences (1)
    
    
    (9,627,540
    )
    
    
    (5,651,512
    )
    
    
    (6,991,458
    )Total change of cash and cash equivalent
    
    
    66,300,160
    
    
    
    (161,270,712
    )
    
    
    69,122,544Cash equivalent opening
    
    
    176,133,695
    
    
    
    242,433,855
    
    
    
    81,163,143Cash equivalent ending
    
    
    242,433,855
    
    
    
    81,163,143
    
    
    
    150,285,687
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Cash and cash equivalents under Chilean GAAP
    
    
    243,154,903
    
    
    
    83,073,422
    
    
    
    155,513,205Elimination of marketable securities
    
    
    (721,048
    )
    
    
    (1,910,279
    )
    
    
    (5,227,518
    )Cash and cash equivalents under US GAAP
    
    
    242,433,855
    
    
    
    81,163,143
    
    
    
    150,285,687
 F-137




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    31,350,043
    
    
    
    10,233,607
    
    
    
    21,356,149Time deposits and repurchase agreements
    
    
    211,083,813
    
    
    
    70,929,537
    
    
    
    128,929,538Total cash and cash equivalents under US GAAP
    
    
    242,433,855
    
    
    
    81,163,143
    
    
    
    150,285,687
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Interest paid during the year,
net of amount capitalized
    
    
    190,086,587
    
    
    
    168,205,118
    
    
    
    154,783,915Income taxes paid during the year
    
    
    127,836,120
    
    
    
    148,155,115
    
    
    
    160,316,158Assets acquired under leasing
    
    
    29,084,335
    
    
    
    
    
    
    
    
  Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Foreign exchange losses
    
    
    (14,519,396
    )
    
    
    (10,573,457
    )
    
    
    (9,009,294
    )Effects of inflation
    
    
    4,891,856
    
    
    
    4,921,945
    
    
    
    2,017,836Effect of inflation and foreign exchange differences
    
    
    (9,627,540
    )
    
    
    (5,651,512
    )
    
    
    (6,991,458
    )
 F-138




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Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 h) Disclosures about fair value of financial instruments
  
    
    Cash
  Time deposits and marketable securities, short-term receivables and payables
  
    
    Long-term accounts receivable
  Long-term debt
  
    
    Derivative instruments
  F-139




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Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32. Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
  As of December 31,2005
    
    2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    10,233,607
    
    
    
    10,233,607
    
    
    
    21,356,149
    
    
    
    21,356,149Time deposits
    
    
    61,738,121
    
    
    
    61,738,121
    
    
    
    92,305,965
    
    
    
    92,305,965Marketable securities
    
    
    1,910,279
    
    
    
    1,910,279
    
    
    
    5,231,667
    
    
    
    5,231,667Current receivables, net
    
    
    101,630,637
    
    
    
    101,630,637
    
    
    
    146,854,403
    
    
    
    146,854,403Other receivables, net
    
    
    37,425,026
    
    
    
    37,425,026
    
    
    
    53,868,866
    
    
    
    53,868,866Amounts due from related companies
    
    
    36,126,926
    
    
    
    36,126,926
    
    
    
    32,891,940
    
    
    
    32,891,940Long term receivables
    
    
    26,991,972
    
    
    
    26,991,972
    
    
    
    69,067,592
    
    
    
    69,067,592Long term amounts due from related companies
    
    
    91,713,736
    
    
    
    91,713,736
    
    
    
    90,524,359
    
    
    
    90,524,359Derivative contracts (Assets)
    
    
    58,894,369
    
    
    
    58,894,369
    
    
    
    36,239,094
    
    
    
    36,239,094Accounts payable
    
    
    (57,110,493
    )
    
    
    (57,110,493
    )
    
    
    (87,751,397
    )
    
    
    (87,751,397
    )Short term amounts payables to related
companies
    
    
    (7,320,939
    )
    
    
    (7,320,939
    )
    
    
    (8,230,557
    )
    
    
    (8,230,557
    )Debt, notes payable and bonds payable
    
    
    (2,023,201,781
    )
    
    
    (2,204,077,451
    )
    
    
    (2,092,458,072
    )
    
    
    (2,320,108,500
    )Derivative contracts (Liabilities)
    
    
    (51,320,478
    )
    
    
    (51,320,478
    )
    
    
    (24,092,383
    )
    
    
    (24,092,383
    )
 F-140




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 i) Derivative instruments
    As of December 31,2005
    
    2006ThCh$
    
    ThCh$Commodity
derivatives  assets
    
    
    19,105,375
    
    
    
    Commodity
derivatives  liabilities
    
    
    (40,606,084
    )
    
    
    (7,731,630
    )Embedded derivatives  assets
    
    
    39,788,994
    
    
    
    36,239,094Embedded derivatives  liabilities
    
    
    (10,576,695
    )
    
    
    (16,335,039
    )Financial
derivatives  assets
    
    
    
    
    
    
    Financial derivatives  liabilities
    
    
    (137,699
    )
    
    
    (25,714
    )Total derivative adjustment (paragraph I p)
    
    
    7,573,891
    
    
    
    12,146,711Effects of minority interest (paragraph I t)
    
    
    1,837,998
    
    
    
    126,058Deferred tax effects (paragraph I c)
    
    
    61,154
    
    
    
