##### 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, 2007
 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:
 Title of each class
    
    Name of each exchange on which 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:
 $ 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$ 230,000,000
    
    7.875%
    
    Notes due 2027$ 220,000,000
    
    7.325%
    
    Notes due 2037$ 200,000,000
    
    8.125%
    
    Notes due 2097
   þ o
  o þ
  þ o
  þ Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
  o U.S. GAAP
    
    o
    
    International Financial Reporting Standards as issued by
the International Accounting Standards Board
    
    þ Other
  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
    
    
    17Item 4A. Unresolved Staff Comments
    
    
    69Item 5. Operating and Financial Review and Prospects
    
    
    69Item 6. Directors, Senior Management and Employees
    
    
    96Item 7. Major Shareholders and Related Party Transactions
    
    
    104Item 8. Financial Information
    
    
    105Item 9. The Offer and Listing
    
    
    108Item 10. Additional Information
    
    
    109Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    124Item 12. Description of Securities other than Equity Securities
    
    
    127PART II
    
    
    128Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    128Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    128Item 15. Controls and Procedures
    
    
    128Item 16. [Reserved]
    
    
    129Item 16A. Audit Committee Financial Expert
    
    
    129Item 16B. Code of Ethics
    
    
    129Item 16C. Principal Accountant Fees and Services
    
    
    130Item 16D. Exemptions from Listing Requirements for Audit Committees
    
    
    131Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Persons
    
    
    131PART III
    
    
    132Item 17. Financial Statements
    
    
    132Item 18. Financial Statements
    
    
    132Item 19. Exhibits
    
    
    132Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1
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GLOSSARY
 ACCIONA, S.A.
    
    Acciona, S.A.
    
    Spanish construction holding company.AESGener
    
    AES Gener S.A.
    
    Chilean generation company that competes with us in
Chile, Argentina, Brazil and Colombia.AFP
    
    Administradora de Fondos de
Pensiones
    
    Chilean private pension funds.Ampla
    
    Ampla Energía e Servicos S.A.
    
    Brazilian distribution company operating in Rio de
Janeiro, owned by Endesa Brasil, a subsidiary of our
parent company, Enersis.ANEEL
    
    Agéncia Nacional de Energia
Elétrica
    
    Brazilian governmental agency for electric energy.Betania
    
    Central Hidroeléctrica
de
Betania S.A. E.S.P.
    
    Endesa Chiles Colombian subsidiary which merged with
Emgesa in 2007.Bureau Veritas
    
    Bureau Veritas
    
    International independent certification company.Cachoeira Dourada
    
    Centrais Eléctricas
Cachoeira Dourada S.A.
    
    Brazilian generating company owned by Endesa Brasil, a
subsidiary of our parent company, Enersis.Cammesa
    
    Compañía Administradora del
Mercado Mayorista Eléctrico
S.A.
    
    Argentine autonomous entity in charge of the operation
of the Mercado Eléctrico Mayorista (Wholesale
Electricity Market), or MEM. Cammesas stockholders are
generation, transmission and distribution companies,
large users and the Secretariat of Energy.CDEC
    
    Centro de Despacho Económico
de Carga
    
    Autonomous entity in two Chilean electric systems in
charge of coordinating the efficient operation and
dispatch of units to satisfy the demand at any time.CELTA
    
    Compañía Eléctrica Tarapacá
S.A.
    
    Endesa Chiles subsidiary that operates in the SING
with thermal plants.CEMSA
    
    Compañía de
Energía del
Mercosur S.A.
    
    Energy trading company with operations in Argentina
subsidiary of Endesa Chile.Chilectra
    
    Chilectra S.A.
    
    Chilean electricity distribution company operating in
the Santiago metropolitan area owned by our parent
company, Enersis.CIEN
    
    Companhia de Interconexão
Energética S.A.
    
    Brazilian transmission company, wholly-owned by Endesa
Brasil, a subsidiary of our parent company, Enersis.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 our parent
company, Enersis that operates mainly in Bogotá and
Cundinamarca.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 our parent company, Enersis.
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CREG
    
    Comisión de Regulación de
Energía y Gas
    
    Colombian Commission for the Regulation of Energy and
Gas.CTM
    
    Compañía de Transmisión del
Mercosur
    
    Endesa Brasils transmission subsidiary with operations
in Argentina.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 a concession area in
the northern part of Lima, a subsidiary of our parent
company, Enersis.Edesur
    
    Empresa Distribuidora Sur
S.A.
    
    Argentine distribution company with a concession area
in the south of the Buenos Aires larger metropolitan
area, a subsidiary of our parent company, Enersis.El Chocón
    
    Hidroeléctrica El Chocón S.A.
    
    Endesa Chiles subsidiary with two hydroelectric
plants, El Chocón and Arroyito, both located in the
Limay River, Argentina.Emgesa
    
    Emgesa S.A. E.S.P.
    
    Colombian generation company controlled by Endesa Chile.Endesa Brasil
    
    Endesa Brasil, S.A.
    
    Brazilian holding company, subsidiary of our parent
company, Enersis, created in 2005.Endesa Costanera
    
    Endesa Costanera S.A.
    
    Argentine generation company controlled by Endesa Chile.Endesa Fortaleza
    
    Central Geradora
Termelétrica Endesa
Fortaleza S.A.
    
    Endesa Fortaleza owns a combined cycle generating
plant, located in the state of Ceará. Endesa Fortaleza
is fully owned by Endesa Brasil, a subsidiary of our
parent company, Enersis.Endesa Internacional
    
    Endesa Internacional S.A.
    
    A subsidiary of Endesa Spain and the direct controller
of our parent company, Enersis.Endesa Spain
    
    Endesa, S.A.
    
    A Spanish electricity generation and distribution
company with a 60.6% beneficial interest in Enersis,
parent company of Endesa Chile.ENEL
    
    ENEL S.p.A
    
    A large power company in Italy.ENRE
    
    Ente Nacional Regulatorio de
la Energía
    
    Argentine national regulatory authority of the energy
sector.GasAtacama
    
    GasAtacama S.A.
    
    Company involved in the gas transportation and
electricity generation in the north of Chile, affiliate
of Endesa Chile.IFRS
    
    International Financial
Reporting Standards
    
    Reporting standard that the company will adopt starting
on January 1, 2009.LNG
    
    Liquid Natural Gas
    
    The gas that the future LNG Quintero plant will process.MEM
    
    Mercado Eléctrico Mayorista
    
    Wholesale Electricity Market in Argentina.
  2




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MME
    
    Ministério de Minas e Energia
    
    Ministry of Mines and Energy of Brazil.NIS
    
    Sistema Interconectado Nacional
    
    National interconnected electric system. There are such
systems in Argentina, Brazil and Colombia.ONS
    
    Operador Nacional do Sistema
Elétricos
    
    Electric System National Operator. Brazilian nonprofit
private entity responsible for the planning and
coordination of operations in interconnected systems.OSINERGMIN
    
    Organismo Supervisor de la
Inversión en Energía y
Minería
    
    Energy and mining investment supervisor authority. The
Peruvian regulatory electricity authority.Pangue
    
    Empresa Eléctrica Pangue S.A.
    
    Chilean electricity company, owner of the Pangue power
station. Pangue is an Endesa Chile subsidiary.Pehuenche
    
    Empresa Eléctrica Pehuenche
S.A.
    
    Chilean electricity 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 electricity 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 electricity industry.SEIN
    
    Sistema Eléctrico
Interconectado Nacional
    
    Peruvian interconnected electric system.SIC
    
    Sistema Interconectado Central
    
    Chilean central interconnected electric system.SING
    
    Sistema Interconectado del
Norte Grande
    
    Electric system operating in northern Chile.SVS
    
    Superintendencia de Valores
y Seguros
    
    Chilean authority in charge of supervising public
companies, securities and insurance.UTA
    
    Unidad Tributaria Anual
    
    Chilean annual tax unit. One UTA equals 12 UTM.UTM
    
    Unidad Tributaria Mensual
    
    Chilean monthly tax unit used to define fines, among
other purposes.VAD
    
    Valued Added Distribution
    
    Valued added from distribution of electricity.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 or the Company) and our
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, 2007.
 
 Financial Information
 Unidades de
Fomento Unidad de Fomento Banco Central de Chile
 Superintendencia de Valores y Seguros, Indice de Precios al Consumidor 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 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.
  5




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
    
    changes in the regulatory framework for the electric industry 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 Elétricas Cachoeira Dourada S.A.,
  As of or for the year ended December 31, (in constant millions of Ch$)2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2007(millionsCh$
    
    
    Ch$
    
    
    Ch$
    
    
    Ch$
    
    

Ch$
    
    
    of $) (1)Chilean GAAP:Revenues from operations
    
    
    1,071,603
    
    
    
    1,173,136
    
    
    
    1,231,473
    
    
    
    1,436,068
    
    
    
    1,726,964
    
    
    
    3,476Cost of operations
    
    
    (640,957
    )
    
    
    (714,780
    )
    
    
    (756,183
    )
    
    
    (851,961
    )
    
    
    (1,119,053
    )
    
    
    (2,252
    )Administrative and
selling expenses
    
    
    (36,475
    )
    
    
    (39,130
    )
    
    
    (42,303
    )
    
    
    (42,301
    )
    
    
    (37,081
    )
    
    
    (75
    )Operating income
    
    
    394,171
    
    
    
    419,226
    
    
    
    432,987
    
    
    
    541,806
    
    
    
    570,830
    
    
    
    1,149Equity in income (losses)
of related companies, net
    
    
    20,226
    
    
    
    21,815
    
    
    
    14,879
    
    
    
    45,478
    
    
    
    (10,453
    )
    
    
    (21
    )Goodwill amortization
    
    
    (1,797
    )
    
    
    (1,664
    )
    
    
    (1,498
    )
    
    
    (1,013
    )
    
    
    (910
    )
    
    
    (2
    )Interest expense, net
    
    
    (219,930
    )
    
    
    (201,811
    )
    
    
    (179,004
    )
    
    
    (168,726
    )
    
    
    (154,254
    )
    
    
    (310
    )Price-level restatement
and foreign currency
translation, net
    
    
    11,099
    
    
    
    25,949
    
    
    
    17,785
    
    
    
    5,473
    
    
    
    25,466
    
    
    
    51
  7




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As of or for the year ended December 31, (in constant millions of Ch$)2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2007(millionsCh$
    
    
    Ch$
    
    
    Ch$
    
    
    Ch$
    
    
    Ch$
    
    
    of $) (1)Other non-operating
expense, net
    
    
    (18,036
    )
    
    
    (31,859
    )
    
    
    (22,266
    )
    
    
    (14,607
    )
    
    
    (67,335
    )
    
    
    (136
    )Income before income
taxes, minority interest
and negative goodwill
amortization
    
    
    185,733
    
    
    
    231,656
    
    
    
    262,883
    
    
    
    408,411
    
    
    
    363,345
    
    
    
    731Income taxes
    
    
    (31,880
    )
    
    
    (106,136
    )
    
    
    (100,832
    )
    
    
    (140,540
    )
    
    
    (113,413
    )
    
    
    (228
    )Extraordinary loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    (81,029
    )
    
    
    (48,624
    )
    
    
    (57,535
    )
    
    
    (70,788
    )
    
    
    (61,874
    )
    
    
    (125
    )Amortization of negative
goodwill
    
    
    18,154
    
    
    
    18,291
    
    
    
    16,788
    
    
    
    6,484
    
    
    
    4,382
    
    
    
    9Net income
    
    
    90,978
    
    
    
    95,187
    
    
    
    121,304
    
    
    
    203,567
    
    
    
    192,439
    
    
    
    387Net income per share in
Ch$/$
    
    
    11.09
    
    
    
    11.60
    
    
    
    14.79
    
    
    
    24.82
    
    
    
    23.46
    
    
    
    0.05Net income per ADS in
Ch$/$ (2)
    
    
    332.92
    
    
    
    348.05
    
    
    
    443.77
    
    
    
    744.60
    
    
    
    703.89
    
    
    
    1.42U.S. GAAP (6):Revenues from operations
    
    
    1,071,604
    
    
    
    1,173,136
    
    
    
    1,231,473
    
    
    
    1,436,068
    
    
    
    1,726,964
    
    
    
    3,476Operating income
    
    
    182,197
    
    
    
    440,683
    
    
    
    450,583
    
    
    
    568,526
    
    
    
    587,669
    
    
    
    1,183Equity in income of
related companies, net
    
    
    52,625
    
    
    
    21,816
    
    
    
    (16,444
    )
    
    
    50,031
    
    
    
    (33,438
    )
    
    
    (67
    )Income taxes
    
    
    28,492
    
    
    
    (172,987
    )
    
    
    (109,374
    )
    
    
    (149,193
    )
    
    
    (117,303
    )
    
    
    (236
    )Net income (loss) from
continuing operations
    
    
    84,701
    
    
    
    72,187
    
    
    
    109,958
    
    
    
    227,574
    
    
    
    181,442
    
    
    
    365Cumulative effect of
changes in accounting
principles, net of tax
and minority interest
    
    
    (140
    )
    
    
    1,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from discontinued
operations, net of tax
and minority interest
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    84,695
    
    
    
    73,558
    
    
    
    109,958
    
    
    
    227,574
    
    
    
    181,442
    
    
    
    365Income from continuing
operations per share in
Ch$/$
    
    
    10.45
    
    
    
    8.81
    
    
    
    13.41
    
    
    
    27.74
    
    
    
    22.12
    
    
    
    0.04Cumulative effect of
changes in accounting
principles
    
    
    (0.02
    )
    
    
    0.16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Discontinued operations
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income per share in
Ch$/$
    
    
    10.45
    
    
    
    8.97
    
    
    
    13.41
    
    
    
    27.74
    
    
    
    22.12
    
    
    
    0.04Income from continuing
operations per ADS in
Ch$/$
    
    
    313.50
    
    
    
    264.20
    
    
    
    402.32
    
    
    
    803.67
    
    
    
    663.60
    
    
    
    1.34Income from discontinued
operations per ADS in
Ch$/$ (2)
    
    
    0.66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income per ADS in
Ch$/$ (2)
    
    
    314.16
    
    
    
    264.20
    
    
    
    402.32
    
    
    
    803.67
    
    
    
    663.60
    
    
    
    1.34
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As of or for the year ended December 31, (in constant millions of Ch$)2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2007(millionsCh$
    
    
    Ch$
    
    
    Ch$
    
    
    Ch$
    
    
    Ch$
    
    
    of $) (1)Consolidated Balance
Sheet DataChilean GAAP:Total assets
    
    
    6,364,004
    
    
    
    6,041,020
    
    
    
    5,345,121
    
    
    
    5,678,830
    
    
    
    5,387,378
    
    
    
    10,842Long-term liabilities
    
    
    2,666,122
    
    
    
    2,489,735
    
    
    
    1,941,502
    
    
    
    2,248,143
    
    
    
    1,921,620
    
    
    
    3,867Minority interest
    
    
    1,417,979
    
    
    
    1,280,750
    
    
    
    1,024,072
    
    
    
    1,004,392
    
    
    
    886,883
    
    
    
    1,785Total Shareholders equity
    
    
    1,738,109
    
    
    
    1,782,315
    
    
    
    1,800,825
    
    
    
    1,927,089
    
    
    
    1,884,227
    
    
    
    3,792Capital stock
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    2,461U.S. GAAP:Total assets
    
    
    6,002,357
    
    
    
    5,672,773
    
    
    
    5,042,886
    
    
    
    5,364,885
    
    
    
    5,126,547
    
    
    
    10,311Long-term liabilities
    
    
    2,753,770
    
    
    
    2,623,481
    
    
    
    2,087,430
    
    
    
    2,367,599
    
    
    
    2,047,132
    
    
    
    4,120Minority interest
    
    
    1,371,917
    
    
    
    1,181,435
    
    
    
    939,404
    
    
    
    914,225
    
    
    
    749,512
    
    
    
    1,508Total Shareholders equity
    
    
    1,308,129
    
    
    
    1,355,113
    
    
    
    1,406,038
    
    
    
    1,550,839
    
    
    
    1,596,838
    
    
    
    3,214Capital stock
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    1,222,878
    
    
    
    2,461Other Consolidated
Financial DataChilean GAAP:Capital expenditures (5)
    
    
    152,703
    
    
    
    109,214
    
    
    
    64,455
    
    
    
    182,671
    
    
    
    207,030
    
    
    
    417Depreciation and
amortization
    
    
    194,554
    
    
    
    178,986
    
    
    
    172,957
    
    
    
    183,998
    
    
    
    192,976
    
    
    
    384Cash dividends per share
in Ch$/$ (3)
    
    
    2.61
    
    
    
    4.69
    
    
    
    6.41
    
    
    
    2.76
    
    
    
    13.03
    
    
    
    0.026Cash
dividends per ADS in
$ (2)(3)(4)
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.15
    
    
    
    0.79
    
    
    
    0.79Weighted average
outstanding (million)Number of shares
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202
    
    
    
    8,202Number of ADS
    
    
    14
    
    
    
    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$ 496.89 per dollar, the Observed Exchange Rate as of December 31, 2007. 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 constant pesos are determined by multiplying per share amounts by 30 (1
ADS = 30 Shares). Per share amounts in $ 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. 2006 dividend was paid in May 2007. The final dividend for 2007 was paid after the
stockholders meeting held on April 1, 2008.(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. Exchange Rates
 Bolsa de Comercio de Santiago Bolsa
Electrónica de Chile Bolsa de Corredores de Valparaíso
  9




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##### Table of Contents



Ley Orgánica del Banco Central de Chile No. 18,840 Mercado Cambiario Formal Mercado Cambiario Informal
 dólar acuerdo, dólar observado, or
   Observed Exchange Rate (1)(Ch$ per $)Low
    
    
    High
    
    
    Average
    
    
    Period-Year
    
    (2)
    
    
    (2)
    
    
    (3)
    
    
    end2003
    
    
    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
    
    
    
    532.392007
    
    
    493.14
    
    
    
    548.67
    
    
    
    521.06
    
    
    
    496.89
  10




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Observed Exchange Rate (1)(Ch$ per $)Average
    
    
    Period-Last six months
    
    Low (2)
    
    
    High (2)
    
    
    (3)
    
    
    end2007November
    
    
    496.27
    
    
    
    516.25
    
    
    
    
    
    
    
    505.38December
    
    
    495.49
    
    
    
    506.79
    
    
    
    
    
    
    
    496.892008January
    
    
    463.58
    
    
    
    498.05
    
    
    
    
    
    
    
    465.34February
    
    
    453.95
    
    
    
    476.44
    
    
    
    
    
    
    
    453.95March
    
    
    431.22
    
    
    
    454.94
    
    
    
    
    
    
    
    437.71April
    
    
    433.98
    
    
    
    461.49
    
    
    
    
    
    
    
    461.49May
    
    
    464.83
    
    
    
    479.66
    
    
    
    
    
    
    
    479.54
 
 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.
  C. Reasons for the offer and use of proceeds.
  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 affect our
profitability.
    Regulatory authorities may impose fines on our subsidiaries.
 Unidad Tributaria
Mensual Unidades Tributarias Anuales 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
  Environmental regulations in the countries in which we operate may increase our costs of
operations.
  Foreign exchange risks may adversely affect our results of operations and financial condition.
   12




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We may be subject to refinancing risk.
      13




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We depend in part on payments from our subsidiaries and affiliates to meet our payment
obligations.
    Dividend Limits and Other Legal Restrictions.
 Contractual Constraints. Empresa Eléctrica Pangue S.A. Pangue Pangues
 Operating Results of Our Subsidiaries.
 Foreign Currency Controls.
 The Argentine natural gas crisis has increased the vulnerability of the electricity sector in
Chile.
    14




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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.
  Construction of new facilities may be affected adversely by factors associated with these
projects.
   We are involved in litigation proceedings.
    15




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Our controlling shareholders may have conflicts of interest relating to our business.
  We have outstanding credit facilities with change of control provisions which could result in
some acceleration rights on such indebtedness.
    .
 The values of our subsidiaries long-term energy supply contracts are subject to fluctuations in
the market prices of certain commodities.
   16




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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.
  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.
  
 Item 4. Information on the Company
 A. History and Development of the Company.
 Incorporation and Contact Information of the Company
   17




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Main office:
    
    Santa Rosa 76, Santiago, ChileMailing Address:
    
    C.P. 8330099, 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; in March 2007 Endesa Chile
increased its equity interest in El Chocón from 47.44% to 65.37% and in Endesa Costanera
from 64.26% to 69.76%.
    
    we acquired Edegel in Peru in October 1995; in June 2006, there was a merger between
Edegel and Etevensa, after which Endesa Chiles equity interest became 33.06% of its
Peruvian assets.
    
    we acquired Betania and Emgesa, both in Colombia, in December 1996 and in October 1997,
respectively. In September 2007 both subsidiaries were merged into Betania, which then
changed its name to Emgesa S.A. E.S.P.;
    
    we acquired Cachoeira Dourada in Brazil in September 1997. Since October 2005,
Cachoeira Dourada has been a subsidiary of Endesa Brasil.
  Bolsa de Comercio de Santiago, Bolsa de
Valores Bolsa Electrónica de Chile, Bolsa de Valores Bolsa de Corredores, Bolsa de Valores Bolsa de
Valores Latinoamericanos de la Bolsa de Madrid
 Investments, Capital Expenditures and Divestitures
   18




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19




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CAPITAL EXPENDITURES OF ENDESA CHILE AND ITS SUBSIDIARIES
 (in millions of $) (1)2005
    
    
    2006
    
    
    2007
    
    
    2008-2012Chile
    
    
    46.8
    
    
    
    241.3
    
    
    
    408.3
    
    
    
    3,186Argentina
    
    
    29.7
    
    
    
    28.3
    
    
    
    34.9
    
    
    
    159Brazil
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    Colombia
    
    
    9.2
    
    
    
    36.6
    
    
    
    32.3
    
    
    
    1,264Peru
    
    
    21.6
    
    
    
    94.5
    
    
    
    23.7
    
    
    
    256Total
    
    
    108.3
    
    
    
    400.7
    
    
    
    499.3
    
    
    
    4,865
 
 (1)
    
    Figures for 2005, 2006 and 2007 are in historical dollars. Figures for 2008-2012 are
expressed in dollars at the exchange rate as of December 31, 2007.  
    
    On April 18, 2005, Endesa Chile and its subsidiary Endesa Inversiones Generales S.A.
(ENIGESA), created a new subsidiary Endesa Eco S.A. (See   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., 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
(37.65% as of December 2007). 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 strengthen the
groups positioning to take advantage of new investment opportunities, making it the
fourth integrated private sector electric utility in Brazil.
    
    On October 3, 2005, the Board of Endesa Chile approved the dissolution and liquidation
of the investment company 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. The company was
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. Today GNL Chile S.A. is owned by Endesa Chile (20%),
ENAP (20%), Metrogas (20%) and British Gas (40%).
    
    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 for the Manuel Belgrano
power plant is in the first half of 2009 and in the second half of 2009 for José de San
Martín. Until then the companies will begin to recover their credits from the cash flows
generated by the project under the ten-year production sales contract with the Mercado
Eléctrico Mayorista, or MEM. (See  B. Business Overview. Operations in Argentina for
details).
  20




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##### Table of Contents




    
    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% holding and Colbún S.A. holds the remaining
49%. As of December 1, 2006, an environmental impact study was granted to the
international consortium created by the companies SWECO, POCH Ambiental and EPS. The
total installed capacity of the project is approximately 2,750 MW and the estimated
investment is currently under study.
    
    On February 28, 2007, Endesa acquired 19,574,798 ordinary shares from Southern Cone
Power Argentina S.A., which holds 5.5% of the share capital of Endesa Costanera. The
investment was $ 9.5 million. As a result of this purchase, Endesa Chiles beneficial
interest in Endesa Costanera increased from 64.3% in 2003 to 69.8%.
    
    On March 8, 2007, Endesa Chile acquired a total of 4,467,500 shares from CMS Generation
Co. and CMS Generation S.R.L. (individually and collectively, CMS), representing 25% of
the share capital of Hidroinvest S.A., the Argentine holding company and controller of El
Chocón, and also acquired 7,405,768 direct shares of El Chocón. The total purchase price
was $ 50 million, which included the debt that Hidroinvest S.A. owed to CMS. With this
purchase, the beneficial interest of Endesa Chile in Hidroinvest S.A. increased from 69.9%
to 96.1%, and strengthens our control of El Chocón, which is 59%-controlled by Hidroinvest
S.A. The share purchase was carried out through the exercise of the right of first
refusal, which was agreed in the Shareholders Agreement. As a result of the foregoing
share purchases, Endesa Chile increased its beneficial interest in El Chocón from 47.4% to
65.37%.
    
    On June 30, 2007, Endesa Chile notified CMS Enterprises Company (CMS) of its decision
to exercise, acting directly or through one of its subsidiaries, its right of first offer
granted by CMS for their direct and indirect interests in the companies and vehicles that
conform GasAtacama, for an amount of $ 80,000,000. This included not only the 50% equity
interest in all the companies and vehicles, but also the sponsor loans that CMS granted to
the vehicles of GasAtacama. On this same date, Endesa Chile and Southern Cross Latin
America Private Equity Fund III, L.P. (Southern Cross) executed a sale and purchase
agreement for 50% of the direct and indirect participation of Endesa Chile in the
GasAtacama and of the sponsor loans associated to this participation, to the Southern
Cross fund, for an amount of $ 80,000,000. As a result of the foregoing, Endesa Chile and
Southern Cross each own 50% of GasAtacama.
    
    On September 1, 2007 the Colombian companies Emgesa S.A. E.S.P. and Central
Hidroeléctrica Betania S.A. E.S.P. were merged into the latter, which then changed its
name to Emgesa S.A. E.S.P. As a result, Endesa Chiles direct and indirect shareholding in
the merged company, Emgesa S.A. E.S.P., is 26.87%. This new corporate structure offers
advantages for the management of Colombian financial transactions.
 Recent Developments
  GasAtacama Generación S.A. Inversiones Gas
Atacama Holding Limitada
  21




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Empresa Eléctrica de Arica S.A. Empresa Eléctrica de Iquique S.A. Empresa Eléctrica de
Antofagasta S.A.,
    Contrato de Servicio de Respaldo Compañía de Petróleos de Chile Copec S.A
  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 31,2005
    
    
    2006
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Hydroelectric generation
    
    
    38,068
    
    
    
    76
    
    
    
    38,617
    
    
    
    73
    
    
    
    32,687
    
    
    
    65Thermal generation (2)
    
    
    12,054
    
    
    
    24
    
    
    
    14,332
    
    
    
    27
    
    
    
    17,796
    
    
    
    35Other generation (Wind)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    0Total generation
    
    
    50,122
    
    
    
    100
    
    
    
    52,949
    
    
    
    100
    
    
    
    50,486
    
    
    
    100
 
 (1)
    
    Generation minus power plant own consumption and technical losses.(2)
    
    San Isidro II, operating with diesel in open cycle since April 2007.  23




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ENDESA CHILE PHYSICAL DATA PER COUNTRY
 As of December 31, each year2005
    
    
    2006
    
    
    2007ArgentinaNumber of generating facilities (1)
    
    
    5
    
    
    
    5
    
    
    
    5Installed capacity (MW) (2)
    
    
    3,623.0
    
    
    
    3,638.7
    
    
    
    3,644.1Energy generated (GWh) (3)
    
    
    12,332.5
    
    
    
    13,750.3
    
    
    
    12,117.1Energy sales (GWh)
    
    
    12,578.8
    
    
    
    13,926.3
    
    
    
    12,406.3Brazil (4)Number of generating facilities (1)
    
    
    
    
    
    
    
    
    
    
    Installed capacity (MW) (2)
    
    
    
    
    
    
    
    
    
    
    Energy generated (GWh) (3)
    
    
    2,644.8
    
    
    
    
    
    
    
    Energy sales (GWh)
    
    
    2,897.5
    
    
    
    
    
    
    
    ChileNumber of generating facilities (1)
    
    
    22
    
    
    
    22
    
    
    
    25Installed capacity (MW) (2)
    
    
    4,476.7
    
    
    
    4,476.7
    
    
    
    4,779.2Energy generated (GWh) (3)
    
    
    18,763.8
    
    
    
    19,973.2
    
    
    
    18,773.0Energy sales (GWh)
    
    
    20,730.4
    
    
    
    20,922.8
    
    
    
    19,212.1ColombiaNumber of generating facilities (1)
    
    
    11
    
    
    
    11
    
    
    
    11Installed capacity (MW) (2)
    
    
    2,657.2
    
    
    
    2,778.7
    
    
    
    2,828.7Energy generated (GWh) (3)
    
    
    11,864.2
    
    
    
    12,564.0
    
    
    
    11,941.8Energy sales (GWh)
    
    
    15,077.5
    
    
    
    15,326.9
    
    
    
    15,613.1PeruNumber of generating facilities (1)
    
    
    8
    
    
    
    9
    
    
    
    9Installed capacity (MW) (2)
    
    
    968.5
    
    
    
    1,425.5
    
    
    
    1,468.0Energy generated (GWh) (3)
    
    
    4,516.3
    
    
    
    6,662.0
    
    
    
    7,654.4Energy sales (GWh)
    
    
    4,599.9
    
    
    
    6,766.5
    
    
    
    7,993.5
 
 (1)
    
    For details on generation facilities, see  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 and 2007 by Bureau
Veritas, an international independent certification company. 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. We have
decided not to make a restatement of capacities based on this certification.(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, Cartagenas generation in Colombia
consolidated since March 2006 and San Isidro II, Palmucho and
Canelas generation in Chile
consolidated since April, November and December 2007 respectively.   24




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ENDESA CHILE CONSOLIDATED PHYSICAL SALES BY TYPE OF CUSTOMER (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% ofSales
    
    
    % of Sales
    
    
    Sales
    
    
    % of Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeRegulated customers
    
    
    21,206
    
    
    
    37.9
    
    
    
    20,146
    
    
    
    35.4
    
    
    
    22,881
    
    
    
    41.4Non-regulated customers
    
    
    12,652
    
    
    
    22.6
    
    
    
    13,735
    
    
    
    24.1
    
    
    
    14,374
    
    
    
    26.0Electricity pool market sales
    
    
    22,026
    
    
    
    39.4
    
    
    
    23,061
    
    
    
    40.5
    
    
    
    17,970
    
    
    
    32.5Total electricity sales
    
    
    55,884
    
    
    
    100.0
    
    
    
    56,942
    
    
    
    100.0
    
    
    
    55,225
    
    
    
    100.0
     ENDESA CHILE CONSOLIDATED PHYSICAL SALES PER CUSTOMER PRICE SEGMENT
(GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeContracted sales (1)
    
    
    33,858
    
    
    
    60.6
    
    
    
    33,881
    
    
    
    59.5
    
    
    
    37,255
    
    
    
    67.5Non-contracted sales
    
    
    22,026
    
    
    
    39.4
    
    
    
    23,061
    
    
    
    40.5
    
    
    
    17,970
    
    
    
    32.5Total electricity sales
    
    
    55,884
    
    
    
    100.0
    
    
    
    56,942
    
    
    
    100.0
    
    
    
    55,225
    
    
    
    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 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeElectricity generation
    
    
    50,122
    
    
    
    88.7
    
    
    
    52,949
    
    
    
    91.8
    
    
    
    50,486
    
    
    
    89.8Electricity purchases
    
    
    6,396
    
    
    
    11.3
    
    
    
    4,730
    
    
    
    8.2
    
    
    
    5,722
    
    
    
    10.2Total(1)
    
    
    56,517
    
    
    
    100.0
    
    
    
    57,679
    
    
    
    100.0
    
    
    
    56,208
    
    
    
    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.
 Companhia de Interconexão Energética S.A Comercializadora de Energía del Mercosur
S.A.
 Sistema Interconectado Central, , Sistema Interconectado del Norte Grande
  26




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##### Table of Contents



INSTALLED CAPACITY PER SUBSIDIARY IN CHILE (MW) (1)
 2005
    
    
    2006
    
    
    2007Endesa
    
    
    2,754
    
    
    
    2,754
    
    
    
    3,034Pehuenche
    
    
    695
    
    
    
    695
    
    
    
    699Pangue
    
    
    467
    
    
    
    467
    
    
    
    467San Isidro
    
    
    379
    
    
    
    379
    
    
    
    379Celta
    
    
    182
    
    
    
    182
    
    
    
    182Eco
    
    
    
    
    
    
    
    
    
    
    18Total
    
    
    4,477
    
    
    
    4,477
    
    
    
    4,779
 
 (1)
    
    The installed capacity was certified during 2006 and 2007 by Bureau Veritas.   ELECTRICITY GENERATION IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Endesa
    
    
    10,903
    
    
    
    11,642
    
    
    
    11,093Pehuenche
    
    
    4,060
    
    
    
    4,345
    
    
    
    3,437Pangue
    
    
    2,241
    
    
    
    2,432
    
    
    
    1,351San Isidro
    
    
    1,178
    
    
    
    802
    
    
    
    1,956Celta
    
    
    383
    
    
    
    751
    
    
    
    933Eco
    
    
    
    
    
    
    
    
    
    
    3Total
    
    
    18,764
    
    
    
    19,973
    
    
    
    18,773
  Year ended December 31,Reservoir
    
    2006
    
    
    2007(GWh)
    
    
    (GWh)
    
    
    % ChangeLaja
    
    
    4,754
    
    
    
    3,028
    
    
    
    (36
    )Maule
    
    
    1,573
    
    
    
    1,307
    
    
    
    (17
    )Chapo
    
    
    577
    
    
    
    119
    
    
    
    (79
    )Colbún
    
    
    533
    
    
    
    283
    
    
    
    (47
    )Invernada
    
    
    315
    
    
    
    116
    
    
    
    (63
    )Rapel
    
    
    72
    
    
    
    53
    
    
    
    (26
    )Melado
    
    
    15
    
    
    
    6
    
    
    
    (62
    )Ralco
    
    
    531
    
    
    
    147
    
    
    
    (72
    )Total
    
    
    8,370
    
    
    
    5,059
    
    
    
    (40
    )
  27




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##### Table of Contents



ENDESA CHILE HYDRO/THERMAL GENERATION IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Generation
    
    
    
    
    
    
    Generation
    
    
    
    
    
    
    Generation(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Hydroelectric generation
    
    
    15,762
    
    
    
    84.0
    
    
    
    17,148
    
    
    
    85.9
    
    
    
    13,179
    
    
    
    70.2Thermal generation
    
    
    3,003
    
    
    
    16.0
    
    
    
    2,825
    
    
    
    14.1
    
    
    
    5,591
    
    
    
    29.8Other generation (Wind)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    0.0Total generation
    
    
    18,764
    
    
    
    100.0
    
    
    
    19,973
    
    
    
    100.0
    
    
    
    18,773
    
    
    
    100.0
 Electrogas
     ELECTRICITY SALES PER SYSTEM IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    (GWh)
    
    
    (GWh)Electricity sales in the SIC
    
    
    35,900
    
    
    
    38,259
    
    
    
    39,982Electricity sales in the SING
    
    
    11,546
    
    
    
    12,027
    
    
    
    12,674
   28




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##### Table of Contents



ENDESA CHILE PHYSICAL GENERATION AND PURCHASES IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    %
    
    
    Sales
    
    
    %
    
    
    Sales
    
    
    %(GWh)
    
    
    of Volume
    
    
    (GWh)
    
    
    of Volume
    
    
    (GWh)
    
    
    of VolumeElectricity generation
    
    
    18,764
    
    
    
    89.2
    
    
    
    19,973
    
    
    
    93.8
    
    
    
    18,773
    
    
    
    94.7Electricity purchases
    
    
    2,268
    
    
    
    10.8
    
    
    
    1,317
    
    
    
    6.2
    
    
    
    1,042
    
    
    
    5.3Total (1)
    
    
    21,032
    
    
    
    100.0
    
    
    
    21,290
    
    
    
    100.0
    
    
    
    19,815
    
    
    
    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.  Sociedad Austral de Electricidad S.A.
 ENDESA CHILE PHYSICAL SALES PER CUSTOMER PRICE SEGMENT
IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    % of Sales
    
    
    Sales
    
    
    % of Sales
    
    
    Sales
    
    
    % of Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeRegulated customers (1)
    
    
    10,575
    
    
    
    51.0
    
    
    
    10,756
    
    
    
    51.4
    
    
    
    11,502
    
    
    
    59.9Non-regulated customers
    
    
    4,797
    
    
    
    23.1
    
    
    
    5,176
    
    
    
    24.7
    
    
    
    5,281
    
    
    
    27.5Electricity pool market sales
    
    
    5,358
    
    
    
    25.8
    
    
    
    4,991
    
    
    
    23.9
    
    
    
    2,430
    
    
    
    12.6Total electricity sales
    
    
    20,731
    
    
    
    100.0
    
    
    
    20,923
    
    
    
    100.0
    
    
    
    19,212
    
    
    
    100.0
 
 (1)
    
    Includes the sales to distribution companies in connection with Resolution 88.  29




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##### Table of Contents



Compañía General de Electricidad S.A.
 Chilectra B1
    
    
    Chilectra B2
    
    
    Chilectra B3
    
    
    % of the total(GWh)
    
    
    (GWh)
    
    
    (GWh)
    
    
    energy allocatedEndesa
    
    
    1,700
    
    
    
    
    
    
    
    1,500
    
    
    
    56.1Colbún
    
    
    500
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    43.9Total
    
    
    2,200
    
    
    
    1,000
    
    
    
    2,500
    
    
    
    100.0
 force majeure
  MAIN CUSTOMERS IN CHILE (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    % of
    
    
    Sales
    
    
    % of
    
    
    Sales
    
    
    % of(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesDistribution companies:Chilectra
    
    
    4,231
    
    
    
    20.4
    
    
    
    4,190
    
    
    
    20.0
    
    
    
    4,017
    
    
    
    20.9CGE
    
    
    4,154
    
    
    
    20.0
    
    
    
    4,449
    
    
    
    21.3
    
    
    
    4,835
    
    
    
    25.2Saesa (1)
    
    
    540
    
    
    
    2.6
    
    
    
    665
    
    
    
    3.2
    
    
    
    746
    
    
    
    3.9Empresa Eléctrica de la Frontera S.A.
    
    
    665
    
    
    
    3.2
    
    
    
    717
    
    
    
    3.4
    
    
    
    756
    
    
    
    3.9Empresa Eléctrica de Atacama S.A.
    