    (2,069,312
    )Net effect of adjustment
    
    
    9,473,043
    
    
    
    10,203,457
 F-141




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between and United States Generally Accepted Accounting Principles,
continued:
 Commodity derivatives
    Embedded Derivative Contracts
  Financial Derivatives
  F-142




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 Net Investment Hedges
   j) Reclassifications under US GAAP
  F-143




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Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 (i)
    
    The most significant reclassifications from other operating income under Chilean GAAP to
operating income under US GAAP are presented as follow:
 Years ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Other operating income under Chilean GAAP
    
    
    54,201,367
    
    
    
    33,979,022
    
    
    
    29,967,647Gain on sale of fixed assets
    
    
    7,214,042
    
    
    
    4,158,843
    
    
    
    3,324,949Reversal of contingency provision
    
    
    13,920,112
    
    
    
    1,084,015
    
    
    
    8,691,946Energy and power settlement
    
    
    12,743,603
    
    
    
    7,695,386
    
    
    
    5,082,701Indemnities and commissions
    
    
    10,261
    
    
    
    1,876,636
    
    
    
    7,981,564Recovery of expenses and clients portfolio
    
    
    15,162,936
    
    
    
    3,428,655
    
    
    
    878,268Gains on service and other contracts
    
    
    274,827
    
    
    
    788,079
    
    
    
    545,478Gains on sales of other assets
    
    
    27,121
    
    
    
    
    
    
    
    Total reclassifications
    
    
    49,352,902
    
    
    
    19,031,614
    
    
    
    26,504,906Total other operating income as classified under US GAAP but
calculated in accordance with Chilean GAAP
    
    
    4,848,465
    
    
    
    14,947,408
    
    
    
    3,462,741
 (ii)
    
    The most significant reclassifications from other operating expenses under Chilean GAAP
to operating expenses under US GAAP are presented as follow:
 Years ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Other operating expenses under Chilean GAAP
    
    
    83,865,176
    
    
    
    54,711,669
    
    
    
    43,567,721Loss on sale of fixed assets
    
    
    545,042
    
    
    
    399,173
    
    
    
    173,596Retirement benefits and severance indemnities
    
    
    
    
    
    
    867,703
    
    
    
    1,074,377Board of directors compensation
    
    
    232,022
    
    
    
    233,471
    
    
    
    240,962Contingencies and litigation
    
    
    7,870,383
    
    
    
    16,332,763
    
    
    
    8,215,354Energy and power settlement
    
    
    27,180,199
    
    
    
    8,686,575
    
    
    
    6,566,564Costs of sales of materials and fixed assets
    
    
    
    
    
    
    228,100
    
    
    
    557,828Loss on sales of other assets
    
    
    223,480
    
    
    
    
    
    
    
    Provision for obsolescence of inventory
    
    
    114,271
    
    
    
    
    
    
    
    Total reclassifications
    
    
    36,165,397
    
    
    
    26,747,785
    
    
    
    16,828,681Total other operating expenses as classified under US GAAP but
calculated in accordance with Chilean GAAP
    
    
    47,699,779
    
    
    
    27,963,884
    
    
    
    26,739,040
 F-144




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 (iii)
    
    The condensed consolidated statements of income for the years ended December 31 under US
GAAP and classified in accordance with US GAAP are presented as follows:
 Years ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Sales
    
    
    1,092,304,515
    
    
    
    1,146,622,685
    
    
    
    1,337,120,927Other operating income
    
    
    49,352,902
    
    
    
    19,031,614
    
    
    
    26,504,906Costs of sales
    
    
    (658,737,608
    )
    
    
    (679,981,909
    )
    
    
    (778,552,870
    )Administrative and selling expenses
    
    
    (72,600,319
    )
    
    
    (66,135,307
    )
    
    
    (55,718,730
    )Operating income
    
    
    410,319,490
    
    
    
    419,537,083
    
    
    
    529,354,233Non-operating income and expenses, net
    
    
    (210,067,895
    )
    
    
    (146,137,005
    )
    
    
    (166,230,823
    )Income taxes
    
    
    (161,067,430
    )
    
    
    (101,837,980
    )
    
    
    (138,912,689
    )Minority interest
    
    
    7,715,092
    
    
    
    (53,869,098
    )
    
    
    (58,901,141
    )Equity participation in income of related companies, net
    
    
    20,313,660
    
    
    
    (15,311,178
    )
    
    
    46,584,303Income from continuing operations before cumulative
effect of change in accounting principle
    
    
    67,212,917
    
    
    
    102,381,822
    
    
    
    211,893,883Cumulative effect of change in accounting principle
    
    
    1,277,218
    
    
    
    
    
    
    
    Net income
    
    
    68,490,135
    
    
    
    102,381,822
    
    
    
    211,893,883Other comprehensive income (loss):Gain (loss) on hedge of the foreign currency exposure
of net investment in foreign operations
    
    
    (19,379,821
    )
    
    
    (15,449,838
    )
    
    
    3,009,095Cumulative translation adjustment
    
    
    10,518,198
    
    
    
    14,558,412
    
    
    
    (2,912,682
    )Fair value change in hedging instruments
    
    
    
    
    
    
    (137,687
    )
    
    
    (21,343
    )Comprehensive income
    
    
    59,628,512
    
    
    
    101,352,709
    
    
    