    
    643
    
    
    
    3.1
    
    
    
    417
    
    
    
    2.0
    
    
    
    195
    
    
    
    1.0Total sales to five largest
distribution companies
    
    
    10,233
    
    
    
    49.4
    
    
    
    10,438
    
    
    
    49.9
    
    
    
    10,548
    
    
    
    54.9
  30




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##### Table of Contents



Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    % of
    
    
    Sales
    
    
    % of
    
    
    Sales
    
    
    % of(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesUnregulated customers:Codelco (2)
    
    
    536
    
    
    
    2.6
    
    
    
    548
    
    
    
    2.6
    
    
    
    494
    
    
    
    2.6CMPC
    
    
    794
    
    
    
    3.8
    
    
    
    937
    
    
    
    4.5
    
    
    
    1,103
    
    
    
    5.7Cía. Minera Los Pelambres
    
    
    701
    
    
    
    3.4
    
    
    
    738
    
    
    
    3.5
    
    
    
    871
    
    
    
    4.5Cía. Minera Collahuasi
    
    
    813
    
    
    
    3.9
    
    
    
    867
    
    
    
    4.1
    
    
    
    869
    
    
    
    4.5Cía. Acero del Pacífico
 Huachipato
    
    
    528
    
    
    
    2.5
    
    
    
    546
    
    
    
    2.6
    
    
    
    588
    
    
    
    3.1Total sales to
five largest
unregulated
customers
    
    
    3,372
    
    
    
    16.3
    
    
    
    3,635
    
    
    
    17.4
    
    
    
    3,925
    
    
    
    20.4
 
 (1)
    
    We do not have a contract with Sociedad Austral de Electricidad S.A.(Saesa). Sales are
the result of 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 set 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.
     31




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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
    
    
    570Pangue
    
    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
    
    
    40Palmucho
    
    Pass Through
    
    SIC
    
    
    32Total Hydroelectric
    
    
    
    
    
    
    3,452ThermalHuasco ST
    
    Steam Turbine/Coal
    
    SIC
    
    
    16Bocamina
    
    Steam Turbine/Coal
    
    SIC
    
    
    128Tarapacá GT
    
    Steam Turbine/Diesel Oil
    
    SING
    
    
    24Tarapacá coal
    
    Steam Turbine /Coal
    
    SING
    
    
    158Diego de Almagro
    
    Gas Turbine/Diesel Oil
    
    SIC
    
    
    47Huasco GT
    
    Gas Turbine/IFO 180 Oil
    
    SIC
    
    
    64San Isidro
    
    Combined Cycle/Natural Gas & Diesel Oil
    
    SIC
    
    
    379Taltal
    
    Gas Turbine/Natural Gas & Diesel Oil
    
    SIC
    
    
    245San Isidro II
    
    Combined Cycle/Gas & Diesel Oil
    
    SIC
    
    
    248Total Thermal
    
    
    
    
    
    
    1,309OthersCanela
    
    Wind Power
    
    SIC
    
    
    18Total Capacity
    
    
    
    
    
    
    4,779
 
 (1)
    
    Total installed capacity is 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.Steam Turbine refers to a thermal power plant that uses natural gas, coal, diesel or fuel oil
to produce steam, which moves the turbines to generate the electricity.Gas Turbine (GT) or open cycle refers to a thermal power plant that uses diesel oil, fuel
oil, natural gas or other fuels to produce gas that moves the turbines to generate the
electricity.Combined Cycle refers to a thermal power plant that uses either natural gas, diesel oil or
fuel oil to generate gas that moves the turbines to generate electricity and then recovers the
gas that escapes from that process to generate steam to move another turbine. Operations in Argentina
   32




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##### Table of Contents



Termoeléctrica Manuel Belgrano S.A. Manuel Belgrano Termoeléctrica José de San Martin S.A. San Martín
 Sistema Interconectado Nacional
   INSTALLED CAPACITY PER SUBSIDIARY IN ARGENTINA (MW)
 As of December 31,2005
    
    
    2006 (1)
    
    
    2007Endesa CostaneraCostanera (steam turbine)
    
    
    1,131
    
    
    
    1,138
    
    
    
    1,138Costanera (combined cycle II)
    
    
    851
    
    
    
    859
    
    
    
    859Central Termoélectrica Buenos Aires (combined cycle I)
    
    
    322
    
    
    
    322
    
    
    
    327El ChóconEl Chócon (hydroelectric)
    
    
    1,200
    
    
    
    1,200
    
    
    
    1,200Arroyito (hydroelectric)
    
    
    120
    
    
    
    120
    
    
    
    120Total
    
    
    3,624
    
    
    
    3,639
    
    
    
    3,644
 
 (1)
    
    Variations in the installed capacity in 2006 and 2007 due to certification by the consulting
firm Bureau Veritas.   ELECTRICITY GENERATION PER SUBSIDIARY IN ARGENTINA (GWh)
 Year Ended December 31,2005
    
    
    2006
    
    
    2007Endesa Costanera
    
    
    8,402
    
    
    
    8,709
    
    
    
    8,421El Chocón
    
    
    3,931
    
    
    
    5,041
    
    
    
    3,696Total
    
    
    12,333
    
    
    
    13,750
    
    
    
    12,117
  33




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##### Table of Contents



HYDRO/THERMAL GENERATION IN ARGENTINA (GWh)(1)
 Year ended December 31,2005
    
    
    2006
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Hydroelectric generation
    
    
    3,931
    
    
    
    31.9
    
    
    
    5,041
    
    
    
    36.7
    
    
    
    3,696
    
    
    
    30.5Thermal generation
    
    
    8,402
    
    
    
    68.1
    
    
    
    8,709
    
    
    
    63.3
    
    
    
    8,421
    
    
    
    69.5Total generation
    
    
    12,333
    
    
    
    100.0
    
    
    
    13,750
    
    
    
    100.0
    
    
    
    12,117
    
    
    
    100.0
 
 (1)
    
    Generation minus our own power plant consumption and technical losses.  PHYSICAL GENERATION AND PURCHASES IN ARGENTINA (GWh)
 2005
    
    
    2006
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Electricity generation
    
    
    12,333
    
    
    
    97.6
    
    
    
    13,750
    
    
    
    98.2
    
    
    
    12,117
    
    
    
    97.1Electricity purchases
    
    
    308
    
    
    
    2.4
    
    
    
    256
    
    
    
    1.8
    
    
    
    367
    
    
    
    2.9Total(1)
    
    
    12,640
    
    
    
    100.0
    
    
    
    14,006
    
    
    
    100.0
    
    
    
    12,484
    
    
    
    100.0
 
 (1)
    
    Energy generation plus energy purchases differs from electricity sales due to power plant
consumption of electricity that had been uploaded to the grid, referred to as nonbilled
electricity consumption.  PHYSICAL SALES PER CUSTOMER SEGMENT IN ARGENTINA (GWh)
 Year Ended December 31,2005
    
    
    2006
    
    
    2007% ofSales
    
    
    
    
    
    
    % of Sales
    
    
    
    
    
    
    % of Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeContracted sales
    
    
    2,328
    
    
    
    18.5
    
    
    
    2,116
    
    
    
    15.2
    
    
    
    2,364
    
    
    
    19.1Non-contracted
    
    
    10,251
    
    
    
    81.5
    
    
    
    11,810
    
    
    
    84.8
    
    
    
    10,042
    
    
    
    80.9Total electricity sales
    
    
    12,579
    
    
    
    100.0
    
    
    
    13,926
    
    
    
    100.0
    
    
    
    12,406
    
    
    
    100.0
 PHYSICAL SALES PER SUBSIDIARY IN ARGENTINA (GWh)
 Year Ended December 31,2005
    
    
    2006
    
    
    2007Endesa Costanera
    
    
    8,466
    
    
    
    8,736
    
    
    
    8,450El Chocón
    
    
    4,113
    
    
    
    5,191
    
    
    
    3,956Total
    
    
    12,579
    
    
    
    13,926
    
    
    
    12,406
  34




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##### Table of Contents



ENDESA COSTANERAS MAIN CUSTOMERS (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesYPF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159
    
    
    
    15.5Acindar (Cemsa) (1)
    
    
    59
    
    
    
    5.0
    
    
    
    102
    
    
    
    13.4
    
    
    
    88
    
    
    
    8.6Solvay
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    8.5Transclor
    
    
    39
    
    
    
    3.3
    
    
    
    86
    
    
    
    11.3
    
    
    
    81
    
    
    
    7.9Peugeot
    
    
    63
    
    
    
    5.3
    
    
    
    79
    
    
    
    10.4
    
    
    
    79
    
    
    
    7.7Cenco
    
    
    62
    
    
    
    5.3
    
    
    
    62
    
    
    
    8.2
    
    
    
    119
    
    
    
    11.6Papelera de la Plata
    
    
    137
    
    
    
    11.6
    
    
    
    45
    
    
    
    5.9
    
    
    
    
    
    
    
    Indupa (Cemsa) (1)
    
    
    195
    
    
    
    16.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total sales
to our
largest

non-regulated
customers
    
    
    555
    
    
    
    46.9
    
    
    
    373
    
    
    
    49.2
    
    
    
    611
    
    
    
    59.7
 
 (1)
    
    During 2005 and 2006, Acindar and Indupa did not have contracts with Endesa Costanera, but
served them through Cemsa, an Endesa Chiles affiliate. During 2007, Acindar is a Endesa
Costanera customer and Indupa is no longer a customer.    force majeure,
    35




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##### Table of Contents



EL CHOCONS MAIN CUSTOMERS (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesMinera Alumbrera
    
    
    482
    
    
    
    42.1
    
    
    
    496
    
    
    
    36.5
    
    
    
    569
    
    
    
    42.4Profertil (Cemsa) (1).
    
    
    232
    
    
    
    20.3
    
    
    
    242
    
    
    
    17.8
    
    
    
    145
    
    
    
    10.8Massuh
    
    
    126
    
    
    
    11.0
    
    
    
    127
    
    
    
    9.3
    
    
    
    109
    
    
    
    8.1Chevron
    
    
    
    
    
    
    0.0
    
    
    
    107
    
    
    
    7.9
    
    
    
    112
    
    
    
    8.3Acindar (Cemsa) (1)
    
    
    118
    
    
    
    10.3
    
    
    
    88
    
    
    
    6.4
    
    
    
    88
    
    
    
    6.5Petroken (Cemsa) (1)
    
    
    30
    
    
    
    2.6
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0Ensi S.E.
    
    
    27
    
    
    
    2.3
    
    
    
    40
    
    
    
    2.9
    
    
    
    
    
    
    
    0.0Total sales
to our
largest

non-regulated
customers
    
    
    1,014
    
    
    
    88.6
    
    
    
    1,100
    
    
    
    80.9
    
    
    
    1,022
    
    
    
    76.2
 
 (1)
    
    Profertil, Acindar and Petroken do not have contracts with El Chocón, but are served through
Cemsa, an Endesa Chile affiliate.  Sociedad Argentina de Energía Piedra del Aguila Central Puerto Petrobras Energía S.A. Genelba Pichi Picún Leufú
 Operations in Colombia
     36




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##### Table of Contents



INSTALLED CAPACITY PER SUBSIDIARY IN COLOMBIA (MW)(1)(2)
 Year ended December 31,2005
    
    
    2006
    
    
    2007(MW)EmgesaGuavio (hydroelectric)
    
    
    1,164
    
    
    
    1,163
    
    
    
    1,213Cadena Nueva (hydroelectric)
    
    
    601
    
    
    
    601
    
    
    
    601Betania (hydroelectric)
    
    
    541
    
    
    
    541
    
    
    
    541Termozipa (thermal)
    
    
    236
    
    
    
    236
    
    
    
    236Cartagena (thermal)
    
    
    0
    
    
    
    142
    
    
    
    142Minor Plants (hydroelectric)(3)
    
    
    116
    
    
    
    96
    
    
    
    96Total
    
    
    2,657
    
    
    
    2,779
    
    
    
    2,829
 
 (1)
    
    The figure includes the capacity used for power plant consumption.(2)
    
    The installed capacity was certified during 2006 and 2007 by Bureau Veritas.(3)
    
    As of December 31, 2007 Emgesa owned and operated five minor plants: Charquito, El Limonar,
La Tinta, Tequendamaand La Junca.   ENERGY GENERATION PER SUBSIDIARY IN COLOMBIA (GWh)(1)(2)
 Year ended December 31,(GWh)2005
    
    
    2006
    
    
    2007Emgesa
    
    
    9,763
    
    
    
    10,360
    
    
    
    11,942Betania
    
    
    2,101
    
    
    
    2,204
    
    
    
    Total
    
    
    11,864
    
    
    
    12,564
    
    
    
    11,942
 
 (1)
    
    Generation minus power plant own consumption and technical losses.(2)
    
    Since September 2007, Betania and Emgesa were merged into Betania, which then changed
its name to EMGESA S.A. E.S.P. Emgesa consolidates the total generation in Colombia
during 2007.   37




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##### Table of Contents



PHYSICAL PRODUCTION AND PURCHASES IN COLOMBIA (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Electricity production
    
    
    11,864
    
    
    
    78.1
    
    
    
    12,564
    
    
    
    81.3
    
    
    
    11,942
    
    
    
    75.8Electricity purchases
    
    
    3,321
    
    
    
    21.9
    
    
    
    2,883
    
    
    
    18.7
    
    
    
    3,814
    
    
    
    24.2Total
    
    
    15,185
    
    
    
    100.0
    
    
    
    15,447
    
    
    
    100.0
    
    
    
    15,756
    
    
    
    100.0
   PHYSICAL SALES PER CUSTOMER SEGMENT IN COLOMBIA (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % ofSales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    % of Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeContracted sales
    
    
    9,800
    
    
    
    65.0
    
    
    
    9,687
    
    
    
    63.2
    
    
    
    10,539
    
    
    
    67.5Non-contracted sales
    
    
    5,277
    
    
    
    35.0
    
    
    
    5,640
    
    
    
    36.8
    
    
    
    5,074
    
    
    
    32.5Total electricity sales
    
    
    15,077
    
    
    
    100.0
    
    
    
    15,327
    
    
    
    100.0
    
    
    
    15,613
    
    
    
    100.0
   MAIN DISTRIBUTION AND TRADING CUSTOMERS IN COLOMBIA (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Sales
    
    
    % of
    
    
    Sales
    
    
    % of
    
    
    Sales
    
    
    % of(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesDistribution companies:Codensa (1)
    
    
    3,933
    
    
    
    40.1
    
    
    
    2,959
    
    
    
    30.5
    
    
    
    3,036
    
    
    
    28.8Enertolima
    
    
    800
    
    
    
    8.2
    
    
    
    811
    
    
    
    8.4
    
    
    
    437
    
    
    
    4.1Electrocosta
    
    
    426
    
    
    
    4.3
    
    
    
    610
    
    
    
    6.3
    
    
    
    652
    
    
    
    6.2Electricaribe
    
    
    341
    
    
    
    3.5
    
    
    
    469
    
    
    
    4.8
    
    
    
    479
    
    
    
    4.5EPM
    
    
    136
    
    
    
    1.4
    
    
    
    436
    
    
    
    4.5
    
    
    
    1,102
    
    
    
    10.5Dicel
    
    
    222
    
    
    
    2.3
    
    
    
    225
    
    
    
    2.3
    
    
    
    
    
    
    
    Essa
    
    
    206
    
    
    
    2.1
    
    
    
    7
    
    
    
    0.1
    
    
    
    
    
    
    
    Cens
    
    
    221
    
    
    
    2.3
    
    
    
    5
    
    
    
    0.0
    
    
    
    
    
    
    
    Meta
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    649
    
    
    
    6.2Total sales to
our largest
distribution
companies
    
    
    6,285
    
    
    
    64.1
    
    
    
    5,521
    
    
    
    57.0
    
    
    
    6,355
    
    
    
    60.3
 
 (1)
    
    Subsidiary of Enersis.  38




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##### Table of Contents



Operations in Brazil
  INSTALLED GENERATION CAPACITY IN BRAZIL (MW)(1)(2)
 (MW)2005
    
    
    2006
    
    
    2007Cachoeira Dourada
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Total installed capacity defined as the maximum MW capacity of generation units, under
specific technical conditions and characteristics.(2)
    
    As of October 1, 2005 the total participation interest Endesa Chile held in Cachoeira Dourada
was transferred to Endesa Brasil.  PHYSICAL GENERATION AND PURCHASES IN BRAZIL (GWh)
 January-September2005
    
    
    2006
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    (GWh)Electricity generation
    
    
    2,645
    
    
    
    91.3
    
    
    
    
    
    
    
    Electricity purchases
    
    
    253
    
    
    
    8.7
    
    
    
    
    
    
    
    Total(1)
    
    
    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)
 January-September2005
    
    
    2006
    
    
    2006Sales
    
    
    % of Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    (GWh)Contracted sales
    
    
    2,592.9
    
    
    
    89.5
    
    
    
    
    
    
    
    Non-contracted sales
    
    
    304.6
    
    
    
    10.5
    
    
    
    
    
    
    
    Total
    
    
    2,897.5
    
    
    
    100.0
    
    
    
    
    
    
    
    
 Central Geradora Termeléctrica Endesa Fortaleza S.A., Ampla Energía e Servicos S.A.,
  39




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##### Table of Contents



Operations in Peru
 Organismo Supervisor de la Inversión en Energía y
Minería
  INSTALLED CAPACITY IN PERU (MW)(1)
 Year Ended December 31,2005
    
    
    2006
    
    
    2007(MW)Edegel S.A.Huinco (hydroelectric)
    
    
    247
    
    
    
    247
    
    
    
    247Matucana (hydroelectric)
    
    
    129
    
    
    
    129
    
    
    
    129Callahuanca (hydroelectric)
    
    
    75
    
    
    
    75
    
    
    
    80Moyopampa (hydroelectric)
    
    
    65
    
    
    
    65
    
    
    
    65Huampani (hydroelectric)
    
    
    30
    
    
    
    30
    
    
    
    30Yanango (hydroelectric)
    
    
    43
    
    
    
    43
    
    
    
    43Chimay (hydroelectric)
    
    
    151
    
    
    
    151
    
    
    
    151Santa Rosa (thermal)
    
    
    229
    
    
    
    229
    
    
    
    231Ventanilla (thermal)(2)
    
    
    0
    
    
    
    457
    
    
    
    493Total
    
    
    969
    
    
    
    1,426
    
    
    
    1,469
 
 (1)
    
    The installed capacity was certified during 2006 and 2007 by Bureau Veritas.(2)
    
    During 2007 Ventanilla increased its installed capacity by 36 MW due to the control of
the energy losses.  HYDRO/THERMAL GENERATION IN PERU (GWh)(1)
 Year ended December 31,2005
    
    
    2006(2)
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Hydroelectric generation
    
    
    4,095
    
    
    
    90.7
    
    
    
    4,197
    
    
    
    63.0
    
    
    
    4,385
    
    
    
    57.3Thermal generation
    
    
    422
    
    
    
    9.3
    
    
    
    2,465
    
    
    
    37.0
    
    
    
    3,270
    
    
    
    42.7Total generation
    
    
    4,516
    
    
    
    100.0
    
    
    
    6,662
    
    
    
    100.0
    
    
    
    7,654
    
    
    
    100.0
 
 (1)
    
    Generation minus power plant own consumption and technical losses.(2)
    
    Thermal generation includes Ventanillas generation since January 2006.  40




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##### Table of Contents



PHYSICAL GENERATION AND PURCHASES IN PERU (GWh) (1)
 Year ended December 31,2005
    
    
    2006(2)
    
    
    2007(GWh)
    
    
    %
    
    
    (GWh)
    
    
    %
    
    
    (GWh)
    
    
    %Electricity generation
    
    
    4,516
    
    
    
    94.8
    
    
    
    6,662
    
    
    
    96.1
    
    
    
    7,654
    
    
    
    93.9Electricity purchases
    
    
    246
    
    
    
    5.2
    
    
    
    274
    
    
    
    3.9
    
    
    
    499
    
    
    
    6.1Total(1)
    
    
    4,762
    
    
    
    100.0
    
    
    
    6,935
    
    
    
    100.0
    
    
    
    8,153
    
    
    
    100.0
 
 (1)
    
    Total GWh production plus purchases differs from GWh sales due to transmission losses,
given that our 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 Eléctrico Interconectado Nacional
  PHYSICAL SALES PER CUSTOMER SEGMENT IN PERU (GWh)
 Year ended December 31,2005
    
    
    2006 (2)
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales
    
    
    Sales(GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    Volume
    
    
    (GWh)
    
    
    VolumeContracted sales (1)
    
    
    3,766
    
    
    
    81.9
    
    
    
    6,145
    
    
    
    90.8
    
    
    
    7,569
    
    
    
    94.7Non-contracted sales
    
    
    834
    
    
    
    18.1
    
    
    
    621
    
    
    
    9.2
    
    
    
    424
    
    
    
    5.3Total electricity sales
    
    
    4,600
    
    
    
    100.0
    
    
    
    6,766
    
    
    
    100.0
    
    
    
    7,994
    
    
    
    100.0
 
 (1)
    
    Includes the sales to distributors without contracts.(2)
    
    Figures for 2006 include Ventanillas sales since January 2006.   41




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##### Table of Contents



MAIN CUSTOMERS IN PERU (GWh)
 Year ended December 31,2005
    
    
    2006
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofSales
    
    
    contract
    
    
    Sales
    
    
    contract
    
    
    Sales
    
    
    contract(GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    Sales
    
    
    (GWh)
    
    
    SalesDistribution companies:Edelnor (Regulated) (1)
    
    
    1,000
    
    
    
    26.6
    
    
    
    957
    
    
    
    15.6
    
    
    
    1,039
    
    
    
    13.7Luz del Sur (Regulated) (1).
    
    
    440
    
    
    
    11.7
    
    
    
    441
    
    
    
    7.2
    
    
    
    1,222
    
    
    
    16.1Hidrandina
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    0.7Electronoroeste
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    0.6Electronorte
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    0.6Electrosur
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    0.4Total sales to our largest
distribution companies
    
    
    1,440
    
    
    
    38.2
    
    
    
    1,398
    
    
    
    22.8
    
    
    
    2,431
    
    
    
    32.1Unregulated costumers:ElectroPerú (2)
    
    
    0
    
    
    
    0.0
    
    
    
    1,620
    
    
    
    26.4
    
    
    
    2,427
    
    
    
    32.1Antamina
    
    
    676
    
    
    
    18.0
    
    
    
    683
    
    
    
    11.1
    
    
    
    682
    
    
    
    9.0Refinería
    
    
    507
    
    
    
    13.5
    
    
    
    569
    
    
    
    9.3
    
    
    
    516
    
    
    
    6.8Siderperú
    
    
    303
    
    
    
    8.0
    
    
    
    330
    
    
    
    5.4
    
    
    
    362
    
    
    
    4.8Total sales to our largest
unregulated companies
    
    
    1,486
    
    
    
    39.5
    
    
    
    3,202
    
    
    
    52.1
    
    
    
    3,987
    
    
    
    52.7Total sales to our
largest costumers
    
    
    2,926
    
    
    
    77.8
    
    
    
    4,600
    
    
    
    75.0
    
    
    
    6,418
    
    
    
    84.8
 
 (1)
    
    For 2006 and 2007, the energy sold by Edegel to Edelnor and Luz del Sur includes only the
energy associated with bilateral contracts with Edegel. The amount assigned to Edegel for non
contract-related consumption of these distributors is not included. For 2007, the energy sold
to these distributors includes the amount won by Edegel in the bids realized during 2006 and
2007.(2)
    
    Since 2006, ElectroPerú has been a customer of Edegel due to a merger with Etevensa. The
value reported is from January to December 2006, the increase in 2007 is due to the increase
in Ventanillas generation which sells the energy to ElectroPerú.  ELECTRICITY INDUSTRY REGULATORY FRAMEWORK
 Chile
 Industry Structure
    42




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##### Table of Contents



Sistema Inteconectado Central, or Sistema Interconectado del Norte Grande, or Centro de Despacho Económico de Carga
 Chilean Electricity Law
 General
    Sales by Generation Companies
  Sales to Distribution Companies and Certain Regulated Customers
   43




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##### Table of Contents



Sales to Other Generation Companies
   Transmission
  Concessions
  Fines and Compensations
 force majeure
  44




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##### Table of Contents



The Short Laws
  Law No. 20,220
  Environmental Regulation
  Reglamento 30 Reglamento 30
 Ley de Servicios Generales
  45




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##### Table of Contents



Water rights
  Argentina
 Ley Nacional
 Mercado Eléctrico Mayorista Compañía
Administradora del Mercado Eléctrico Mayorista Ente Nacional Regulatorio de la Energía
      Emergency Measures
    46




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##### Table of Contents



Export and Import of Electricity
  Foninvemem
    Energy Plus Service
   47




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##### Table of Contents



Trends
  Dispatch and Pricing
 Sistema
Interconectado de Argentina
       48




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##### Table of Contents



Environmental Regulation
 Ley Nacional No. 24,051
  Brazil
 Industry Structure
 Sistema Interligado Nacional
  União Agencia Nacional de Energía
Elétrica
  Operador Nacional do Sistema Elétrico
  Deregulation and Privatization
   49




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##### Table of Contents



Independent Power Producers and Self-Producers
        Structure of the New Electricity Sector
 Empresa de Pesquisa Energética
   50




---



##### Table of Contents



Comitê de
Monitoramento do Setor Elétrico
 Concessions
  Environmental Regulation
   Colombia
     51




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##### Table of Contents



Superintendencia
de Servicios Públicos Domiciliarios Unidad de
Planeación Minera y Energética
  Generation
 Bolsa de Energía
   52




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##### Table of Contents



Dispatch and Pricing
  ,
  Transmission
   Unidad de Planeación Minero Energética
 Distribution
   53




---



##### Table of Contents



Trading
     Environmental Regulation
   Peru
 Industry Structure
 Organismo
Supervisor de la Inversión en Energía y Minería
  54




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##### Table of Contents



Eléctrico Interconectado Nacional
  Ministerio de Energía y Minas
 Gerencia Adjunta de Regulación Tarifaria Comité de Operación Económica del Sistema
   Dispatch and Pricing
     55




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##### Table of Contents



Transmission
   Distribution Pricing
     Concessions
   ,
  56




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##### Table of Contents



Cogeneration Regulation
  Environmental Regulation
  C. Organizational structure
  Endesa Costanera (Argentina)
 Servicios Eléctricos del Gran Buenos Aires S.A.
 El Chocón (Argentina)
  Endesa Eco (Chile)
  Pehuenche (Chile)
   57




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##### Table of Contents



Pangue (Chile)
  Celta (Chile)
  San Isidro (Chile)
  Ingendesa (Chile)
  Emgesa (Colombia)
 Central
Hidroeléctrica Betania S.A. E.S.P.
  Edegel (Peru)
 Empresa de Generación
Termoelectrica Ventanilla S.A. Generandes Peru S.A.
  58




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##### Table of Contents



Selected Related Companies
 CEMSA (Argentina)
  Electrogas (Chile)
  GasAtacama (Chile)
  Gasoducto Atacama (Chile)
   GasAtacama Generación (Chile)
  Endesa Brasil (Brazil)
    59




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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, 2007)
 ENGINEERINGGENERATION
    
    
    
    
    
    
    
    
    
    SERVICES
    
    INFRASTRUCTUREArgentina
    
    Brazil
    
    Chile
    
    Colombia
    
    Peru
    
    Chile
    
    ChileEndesa
Costanera
   69.76%
El Chocón
   65.37%
    
    
    
    Pehuenche
92.65%
Pangue
94.99% (1)
Celta
100%
San Isidro
100%
Endesa Eco
100%
    
    Emgesa
26.87% (4)
    
    Edegel
33.06% (3)
    
    Ingendesa 100%
    
    Túnel El Melón 100%Related CompaniesCEMSA
45%
    
    Endesa
Brasil (2)
37.65%
    
    GasAtacama 50%
Electrogas 42.5%
Gasoducto Atacama
Chile 50%
Gasoducto Atacama
Argentina 50%
Gasoducto Taltal 50%
Transquillota 50%
HidroAysén 51%
 
 (1)
    
    Endesa Internacional, a subsidiary of Endesa Spain, has a 5.01% shareholding in Pangue.(2)
    
    The economic interest in Endesa Brasil decreased from 37.85% as of December 2005 to 37.65%
at December 2006 as a consequence of the reduction in the indirect share of Endesa Chile in
Edegel due to the merger of Edegel and Etevensa.(3)
    
    In June 2006, Edegel and Empresa de Generacion Termoelectrica Ventanilla S.A.(Etevensa),
a 493 MW thermoelectric generation company, merged.(4)
    
    On September 1, 2007 Central Hidroeléctrica Betania S.A. E.S.P. and EMGESA S.A. E.S.P merged
into Betania and then Betania changed its name to EMGESA S.A. E.S.P.   60




---



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(ENDESA CHILE LOGO)
    
    ENDESA CHILEAs of DECEMBER 31, 2007
    

(ENDESA CHILE LOGO)
 
  61




---



##### Table of Contents



D. Property, Plant and Equipment
      Country/Company
    
    Power Plant Name
    
    Power Plant Type (1)
    
    2005
    
    
    2006
    
    
    2007MW(2)ArgentinaEndesa Costanera
    
    Total
    
    
    
    
    2,304
    
    
    
    2,319
    
    
    
    2,324Costanera Steam
    
    Steam Turbine/NaturalTurbine
    
    Gas+ Fuel Oil
    
    
    1,131
    
    
    
    1,138
    (3)
    
    
    1,138Costanera Combined
    
    Combined Cycle/NaturalCycle II
    
    Gas+Diesel Oil
    
    
    851
    
    
    
    859
    (3)
    
    
    859Central Buenos Aires(CBA)Combined Cycle I
    
    Combined Cycle/Natural Gas
    
    
    322
    
    
    
    322
    
    
    
    327(4
    )El Chocón
    
    Total
    
    
    
    
    1,320
    
    
    
    1,320
    
    
    
    1,320Chocón
    
    Reservoir
    
    
    1,200
    
    
    
    1,200
    
    
    
    1,200Arroyito
    
    Pass Through
    
    
    120
    
    
    
    120
    
    
    
    120Total
Capacity in
Argentina
    
    
    
    
    
    
    3,624
    
    
    
    3,639
    
    
    
    3,644Brazil (5)Cachoeira Dourada
    
    Cachoeira Dourada
    
    Pass Through
    
    
    
    
    
    
    
    
    
    
    Total
Capacity in
Brazil
    
    
    
    
    
    
    
    
    
    
    ChileEndesa Chile
    
    Total
    
    
    
    
    2,754
    
    
    
    2,754
    
    
    
    3,034Total Hydroelectric
    
    
    
    
    2,254
    
    
    
    2,254
    
    
    
    2,286Rapel
    
    Reservoir
    
    
    377
    
    
    
    377
    
    
    
    377Cipreses
    
    Reservoir
    
    
    106
    
    
    
    106
    
    
    
    106El Toro
    
    Reservoir
    
    
    450
    
    
    
    450
    
    
    
    450Los Molles
    
    Pass Through
    
    
    18
    
    
    
    18
    
    
    
    18
  62




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##### Table of Contents



Country/Company
    
    Power Plant Name
    
    Power Plant Type (1)
    
    2005
    
    
    2006
    
    
    2007MW(2)Sauzal
    
    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
    
    
    
    690Palmucho
    
    Pass Through
    
    
    
    
    
    
    
    
    
    
    32
    (6)Total Thermal
    
    
    
    
    500
    
    
    
    500
    
    
    
    748Huasco
    
    Steam Turbine/Coal
    
    
    16
    
    
    
    16
    
    
    
    16Bocamina
    
    Steam Turbine/Coal
    
    
    128
    
    
    
    128
    
    
    
    128Diego de Almagro (7)

    Gas Turbine/ Diesel Oil


    47
    
    
    
    47
    
    
    
    47Huasco
    
    Gas Turbine/IFO 180 Oil


    64
    
    
    
    64
    
    
    
    64Taltal
    
    Gas Turbine/Natural Gas/ Diesel Oil (8)
    
    
    245
    
    
    
    245
    
    
    
    245San Isidro II
    
    Gas Turbine/ Diesel Oil


    
    
    
    
    
    
    
    
    248
    (9)Pehuenche
    
    Total
    
    
    
    
    695
    
    
    
    695
    
    
    
    699Pehuenche
    
    Reservoir
    
    
    566
    
    
    
    566
    
    
    
    570
    (4)Curillinque
    
    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
    
    
    
    24Endesa Eco
    
    Canela
    
    Wind Farm
    
    
    
    
    
    
    
    
    
    
    18
    (10)Total Capacity in
Chile
    
    
    
    
    
    
    4,477
    
    
    
    4,477
    
    
    
    4,779ColombiaEmgesa
    
    Total
    
    
    
    
    2,116
    
    
    
    2,238
    
    
    
    2,829
    (11)Guavio
    
    Reservoir
    
    
    1,164
    
    
    
    1,163
    
    
    
    1,213
    (12)Paraíso
    
    Reservoir
    
    
    276
    
    
    
    276
    
    
    
    276La Guaca
    
    Pass Through (13)
    
    
    325
    
    
    
    325
    
    
    
    325Termozipa
    
    Steam Turbine/Coal
    
    
    235
    
    
    
    236
    
    
    
    236Cartagena (14)
    
    Steam Turbine/ Natural Gas + Diesel Oil
    
    
    
    
    
    
    142
    
    
    
    142Minor plants (15)
    
    Pass Through
    
    
    116
    
    
    
    96
    
    
    
    96Betania (11)
    
    Reservoir
    
    
    
    
    
    
    
    
    
    
    541Betania (11)
    
    Betania
    
    Reservoir
    
    
    541
    
    
    
    541Total Capacity in
Colombia
    
    
    
    
    
    
    2,657
    
    
    
    2,779
    
    
    
    2,829PeruEdegel
    
    Total
    
    
    
    
    969
    
    
    
    1,426
    
    
    
    1,469Huinco
    
    Pass Through
    
    
    247
    
    
    
    247
    
    
    
    247Matucana
    
    Pass Through
    
    
    129
    
    
    
    129
    
    
    
    129Callahuanca
    
    Pass Through
    
    
    75
    
    
    
    75
    
    
    
    80
    (16)Moyopampa
    
    Pass Through
    
    
    65
    
    
    
    65
    
    
    
    65Huampani
    
    Pass Through
    
    
    30
    
    
    
    30
    
    
    
    30Yanango
    
    Pass Through
    
    
    43
    
    
    
    43
    
    
    
    43Chimay
    
    Pass Through
    
    
    151
    
    
    
    151
    
    
    
    151Santa Rosa
    
    Gas Turbine/Diesel Oil


    229
    
    
    
    229
    
    
    
    231
    (4)Ventanilla (17)
    
    Combined Cycle/Natural Gas
    
    
    
    
    
    
    457
    
    
    
    493
    (18)Total Capacity in
Peru
    
    
    
    
    
    
    969
    
    
    
    1,426
    
    
    
    1,469Total Endesa Chile
    
    
    
    
    
    
    11,727
    
    
    
    12,320
    
    
    
    12,721
 
 (1)
    
    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 (GT) 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.Wind Farm refers to the technology that transforms the kinetic energy of wind into
electricity.(2)
    
    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 and 2007 by Bureau Veritas.
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.  63




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##### Table of Contents



(3)
    
    Certified by Bureau Veritas in 2006.(4)
    
    Certified by Bureau Veritas in 2007.(5)
    
    Cachoeira Dourada was a subsidiary of Endesa Chile until September 30, 2005, when it became a
subsidiary of Endesa Brasil.(6)
    
    The Palmucho plant began commercial operations on November 28, 2007.(7)
    
    Includes one additional unit of Diego de Almagro (23 MW), which Endesa Chile has rented from
Codelco since 2001.(8)
    
    One of two generation units of Tal Tal may use diesel as an alternative to natural gas.(9)
    
    San Isidro II plant began commercial operations in open cycle on April 23, 2007.(10)
    
    Canela plant (wind farm) began its commercial operation on December 27, 2007(11)
    
    During 2007, Emgesa and Betania merged and Emgesa added Betania to its generation assets.(12)
    
    On February 12, 2007, the five units of the Guavio plant were repowered (240 MW each).(13)
    
    Operates in series with Paraíso.(14)
    
    Purchased in 2006. Figure represents capacity value for units 1 and 3. Unit 2 is under
overhaul and recovery of capacity.(15)
    
    Minor plants are registered with a total capacity of 96.1 MW. At December 31, 2007 Emgesa
owned and operated five minor plants: Charquito, El Limonar, La Tinta, Tequendamaand La
Junta. On January 1, 2006, the minor plant San Antonio (19.5 MW) was withdrawn from the NIS.(16)
    
    On February 13, 2007, the Callahuanca plant was repowered.(17)
    
    During 2006, Edegel and Etevensa merged and Edegel added Ventanilla to its generation assets.(18)
    
    On October 31, 2007, the regulator notified maximum capacity with additional fire of the
Ventanilla plant.  Environmental Issues
    64




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##### Table of Contents



Investment Projects Completed during 2007
 Chile. Palmucho Hydroelectric Power Plant
  Chile. San Isidro Power Plant Expansion Project
  
    
    Stage 1: Operation of gas turbine as an open cycle using diesel (248 MW).
Commercial operations started on April 23, 2007.
    
    Stage 2: Operation of gas turbine as a combined cycle using diesel, reaching
353 MW. In December 2007 San Isidro 2 synchronized as combined-cycle. The steam
unit began commercial operations in January 2008.
    
    Stage 3 (2009, depending on the arrival of LNG): Operation of gas turbine as a
combined-cycle using LNG.
 Chile. Canela Wind Generation Project
  Chile. Concón Lo Venecia Oil Pipeline.
  Projects under Construction
 Chile. Ojos de Agua Project
   Chile. Bocamina Plant Expansion, Second Unit
   65




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##### Table of Contents



Chile. Conversion to diesel TG Taltal
     Chile. LNG Receiving Terminal at Quintero, Región de Valparaíso
    Argentina. Manuel Belgrano Power Plant Project
      66




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##### Table of Contents



Argentina. José de San Martín Power Plant Project
     Peru. Santa Rosa Thermal Plant Expansion Project
  Projects under Development
  Chile. Quintero Power Plant
   Chile. Los Cóndores Project
  Chile. Piruquina Mini Hydro Project
  Chile. Neltume-Choshuenco Hydroelectric Project
   67




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##### Table of Contents



Chile. Canela 2 Wind Farm Project
  Chile. Quintero Quillota Pipeline
    Chile. HidroAysén Project
   Colombia. Quimbo Hydroelectric Project
  Major Encumbrances
    68




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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 Selected financial data, included in
Item 3 herein. Our consolidated financial statements are prepared in accordance with Chilean GAAP,
which differs in some important respects from U.S. 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
   69




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##### Table of Contents



b. Regulatory Developments
  c. Economic Conditions
   70




---



##### Table of Contents



Economic Growth and Electricity Demand
  2005
    
    
    2006
    
    
    2007Electricity
    
    
    GDP
    
    
    Electricity
    
    
    GDP
    
    
    ElectricityGDP
    
    
    Demand
    
    
    Growth
    
    
    Demand
    
    
    Growth (1)
    
    
    DemandGrowth (%)
    
    
    Growth (%)
    
    
    (%)
    
    
    Growth (%)
    
    
    (%)
    
    
    Growth (%)Chile
    
    
    6.3
    
    
    
    4.0
    
    
    
    4.2
    
    
    
    6.0
    
    
    
    5.2
    
    
    
    4.5
    (2)Argentina
    
    
    8.5
    
    
    
    5.8
    
    
    
    8.0
    
    
    
    5.9
    
    
    
    7.5
    
    
    
    5.2Colombia
    
    
    5.3
    
    
    
    3.8
    
    
    
    4.8
    
    
    
    4.1
    
    
    
    6.6
    
    
    
    4.0Brazil
    
    
    2.3
    
    
    
    4.3
    
    
    
    3.6
    
    
    
    3.9
    
    
    
    4.4
    
    
    
    4.8Peru
    
    
    6.4
    
    
    
    5.0
    
    
    
    6.0
    
    
    
    7.7
    
    
    
    7.0
    
    
    
    10.7
 
 (1)
    
    Sources: For Chile, Central Bank of Chile. For Argentina, Colombia, Brazil and Peru, World
Economic Outlook (October 2007) estimate of the International Monetary Fund, and internal Company physical
energy data for 2005-2007.(2)
    
    Electricity Demand Growth in the Central Interconnected System (SIC). Local Currency Exchange Rate
    Local Currency U.S. Dollar Exchange Rates2005
    
    
    2006
    
    
    2007Average
    
    
    Year End
    
    
    Average
    
    
    Year End
    
    
    Average
    
    
    Year EndChile (peso per dollar)
    
    
    558.06
    
    
    
    512.50
    
    
    
    529.64
    
    
    
    532.39
    
    
    
    521.7
    
    
    
    496.89Argentina (peso per dollar)
    
    
    2.94
    
    
    
    3.02
    
    
    
    3.08
    
    
    
    3.061
    
    
    
    3.14
    
    
    
    3.149Colombia (peso per dollar)
    
    
    2,321.6
    
    
    
    2,285.0
    
    
    
    2,358.3
    
    
    
    2,239.0
    
    
    
    2,074
    
    
    
    2,014Brazil (reais per dollar)
    
    
    2.44
    
    
    
    2.34
    
    
    
    2.17
    
    
    
    2.14
    
    
    
    1.94
    
    
    
    1.77Peru (sol per dollar)
    
    
    3.30
    
    
    
    3.42
    
    
    
    3.27
    
    
    
    3.20
    
    
    
    3.13
    
    
    
    2.99
   71




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##### Table of Contents



d. Technical Bulletin 64 and Other Critical Accounting Policies
 Technical Bulletin 64
  BT 64-Conversion Effect
   BT 64-Equity Hedge
  72




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##### Table of Contents



U.S. GAAP Reconciliation
    Chilean GAAP
    
    
    U.S. GAAP(in millions of constant Ch$ as of December 31, 2007)Net income for the year ended December 31:2005
    
    
    121,304
    
    
    
    109,9582006
    
    
    203,567
    
    
    
    227,5742007
    
    
    192,439
    
    
    
    181,442Shareholders equity as of December 31:2005
    
    
    1,800,825
    
    
    
    1,406,0382006
    
    
    1,927,089
    
    
    
    1,550,8392007
    
    
    1,884,227
    
    
    
    1,596,838
 Critical Accounting Policies Affecting Operating Results
  Impairment of Long-lived Assets
   73




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##### Table of Contents



Impairment of Goodwill
  
    
    the foreseeable life of the business, and the expectation of future benefits
associated with the business or with unidentifiable assets;
    
    expected actions by competitors and potential competitors; and
    
    legal, regulatory or contractual provisions affecting the useful life.
    Estimation of Fair Value of Certain Energy Contracts under U.S. GAAP
    74




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##### Table of Contents



Year ended December 31,2006
    
    
    2007(in million of Ch$)Model using internal data (1)
    
    
    1,299.5
    
    
    
    2,081.8Model using external data only
    
    
    0
    
    
    
    0
 
 (1)
    
    The model using internal data also relies on external data. Litigation and Contingencies
   Pension and Post-Retirement Benefits Liabilities
   Year ended December 31,2006
    
    
    2007(increase in millions of Ch$)Projected benefit obligation
    
    
    1,920
    
    
    
    1,798
  Year ended December 31,2006
    
    
    2007(increase in millions of Ch$)Accumulated postretirement benefit obligation
    
    
    713
    
    
    
    741
 Introduction of International Financial Reporting Standards
   75




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##### Table of Contents



SAB 74 Disclosures  Recent Accounting Pronouncements
 Fair Value Measurement
  The Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Non-controlling Interest in Consolidated Financial Statements
  Derivative Instruments and Hedging Activities
   76




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##### Table of Contents



2.
    