    211,968,953
 F-145




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 (iv)
    
    Certain reclassifications would be made to the Chilean GAAP balance sheet in order to present
Chilean GAAP amounts in accordance with presentation requirements under US GAAP. Deferred
taxes from depreciation differences that are recorded as short-term under Chilean GAAP would
be recorded as long-term under US GAAP. Debt discounts are included in other assets in
Chilean GAAP while the discount would be offset against the debt under US GAAP. The amounts
receivable and payable related to financial derivatives have been recorded in the balance
sheet at their gross amounts, whereas, these amounts would have been recorded at their net
amounts by financial institution under US GAAP, provided the contracts have net settlement
provisions. Negative goodwill would be presented as a deduction to property, plant, and
equipment instead of a separate line-item in other assets. Investments in companies in the
development stage would be consolidated under US GAAP, as opposed to being presented as equity
method investees, under Chile GAAP.
  As of December 31,2005
    
    2006ThCh$
    
    ThCh$Current assets
    
    
    290,918,234
    
    
    
    418,324,915Property, plant, and equipment
    
    
    6,041,660,526
    
    
    
    6,447,775,965Accumulated depreciation of property,
plant and equipment
    
    
    (2,419,094,752
    )
    
    
    (2,655,258,991
    )Property, plant, and equipment, net
    
    
    3,622,565,774
    
    
    
    3,792,516,974Goodwill, net
    
    
    41,863,755
    
    
    
    37,222,867Other assets
    
    
    740,077,103
    
    
    
    747,172,596Total assets
    
    
    4,695,424,866
    
    
    
    4,995,237,352Current liabilities
    
    
    567,982,689
    
    
    
    495,551,183Long-term liabilities
    
    
    1,943,603,472
    
    
    
    2,204,468,507Minority interest
    
    
    874,678,235
    
    
    
    851,233,357Shareholders equity
    
    
    1,309,160,470
    
    
    
    1,443,984,305Total liabilities and shareholders equity
    
    
    4,695,424,866
    
    
    
    4,995,237,352
 F-146




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 k) Employee Benefit Plans
  Severance indemnities
  Benefits for Retired Personnel
       Institución de
Previsión Social
   F-147




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Pensions Benefits
    
    Other BenefitsForeign
    
    Chilean
    

    Foreign2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Changes in benefit obligationsObligations as of January 1
    
    
    (18,166,749
    )
    
    
    (17,375,576
    )
    
    
    (9,121,228
    )
    
    
    (9,656,673
    )
    
    
    (3,678,657
    )
    
    
    (1,864,132
    )Foreign exchange effect
    
    
    1,340,670
    
    
    
    (1,034,733
    )
    
    
    
    
    
    
    
    
    
    
    264,266
    
    
    
    117,218Net periodic expense
    
    
    (2,151,810
    )
    
    
    (1,911,913
    )
    
    
    (1,724,643
    )
    
    
    (1,531,207
    )
    
    
    1,216,798
    
    
    
    (125,904
    )Benefits paid
    
    
    1,602,313
    
    
    
    2,053,945
    
    
    
    1,189,198
    
    
    
    1,101,398
    
    
    
    333,461
    
    
    
    166,920Projected benefit obligation
as of December 31
    
    
    (17,375,576
    )
    
    
    (18,268,277
    )
    
    
    (9,656,673
    )
    
    
    (10,086,482
    )
    
    
    (1,864,132
    )
    
    
    (1,705,898
    )Funded Status of the PlansProjected Benefit Obligation
    
    
    (17,566,030
    )
    
    
    (18,268,277
    )
    
    
    (9,656,673
    )
    
    
    (10,086,482
    )
    
    
    (1,864,132
    )
    
    
    (1,705,898
    )Fair value of plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Funded status
    
    
    (17,566,030
    )
    
    
    (18,268,277
    )
    
    
    (9,656,673
    )
    
    
    (10,086,482
    )
    
    
    (1,864,132
    )
    
    
    (1,705,898
    )Unrecognized prior service
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrecognized net loss
    
    
    190,454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    
    (17,375,576
    )
    
    
    (18,268,277
    )
    
    
    (9,656,673
    )
    
    
    (10,086,482
    )
    
    
    (1,864,132
    )
    
    
    (1,705,898
    )Accumulated benefit obligation
    
    
    (17,375,576
    )
    
    
    (18,268,277
    )
    
    
    (9,656,673
    )
    
    
    (10,086,482
    )
    
    
    (1,864,132
    )
    
    
    (1,705,898
    )
 Pension BenefitsForeign2004
    
    2005
    
    2006Assumptions as of December 31
    
    ThCh$
    
    ThCh$
    
    ThCh$Weighted-average discount rate
    
    
    12.00
    %
    
    
    11.20
    %
    
    
    10.4
    %Weighted-average salary increase
    
    
    6.90
    %
    
    
    6.10
    %
    
    
    5.3
    %Weighted-average return on plan assets
    
    
    
    
    
    
    
    
    
    
    Components of net periodic
Benefits expensesService cost
    
    
    (93,778
    )
    
    
    (94,666
    )
    
    
    (54,504
    )Interest cost
    
    
    (2,426,344
    )
    
    
    (1,963,920
    )
    
    
    (1,944,745
    )Expected return on assets
    
    
    
    
    
    
    
    
    