    Country by Country Comparative Analysis of Operating Results and Details of Non-Operating
Figures 2006 vs. 2007
 Revenues from operations
  Year ended December 31,Revenues from sales
    
    2006
    
    
    2007(as a % of total)Chile
    
    
    49.3
    
    
    
    56.5Argentina
    
    
    17.6
    
    
    
    15.3Colombia
    
    
    20.5
    
    
    
    18.4Peru
    
    
    12.6
    
    
    
    9.7Total Consolidated Revenues
    
    
    100.0
    
    
    
    100.0
  Year ended December 31,%Revenues
    
    2006
    
    
    2007
    
    
    Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Chile
    
    
    708,516
    
    
    
    976,559
    
    
    
    37.8Argentina
    
    
    252,837
    
    
    
    264,941
    
    
    
    4.8Colombia
    
    
    294,088
    
    
    
    318,085
    
    
    
    8.2Peru
    
    
    180,628
    
    
    
    167,379
    
    
    
    (7.3
    )Total Revenues
    
    
    1,436,068
    
    
    
    1,726,964
    
    
    
    20.3
 Year ended December 31,%Energy Sales
    
    2006
    
    
    2007
    
    
    Change(GWh)
    
    
    (GWh)
    
    
    (GWh)Chile
    
    
    20,923
    
    
    
    19,212
    
    
    
    (8.2
    )Argentina
    
    
    13,926
    
    
    
    12,406
    
    
    
    (10.9
    )Colombia
    
    
    15,327
    
    
    
    15,613
    
    
    
    1.9Peru
    
    
    6,767
    
    
    
    7,994
    
    
    
    18.1Total
    
    
    56,943
    
    
    
    55,225
    
    
    
    (3.0
    )
   77




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##### Table of Contents



.
   Operating Expenses
  Year ended December 31,2006
    
    
    2007
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Operating Expenses(1)Chile (2)
    
    
    374,671
    
    
    
    619,364
    
    
    
    65.3Argentina
    
    
    211,514
    
    
    
    235,519
    
    
    
    11.3Colombia
    
    
    158,854
    
    
    
    152,793
    
    
    
    (3.8
    )Peru
    
    
    108,263
    
    
    
    112,328
    
    
    
    3.8Consolidated Adjustments Foreign Subs
    
    
    1,341
    
    
    
    951
    
    
    
    Total
    
    
    851,961
    
    
    
    1,119,053
    
    
    
    31.4
 
 (1)
    
    Excludes SG&A expenses.(2)
    
    Includes all subsidiaries and investment vehicles in Chile.  78




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##### Table of Contents



Administrative and Selling Expenses
   Year ended December 31,2006
    
    
    2007
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007 except percentages)Administrative and Selling ExpensesChile
    
    
    21,251
    
    
    
    19,556
    
    
    
    (8.0
    )Argentina
    
    
    3,516
    
    
    
    3,729
    
    
    
    6.1Colombia
    
    
    4,925
    
    
    
    5,021
    
    
    
    1.9Peru
    
    
    12,719
    
    
    
    8,898
    
    
    
    (30.0
    )Consolidated Adjustment Foreign Subs
    
    
    111
    
    
    
    123
    
    
    
    Total Selling and Administrative Expense
    
    
    42,300
    
    
    
    37,081
    
    
    
    (12.3
    )
  79




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##### Table of Contents



Operating Margin and Operating Income
  Year ended December 31,2006
    
    
    2007(percentage based on figures inChilean GAAP in millions of Ch$ asof December 31, 2007)Operating MarginChile
    
    
    44.1
    %
    
    
    34.6
    %Argentina
    
    
    15.5
    %
    
    
    9.7
    %Colombia
    
    
    44.3
    %
    
    
    50.4
    %Peru
    
    
    33.0
    %
    
    
    27.6
    %Total Operating Margin
    
    
    37.7
    %
    
    
    33.1
    %
  Year ended December 31,%2006
    
    
    2007
    
    
    Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Operating IncomeChile
    
    
    312,594
    
    
    
    337,639
    
    
    
    8.0Argentina
    
    
    37,807
    
    
    
    25,693
    
    
    
    (32.0
    )Colombia
    
    
    130,308
    
    
    
    160,271
    
    
    
    23.0Peru
    
    
    59,645
    
    
    
    46,153
    
    
    
    (22.6
    )Consolidated Adjustment Foreign Subs
    
    
    1,452
    
    
    
    1,074
    
    
    
    Total Operating Income
    
    
    541,806
    
    
    
    570,830
    
    
    
    5.4
   80




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##### Table of Contents



Non-operating Results
  Year ended December 31,2006
    
    
    2007
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Non-operating income:Interest income
    
    
    15,914
    
    
    
    23,275
    
    
    
    46.3Equity income of non-consolidated affiliates
    
    
    45,613
    
    
    
    46,947
    
    
    
    2.9Other non-operating income
    
    
    32,185
    
    
    
    17,916
    
    
    
    (44.3
    )Non-operating expenses:Interest expense
    
    
    184,641
    
    
    
    177,529
    
    
    
    (3.9
    )Equity losses of non-consolidated affiliates
    
    
    134
    
    
    
    57,400
    
    
    
    42,585.1Goodwill amortization
    
    
    1,013
    
    
    
    910
    
    
    
    (10.1
    )Other non-operating expenses
    
    
    46,792
    
    
    
    85,251
    
    
    
    82.2Monetary correction:Price level restatement
    
    
    1,598
    
    
    
    8,854
    
    
    
    454.2Foreign Exchange translation
    
    
    3,875
    
    
    
    16,612
    
    
    
    328.7Non-operating results
    
    
    (133,395
    )
    
    
    (207,485
    )
    
    
    55.5
    81




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##### Table of Contents



Net Income
  Year ended December 31,%2006
    
    
    2007
    
    
    Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Operating income
    
    
    541,806
    
    
    
    570,830
    
    
    
    5.4Non-operating expense
    
    
    (133,395
    )
    
    
    (207,485
    )
    
    
    55.5Income before taxes, minority
interest and negative goodwill
amortization
    
    
    408,411
    
    
    
    363,345
    
    
    
    (11.0
    )Current income taxes
    
    
    (106,771
    )
    
    
    (80,005
    )
    
    
    (25.1
    )Deferred income taxes
    
    
    (33,769
    )
    
    
    (33,408
    )
    
    
    (1.1
    )Total income taxes
    
    
    (140,540
    )
    
    
    (113,413
    )
    
    
    (19.3
    )Minority interest
    
    
    (70,788
    )
    
    
    (61,874
    )
    
    
    (12.6
    )Amortization of negative goodwill
    
    
    6,484
    
    
    
    4,382
    
    
    
    (32.4
    )Net income
    
    
    203,567
    
    
    
    192,439
    
    
    
    (5.5
    )
 Income Taxes
 Minority Interest
  82




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##### Table of Contents



3.
    
    Country by Country Comparative Analysis of Operating Results and Details of Non-operating
Figures 2006 vs. 2005
 Revenues from Operations
  Year ended December 31,Revenues
    
    2005
    
    
    2006
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Chile
    
    
    600,943
    
    
    
    708,516
    
    
    
    17.9Argentina
    
    
    171,933
    
    
    
    252,837
    
    
    
    47.1Colombia
    
    
    283,741
    
    
    
    294,088
    
    
    
    3.6Brazil (1)
    
    
    45,831
    
    
    
    
    
    
    
    Peru
    
    
    129,024
    
    
    
    180,627
    
    
    
    40.0Total Revenues
    
    
    1,231,472
    
    
    
    1,436,068
    
    
    
    16.6
 
 (1)
    
    Tables include figures for 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. Year ended December 31,Energy Sales
    
    2005
    
    
    2006
    
    
    % Change(GWh)
    
    
    (GWh)
    
    
    (GWh)Chile
    
    
    20,731
    
    
    
    20,923
    
    
    
    0.9Argentina
    
    
    12,579
    
    
    
    13,926
    
    
    
    10.7Colombia
    
    
    15,077
    
    
    
    15,327
    
    
    
    3.6Brazil (1)
    
    
    2,897
    
    
    
    
    
    
    
    Peru
    
    
    4,600
    
    
    
    6,767
    
    
    
    47.1Total
    
    
    55,884
    
    
    
    56,943
    
    
    
    1.9
 
 (1)
    
    Tables include figures for 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.   83




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##### Table of Contents



Operating Expenses
  Year ended December 31,2005
    
    
    2006
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Operating Expenses(1)Chile
    
    
    373,151
    
    
    
    374,671
    
    
    
    0.4Argentina
    
    
    154,892
    
    
    
    210,172
    
    
    
    35.7Colombia
    
    
    145,873
    
    
    
    158,854
    
    
    
    8.9Brazil (2)
    
    
    21,512
    
    
    
    
    
    
    
    Peru
    
    
    60,755
    
    
    
    108,263
    
    
    
    78.2Total
    
    
    756,183
    
    
    
    851,961
    
    
    
    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.   84




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##### Table of Contents



,
   Administrative and Selling Expenses
   Year ended December 31,2005
    
    
    2006
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007 except percentages)Administrative and Selling ExpensesChile
    
    
    20,534
    
    
    
    21,251
    
    
    
    3.5Argentina
    
    
    2,882
    
    
    
    3,405
    
    
    
    18.2Colombia
    
    
    5,681
    
    
    
    4,925
    
    
    
    (13.3
    )Brazil (1)
    
    
    3,957
    
    
    
    
    
    
    
    Peru
    
    
    9,248
    
    
    
    12,719
    
    
    
    37.5Total Selling and Administrative Expense
    
    
    42,302
    
    
    
    42,301
    
    
    
    0.0
 
 (1)
    
    Tables include figures of Cachoeira Dourada from January 1 to September 30, 2005, when Endesa
Chile transferred its investments in this company to Endesa Brasil. See Item 4. Information
on the Company A. History and Development of the Company for details.  85




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Operating Margin and Operating Income
  Year ended December 31,2005
    
    
    2006(percentage based on figures in ChileanGAAP in millions of Ch$ as ofOperating Margin
    
    December 31, 2007)Chile
    
    
    34.5
    %
    
    
    44.1
    %Argentina
    
    
    8.2
    %
    
    
    15.5
    %Colombia
    
    
    46.6
    %
    
    
    44.3
    %Brazil (1)
    
    
    44.4
    %
    
    
    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.  Year ended December 31,2005
    
    
    2006
    
    
    % Change(in millions of constant Ch$ as ofOperating Income
    
    December 31, 2007, except percentages)Chile
    
    
    207,257
    
    
    
    312,593
    
    
    
    50.8Argentina
    
    
    14,160
    
    
    
    39,259
    
    
    
    177.3Colombia
    
    
    132,188
    
    
    
    130,308
    
    
    
    (1.4
    )Brazil (1)
    
    
    20,363
    
    
    
    
    
    
    
    Peru
    
    
    59,021
    
    
    
    59,646
    
    
    
    1.1Total Operating Income
    
    
    432,988
    
    
    
    541,806
    
    
    
    25.1
 
 (1)
    
    Tables include figures for 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.   86




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##### Table of Contents



Non-operating Results
  Year ended December 31,2005
    
    
    2006
    
    
    % Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Non-operating income:Interest earned
    
    
    17,053
    
    
    
    15,915
    
    
    
    (6.7
    )Equity income of non-consolidated affiliates
    
    
    23,438
    
    
    
    45,613
    
    
    
    94.6Other non-operating income
    
    
    36,493
    
    
    
    32,186
    
    
    
    (11.8
    )Non-operating expenses:Interest expense
    
    
    196,058
    
    
    
    184,641
    
    
    
    (5.8
    )Equity losses of non-consolidated affiliates
    
    
    8,559
    
    
    
    134
    
    
    
    (98.4
    )Goodwill amortization
    
    
    1,498
    
    
    
    1,013
    
    
    
    (32.4
    )Other non-operating expenses
    
    
    58,760
    
    
    
    46,792
    
    
    
    (20.4
    )Monetary correction:Price level restatement
    
    
    1,446
    
    
    
    1,597
    
    
    
    10.5Foreign Exchange translation
    
    
    16,340
    
    
    
    3,875
    
    
    
    (76.3
    )Non-operating results
    
    
    (170,104
    )
    
    
    (133,395
    )
    
    
    21.6
     87




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##### Table of Contents



Net Income
  Year ended December 31,%2005
    
    
    2006
    
    
    Change(in millions of constant Ch$ as ofDecember 31, 2007, except percentages)Operating income
    
    
    432,987
    
    
    
    541,806
    
    
    
    25.1Non-operating income
    
    
    (170,104
    )
    
    
    (133,395
    )
    
    
    21.6Income before taxes, minority
interest and negative goodwill
amortization
    
    
    262,883
    
    
    
    408,411
    
    
    
    55.4Current income taxes
    
    
    (65,947
    )
    
    
    (106,771
    )
    
    
    61.9Deferred income taxes
    
    
    (34,886
    )
    
    
    (33,770
    )
    
    
    (3.2
    )Total income taxes
    
    
    (100,832
    )
    
    
    (140,540
    )
    
    
    39.4Minority interest
    
    
    (57,534
    )
    
    
    (70,788
    )
    
    
    23.0Amortization of negative goodwill
    
    
    16,789
    
    
    
    6,484
    
    
    
    (61.4
    )Extraordinary items
    
    
    0
    
    
    
    0
    
    
    
    n.a.Net income
    
    
    121,304
    
    
    
    203,566
    
    
    
    67.8
 Income Taxes
 Minority Interest
 B. Liquidity and capital resources.
    88




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##### Table of Contents



2006
    
    
    2007(figures in $ million)INITIAL CASH (A)
    
    
    23.4
    
    
    
    103.1SOURCES (B) + (C)
    
    
    1,622.2
    
    
    
    1,928.0Cash Inflows from Chile (B)
    
    
    1,238.4
    
    
    
    1,765.4Cash Inflows from Operations
    
    
    960.2
    
    
    
    1,384.5Interest Income from Chilean Subs
    
    
    2.1
    
    
    
    6.3Dividend from Chilean Subs
    
    
    143.5
    
    
    
    220.7Amortization of Intercompany Loans from Chilean Subs
    
    
    92.9
    
    
    
    25.9Other Income from non-operating Activities
    
    
    39.7
    
    
    
    23.7Net New Financing
    
    
    0.0
    
    
    
    104.4Cash Inflows from Foreign subsidiaries (C)
    
    
    383.8
    
    
    
    162.6Interest Income from foreign Subs
    
    
    44.8
    
    
    
    0.6Dividends from Foreign Subs. and Foreign Related Companies
    
    
    43.7
    
    
    
    143.9Capital Reductions
    
    
    0.0
    
    
    
    4.8Amortization of Intercompany Loans from Foreign Subs
    
    
    293.3
    
    
    
    10.4Management Fee and Others
    
    
    2.0
    
    
    
    2.9USES (D) + (E)
    
    
    1,542.4
    
    
    
    1,923.8Cash Outflows from Operations (D)
    
    
    786.9
    
    
    
    1,533.8Cash Outflows from Operations (1)
    
    
    723.6
    
    
    
    1,404.9Taxes
    
    
    63.3
    
    
    
    128.9Cash Outflows from non-operating Activities (E)
    
    
    755.5
    
    
    
    390.0Intercompany Loans
    
    
    0.0
    
    
    
    4.1Interest Expenses and Derivative Contracts
    
    
    204.5
    
    
    
    182.7Dividend Payment
    
    
    131.3
    
    
    
    202.8Net Financial Debt Amortization
    
    
    411.4
    
    
    
    0.0Others
    
    
    8.4
    
    
    
    0.4FINAL CASH (A)+(B)+(C)-(D)-(E)
    
    
    103.1
    
    
    
    107.3
 
 (1)
    
    Includes cash flows from investment and operations.  
    
    $ 1,384.5 million cash inflows from the operating revenues, before taxes and
interest expense, of Endesa Chile and its wholly-owned subsidiaries;
    
    $ 252.9 million from interest income, dividends and amortization of intercompany
loans from its other Chilean subsidiaries;
    
    $ 23.7 million from non-operating activities, mainly from the sale of shares of
Emgesa S.A to Empresa Eléctrica de Bogotá (as agreed to in the Emgesa S.A.  Betania
S.A. merger agreement) for $ 16.7 million;
    
    $ 104.4 million from net financing operations, which mainly included four
borrowings of Endesa Chiles Revolving Credit Facilities for an aggregate amount of
$ 116 million; and
    
    $ 162.6 million from foreign subsidiaries and foreign-related companies, mainly
Endesa Brasil S.A. (approx. $ 74 million), Emgesa S.A. (approx. $ 50 million) and
Edegel S.A. (approx. $ 19 million).
  89




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
    
    $ 1,404.9 million in investments, including capital expenditure and operating
expenses of Endesa Chile and its wholly-owned subsidiaries;
    
    $ 128.9 million in taxes paid by Endesa Chile and its 100% wholly-owned
subsidiaries;
    
    $ 182.7 million in interest expense (net of derivative contracts). In 2007,
derivative instruments resulted in additional interest expenses of $ 0.3 million;
    
    $ 202.8 million in dividend payments by Endesa Chile and dividends paid by Endesa
Chiles wholly-owned subsidiaries to third parties; and
   
    
    $ 960.2 million cash inflows from operating revenues, before taxes and interest
expenses, of Endesa Chile and its wholly-owned subsidiaries;
    
    $ 244.4 million from interest income, dividends and amortization of intercompany
loans from its other Chilean subsidiaries;
    
    $ 39.7 million from non-operating activities, including $ 19.4 million from the
sales of water rights to Hidroaysén, $ 19.1 million from intercompany debt amortization
from related companies and interest income from related companies and third parties,
and dividends of $ 1.2 million from Chilean-related companies;
    
    $ 44.8 million on interest income from intercompany debt with its Colombian and
Argentine subsidiaries;
    
    $ 43.7 million from dividends from foreign subsidiaries and foreign-related
companies, which included $ 24.7 million from Brazil (related company) and
$ 19.0 million from Peru; and
    
    $ 293.3 million from intercompany debt amortization by Colombian and Argentine
subsidiaries.
   
    
    $ 723.6 million in operating expenses of Endesa Chile and its wholly-owned
subsidiaries, including investments and capital expenditure;
    
    $ 63.3 million in net sale taxes paid by Endesa Chile and its wholly-owned
subsidiaries;
    
    $ 204.5 million in interest expenses (net of derivative contracts). In 2006,
derivative instruments resulted in additional interest expense of $ 3.1 million;
    
    $ 131.3 million in dividend payments by Endesa Chile and dividends paid by Endesa
Chiles wholly-owned subsidiaries to third parties; and
    
    $ 411.4 million of net financial debt amortization (discounting new debt used for
refinancing purposes) which included a $ 150 million Yankee Bond issued by Endesa
Chile Internacional that matured in April 2006 and a domestic bond issuance of
$ 200 million that matured in August 2006. These maturities were covered with the
operating cash flows of Endesa Chile and its wholly-owned subsidiaries, cash flow from
its foreign subsidiaries and other available liquidity sources.
  90




---



##### Table of Contents



AggregatePrincipal AmountIssuer
    
    Maturity
    
    Coupon
    
    
    Issued(as a percentage)
    
    
    (in $ 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.  91




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92




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##### Table of Contents




    
    Edegel issued a total of nine series of local currency bonds in 2007 for a total
amount of $ 70 million, with maturities ranging from four to 15 years.
    
    Emgesa issued local currency bonds in February for CPs 170,000 million
($ 77 million), for a ten-year term, in order to refinance the bridge loan used to
finance the maturity of local bonds during 2006.
  93




---



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
    
    Edegel: credit agreement with West LB in July for $ 20 million for a 3-year term.
In October, it
placed two domestic bond issues on the Peruvian market for 25 million soles each
($ 16 million) for a 7-year term, and also refinanced a note for 50 million soles for a
2-year term. In December, Edegel signed a loan for $ 24 million for 3 years to
refinance short-term loans.
    
    El Chocón: bank loan for $ 100 million for a 5-year term. The proceeds were used to
prepay bonds maturing in 2007.
    
    Betania: local currency bond for CPs 100,000 million ($ 44 million) for a 7-year
term, and in June signed a structured loan for CPs 305 billion ($ 123 million) to
mature in April 2012.
    
    Emgesa: local currency bonds for $ 17 million on a ten-year term basis.
Additionally, the company closed three 180-day facilities with local banks in CPs for
$ 62 million. To finance such facilities and other financial needs, Emgesa issued a
local currency bond for CPs 170,000 million  ($ 76 million) on a 10-year term basis.
 C. Research and developments, patents and licenses, etc.
 (Gerencia de Tecnología y Soporte Técnico) (Subgerencia de Tecnología, Innovación y Soporte Técnico).
 Energy efficiency
 
    
    Modernization of hydraulic turbines, consisting of the recovery and increase of
capacity, obtaining more energy from the same generating flow due to the efficiency of
the present runner designs.
    
    Introduction of a system of on-line optimization and energy production accounting
for application in coal-fired and combined-cycle plants.
    
    Technical audits of energy efficiency in our installations, both administrative
offices and our plants.
 Technological research
 
    
    Investigation and application of wave-generated power. The objective is to study
the present energy potential of the coast in southern Chile and define the most
suitable technology for the characteristics and conditions found.
    
    Applications of intelligent systems oriented to the development of research work in
the areas of analytical processing, artificial intelligence and information tools that
have characteristics that make them very useful for application in the electricity
generation area.
 Innovation in business processes
  94




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##### Table of Contents



Technological modernization
 D. Trend information
       E. Off-balance sheet arrangements
  F. Tabular disclosures of contractual obligations
  Payment obligations due by period (in billions of Ch$)
Endesa Chile on a consolidated basis (4)
 Jan.
    
    
    Jan.
    
    
    Jan.
    
    
    Jan.2008-
    
    
    2009-
    
    
    2010 
    
    
    2011 
    
    
    AfterDec.
    
    
    Dec.
    
    
    Dec.
    
    
    Dec.
    
    
    Dec.As of December 31, 2007
    
    TOTAL
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2011Bank Debt
    
    
    419
    
    
    
    89
    
    
    
    49
    
    
    
    71
    
    
    
    99
    
    
    
    111Local Bonds
    
    
    570
    
    
    
    17
    
    
    
    100
    
    
    
    15
    
    
    
    116
    
    
    
    322Yankee Bonds (1)
    
    
    927
    
    
    
    199
    
    
    
    308
    
    
    
    
    
    
    
    
    
    
    
    421Other debt (2)
    
    
    105
    
    
    
    20
    
    
    
    20
    
    
    
    17
    
    
    
    18
    
    
    
    29Interest Expenses
    
    
    1,149
    
    
    
    145
    
    
    
    114
    
    
    
    96
    
    
    
    88
    
    
    
    706Pension and postretirement
obligations (3)
    
    
    40
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    28Contractual operational obligations
    
    
    1,744
    
    
    
    156
    
    
    
    138
    
    
    
    138
    
    
    
    138
    
    
    
    1,173Financial Leases
    
    
    84
    
    
    
    11
    
    
    
    9
    
    
    
    10
    
    
    
    9
    
    
    
    45Total
    
    
    5,782
    
    
    
    687
    
    
    
    788
    
    
    
    397
    
    
    
    518
    
    
    
    3,393
 
 (1)
    
    Net of Mark-to-Market (negative Ch$ 4 billion) of Cross Currency Swaps associated to Yankee
Bonds mature in 2008.(2)
    
    Includes Endesa Chile capital lease obligations for a total of Ch$ 22 billion and the Mutual
Financing Agreement with Peruana de Energía S.A. (Perené) of Ch$ 4 billion and includes Endesa
Costaneras debt with Mitsubishi Corporation for Ch$ 72 billion.(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
postretirement obligations.(4)
    
    All figures are in Ch$ of each year.  95




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##### Table of Contents



G. Safe Harbor
  
 Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
  CurrentPosition
    
    
    Expiration ofName
    
    Position
    
    Held Since
    
    
    Current TermDirectorsMario Valcarce D. (2)
    
    Chairman
    
    
    2006
    
    
    
    2008Carlos Torres V.
    
    Vice Chairman
    
    
    2002
    
    
    
    2008Rafael Español N.
    
    Director
    
    
    2007
    
    
    
    2008José Fernández O. (3)
    
    Director
    
    
    2005
    
    
    
    2008Leonidas Vial E.
    
    Director
    
    
    1995
    
    
    
    2008Raimundo Valenzuela L.
(1)(2)
    
    Director
    
    
    2007
    
    
    
    2008José María Calvo-Sotelo I.
    
    Director
    
    
    2007
    
    
    
    2008Jaime Estévez V. (1)(2)(3)
    
    Director
    
    
    2006
    
    
    
    2008Enrique García A. (3)
    
    Director
    
    
    2003
    
    
    
    2008
 
 (1)
    
    Independent member(2)
    
    Member of the Directors Committee.(3)
    
    Member of the Audit Committee. 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
  96




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Directors
 Mario Valcarce D., Chairman of the Board of Directors and Member of the Directors Committee. Sociedad de Fomento Fabril
(Sofofa) Universidad Católica de Valparaíso
 José Fernández O., Director and Member of the Audit Committee. Aldeasa Grupo Pascual Universidad Complutense de Madrid Universidad
Politécnica de Madrid Universidad Complutense de Madrid Universidad Politécnica de Madrid
 Leonidas Vial E. Director of the Board. Empresas Santa Carolina S.A., Cía. Industrial El Volcán S.A, Cías. Cic S.A. Embotelladora Arica
 Carlos Torres V., Director of the Board. Auna
Operadores de Telecomunicaciones S.A. the Universidad
Nacional de Educación a Distancia
 Jaime Estévez V., Director and Member of the Directors Committee and Audit Committee. Banco de Chile BancoEstado AFP Provida AFP Protección Universidad de Chile .
 Enrique García A., Director and Member of the Audit Committee. Distrilec Inversora Edesur Escuela Técnica Superior de ICCP
 José María Calvo-Sotelo Ibáñez-Martín, Director of the Board. Amena Smartcom Universidad Complutense de
Madrid
  97




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##### Table of Contents



Raimundo Valenzuela L., Director and Member of the Directors Committee. Cristalerías de Chile Viña Santa Rita Parque Arauco, Forestal Argentina Compass Chile Pontificia Universidad
Católica de Chile
 Rafael Español N., Director of the Board. Aiscondel Monsando Ibérica Aragonesas Grupo SEDA Productores
Fibras Químicas de España Centro de Supercomputación de Cataluña Fundaciones Catalanas
para la Innovación y para el Deporte Universidad de Barcelona
  Executive Officers
 Rafael Mateo A Unipede 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. Smartcom PCS Hill & Knowlton Captiva Universidad
Gabriela Mistral
  98




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##### Table of Contents



Manuel Irarrázaval A. Viña Santa Rita Pontificia Universidad Católica de Chile Pontificia Universidad Católica de
Chile
 Claudio Iglesis G. Cammesa AGEERA Universidad de Chile
 Carlos Martín V. Universidad
Católica de Valparaíso Universidad de Navarra,
 Juan Carlos Mundaca A. Universidad de Santiago
 Julio Valbuena S Endesa Energía 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
  Board
    
    
    BoardCompensation
    
    
    CompensationFrom Endesa
    
    
    From
    
    
    DirectorDirector
    
    Chile
    
    
    Subsidiaries
    
    
    Committee
    
    
    TotalYear ended December 31, 2007 (in thousands of Ch$)Mario
Valcarce D.
    
    
    47,056
    
    
    
    4,312
    
    
    
    8,467
    
    
    
    59,835Carlos
Torres V.
    
    
    25,323
    
    
    
    
    
    
    
    
    
    
    
    25,323Pedro Larrea
P.
    
    
    21,438
    
    
    
    
    
    
    
    
    
    
    
    21,438Enrique
García A.
    
    
    23,528
    
    
    
    
    
    
    
    2,826
    
    
    
    26,354José
Fernández O.
    
    
    23,528
    
    
    
    
    
    
    
    2,826
    
    
    
    26,354Héctor
López V.
    
    
    14,292
    
    
    
    
    
    
    
    
    
    
    
    14,292Jaime
Bauzá B.
    
    
    6,950
    
    
    
    
    
    
    
    2,835
    
    
    
    9,785Jaime
Estévez V.
    
    
    23,528
    
    
    
    
    
    
    
    10,585
    
    
    
    34,113Leonidas
Vial E.
    
    
    20,708
    
    
    
    
    
    
    
    
    
    
    
    20,708Raimundo
Valenzuela L.
    
    
    15,176
    
    
    
    
    
    
    
    4,939
    
    
    
    20,115Rafael
Español N.
    
    
    8,891
    
    
    
    
    
    
    
    
    
    
    
    8,891José Maria Calvo-Sotelo I.
    
    
    8,538
    
    
    
    
    
    
    
    
    
    
    
    8,538Total
    
    
    238,956
    
    
    
    4,312
    
    
    
    32,478
    
    
    
    275,746
  99




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Código del Trabajo
 C. Board Practices
 Corporate Governance
 estatutos
 estatutos estatutos
   100




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Estatuto del Directivo
 Bases del Gobierno Corporativo
 1.
    
    Committing the efforts of the Board and Management to focus on maximizing the value
of the Company for all its shareholders, and also for its employees, customers and
suppliers;2.
    
    Reaffirming the Boards duty to provide guidelines for the Management to attain the
best practices at each level of the Organization;3.
    
    Emphasizing one of the most important objectives of the Board, which is to make known
the Companys Vision, its Objectives and the Strategy for achieving them;4.
    
    Emphasizing the responsibility of the Board to continuously control the performance
of the Management in line with the Companys Vision and Strategy.
  Compliance with NYSE Listing Standards on Corporate Governance
  Independence and Functions of the Audit Committee
   Comité de Directores Comité de Directores Comité de Directores Comité de Directores
  101




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##### Table of Contents



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.
   Corporate Governance Guidelines
 Bases del Gobierno Corporativo
 D. Employees
  Company
    
    2005
    
    
    2006
    
    
    2007In ArgentinaEndesa Costanera
    
    
    262
    
    
    
    267
    
    
    
    273El Chocón
    
    
    49
    
    
    
    49
    
    
    
    50Total personnel in Argentina
    
    
    311
    
    
    
    316
    
    
    
    323In ChileEndesa Chile
    
    
    484
    
    
    
    501
    
    
    
    525Pehuenche
    
    
    3
    
    
    
    3
    
    
    
    3Pangue
    
    
    
    
    
    
    
    
    
    
    San Isidro
    
    
    
    
    
    
    
    
    
    
    Celta
    
    
    1
    
    
    
    1
    
    
    
    1Ingendesa (1)
    
    
    253
    
    
    
    261
    
    
    
    289Túnel El Melón
    
    
    24
    
    
    
    23
    
    
    
    23Total personnel in Chile
    
    
    765
    
    
    
    789
    
    
    
    841In ColombiaEmgesa (2)
    
    
    292
    
    
    
    341
    
    
    
    399Betania
    
    
    34
    
    
    
    35
    
    
    
    Total personnel in Colombia
    
    
    326
    
    
    
    376
    
    
    
    399In PeruEdegel
    
    
    158
    
    
    
    200
    
    
    
    206Total personnel in Peru
    
    
    158
    
    
    
    200
    
    
    
    206Total personnel of Endesa Chile and Subsidiaries
    
    
    1,560
    
    
    
    1,681
    
    
    
    1,769
 
 (1)
    
    The Ingendesa figure includes Ingendesa employees of Ingendesas subsidiary in Brazil.(2)
    
    In September 2007, Emgesa and Betania were merged into the latter, which then changed its
name to Emgesa, where all the employees were transferred.  102




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##### Table of Contents



Company
    
    2005
    
    
    2006
    
    
    2007In ArgentinaEndesa Costanera
    
    
    
    
    
    
    
    
    
    
    El Chocón
    
    
    
    
    
    
    
    
    
    
    Total temporary personnel in Argentina
    
    
    
    
    
    
    
    
    
    
    In ChileEndesa Chile
    
    
    3
    
    
    
    10
    
    
    
    9Pehuenche
    
    
    
    
    
    
    
    
    
    
    Pangue
    
    
    
    
    
    
    
    
    
    
    San Isidro
    
    
    
    
    
    
    
    
    
    
    Celta
    
    
    
    
    
    
    
    
    
    
    Ingendesa (1)
    
    
    272
    
    
    
    315
    
    
    
    269Túnel El Melón
    
    
    1
    
    
    
    2
    
    
    
    2Total temporary personnel in Chile
    
    
    276
    
    
    
    327
    
    
    
    280In ColombiaEmgesa (2)
    
    
    
    
    
    
    
    
    
    
    Betania (2)
    
    
    
    
    
    
    
    
    
    
    Total temporary personnel in Colombia
    
    
    
    
    
    
    
    
    
    
    In PeruEdegel
    
    
    9
    
    
    
    20
    
    
    
    20Total temporary personnel in Peru
    
    
    9
    
    
    
    20
    
    
    
    20Total temporary personnel in Endesa
Chile and Subsidiaries
    
    
    285
    
    
    
    347
    
    
    
    300
 
 (1)
    
    Ingendesa figure includes Ingendesa employees of Ingendesas subsidiary in Brazil.(2)
    
    In September 2007, Emgesa and Betania were merged into the latter, which then changed its
name to Emgesa, where all the employees were transferred.   103




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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, 2007Shares
    
    
    Percentage ofBeneficially
    
    
    Total SharesOwned
    
    
    OutstandingEnersis (1)
    
    
    4,919,488,794
    
    
    
    59.98
    %
 
 (1)
    
    Endesa Spain, as of December 31, 2007, directly or indirectly, owned 60.6% of the share
capital of Enersis.    B. Related party transactions
   104




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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
    105




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##### Table of Contents



Proceeding against Endesa, Ministry of Economy and Superintendency of Electricity and Fuel to
replace an easement with expropriation (Court of Letters of Santa Bárbara, N° 4340-2004)
  Proceeding against Endesa and Chilean government (Court of Letters of Curacautín, N° 16007)
  Proceeding initiated by Endesa against YPF (Court of Arbitration of International Chamber of
Commerce, N° 14210/CCO)
  Proceeding against Pangue S.A. (Second Civil Tribunal of Concepción, N° 6693-2003)
  Proceeding initiated by Héctor Moisés Camacho et al at 36th Circuit Court
  Dividend Policy
     106




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Dividends
  Dividends Distributed (1)$ per 30 SharesYear
    
    Ch$ per Share (2)
    
    
    Ch$ per Share (3)
    
    
    (ADS) (4)2003
    
    
    2.30
    
    
    
    2.68103
    
    
    
    0.1622004
    
    
    4.13
    
    
    
    4.70087
    
    
    
    0.2842005
    
    
    5.82
    
    
    
    6.40695
    
    
    
    0.3872006
    
    
    13.41
    
    

    14.26

    
    
    
    0.8612007 (5)
    
    
    13.76
    
    
    
    13.76
    
    
    
    0.830
 
 (1)
    
    This chart details dividends payable in any given year, not necessarily paid that same year,
and does not reflect reduction for any applicable Chilean tax withholding.(2)
    
    Amounts shown are in historical pesos.(3)
    
    Amounts shown are expressed in constant pesos as of December 31, 2007.(4)
    
    The dollar per ADS amount has been calculated by applying the exchange rate of Ch$ 496.89 =
$ 1.00, the Observed Exchange Rate prevailing on December 31, 2007, to the constant peso
amount.(5)
    
    Dividend approved at the Annual Shareholders Meeting of Endesa Chile held on April 1, 2008. B. Significant Changes
   107




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Item 9. The Offer and Listing
 A. Offer and listing details
 Market Price and Volume Information
    Santiago StockExchange (1)(2)
    
    
    NYSE (1)Ch$ per Share
    
    
    $ per ADSMost Recent Six Months
    
    High
    
    
    Low
    
    
    High
    
    
    LowMay 2008
    
    
    835.02
    
    
    
    693.00
    
    
    
    52.53
    
    
    
    44.15April 2008
    
    
    762.50
    
    
    
    699.84
    
    
    
    50.70
    
    
    
    46.19March 2008
    
    
    712.01
    
    
    
    610.00
    
    
    
    51.28
    
    
    
    40.38February 2008
    
    
    660.00
    
    
    
    522.00
    
    
    
    43.30
    
    
    
    33.36January 2008
    
    
    635.00
    
    
    
    485.00
    
    
    
    38.00
    
    
    
    31.34December 2007
    
    
    773.26
    
    
    
    650.00
    
    
    
    43.20
    
    
    
    37.202007 Annual
    
    
    794.35
    
    
    
    693.92
    
    
    
    47.80
    
    
    
    37.60lst Quarter
    
    
    738.00
    
    
    
    668.83
    
    
    
    43.08
    
    
    
    36.312nd Quarter
    
    
    871.33
    
    
    
    757.83
    
    
    
    51.09
    
    
    
    39.743rd Quarter
    
    
    810.33
    
    
    
    694.00
    
    
    
    49.75
    
    
    
    37.254th Quarter
    
    
    757.75
    
    
    
    655.00
    
    
    
    47.27
    
    
    
    37.102006 Annual
    
    
    576.68
    
    
    
    490.63
    
    
    
    32.77
    
    
    
    27.31lst 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
    
    
    
    22.072004 Annual
    
    
    347.50
    
    
    
    225.00
    
    
    
    18.66
    
    
    
    11.502003 Annual
    
    
    253.00
    
    
    
    172.00
    
    
    
    12.02
    
    
    
    7.02
 
 (1)
    
    Sources: Santiago Stock Exchange, Official Quotation Bulletin, NYSE.(2)
    
    Nominal price in pesos per Share at trade date. 
  108




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##### Table of Contents



B. Plan of Distribution
  C. Markets
  Telepregón
  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
   109




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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
 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 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 104
  110




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##### Table of Contents



Register
  Corporate Objective and Purpose
  Board of Directors
      Certain Powers of the Board of Directors
  
    
    the directors power, in the absence of an independent quorum, to vote on compensation
for 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.
  111




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Certain Provisions Regarding Shareholder Rights
   
    
    redemption provisions;
    
    sinking funds; or
    
    liability to further capital calls by the Company.
  Capitalization
   Preemptive Rights and Increases of Share Capital
   Shareholders Meetings and Voting Rights
 El Mercurio de Santiago
  112




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##### Table of Contents




    
    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;
    
    besides those established by the bylaws or the laws;
    
    certain remedies for the nullification of the corporate bylaws.
     113




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Dividends and Liquidation Rights
      114




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##### Table of Contents



Approval of Financial Statements
  Change of Control
 Norma de Carácter General 104
 Acquisition of Shares
  Right of Dissenting Shareholders to Tender Their Shares
    
    
    the transformation of the company into an entity which is not a sociedad anónima
abiertagoverned by Chilean Companies Act;
    
    the merger of the company with another company;
  115




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##### Table of Contents




    
    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 this 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 bylaws; and
    
    such other causes as may be established by the law and by the companys bylaws.
 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
   116




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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.
       117




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The Compendium and International Bond Issuances
  encaje encaje encaje encaje
 C. Material contracts
  D. Exchange controls
     
    
    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;
  118




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##### Table of Contents




    
    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 on the issuance 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 of Chile; for purposes of
Chilean taxation, an individual holder is resident of 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
   119




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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
    
    =
    
    (Withholding tax rate)  (Chilean corporate income 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
   120




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##### Table of Contents



Taxation of Rights and ADS Rights
  Other Chilean Taxes
  Material U.S. Income Tax Considerations
  
    
    certain financial institutions;
    
    insurance companies;
    
    dealers and traders in securities;
    
    persons holding shares or ADSs as part of a hedge, straddle, integrated
transaction or similar transaction;
    
    persons whose functional currency for U.S. federal income tax purposes is not the
U.S. dollar;
    
    partnerships or other entities classified as partnerships for U.S. federal income
tax purposes;
    
    persons liable for the alternative minimum tax;
    
    tax-exempt organizations;
    
    persons holding shares or ADSs that own or are deemed to own ten percent or more of
our voting stock; or
    
    persons who acquired our shares or ADSs pursuant to the exercise of any employee
stock option or otherwise as compensation.
   121




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##### Table of Contents




    
    a citizen or individual resident of the United States;
    
    a corporation, or other entity taxable as a corporation, created or organized in or
under the laws of the United States or any political subdivision thereof; or
    
    an estate or trust the income of which is subject to U.S. federal income taxation
regardless of its source.
      Taxation of Distributions
    122




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##### Table of Contents



Sale or Other Disposition of Shares or ADSs
   Passive Foreign Investment Company Rules
  Information Reporting and Backup Withholding
   123




---



##### Table of Contents



F. Dividends and paying agents
  G. Statement by experts
  H. Documents on display
 http://www.sec.gov
 I. Subsidiary information
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
   Commodity Price Risk
     124




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##### Table of Contents



Interest Rate Risk
   As of December 31, 20072008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair value(in millions of constant Ch$, except percentages)Debt:Fixed rate:Ch$- and UF-denominated
    
    
    589
    
    
    
    589
    
    
    
    4,670
    
    
    
    4,670
    
    
    
    4,670
    
    
    
    171,227
    
    
    
    186,415
    
    
    
    267,032Weighted average interest rate
    
    
    12.88
    %
    
    
    12.89
    %
    
    
    12.89
    %
    
    
    12.89
    %
    
    
    12.90
    %
    
    
    
    
    
    
    12.89
    %
    
    
    $ denominated
    
    
    220,235
    
    
    
    331,426
    
    
    
    15,816
    
    
    
    23,144
    
    
    
    22,221
    
    
    
    440,809
    
    
    
    1,053,652
    
    
    
    1,269,770Weighted average interest rate
    
    
    8.17
    %
    
    
    8.05
    %
    
    
    8.09
    %
    
    
    8.16
    %
    
    
    8.33
    %
    
    
    
    
    
    
    8.16
    %
    
    
    Other currencies
    
    
    46,357
    
    
    
    20,415
    
    
    
    11,939
    
    
    
    108,764
    
    
    
    
    
    
    
    135,913
    
    
    
    323,388
    
    
    
    316,885Weighted average interest rate
    
    
    8.98
    %
    
    
    9.00
    %
    
    
    9.17
    %
    
    
    9.04
    %
    
    
    9.04
    %
    
    
    
    
    
    
    9.04
    %
    
    
    Variable rateCh$- and UF-denominated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ denominated
    
    
    38,325
    
    
    
    48,972
    
    
    
    68,635
    
    
    
    97,075
    
    
    
    26,465
    
    
    
    5,795
    
    
    
    285,266
    
    
    
    277,749Weighted average interest rate
    
    
    5.15
    %
    
    
    5.16
    %
    
    
    5.37
    %
    
    
    4.63
    %
    
    
    1.46
    %
    
    
    
    
    
    
    5.13
    %
    
    
    Other currencies
    
    
    19,493
    
    
    
    75,755
    
    
    
    1,782
    
    
    
    
    
    
    
    75,223
    
    
    
    
    
    
    
    172,252
    
    
    
    162,777.27Weighted average interest rate
    
    
    11.87
    %
    
    
    11.11
    %
    
    
    10.30
    %
    
    
    10.30
    %
    
    
    
    
    
    
    
    
    
    
    11.16
    %
    
    
    Total
    
    
    324,999
    
    
    
    477,157
    
    
    
    102,842
    
    
    
    233,654
    
    
    
    128,578
    
    
    
    753,743
    
    
    
    2,020,973
    
    
    
    2,294,213
  As of December 31, 20062007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total
    
    
    Fair value(in millions of constant Ch$, except percentages)Debt:Fixed rate:Ch$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-denominated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted 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
  125




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##### Table of Contents



Foreign Currency Risk
     As of December 31, 2007Fair value2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    (3)(in millions of constant Ch$) (1)Debt:Fixed rate:$ denominated
    
    
    220,235
    
    
    
    331,426
    
    
    
    15,816
    
    
    
    23,144
    
    
    
    22,221
    
    
    
    440,809
    
    
    
    1,053,652
    
    
    
    1,269,055Other foreign currencies
    
    
    46,946
    
    
    
    21,004
    
    
    
    16,609
    
    
    
    113,434
    
    
    
    4,670
    
    
    
    307,140
    
    
    
    509,803
    
    
    
    583,917Variable rate:$ denominated
    
    
    38,325
    
    
    
    48,972
    
    
    
    68,635
    
    
    
    97,075
    
    
    
    26,465
    
    
    
    5,795
    
    
    
    285,266
    
    
    
    278,464Other foreign currencies
    
    
    19,493
    
    
    
    75,755
    
    
    
    1,782
    
    
    
    
    
    
    
    75,223
    
    
    
    
    
    
    
    172,252
    
    
    
    162,777Other Instruments(2):$ denominated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other foreign currencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward contracts

(receive $/pay Ch$-UF)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Swap contracts (receive
$/pay Ch$)
    
    
    62,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,111
    
    
    
    (3,878
    )
 
 (1)
    
    Calculated based on the Observed Exchange Rate as of December 31, 2007, which was Ch$ 496.89
= $ 1.00.(2)
    
    Other instruments include cash, time deposits and short-term accounts receivables.(3)
    
    Fair value 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.  126




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##### Table of Contents



As of December 31, 2006Fair value2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total
    
    
    (3)(in millions of constant Ch$) (1)Debt:Fixed rate:$ denominated
    
    
    76,970
    
    
    
    233,305
    
    
    
    354,972.5
    
    
    
    62,117.84
    
    
    
    19,369
    
    
    
    484,889
    
    
    
    1,231,624
    
    
    
    1,439,518Other currencies
    
    
    14,769
    
    
    
    44,220
    
    
    
    20,464.37
    
    
    
    127,771.7
    
    
    
    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
    
    
    
    0
    
    
    
    0
    
    
    
    72,532
    
    
    
    209,711
    
    
    
    204,713Other Instruments (2):$ denominated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other currencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward contracts

(receive$ /pay Ch$ -
UF)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Swap contracts
(receive$/pay Ch$)
    
    
    
    
    
    
    
    
    
    
    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. D. Safe Harbor
  
 Item 12. Description of Securities other than Equity Securities
   127




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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
      128




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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
     I.
    