    
    Actuarial gain (loss)
    
    
    2,020,617
    
    
    
    (93,224
    )
    
    
    87,336Net periodic expenses
    
    
    (499,505
    )
    
    
    (2,151,810
    )
    
    
    (1,911,913
    )
 F-148




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 Other BenefitsChilean
    
    Foreign2004
    
    2005
    
    2006
    
    2004
    
    2005
    
    2006Assumptions as of December 31
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Weighted-average discount rate
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    12.70
    %
    
    
    12.00
    %
    
    
    10.40
    %Weighted-average salary
increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    7.50
    %
    
    
    6.90
    %
    
    
    5.30
    %Components of net periodic
Benefits expensesService cost
    
    
    (134,732
    )
    
    
    70,418
    
    
    
    (124,237
    )
    
    
    (11,620
    )
    
    
    (12,640
    )
    
    
    (4,800
    )Interest cost
    
    
    (667,941
    )
    
    
    (510,831
    )
    
    
    (826,108
    )
    
    
    (428,869
    )
    
    
    (389,587
    )
    
    
    (186,048
    )Expected return on assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actuarial gain (loss)
    
    
    511,022
    
    
    
    (1,284,230
    )
    
    
    (580,862
    )
    
    
    (26,324
    )
    
    
    1,619,025
    
    
    
    64,944Amortization of prior service
costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic expenses
    
    
    (291,651
    )
    
    
    (1,724,643
    )
    
    
    (1,531,207
    )
    
    
    (466,813
    )
    
    
    1,216,798
    
    
    
    (125,904
    )
  As of December 31,2006ThCh$2007
    
    
    58,9022008
    
    
    2,855,0872009
    
    
    2,729,1302010
    
    
    2,718,6612011
    
    
    2,558,916Thereafter
    
    
    30,721,555Total
    
    
    41,642,251
 F-149




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 l) Comprehensive income (loss)
   2004Effect of USForeign currency
    
    
    
    
    
    
    GAAPtranslation
    
    
    Chilean GAAP
    
    
    adjustments onadjustment related
    
    
    cumulative
    
    
    cumulative
    
    
    Accumulatedto foreign
    
    
    translation
    
    
    translation
    
    
    Other Comprehensivesubsidiaries
    
    
    adjustment
    
    
    adjustment
    
    
    (Loss)Beginning balance
    
    
    (595,007
    )
    
    
    (14,649,786
    )
    
    
    10,161,691
    
    
    
    (5,083,102
    )Credit (charge) for
the period
    
    
    (19,379,821
    )
    
    
    (6,066,762
    )
    
    
    16,584,960
    
    
    
    (8,861,623
    )Ending balance
    
    
    (19,974,828
    )
    
    
    (20,716,548
    )
    
    
    26,746,651
    
    
    
    (13,944,725
    )
 2005Effect of US
    
    
    Fair valueForeign currency
    
    
    
    
    
    
    GAAP
    
    
    change oftranslation
    
    
    Chilean GAAP
    
    
    adjustments on
    
    
    financial
    
    
    Accumulatedadjustment related
    
    
    cumulative
    
    
    cumulative
    
    
    instruments
    
    
    Otherto foreign
    
    
    translation
    
    
    translation
    
    
    used in cash-
    
    
    Comprehensivesubsidiaries
    
    
    adjustment
    
    
    adjustment
    
    
    flow hedges
    
    
    (Loss)Beginning balance
    
    
    (19,974,828
    )
    
    
    (20,716,548
    )
    
    
    26,746,651
    
    
    
    
    
    
    
    (13,944,725
    )Credit (charge) for
the period
    
    
    (15,449,838
    )
    
    
    (9,437,690
    )
    
    
    23,996,103
    
    
    
    (137,687
    )
    
    
    (1,029,112
    )Ending balance
    
    
    (35,424,666
    )
    
    
    (30,154,238
    )
    
    
    50,742,754
    
    
    
    (137,687
    )
    
    
    (14,973,837
    )
 2006Foreign
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair valuecurrency
    
    
    
    
    
    
    Effect of US
    
    
    
    
    
    
    change oftranslation
    
    
    
    
    
    
    GAAP
    
    
    Application
    
    
    financialadjustment
    
    
    Chilean GAAP
    
    
    adjustments on
    
    
    of FAS 158
    
    
    instruments
    
    
    Accumulatedrelated to
    
    
    cumulative
    
    
    cumulative
    
    
    Endesa Brasil
    
    
    used in
    
    
    Otherforeign
    
    
    translation
    
    
    translation
    
    
    (See note
    
    
    cash-flow
    
    
    Comprehensivesubsidiaries
    
    
    adjustment
    
    
    adjustment
    
    
    32 I f)
    
    
    hedges
    
    
    Income (Loss)Beginning balance
    
    
    (35,424,666
    )
    
    
    (30,154,238
    )
    
    
    50,742,754
    
    
    
    
    
    
    
    (137,687
    )
    
    
    (14,973,837
    )Credit (charge) for
the period
    
    
    3,009,095
    
    
    
    1,690,431
    
    
    
    (4,603,113
    )
    
    
    2,871,484
    
    
    
    (21,343
    )
    
    
    2,946,554Ending balance
    
    
    (32,415,571
    )
    
    
    (28,463,807
    )
    
    
    46,139,641
    
    
    
    2,871,484
    
    
    
    (159,030
    )
    
    
    (12,027,283
    )
 F-150




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 m) Intangible assets
  n) Investments in related companies
  As of December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Current assets
    
    
    158,686,583
    
    
    
    617,867,166
    
    
    
    773,572,141Non-current assets
    
    
    791,874,926
    
    
    
    2,625,972,884
    
    
    
    2,780,851,317Total assets
    
    
    950,561,509
    
    
    
    3,243,840,051
    
    
    
    3,554,423,458Current liabilities
    
    
    138,534,219
    
    
    
    666,474,342
    
    
    
    708,593,459Non-current liabilities
    
    
    501,845,439
    
    
    
    1,028,250,226
    
    
    
    1,609,062,513Total liabilities
    
    
    640,379,658
    
    
    
    1,694,724,568
    
    
    
    2,317,655,972Net sales
    
    
    311,754,335
    
    
    
    351,008,284
    
    
    
    1,355,018,464Gross profit
    
    
    41,508,396
    
    
    
    106,689,168
    
    
    
    374,872,089Net income
    
    
    29,717,289
    
    
    
    62,759,889
    
    
    
    103,701,446Endesa-Chiles
participation in net
income
    
    
    19,410,859
    
    
    
    27,406,608
    
    
    
    42,131,632
  F-151




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
 p) Restrictions which limit the payment of dividends by the registrant
  Proportionate Shareof Restricted NetSubsidiary
    
    AssetsThCh$Pangue S.A.
    
    
    40,015,963Pehuenche S.A.
    
    
    161,753,721Edegel S.A.
    
    
    106,717,481El Chocón
    
    
    119,939,529Central Hidroeléctrica Betania S.A.
    
    
    272,823,102Total
    
    
    701,249,796
  F-152




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 q) Capital lease obligations
  Year ended December 31,2005
    
    2006ThCh$
    
    ThCh$Short-term:Lease obligations
    
    
    2,093,050
    
    
    
    15,354,959Less: interest expense
    
    
    (1,373,523
    )
    
    
    (9,547,254
    )Net short-term lease obligations
    
    
    719,527
    
    
    
    5,807,705Long-term:Lease obligations
    
    
    37,214,877
    
    
    
    123,292,061Less interest expense
    
    
    (13,000,900
    )
    
    
    (40,669,984
    )Net long-term lease obligations
    
    
    24,213,977
    
    
    
    82,622,077Weighted-average interest rate
    
    
    6.50
    %
    
    
    8.47
    %
  Year endedDecember 31,2006ThCh$2007
    
    
    15,354,9592008
    
    
    27,512,8772009
    
    
    13,857,6912010
    
    
    14,741,9762011 and thereafter
    
    
    67,179,517Total
    
    
    138,647,020
 F-153




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 r) Available for sale securities
   Grossunrealized
    
    FairCost
    
    gains
    
    valueThCh$
    
    ThCh$
    
    ThCh$Securities available-for-sale at December 31, 2004
    
    
    721,048
    
    
    
    
    
    
    
    721,048Securities available-for-sale at December 31, 2005
    
    
    1,910,279
    
    
    
    
    
    
    
    1,910,279Securities available-for-sale at December 31, 2006
    
    
    5,227,518
    
    
    
    
    
    
    
    5,227,518
  2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Proceeds from sales
    
    
    1,292,018
    
    
    
    721,048
    
    
    
    1,910,279
  F-154




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 s) Recent accounting pronouncements
  a)
    
    permits fair value re-measurement of any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation;b)
    
    clarifies which interest-only strips and principal-only strips are not subject to the
requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities;c)
    
    establishes a requirement to evaluate interests in securitized financial assets to
identify interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation;d)
    
    clarifies that concentrations of credit risk in the form of subordination are not
embedded derivatives; ande)
    
    amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument.
  .
 .
  F-155




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##### Table of Contents



Endesa-Chile and Subsidiaries
Notes to the Audited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish-See Note 2 (a)
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 s) Recent accounting pronouncements, continued
    F-156




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##### Table of Contents



Schedule I
 Endesa-Chile Individual Condensed Financial Statements
 (Restated for general price-level changes and expressed in thousands of constant
 Chilean pesos as of December 31, 2006, except as stated)
 Schedule I  Condensed financial information of Empresa Nacional de Electricidad S.A. (Endesa
Individual)
 1.
    
    Condensed balance sheets of Endesa Individual under US GAAP as of December 31, 2005 and 2006
are as follows:
 As of December 31,2005
    
    2006ThCh$
    
    ThCh$Current assets
    
    
    224,810,908
    
    
    
    217,973,528Property, plant, and equipment
    
    
    2,313,350,136
    
    
    
    2,419,074,458Accumulated depreciation of property,
plant and equipment
    
    
    (1,165,218,350
    )
    
    
    (1,214,830,216
    )Property, plant, and equipment, net
    
    
    1,148,131,786
    
    
    
    1,204,244,242Other assets
    
    
    1,660,158,920
    
    
    
    1,708,204,446Total assets
    
    
    3,033,101,614
    
    
    
    3,130,422,216Current liabilities
    
    
    291,155,626
    
    
    
    235,252,351Long-term liabilities
    
    
    1,432,785,518
    
    
    
    1,451,185,560Shareholders equity
    
    
    1,309,160,470
    
    
    
    1,443,984,305Total liabilities and shareholders equity
    
    
    3,033,101,614
    
    
    
    3,130,422,216
 2.
    