    Committing the efforts of the Board and Management to focus on maximizing the
value of the Company for all its shareholders, and also for its employees, customers
and suppliers;II.
    
    Reaffirming the Boards duty to provide guidelines for the Management to
attain the best practices at each level of the Organization;III.
    
    Emphasizing one of the most important objectives of the Board, which is to
make the Companys Vision, its Objectives and Strategy, common knowledge; andIV.
    
    Emphasizing the responsibility of the Board to continuously control the
performance of the Management in line with the Companys Vision and Strategy.
   129




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##### Table of Contents



www.endesa.cl
 
 
 Item 16C. Principal Accountant Fees and Services
  Services Rendered
    
    2006
    
    
    2007(millions of $)Audit Fees
    
    
    0.94
    
    
    
    0.90Audit-Related Fees (1)
    
    
    0.00
    
    
    
    0.04Tax Fees
    
    
    0.04
    
    
    
    0.00Total
    
    
    0.98
    
    
    
    0.94
 
 (1)
    
    During 2007, fees were paid for due diligence work in Colombia for $ 36,000.    Audit Committee Pre-Approval Policies and Procedures
      130




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##### Table of Contents




    
    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.
    
    At that point, the corporate audit department analyzes the request and requires the
audit firm that has been requested to provide the service issue a certificate signed
by the partner responsible for the audit of our consolidated financial statements
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
   131




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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) 2005, 2006 and 2007
    
    
    F-2Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A. (Endesa-Chile) about the
effectiveness of internal control as of December 31, 2007
    
    
    F-3Report of Independent Registered Public Accounting Firm  Endesa Argentina S.A. 2005, 2006 and 2007
    
    
    F-4Report of Independent Registered Public Accounting Firm  Emgesa S.A. E.S.P. 2005, 2006 and 2007
    
    
    F-5Report
of Independent Registered Public Accounting Firm  Endesa Brasil
S.A.,2005, 2006 and 2007
    
    
    F-6Report
of Independent Registered Public Accounting Firm  Companhia de
Interconexão Energética S.A. 2005
    
    
    F-8Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2005
    
    
    F-9Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2005
    
    
    F-10Report
of Independent Registered Public Accounting Firm  Companhia de
Interconexão Energética S.A. 2006 and 2007
    
    
    F-11Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2006 and 2007
    
    
    F-13Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2006 and 2007
    
    
    F-14Report of Independent Registered Public Accounting Firm  Transportadora de Energía S.A. 2006 and 2007
    
    
    F-15Report of Independent Registered Public Accounting Firm  Compañía de Transmisión del Mercosur S.A. 2006 and 2007
    
    
    F-16Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2006 and 2007
    
    
    F-17Consolidated Statements of Income for the years ended December 31, 2005, 2006 and 2007
    
    
    F-19Consolidated Statements of Shareholders Equity for the years ended December 31, 2005, 2006 and 2007
    
    
    F-20Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007
    
    
    F-22Notes to the Consolidated Financial Statements
    
    
    F-24
 
 Item 19. Exhibits
 Exhibit
    
    Description1.1
    
    
    Bylaws (Estatutos) of Empress Nacional de Electricidad S.A., as amended.*8.1
    
    
    List of Subsidiaries as of December 31, 2007.12.1
    
    
    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.
 
 *
    
    Incorporated by reference to Endesa Chiles Form 20-F for the year ended December 31, 2006.   132




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##### Table of Contents



Endesa Chile and Subsidiaries
 Audited Consolidated Financial Statements as of
December 31, 2006 and 2007 and for each of the three years in the period ended December 31, 2007
together with the Reports of Independent Registered Public Accounting Firms




---



##### Table of Contents



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) 2005, 2006 and 2007
    
    
    F-2Report of Independent Registered Public Accounting Firm  Empresa Nacional de Electricidad S.A. (Endesa-Chile) about the
effectiveness of internal control as of December 31, 2007
    
    
    F-3Report of Independent Registered Public Accounting Firm  Endesa Argentina S.A. 2005, 2006 and 2007
    
    
    F-4Report of Independent Registered Public Accounting Firm  Emgesa S.A. E.S.P. 2005, 2006 and 2007
    
    
    F-5Report of Independent Registered Public Accounting Firm  Endesa Brasil S.A.,2005, 2006 and 2007
    
    
    F-6Report
of Independent Registered Public Accounting Firm  Companhia de
Interconexão Energética S.A. 2005
    
    
    F-8Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2005
    
    
    F-9Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2005
    
    
    F-10Report
of Independent Registered Public Accounting Firm  Companhia de
Interconexão Energética S.A. 2006 and 2007
    
    
    F-11Report of Independent Registered Public Accounting Firm  Cachoeira Dourada S.A. 2006 and 2007
    
    
    F-13Report of Independent Registered Public Accounting Firm  CGT Fortaleza S.A. 2006 and 2007
    
    
    F-14Report of Independent Registered Public Accounting Firm  Transportadora de Energía S.A. 2006 and 2007
    
    
    F-15Report of Independent Registered Public Accounting Firm  Compañía de Transmisión del Mercosur S.A. 2006 and 2007
    
    
    F-16Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2006 and 2007
    
    
    F-17Consolidated Statements of Income for the years ended December 31, 2005, 2006 and 2007
    
    
    F-19Consolidated Statements of Shareholders Equity for the years ended December 31, 2005, 2006 and 2007
    
    
    F-20Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007
    
    
    F-22Notes to the Consolidated Financial Statements
    
    
    F-24
 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
   F-1




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##### 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
      ERNST & YOUNG LTDA.
    
    /s/ Ernst & Young
 
   F-2




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##### 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
        ERNST & YOUNG LTDA.
    
    /s/ Ernst & Young
 
   F-3




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##### Table of Contents



Deloitte & Touche S.R.LFlorida 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.
  
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##### Table of Contents



Deloitte & Touche Ltda.Cra. 7 N° 74 - 09AA 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.lmpuestos.Consultoría.Finanzas Corporativas.
    
    Una firma miembro deDeloitte Touche Tohmatsu
  F-5




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##### Table of Contents



Deloitte Auditores y Consultores Ltda.RUT: 80.276.200-3Av. Providencia 1760Pisos 6, 7, 8, 9y 13Providencia, SantiagoChileFono: (56-2) 729 7000Fax: (56-2) 374 9177e-mail: deloittechile@deloitte.comwww.deloitte.cl
 
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    Una firma miembro deDeloitte Touche Tohmatsu
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##### Table of Contents



Una firma miembro deDeloitte Touche Tohmatsu
  F-7




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##### Table of Contents




    
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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##### Table of Contents




    
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    Fax:    (55) (21) 2109-1400www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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##### Table of Contents




    
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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  F-10




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##### Table of Contents




    
    Praia de Botafogo, 300  13° andar
    
    
    
    Fone: (55) (21) 2109-140022250-040  Rio de Janeiro, RJ Brasil
    
    
    
    Fax:    (55) (21) 2109-1400www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 CIEN  Companhia de Interconexão Energética
    F-11




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##### Table of Contents



F-12




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##### Table of Contents




    
    Praia de Botafogo, 300  13° andar
    
    
    
    Fone: (55) (21) 2109-140022250-040  Rio de Janeiro, RJ Brasil
    
    
    
    Fax:    (55) (21) 2109-1400www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Centrais Elétricas Cachoeira Dourada  CDSA
     
  
  F-13




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##### Table of Contents




    
    Praia de Botafogo, 300  13° andar
    
    
    
    Fone: (55) (21) 2109-140022250-040  Rio de Janeiro, RJ Brasil
    
    
    
    Fax:    (55) (21) 2109-1400www.ey.com.br
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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  F-14




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##### Table of Contents



Deloitte & Touche S.R.LFlorida 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.
  
 www.deloitte.com/about
  F-15




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##### Table of Contents



Deloitte & Touche S.R.LFlorida 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.
  
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  F-16




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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, 2007, except as stated)
 As of December 31,Note
    
    2006
    
    
    2007
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThUS$(Note 2 (b))AssetsCurrent assets:Cash
    
    
    
    
    22,936,504
    
    
    
    19,397,212
    
    
    
    39,037Time deposits
    
    4
    
    
    99,136,606
    
    
    
    44,272,635
    
    
    
    89,099Marketable securities
    
    
    
    
    5,618,810
    
    
    
    10,304,785
    
    
    
    20,739Accounts receivable, net
    
    5a
    
    
    157,721,629
    
    
    
    211,209,592
    
    
    
    425,063Other accounts receivable, net
    
    5a
    
    
    57,855,162
    
    
    
    60,045,262
    
    
    
    120,842Accounts receivable from related companies
    
    6a
    
    
    35,325,944
    
    
    
    175,950,661
    
    
    
    354,104Inventories
    
    
    
    
    21,917,484
    
    
    
    52,288,016
    
    
    
    105,231Taxes receivables
    
    7a
    
    
    5,944,970
    
    
    
    64,881,489
    
    
    
    130,575Prepaid expenses
    
    
    
    
    4,398,121
    
    
    
    4,581,127
    
    
    
    9,220Deferred income taxes
    
    7b
    
    
    2,284,599
    
    
    
    2,884,566
    
    
    
    5,805Other current assets
    
    8
    
    
    39,569,290
    
    
    
    27,822,980
    
    
    
    55,994Total current assets
    
    
    
    
    452,709,119
    
    
    
    673,638,325
    
    
    
    1,355,709Property, plant and equipment, net
    
    9
    
    
    4,457,718,916
    
    
    
    4,165,428,072
    
    
    
    8,382,998Other assets:Investments in related companies
    
    10a
    
    
    561,636,516
    
    
    
    444,032,166
    
    
    
    893,623Investments in other companies
    
    11
    
    
    4,188,867
    
    
    
    4,131,403
    
    
    
    8,315Long-term receivables
    
    5a
    
    
    74,178,594
    
    
    
    83,285,957
    
    
    
    167,615Goodwill, net
    
    12a
    
    
    11,914,850
    
    
    
    9,854,540
    
    
    
    19,832Negative goodwill, net
    
    12b
    
    
    (39,274,732
    )
    
    
    (37,003,902
    )
    
    
    (74,471
    )Accounts receivable from related companies
    
    6a
    
    
    97,223,162
    
    
    
    369
    
    
    
    1Other intangibles
    
    13
    
    
    27,585,462
    
    
    
    25,257,477
    
    
    
    50,831Accumulated amortization of other intangibles
    
    13
    
    
    (9,616,732
    )
    
    
    (9,895,864
    )
    
    
    (19,916
    )Other assets
    
    14
    
    
    40,565,737
    
    
    
    28,649,269
    
    
    
    57,657Total other assets
    
    
    
    
    768,401,724
    
    
    
    548,311,415
    
    
    
    1,103,487Total assets
    
    
    
    
    5,678,829,759
    
    
    
    5,387,377,812
    
    
    
    10,842,194
   F-17




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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, 2007, except as stated)
 As of December 31,Note
    
    2006
    
    
    2007
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThUS$(Note 2 (b))Liabilities and Shareholders equityCurrent liabilities:Short-term debt due to banks and financial institutions
    
    15a
    
    
    60,727,331
    
    
    
    26,435,493
    
    
    
    53,202Current portion of long-term debt due to banks and financial institutions
    
    15b
    
    
    65,226,493
    
    
    
    66,998,709
    
    
    
    134,836Current portion of bonds payable
    
    16a
    
    
    75,704,336
    
    
    
    256,625,251
    
    
    
    516,463Current portion of long-term notes payable
    
    16d
    
    
    33,576,468
    
    
    
    23,414,451
    
    
    
    47,122Dividends payable
    
    
    
    
    27,875,625
    
    
    
    23,525,437
    
    
    
    47,345Accounts payable
    
    
    
    
    94,245,000
    
    
    
    192,954,223
    
    
    
    388,324Miscellaneous payables
    
    
    
    
    38,050,959
    
    
    
    25,167,210
    
    
    
    50,649Accounts payable to related companies
    
    6b
    
    
    8,839,618
    
    
    
    15,743,108
    
    
    
    31,683Accrued liabilities
    
    17
    
    
    26,608,330
    
    
    
    29,534,342
    
    
    
    59,438Employee withholdings
    
    
    
    
    12,991,660
    
    
    
    19,960,444
    
    
    
    40,171Income taxes payable
    
    7a
    
    
    54,170,977
    
    
    
    8,246,699
    
    
    
    16,597Deferred revenue
    
    
    
    
    445,552
    
    
    
    628,056
    
    
    
    1,264Other current liabilities
    
    
    
    
    742,895
    
    
    
    5,415,359
    
    
    
    10,899Total current liabilities
    
    
    
    
    499,205,244
    
    
    
    694,648,782
    
    
    
    1,397,993Long-term liabilities:Long-term debt due to banks and financial institutions
    
    15c
    
    
    307,679,655
    
    
    
    290,814,076
    
    
    
    585,269Bonds payable
    
    16b
    
    
    1,574,436,778
    
    
    
    1,281,797,215
    
    
    
    2,579,639Long-term notes payable
    
    16d
    
    
    61,372,171
    
    
    
    63,047,888
    
    
    
    126,885Miscellaneous payables
    
    
    
    
    102,153,204
    
    
    
    72,876,338
    
    
    
    146,665Accrued liabilities
    
    17
    
    
    32,221,885
    
    
    
    27,858,328
    
    
    
    56,065Deferred income taxes
    
    7b
    
    
    146,670,076
    
    
    
    158,941,619
    
    
    
    319,873Other long-term liabilities
    
    
    
    
    23,609,577
    
    
    
    26,284,340
    
    
    
    52,898Total long-term liabilities
    
    
    
    
    2,248,143,346
    
    
    
    1,921,619,804
    
    
    
    3,867,294Commitments and contingencies
    
    26Minority interest
    
    18a
    
    
    1,004,392,388
    
    
    
    886,882,586
    
    
    
    1,784,867Shareholders equity:
    
    19Stated capital
    
    
    
    
    1,222,877,948
    
    
    
    1,222,877,948
    
    
    
    2,461,064Additional paid-in capital  share premium
    
    
    
    
    239,882,687
    
    
    
    239,882,687
    
    
    
    482,768Other reserves
    
    19d
    
    
    (39,677,774
    )
    
    
    (161,988,361
    )
    
    
    (326,004
    )Deficit from development stage companies
    
    3
    
    
    (325,438
    )
    
    
    
    
    
    
    Retained earnings
    
    3
    
    
    300,763,982
    
    
    
    391,015,096
    
    
    
    786,925Net income
    
    
    
    
    203,567,376
    
    
    
    192,439,270
    
    
    
    387,287Total Shareholders equity
    
    
    
    
    1,927,088,781
    
    
    
    1,884,226,640
    
    
    
    3,792,040Total Liabilities and Shareholders equity
    
    
    
    
    5,678,829,759
    
    
    
    5,387,377,812
    
    
    
    10,842,194
   F-18




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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, 2007, except as stated)
 For the year ended December 31,Note
    
    2005
    
    
    2006
    
    
    2007
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThUS$(Note 2 (b))Operating income:Sales
    
    
    
    
    1,231,472,764
    
    
    
    1,436,067,876
    
    
    
    1,726,963,925
    
    
    
    3,475,546Cost of sales
    
    
    
    
    (756,182,971
    )
    
    
    (851,961,274
    )
    
    
    (1,119,053,180
    )
    
    
    (2,252,115
    )Gross profit
    
    
    
    
    475,289,793
    
    
    
    584,106,602
    
    
    
    607,910,745
    
    
    
    1,223,431Administrative and Selling expenses
    
    
    
    
    (42,302,319
    )
    
    
    (42,300,328
    )
    
    
    (37,080,644
    )
    
    
    (74,625
    )Operating income
    
    
    
    
    432,987,474
    
    
    
    541,806,274
    
    
    
    570,830,101
    
    
    
    1,148,806Non-operating income and expense:Interest income
    
    
    
    
    17,053,354
    
    
    
    15,914,237
    
    
    
    23,274,703
    
    
    
    46,841Equity participation in income of related companies
    
    10a
    
    
    23,437,767
    
    
    
    45,612,958
    
    
    
    46,947,141
    
    
    
    94,482Other non-operating income
    
    20a
    
    
    36,493,470
    
    
    
    32,185,253
    
    
    
    17,916,307
    
    
    
    36,057Equity participation in losses of related companies
    
    10a
    
    
    (8,558,076
    )
    
    
    (134,473
    )
    
    
    (57,399,943
    )
    
    
    (115,519
    )Goodwill amortization
    
    12 a
    
    
    (1,498,305
    )
    
    
    (1,012,592
    )
    
    
    (910,091
    )
    
    
    (1,832
    )Interest expense
    
    
    
    
    (196,057,317
    )
    
    
    (184,640,966
    )
    
    
    (177,528,830
    )
    
    
    (357,280
    )Other non-operating expenses
    
    20b
    
    
    (58,760,333
    )
    
    
    (46,791,732
    )
    
    
    (85,250,850
    )
    
    
    (171,569
    )Price-level restatement, net
    
    21
    
    
    1,445,210
    
    
    
    1,597,565
    
    
    
    8,854,382
    
    
    
    17,820Foreign currency translation, net
    
    22
    
    
    16,339,702
    
    
    
    3,874,962
    
    
    
    16,611,944
    
    
    
    33,432Non-operating loss
    
    
    
    
    (170,104,528
    )
    
    
    (133,394,788
    )
    
    
    (207,485,237
    )
    
    
    (417,568
    )Income before income taxes
    
    
    
    
    262,882,946
    
    
    
    408,411,486
    
    
    
    363,344,864
    
    
    
    731,238Income taxes
    
    7
    
    
    (100,832,950
    )
    
    
    (140,540,151
    )
    
    
    (113,413,498
    )
    
    
    (228,247
    )Income before minority interest
    
    
    
    
    162,049,996
    
    
    
    267,871,335
    
    
    
    249,931,366
    
    
    
    502,991Minority interest
    
    18b
    
    
    (57,534,622
    )
    
    
    (70,788,191
    )
    
    
    (61,874,172
    )
    
    
    (124,523
    )Income before amortization of negative goodwill
    
    
    
    
    104,515,374
    
    
    
    197,083,144
    
    
    
    188,057,194
    
    
    
    378,468Amortization of negative goodwill
    
    12b
    
    
    16,788,712
    
    
    
    6,484,232
    
    
    
    4,382,076
    
    
    
    8,819Net income
    
    
    
    
    121,304,086
    
    
    
    203,567,376
    
    
    
    192,439,270
    
    
    
    387,287
   F-19




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##### 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, 2007, except as stated)
 Number of
    
    
    
    
    
    
    Additional paid-
    
    
    Development stage
    
    
    Otheroutstanding shares
    
    
    Stated capital
    
    
    in capital
    
    
    companies (3)
    
    
    reserves
    
    
    Retained earnings
    
    
    Net income
    
    
    Total(In thousands)
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$As 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, 2007 (1)
    
    
    8,201,755
    
    
    
    1,222,877,948
    
    
    
    239,882,687
    
    
    
    
    
    
    
    (37,840,379
    )
    
    
    254,601,145
    
    
    
    121,304,086
    
    
    
    1,800,825,487As 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 deficit of development stage companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,015
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,015
    )Interim 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
    )
    
    
    280,040,952
    
    
    
    189,541,318
    
    
    
    1,794,309,851As of December 31, 2007 (1)
    
    
    8,201,755
    
    
    
    1,222,877,948
    
    
    
    239,882,687
    
    
    
    (325,438
    )
    
    
    (39,677,774
    )
    
    
    300,763,982
    
    
    
    203,567,376
    
    
    
    1,927,088,781As of January 1, 2007
    
    
    8,201,755
    
    
    
    1,138,620,063
    
    
    
    223,354,457
    
    
    
    (303,015
    )
    
    
    (36,943,924
    )
    
    
    280,040,952
    
    
    
    189,541,318
    
    
    
    1,794,309,851Reclassification of prior year net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,541,318
    
    
    
    (189,541,318
    )
    
    
    Price-level restatement of capital
    
    
    
    
    
    
    84,257,885
    
    
    
    16,528,230
    
    
    
    
    
    
    
    (2,733,849
    )
    
    
    28,626,028
    
    
    
    
    
    
    
    126,678,294Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,907,020
    )
    
    
    
    
    
    
    (88,907,020
    )Reorganization of entities under common control (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94,522,106
    )
    
    
    
    
    
    
    
    
    
    
    (94,522,106
    )Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,788,482
    )
    
    
    
    
    
    
    
    
    
    
    (27,788,482
    )Accumulated deficit of development stage companies (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    303,015
    
    
    
    
    
    
    
    (303,015
    )
    
    
    
    
    
    
    Interim dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,983,167
    )
    
    
    
    
    
    
    (17,983,167
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192,439,270
    
    
    
    192,439,270As of December 31, 2007
    
    
    8,201,755
    
    
    
    1,222,877,948
    
    
    
    239,882,687
    
    
    
    
    
    
    
    (161,988,361
    )
    
    
    391,015,096
    
    
    
    192,439,270
    
    
    
    1,884,226,640
   F-20




---



##### 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, 2007, except as stated)
 (1)
    
    Restated in thousands of constant Chilean pesos as of December 31, 2007(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: Transaction
    
    2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$(historic)
    
    
    (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))
    
    
    
    
    
    
    3,189,180
    
    
    
    Merger Betania and Emgesa (Note 10 c. (v))
    
    
    
    
    
    
    
    
    
    
    (94,522,106
    )Total
    
    
    (33,694,515
    )
    
    
    (6,410,324
    )
    
    
    (94,522,106
    )
 (3)
    
    See Note 3   F-21




---



##### 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, 2007, except as stated)
 Years Ended December 31,2005
    
    
    2006
    
    
    2007
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThUS$(Note 2 (b))Cash flows from operating activities:Net income
    
    
    121,304,086
    
    
    
    203,567,376
    
    
    
    192,439,270
    
    
    
    387,287(Gain) loss on sales of property, plant and equipment
    
    
    (4,037,885
    )
    
    
    (3,384,553
    )
    
    
    (378,964
    )
    
    
    (763
    )(Gain) on sales of investments
    
    
    
    
    
    
    
    
    
    
    (3,077,984
    )
    
    
    (6,194
    )Charges (credits) to income which do not represent cash flows:Depreciation
    
    
    186,931,777
    
    
    
    188,279,191
    
    
    
    192,975,973
    
    
    
    388,368Amortization of intangibles
    
    
    1,315,574
    
    
    
    1,189,822
    
    
    
    1,221,526
    
    
    
    2,458Write-offs and Provisions
    
    
    2,557,947
    
    
    
    28,052
    
    
    
    142,111
    
    
    
    286Equity participation in income of related companies
    
    
    (23,437,767
    )
    
    
    (45,612,958
    )
    
    
    (46,947,141
    )
    
    
    (94,482
    )Equity participation in losses of related companies (see Note 10 g)
    
    
    8,558,076
    
    
    
    134,473
    
    
    
    57,399,943
    
    
    
    115,518Amortization of goodwill (see Note 12 a))
    
    
    1,498,305
    
    
    
    1,012,592
    
    
    
    910,091
    
    
    
    1,832Amortization of negative goodwill
    
    
    (16,788,712
    )
    
    
    (6,484,232
    )
    
    
    (4,382,076
    )
    
    
    (8,819
    )Price-level restatement, net
    
    
    (1,445,210
    )
    
    
    (1,597,565
    )
    
    
    (8,854,382
    )
    
    
    (17,820
    )Foreign currency transaction, net
    
    
    (16,339,702
    )
    
    
    (3,874,962
    )
    
    
    (16,611,944
    )
    
    
    (33,432
    )Dividends received from equity method investees
    
    
    2,538,472
    
    
    
    18,210,647
    
    
    
    45,943,044
    
    
    
    92,461Other credits to income which do not represent cash flows
    
    
    (11,809,692
    )
    
    
    (649,249
    )
    
    
    (1,080,365
    )
    
    
    (2,174
    )Other charges to income which do not represent 
cash flows
    
    
    25,209,145
    
    
    
    7,434,952
    
    
    
    3,460,250
    
    
    
    6,964Income attributable to minority interest
    
    
    57,534,622
    
    
    
    70,788,191
    
    
    
    61,874,172
    
    
    
    124,523Changes in assets which affect cash flows:Increase in trade receivables
    
    
    (17,072,411
    )
    
    
    (103,113,544
    )
    
    
    (127,454,962
    )
    
    
    (256,505
    )Decrease (increase) in inventory
    
    
    (9,890,099
    )
    
    
    4,685,614
    
    
    
    (27,366,355
    )
    
    
    (55,075
    )Increase in other assets
    
    
    (5,590,121
    )
    
    
    (16,689,262
    )
    
    
    (50,382,137
    )
    
    
    (101,395
    )Changes in liabilities which affect cash flows:Increase (decrease) in accounts payable associated with operating
results
    
    
    (56,468,676
    )
    
    
    61,930,310
    
    
    
    208,202,601
    
    
    
    419,011Increase (decrease) in interest payable
    
    
    1,735,368
    
    
    
    (1,769,977
    )
    
    
    (18,668,621
    )
    
    
    (37,571
    )Increase (decrease) in income tax payable
    
    
    37,397,891
    
    
    
    65,461,873
    
    
    
    17,633,626
    
    
    
    35,488Increase (decrease) in other accounts payable associated with non-operating results
    
    
    44,038,502
    
    
    
    3,471,496
    
    
    
    12,074,914
    
    
    
    24,301Net (decrease) increase in value added tax and other payables
    
    
    (30,652,744
    )
    
    
    8,169,943
    
    
    
    (69,227,594
    )
    
    
    (139,321
    )Net cash flows provided by operating activities
    
    
    297,086,746
    
    
    
    451,188,230
    
    
    
    419,844,996
    
    
    
    844,946
   F-22




---



##### 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, 2007, except as stated)
 Years Ended December 31,2005
    
    
    2006
    
    
    2007
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThUS$(Note 2 (b))Cash flows from financing activities:Proceeds from the issuance of debt
    
    
    93,739,237
    
    
    
    572,989,387
    
    
    
    166,129,275
    
    
    
    334,338Proceeds from bond issuances
    
    
    87,098,632
    
    
    
    49,967,139
    
    
    
    152,731,371
    
    
    
    307,375Proceeds from loans obtained from related companies
    
    
    44,022,446
    
    
    
    36,212,674
    
    
    
    39,720,481
    
    
    
    79,938Dividends paid
    
    
    (92,317,381
    )
    
    
    (122,766,581
    )
    
    
    (236,721,721
    )
    
    
    (476,407
    )Distributions of capital by foreign subsidiaries
    
    
    (88,770,792
    )
    
    
    
    
    
    
    
    
    
    
    Repayment of debt
    
    
    (349,298,485
    )
    
    
    (386,310,964
    )
    
    
    (159,497,630
    )
    
    
    (320,992
    )Repayment of bonds
    
    
    (50,262,447
    )
    
    
    (289,417,920
    )
    
    
    (108,256,679
    )
    
    
    (217,868
    )Payment of loans obtained from related companies
    
    
    (42,559,152
    )
    
    
    (5,657,822
    )
    
    
    
    
    
    
    Other disbursements for financing
    
    
    (4,157,140
    )
    
    
    (1,258,713
    )
    
    
    (1,029,343
    )
    
    
    (2,072
    )Net cash used in financing activities
    
    
    (402,505,082
    )
    
    
    (146,242,800
    )
    
    
    (146,924,246
    )
    
    
    (295,688
    )Cash flows from investing activities:Proceeds from sales of property, plant and equipment
    
    
    4,636,512
    
    
    
    19,680,044
    
    
    
    2,979,081
    
    
    
    5,995Payments related to loans to related companies
    
    
    36,272,115
    
    
    
    13,764,934
    
    
    
    
    
    
    
    Other receipts from investments (1)
    
    
    7,082,628
    
    
    
    1,113,014
    
    
    
    43,172,429
    
    
    
    86,885Additions to property, plant and equipment
    
    
    (64,455,805
    )
    
    
    (182,671,177
    )
    
    
    (207,029,784
    )
    
    
    (416,651
    )Long-term investments
    
    
    (16,579,083
    )
    
    
    (22,567,961
    )
    
    
    (38,183,886
    )
    
    
    (76,846
    )Proceeds from sales of long-term investments
    
    
    
    
    
    
    53,047
    
    
    
    8,373,539
    
    
    
    16,852Liquidation of subsidiary (2)
    
    
    
    
    
    
    (4,425,890
    )
    
    
    
    
    
    
    Other loans granted to related companies
    
    
    (27,395,818
    )
    
    
    (44,582,287
    )
    
    
    (81,839,056
    )
    
    
    (164,703
    )Other disbursements related to investing activities (1)
    
    
    
    
    
    
    
    
    
    
    (43,666,808
    )
    
    
    (87,879
    )Net cash used in investing activities
    
    
    (60,439,451
    )
    
    
    (219,636,276
    )
    
    
    (316,194,485
    )
    
    
    (636,347
    )Net cash flow for the year
    
    
    (165,857,787
    )
    
    
    85,309,154
    
    
    
    (43,273,735
    )
    
    
    (87,089
    )Effect of price-level restatement and exchange rate
difference on cash and cash equivalents
    
    
    (6,069,724
    )
    
    
    (7,508,827
    )
    
    
    (22,762,635
    )
    
    
    (45,810
    )Net increase in cash and cash equivalents
    
    
    (171,927,511
    )
    
    
    77,800,327
    
    
    
    (66,036,370
    )
    
    
    (132,899
    )Cash and cash equivalents  Beginning of year
    
    
    261,148,366
    
    
    
    89,220,855
    
    
    
    167,021,182
    
    
    
    336,133Cash and cash equivalents  End of year
    
    
    89,220,855
    
    
    
    167,021,182
    
    
    
    100,984,812
    
    
    
    203,234
 (1)
    
    See Note 24(2)
    
    See Note 10 e. (iv). As a result of the liquidation of CESA, cash amounting to ThCh$ 4,425,890
was transferred to CESAs other shareholder, Endesa Internacional S.A.   F-23




---



##### 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, 2007, except as stated)
 1.
    
    Description of Business:
    2.
    
    Summary of Significant Accounting Policies:a.
    
    General:
      F-24




---



##### 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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:
  Percentage participation in voting rights as of December 31,Company name
    
    2005
    
    
    2006
    
    
    2007Total
    
    
    Total
    
    
    Direct
    
    
    Indirect
    
    
    TotalEnigesa S.A. (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.51
    
    
    
    0.49
    
    
    
    100.00Ingendesa S.A. (1) (Chile)
    
    
    100.00
    
    
    
    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
    
    
    
    99.66
    
    
    
    0.33
    
    
    
    99.99Endesa Chile Internacional (Chile) (2)
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    
    
    
    
    Pangue S.A.(3) (Chile)
    
    
    94.99
    
    
    
    94.99
    
    
    
    94.98
    
    
    
    0.01
    
    
    
    94.99Central Hidroeléctrica Betania S.A. (4)(Colombia)
    
    
    85.62
    
    
    
    99.99
    
    
    
    
    
    
    
    
    
    
    
    Endesa Brasil Participacoes Ltda. (Brazil)
    
    
    100.00
    
    
    
    100.00
    
    
    
    5.00
    
    
    
    95.00
    
    
    
    100.00Capital de Energía S.A. (5) (Colombia)
    
    
    51.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compañía Eléctrica Cono Sur S.A. (Panama)
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Emgesa S.A (6), (8) (Colombia)
    
    
    51.32
    
    
    
    23.45
    
    
    
    1.44
    
    
    
    25.43
    
    
    
    26.87Compañía Eléctrica San Isidro S.A. (7) (Chile)
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Edegel S.A. (9) (Peru)
    
    
    63.56
    
    
    
    55.44
    
    
    
    
    
    
    
    55.44
    
    
    
    55.44Generandes Perú S.A. (Peru)
    
    
    59.63
    
    
    
    59.63
    
    
    
    
    
    
    
    59.63
    
    
    
    59.63Compañía 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 (Brazil)
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    100.00Endesa Eco S.A. (Chile) (10)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00Hidroinvest S.A. (Argentina) (11)
    
    
    69.93
    
    
    
    69.93
    
    
    
    41.94
    
    
    
    54.15
    
    
    
    96.09Hidroeléctrica El Chocón S.A. 
(Argentina) (12)
    
    
    65.19
    
    
    
    65.19
    
    
    
    2.48
    
    
    
    65.19
    
    
    
    67.67Endesa Costanera S.A. (Argentina) (13)
    
    
    64.26
    
    
    
    64.26
    
    
    
    12.33
    
    
    
    57.44
    
    
    
    69.77Southern Cone Power Argentina S.A (Argentina) (14)
    
    
    
    
    
    
    
    
    
    
    98.00
    
    
    
    2.00
    
    
    
    100.00Central Eólica Canela S.A. (Chile) (15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75.00
    
    
    
    75.00Túnel El Melón S.A. (Chile) (16)
    
    
    99.96
    
    
    
    99.96
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00
 (1)
    
    See Note 10 (c.) (ii.).(2)
    
    See Note 10 (c.) (iv.)(3)
    
    See Note 10 (d.) (ii.)(4)
    
    See Note 10 (c.) (v.), Note 10 (d) (iv.)(5)
    
    See Note 10 (e.) (iv.)(6)
    
    Endesa Chile exercises control over this company pursuant to a shareholders agreement(7)
    
    See Note 10 (c.) (iii.), Note 10 (d) (i.) and Note 10 (e) (ii.)(8)
    
    See Note 10 (c.) (v), Note 10 (d) (iv.), Note 10 (e) (iv)  F-25




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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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:
 (9)
    
    See Note 10 (d.) (iii.)(10)
    
    See Note 10 (b.) (i.)(11)
    
    See Note 10 (d.)(vi.)(12)
    
    See Note 10 (d.) (vi.)(13)
    
    See Note 10 (d.) (v.)(14)
    
    See Note 10 (d.) (v.)(15)
    
    See Note 10 (b.) (iv.)(16)
    
    See Note 10 (d.) (vii.)  Percentage of economic participation as of December 31,2005
    
    
    2006
    
    
    2007%
    
    
    %
    
    
    %Emgesa S.A. (1)
    
    
    22.36
    
    
    
    23.45
    
    
    
    26.87Edegel S.A. (2)
    
    
    37.90
    
    
    
    33.06
    
    
    
    33.06Capital de Energía S.A. (3)
    
    
    43.59
    
    
    
    
    
    
    
    Hidroeléctrica El Chocón S.A. (4)
    
    
    47.45
    
    
    
    47.45
    
    
    
    65.37
 (1)
    
    See Note 10 (c.) (v), Note 10 (d) (iv.), Note 10 (e) (iv); subsequent to the mergers in
2007, voting rights are equal to economic interest(2)
    
    See Note 10 (d.) (iii.)(3)
    
    See Note 10 (e.) (iv.)(4)
    
    See Note 10 (d.) (vi.)  F-26




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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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:b)
    
    Constant currency restatement:
       Change over PreviousIndex
    
    
    November 30,November 30, 2005
    
    
    100.00
    
    
    
    3.6
    %November 30, 2006
    
    
    102.10
    
    
    
    2.1
    %November 30, 2007
    
    
    109.67
    
    
    
    7.4
    %
  Change over PreviousIndex
    
    
    December 31,December 31, 2005
    
    
    100.00
    
    
    
    3.7
    %December 31, 2006
    
    
    103.67
    
    
    
    2.6
    %December 31, 2007
    
    
    111.76
    
    
    
    7.8
    %
  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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:
  Index-linked assets and liabilities
 Unidad de Fomento
 Ch$December 31, 2005
    
    
    17,974.81December 31, 2006
    
    
    18,336.38December 31, 2007
    
    
    19,622.66
 Comparative financial statements
  Year
    
    Change in Index2005
    
    
    9.7%
    (1)2006
    
    
    7.4%
    (2)
 (1)
    
    Equivalent to the amounts for 2005 multiplied by the change in the CPI for 2006, then by the
change in the CPI for 2007.(2)
    
    Equivalent to the amounts for 2006 multiplied by the change in the CPI for 2007.  Convenience translation to US dollars
   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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:c)
    
    Assets and liabilities denominated in foreign currencies:
  Currency
    
    Symbol used
    
    2005
    
    
    2006
    
    
    2007Ch$
    
    
    Ch$
    
    
    Ch$United States dollar (observed)
    
    US$
    
    
    512.50
    
    
    
    532.39
    
    
    
    496.89British pound sterling
    
    £
    
    
    880.43
    
    
    
    1,041.86
    
    
    
    989.43Colombian Peso
    
    $ Col.
    
    
    0.22
    
    
    
    0.24
    
    
    
    0.25New Peruvian Sol
    
    Soles
    
    
    149.42
    
    
    
    166.58
    
    
    
    165.85Brazilian real
    
    Rs
    
    
    219.02
    
    
    
    249.01
    
    
    
    280.52Japanese yen
    
    ¥
    
    
    4.34
    
    
    
    4.47
    
    
    
    4.41Euro
    
    
    
    
    606.08
    
    
    
    702.08
    
    
    
    730.94Argentine peso
    
    $ Arg.
    
    
    181.92
    
    
    
    173.87
    
    
    
    157.79
 Index
    
    Symbol used
    
    2005
    
    
    2006
    
    
    2007Ch$
    
    
    Ch$
    
    
    Ch$Unidad de Fomento
    
    UF
    
    
    17,974.81
    
    
    
    18,336.38
    
    
    
    19,622.66Annual Tax Unit
    
    UTA
    
    
    378,852
    
    
    
    386,472
    
    
    
    410,664
  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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:d)
    
    Time deposits, Repurchase Agreements and Marketable securities:
  e)
    
    Accounts receivable and Allowance for doubtful accounts:
  f)
    
    Inventories:
  g)
    
    Property, plant and equipment:
       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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:h)
    
    Leasing
        i)
    
    Depreciation:
    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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:j)
    
    Investments in related companies:
    k)
    
    Foreign investments:
   l)
    
    Other intangibles:
   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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:m)
    
    Goodwill and negative goodwill:
      1.
    
    The first step is to compare each CGUs fair value with its
carrying amount, including goodwill. The CGUs fair value is determined using
market prices, or, if not available, valuation techniques including discounted
cash flow approaches. If a CGUs carrying amount exceeds its fair value, an
indicator for goodwill impairment exists and step two is performed.2.
    
    The second step is to compare the implied fair value of goodwill
with its carrying amount. The implied fair value represents the excess of the
CGUs net identifiable assets over the CGUs net assets at fair value. Any excess
of the carrying amount of goodwill over its implied fair value is recorded as
impairment loss, writing down the carrying amount of goodwill to its implied fair
value.
    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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:n)
    
    Revenue recognition:
  Core Energy Business:
  Other Services:
  o)
    
    Current and deferred income taxes:
    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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:p)
    
    Accrued vacation expense:
  q)
    
    Staff severance indemnity:
  r)
    
    Pension and post-retirement benefits:
  s)
    
    Other provisions:
  t)
    
    Statements of cash flows:
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Cash
    
    
    10,990,894
    
    
    
    22,936,504
    
    
    
    19,397,212Time deposits
    
    
    66,306,742
    
    
    
    99,136,606
    
    
    
    44,272,635Repurchase agreements
    
    
    9,871,580
    
    
    
    39,333,717
    
    
    
    27,015,926Marketable securities
    
    
    2,051,639
    
    
    
    5,614,355
    
    
    
    10,299,039Total cash and cash
equivalents
    
    
    89,220,855
    
    
    
    167,021,182
    
    
    
    100,984,812
 u)
    
    Bonds:
   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, 2007, except as stated)
 2.
    
    Summary of Significant Accounting Policies, continued:
 v)
    
    Financial derivative contracts:
  w)
    
    Research and development costs:
  x)
    
    Computer software:
  y)
    
    Cost of sales and administrative and selling expenses:
  z)
    
    Cost recovery:
  aa)
    
    Advertising costs:
   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, 2007, except as stated)
 3.
    
    Change in accounting policy
  Reclassifications in the Balance Sheet:
  Amount ThCh$
    
    
    
    
    Amount ThCh$From Account
    
    Credit (Debit)
    
    
    To Account
    
    Credit (Debit)Technical revaluation of fixed assets
    
    
    (58,408,028
    )
    
    Buildings and Infrastructure
    
    
    58,408,028Income tax
    
    
    (3,428,160
    )
    
    Recoverable tax
    
    
    3,428,160Other non-current liabilities
    
    
    352,011
    
    
    Investments in related companies
    
    
    (352,011
    )
  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, 2007, except as stated)
 4.
    
    Time deposits:
  AnnualizedInterest
    
    
    Scheduled
    
    
    As of December 31,Financial Institution
    
    Rates
    
    
    Maturity
    
    
    2006
    
    
    2007%
    
    
    
    
    
    ThCh $
    
    
    ThCh$Banco Galicia
    
    
    2.06
    
    
    January 2, 2008
    
    
    2,040,457
    
    
    
    733,650Banco Itau Corp Plus
    
    
    2.06
    
    
    January 2, 2008
    
    
    505,122
    
    
    
    864,705Banco Río de la Plata
    
    
    2.06
    
    
    January 2, 2008
    
    
    7,708,848
    
    
    
    34,782Banco Santander
    
    
    1.6
    
    
    January 2, 2008
    
    
    120,973
    
    
    
    230,807Fidubogotá
    
    
    6.98
    
    
    January 2, 2008
    
    
    
    
    
    
    21,539Banco Rio
    
    
    2.06
    
    
    January 2, 2008
    
    
    
    
    
    
    2,737,708Bank of America
    
    
    3.17
    
    
    January 2, 2008
    
    
    10,813,619
    
    
    
    3,269,537Citibank
    
    
    3.25
    
    
    January 2, 2008
    
    
    21,383,869
    
    
    
    2,918,061Citibank N.A. (Overnight)
    
    
    3.7
    
    
    January 2, 2008
    
    
    
    
    
    
    25,914,600Citibank New York
    
    
    6.85
    
    
    January 2, 2008
    
    
    3,517,217
    
    
    
    7,470,924Corficolombiana Multiplicar
    
    
    8.57
    
    
    January 2, 2008
    
    
    3,360,227
    
    
    
    7,516Corficolombiana Valor Plus
    
    
    7.46
    
    
    January 2, 2008
    
    
    8,952,792
    
    
    
    62,704Fiducolombia
    
    
    8.44
    
    
    January 2, 2008
    
    
    7,120,679
    
    
    
    6,102Banco Boston
    
    
    
    
    
    
    
    
    
    14,005
    
    
    
    Banco Continental
    
    
    
    
    
    
    
    
    
    9,031,979
    
    
    
    Fiduoccidente
    
    
    
    
    
    
    
    
    
    248,867
    
    
    
    Fondeos
    
    
    
    
    
    
    
    
    
    17,472,383
    
    
    
    Banco Frances
    
    
    
    
    
    
    
    
    
    959,791
    
    
    
    Banco Nationale de Paris
    
    
    
    
    
    
    
    
    
    63,491
    
    
    
    Pension Fund Correval
    
    
    
    
    
    
    
    
    
    6,311
    
    
    
    CDT Otros
    
    
    
    
    
    
    
    
    
    259,389
    
    
    
    Fund Surenta
    
    
    
    
    
    
    
    
    
    2,816,788
    
    
    
    FAM Fondo Ganadero
    
    
    
    
    
    
    
    
    
    769
    
    
    
    FCE efectivo BBVA
    
    
    
    
    
    
    
    
    
    112,925
    
    
    
    FCO sumar
    
    
    
    
    
    
    
    
    
    239,732
    
    
    
    Fund Surgir
    
    
    
    
    
    
    
    
    
    2,356,388
    
    
    
    HSBC Argentina
    
    
    
    
    
    
    
    
    
    27,637
    
    
    
    Serfinco
    
    
    
    
    
    
    
    
    
    2,348
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    99,136,606
    
    
    
    44,272,635
  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, 2007, except as stated)
 5.
    
    Accounts receivable and other receivables:
 a.
    
    Current accounts receivable, other receivables and related allowances
for doubtful accounts as of December 31, 2006 and 2007 are as follows:
 As of December 31,2006
    
    
    2007Under 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
    
    
    156,584,369
    
    
    
    2,944,095
    
    
    
    (1,806,835
    )
    
    
    157,721,629
    
    
    
    206,742,345
    
    
    
    5,718,569
    
    
    
    (1,251,322
    )
    
    
    211,209,592Other Receivables (1)
    
    
    54,714,003
    
    
    
    4,143,252
    
    
    
    (1,002,093
    )
    
    
    57,855,162
    
    
    
    58,068,399
    
    
    
    2,814,908
    
    
    
    (838,045
    )
    
    
    60,045,262Total
    
    
    211,298,372
    
    
    
    7,087,347
    
    
    
    (2,808,928
    )
    
    
    215,576,791
    
    
    
    264,810,744
    
    
    
    8,533,477
    
    
    
    (2,089,367
    )
    
    
    271,254,854
  (1)
    
    As of December 31, 2006 and 2007 the balances include amounts of ThCh$ 31,241,992 and ThCh$
29,343,531, respectively that will be reimbursed to Endesa Chile and its subsidiaries for
transmission line use. b.
    
    Current and long-term accounts receivable, net of Allowances for
Doubtful Accounts, by country as of December 31, 2006 and 2007 are as follows:
 As of December 31,Country
    
    2006
    
    
    2007ThCh$
    
    
    %
    
    
    ThCh$
    
    
    %Chile
    
    
    113,496,566
    
    
    
    39.17
    %
    
    
    150,146,254
    
    
    
    42.35
    %Peru
    
    
    31,355,196
    
    
    
    10.82
    %
    
    
    15,658,545
    
    
    
    4.42
    %Argentina
    
    
    94,587,267
    
    
    
    32.64
    %
    
    
    119,948,252
    
    
    
    33.83
    %Colombia
    
    
    44,470,809
    
    
    
    15.35
    %
    
    
    52,118,791
    
    
    
    14.70
    %Panama (1)
    
    
    5,845,547
    
    
    
    2.02
    %
    
    
    16,668,969
    
    
    
    4.70
    %Total
    
    
    289,755,385
    
    
    
    100.00
    %
    
    
    354,540,811
    
    
    
    100.00
    %
 (1)
    
    Country of incorporation of the wholly-owned subsidiary Compañía Eléctrica Cono Sur S.A.  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, 2007, except as stated)
 5.
    
    Accounts receivable and other receivables, continued:
 c.
    
    Changes in the allowance for doubtful accounts are as follows:
 Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Beginning balance
    
    
    3,817,020
    
    
    
    3,482,422
    
    
    
    2,808,928Charged to expense
    
    
    183,683
    
    
    
    397,593
    
    
    
    470,532Write-offs
    
    
    (146,980
    )
    
    
    (554,318
    )
    
    
    (645,190
    )Price-level restatement and
conversion adjustment
    
    
    (371,301
    )
    
    
    (516,769
    )
    
    
    (544,903
    )Ending balance
    
    
    3,482,422
    
    
    
    2,808,928
    
    
    
    2,089,367
 d.
    
    Sales recorded but not invoiced are ThCh$ 81,378,073 ThCh$ 102,489,278
and ThCh$ 150,181,755 as of December 31, 2005, 2006 and 2007, respectively.
  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, 2007, except as stated)
 6.
    
    Transactions with Related Companies:
  
    
    Sales and purchases of electricity and various services, which have payment terms of 30
days and are not adjustable.
    
    Operating loans, which have adjustment clauses and bear interest.
  a.
    
    Notes and accounts receivable from related companies:
 As of December 31,Short-term
    
    
    Long-termCompany Name
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Transmisora Eléctrica de Quillota Ltda.
    
    
    3,097
    
    
    
    1,855,524
    
    
    
    
    
    
    
    Atacama Finance Co. (1)
    
    
    66,117
    
    
    
    89,682,080
    
    
    
    97,222,766
    
    
    
    Cía de Energía del Mercosur S.A.
    
    
    1,304,754
    
    
    
    1,596,912
    
    
    
    
    
    
    
    Chilectra S.A.
    
    
    17,277,165
    
    
    
    17,265,900
    
    
    
    396
    
    
    
    369Cía. Interconexión Energética S.A.
    
    
    891,479
    
    
    
    749,359
    
    
    
    
    
    
    
    Codensa S.A.
    
    
    14,819,700
    
    
    
    19,076,824
    
    
    
    
    
    
    
    Edelnor S.A.
    
    
    3,571
    
    
    
    2,527,408
    
    
    
    
    
    
    
    Empresa Eléctrica Piura S.A.
    
    
    115,539
    
    
    
    90,337
    
    
    
    
    
    
    
    Enersis S.A.
    
    
    95,591
    
    
    
    81,054
    
    
    
    
    
    
    
    Endesa Brasil S.A.
    
    
    
    
    
    
    54,596
    
    
    
    
    
    
    
    Gasoducto Tal Ltda.
    
    
    2,119
    
    
    
    180
    
    
    
    
    
    
    
    Gas Atacama Generación Ltda.
    
    
    65,906
    
    
    
    18,421
    
    
    
    
    
    
    
    GNL Quintero S.A. (2)
    
    
    
    
    
    
    40,175,603
    
    
    
    
    
    
    
    Cachoeira Dourada S.A.
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    Central Generadora Termoeléctrica de
Fortaleza S.A.
    
    
    98,094
    
    
    
    1,792
    
    
    
    
    
    
    
    Cam Colombia Ltda.
    
    
    68,820
    
    
    
    57,683
    
    
    
    
    
    
    
    Synapsis Soluciones y Servicios IT Ltda.
    
    
    13,684
    
    
    
    13,569
    
    
    
    
    
    
    
    Endesa Internacional S.A.
    
    
    28,320
    
    
    
    12,669
    
    
    
    
    
    
    
    GNL Chile S.A.
    
    
    
    
    
    
    1,873,672
    
    
    
    
    
    
    
    Gasoducto Atacama Chile S.A.
    
    
    304,823
    
    
    
    13,096
    
    
    
    
    
    
    
    Consorcio Ara  Ingendesa Ltda.
    
    
    158,496
    
    
    
    50,423
    
    
    
    
    
    
    
    Centrales Hidroeléctricas de Aysén S.A.
    
    
    
    
    
    
    752,836Sociedad Consorcio Ingendesa Ara Ltda.
    
    
    8,515
    
    
    
    723
    
    
    
    
    
    
    
    Total
    
    
    35,325,944
    
    
    
    175,950,661
    
    
    
    97,223,162
    
    
    
    369
 (1)
    
    The receivables from Atacama Finance Co. correspond to a sponsor 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.(2)
    
    The receivable from GNL Quintero S.A. represents a sponsor loan to finance the investees
operations and are denominated in US$ . They bear interests of 5.56% p.a. and mature in 2008.  F-41




---



##### 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, 2007, 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
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Cachoeira Dourada S.A.
    
    
    14,623
    
    
    
    
    
    
    
    
    
    
    
    Compañía de Energía del Mercosur S.A.
    
    
    15,499
    
    
    
    10,281,404
    
    
    
    
    
    
    
    Compañía de Transmisión del Mercosur S.A.
    
    
    891,479
    
    
    
    749,359
    
    
    
    
    
    
    
    Chilectra S.A.
    
    
    49,401
    
    
    
    108,590
    
    
    
    
    
    
    
    Codensa S.A.
    
    
    3,662,827
    
    
    
    2,845,969
    
    
    
    
    
    
    
    Enersis S.A. (3)
    
    
    260,877
    
    
    
    271,505
    
    
    
    
    
    
    
    Synapsis Soluciones y Servicios IT Ltda.
    
    
    817,124
    
    
    
    583,572
    
    
    
    
    
    
    
    Transmisora Eléctrica de Quillota Ltda.
    
    
    
    
    
    
    32,184
    
    
    
    
    
    
    
    Compañía Americana de Multiservicios
Ltda.
    
    
    448
    
    
    
    84,734
    
    
    
    
    
    
    
    Electrogas S.A.
    
    
    239,557
    
    
    
    209,417
    
    
    
    
    
    
    
    Cam Colombia Ltda.
    
    
    470,150
    
    
    
    250,388
    
    
    
    
    
    
    
    Synapsis Perú Ltda.
    
    
    350,725
    
    
    
    35,003
    
    
    
    
    
    
    
    Synapsis Colombia Ltda.
    
    
    131,743
    
    
    
    
    
    
    
    
    
    
    
    Synapsis Argentina Ltda.
    
    
    
    
    
    
    79,980
    
    
    
    
    
    
    
    Gas Atacama Generación S.A.
    
    
    692,060
    
    
    
    31,224
    
    
    
    
    
    
    
    Gasoducto Tal Tal Ltda.
    
    
    
    
    
    
    46,585
    
    
    
    
    
    
    
    Consorcio Ara-Ingendesa Ltda.
    
    
    164,338
    
    
    
    333
    
    
    
    
    
    
    
    Edelnor S.A.
    
    
    10,416
    
    
    
    91,371
    
    
    
    
    
    
    
    Cam Perú
    
    
    60,360
    
    
    
    27,830
    
    
    
    
    
    
    
    Empresa Eléctrica Piura S.A.
    
    
    1,007,991
    
    
    
    13,660
    
    
    
    
    
    
    
    Total
    
    
    8,839,618
    
    
    
    15,743,108
    
    
    
    
    
    
    
    
 
 (3)
    
    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-42




---



##### 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, 2007, except as stated)
 6.
    
    Transactions with Related Companies, continued:c.
    
    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
    
    2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Atacama Finance Co.
    
    Interest
    
    
    5,288,647
    
    
    
    6,976,594
    
    
    
    7,103,591Price-level restatement
    
    
    4,149,796
    
    
    
    2,025,889
    
    
    
    6,772,234Foreign currency translation
    
    
    (13,542,589
    )
    
    
    1,764,710
    
    
    
    (12,992,064
    )Cia. Americana Multiservicios Ltda.
    
    Services provided
    
    
    687
    
    
    
    
    
    
    
    243Cen. Gen. Termoeléctrica de Fortaleza S.A.
    
    Services provided
    
    
    40,428
    
    
    
    249,772
    
    
    
    77,547Com. De Energía del Mercosur S.A.
    
    Sales of energy
    
    
    12,093,332
    
    
    
    6,275,933
    
    
    
    9,317,681Purchases of energy
    
    
    (945,257
    )
    
    
    (44,599
    )
    
    
    (82,981
    )Services received
    
    
    
    
    
    
    
    
    
    
    (15,725,075
    )Codensa S.A.
    
    Purchases of energy
    
    
    (17,792,086
    )
    
    
    (19,480,778
    )
    
    
    (16,068,926
    )Sales of energy
    
    
    70,148,942
    
    
    
    55,220,888
    
    
    
    59,981,578Services provided
    
    
    70,096
    
    
    
    65,183
    
    
    
    73,922Services received
    
    
    (1,006,704
    )
    
    
    (755,340
    )
    
    
    (518,552
    )Interest
    
    
    
    
    
    
    1,105,836
    
    
    
    26,335Cía. Transmisión del Mercosur S.A.
    
    Purchases of energy
    
    
    (2,197,357
    )
    
    
    (711,303
    )
    
    
    Cía. Interconexión Energética S.A.
    
    Sales of energy
    
    
    5,629,825
    
    
    
    711,303
    
    
    
    Foreign currency translation
    
    
    172,198
    
    
    
    705,681
    
    
    
    688,712Chilectra S.A.
    
    Sales of energy
    
    
    155,523,040
    
    
    
    162,938,076
    
    
    
    186,478,941Services provided
    
    
    2,679,503
    
    
    
    2,672,345
    
    
    
    2,729,140Services received
    
    
    (93,753
    )
    
    
    (106,678
    )
    
    
    (700,228
    )Gas Atacama Generación S.A.
    
    Services provided
    
    
    158,166
    
    
    
    1,042,030
    
    
    
    353,218Empresa Eléctrica Piura S.A.
    
    Sales of energy
    
    
    776,121
    
    
    
    728,503
    
    
    
    261,641Services provided
    
    
    2,767
    
    
    
    100,003
    
    
    
    14,031Enersis S.A.
    
    Interest
    
    
    (435,551
    )
    
    
    (197,595
    )
    
    
    (1,205,197
    )Services provided
    
    
    340,578
    
    
    
    141,716
    
    
    
    1,085,823Foreign currency translation
    
    
    747,586
    
    
    
    109,464
    
    
    
    Services received
    
    
    
    
    
    
    
    
    
    
    (980,069
    )Endesa Internacional S.A.
    
    Services received
    
    
    
    
    
    
    (4,427,229
    )
    
    
    Interest
    
    
    
    
    
    
    (80,608
    )
    
    
    Price-level restatement
    
    
    
    
    
    
    (64,736
    )
    
    
    Foreign currency translation
    
    
    
    
    
    
    (13,632
    )
    
    
    Ingendesa do Brasil Ltda.
    
    Services received
    
    
    (5,059
    )
    
    
    
    
    
    
    Consorcio Ingendesa ARA Ltda.
    
    Services provided
    
    
    235,305
    
    
    
    176,960
    
    
    
    620,670Etevensa S.A.
    
    Sales of energy
    
    
    1,101,957
    
    
    
    
    
    
    
    Services provided
    
    
    587,847
    
    
    
    
    
    
    
    
  F-43




---



##### 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, 2007, except as stated)
 6.
    
    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
    
    2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Electrogas S.A.
    
    Purchases of gas
    
    
    (1,702,881
    )
    
    
    (2,112,880
    )
    
    
    (2,740,516
    )Endesa Brasil S.A.
    
    Services provided
    
    
    73,898
    
    
    
    195,215
    
    
    
    268,088Edelnor S.A.
    
    Sales of energy
    
    
    29,006,449
    
    
    
    27,085,030
    
    
    
    25,243,296Endesa, S.A.
    
    Services provided
    
    
    43,004
    
    
    
    
    
    
    
    Synapsis Argentina Ltda.
    
    Services received
    
    
    
    
    
    
    
    
    
    
    (111,202
    )Cam Colombia Ltda.
    
    Services received
    
    
    (379,945
    )
    
    
    (535,555
    )
    
    
    (592,296
    )Cam Perú S.A.
    
    Services received
    
    
    (46,335
    )
    
    
    (350,727
    )
    
    
    (6,049
    )Synapsis Sol y Serv. IT Ltda.
    
    Services received
    
    
    (2,005,250
    )
    
    
    (2,115,080
    )
    
    
    (2,518,448
    )Services provided
    
    
    
    
    
    
    
    
    
    
    548,651Synapsis Colombia
    
    Services received
    
    
    (485,353
    )
    
    
    (525,099
    )
    
    
    (748,736
    )Synapsis Brasil Ltda.
    
    Services received
    
    
    (94,753
    )
    
    
    1,849
    
    
    
    Synapsis Perú Ltda.
    
    Services received
    
    
    (300,741
    )
    
    
    (297,840
    )
    
    
    (176,371
    )Consorcio ARA  Ingendesa Ltda.
    
    Services provided
    
    
    2,068,892
    
    
    
    859,252
    
    
    
    30,155Cachoeira Dourada S.A.
    
    Services provided
    
    
    34,841
    
    
    
    9,258
    
    
    
    17,863Transmisora Eléc. De Quillota Ltda.
    
    Interest
    
    
    66,506
    
    
    
    28,879
    
    
    
    Services provided
    
    
    5,264
    
    
    
    5,497
    
    
    
    Ampla Energía y Servicios S.A.
    
    Services provided
    
    
    86,231
    
    
    
    
    
    
    
    Sociedad Agrícola Pastos Verdes
    
    Services provided
    
    
    
    
    
    
    9,646
    
    
    
    7,262Consorcio Ingendesa Minmetal Ltda.
    
    Services provided
    
    
    114,317
    
    
    
    67,725
    
    
    
    GNL Quintero S.A.
    
    Interest
    
    
    
    
    
    
    
    
    
    
    802,022Exchange rate difference
    
    
    
    
    
    
    
    
    
    
    (3,114,788
    )Price-level restatement
    
    
    
    
    
    
    
    
    
    
    1,310,042Centrales Hidroeléctricas de Aysén S.A.
    
    Services provided
    
    
    
    
    
    
    
    
    
    
    2,958,049Price-level restatement
    
    
    
    
    
    
    
    
    
    
    23,844Interest
    
    
    
    
    
    
    
    
    
    
    5,675
 
  F-44




---



##### 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, 2007, except as stated)
 7.
    
    Income taxes:a.
    
    Taxes recoverable (payable) as of each year-end are as follows:
 As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Income tax provision
    
    
    (54,170,977
    )
    
    
    (8,246,699
    )Value added tax (payable) recoverable
    
    
    (1,774,565
    )
    
    
    58,863,882Income tax recoverable
    
    
    7,719,535
    
    
    
    6,017,607Net tax position recoverable (payable)
    
    
    (48,226,007
    )
    
    
    56,634,790
 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, 2006 and 2007 as follows:
 As of December 31, 2006
    
    
    As of December 31, 2007Asset
    
    
    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$Accounts receivables
    
    
    1,345
    
    
    
    9,484,435
    
    
    
    
    
    
    
    
    
    
    
    395
    
    
    
    7,271,529
    
    
    
    
    
    
    
    Deferred income
    
    
    74,281
    
    
    
    989,257
    
    
    
    
    
    
    
    
    
    
    
    104,558
    
    
    
    903,656
    
    
    
    
    
    
    
    Vacation accrual
    
    
    521,481
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548,144
    
    
    
    
    
    
    
    
    
    
    
    Assets in leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    498,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,058,920Depreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285,738,376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289,130,419Severance indemnities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,105,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    985,660Deferred Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    705,803Capitalized interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,754,749
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,099,991Tax loss carryforwards
    
    
    
    
    
    
    48,568,311
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,506,004
    
    
    
    
    
    
    
    Contingencies
    
    
    1,071,131
    
    
    
    1,414,357
    
    
    
    
    
    
    
    
    
    
    
    1,132,214
    
    
    
    2,730,346
    
    
    
    
    
    
    
    Imputed interest on construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,034,502
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,959,224Costs of studies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,043,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,960,610Spare parts used
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    871,574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    806,387Accrued liabilities
    
    
    101,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    615,647
    
    
    
    
    
    
    
    
    
    
    
    Bonds discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    358,920
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    235,630Intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450,082
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332,280Recoverable contributions to assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419,902
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318,469Provision for obsolete spare parts
    
    
    
    
    
    
    1,741,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,445,992
    
    
    
    
    
    
    
    Pension benefits
    
    
    515,069
    
    
    
    992,332
    
    
    
    
    
    
    
    
    
    
    
    483,608
    
    
    
    890,494
    
    
    
    
    
    
    
    Deferred bond discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    897,343Capitalized commission for loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,871
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,783Other events
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200,836
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    954,568Complementary accounts, net
    
    
    
    
    
    
    (4,707,463
    )
    
    
    
    
    
    
    (145,458,117
    )
    
    
    
    
    
    
    (4,285,763
    )
    
    
    
    
    
    
    (134,154,437
    )Valuation allowance
    
    
    
    
    
    
    (30,241,236
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,062,227
    )
    
    
    
    
    
    
    Total
    
    
    2,284,599
    
    
    
    28,241,785
    
    
    
    
    
    
    
    174,911,861
    
    
    
    2,884,566
    
    
    
    29,400,031
    
    
    
    
    
    
    
    188,341,650Net deferred tax balance
    
    
    2,284,599
    
    
    
    
    
    
    
    
    
    
    
    (146,670,076
    )
    
    
    2,884,566
    
    
    
    
    
    
    
    
    
    
    
    (158,941,619
    )
  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, 2007, except as stated)
 7.
    
    Income taxes, continued:c.
    
    Income tax expense for the years ended December 31, 2005, 2006 and 2007 is as follows:
 As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Current income tax (expense) benefitIncome tax provision
    
    
    (65,947,139
    )
    
    
    (111,297,525
    )
    
    
    (80,754,221
    )Adjustment from prior periods
    
    
    
    
    
    
    4,526,691
    
    
    
    749,004Deferred tax (expense) benefitDeferred taxes
    
    
    (29,340,975
    )
    
    
    (23,907,656
    )
    
    
    (49,644,715
    )Amortization of complementary
accounts
    
    
    (3,487,128
    )
    
    
    (9,762,791
    )
    
    
    (9,745,330
    )Change in valuation allowance (1)
    
    
    (983,477
    )
    
    
    (116,596
    )
    
    
    25,998,339Other charges or credits
    
    
    (1,074,231
    )
    
    
    17,726
    
    
    
    (16,575
    )Total
    
    
    (100,832,950
    )
    
    
    (140,540,151
    )
    
    
    (113,413,498
    )
 (1)
    
    During the year ended December 31, 2007, due to the reorganization of subsidiaries in Colombia
(see note 10 c. (v)), the Company was able to recover tax loss carryforwards recorded in the former
subsidiary Betania. These tax loss carryforwards and the related deferred tax assets were
previously fully covered by a valuation allowance. As a result of the transaction the tax loss
carryforwards and the related deferred tax asset were recovered and the related valuation allowance
has been reversed. 8.
    
    Other current assets:
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Advance payments
    
    
    143,724
    
    
    
    133,821Repurchase agreements
    
    
    39,333,717
    
    
    
    27,015,926Other
    
    
    91,849
    
    
    
    673,233Total
    
    
    39,569,290
    
    
    
    27,822,980
  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, 2007, except as stated)
 9.
    
    Property, plant and equipment:
  Estimated years
    
    As of December 31,of useful lives
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$Land
    
    
    
    
    55,889,296
    
    
    
    52,942,477Buildings and infrastructure
    
    35  65
    
    
    5,992,547,217
    
    
    
    5,847,775,979Distribution and transmission lines and public lighting
    
    35
    
    
    24,093,972
    
    
    
    29,912,309Machinery and equipment
    
    10  30
    
    
    1,262,263,500
    
    
    
    1,144,896,780Construction in progress
    
    
    
    
    57,832,722
    
    
    
    54,680,205Property, plant and equipment in leasing (1)
    
    
    
    
    106,463,451
    
    
    
    78,197,506Furniture and fixtures, tools, software and IT equipment
    
    3  10
    
    
    23,328,255
    
    
    
    22,130,533Vehicles
    
    6  10
    
    
    1,945,460
    
    
    
    1,712,994Other assets
    
    3  8
    
    
    4,567,768
    
    
    
    12,331,275Sub-total
    
    
    
    
    194,137,656
    
    
    
    169,052,513Technical appraisal
    
    
    
    
    12,803,027
    
    
    
    12,833,487Total Property, plant and equipment
    
    
    
    
    7,541,734,668
    
    
    
    7,257,413,545Less: Accumulated depreciation
    
    
    
    
    (3,084,015,752
    )
    
    
    (3,091,985,473
    )Total Property, plant and equipment, net
    
    
    
    
    4,457,718,916
    
    
    
    4,165,428,072
 (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%. (see also Note 32 p)(ii)
    
    Corresponds to a contract to remodel a power plant operated by the former subsidiary
Etevensa. The project is being carried out by the Company and the financial institutions:
Banco de Crédito del Perú, BBVA, Banco Continental, and Citibank. This contract is for 8
years and bears an annual interest rate of Libor + 2.5%. (see also Note 32 p)   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, 2007, except as stated)
 10.
    
    Investment in related companies:a.
    
    Investments as of each year-end are as follows:


As ofDecember31, 2006
    
    
    As of December 31, 2007Percentage
    
    
    Number of
    
    
    Percentage
    
    
    Related
    
    
    Carrying
Value
    
    
    Equity in Net Earnings (Losses)Related Companies
    
    Owned
    
    
    Shares
    
    
    Owned
    
    
    Equity
    
    
    2006
    
    
    2007
    
    
    2005
    
    
    2006
    
    
    2007%
    
    
    
    
    
    %
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Comp. De Interconexión Energética S.A. (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,456,356
    )
    
    
    
    
    
    
    Gas Atacama Generación S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.05
    %
    
    
    (5,006,882
    )
    
    
    13,958
    
    
    
    (2,504
    )
    
    
    (5,524
    )
    
    
    (8,279
    )
    
    
    (14,633
    )Gasoducto Atacama Argentina S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.03
    %
    
    
    117,961,103
    
    
    
    39,363
    
    
    
    35,388
    
    
    
    4,644
    
    
    
    5,662
    
    
    
    (437
    )Gasoducto Atacama Chile S.A.
    
    
    0.05
    %
    
    
    
    
    
    
    0.05
    %
    
    
    93,723,709
    
    
    
    43,459
    
    
    
    46,862
    
    
    
    6,552
    
    
    
    6,070
    
    
    
    9,434Centrales Hidroeléctricas de Aysén S.A.(2)
    
    
    51.00
    %
    
    
    1,702,124
    
    
    
    51.00
    %
    
    
    29,258,515
    
    
    
    10,939,474
    
    
    
    14,921,838
    
    
    
    
    
    
    
    
    
    
    
    (985,219
    )Inversiones Electrogas S.A.
    
    
    42.50
    %
    
    
    425
    
    
    
    42.50
    %
    
    
    17,260,328
    
    
    
    7,832,630
    
    
    
    7,335,639
    
    
    
    1,918,728
    
    
    
    2,005,331
    
    
    
    2,246,836Inversiones Gas Atacama Holding Ltda. (3)
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    152,292,311
    
    
    
    95,857,601
    
    
    
    27,255,769
    
    
    
    6,818,420
    
    
    
    3,053,646
    
    
    
    (56,045,596
    )Comerc. Energía del Mercosur S.A.
    
    
    45.00
    %
    
    
    6,305,400
    
    
    
    45.00
    %
    
    
    7,588,668
    
    
    
    3,990,917
    
    
    
    3,414,901
    
    
    
    54,631
    
    
    
    845
    
    
    
    (53,257
    )Transmisora Eléctrica de Quillota Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    8,075,084
    
    
    
    3,705,885
    
    
    
    4,037,542
    
    
    
    188,156
    
    
    
    229,956
    
    
    
    331,656Endesa Brasil S.A. (1)
    
    
    40.45
    %
    
    
    67,256,360
    
    
    
    40.45
    %
    
    
    948,146,991
    
    
    
    436,786,086
    
    
    
    383,553,540
    
    
    
    14,099,465
    
    
    
    40,068,416
    
    
    
    44,114,265Gas Atacama S.A.
    
    
    0.001
    %
    
    
    1,147
    
    
    
    0.001
    %
    
    
    157,594,012
    
    
    
    2,209
    
    
    
    1,808
    
    
    
    153
    
    
    
    78
    
    
    
    (113
    )Electrogas S.A.
    
    
    0.02
    %
    
    
    85
    
    
    
    0.02
    %
    
    
    16,028,805
    
    
    
    3,618
    
    
    
    3,406
    
    
    
    985
    
    
    
    1,034
    
    
    
    1,161Distrilec Inversora S.A.
    
    
    0.89
    %
    
    
    4,416,141
    
    
    
    0.89
    %
    
    
    252,637,584
    
    
    
    2,462,014
    
    
    
    2,242,073
    
    
    
    (96,196
    )
    
    
    (126,194
    )
    
    
    102,552Consorcio
ARA  Ingendesa Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    212,273
    
    
    
    173,744
    
    
    
    106,137
    
    
    
    160,729
    
    
    
    99,958
    
    
    
    140,491Sociedad Consorcio Ingendesa ARA Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    23,820
    
    
    
    83,031
    
    
    
    11,910
    
    
    
    67,401
    
    
    
    63,022
    
    
    
    (13,966
    )Consorcio
Ingendesa  Minmetal Ltda.
    
    
    50.00
    %
    
    
    
    
    
    
    50.00
    %
    
    
    32,800
    
    
    
    15,656
    
    
    
    16,400
    
    
    
    117,903
    
    
    
    78,940
    
    
    
    746Consorcio ARA Ingendesa Sener Ltda.
    
    
    
    
    
    
    
    
    
    
    33.33
    %
    
    
    (5,283
    )
    
    
    
    
    
    
    (1,761
    )
    
    
    
    
    
    
    
    
    
    
    (2,094
    )GNL Chile S.A.
    
    
    23.57
    %
    
    
    3,023,642
    
    
    
    33.33
    %
    
    
    (1,708,857
    )
    
    
    (352,011
    )
    
    
    (569,619
    )
    
    
    
    
    
    
    
    
    
    
    (137,496
    )GNL Quintero S.A. (4)
    
    
    
    
    
    
    200
    
    
    
    20.00
    %
    
    
    7,950,210
    
    
    
    
    
    
    
    1,590,042
    
    
    
    
    
    
    
    
    
    
    
    (147,132
    )Central Térmica San Martín S.A.
    
    
    23.10
    %
    
    
    500,006
    
    
    
    23.10
    %
    
    
    70,987
    
    
    
    19,441
    
    
    
    16,398
    
    
    
    
    
    
    
    
    
    
    
    Central Térmica Manuel Belgrano S.A.
    
    
    23.10
    %
    
    
    500,006
    
    
    
    23.10
    %
    
    
    70,983
    
    
    
    19,441
    
    
    
    16,397
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561,636,516
    
    
    
    444,032,166
    
    
    
    14,879,691
    
    
    
    45,478,485
    
    
    
    (10,452,802
    )


(1)
    
    See Note 10 (c) (i.)(2)
    
    See Note 10 (b) (ii.)(3)
    
    See Note 10 (g)(4)
    
    See Note 10 (b) (iii.)  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, 2007, except as stated)
 10.
    
    Investment in related companies, continued:b.
    
    Constitution of companies
 (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$ 636,001
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$ 197,360; 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$20. 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$1,000, divided in 100 nominative shares, all of the same unique series, of equal value
and without nominal value. Endesa Chile subscribed 99 shares, representing 99% of the
paid-in capital and effectively paid ThCh$ 1059 for all 99 shares; Endesa Inversiones
Generales S.A. subscribed 1 share, representing 1% of the paid-in capital and effectively
paid ThCh$ 11 for 1 share.On September 21, 2006 Centrales Hidroelectricas de Aysén S. A. (Aysén) 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 ThCh$ 10,909,900 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
ThCh$11 paid in cash and through contribution of the bare property of the groundwater rights
that are described in the aforementioned deed.On October 16, 2007, Aysén increased its paid-in capital by ThCh$ 13,375,000 by issuing
1,337,500 shares without par value. The Company subscribed 682,125 of the issued shares
paying ThCh$ 3,848,089 in cash and ThCh$ 1,119,500 by capitalization of an intercompany
receivable between the Company and Aysén.
  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, 2007, except as stated)
 10.
    
    Investment in related companies, continued:
 (iii)
    
    On March 9, 2007, the Company subscribed 200 of the 1,000 nominative shares issued by GNL
Quintero S.A. for the amount of Th$2,011,863, giving Endesa Chile a participation of 20% in
the newly constituted company.(iv)
    
    On October 29, 2007, the entity Central Eólica Canela S.A. (Canela) was created, with
the Companys subsidiary Endesa Eco S.A. subscribing 75% of the issued shares. The 25% were
subscribed by Centinela S.A., an unrelated party. In addition, Centinela S.A. subscribed a
put-option for its participation in Canela, establishing that the participation can be sold
to Endesa Eco S.A. on or after October 29, 2012.
 c.
    
    Reorganizations of entities under common control
 (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 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$66,458, 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 amount of ThCh$ 15.(iv)
    
    On August 3, 2007, the Companys wholly owned subsidiaries Compañía Eléctrica Cono Sur
S.A. and Endesa Chile Internacional S.A. were merged, with Compañía Eléctrica Cono Sur S.A.
being the absorbing entity. As of the date of the merger both entities were under common
control of the Company, the transaction was accounted for as a reorganization of entities
under common control using the pooling-of-interests method to combine the balance sheets and
income statements of the involved entities.
  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, 2007, except as stated)
 10.
    
    Investments in related companies, continued:
 (v)
    
    On September 1, 2007, the Companys subsidiary Betania and its subsidiary Emgesa were
merged, by Betania absorbing Emgesa and the merged entity then changing its name to Emgesa.
Prior to the merger, the Company directly and indirectly owned 99.99% in Betania and through
Betania 23.45% in Emgesa. Pursuant to a shareholders agreement, the Company had controlled
Emgesa prior to the merger.The merger was materialized by Betania issuing shares in exchange for the investment in
Emgesa.
As a result of the exchange ratio agreed between the shareholders of former Emgesa, and the
subsequent exchange of Emgesa shares against Betania shares, the Company increased its
participation in Emgesa (merged entity) to 26.87%.The shareholders of former Emgesa, Endesa Chile and Endesa Internacional are under common
control of Endesa, S.A., the Companys ultimate parent company to the extent minority
interest is not affected. Consequently, pursuant to Technical Bulletin No. 72, the
transaction was accounted for as a common control transaction, using the pooling-of-interest
method to combine the balance sheets and income statements of the merged entities, resulting
in a decrease of other reserves of ThCh$ 94,522,106.All the transfers were recorded at book value of the related investments.
 d.
    
    Acquisitions
 (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 amounts of ThCh$ 9,167,709
and ThCh$ 90, 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 Superintendence 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$ 7,287,452, 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$ 6,055, increasing its direct participation in this entity to 94.97%.On July 20, 2006, the Company acquired 3,500 shares in Empresa Eléctrica Pangue S.A. for the
sum of ThCh$ 3,774, increasing its participation to 94.98 % (94.97% as of December 31, 2005).
  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, 2007, except as stated)
 10.
    
    Investments in related companies, continued:
 (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$10,309,867.(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 Superintendence 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 Accountants and resulted in a negative
goodwill amounting to ThCh$ 7,855,746.(v)
    
    On February 27, 2007, the Company purchased 19,574,798 of the outstanding ordinary shares
of Southern Cone Power Argentina S.A.. These shares represented 100% of the outstanding
 shares and were purchased for ThCh$ 5,505,301 in cash. The acquired entity owns 5.5% of the
outstanding class A shares of Endesa Costanera S.A.. Through the purchase of Southern Cone
Power Argentina, the Company increased its participation in Endesa Costanera S.A. to 69.77%.
In accordance with Technical Buletin No. 72, the transaction represents a purchase of
minority interest and consequently was accounted for under the purchase method.(vi)
    
    On March 8, 2007, the Company purchased for US$ 50,000,000 in cash, 2,734,110 class R shares
and 1,733,390 class L shares, equivalent to 25% of the outstanding shares of Hidroinvest
S.A., the controlling company of Endesa Chiles subsidiary Hidroeléctrica el Chocón S.A. and
additionally 7,405,768 shares of Hidroeléctrica el Chocón S.A.. As a result, the Company
increased its direct and indirect participation in Hidroeléctrica el Chocón S.A. to 67.67%.
In accordance with Technical Bulletin No. 72, the transaction represents a purchase of
minority interest and consequently was accounted for under the purchase method resulting in
negative goodwill amounting to ThCh$ 2,035,385 related to the purchase of minority interest of
Endesa Costanera and negative goodwill amounting to ThCh$ 5,356,840 related to the purchase of
minority interest of Hidroeléctrica el Chocón S.A.. .
  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, 2007, except as stated)
 10.
    
    Investments in related companies, continued:
 (vii)
    
    On March 27, 2007, Sociedad Concesionaria Túnel el Melón S.A. increased its paid-in
capital by issuing 3,169,614,306 shares at a total amount of ThCh$ 32,042,220, with the
Company subscribing for 100%, through a cash payment of ThCh$ 16,927,339 and capitalization of
loans in the amount of ThCh$ 15,114,821, thereby increasing the Companys participation in
that company by 0.01% to 100% .
 e.
    
    Dissolution of related parties:
 (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$ 91. 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.(iii)
    
    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.(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 was formalized during 2006 when the legal processes defined by both parts are
completed. Afterwards, the assets were 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$ 3,425,179 and a negative goodwill
of ThCh$ 7,855,746 was registered.
  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, 2007, except as stated)
 10.
    
    Investments in related companies, continued:f.
    
    Net investment hedge
  As of December 31, 2007Country of
    
    
    
    
    
    
    Functional
    
    
    AssociatedCompany
    
    Origin
    
    
    Investment
    
    
    Currency
    
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Emgesa S.A.
    
    Colombia
    
    
    178,159,768
    
    
    US$
    
    
    227,962,660Endesa Brasil S.A.
    
    Brazil
    
    
    343,878,661
    
    
    US$
    
    
    345,844,624Edegel S.A.
    
    Peru
    
    
    123,522,245
    
    
    US$
    
    
    105,048,701Hidroeléctrica el Chocón S.A.
    
    Argentina
    
    
    209,430,225
    
    
    US$
    
    
    70,068,527Comercializadora de Energia del Mercosur S.A.
    
    Argentina
    
    
    3,414,901
    
    
    US$
    
    
    2,328,177Endesa Costanera S.A.
    
    Argentina
    
    
    76,640,125
    
    
    US$
    
    
    42,241,091Distrilec Inversora S.A.
    
    Argentina
    
    
    2,242,073
    
    
    US$
    
    
    1,123,130Total
    
    
    
    
    
    
    937,287,998
    
    
    
    
    
    
    
    794,616,910
 As of December 31, 2006Country of
    
    
    
    
    
    
    Functional
    
    
    AssociatedCompany
    
    Origin
    
    
    Investment
    
    
    Currency
    
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Central Hidroeléctrica Betania S.A.
    
    Colombia
    
    
    355,604,911
    
    
    US$
    
    
    262,323,761Endesa Brasil S.A.
    
    Brazil
    
    
    391,604,818
    
    
    US$
    
    
    397,974,223Edegel S.A.
    
    Peru
    
    
    150,895,239
    
    
    US$
    
    
    120,882,825Hidroeléctrica El Chocón S.A.
    
    Argentina
    
    
    189,228,513
    
    
    US$
    
    
    84,283,253Comercializadora de Energia del Mercosur S.A.
    
    Argentina
    
    
    3,990,917
    
    
    US$
    
    
    2,674,710Endesa Costanera S.A.
    
    Argentina
    
    
    88,845,906
    
    
    US$
    
    
    52,242,841Distrilec Inversora S.A.
    
    Argentina
    
    
    2,462,014
    
    
    US$
    
    
    1,292,422Total
    
    
    
    
    
    
    1,182,632,318
    
    
    
    
    
    
    
    921,674,035
  F-54




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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, 2007, except as stated)
 10.
    
    Investments in related companies, continued:g.
    
    Impairment of investment accounted for under the equity-method
         F-55




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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, 2007, except as stated)
 11.
    