    Condensed income statements of Endesa Individual under US GAAP for the years ended December
31, 2004, 2005 and 2006 are as follows:
 2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Sales
    
    
    420,170,926
    
    
    
    505,540,879
    
    
    
    558,392,307Other operating income
    
    
    29,833,855
    
    
    
    31,319,544
    
    
    
    3,027,119Costs of sales
    
    
    (321,312,851
    )
    
    
    (376,624,403
    )
    
    
    (383,885,756
    )Administrative and selling expenses
    
    
    (26,359,036
    )
    
    
    (34,962,210
    )
    
    
    (29,753,018
    )Operating income
    
    
    102,332,894
    
    
    
    125,273,810
    
    
    
    147,780,652Non-operating income and expenses, net
    
    
    (54,098,234
    )
    
    
    (59,151,637
    )
    
    
    (5,234,995
    )Income taxes
    
    
    (342,856
    )
    
    
    (17,943,839
    )
    
    
    (35,163,944
    )Equity participation in income of related companies, net
    
    
    19,321,113
    
    
    
    54,203,488
    
    
    
    104,512,170Income from before cumulative effect of change in
accounting principle
    
    
    67,212,917
    
    
    
    102,381,822
    
    
    
    211,893,883Cumulative effect of change in accounting principle
    
    
    1,277,218
    
    
    
    
    
    
    
    Net income
    
    
    68,490,135
    
    
    
    102,381,822
    
    
    
    211,893,883Other comprehensive income (loss):Gain (loss) on hedge of the foreign currency exposure
of net investment in foreign operations
    
    
    (19,379,821
    )
    
    
    (15,449,838
    )
    
    
    3,009,095Cumulative translation adjustment
    
    
    10,518,198
    
    
    
    14,558,412
    
    
    
    (2,912,682
    )Cash Flow Hedges, net of tax (ThCh$28, 201 and
ThCh$4,371 as of December 31, 2005 and 2006,
respectively)
    
    
    
    
    
    
    (137,687
    )
    
    
    (21,343
    )Comprehensive income (loss)
    
    
    59,628,512
    
    
    
    101,352,709
    
    
    
    211,968,953
 G-1




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##### Table of Contents



Schedule I
 Endesa-Chile Individual Condensed Financial Statements
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 3.
    
    Condensed cash-flow statements of Endesa Individual under US GAAP for the years ended
December 31, 2004, 2005 and 2006 are as follows:
 Year ended December 31,2004
    
    
    2005
    
    
    2006ThCh$
    
    
    ThCh$
    
    
    ThCh$Net cash provided by operating activities
    
    
    68,917,852
    
    
    
    90,640,909
    
    
    
    250,931,109Cash flows from financing activities:Proceeds from the issuance of debt
    
    
    68,922,353
    
    
    
    8,825,092
    
    
    
    169,857,911Proceeds from loans obtained from related companies
    
    
    3,240,200
    
    
    
    40,989,244
    
    
    
    182,359,630Other sources of financing
    
    
    5,979,580
    
    
    
    
    
    
    
    Dividends paid
    
    
    (20,472,340
    )
    
    
    (35,898,799
    )
    
    
    (70,008,869
    )Payment of debt
    
    
    (144,324,969
    )
    
    
    (83,926,488
    )
    
    
    (186,366,076
    )Payment of bonds
    
    
    (2,565,602
    )
    
    
    (19,219,293
    )
    
    
    (109,896,254
    )Payment of loans obtained from related companies
    
    
    (3,926,528
    )
    
    
    (63,750,612
    )
    
    
    (11,994,351
    )Payment of bond issuance costs
    
    
    (502,240
    )
    
    
    
    
    
    
    Other disbursements for financing
    
    
    (2,875,860
    )
    
    
    (3,870,708
    )
    
    
    (1,142,172
    )Net cash provided by (used in) financing activities
    
    
    (96,525,406
    )
    
    
    (156,851,564
    )
    
    
    (27,190,181
    )Cash flows from investing activities:Proceeds from sales of property, plant and equipment
    
    
    650,249
    
    
    
    4,311,575
    
    
    
    12,800,668Payments received on loans to related companies
    
    
    163,387,315
    
    
    
    35,831,849
    
    
    
    (125,096,559
    )Other receipts from investments
    
    
    90,462,825
    
    
    
    130,506,597
    
    
    
    124,868,084Additions to property, plant and equipment
    
    
    (69,027,172
    )
    
    
    (20,241,892
    )
    
    
    (103,851,727
    )Long-term investments
    
    
    (1,246,843
    )
    
    
    (8,598,019
    )
    
    
    (10,567,502
    )Other loans granted to related companies
    
    
    (109,648,484
    )
    
    
    (86,499,475
    )
    
    
    (85,187,211
    )Other investment disbursements
    
    
    
    
    
    
    (42,909,058
    )
    
    
    (9,754,251
    )Net cash provided used in investing activities
    
    
    74,577,890
    
    
    
    12,401,577
    
    
    
    (196,788,498
    )Net cash flow for the year
    
    
    46,970,336
    
    
    
    (53,809,078
    )
    
    
    26,952,430Effect of price-level restatement and foreign currency
translation effects on cash and cash equivalents
    
    
    (89,518
    )
    
    
    11,480,184
    
    
    
    (220,896
    )Net (decrease) increase in cash and cash equivalents
    
    
    46,880,818
    
    
    
    (42,328,894
    )
    
    
    26,731,534Cash and cash equivalents beginning of year
    
    
    5,407,167
    
    
    
    52,287,985
    
    
    
    9,959,091Cash and cash equivalents end of year
    
    
    52,287,985
    
    
    
    9,959,091
    
    
    
    36,690,625
 G-2




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##### Table of Contents



Schedule I
Endesa-Chile Individual Condensed Financial Statements
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 4.
    