    Investments in other companies:
  Percentageowned as ofNumber of
    
    
    December 31,
    
    
    As of December 31,Company
    
    shares
    
    
    2007
    
    
    2006
    
    
    2007%
    
    
    ThCh$
    
    
    ThCh$Club de la Banca y Comercio
    
    
    1
    
    
    
    
    
    
    
    2,212
    
    
    
    1,892Club Empresarial
    
    
    1
    
    
    
    1.00
    %
    
    
    24,749
    
    
    
    21,538Empresa Eléctrica de Aysén S.A.
    
    
    2,516,231
    
    
    
    
    
    
    
    2,317,758
    
    
    
    2,326,312Cooperativa Eléctrica de Chillán Ltda.
    
    
    
    
    
    
    
    
    
    
    15,181
    
    
    
    15,180CDEC-SIC Ltda.
    
    
    
    
    
    
    14.36
    %
    
    
    146,315
    
    
    
    175,836CDEC-SING Ltda.
    
    
    
    
    
    
    7.69
    %
    
    
    164,009
    
    
    
    278,359Financiera Eléctrica Nacional S.A.
    
    
    4,098
    
    
    
    0.10
    %
    
    
    118,415
    
    
    
    102,905Electrificadora de la Costa S.A.
    
    
    6,795,148
    
    
    
    0.14
    %
    
    
    98,271
    
    
    
    85,398Electrificadora del Caribe S.A.
    
    
    42,784,058
    
    
    
    0.10
    %
    
    
    1,301,957
    
    
    
    1,123,983Total
    
    
    
    
    
    
    
    
    
    
    4,188,867
    
    
    
    4,131,403
  12.
    
    Goodwill and Negative Goodwill:a.
    
    Goodwill as of December 31, 2006 and 2007 and the related amortization for each of the years
ended December 31, is as follows:
 As of December 31,Amortization
    
    
    Net BalanceCompany
    
    2005
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Emgesa S.A.
    
    
    1,263,902
    
    
    
    777,629
    
    
    
    619,125
    
    
    
    8,427,566
    
    
    
    6,704,537Gasoducto Atacama Chile Ltda. (1)
    
    
    5,613
    
    
    
    5,613
    
    
    
    68,288
    
    
    
    68,288
    
    
    
    Edegel S.A.
    
    
    32,079
    
    
    
    32,639
    
    
    
    25,967
    
    
    
    353,587
    
    
    
    281,305Pangue S.A.
    
    
    196,711
    
    
    
    196,711
    
    
    
    196,711
    
    
    
    3,065,409
    
    
    
    2,868,698Total
    
    
    1,498,305
    
    
    
    1,012,592
    
    
    
    910,091
    
    
    
    11,914,850
    
    
    
    9,854,540
 (1)
    
    During the year ended December 31, 2007, in addition to ordinary annual amortization of
ThCh$5,613, the Company recorded goodwill impairment amounting to ThCh$ 62,675, resulting in a
complete impairment of goodwill recorded over this investment. See Note 10 g) for details.  F-56




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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, 2007, except as stated)
 12.
    
    Goodwill and Negative Goodwill, continued:b.
    
    Negative goodwill as of December 31, 2006 and 2007 and the related amortization for each of
the years ended December 31, is as follows:
 As of December 31,Amortization
    
    
    Net BalanceCompany
    
    2005
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Edegel S.A.
    
    
    8,050,476
    
    
    
    1,819,292
    
    
    
    1,580,988
    
    
    
    23,802,402
    
    
    
    19,103,601Endesa Costanera S.A.
    
    
    2,722,178
    
    
    
    2,769,662
    
    
    
    2,495,374
    
    
    
    7,616,584
    
    
    
    6,247,414Emgesa (see note 10 c. (v))
    
    
    6,016,058
    
    
    
    1,895,278
    
    
    
    97,005
    
    
    
    7,855,746
    
    
    
    6,296,047Hidroeléctrica el Chocón

(see note 10 d. (vi))
    
    
    
    
    
    
    
    
    
    
    208,709
    
    
    
    
    
    
    
    5,356,840Total
    
    
    16,788,712
    
    
    
    6,484,232
    
    
    
    4,382,076
    
    
    
    39,274,732
    
    
    
    37,003,902
 13.
    
    Other intangible assets:
  As of December 31,Estimated
    
    
    2006
    
    
    2007Useful
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedItem
    
    life
    
    
    Total
    
    
    Amortization
    
    
    Net Balance
    
    
    Total
    
    
    Amortization
    
    
    Net BalanceMonths
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Easements
    
    
    24
    
    
    
    3,100,017
    
    
    
    (2,321,848
    )
    
    
    778,169
    
    
    
    3,414,788
    
    
    
    (2,639,800
    )
    
    
    774,988Water rights
    
    
    1,440
    
    
    
    15,002,886
    
    
    
    (2,096,034
    )
    
    
    12,906,852
    
    
    
    12,803,954
    
    
    
    (1,960,148
    )
    
    
    10,843,806Salex-fourth line Comahue
    
    
    60
    
    
    
    7,460,675
    
    
    
    (3,523,350
    )
    
    
    3,937,325
    
    
    
    6,483,421
    
    
    
    (3,491,149
    )
    
    
    2,992,272Software
    
    
    36
    
    
    
    1,641,745
    
    
    
    (1,319,376
    )
    
    
    322,369
    
    
    
    2,321,276
    
    
    
    (1,589,544
    )
    
    
    731,732Other
    
    
    36-60
    
    
    
    380,139
    
    
    
    (356,124
    )
    
    
    24,015
    
    
    
    234,038
    
    
    
    (215,223
    )
    
    
    18,815Total
    
    
    
    
    
    
    27,585,462
    
    
    
    (9,616,732
    )
    
    
    17,968,730
    
    
    
    25,257,477
    
    
    
    (9,895,864
    )
    
    
    15,361,613
  14.
    
    Other assets:
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Bond discount (1)
    
    
    9,600,354
    
    
    
    6,908,551Reimbursable contributions
    
    
    2,470,010
    
    
    
    1,873,345Deferred commissions on loans and lines of credit
    
    
    7,670,737
    
    
    
    6,205,250Minimum tax on productive assets (Argentina)
    
    
    13,567,456
    
    
    
    8,236,877Capitalized debt issuance costs (1)
    
    
    4,558,723
    
    
    
    3,421,213Unrealized loss on derivative contracts
    
    
    1,331,350
    
    
    
    1,349,967Other
    
    
    1,367,107
    
    
    
    654,066Total
    
    
    40,565,737
    
    
    
    28,649,269
 (1)
    
    During the year ended December 31, 2007, the Company repaid its series G bonds and completely
amortized the related deferred bond-discount and capitalized bond issuance costs totaling
ThCh$2,448,157.  F-57




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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, 2007, except as stated)
 15.
    
    Debt due to banks and financial institutions:a.
    
    Short-term debt due to banks and financial institutions:
 Foreign Currency
    
    
    Local Currency
    
    
    TotalUS$
    
    
    Other Foreign Currencies
    
    
    Ch$Financial Institution
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Banco BBVA Bhif
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Scotiabank
    
    
    
    
    
    
    2,032,414
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,032,414Banco Continental
    
    
    2,346
    
    
    
    
    
    
    
    5,444,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,446,978
    
    
    
    Banco Ciudad de Buenos Aires
    
    
    
    
    
    
    
    
    
    
    2,258,158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,258,158
    
    
    
    Banco de Crédito e Inversiones Perú
    
    
    
    
    
    
    4,408,224
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,408,224Banco de Galicia y Buenos Aires
    
    
    634,838
    
    
    
    885,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634,838
    
    
    
    885,686Banco de Bogotá
    
    
    
    
    
    
    
    
    
    
    21,171,020
    
    
    
    4,446,466
    
    
    
    
    
    
    
    
    
    
    
    21,171,020
    
    
    
    4,446,466Banco Itau
    
    
    928,564
    
    
    
    1,026,904
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    928,564
    
    
    
    1,026,904AVVillas
    
    
    
    
    
    
    
    
    
    
    3,068,422
    
    
    
    9,906,699
    
    
    
    
    
    
    
    
    
    
    
    3,068,422
    
    
    
    9,906,699Banco Provincia de Buenos Aires
    
    
    1,447,296
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447,296
    
    
    
    Banco Santander
    
    
    
    
    
    
    
    
    
    
    4,904,556
    
    
    
    1,313,777
    
    
    
    
    
    
    
    
    
    
    
    4,904,556
    
    
    
    1,313,777Citibank
    
    
    
    
    
    
    
    
    
    
    5,290,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,290,875
    
    
    
    Banco Bladex
    
    
    2,620,087
    
    
    
    2,415,322
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,620,087
    
    
    
    2,415,322Bancolombia
    
    
    
    
    
    
    
    
    
    
    12,956,537
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,956,537
    
    
    
    Total
    
    
    5,633,131
    
    
    
    10,768,550
    
    
    
    55,094,200
    
    
    
    15,666,942
    
    
    
    
    
    
    
    1
    
    
    
    60,727,331
    
    
    
    26,435,493Total outstanding principal
    
    
    4,701,186
    
    
    
    4,242,716
    
    
    
    54,997,779
    
    
    
    15,666,942
    
    
    
    
    
    
    
    1
    
    
    
    59,698,965
    
    
    
    19,909,659Weighted average interest rate
    
    
    6.94
    %
    
    
    6.47
    %
    
    
    7.94
    %
    
    
    11.95
    %
    
    
    
    
    
    
    0.30
    %
    
    
    7.85
    %
    
    
    9.72
    %
 As of December 31,2006
    
    
    2007%
    
    
    %Percentage of debt in foreign currency
    
    
    100.00
    %
    
    
    100.00
    %Percentage of debt Chilean Peso
    
    
    
    
    
    
    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, 2007, except as stated)
 15.
    
    Debt due to banks and financial institutions, continued: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
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Bancafe
    
    
    
    
    
    
    
    
    
    
    1,315,277
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,315,277
    
    
    
    Bancolombia
    
    
    
    
    
    
    
    
    
    
    4,786,166
    
    
    
    2,884,954
    
    
    
    
    
    
    
    
    
    
    
    4,786,166
    
    
    
    2,884,954Banesto
    
    
    4,739,978
    
    
    
    2,047,648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,739,978
    
    
    
    2,047,648Banco Continental
    
    
    1,425,122
    
    
    
    1,486,139
    
    
    
    10,556,713
    
    
    
    9,784,862
    
    
    
    
    
    
    
    
    
    
    
    11,981,835
    
    
    
    11,271,001Banco Bilbao Vizcaya
Argentaria S.A.
    
    
    
    
    
    
    
    
    
    
    1,087,464
    
    
    
    2,453,214
    
    
    
    
    
    
    
    
    
    
    
    1,087,464
    
    
    
    2,453,214Banco Estado
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415,497
    
    
    
    
    
    
    
    415,497
    
    
    
    Banco de Crédito
    
    
    
    
    
    
    
    
    
    
    10,874
    
    
    
    10,045,982
    
    
    
    
    
    
    
    
    
    
    
    10,874
    
    
    
    10,045,982Banco Mediocredito Italiano
    
    
    
    
    
    
    
    
    
    
    2,178,467
    
    
    
    2,003,678
    
    
    
    
    
    
    
    
    
    
    
    2,178,467
    
    
    
    2,003,678Banco Nationale París
    
    
    3,767,729
    
    
    
    3,229,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,767,729
    
    
    
    3,229,981Banco Santander Central Hispano
    
    
    
    
    
    
    
    
    
    
    1,238,237
    
    
    
    2,793,017
    
    
    
    
    
    
    
    
    
    
    
    1,238,237
    
    
    
    2,793,017Caja Madrid Miami Agency
    
    
    15,526
    
    
    
    18,368
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,526
    
    
    
    18,368Conavi
    
    
    
    
    
    
    
    
    
    
    2,192,130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,192,130
    
    
    
    Colpatria
    
    
    
    
    
    
    
    
    
    
    876,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    876,944
    
    
    
    Corfinsura
    
    
    
    
    
    
    
    
    
    
    3,507,407
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,507,407
    
    
    
    Granahorrar
    
    
    
    
    
    
    
    
    
    
    1,315,277
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,315,277
    
    
    
    Davivienda
    
    
    
    
    
    
    
    
    
    
    3,046,376
    
    
    
    938,051
    
    
    
    
    
    
    
    
    
    
    
    3,046,376
    
    
    
    938,051Export Development Corporation
    
    
    1,933,960
    
    
    
    1,632,362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,933,960
    
    
    
    1,632,362J.P. Morgan Chase Bank
    
    
    14,397,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,397,116
    
    
    
    Citibank
    
    
    2,292,664
    
    
    
    4,972,903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,292,664
    
    
    
    4,972,903Kreditanstalt für Wiederaufbau
    
    
    322,269
    
    
    
    276,815
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322,269
    
    
    
    276,815Credit Suisse First Boston
    
    
    12,048
    
    
    
    4,278,999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,048
    
    
    
    4,278,999Skandinaviska Enskilda Banken
    
    
    947,920
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    947,920
    
    
    
    Deutsche Bank
    
    
    132,654
    
    
    
    2,986,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,654
    
    
    
    2,986,309Standard Bank
    
    
    132,655
    
    
    
    2,986,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,655
    
    
    
    2,986,309The Bank of Tokyo-Mitsubishi,
Ltd. New York Branch
    
    
    2,703
    
    
    
    27,902
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,703
    
    
    
    27,902WestLB AG, New York Branch
    
    
    2,479,073
    
    
    
    131,165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,479,073
    
    
    
    131,165Scotiabank
    
    
    
    
    
    
    3,639,187
    
    
    
    98,247
    
    
    
    8,380,864
    
    
    
    
    
    
    
    
    
    
    
    98,247
    
    
    
    12,020,051Total
    
    
    32,601,417
    
    
    
    27,714,087
    
    
    
    32,209,579
    
    
    
    39,284,622
    
    
    
    415,497
    
    
    
    
    
    
    
    65,226,493
    
    
    
    66,998,709Total outstanding Principal
    
    
    31,588,532
    
    
    
    27,270,738
    
    
    
    32,026,679
    
    
    
    39,166,806
    
    
    
    415,497
    
    
    
    
    
    
    
    64,030,708
    
    
    
    66,437,544Weighted average interest rate
    
    
    6.61
    %
    
    
    7.85
    %
    
    
    7.70
    %
    
    
    7.19
    %
    
    
    9.00
    %
    
    
    
    
    
    
    7.16
    %
    
    
    7.46
    %
 As of December 31,2006
    
    
    2007%
    
    
    %Percentage of debt in foreign currency
    
    
    99.36
    %
    
    
    100.00
    %Percentage of debt in Chilean Peso
    
    
    0.64
    %
    
    
    Total
    
    
    100.00
    %
    
    
    100.00
    %
  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, 2007, except as stated)
 15.
    
    Debt due to banks and financial institutions, continued:c.
    
    Long-term portion of debt due to banks and financial institutions were denominated as
follows:
 As ofDecember31, 2006
    
    
    As of December 31, 2007After 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$
    
    
    2,025,079
    
    
    
    
    
    
    
    1,759,819
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,759,819
    
    
    
    5.18
    %Instituto de Crédito Oficial
    
    US$
    
    
    2,882,760
    
    
    
    
    
    
    
    1,759,819
    
    
    
    6,509,259
    
    
    
    
    
    
    
    
    
    
    
    8,269,078
    
    
    
    5.18
    %Bancolombia
    
    $ Col.
    
    
    24,778,885
    
    
    
    
    
    
    
    
    
    
    
    23,927,531
    
    
    
    
    
    
    
    
    
    
    
    23,927,531
    
    
    
    12.19
    %Banesto
    
    US$
    
    
    2,328,898
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Bilbao Viscaya Argentaria
    
    US$
    
    
    6,075,236
    
    
    
    
    
    
    
    5,279,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,279,456
    
    
    
    5.18
    %Banco Bilbao Viscaya Argentaria
    
    $ Col.
    
    
    21,072,211
    
    
    
    
    
    
    
    
    
    
    
    20,348,091
    
    
    
    
    
    
    
    
    
    
    
    20,348,091
    
    
    
    12.19
    %Banco Estado
    
    US$
    
    
    589,655
    
    
    
    
    
    
    
    
    
    
    
    4,475,116
    
    
    
    
    
    
    
    
    
    
    
    4,475,116
    
    
    
    5.18
    %Banco Nationales de Paris
    
    US$
    
    
    4,491,992
    
    
    
    1,635,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,635,585
    
    
    
    5.78
    %Banco Nationales de Paris
    
    US$
    
    
    7,483,874
    
    
    
    812,948
    
    
    
    812,948
    
    
    
    1,625,896
    
    
    
    2,438,844
    
    
    
    
    
    
    
    5,690,636
    
    
    
    5.98
    %Banco Medio Crédito
    
    $ Arg.
    
    
    7,601,335
    
    
    
    1,990,992
    
    
    
    1,990,992
    
    
    
    995,577
    
    
    
    
    
    
    
    
    
    
    
    4,977,561
    
    
    
    1.75
    %Banco Santander Central Hispano
    
    US$
    
    
    7,522,571
    
    
    
    
    
    
    
    3,590,030
    
    
    
    10,984,374
    
    
    
    
    
    
    
    
    
    
    
    14,574,404
    
    
    
    5.18
    %Banco Santander Central Hispano
    
    $ Col.
    
    
    23,990,532
    
    
    
    
    
    
    
    
    
    
    
    23,166,434
    
    
    
    
    
    
    
    
    
    
    
    23,166,434
    
    
    
    12.19
    %Bank Of Tokio Mitsubishi Ltda.
    
    US$
    
    
    6,307,521
    
    
    
    
    
    
    
    4,223,565
    
    
    
    10,984,374
    
    
    
    
    
    
    
    
    
    
    
    15,207,939
    
    
    
    5.18
    %Caja Madrid, Miami Agency
    
    US$
    
    
    3,159,123
    
    
    
    
    
    
    
    2,745,317
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,745,317
    
    
    
    5.18
    %Citibank N.A.
    
    US$
    
    
    7,522,571
    
    
    
    
    
    
    
    5,279,456
    
    
    
    10,984,374
    
    
    
    
    
    
    
    
    
    
    
    16,263,830
    
    
    
    5.18
    %Citibank
    
    US$
    
    
    11,435,737
    
    
    
    4,968,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,968,900
    
    
    
    6.08
    %Davivienda
    
    $ Col.
    
    
    8,057,469
    
    
    
    
    
    
    
    
    
    
    
    7,780,630
    
    
    
    
    
    
    
    
    
    
    
    7,780,630
    
    
    
    12.19
    %Export Development Corporation
    
    US$
    
    
    5,730,408
    
    
    
    711,399
    
    
    
    711,399
    
    
    
    1,422,798
    
    
    
    1,422,799
    
    
    
    
    
    
    
    4,268,395
    
    
    
    6.61
    %Export Development Corporation
    
    US$
    
    
    2,075,706
    
    
    
    721,529
    
    
    
    360,763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,082,292
    
    
    
    6.06
    %Export Development Canada
    
    US$
    
    
    1,072,100
    
    
    
    
    
    
    
    
    
    
    
    8,136,574
    
    
    
    
    
    
    
    
    
    
    
    8,136,574
    
    
    
    5.18
    %Kreditanstalt für Wiederaufbau
    
    US$
    
    
    469,180
    
    
    
    135,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135,908
    
    
    
    4.85
    %WestLB AG, New York Branch
    
    US$
    
    
    9,148,590
    
    
    
    7,950,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,950,240
    
    
    
    6.83
    %Banco de Crédito
    
    Soles
    
    
    18,247,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Continental
    
    US$
    
    
    20,314,028
    
    
    
    2,829,541
    
    
    
    7,663,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,492,579
    
    
    
    7.33
    %The Bank of Nova Scotia
    
    US$
    
    
    
    
    
    
    
    
    
    
    1,689,426
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,689,426
    
    
    
    5.18
    %Credit Suisse First Boston
    
    US$
    
    
    17,153,606
    
    
    
    4,259,057
    
    
    
    6,388,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,647,642
    
    
    
    10.95
    %Scotiabank
    
    US$
    
    
    
    
    
    
    7,155,216
    
    
    
    5,366,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,521,628
    
    
    
    6.70
    %Deutsche Bank AG, New York
    
    US$
    
    
    1,620,062
    
    
    
    
    
    
    
    1,407,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,407,855
    
    
    
    5.18
    %Deutsche Bank AG, New York
    
    US$
    
    
    28,589,343
    
    
    
    5,796,967
    
    
    
    5,796,967
    
    
    
    10,351,958
    
    
    
    
    
    
    
    
    
    
    
    21,945,892
    
    
    
    9.19
    %Scotiabank
    
    Soles
    
    
    8,942,554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ING Bank N.V., Curacao Branch
    
    US$
    
    
    7,776,301
    
    
    
    
    
    
    
    6,757,704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,757,704
    
    
    
    5.18
    %San Paolo
    
    US$
    
    
    4,860,188
    
    
    
    
    
    
    
    4,223,565
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,223,565
    
    
    
    5.18
    %HSBC
    
    US$
    
    
    4,050,157
    
    
    
    
    
    
    
    3,519,638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,519,638
    
    
    
    5.18
    %The Royal Bank of Scotland PLC
    
    US$
    
    
    428,841
    
    
    
    
    
    
    
    
    
    
    
    3,254,630
    
    
    
    
    
    
    
    
    
    
    
    3,254,630
    
    
    
    5.18
    %B.N.P. Paribas Panama Branch
    
    US$
    
    
    857,680
    
    
    
    
    
    
    
    
    
    
    
    6,509,259
    
    
    
    
    
    
    
    
    
    
    
    6,509,259
    
    
    
    5.18
    %Banesto N.Y. Branch
    
    US$
    
    
    428,841
    
    
    
    
    
    
    
    
    
    
    
    3,254,630
    
    
    
    
    
    
    
    
    
    
    
    3,254,630
    
    
    
    5.18
    %Standard Bank
    
    US$
    
    
    28,589,343
    
    
    
    5,796,967
    
    
    
    5,796,967
    
    
    
    10,351,958
    
    
    
    
    
    
    
    
    
    
    
    21,945,892
    
    
    
    9.19
    %Total
    
    
    
    
    
    
    307,679,655
    
    
    
    44,765,249
    
    
    
    77,123,721
    
    
    
    165,063,463
    
    
    
    3,861,643
    
    
    
    
    
    
    
    290,814,076
 As of December 31,2006
    
    
    2007%
    
    
    %Percentage of debt in foreign currency
    
    
    100.00
    %
    
    
    100.00
    %Percentage of debt in Chilean Peso
    
    
    
    
    
    
    Total
    
    
    100.00
    %
    
    
    100.00
    %
  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, 2007, except as stated)
 15.
    
    Debt due to banks and financial institutions, continued:d.
    
    Debt priority
       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, 2007, except as stated)
 16.
    
    Bonds and notes payablea.
    
    Details of the current portion of bonds payable is as follows at each year-end:
 Par ValueFace Value
    
    
    Interest
    
    
    
    
    
    
    ThCh$
    
    
    ThCh$Issuer
    
    Series
    
    Currency
    
    Outstanding
    
    
    rate
    
    
    Maturity Date
    
    
    2006
    
    
    2007Endesa Chile
    
    1
    
    US$
    
    
    230,000,000
    
    
    
    7.88
    %
    
    
    02-01-2027
    
    
    
    3,871,740
    
    
    
    3,369,834Endesa Chile
    
    2
    
    US$
    
    
    220,000,000
    
    
    
    7.33
    %
    
    
    02-01-2037
    
    
    
    3,839,312
    
    
    
    3,336,409Endesa Chile
    
    3
    
    US$
    
    
    200,000,000
    
    
    
    8.13
    %
    
    
    02-01-2097
    
    
    
    844,131
    
    
    
    769,352Endesa Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    7.75
    %
    
    
    07-15-2008
    
    
    
    8,124,138
    
    
    
    205,815,978Endesa Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    8.50
    %
    
    
    04-01-2009
    
    
    
    4,860,188
    
    
    
    4,223,565Endesa Chile
    
    F
    
    U.F.
    
    
    1,500,000
    
    
    
    6.20
    %
    
    
    08-01-2022
    
    
    
    751,639
    
    
    
    1,337,624Endesa Chile
    
    144A
    
    US$
    
    
    400,000,000
    
    
    
    8.35
    %
    
    
    08-01-2013
    
    
    
    7,957,367
    
    
    
    6,915,053Endesa Chile
    
    144A
    
    US$
    
    
    200,000,000
    
    
    
    8.63
    %
    
    
    08-01-2015
    
    
    
    4,109,718
    
    
    
    3,571,397Endesa Chile
    
    G
    
    U.F.
    
    
    4,000,000
    
    
    
    4.80
    %
    
    
    10-15-2010
    
    
    
    778,497
    
    
    
    Endesa Chile
    
    H
    
    U.F.
    
    
    4,000,000
    
    
    
    6.20
    %
    
    
    10-15-2008
    
    
    
    1,002,184
    
    
    
    998,591Endesa Chile
    
    K
    
    U.F.
    
    
    4,000,000
    
    
    
    3.80
    %
    
    
    04-15-2027
    
    
    
    
    
    
    
    615,596Emgesa-Colombia
    
    B 1°
    
    $ Col.
    
    
    400,000,000,000
    
    
    
    11.29
    %
    
    
    11-10-2011
    
    
    
    1,504,943
    
    
    
    1,494,929Edegel-Peru
    
    2
    
    US$
    
    
    30,000,000
    
    
    
    8.41
    %
    
    
    02-14-2007
    
    
    
    17,700,584
    
    
    
    Edegel-Peru
    
    3
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    %
    
    
    06-13-2007
    
    
    
    17,229,716
    
    
    
    Edegel-Peru
    
    5 A
    
    US$
    
    
    10,000,000
    
    
    
    3.75
    %
    
    
    01-26-2009
    
    
    
    91,724
    
    
    
    79,710Edegel-Peru
    
    6 A
    
    Soles
    
    
    30,000,000
    
    
    
    5.88
    %
    
    
    02-27-2008
    
    
    
    107,702
    
    
    
    5,073,714Edegel-Peru
    
    6 B
    
    Soles
    
    
    20,000,000
    
    
    
    8.50
    %
    
    
    06-18-2008
    
    
    
    10,980
    
    
    
    3,325,311Edegel-Peru
    
    7 A
    
    US$
    
    
    10,000,000
    
    
    
    7.16
    %
    
    
    01-26-2007
    
    
    
    179,518
    
    
    
    152,092Edegel-Peru
    
    8 A
    
    Soles
    
    
    22,370,000
    
    
    
    6.00
    %
    
    
    02-23-2007
    
    
    
    73,350
    
    
    
    3,776,847Edegel-Peru
    
    8 B
    
    Soles
    
    
    25,700,000
    
    
    
    6.47
    %
    
    
    03-30-2008
    
    
    
    74,334
    
    
    
    4,329,860Edegel-Peru
    
    9 A
    
    Soles
    
    
    70,000,000
    
    
    
    6.91
    %
    
    
    06-1-2009
    
    
    
    72,053
    
    
    
    66,793Edegel-Peru
    
    10 A
    
    Soles
    
    
    35,000,000
    
    
    
    6.72
    %
    
    
    10-21-2010
    
    
    
    80,611
    
    
    
    74,727Edegel-Peru
    
    11 A
    
    US$
    
    
    20,000,000
    
    
    
    6.06
    %
    
    
    11-18-2012
    
    
    
    80,884
    
    
    
    70,289Edegel-Peru
    
    13 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.47
    %
    
    
    10-20-2013
    
    
    
    56240
    
    
    
    52,135Edegel-Peru
    
    14 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.09
    %
    
    
    10-27-2010
    
    
    
    47,682
    
    
    
    44,201Edegel-Peru
    
    15 A
    
    Soles
    
    
    30,000,000
    
    
    
    6.16
    %
    
    
    11-27-2011
    
    
    
    30,279
    
    
    
    28,069Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    60,000,000,000
    
    
    
    11.43
    %
    
    
    11-10-2009
    
    
    
    204,277
    
    
    
    226,963Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    9,684,517,481
    
    
    
    9.87
    %
    
    
    11-10-2009
    
    
    
    101,125
    
    
    
    102,994Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    17,235,158,229
    
    
    
    10.25
    %
    
    
    10-09-2009
    
    
    
    54,765
    
    
    
    55,771Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    229,825,000,000
    
    
    
    11.31
    %
    
    
    10-09-2009
    
    
    
    1,242,288
    
    
    
    1,475,623Emgesa-Colombia
    
    A-10
    
    $ Col.
    
    
    210,000,000,000
    
    
    
    10.32
    %
    
    
    02-23-2015
    
    
    
    622,367
    
    
    
    570,961Edegel-Peru
    
    13 B
    
    Soles
    
    
    25,000,000
    
    
    
    6.16
    %
    
    
    01-15-2014
    
    
    
    
    
    
    
    116,953Edegel-Peru
    
    14 B
    
    Soles
    
    
    25,000,000
    
    
    
    5.91
    %
    
    
    02-22-2011
    
    
    
    
    
    
    
    87,043Edegel-Peru
    
    1 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.31
    %
    
    
    06-21-2022
    
    
    
    
    
    
    
    6,541Edegel-Peru
    
    2 A
    
    US$
    
    
    8,000,000
    
    
    
    5.97
    %
    
    
    07-18-2011
    
    
    
    
    
    
    
    106,769Edegel-Peru
    
    3 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.28
    %
    
    
    07-03-2019
    
    
    
    
    
    
    
    128,006Edegel-Peru
    
    4 A
    
    Soles
    
    
    20,000,000
    
    
    
    6.75
    %
    
    
    08-31-2014
    
    
    
    
    
    
    
    74,608Edegel-Peru
    
    5 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.50
    %
    
    
    03-18-2013
    
    
    
    
    
    
    
    77,084Edegel-Peru
    
    6 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.44
    %
    
    
    05-21-2013
    
    
    
    
    
    
    
    29,647Edegel-Peru
    
    7 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.63
    %
    
    
    06-13-2013
    
    
    
    
    
    
    
    13,730Emgesa-Colombia
    
    10A
    
    $ Col.
    
    
    40,000,000,000
    
    
    
    10.32
    %
    
    
    02-23-2015
    
    
    
    
    
    
    
    108,755Emgesa-Colombia
    
    10B
    
    $ Col.
    
    
    170,000,000,000
    
    
    
    10.84
    %
    
    
    02-20-2017
    
    
    
    
    
    
    
    3,921,727Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,704,336
    
    
    
    256,625,251
  F-62




---



##### 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, 2007, except as stated)
 16. Bonds and notes payable, continued:
  Par ValueFace Value
    
    
    Interest
    
    
    Maturity
    
    
    2006
    
    
    2007Issuer
    
    Series
    
    Currency
    
    Outstanding
    
    
    Rate
    
    
    Date
    
    
    ThCh$
    
    
    ThCh$Endesa Chile
    
    1
    
    US$
    
    
    230,000,000
    
    
    
    7.88
    %
    
    
    02-01-2027
    
    
    
    117,720,051
    
    
    
    102,300,210Endesa Chile
    
    2
    
    US$
    
    
    220,000,000
    
    
    
    7.33
    %
    
    
    02-01-2037
    
    
    
    125,793,109
    
    
    
    109,315,800Endesa Chile
    
    3
    
    US$
    
    
    200,000,000
    
    
    
    8.13
    %
    
    
    02-01-2097
    
    
    
    23,109,337
    
    
    
    20,082,306Endesa Chile
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    7.75
    %
    
    
    07-15-2008
    
    
    
    228,714,744
    
    
    
    Endesa Chile
    
    Only
    
    US$
    
    
    400,000,000
    
    
    
    8.50
    %
    
    
    04-01-2009
    
    
    
    228,714,744
    
    
    
    198,756,000Endesa Chile
    
    F
    
    U.F.
    
    
    1,500,000
    
    
    
    6.20
    %
    
    
    08-01-2022
    
    
    
    29,539,908
    
    
    
    28,845,310Endesa Chile
    
    144A
    
    US$
    
    
    400,000,000
    
    
    
    8.35
    %
    
    
    08-01-2013
    
    
    
    228,714,744
    
    
    
    198,756,000Endesa Chile
    
    144A
    
    US$
    
    
    200,000,000
    
    
    
    8.63
    %
    
    
    08-01-2015
    
    
    
    114,357,372
    
    
    
    99,378,000Endesa Chile
    
    G
    
    U.F.
    
    
    4,000,000
    
    
    
    4.80
    %
    
    
    10-15-2010
    
    
    
    78,773,088
    
    
    
    Endesa Chile
    
    H
    
    U.F.
    
    
    4,000,000
    
    
    
    6.20
    %
    
    
    10-15-2008
    
    
    
    78,773,088
    
    
    
    78,490,640Endesa Chile
    
    K
    
    U.F.
    
    
    4,000,000
    
    
    
    3,80
    %
    
    
    04-15-2027
    
    
    
    
    
    
    
    78,490,640Emgesa (ex Betania)
    
    B
    
    $ Col.
    
    
    400,000,000,000
    
    
    
    11.29
    %
    
    
    11-10-2011
    
    
    
    102,160,015
    
    
    
    98,650,075Edegel-Peru
    
    5A
    
    US$
    
    
    10,000,000
    
    
    
    3.75
    %
    
    
    1-26-2009
    
    
    
    5,717,869
    
    
    
    4,968,900Edegel-Peru
    
    6 A
    
    Soles
    
    
    30,000,000
    
    
    
    5.88
    %
    
    
    2-27-2008
    
    
    
    5,365,532
    
    
    
    Edegel-Peru
    
    6 B
    
    Soles
    
    
    20,000,000
    
    
    
    8.50
    %
    
    
    6-18-2008
    
    
    
    3,577,021
    
    
    
    Edegel-Peru
    
    7 A
    
    US$
    
    
    10,000,000
    
    
    
    7.16
    %
    
    
    7-26-2009
    
    
    
    5,717,869
    
    
    
    4,968,900Edegel-Peru
    
    8 A
    
    Soles
    
    
    22,370,000
    
    
    
    6.00
    %
    
    
    03-10-2008
    
    
    
    4,000,897
    
    
    
    Edegel-Peru
    
    8 B
    
    Soles
    
    
    25,700,000
    
    
    
    6.47
    %
    
    
    03-30-2008
    
    
    
    4,596,472
    
    
    
    Edegel-Peru
    
    9A
    
    Soles
    
    
    70,000,000
    
    
    
    6.91
    %
    
    
    06-01-2009
    
    
    
    12,519,575
    
    
    
    11,605,706Edegel-Peru
    
    10A
    
    Soles
    
    
    35,000,000
    
    
    
    6.72
    %
    
    
    10-21-2010
    
    
    
    6,259,788
    
    
    
    5,802,853Edegel-Peru
    
    11A
    
    US$
    
    
    20,000,000
    
    
    
    6.06
    %
    
    
    11-18-2012
    
    
    
    11,435,736
    
    
    
    9,937,800Edegel-Peru
    
    13 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.47
    %
    
    
    10-20-2013
    
    
    
    4,471,277
    
    
    
    4,144,895Edegel-Peru
    
    14 A
    
    Soles
    
    
    25,000,000
    
    
    
    6.09
    %
    
    
    10-27-2010
    
    
    
    4,471,277
    
    
    
    4,144,895Edegel-Peru
    
    15 A
    
    Soles
    
    
    30,000,000
    
    
    
    6.16
    %
    
    
    11-27-2011
    
    
    
    5,365,532
    
    
    
    4,973,874Edegel-Peru
    
    13 B
    
    Soles
    
    
    25,000,000
    
    
    
    6.16
    %
    
    
    01-15-2014
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    14 B
    
    Soles
    
    
    25,000,000
    
    
    
    5.91
    %
    
    
    02-22-2011
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    1A
    
    Soles
    
    
    25,000,000
    
    
    
    6.31
    %
    
    
    06-21-2022
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    2A
    
    US$
    
    
    8,000,000
    
    
    
    5.97
    %
    
    
    07-18-2011
    
    
    
    
    
    
    
    3,975,118Edegel-Peru
    
    3A
    
    Soles
    
    
    25,000,000
    
    
    
    6.28
    %
    
    
    07-03-2019
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    4A
    
    Soles
    
    
    20,000,000
    
    
    
    6.75
    %
    
    
    08-31-2014
    
    
    
    
    
    
    
    3,315,916Edegel-Peru
    
    5A
    
    Soles
    
    
    25,000,000
    
    
    
    6.50
    %
    
    
    03-18-2013
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    6A
    
    Soles
    
    
    25,000,000
    
    
    
    6.44
    %
    
    
    05-21-2013
    
    
    
    
    
    
    
    4,144,895Edegel-Peru
    
    7A
    
    Soles
    
    
    25,000,000
    
    
    
    6.63
    %
    
    
    06-13-2013
    
    
    
    
    
    
    
    4,144,895Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    229,825,000,000
    
    
    
    11.31
    %
    
    
    10-09-2009
    
    
    
    58,697,032
    
    
    
    56,680,570Emgesa-Colombia
    
    B-10
    
    $ Col.
    
    
    60,000,000,000
    
    
    
    11.43
    %
    
    
    11-10-2009
    
    
    
    15,323,997
    
    
    
    14,797,494Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    9,684,517,481
    
    
    
    9.88
    %
    
    
    10-09-2009
    
    
    
    2,409,167
    
    
    
    2,485,162Emgesa-Colombia
    
    C-10
    
    $ Col.
    
    
    17,235,158,229
    
    
    
    10.25
    %
    
    
    10-09-2009
    
    
    
    4,287,499
    
    
    
    4,333,425Emgesa-Colombia
    
    A-10
    
    $ Col.
    
    
    210,000,000,000
    
    
    
    10.32
    %
    
    
    02-23-2015
    
    
    
    63,850,038
    
    
    
    51,791,231Emgesa-Colombia
    
    10A
    
    $ Col.
    
    
    40,000,000,000
    
    
    
    10.32
    %
    
    
    02-23-2015
    
    
    
    
    
    
    
    9,864,996Emgesa-Colombia
    
    10B
    
    $ Col.
    
    
    170,000,000,000
    
    
    
    10.84
    %
    
    
    02-20-2017
    
    
    
    
    
    
    
    41,926,234Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,574,436,778
    
    
    
    1,281,797,215
  F-63




---



##### 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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:c.
    
    Bonds payable by entities:
 Endesa Chile (individual legal entity):
  Rating Entity
    
    CategoryFeller  Comisión Clasificadora de Riesgo Ltda.
    
    AA-Comisión Clasificadora de Riesgo
    
    
    A+Fitch Chile Clasificadora de Riesgo Ltda.
    
    AA-
 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, 2007 amounted to ThCh$ 748,944
(ThCh$ 751,639 in 2006) and is presented 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, 2007, 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 K: 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 K: April 15, 2027.Series H: in semi-annual installments from April 15, 2010.Early Redemption
    
    Only in the case of Series K, beginning October 16, 2011.Nominal interest rate
    
    Series K: 3.8% 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 1.8823%.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, 2007. Accrued interest as of December 31, 2007 amounted to ThCh$ 1,614,187
(ThCh$ 1,780,681 in 2006) 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
    
    BBBMoodys Investors Services
    
    Baa3Fitch
    
    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, 2007, 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, 2007 amounts to ThCh$ 10,450,735 (ThCh$ 12,025,990 in 2006),
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, 2007 amounts to ThCh$ 7,059,978 (ThCh$ 8,124,138 in 2006),
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,
2007 amounts to ThCh$ 4,223,565 (ThCh$ 4,860,188 in 2006), 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, 2007, 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, 2007 amounts to ThCh$ 10,486,450 (ThCh$ 12,067,085 in
2006), which is shown under current liabilities.
   
    
    Series 1: US$ 230,000,000; 30 years term with maturity in 2027.
 
    
    Series 3: US$ 200,000,000; 100 years term with maturity in 2097.
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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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 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, 2007 amounts
to ThCh$ 0 (ThCh$ 761,382 in 2006) and is shown under other current liabilities.
As of December 31, 2007 this issuance (principal and interest) 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 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.
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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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 Edegel S.A.
 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, 2007 amounts to ThCh$ 79,710 (ThCh$ 91,724 in
2006) and is shown under other current liabilities.
 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, 2007 amounts to ThCh$ 99,840 (ThCh$ 107,702 in 2006)
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, 2007 amounts to ThCh$ 9,395 (ThCh$ 10,980 in 2006) 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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 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
    
    7.16% annuallyInterest Payments
    
    Interest will be paid semi-annually. Accrued interest
as of December 31, 2007 amounts to ThCh$ 152,092
(ThCh$ 179,519 in 2006) 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, 2007 amounts to ThCh$ 67,995 (ThCh$ 73,350 in 2006)
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, 2007 amounts to ThCh$ 68,908 (ThCh$ 74,334 in 2006)
and is shown under other current liabilities.
 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, 2007 amounts to ThCh$ 66,793 (ThCh$ 72,053 in 2006)
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, 2007 amounts to ThCh$ 74,727 (ThCh$ 80,611 in 2006)
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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 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
    
    6.06% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as
of December 31, 2007 amounts to ThCh$ 70,289 (ThCh$ 80,884 in
2006) 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, 2007 amounts to ThCh$ 52,135 (ThCh$ 56,240 in 2006)
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, 2007 amounts to ThCh$ 44,201 (ThCh$ 47,682 in 2006)
and is shown under other current liabilities.
 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, 2007 amounts to ThCh$ 28,069 (ThCh$ 30,278 in 2006)
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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 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 January 15, 2014.Nominal interest rate
    
    6.16% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 116,953 (ThCh$ 0 in 2006) 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 February 22, 2011.Nominal interest rate
    
    5.91% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 87,043 (ThCh$ 0 in 2006) 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 June 21, 2022Nominal interest rate
    
    6.31% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 6,541 (ThCh$ 0 in 2006) and
is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated US Dollar (8,000 bonds).Issuance Value
    
    Eight million US$(US$8,000,000)Capital amortization
    
    Full expiration as of July 18, 2011Nominal interest rate
    
    5.97% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as
of December 31, 2007 amounts to ThCh$ 106,769 (ThCh$ 0 in
2006) 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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 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 July 3, 2019Nominal interest rate
    
    6.28% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 128,006 (ThCh$ 0 in 2006) and
is shown under other current liabilities.
 Issuance TermsIssuer
    
    Edegel S.A.Securities issued
    
    Marketable securities denominated Peruvian Soles (4,000 bonds).Issuance Value
    
    Twenty million Peruvian Soles (Peruvian Soles 20,000,000)Capital amortization
    
    Full expiration as of August 31, 2014Nominal interest rate
    
    6.75% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 74,608 (ThCh$ 0 in 2006) 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 March 18, 2013Nominal interest rate
    
    6.50% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 77,084 (ThCh$ 0 in 2006) 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 May 21, 2013Nominal interest rate
    
    6.4375% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 29,647 (ThCh$ 0 in 2006) 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 June 13, 2013Nominal interest rate
    
    6.625% annually.Interest Payments
    
    Interest will be paid semi-annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 13,730 (ThCh$ 0 in 2006) 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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:
 Emgesa S.A.
  First Issuance
    
    Issuance TermsIssuer
    
    Emgesa S.A.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% (11,29%) effective annual rateInterest Payments
    
    Interest will be paid quarterly. Accrued interest as of December 31,
2007 amounts to ThCh$ 1,494,929 (ThCh$ 1,504,943 in 2006) and is shown
under current liabilities.
 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 316,744,675,710Nominal interest rate
    
    10.72% annual average rateInterest Payments
    
    Interest will be paid quarterly and annually. Accrued interest as of
December 31, 2007 amounts to ThCh$ 1,861,351 (ThCh$ 1,602,455 in 2006) and
is shown under current liabilities.
 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% (10.32%) quarterlyInterest Payments
    
    Interest will be paid annually. Accrued interest as of December 31,
2007 amounts to ThCh$ 679,716 (ThCh$ 622,367 in 2006) and is shown
under current liabilities.
 Fourth Issuance
    
    Issuance TermsIssuer
    
    EmgesaSecurities issued
    
    Ordinary bonds denominated in Colombian pesosIssuance Value
    
    One hundred seventy billion Colombian pesos ($Col 170,000,000,000)Capital amortization
    
    Full expiration on February 20, 2017Nominal interest rate
    
    IPC+6.29% (10.84%) effective annual rateInterest Payments
    
    Interest will be paid quarterly. Accrued interest as of December
31, 2007 amounts to ThCh$ 3,921,727 (ThCh$ 0 in 2006) 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, 2007, except as stated)
 16.
    