    The following table presents Endesa Individuals long-term debt owed to banks and other
financial institutions as of December 31, 2005 and 2006:
 As ofDecemberAs of December 31, 2006
    
    31, 2005After 3After 1 year
    
    After 2 years
    
    years
    
    After 5 years
    
    
    
    
    
    Total long-
    
    Annual
    
    Total long-but within
    
    but within
    
    but within
    
    but within
    
    After 10
    
    term
    
    interest
    
    termCurrency
    
    2 years
    
    3 years
    
    5 years
    
    10 years
    
    years
    
    portion
    
    rate
    
    liabilitiesThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    %
    
    ThCh$Financial institutionBanco Nationale de Paris
    
    US$
    
    
    2,430,049
    
    
    
    1,752,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,182,488
    
    
    
    5.78
    
    
    
    6,499,168Citibank N.A. Nassau, Bahamas
    
    US$
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    5.71
    
    
    
    8,503,016Caja Madrid, Miami Agency
    
    US$
    
    
    
    
    
    
    
    
    
    
    2,941,455
    
    
    
    
    
    
    
    
    
    
    
    2,941,455
    
    
    
    5.71
    
    
    
    4,421,568Export Development Corp. Loan
    
    US$
    
    
    762,225
    
    
    
    762,225
    
    
    
    1,524,450
    
    
    
    2,286,675
    
    
    
    
    
    
    
    5,335,575
    
    
    
    6.61
    
    
    
    5,993,254Banque Nationale de París
    
    US$
    
    
    871,028
    
    
    
    871,028
    
    
    
    1,742,056
    
    
    
    3,484,113
    
    
    
    
    
    
    
    6,968,225
    
    
    
    5.98
    
    
    
    7,704,858Banco Bilbao Vizcaya
Argentaria S.A.
    
    US$
    
    
    
    
    
    
    
    
    
    
    5,656,644
    
    
    
    
    
    
    
    
    
    
    
    5,656,644
    
    
    
    5.71
    
    
    
    8,503,016Banco Santander Hispano S.A.
    
    US$
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    
    
    
    
    
    
    
    
    7,004,256
    
    
    
    5.71
    
    
    
    8,503,016HSBC Bank plc, Spanish Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    3,771,096
    
    
    
    
    
    
    
    
    
    
    
    3,771,096
    
    
    
    5.71
    
    
    
    5,668,675Banco San Paolo IMI S.P.A.
    
    US$
    
    
    
    
    
    
    
    
    
    
    4,525,315
    
    
    
    
    
    
    
    
    
    
    
    4,525,315
    
    
    
    5.71
    
    
    
    6,802,413Deutsche Bank AG, New York
Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    1,508,438
    
    
    
    
    
    
    
    
    
    
    
    1,508,438
    
    
    
    5.71
    
    
    
    2,267,470ING Bank N.V
    
    US$
    
    
    
    
    
    
    
    
    
    
    7,240,504
    
    
    
    
    
    
    
    
    
    
    
    7,240,504
    
    
    
    5.71
    
    
    
    10,883,860The Bank of Tokyo-Mitsubishi,
Ltd. N.Y. Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    5,872,925
    
    
    
    
    
    
    
    
    
    
    
    5,872,925
    
    
    
    5.71
    
    
    
    6,802,413ABN AMRO Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    1,885,548
    
    
    
    
    
    
    
    
    
    
    
    1,885,548
    
    
    
    5.71
    
    
    
    2,834,339Instituto de Crédito Oficial
    
    US$
    
    
    
    
    
    
    
    
    
    
    2,684,134
    
    
    
    
    
    
    
    
    
    
    
    2,684,134
    
    
    
    5.71
    
    
    
    2,834,339The Royal Bank of Scotland PLC
    
    US$
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    5.71
    
    
    
    Export Development Canada
    
    US$
    
    
    
    
    
    
    
    
    
    
    998,231
    
    
    
    
    
    
    
    
    
    
    
    998,231
    
    
    
    5.71
    
    
    
    Banco Nacionale de Paris
    
    US$
    
    
    
    
    
    
    
    
    
    
    798,585
    
    
    
    
    
    
    
    
    
    
    
    798,585
    
    
    
    5.71
    
    
    
    Banesto New York Branch
    
    US$
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    
    
    
    
    
    
    
    
    399,293
    
    
    
    5.71
    
    
    
    Bancoestado
    
    US$
    
    
    
    
    
    
    
    
    
    
    549,027
    
    
    
    
    
    
    
    
    
    
    
    549,027
    
    
    
    5.71
    
    
    
    Total
    
    
    
    
    
    
    4,063,302
    
    
    
    3,385,692
    
    
    
    56,505,506
    
    
    
    5,770,788
    
    
    
    
    
    
    
    69,725,288
    
    
    
    
    
    
    
    88,221,405
 G-3




---



##### Table of Contents



Schedule I
Endesa-Chile Individual Condensed Financial Statements
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
  Face value
    
    
    
    
    
    Interest
    
    
    
    
    
    Par value as of December 31,Series
    
    outstanding
    
    Currency
    
    Rate
    
    Maturity
    
    2005
    
    2006%
    
    
    
    
    
    ThCh$
    
    ThCh$1
    
    
    230,000,000
    
    
    US$
    
    
    7.88
    
    
    
    02-01-2027
    
    
    
    3,948,996
    
    
    
    4,017,8812
    
    
    220,000,000
    
    
    US$
    
    
    7.33
    
    
    
    02-01-2037
    
    
    
    3,513,491
    
    
    
    3,574,7783
    
    
    200,000,000
    
    
    US$
    
    
    8.13
    
    
    
    02-01-2097
    
    
    
    3,542,924
    
    
    
    3,604,7251
    
    
    400,000,000
    
    
    US$
    
    
    7.75
    
    
    
    07-15-2008
    
    
    
    7,434,687
    
    
    
    7,564,3741
    
    
    400,000,000
    
    
    US$
    
    
    8.50
    
    
    
    04-01-2009
    
    
    
    4,447,731
    
    
    
    4,525,315E-1, E-2
    
    
    6,000,000
    
    
    UF
    
    
    6.20
    
    
    
    08-01-2006
    
    
    
    112,915,513
    
    
    
    F
    
    
    1,500,000
    
    
    UF
    
    
    6.20
    
    
    
    08-01-2022
    
    
    
    700,457
    
    
    
    699,850144A
    
    
    400,000,000
    
    
    US$
    
    
    8.35
    
    
    
    08-01-2013
    
    
    
    7,282,070
    
    
    
    7,409,094144A
    
    
    200,000,000
    
    
    US$
    
    
    8.63
    
    
    
    08-01-2015
    
    
    
    3,760,949
    
    
    
    3,826,553G
    
    
    4,000,000
    
    
    UF
    
    
    4.80
    
    
    
    10-15-2010
    
    
    
    725,487
    
    
    
    724,858H
    
    
    4,000,000
    
    
    UF
    
    
    6.20
    
    
    
    10-15-2008
    
    
    
    933,942
    
    
    
    933,132Total current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149,206,247
    
    
    
    36,880,5601
    
    
    230,000,000
    
    
    US$
    
    
    7.88
    
    
    
    02-01-2027
    
    
    
    120,350,375
    
    
    
    122,449,7002
    
    
    220,000,000
    
    
    US$
    
    
    7.33
    
    
    
    02-01-2037
    
    
    
    115,117,750
    
    
    
    117,125,8003
    
    
    200,000,000
    
    
    US$
    
    
    8.13
    
    
    
    02-01-2097
    
    
    
    104,652,500
    
    
    
    106,478,0001
    
    
    400,000,000
    
    
    US$
    
    
    7.75
    
    
    
    07-15-2008
    
    
    
    209,305,000
    
    
    
    212,956,0001
    
    
    400,000,000
    
    
    US$
    
    
    8.50
    
    
    
    04-01-2009
    
    
    
    209,305,000
    
    
    
    212,956,000F
    
    
    1,500,000
    
    
    UF
    
    
    6.20
    
    
    
    08-01-2022
    
    
    
    27,528,422
    
    
    
    27,504,570144A
    
    
    400,000,000
    
    
    US$
    
    
    8.35
    
    
    
    08-01-2013
    
    
    
    209,305,000
    
    
    
    212,956,000144A
    
    
    200,000,000
    
    
    US$
    
    
    8.63
    
    
    
    08-01-2015
    
    
    
    104,652,500
    
    
    
    106,478,000G
    
    
    4,000,000
    
    
    UF
    
    
    4.80
    
    
    
    10-15-2010
    
    
    
    73,409,124
    
    
    
    73,345,520H
    
    
    4,000,000
    
    
    UF
    
    
    6.20
    
    
    
    10-15-2008
    
    
    
    73,409,124
    
    
    
    73,345,520Total long-term portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,247,034,795
    
    
    
    1,265,595,110
 6.
    
    The following table presents a schedule of debt maturity in each of the next five years and
thereafter as of December 31, 2006:
 As of December 31,2006ThCh$2007
    
    
    41,354,8462008
    
    
    217,569,3932009
    
    
    216,891,7832010
    
    
    124,595,9812011
    
    
    13,983,1612012 and thereafter
    
    
    762,280,080Total
    
    
    1,376,675,244
 G-4




---



##### Table of Contents



Schedule I
Endesa-Chile Individual Condensed Financial Statements
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006, except as stated)
 7.
    
    The following table presents the dividends received by Endesa Individual in the years ended
December 31, 2004, 2005 and 2006:
 Year ended December 31,2004
    
    2005
    
    2006ThCh$
    
    ThCh$
    
    ThCh$Dividends received
    
    
    81,311,753
    
    
    
    49,023,371
    
    
    
    171,512,155
 G-5