    Bonds and notes payable, continued:d.
    
    Notes payable
  Short-term
    
    
    Long-termAs of December 31,
    
    
    As of December 31,Lending Institution
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Mitsubishi Corporation
    
    
    30,556,567
    
    
    
    19,430,179
    
    
    
    57,200,293
    
    
    
    56,988,165CAMMESA
    
    
    3,019,901
    
    
    
    3,094,272
    
    
    
    4,171,878
    
    
    
    6,059,723Total
    
    
    33,576,468
    
    
    
    23,414,451
    
    
    
    61,372,171
    
    
    
    63,047,888
   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, 2007, except as stated)
 17.
    
    Accrued liabilities:
  Short-term
    
    
    Long-termAs of December 31,
    
    
    As of December 31,2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Employee salaries
    
    
    10,784,934
    
    
    
    10,005,011
    
    
    
    
    
    
    
    Provision for contingences, lawsuits, and
others
    
    
    6,097,026
    
    
    
    6,862,026
    
    
    
    
    
    
    
    Provision for expenses, costs and investments
    
    
    9,459,924
    
    
    
    9,985,593
    
    
    
    
    
    
    
    Post retirement benefits
    
    
    
    
    
    
    2,481,230
    
    
    
    4,554,913
    
    
    
    3,995,927Employee severance indemnities (1)
    
    
    63,261
    
    
    
    13,157
    
    
    
    6,382,206
    
    
    
    6,425,298Pensions and post-retirement benefits of
foreign subsidiaries
    
    
    
    
    
    
    
    
    
    
    21,284,766
    
    
    
    16,900,421Others
    
    
    203,185
    
    
    
    187,325
    
    
    
    
    
    
    
    536,682Total
    
    
    26,608,330
    
    
    
    29,534,342
    
    
    
    32,221,885
    
    
    
    27,858,328
 (1)
    
    Long-term accruals include severance indemnities to personnel, calculated in accordance with
the policy described in Note 2 (q), and an analysis of the changes in the accrual in each year
is as follows: As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Opening balance as of January 1
    
    
    5,693,924
    
    
    
    6,382,206Net increase in accrual
    
    
    2,023,782
    
    
    
    806,088Payments during the year
    
    
    (1,335,500
    )
    
    
    (762,996
    )Total
    
    
    6,382,206
    
    
    
    6,425,298
  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, 2007, 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, 2006
    
    
    As of December 31, 2007Company
    
    Equity
    
    
    Participation
    
    
    Total
    
    
    Equity
    
    
    Participation
    
    
    TotalThCh$
    
    
    %
    
    
    ThCh$
    
    
    ThCh$
    
    
    %
    
    
    ThCh$Central Hidroeléctrica Betania S.A (1)
    
    
    363,482,619
    
    
    
    0.01
    %
    
    
    21,961
    
    
    
    
    
    
    
    
    
    
    
    Endesa Costanera S.A (2)
    
    
    150,100,911
    
    
    
    35.74
    %
    
    
    53,638,422
    
    
    
    119,304,734
    
    
    
    30.23
    %
    
    
    36,071,676Edegel S.A.
    
    
    498,365,151
    
    
    
    44.56
    %
    
    
    222,058,918
    
    
    
    407,048,817
    
    
    
    44.56
    %
    
    
    181,370,667Emgesa S.A. (1)
    
    
    664,042,954
    
    
    
    76.55
    %
    
    
    508,304,296
    
    
    
    686,373,037
    
    
    
    73.13
    %
    
    
    501,937,249Empresa Eléctrica Pangue S.A.
    
    
    125,430,647
    
    
    
    5.01
    %
    
    
    6,291,852
    
    
    
    118,093,601
    
    
    
    5.01
    %
    
    
    5,923,811Endesa Argentina S.A.
    
    
    42,737,894
    
    
    
    0.01
    %
    
    
    4,273
    
    
    
    134,393,664
    
    
    
    0.01
    %
    
    
    13,439Generandes Perú S.A.
    
    
    252,455,436
    
    
    
    40.37
    %
    
    
    101,913,786
    
    
    
    206,672,674
    
    
    
    40.37
    %
    
    
    83,431,733Hidroeléctrica El Chocón S.A (3)
    
    
    202,116,934
    
    
    
    34.81
    %
    
    
    70,356,904
    
    
    
    170,188,801
    
    
    
    32.33
    %
    
    
    55,015,232Hidroinvest S.A (4)
    
    
    82,180,015
    
    
    
    30.07
    %
    
    
    24,711,531
    
    
    
    103,672,237
    
    
    
    3.91
    %
    
    
    4,048,816Pehuenche S.A.
    
    
    232,588,570
    
    
    
    7.35
    %
    
    
    17,095,260
    
    
    
    259,455,281
    
    
    
    7.35
    %
    
    
    19,069,963Túnel El Melón S.A (5)
    
    
    (9,629,565
    )
    
    
    0.05
    %
    
    
    (4,815
    )
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    1,004,392,388
    
    
    
    
    
    
    
    
    
    
    
    886,882,586
 (1)
    
    See Note 10 (d) (iv.), Note 10 (e) (iv.)(2)
    
    See Note 10 d. (v)(3)
    
    See note 10 (d) (vi.)(4)
    
    See note 10 (d) (vi.)(5)
    
    See Note 10 d. (vii)  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, 2007, 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, 2005
    
    
    Year-ended December 31, 2006
    
    
    Year-ended December 31, 2007Net
    
    


    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. (1)
    
    
    21,247,487
    
    
    
    49.00
    %
    
    
    10,411,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Central Hidroeléctrica Betania
S.A. (2)
    
    
    2,663,802
    
    
    
    14.38
    %
    
    
    382,997
    
    
    
    1,088,685
    
    
    
    0.01
    %
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    Central Cachoeira Dourada S.A.
(3)
    
    
    25,197,630
    
    
    
    0.39
    %
    
    
    99,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Endesa Costanera S.A. (4)
    
    
    (11,866,291
    )
    
    
    35.74
    %
    
    
    (4,240,409
    )
    
    
    (6,644,735
    )
    
    
    35.74
    %
    
    
    (2,374,489
    )
    
    
    (11,134,854
    )
    
    
    30.23
    %
    
    
    (3,366,613
    )Inversiones Eléctricas Quillota
S.A. (5)
    
    
    (11,028,656
    )
    
    
    50.00
    %
    
    
    (5,514,327
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Edegel S.A. (6)
    
    
    37,855,704
    
    
    
    36.44
    %
    
    
    13,796,058
    
    
    
    9,277,188
    
    
    
    44.56
    %
    
    
    4,133,681
    
    
    
    3,803,113
    
    
    
    44.56
    %
    
    
    1,694,571Emgesa S.A. (7)
    
    
    44,287,702
    
    
    
    51.52
    %
    
    
    22,815,651
    
    
    
    67,282,159
    
    
    
    76.55
    %
    
    
    51,502,408
    
    
    
    51,012,220
    
    
    
    73.13
    %
    
    
    46,295,005Empresa Eléctrica Pangue S.A.
    
    
    21,247,201
    
    
    
    5.01
    %
    
    
    1,065,802
    
    
    
    41,830,532
    
    
    
    5.01
    %
    
    
    2,098,303
    
    
    
    34,138,191
    
    
    
    5.01
    %
    
    
    1,712,440Endesa Argentina S.A.
    
    
    (10,435,679
    )
    
    
    0.01
    %
    
    
    (1,044
    )
    
    
    (2,592,233
    )
    
    
    0.01
    %
    
    
    (259
    )
    
    
    38,363,392
    
    
    
    0.01
    %
    
    
    3,836Generandes Perú S.A.
    
    
    32,011,576
    
    
    
    40.37
    %
    
    
    12,922,760
    
    
    
    6,844,543
    
    
    
    40.37
    %
    
    
    2,763,074
    
    
    
    3,514,474
    
    
    
    40.37
    %
    
    
    1,418,759Hidroeléctrica El Chocón S.A. (8)
    
    
    2,833,523
    
    
    
    34.81
    %
    
    
    986,349
    
    
    
    14,840,727
    
    
    
    34.81
    %
    
    
    5,166,057
    
    
    
    8,814,829
    
    
    
    32.33
    %
    
    
    2,860,563Hidroinvest S.A. (9)
    
    
    (131,228
    )
    
    
    30.07
    %
    
    
    (39,461
    )
    
    
    7,174,042
    
    
    
    30.07
    %
    
    
    2,157,234
    
    
    
    20,907,848
    
    
    
    3.91
    %
    
    
    1,058,126Pehuenche S.A.
    
    
    65,995,226
    
    
    
    7.35
    %
    
    
    4,850,649
    
    
    
    72,668,962
    
    
    
    7.35
    %
    
    
    5,341,168
    
    
    
    138,741,293
    
    
    
    7.35
    %
    
    
    10,197,485Túnel El Melón S.A. (10)
    
    
    (1,958,659
    )
    
    
    0.05
    %
    
    
    (979
    )
    
    
    1,896,959
    
    
    
    0.05
    %
    
    
    948
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    57,534,622
    
    
    
    
    
    
    
    
    
    
    
    70,788,191
    
    
    
    
    
    
    
    
    
    
    
    61,874,172
 (1)
    
    See Note 10 (e.) (iv.)(2)
    
    See Note 10 (c.) (v.), Note 10 (d) (iv.)(3)
    
    See Note 10 (c.) (i.)(4)
    
    See Note 10 (d.) (v.)(5)
    
    See Note 10 (e.) (iii.)(6)
    
    See Note 10 (d.) (iii.)(7)
    
    See Note 10 (c.) (v), Note 10 (d) (iv.), Note 10 (e) (iv)(8)
    
    See Note 10 (d.) (vi.)(9)
    
    See Note 10 (d.)(vi.)(10)
    
    See Note 10 (d.) (vii.)  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, 2007, 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
    
    
    Interim
    
    2006May 2007
    
    
    10.84000
    
    
    Final
    
    2006December 2007
    
    
    2.1926
    
    
    Interim
    
    2007
 b.
    
    Number of shares
 .
 c.
    
    Subscribed and paid-in capital
   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, 2007, except as stated)
 19.
    
    Shareholders equity, continued:d.
    
    Other reserves
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Accumulated capital revaluation
    
    
    1,942,082
    
    
    
    1,942,082Revaluation of property, plant and equipment under Decree Law No. 4
    
    
    1,331,497
    
    
    
    1,331,497Other revaluations
    
    
    86,645
    
    
    
    86,645Reserve for technical revaluation of property, plant and equipment (Circulars 550 and 566)
    
    
    33,308,498
    
    
    
    33,308,498Reserve for technical revaluation of investments in subsidiaries subsequently sold
(Circulars 550 and 566)
    
    
    28,009,943
    
    
    
    28,009,943Equity adjustment of unconsolidated subsidiaries
    
    
    (379,527
    )
    
    
    (379,527
    )Reserve for reorganization of entities under common control
    
    
    (43,832,543
    )
    
    
    (138,354,989
    )Reduction of capital in foreign subsidiaries
    
    
    (7,069,645
    )
    
    
    (7,069,645
    )Accumulated translation adjustment of Chilean entities reporting in foreign currency
    
    
    (18,260,401
    )
    
    
    (31,102,646
    )Accumulated foreign currency translation adjustment related to foreign subsidiaries, net (1)
    
    
    (34,814,323
    )
    
    
    (49,760,219
    )Total
    
    
    (39,677,774
    )
    
    
    (161,988,361
    )
 (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, 2005, 2006 and 2007, respectively are as follows: As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Endesa Argentina S.A.
    
    
    (5,679,865
    )
    
    
    (4,920,246
    )
    
    
    (11,531,112
    )Endesa Chile Internacional
    
    
    1,914,915
    
    
    
    1,914,915
    
    
    
    1,914,915Distrilec Inversora S.A.
    
    
    (139,741
    )
    
    
    (117,526
    )
    
    
    (270,728
    )Gas Atacama
    
    
    
    
    
    
    
    
    
    
    (289
    )Electrogas
    
    
    
    
    
    
    
    
    
    
    (474
    )Inversiones Electrogas
    
    
    
    
    
    
    
    
    
    
    (680,429
    )Hidroeléctrica El Chocón
    
    
    
    
    
    
    
    
    
    
    179,730Hidroinvest
    
    
    
    
    
    
    
    
    
    
    (2,808,384
    )Southern Cone Power Argentina. S.A.
    
    
    
    
    
    
    
    
    
    
    (662,142
    )Capital de Energía S.A.
    
    
    (41,346
    )
    
    
    
    
    
    
    C.H. Betania S.A.
    
    
    131,755
    
    
    
    (194,015
    )
    
    
    (1,637,483
    )Ingendesa Do Brasil Ltda.
    
    
    (269,168
    )
    
    
    (249,346
    )
    
    
    (415,476
    )Cono Sur S.A.
    
    
    (32,424,762
    )
    
    
    (29,863,574
    )
    
    
    (31,036,749
    )Endesa Costanera S.A.
    
    
    (1,537,879
    )
    
    
    (1,384,531
    )
    
    
    (2,811,598
    )Total
    
    
    (38,046,091
    )
    
    
    (34,814,323
    )
    
    
    (49,760,219
    )
  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, 2007, except as stated)
 20.
    
    Other income and expenses:a.
    
    The detail of other non-operating income in each year is as follows:
 Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Gain from foreign currency transaction
    
    
    11,799,360
    
    
    
    37,114
    
    
    
    91,127Gain on sale of property, plant and equipment
    
    
    4,466,597
    
    
    
    3,570,995
    
    
    
    449,283Energy and power contract settlement
    
    
    8,264,845
    
    
    
    5,458,821
    
    
    
    6,460,185Dividends Empresa Eléctrica de Bogotá
    
    
    1,001,703
    
    
    
    
    
    
    
    Indemnities and commissions
    
    
    2,015,507
    
    
    
    8,572,200
    
    
    
    2,152,944Gains on service and other contracts
    
    
    846,397
    
    
    
    585,843
    
    
    
    212,788Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    3,077,984Recovery of expenses and clients portfolios
    
    
    2,518,143
    
    
    
    943,260
    
    
    
    2,371,522Reversal of contingency provision
    
    
    1,164,232
    
    
    
    9,335,150
    
    
    
    878,818Other
    
    
    4,416,686
    
    
    
    3,681,870
    
    
    
    2,221,656Total
    
    
    36,493,470
    
    
    
    32,185,253
    
    
    
    17,916,307
 b.
    
    Other non-operating expenses in each year are as follows:
 Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Loss from foreign currency transaction
    
    
    14,546,952
    
    
    
    16,854,123
    
    
    
    40,796,526Adjustment of Investments in Related Companies
    
    
    4,541,333
    
    
    
    1,129,468
    
    
    
    1,123,415Loss on sale of property, plant and equipment
    
    
    428,712
    
    
    
    186,442
    
    
    
    70,319Costs of sales of property, plant and equipment
    
    
    244,979
    
    
    
    599,107
    
    
    
    Retirement benefits and severance indemnities
    
    
    931,913
    
    
    
    1,153,881
    
    
    
    780,756Board of directors compensation
    
    
    250,748
    
    
    
    258,793
    
    
    
    271,434Contingencies and litigation
    
    
    17,541,387
    
    
    
    8,823,290
    
    
    
    12,128,496Energy and power settlement (1)
    
    
    9,329,382
    
    
    
    7,052,490
    
    
    
    8,503,789Tax penalties
    
    
    2,028,533
    
    
    
    3,210,130
    
    
    
    3,393,266Tax on equity, Colombia
    
    
    3,711,897
    
    
    
    3,196,912
    
    
    
    14,037,294Other
    
    
    5,204,497
    
    
    
    4,327,096
    
    
    
    4,145,555Total
    
    
    58,760,333
    
    
    
    46,791,732
    
    
    
    85,250,850
 (1)
    
    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. In 2007,
the amount recorded corresponds to the period of January 2006  December 2006.  F-81




---



##### 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, 2007, except as stated)
 21.
    
    Price-level restatement:
  Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$AssetsCurrent assets
    
    
    10,482,946
    
    
    
    6,184,546
    
    
    
    866,183Accounts receivable from subsidiaries
    
    
    4,149,796
    
    
    
    1,961,153
    
    
    
    8,082,276Property, plant and equipment
    
    
    72,341,436
    
    
    
    41,024,274
    
    
    
    145,486,524Investment in subsidiaries
    
    
    6,594,505
    
    
    
    10,601,775
    
    
    
    38,721,742Goodwill and negative goodwill
    
    
    (1,584,461
    )
    
    
    (512,210
    )
    
    
    (3,056,029
    )Other assets
    
    
    60,639,542
    
    
    
    17,962,382
    
    
    
    77,928,240Net gain from asset accounts
    
    
    152,623,764
    
    
    
    77,221,920
    
    
    
    268,028,936Liabilities and Shareholders equityShareholders equity
    
    
    (60,522,263
    )
    
    
    (35,803,120
    )
    
    
    (126,678,294
    )Current and long-term liabilities
    
    
    (79,074,405
    )
    
    
    (33,084,371
    )
    
    
    (110,045,318
    )Minority interest
    
    
    (5,644,765
    )
    
    
    (3,035,456
    )
    
    
    (8,290,174
    )Net loss from Liabilities and Shareholders equity accounts
    
    
    (145,241,433
    )
    
    
    (71,922,947
    )
    
    
    (245,013,786
    )Net gain from price-level restatement of balance
sheet accounts
    
    
    7,382,331
    
    
    
    5,298,973
    
    
    
    23,015,150Net loss from price-level restatement of income
statement
    
    
    (5,937,121
    )
    
    
    (3,701,408
    )
    
    
    (14,160,768
    )Net gain from price-level restatement
    
    
    1,445,210
    
    
    
    1,597,565
    
    
    
    8,854,382
  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, 2007, except as stated)
 22.
    
    Foreign currency translation:
  As of December 31,Currency
    
    
    2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$AssetsCurrent assetsCash
    
    US$
    
    
    1,473,474
    
    
    
    453,185
    
    
    
    338,875Other
    
    
    
    
    
    
    (2,767
    )
    
    
    (49,732
    )Time deposits
    
    US$
    
    
    2,343,776
    
    
    
    (485,737
    )
    
    
    (154,050
    )Other
    
    
    (252,114
    )
    
    
    
    
    
    
    Other accounts receivable, net
    
    US$
    
    
    (24,199
    )
    
    
    2,757
    
    
    
    (450
    )Other
    
    
    
    
    
    
    12,457
    
    
    
    (277,529
    )Other
    
    
    (24,054
    )
    
    
    (9,730
    )
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    (1,866,499
    )Other current assets
    
    US$
    
    
    (2,824,158
    )
    
    
    616
    
    
    
    Other
    
    
    (31,369
    )
    
    
    (2,655
    )
    
    
    (881
    )Accounts due from related companies
    
    US$
    
    
    (554,857
    )
    
    
    154,304
    
    
    
    Non-current assetsAccounts due from related companies
    
    US$
    
    
    (13,380,596
    )
    
    
    2,425,552
    
    
    
    (15,418,140
    )Forward contracts
    
    US$
    
    
    
    
    
    
    39,581
    
    
    
    Other non-current assets
    
    US$
    
    
    (40,904,239
    )
    
    
    10,939,876
    
    
    
    (5,602,087
    )Subtotal foreign currency translation
    
    
    
    
    
    
    (54,178,336
    )
    
    
    13,527,439
    
    
    
    (23,030,493
    )LiabilitiesCurrent liabilitiesShort-term debt due to banks and financial institutions
    
    US$
    
    
    
    
    
    
    
    
    
    
    83,178Current portion of long-term
    
    US$
    
    
    (3,486,004
    )
    
    
    21,580
    
    
    
    1,480,231debt due to banks and financial institutions
    
    ¥
    
    
    (55,078
    )
    
    
    
    
    
    
    Euro
    
    
    1,358
    
    
    
    
    
    
    
    Pounds
    
    
    (33,210
    )
    
    
    
    
    
    
    Current portion of bonds payable
    
    US$
    
    
    10,685,875
    
    
    
    (3,841,853
    )
    
    
    1,999,966Current portion of long-term
    
    US$
    
    
    (535,298
    )
    
    
    
    
    
    
    Accounts payable to related companies
    
    US$
    
    
    1,312,646
    
    
    
    
    
    
    
    Accrued liabilities
    
    US$
    
    
    17,415
    
    
    
    
    
    
    
    Other
    
    
    (2,225,763
    )
    
    
    1,989
    
    
    
    Miscellaneous payables
    
    Other
    
    
    
    
    
    
    (227,093
    )
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    820,691Other current liabilities
    
    US$
    
    
    1,367,490
    
    
    
    (324,533
    )
    
    
    222,081Other
    
    
    
    
    
    
    113
    
    
    
    12,252
    
    
    
    
    
    
    
    Long-term liabilitiesDebt due to banks and financial Institutions
    
    US$
    
    
    26,014,091
    
    
    
    1,444,310
    
    
    
    21,379,596Yen
    
    
    70,636
    
    
    
    
    
    
    
    Euro
    
    
    5,789
    
    
    
    
    
    
    
    Other
    
    
    45,214
    
    
    
    
    
    
    
    Bonds payable
    
    US$
    
    
    39,141,904
    
    
    
    (6,203,212
    )
    
    
    15,810,134Accounts payable
    
    US$
    
    
    3,703,793
    
    
    
    
    
    
    
    1,556,423Other long-term liabilities
    
    US$
    
    
    (1,182,106
    )
    
    
    (510,146
    )
    
    
    978,085Accounts payable to related
Companies
    
    US$
    
    
    
    
    
    
    (13,632
    )
    
    
    Forwards
    
    US$
    
    
    (4,330,716
    )
    
    
    
    
    
    
    (4,700,200
    )Subtotal foreign currency translation
    
    
    
    
    
    
    70,518,038
    
    
    
    (9,652,477
    )
    
    
    39,642,437Net effect on income
    
    
    
    
    
    
    16,339,702
    
    
    
    3,874,962
    
    
    
    16,611,944
  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, 2007, except as stated)
 23.
    
    Bond issuance costs:
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Consulting fees
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    11,056Total
    
    
    
    
    
    
    
    
    
    
    11,056
  24.
    
    Other cash-flow items:
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Realization of forward contracts
    
    
    (4,157,140
    )
    
    
    (572,640
    )
    
    
    (460,663
    )Revolving Facility Mitsubishi Fees
    
    
    
    
    
    
    (612,663
    )
    
    
    Other
    
    
    
    
    
    
    (73,410
    )
    
    
    (568,680
    )Total cash-outflow
    
    
    (4,157,140
    )
    
    
    (1,258,713
    )
    
    
    (1,029,343
    )
  As of December, 312005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Sale of participation in Gas Atacama to Southern Cross (1)
    
    
    
    
    
    
    
    
    
    
    43,172,429Receipt of Loans granted to former subsidiaries of
Infraestructura 2000 S.A.
    
    
    2,262,691
    
    
    
    583,012
    
    
    
    Return of capital investment from related company (Empresa de
Energía de Bogotá S.A.)
    
    
    4,819,937
    
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    530,002
    
    
    
    Total Cash flows related to other receipts from investments
    
    
    7,082,628
    
    
    
    1,113,014
    
    
    
    43,172,429
  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, 2007, except as stated)
 24.
    
    Other cash-flow items, continued
  As of December, 312005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Purchase of participation in Gas Atacama from CMS (1)
    
    
    
    
    
    
    
    
    
    
    (43,666,808
    )Total Cash flows related to other receipts from
investments
    
    
    
    
    
    
    
    
    
    
    (43,666,808
    )
 (1)
    
    On June 30, 2007, the Company notified CMS Enterprises Company (the entity controlling 50% of
Inversiones Gas Atacama Holding and subsidiaries) of its decision to exercise its right of first
offer to purchase the interest held by CMS Enterprises Company in Inversiones Gas Atacama Holding
for US$ 80 million. Included in this amount was the purchase of a sponser loan that CMS had grants
to Inversiones Gas Atacama Holding and its subsidiaries.   25.
    
    Financial derivatives:
  As of December 31, 2007Nominal
    
    
    Period
    
    
    
    
    
    
    
    
    
    
    
    Hedged
    
    
    DeferredType
    
    amount
    
    
    Of
    
    
    
    
    
    Sales (S)/
    
    Hedged

    
    Amount
    
    
    Fair Value Change(1)
    
    US$
    
    
    Maturity
    
    Item

    
    Purchase (P)
    
    Item

    
    ThCh$
    
    
    ThCh$EO
    
    
    40,000,000
    
    
    3rdQuarter 2010
    
    Interest rate
    
    P/S
    
    Bank-debt
    
    
    19,875,600
    
    
    
    EO
    
    
    60,000,000
    
    
    3rd  Quarter 2009
    
    Interest rate
    
    P/S
    
    Bank-debt
    
    
    29,813,400
    
    
    
    S
    
    
    125,000,000
    
    
    3rd  Quarter 2008
    
    Exchange rate
    
    P
    
    Bank-debt
    
    
    62,111,250
    
    
    
    (4,645,735
    )S
    
    
    84,100,000
    
    
    4th  Quarter 2012
    
    Interest rate
    
    P
    
    Bank-debt
    
    
    41,788,449
    
    
    
    (715,522
    )
 (1)
    
    EO = European Option, S = Swap  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, 2007, except as stated)
 26.
    
    Commitments and contingencies:
  a.
    
    Liens held by third parties:
 As of December 31, 2007Book value of remaining encumbered assets andschedule to be releasedGuarantee
    
    Subsidiary
    
    2007
    
    
    2008-2010
    
    
    After 2010
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Banks
    
    Pangue S.A.
    
    
    2,267,573
    
    
    
    
    
    
    
    
    
    
    
    2,267,573Soc. de Energía de la
    
    Endesa Argentina, EndesaRepública Argentina
    
    Costanera
    
    
    6,981,239
    
    
    
    
    
    
    
    
    
    
    
    6,981,239Mitsubishi
    
    Endesa Costanera
    
    
    34,039,097
    
    
    
    
    
    
    
    
    
    
    
    34,039,097Credit Suisse First Boston
    
    Endesa Costanera
    
    
    19,875,600
    
    
    
    
    
    
    
    
    
    
    
    19,875,600Miscellaneous
    
    Endesa parent company
    
    
    3,024,438
    
    
    
    
    
    
    
    
    
    
    
    3,024,438Miscellaneous
    
    Edegel
    
    
    52,634,012
    
    
    
    
    
    
    
    
    
    
    
    52,634,012Total
    
    
    
    
    118,821,959
    
    
    
    
    
    
    
    
    
    
    
    118,821,959
 b.
    
    Guarantees of subsidiary obligations:
 As of December 31, 2007Schedule of balance payable of related debtGuarantee
    
    Subsidiary
    
    2008
    
    
    2009-2010
    
    
    After 2010
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$2° Juzgado Civil de Quillota
    
    Cía. Eléctrica San Isidro
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    10,000Vestas Elóicas S.A.U.
    
    Endesa Eco S.A.
    
    
    7,468,361
    
    
    
    
    
    
    
    
    
    
    
    7,468,361Banco Español de Crédito
    
    Cía. Eléctrica Tarapacá S.A.
    
    
    2,047,648
    
    
    
    
    
    
    
    
    
    
    
    2,047,648Total
    
    
    
    
    9,526,009
    
    
    
    
    
    
    
    
    
    
    
    9,526,009
  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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:c.
    
    Litigation and other legal actions:
   Endesa Chile
 
      th
       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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
     th
  th
  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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 
            th
    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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
      
    th
      th
     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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 
     
    nd
   th
     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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
    
    
     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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Pangue S.A.
 
       F-93




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 
     
    
   
     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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
       th
               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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Pehuenche S.A.
                      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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
             San Isidro S.A.
       th
             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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Edegel S.A.A.
                              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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
                                     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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
                       Generandes Perú S.A.
         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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Emgesa S.A ESP. (Colombia )
               rd th
     rd
 th
  st
        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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
                       th
        F-102




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 th
      th
                      F-103




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
                             F-104




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Hidroelectrica El Chocón S.A. (Argentina)
                      F-105




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
        Hidroinvest S.A. (Argentina)
        Endesa Costanera S.A. (Argentina)
    F-106




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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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
             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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
   d.
    
    Restrictions:
  Endesa Chile (Parent company)
  
    
    Ratio of debt to cash flows for four quarters for Endesa Chile and its Chilean subsidiaries
does not exceed 8.40x for 2007, which decreases to 7.50 in 2010;
 
    
    The ratio of consolidated debt to EBITDA for four consolidated quarters, does not exceed 5.00
for 2007, 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 1.70 for 2007, increasing to 2.00 in 2010;
 
    
    The consolidated debt to shareholders equity plus minority interest does not exceed 102.0%
for 2007, 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.
   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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Endesa Costanera S.A.
    
    
    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
  
    
    Ratio of EBITDA to financial expenses no less than 3.5;Ratio of debt to EBITDA no greater than 3.0;
 
    
    Net shareholders equity no less than 690 million Argentine pesos.
 Edegel S.A.
 
   Emgesa S.A. ESP
   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, 2007, except as stated)
 26.
    
    Commitments and contingencies, continued:
 Cross-Default Provisions:
    27.
    
    Collaterals obtained from third parties:
 Endesa Chile
  Enigesa S.A.
   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, 2007, except as stated)
 28.
    
    Foreign currencies:
  and 2 k))
 a.
    
    Assets:
 As of December 31,Account
    
    Currency
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$Cash
    
    Ch$
    
    
    422,401
    
    
    
    712,450US$
    
    
    2,352,543
    
    
    
    6,939,394$ Col
    
    
    13,731,419
    
    
    
    9,056,685Soles
    
    
    5,468,727
    
    
    
    2,237,065$ Arg
    
    
    867,091
    
    
    
    377,938Reales
    
    
    94,323
    
    
    
    73,680Time deposits
    
    US$
    
    
    34,792,043
    
    
    
    37,825,054$ Col
    
    
    43,949,825
    
    
    
    1,040,985Soles
    
    
    9,031,979
    
    
    
    $ Arg
    
    
    11,241,786
    
    
    
    5,175,789Reales
    
    
    120,973
    
    
    
    230,807Marketable securities
    
    Ch$
    
    
    4,189
    
    
    
    5,498US$
    
    
    266
    
    
    
    248$ Col.
    
    
    4,720,100
    
    
    
    10,299,039Soles
    
    
    894,255
    
    
    
    Accounts receivables, net
    
    Ch$
    
    
    63,046,997
    
    
    
    109,891,826US$
    
    
    1,855,102
    
    
    
    4,636,660$ Col.
    
    
    38,075,287
    
    
    
    44,826,931Soles
    
    
    23,856,317
    
    
    
    9,528,092$ Arg
    
    
    30,887,925
    
    
    
    42,326,083Other accounts receivable, net
    
    UF
    
    
    
    
    
    
    2,801,441Ch$
    
    
    42,144,096
    
    
    
    31,786,228US$
    
    
    282,805
    
    
    
    11,112,226$ Col.
    
    
    6,395,522
    
    
    
    7,291,860Soles
    
    
    3,185,283
    
    
    
    919,137$ Arg
    
    
    1,714
    
    
    
    2,485Reales
    
    
    5,845,742
    
    
    
    6,131,885Accounts receivables from
related companies
    
    Ch$
    
    
    17,995,512
    
    
    
    62,113,670US$
    
    
    1,333,075
    
    
    
    91,278,992$ Col.
    
    
    14,888,520
    
    
    
    19,134,507Soles
    
    
    119,110
    
    
    
    2,617,745Reales
    
    
    989,726
    
    
    
    805,747
  F-111




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:a.
    
    Assets, continued:
 As of December 31,Account
    
    Currency
    
    

2007
    
    

2006ThCh$
    
    
    ThCh$Inventory, net
    
    Ch$
    
    
    6,766,660
    
    
    
    37,683,271US$
    
    
    1,956,158
    
    
    
    $ Col.
    
    
    2,440,387
    
    
    
    3,294,908Soles
    
    
    9,098,956
    
    
    
    9,433,580$ Arg
    
    
    1,655,323
    
    
    
    1,876,257Income taxes recoverable
    
    Ch$
    
    
    5,263,915
    
    
    
    48,879,317US$
    
    
    657,664
    
    
    
    6,378Reales
    
    
    19,021
    
    
    
    3,561,195Soles
    
    
    4,370
    
    
    
    10,361,647$ Arg
    
    
    
    
    
    
    2,072,952Prepayments
    
    UFCh$
    
    
    675,371
    
    
    
    550,185US$
    
    
    679,560
    
    
    
    703,947$ Col.
    
    
    639,258
    
    
    
    798,999Soles
    
    
    1,706,772
    
    
    
    1,586,886$ Arg
    
    
    697,161
    
    
    
    941,110RealesDeferred income tax
    
    Ch$
    
    
    2,183,307
    
    
    
    2,268,919$ Col.
    
    
    101,292
    
    
    
    615,647Other current assets
    
    Ch$
    
    
    39,510,672
    
    
    
    27,218,526$ Col.
    
    
    
    
    
    
    517,262Soles
    
    
    1,175$ Arg
    
    
    57,025
    
    
    
    86,956Reales
    
    
    419
    
    
    
    236Total current assets
    
    
    
    
    
    
    452,709,119
    
    
    
    673,638,325
  F-112




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:a.
    
    Assets, continued
 As of December 31,Fixed assets
    
    Currency
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$Land
    
    Ch$
    
    
    33,651,680
    
    
    
    33,622,675$ Col.
    
    
    12,386,047
    
    
    
    10,758,663Soles
    
    
    4,379,570
    
    
    
    3,805,902$ Arg.
    
    
    5,472,000
    
    
    
    4,755,237Construction in progress
    
    Ch$
    
    
    3,570,375,758
    
    
    
    3,728,336,748$ Col.
    
    
    1,607,654,814
    
    
    
    1,411,615,803Soles
    
    
    569,165,208
    
    
    
    503,584,275$ Arg.
    
    
    269,445,409
    
    
    
    234,151,462Machinery and equipment
    
    Ch$
    
    
    14,075,244
    
    
    
    14,763,817$ Col.
    
    
    14,248,356
    
    
    
    12,353,183Soles
    
    
    582,628,085
    
    
    
    534,431,247$ Arg.
    
    
    651,264,662
    
    
    
    583,306,625Reales
    
    
    47,153
    
    
    
    41,908Other fixed assets
    
    Ch$
    
    
    79,140,945
    
    
    
    90,579,477$ Col.
    
    
    8,700,309
    
    
    
    8,696,569Soles
    
    
    98,579,706
    
    
    
    62,859,305$ Arg.
    
    
    7,711,118
    
    
    
    6,909,752Reales
    
    
    5,577
    
    
    
    7,410
  F-113




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:a.
    
    Assets, continued
 As of December 31,Fixed assets
    
    Currency
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$Technical appraisal
    
    Ch$
    
    
    12,803,027
    
    
    
    12,833,487Accumulated depreciation
    
    Ch$
    
    
    (1,661,803,395
    )
    
    
    (1,755,977,687
    )$ Col.
    
    
    (451,676,740
    )
    
    
    (423,550,528
    )Soles
    
    
    (491,237,425
    )
    
    
    (459,402,266
    )$ Arg.
    
    
    (479,281,467
    )
    
    
    (453,034,985
    )Reales
    
    
    (16,725
    )
    
    
    (20,007
    )Total fixed assets
    
    
    
    
    
    
    4,457,718,916
    
    
    
    4,165,428,072
 As of December 31,Other assets
    
    Currency
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$Investments in related
    
    Ch$
    
    
    118,261,838
    
    
    
    54,741,906companies
    
    US$
    
    
    443,374,678
    
    
    
    389,290,260Investments in other
    
    Ch$
    
    
    2,651,806
    
    
    
    2,795,686companies
    
    $ Col.
    
    
    1,510,100
    
    
    
    1,312,286Soles
    
    
    26,962
    
    
    
    23,431Goodwill
    
    Ch$
    
    
    3,133,697
    
    
    
    2,868,698US$
    
    
    353,587
    
    
    
    281,305$ Col
    
    
    8,427,566
    
    
    
    6,704,537Negative goodwill
    
    Ch$
    
    
    (15,472,330
    )
    
    
    (11,941,411
    )US$
    
    
    
    
    
    
    (5,958,890
    )Soles
    
    
    (23,802,403
    )
    
    
    (19,103,601
    )
  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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:a.
    
    Assets, continued
 As of December 31,Other assets
    
    Currency
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$Long-term receivables
    
    UF
    
    
    7,297,870
    
    
    
    4,933,806Ch$
    
    
    953,209
    
    
    
    732,467US$
    
    
    2,200,940
    
    
    
    Soles
    
    
    28,948
    
    
    
    $ Arg
    
    
    63,697,628
    
    
    
    77,619,684Receivables from
    
    Ch$
    
    
    396
    
    
    
    369Related companies
    
    US$
    
    
    97,222,765
    
    
    
    Other long-term assets
    
    Ch$
    
    
    24,288,325
    
    
    
    18,311,938US$
    
    
    27,617
    
    
    
    1,349,967$ Col.
    
    
    14,490,829
    
    
    
    12,104,301$ Arg
    
    
    18,503,595
    
    
    
    11,881,635Soles
    
    
    1,224,101
    
    
    
    363,041Total other assets
    
    
    
    
    
    
    768,401,724
    
    
    
    548,311,415
 As of December 31,2006
    
    
    2007Total assets by currency
    
    Currency
    
    
    ThCh$
    
    
    ThCh$UF
    
    
    7,297,870
    
    
    
    7,735,247Ch$
    
    
    2,360,073,321
    
    
    
    2,512,778,060US$
    
    
    587,088,802
    
    
    
    537,459,163$ Col.
    
    
    1,340,682,891
    
    
    
    1,147,233,284Soles
    
    
    794,359,697
    
    
    
    656,445,034$ Arg
    
    
    582,220,970
    
    
    
    518,448,980Reales
    
    
    7,106,209
    
    
    
    7,278,044Total assets
    
    
    
    
    
    
    5,678,829,760
    
    
    
    5,387,377,812
  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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:b.
    
    Current liabilities:
 Within 90 days
    
    
    91 days to 1 yearas of December 31, 2006
    
    
    as of December 31, 2007
    
    
    as of December 31, 2006
    
    
    as of December 31, 2007Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAccount
    
    Currency
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateThCh$
    
    
    
    
    
    
    ThCh$
    
    
    
    
    
    
    ThCh$
    
    
    
    
    
    
    ThCh$Short-term debt due to banks and
    
    Ch$
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    0.30
    %
    
    
    
    
    
    
    
    
    
    
    financial Institutions
    
    US$
    
    
    4,110,634
    
    
    
    6.94
    %
    
    
    7,434,418
    
    
    
    6.18
    %
    
    
    1,522,497
    
    
    
    6.94
    %
    
    
    3,334,132
    
    
    
    6.90
    %$ Col.
    
    
    47,391,410
    
    
    
    8.24
    %
    
    
    15,666,942
    
    
    
    11.95
    %
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    5,444,632
    
    
    
    5.01
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    17,321
    
    
    
    8.72
    %
    
    
    
    
    
    
    
    
    
    
    2,240,837
    
    
    
    8.72
    %
    
    
    Current portion of long-term debt
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415.497
    
    
    
    9.00
    %
    
    
    due to banks and financial
    
    US$
    
    
    11,311,016
    
    
    
    4.76
    %
    
    
    12,508,475
    
    
    
    7.15
    %
    
    
    21,290,401
    
    
    
    7.60
    %
    
    
    15,205,612
    
    
    
    8.35
    %institutions
    
    Soles
    
    
    10,665,834
    
    
    
    5.00
    %
    
    
    28,211,708
    
    
    
    5.96
    %
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,178,467
    
    
    
    1.75
    %
    
    
    2,003,678
    
    
    
    1.75
    %$ Col.
    
    
    19,365,278
    
    
    
    9.85
    %
    
    
    9,069,236
    
    
    
    12.19
    %
    
    
    
    
    
    
    
    
    
    
    Current portion of
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,532,320
    
    
    
    5.61
    %
    
    
    2,951,811
    
    
    
    5.70
    %bonds payable
    
    US$
    
    
    35,282,428
    
    
    
    5.00
    %
    
    
    408,860
    
    
    
    7.79
    %
    
    
    33,606,593
    
    
    
    8.22
    %
    
    
    228,001,588
    
    
    
    7.79
    %$ Col.
    
    
    3,729,765
    
    
    
    10.31
    %
    
    
    7,957,723
    
    
    
    10.97
    %
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    553,230
    
    
    
    5.00
    %
    
    
    17,305,269
    
    
    
    10.20
    %
    
    
    
    
    
    
    
    
    
    
    Current portion of long term
    
    US$
    
    
    21,914,304
    
    
    
    7.42
    %
    
    
    12,224,280
    
    
    
    7.42
    %
    
    
    11,662,164
    
    
    
    7.42
    %
    
    
    7,205,899
    
    
    
    7.42
    %payables
    
    $ Arg.
    
    
    
    
    
    
    
    
    
    
    1,063,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,920,274Dividends payable
        Ch$
    
    
    1,331,986
    
    
    
    
    
    
    
    3,010,638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    26,453,233
    
    
    
    
    
    
    
    20,172,336
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    89,726
    
    
    
    
    
    
    
    73,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    680
    
    
    
    
    
    
    
    269,293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous payables
        Ch$
    
    
    2,668,321
    
    
    
    
    
    
    
    4,603,951
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    14,870,475
    
    
    
    
    
    
    
    239,089
    
    
    
    
    
    
    
    837,358
    
    
    
    
    
    
    
    6,981,468$ Col.
    
    
    2,937,269
    
    
    
    
    
    
    
    9,153,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    16,733,158
    
    
    
    
    
    
    
    4,187,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    4,322
    
    
    
    
    
    
    
    1,694
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable
    
    Ch$
    
    
    45,054,410
    
    
    
    
    
    
    
    114,109,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    6,361,655
    
    
    
    
    
    
    
    27,919,379
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,078,003Euro
    
    
    548,289
    
    
    
    
    
    
    
    415,113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    3,419,285
    
    
    
    
    
    
    
    10,516,677
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    13,904,369
    
    
    
    
    
    
    
    10,835,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    24,944,769
    
    
    
    
    
    
    
    22,078,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    12,223
    
    
    
    
    
    
    
    646
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable to related
    
    US$
    
    
    
    
    
    
    
    
    
    
    11,030,763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    companies
    
    Ch$
    
    
    2,223,804
    
    
    
    
    
    
    
    1,368,144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    906,978
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    4,264,721
    
    
    
    
    
    
    
    3,096,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,429,492
    
    
    
    
    
    
    
    167,864
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    
    
    
    
    
    
    
    
    79,980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    14,623
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  F-116




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:b.
    
    Current liabilities, continued:
 Scheduled MaturitiesWithin 90 days
    
    
    91 days to 1 yearAs of December 31, 2006
    
    
    As of December 31, 2007
    
    
    As of December 31, 2006
    
    
    As of December 31, 2007Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAccount
    
    Currency
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateAccrued income
    
    Ch$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    445,552
    
    
    
    
    
    
    
    628,056Accrued liabilities
    
    Ch$
    
    
    2,095,592
    
    
    
    
    
    
    
    1,493,760
    
    
    
    
    
    
    
    12,218,349
    
    
    
    
    
    
    
    13,129,840US$
    
    
    3,716
    
    
    
    
    
    
    
    6,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    9,219,491
    
    
    
    
    
    
    
    12,622,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,982,816
    
    
    
    
    
    
    
    464,511
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    605,186$ Arg.
    
    
    1,082,964
    
    
    
    
    
    
    
    1,207,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,402
    
    
    
    
    
    
    
    4,248Withholdings
    
    Ch$
    
    
    3,921,443
    
    
    
    
    
    
    
    10,954,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    782,205
    
    
    
    
    
    
    
    854,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    3,450,286
    
    
    
    
    
    
    
    1,798,266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    4,832,048
    
    
    
    
    
    
    
    6,386,066
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    5,678
    
    
    
    
    
    
    
    9,742
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax payables
        Ch$
    
    
    11,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,409,554
    
    
    
    
    
    
    
    $ Col.
    
    
    11,610,407
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    3,372,755
    
    
    
    
    
    
    
    8,155,456
    
    
    
    
    
    
    
    759,904
    
    
    
    
    
    
    
    91,243Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,482
    
    
    
    
    
    
    
    Other current liabilities
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,846
    
    
    
    
    
    
    
    Ch$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,278
    
    
    
    
    
    
    
    58,061US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,309,486Soles
    
    
    506,412
    
    
    
    
    
    
    
    960,856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    118,359
    
    
    
    
    
    
    
    86,956
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current liabilities
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,013,663
    
    
    
    
    
    
    
    2,951,811per currency
    
    Ch$
    
    
    57,307,431
    
    
    
    
    
    
    
    135,540,556
    
    
    
    
    
    
    
    51,125,733
    
    
    
    
    
    
    
    13,815,957US$
    
    
    93,854,228
    
    
    
    
    
    
    
    71,771,894
    
    
    
    
    
    
    
    68,919,013
    
    
    
    
    
    
    
    272,116,188Euro
    
    
    548,289
    
    
    
    
    
    
    
    415,113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    129,173,064
    
    
    
    
    
    
    
    89,109,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    54,759,955
    
    
    
    
    
    
    
    64,004,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    605,186$ Arg.
    
    
    34,368,952
    
    
    
    
    
    
    
    39,286,549
    
    
    
    
    
    
    
    5,179,208
    
    
    
    
    
    
    
    5,015,195Reales
    
    
    943,824
    
    
    
    
    
    
    
    12,082
    
    
    
    
    
    
    
    11,884
    
    
    
    
    
    
    
    4,248Total current liabilities
    
    
    
    
    
    
    370,955,743
    
    
    
    
    
    
    
    400,140,197
    
    
    
    
    
    
    
    128,249,501
    
    
    
    
    
    
    
    294,508,585
  F-117




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:c.
    
    Long-term liabilities, December 31, 2006:
 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
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    financial institutions
    
    US$
    
    
    78,777,896
    
    
    
    7.62
    %
    
    
    110,013,668
    
    
    
    6.86
    %
    
    
    6,197,826
    
    
    
    6.23
    %
    
    
    Soles
    
    
    27,189,832
    
    
    
    5.58
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    4,343,391
    
    
    
    1.75
    %
    
    
    3,257,944
    
    
    
    1.75
    %
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    77,899,098
    
    
    
    9.07
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    UF
    
    
    
    
    
    
    
    
    
    
    78,773,087
    
    
    
    4.80
    %
    
    
    
    
    
    
    
    
    
    
    108,312,997
    
    
    
    6.20
    %US$
    
    
    468,865,225
    
    
    
    8.08
    %
    
    
    
    
    
    
    
    
    
    
    354,507,853
    
    
    
    8.29
    %
    
    
    266,622,498
    
    
    
    7.64
    %$ Col.
    
    
    
    
    
    
    
    
    
    
    80,717,694
    
    
    
    10.23
    %
    
    
    166,010,052
    
    
    
    10.56
    %
    
    
    Soles
    
    
    30,059,498
    
    
    
    6.41
    %
    
    
    6,259,788
    
    
    
    6.72
    %
    
    
    14,308,086
    
    
    
    6.23
    %
    
    
    Notes payable
    
    US$
    
    
    32,008,628
    
    
    
    7.42
    %
    
    
    25,191,665
    
    
    
    7.42
    %
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    4,171,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,456Ch$
    
    
    8,245,954
    
    
    
    
    
    
    
    39,107,921
    
    
    
    
    
    
    
    6,532,048
    
    
    
    
    
    
    
    15,159,777US$
    
    
    32,967,048
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued liabilities
    
    Ch$
    
    
    975,837
    
    
    
    
    
    
    
    868,709
    
    
    
    
    
    
    
    9,092,573
    
    
    
    
    
    
    
    $ Col.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,284,766
    
    
    
    
    
    
    
    Deferred Taxes
    
    Ch$
    
    
    29,439,788
    
    
    
    
    
    
    
    4,345,739
    
    
    
    
    
    
    
    25,093,145
    
    
    
    
    
    
    
    39,264,011$ Arg.
    
    
    
    
    
    
    
    
    
    
    47,503,322
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,024,071
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    UF
    
    
    2,480,143
    
    
    
    
    
    
    
    1,653,872
    
    
    
    
    
    
    
    3,652,284
    
    
    
    
    
    
    
    Ch$
    
    
    11,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    238,756
    
    
    
    
    
    
    
    636,341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    5,920,854
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    9,015,936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    UF
    
    
    2,480,143
    
    
    
    
    
    
    
    80,426,959
    
    
    
    
    
    
    
    3,652,284
    
    
    
    
    
    
    
    108,453,453per currency
    
    Ch$
    
    
    38,672,970
    
    
    
    
    
    
    
    44,322,369
    
    
    
    
    
    
    
    40,717,766
    
    
    
    
    
    
    
    54,423,788US$
    
    
    612,857,553
    
    
    
    
    
    
    
    135,841,674
    
    
    
    
    
    
    
    360,705,679
    
    
    
    
    
    
    
    266,622,498$ Col.
    
    
    83,819,952
    
    
    
    
    
    
    
    80,717,694
    
    
    
    
    
    
    
    187,294,818
    
    
    
    
    
    
    
    Soles
    
    
    57,249,330
    
    
    
    
    
    
    
    53,763,110
    
    
    
    
    
    
    
    14,308,086
    
    
    
    
    
    
    
    $ Arg.
    
    
    18,555,276
    
    
    
    
    
    
    
    3,257,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    813,635,224
    
    
    
    
    
    
    
    398,329,750
    
    
    
    
    
    
    
    606,678,633
    
    
    
    
    
    
    
    429,499,739
  F-118




---



##### 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, 2007, except as stated)
 28.
    
    Foreign currencies, continued:d.
    
    Long-term liabilities as of December 31, 2007:
 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
    
    US$
    
    
    117,906,986
    
    
    
    7.08
    %
    
    
    88,845,200
    
    
    
    6.47
    %
    
    
    3,861,643
    
    
    
    5.75
    %
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    3,981,984
    
    
    
    1.75
    %
    
    
    995,577
    
    
    
    1.75
    %
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    
    
    
    
    
    
    
    
    75,222,686
    
    
    
    12.19
    %
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,826,590
    
    
    
    5.19
    %US$
    
    
    322,978,500
    
    
    
    8.21
    %
    
    
    13,912,918
    
    
    
    4.36
    %
    
    
    298,134,000
    
    
    
    8.44
    %
    
    
    117,413,616
    
    
    
    7.71
    %$ Col.
    
    
    78,296,651
    
    
    
    11.25
    %
    
    
    98,650,075
    
    
    
    11.29
    %
    
    
    103,582,461
    
    
    
    10.53
    %
    
    
    Soles
    
    
    21,553,454
    
    
    
    6.70
    %
    
    
    4,973,874
    
    
    
    6.16
    %
    
    
    28,185,286
    
    
    
    6.43
    %
    
    
    8,289,790
    
    
    
    6.30
    %Long-term notes payable
    
    US$
    
    
    29,099,369
    
    
    
    
    
    
    
    27,888,796
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    6,059,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,111Ch$
    
    
    9,575,013
    
    
    
    
    
    
    
    2,832,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    12,862,368
    
    
    
    
    
    
    
    29,595,608
    
    
    
    
    
    
    
    6,045,401
    
    
    
    
    
    
    
    11,808,090Accrued expenses
    
    Ch$
    
    
    1,004,344
    
    
    
    
    
    
    
    797,296
    
    
    
    
    
    
    
    1,896,275
    
    
    
    
    
    
    
    6,723,310$ Col.
    
    
    17,437,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred Taxes
    
    Ch$
    
    
    28,938,362
    
    
    
    
    
    
    
    5,746,970
    
    
    
    
    
    
    
    29,378,736
    
    
    
    
    
    
    
    31,533,441Soles
    
    
    
    
    
    
    
    
    
    
    59,371,474
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    3,972,636
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,063,927
    
    
    
    
    
    
    
    Ch$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    689,877
    
    
    
    
    
    
    
    718,987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col.
    
    
    4,663,840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg.
    
    
    13,147,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    UF
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,063,927
    
    
    
    
    
    
    
    185,983,701per currency
    
    Ch$
    
    
    39,517,719
    
    
    
    
    
    
    
    9,377,013
    
    
    
    
    
    
    
    31,275,011
    
    
    
    
    
    
    
    38,256,751US$
    
    
    483,537,100
    
    
    
    
    
    
    
    160,961,509
    
    
    
    
    
    
    
    308,041,044
    
    
    
    
    
    
    
    129,221,706$ Col.
    
    
    100,397,594
    
    
    
    
    
    
    
    173,872,761
    
    
    
    
    
    
    
    103,582,461
    
    
    
    
    
    
    
    Soles
    
    
    21,553,454
    
    
    
    
    
    
    
    64,345,348
    
    
    
    
    
    
    
    28,185,286
    
    
    
    
    
    
    
    8,289,790$ Arg.
    
    
    27,162,052
    
    
    
    
    
    
    
    995,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    672,167,919
    
    
    
    
    
    
    
    409,552,208
    
    
    
    
    
    
    
    478,147,729
    
    
    
    
    
    
    
    361,751,948
 29.
    
    Sanctions:
   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, 2007, except as stated)
 30.
    
    Subsequent events:
      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, 2007, 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 neutralization system.
    
    Central Bocamina  Design and implementation of an environment management system
    
    Huasco  Construction of anti-leak system for fuel
  
    
    Tarapacá Environment related works pursuant to environment management system under
ISO 14,001.
    
    Los Molles  Settlement of environmental liabilities
    
    Cipreses  Implementation of environmental protection procedures related to
protection of the Maule River
    
    Sauzal   Implementation of environmental protection procedures related to
protection of the Cachapoal River and studies related to the environment management
system
    
    San Isidro   Expenses related to its environment management system under ISO 14.001
    
    Central Bocamina  Development and implementation of a project to contain noise levels
    
    Rapel  Setlement of environmental liabilities and replacement of polychlorinated
biphenyl containing condenser
    
    Sauzalito  Replacement and disposal of polychlorinated biphenyl containing condenser
    
    Isla  Replacement and disposal of polychlorinated biphenyl containing condenser
    
    Pehuenche  Settlement of environmental liabilities and landscape recuperation
    
    Abanico  Implementation of works to contain contaminated waters
    
    El Toro  Implementation of works to contain contaminated waters and studies related to
the environmental impact of the plants operation
    
    Pangue  Construction of contention ponds for transformer oil
    
    Ralco  Construction of contention ponds for transformer oil
    
    Tal Tal   Environment related works pursuant to environment management
system under ISO 14,001
    
    Diego de Almargo  Environment related works pursuant to environment management
system under ISO 14,001
  F-121




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles:
  I.
    
    Differences in Measurement Methods
  a)
    
    Inflation accounting
  b)
    
    Reversal of revaluation of property, plant and equipment
  c)
    
    Deferred income taxes
    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, 2007, 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.)
    
    Net operating loss-carry forwards(ii.)
    
    Accelerated depreciation methods for accounting purposes under Chilean GAAP(iii.)
    
    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(iv.)
    
    Accounting for deferred tax differences related to US GAAP adjustments.
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles, continued:
  
 d)
    
    Staff severance indemnities
    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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles, continued:e)
    
    Pension and post-retirement benefits
   f)
    
    Investments in related companies
    (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 d).(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 and liabilities(B)(ix)
    
    Adjustment related to changes in accounting principles (C)(x)
    
    The deferred income tax effects of adjustments (i) to (ix).
  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, 2007, 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.On January 1, 2002, the Company adopted SFAS 142 and thus ceased amortizing goodwill under US
GAAP. Instead, impairment tests are performed at least annually on the level of reporting
units.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.
  F-126




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 (ii)
    
    Under Chilean GAAP, the Company evaluates the carrying amount of goodwill for impairment on
the level of cash-generating units. 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, 2006 and 2007, apart from the impairment of goodwill
over the Companys equity method investee Gas Atacama Holding (see Note 10(g)).Under US GAAP, goodwill is tested for impairment at least annually on the level of reporting
units, which the Company defined to be as operation units. In addition, goodwill is evaluated
for impairment between these annual tests if events or changes in circumstances indicate that
goodwill might be impaired. The impairment test is performed based on a two-step approach:
 1.
    
    The first step is to compare each reporting units fair value with its carrying
amount including goodwill. If a reporting units carrying amount (including goodwill)
exceeds its fair value, goodwill might be impaired and the second step is required2.
    
    The second step is to compare the implied fair value of the reporting units
goodwill with the carrying amount of goodwill. The implied fair value is computed by
allocating the reporting units fair value to all of its assets and liabilities in a
manner that is similar to a purchase price allocation in a business combination
accounted for in accordance with SFAS 141. The difference between the fair value of the
reporting unit and the fair value of its net assets is the implied fair value of
goodwill. If the implied fair value of goodwill is less than its carrying amount, the
carrying amount is written-down against income to the implied fair value of goodwill.
 The Company carried out the required annual impairment test of goodwill in the fourth quarter
of each year.The following effects are included in the net income and shareholders equity reconciliation
to US GAAP under paragraph (w) below:
 (i)
    
    differences in the amount of goodwill 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-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, 2007, 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, 2006 and 2007, by segment of operation is as follows:
 Goodwill under US GAAPCurrencyTranslation
    
    
    Reclassification
    
    
    December 31,January 1, 2006
    
    
    Acquisitions
    
    
    Adjustment
    
    
    (1)
    
    
    2006ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Chile
    
    
    5,684,445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,684,445Peru
    
    
    16,634,710
    
    
    
    3,430,721
    
    
    
    290,168
    
    
    
    
    
    
    
    20,355,599Colombia
    
    
    22,642,518
    
    
    
    
    
    
    
    394,964
    
    
    
    (9,100,166
    )
    
    
    13,937,316Total
    
    
    44,961,673
    
    
    
    3,430,721
    
    
    
    685,132
    
    
    
    (9,100,166
    )
    
    
    39,977,360
 Goodwill under US GAAPCurrencyImpairment
    
    
    Translation
    
    
    December 31,January 1, 2007
    
    
    (2)
    
    
    Adjustment
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Chile
    
    
    5,684,445
    
    
    
    (96,353
    )
    
    
    
    
    
    
    5,588,092Peru
    
    
    20,355,599
    
    
    
    
    
    
    
    (2,666,720
    )
    
    
    17,688,879Colombia
    
    
    13,937,316
    
    
    
    
    
    
    
    (1,825,455
    )
    
    
    12,111,861Total
    
    
    39,977,360
    
    
    
    (96,353
    )
    
    
    (4,492,175
    )
    
    
    35,388,832
 (1)
    
    See Note 10 (e) (iv.)(2)
    
    See Note 10 (g)  h)
    
    Negative goodwill
    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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  h-1:
    
    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 fair value to property, plant and equipment and other effects on income.
 i)
    
    Capitalized exchange differences
   i-1:
    
    Adjustment to net income related to foreign currency exchange differences;i-2:
    
    Adjustment to depreciation of property, plant and equipment.
 j)
    
    Accumulated deficit during the development stage
     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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:k)
    
    Minimum dividend
  l)
    
    Capitalized general and administrative expenses
   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.
 m)
    
    Involuntary employee termination benefits
  
    
    Management, having the authority to approve the action, commits to a plan of
termination
    
    The plan identifies the number of employees to be terminated, their job classifications
or functions and their locations, and the expected completion date
    
    The plan establishes the terms of the benefit arrangement, including the benefits that
employees will receive upon termination (including but not limited to cash payments), in
sufficient detail to enable employees to determine the type and amount of benefits they
will receive if they are involuntarily terminated, and
    
    Actions required to complete the plan indicate that it is unlikely that significant
changes to the plan will be made or that the plan will be withdrawn.
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:n)
    
    Creation of Endesa Brasil
  o)
    
    Translation of financial statements of investments outside of Chile
  
    
    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-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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  p)
    
    Derivative instruments
       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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:q)
    
    Reorganization of subsidiaries
           
    
    Application of the purchase method for the purchase of minority interest from unrelated parties
    
    Differences resulting from different book values under US GAAP of the assets and liabilities
involved, are recorded in paragraph (w) below.
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:r)
    
    Amortization of bond discount and deferred debt issuance costs
   s)
    
    Accounting for asset retirement obligations
    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, 2005, 2006 and 2007 are reflected as accretion expense.
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Year ended December 31,2005
    
    

2006
    
    

2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Balance as of January 1
    
    
    1,208,228
    
    
    
    1,027,980
    
    
    
    2,272,671Cumulative translation adjustment
    
    
    (58,080
    )
    
    
    8,691
    
    
    
    (191,576
    )Liabilities incurred in the period
    
    
    
    
    
    
    879,946
    
    
    
    458,696Accretion expense
    
    
    (122,168
    )
    
    
    356,054
    
    
    
    11,359Balance as of December 31
    
    
    1,027,980
    
    
    
    2,272,671
    
    
    
    2,551,150
 t)
    
    Effects of minority interest on the US GAAP adjustments
  u)
    
    Accounting for the Impairment or Disposal of Long-Lived Assets
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:(v)
    
    Exchange of non-financial assets and acquisition of minority interest
  a.
    
    The exchange of the participation in Betania against participation of Emgesa
(merged entity) was accounted for as an exchange of financial assets, realizing a loss to
the extent the transaction did not represent a common control transactionb.
    
    To the extent that minority interest was purchased from third parties, the
transaction was accounted for under the purchase method pursuant to SFAS 141, with any
excess of the purchase price consideration over the fair value of identifiable net assets
acquired being accounted for as goodwill.c.
    
    To the extent third parties were involved, the disposal of a portion of
participation of Emgesa (merged entity) was accounted for as a partial disposal of
investments, affecting net income of the period to the extent the fair value of
consideration received exceeded the book value of the investment together with the
pro-rata portion of goodwill, fair value increment to net assets and accumulated other
comprehensive income previously accounted for.
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:(w)
    
    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 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Net income in accordance with Chilean GAAP
    
    
    121,304,086
    
    
    
    203,567,376
    
    
    
    192,439,270Reversal of revaluation of Property, plant and equipment (paragraph b)
    
    
    398,582
    
    
    
    343,473
    
    
    
    421,920Effect of application of FAS 109 (paragraph c-1)
    
    
    3,487,128
    
    
    
    9,762,791
    
    
    
    9,745,330Deferred income taxes on US GAAP adjustments (paragraph c-2)
    
    
    (12,028,168
    )
    
    
    (18,414,868
    )
    
    
    (13,634,342
    )Investments in related companies (paragraph f)
    
    
    (31,323,897
    )
    
    
    4,878,495
    
    
    
    (22,984,920
    )Goodwill (paragraph g)
    
    
    1,498,305
    
    
    
    1,012,592
    
    
    
    813,501Negative goodwill (paragraph h):h-1: Amortization of negative goodwill
    
    
    (16,788,712
    )
    
    
    (6,484,232
    )
    
    
    (4,382,076
    )h-2: Depreciation of Property, plant and equipment
    
    
    11,356,606
    
    
    
    18,954,860
    
    
    
    11,779,556Capitalized exchange differences (paragraph i):i-2: Depreciation of Property, plant and equipment
    
    
    530,125
    
    
    
    532,415
    
    
    
    514,936Accumulated deficit during the development stage (paragraph j)
    
    
    
    
    
    
    (325,438
    )
    
    
    Capitalized general and administrative expenses (paragraph l):l-1: Depreciation of Property, plant and equipment
    
    
    538,942
    
    
    
    (242,437
    )
    
    
    400,720l-2: Other operating results
    
    
    1,038,612
    
    
    
    1,042,998
    
    
    
    787,149Involuntary employee termination benefits (paragraph m)
    
    
    (18,667
    )
    
    
    (22,872
    )
    
    
    (18,385
    )Derivative instruments (paragraph p)Operating
    
    
    29,717,323
    
    
    
    4,933,348
    
    
    
    6,174,276Non-operating
    
    
    738,610
    
    
    
    147,875
    
    
    
    Reorganization of subsidiaries (paragraph q)
    
    
    (250,084
    )
    
    
    (254,445
    )
    
    
    (303,931
    )Amortization of bond discount and deferred debt issuance costs (paragraph r)
    
    
    
    
    
    
    1,865,279
    
    
    
    (482,644
    )Accounting for asset retirement obligations (paragraph s)s-1: Depreciation expense
    
    
    (42,092
    )
    
    
    (15,543
    )
    
    
    (24,166
    )s-2: Accretion expense
    
    
    122,168
    
    
    
    (1,236,000
    )
    
    
    (11,359
    )Effects of minority interest on the US GAAP adjustments (paragraph t)
    
    
    (320,789
    )
    
    
    7,528,365
    
    
    
    207,465Net income in accordance with US GAAP
    
    
    109,958,078
    
    
    
    227,574,032
    
    
    
    181,442,300Other 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
    
    
    (16,593,126
    )
    
    
    3,231,768
    
    
    
    (14,945,898
    )Fair value change of hedging instruments used in cash flow hedges (paragraph
p), net of tax (ThCh$ 25,139, ThCh$ 4,695 and ThCh$ 256,552 as of December
31, 2005 2006 and 2007, respectively)
    
    
    (147,876
    )
    
    
    (22,922
    )
    
    
    (895,316
    )Amortization of FAS 158 adjustment
    
    
    
    
    
    
    
    
    
    
    (294,660
    )Cumulative translation adjustment, net of income tax ( ThCh$ 0)
    
    
    15,635,734
    
    
    
    (3,128,220
    )
    
    
    10,541,273Comprehensive income in accordance with US GAAP
    
    
    108,852,810
    
    
    
    227,654,658
    
    
    
    175,847,699
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:(w)
    
    Effects of conforming to US GAAP:
 (ii)
    
    The reconciliation to conform shareholders equity amounts to US GAAP is as follows:
 As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Shareholders equity in accordance with Chilean GAAP
    
    
    1,927,088,781
    
    
    
    1,884,226,640Reversal of revaluation of Property, plant and equipment (paragraph b):Property, plant and equipment
    
    
    (12,803,027
    )
    
    
    (12,803,027
    )Accumulated depreciation
    
    
    7,747,130
    
    
    
    8,169,050Effect of application of FAS 109 (paragraph c-1)
    
    
    (140,750,654
    )
    
    
    (129,868,674
    )Deferred income taxes on US GAAP adjustments (paragraph c-2)
    
    
    29,664,112
    
    
    
    13,436,488Investments in related companies (paragraph f)
    
    
    (14,305,705
    )
    
    
    (35,883,267
    )Goodwill (paragraph g):Goodwill, gross
    
    
    24,088,420
    
    
    
    21,410,817Accumulated amortization
    
    
    3,974,090
    
    
    
    4,123,475Negative goodwill (paragraph h):h-1: Negative goodwill
    
    
    393,330,784
    
    
    
    347,374,966h-1 Accumulated amortization of negative goodwill
    
    
    (354,056,051
    )
    
    
    (310,371,064
    )h-2: Property, plant and equipment
    
    
    (553,087,194
    )
    
    
    (490,716,429
    )h-2: Accumulated depreciation of Property, plant and equipment
    
    
    211,881,669
    
    
    
    199,898,847Capitalized exchange differences (paragraph i):Property, plant and equipment
    
    
    (22,631,002
    )
    
    
    (21,757,054
    )Accumulated depreciation of Property, plant and equipment
    
    
    1,798,300
    
    
    
    2,199,623Minimum dividend (paragraph k)
    
    
    (36,486,624
    )
    
    
    (38,433,991
    )Capitalized general and administrative expenses (paragraph l):l-1: Property, plant and equipment
    
    
    (32,242,216
    )
    
    
    (33,723,846
    )l-1: Accumulated depreciation of Property, plant and equipment
    
    
    10,840,495
    
    
    
    11,779,937l-2: Other assets
    
    
    (1,583,849
    )
    
    
    1,198,002Involuntary employee termination benefits (paragraph m)
    
    
    41,740
    
    
    
    17,888Derivative instruments (paragraph p)
    
    
    13,045,568
    
    
    
    18,329,221Reorganization of subsidiaries (paragraph q), (paragraph v)
    
    
    4,955,677
    
    
    
    21,025,852Amortization of bond discount and deferred debt issuance costs (paragraph r)
    
    
    1,865,279
    
    
    
    1,382,635Accounting for asset retirement obligations, net (paragraph s)
    
    
    (1,704,341
    )
    
    
    (1,548,635
    )Effects of minority interest on the US GAAP adjustments (paragraph t) and v)
    
    
    90,167,763
    
    
    
    137,370,814Shareholders equity in accordance with US GAAP
    
    
    1,550,839,145
    
    
    
    1,596,838,268
  F-138




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:(w)
    
    The changes in shareholders equity in US GAAP as of each year-end are as follows:
 As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Shareholders equity in accordance with US GAAP  January 1,
    
    
    1,355,111,848
    
    
    
    1,406,038,345
    
    
    
    1,550,839,144Dividends paid during the year
    
    
    (37,143,843
    )
    
    
    (73,904,865
    )
    
    
    (112,990,526
    )Reversal of minimum dividends as of previous balance sheet date
    
    
    23,068,401
    
    
    
    31,354,612
    
    
    
    36,486,624Minimum dividend current period(paragraph k)
    
    
    (31,354,612
    )
    
    
    (36,486,624
    )
    
    
    (38,433,991
    )Cumulative translation adjustment
    
    
    15,635,734
    
    
    
    (3,128,220
    )
    
    
    10,541,273Reorganization under common control
    
    
    (12,496,259
    )
    
    
    (6,900,956
    )
    
    
    (14,910,682
    )Gain (loss) on hedge of the foreign currency exposure of net
investment in foreign operations
    
    
    (16,593,126
    )
    
    
    3,231,768
    
    
    
    (14,945,898
    )Fair value change of hedging instruments used in cash flow hedges
    
    
    (147,876
    )
    
    
    (22,922
    )
    
    
    (895,316
    )Amortization of FAS 158 adjustment Endesa Brasil
    
    
    
    
    
    
    3,083,974
    
    
    
    (294,660
    )Net income in accordance with US GAAP for the year
    
    
    109,958,078
    
    
    
    227,574,032
    
    
    
    181,442,300Shareholders equity in accordance with US GAAP  December 31,
    
    
    1,406,038,345
    
    
    
    1,550,839,144
    
    
    
    1,596,838,268
  F-139




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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, 2007, 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 31,2005
    
    
    2006
    
    
    2007Ch$
    
    
    Ch$
    
    
    Ch$Chilean GAAP earnings per share
    
    
    14.49
    
    
    
    24.82
    
    
    
    23.46US GAAP basic and diluted earnings per share
    
    
    13.14
    
    
    
    27.74
    
    
    
    22.12Weighted average number of common shares
outstanding (000s)
    
    
    8,201,755
    
    
    
    8,201,755
    
    
    
    8,201,755
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:b)
    
    Income taxes:
  Year ended December 31, 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
    
    
    (1,957,416
    )
    
    
    
    
    
    
    (3,046,556
    )
    
    
    (18,550,471
    )
    
    
    (42,392,696
    )
    
    
    (65,947,139
    )Deferred income taxes as determined under Chilean GAAP
    
    
    (30,944,753
    )
    
    
    (6,175,079
    )
    
    
    
    
    
    
    1,725,425
    
    
    
    508,596
    
    
    
    (34,885,811
    )Total income tax provision under Chilean GAAP
    
    
    (32,902,169
    )
    
    
    (6,175,079
    )
    
    
    (3,046,556
    )
    
    
    (16,825,046
    )
    
    
    (41,884,100
    )
    
    
    (100,832,950
    )US GAAP adjustmentsDeferred tax effect of applying SFAS 109
    
    
    227,258
    
    
    
    
    
    
    
    
    
    
    
    3,259,870
    
    
    
    
    
    
    
    3,487,128Deferred tax effect of adjustment to US GAAP
    
    
    (10,095,548
    )
    
    
    (312,360
    )
    
    
    (311,194
    )
    
    
    (1,374,553
    )
    
    
    65,487
    
    
    
    (12,028,168
    )Total US GAAP adjustments
    
    
    (9,868,290
    )
    
    
    (312,360
    )
    
    
    (311,194
    )
    
    
    1,885,317
    
    
    
    65,487
    
    
    
    (8,541,040
    )Total income tax provision under US GAAP
    
    
    (42,770,459
    )
    
    
    (6,487,439
    )
    
    
    (3,357,750
    )
    
    
    (14,939,729
    )
    
    
    (41,818,613
    )
    
    
    (109,373,990
    )
 Year ended December 31, 2006Chile
    
    
    Argentina
    
    
    Peru
    
    
    Colombia
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Income tax provision under Chilean GAAP:Current income tax as determined under Chilean GAAP
    
    
    (43,086,339
    )
    
    
    (4,355,301
    )
    
    
    (17,847,773
    )
    
    
    (41,481,421
    )
    
    
    (106,770,834
    )Deferred income taxes as determined under Chilean
GAAP
    
    
    (25,527,932
    )
    
    
    (10,121,199
    )
    
    
    (12,146,689
    )
    
    
    14,026,503
    
    
    
    (33,769,317
    )Total income tax provision under Chilean GAAP
    
    
    (68,614,271
    )
    
    
    (14,476,500
    )
    
    
    (29,994,462
    )
    
    
    (27,454,918
    )
    
    
    (140,540,151
    )US GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    6,204,332
    
    
    
    
    
    
    
    3,558,459
    
    
    
    
    
    
    
    9,762,791Deferred tax effect of adjustment to US GAAP
    
    
    (6,768,413
    )
    
    
    (3,008,476
    )
    
    
    (6,913,736
    )
    
    
    (1,724,243
    )
    
    
    (18,414,868
    )Total US GAAP adjustments
    
    
    (564,081
    )
    
    
    (3,008,476
    )
    
    
    (3,355,277
    )
    
    
    (1,724,243
    )
    
    
    (8,652,077
    )Total income tax provision under US GAAP
    
    
    (69,178,352
    )
    
    
    (17,484,976
    )
    
    
    (33,349,739
    )
    
    
    (29,179,161
    )
    
    
    (149,192,228
    )
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 Year ended December 31, 2007Chile
    
    
    Argentina
    
    
    Peru
    
    
    Colombia
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Income tax provision under Chilean GAAP:Current income tax as determined under Chilean GAAP
    
    
    (33,226,760
    )
    
    
    (10,141,525
    )
    
    
    (15,072,403
    )
    
    
    (21,564,529
    )
    
    
    (80,005,217
    )Deferred income taxes as determined under Chilean
GAAP
    
    
    (25,645,576
    )
    
    
    (2,574,884
    )
    
    
    (4,969,686
    )
    
    
    (218,135
    )
    
    
    (33,408,281
    )Total income tax provision under Chilean GAAP
    
    
    (58,872,336
    )
    
    
    (12,716,409
    )
    
    
    (20,042,089
    )
    
    
    (21,782,664
    )
    
    
    (113,413,498
    )US GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    6,359,214
    
    
    
    
    
    
    
    3,386,116
    
    
    
    
    
    
    
    9,745,330Deferred tax effect of adjustment to US GAAP
    
    
    (7,282,557
    )
    
    
    (81,375
    )
    
    
    (6,350,425
    )
    
    
    80,015
    
    
    
    (13,634,342
    )Total US GAAP adjustments
    
    
    (923,343
    )
    
    
    (81,375
    )
    
    
    (2,964,309
    )
    
    
    80,015
    
    
    
    (3,889,012
    )Total income tax provision under US GAAP
    
    
    (59,795,679
    )
    
    
    (12,797,784
    )
    
    
    (23,006,398
    )
    
    
    (21,702,649
    )
    
    
    (117,302,510
    )
 
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Short-term
    
    
    Long-term
    
    
    Short-term
    
    
    Long-termDeferred income tax assetsProperty, plant and equipment
    
    
    
    
    
    
    121,091,977
    
    
    
    
    
    
    
    104,098,773Prepaid income
    
    
    74,281
    
    
    
    989,257
    
    
    
    104,558
    
    
    
    903,656Derivative contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,130Vacation accrual
    
    
    521,481
    
    
    
    
    
    
    
    548,114
    
    
    
    Tax losses (1)
    
    
    
    
    
    
    48,568,311
    
    
    
    
    
    
    
    23,506,004Contingencies
    
    
    1,071,131
    
    
    
    1,414,357
    
    
    
    1,132,214
    
    
    
    2,730,346Allowance for doubtful accounts
    
    
    1,345
    
    
    
    9,484,435
    
    
    
    395
    
    
    
    7,271,529Provision for employee obligations
    
    
    515,069
    
    
    
    992,332
    
    
    
    483,608
    
    
    
    890,494Provision for obsolete materials
    
    
    
    
    
    
    1,741,792
    
    
    
    
    
    
    
    1,445,992Other
    
    
    101,292
    
    
    
    627,676
    
    
    
    615,677
    
    
    
    730,207Valuation allowance
    
    
    
    
    
    
    (31,427,599
    )
    
    
    
    
    
    
    (6,539,366
    )Total deferred income tax assets
    
    
    2,284,599
    
    
    
    153,482,538
    
    
    
    2,884,566
    
    
    
    135,258,765Deferred income tax liabilitiesProperty, plant and equipment
    
    
    
    
    
    
    (374,072,708
    )
    
    
    
    
    
    
    (373,797,413
    )Severance indemnities
    
    
    
    
    
    
    (1,105,858
    )
    
    
    
    
    
    
    (985,660
    )Derivative contracts
    
    
    
    
    
    
    (2,217,747
    )
    
    
    
    
    
    
    (3,228,182
    )Finance costs
    
    
    
    
    
    
    (14,754,749
    )
    
    
    
    
    
    
    (14,099,991
    )Capitalized interest on construction
    
    
    
    
    
    
    (4,034,502
    )
    
    
    
    
    
    
    (3,959,224
    )Capitalized cost of studies
    
    
    
    
    
    
    (9,043,752
    )
    
    
    
    
    
    
    (8,960,610
    )Capitalized spare parts used
    
    
    
    
    
    
    (871,574
    )
    
    
    
    
    
    
    (806,387
    )Bonds discount
    
    
    
    
    
    
    (676,017
    )
    
    
    
    
    
    
    (470,678
    )Leasing
    
    
    
    
    
    
    (498,992
    )
    
    
    
    
    
    
    (1,058,920
    )Investment in Argentina
    
    
    
    
    
    
    (450,082
    )
    
    
    
    
    
    
    (332,280
    )Other
    
    
    
    
    
    
    (3,513,175
    )
    
    
    
    
    
    
    (2,933,225
    )Total deferred income tax
liabilities
    
    
    
    
    
    
    (411,239,156
    )
    
    
    
    
    
    
    (410,632,570
    )Net deferred tax balance
    
    
    2,284,599
    
    
    
    (257,756,618
    )
    
    
    2,884,566
    
    
    
    (275,373,805
    )
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Balance as of January 1,
    
    
    (31,497,470
    )
    
    
    (31,427,599
    )Cumulative translation adjustment
    
    
    356,984
    
    
    
    2,367,033Decrease of valuation allowance
    
    
    
    
    
    
    26,017,535Increase of valuation allowance
    
    
    (287,113
    )
    
    
    (3,496,335
    )Balance as of December 31,
    
    
    (31,427,599
    )
    
    
    (6,539,366
    )
  F-143




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:(1)
    
    Accumulated tax losses by country as of December 31, 2006 and 2007, are as follows:
 December 31, 2006
    
    
    December 31, 2007Year of
    
    
    
    
    
    Year ofAmount
    
    
    expiration
    
    
    Amount
    
    
    expirationThCh$
    
    
    
    
    
    
    ThCh$Chile
    
    
    113,983,360
    
    
    Do not expire
    
    
    138,132,386
    
    
    Do not expireArgentina
    
    
    8,389,340
    
    
    
    2007
    
    
    
    4,715,978
    
    
    
    2012Colombia (A)
    
    
    77,220,205
    
    
    
    2007
    
    
    
    
    
    
    
    Total
    
    
    199,592,905
    
    
    
    
    
    
    
    142,848,364
 (A)
    
    During the years ended December 31, 2005 and 2006, management did 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, 2006, a valuation allowance has been recorded,
which covered the whole amount of the deferred tax asset related to tax loss
carryforwards. However, due to the merger of the Companys Colombian Subsidiaries, the tax
loss carryforwards were applied against income during the year ended December 31, 2007.  Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Chile
    
    
    60,358,782
    
    
    
    1,580,886
    
    
    
    7,726,488Argentina
    
    
    44,083,625
    
    
    
    30,108,315
    
    
    
    2,373,046Colombia
    
    
    
    
    
    
    1,245,390
    
    
    
    74,567,069Total
    
    
    104,442,407
    
    
    
    32,934,591
    
    
    
    84,666,603
   Tax YearsSubject toTax jurisdiction
    
    ExaminationChile
    
    
    2005-2007Argentina
    
    
    2003-2007Colombia
    
    
    2003-2007Peru
    
    
    2004-2007
 
  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, 2007, 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%)
    
    
    (23,482,930
    )
    
    
    4,765,408
    
    
    
    (9,874,611
    )
    
    
    (5,075,567
    )
    
    
    (13,454,171
    )
    
    
    (47,121,871
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    5,045,725
    
    
    
    (9,584,181
    )
    
    
    (5,075,567
    )
    
    
    (14,245,594
    )
    
    
    (23,859,617
    )Increase (decrease) in rates resulting from:Price-level restatement not accepted for tax purposes
    
    
    5,190,285
    
    
    
    (7,175,270
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,984,985
    )Non-taxable items
    
    
    6,464,693
    
    
    
    
    
    
    
    7,030,589
    
    
    
    6,793,384
    
    
    
    
    
    
    
    20,288,666Non-deductable items
    
    
    (31,471,373
    )
    
    
    (7,524,527
    )
    
    
    (1,071,060
    )
    
    
    
    
    
    
    (11,705,219
    )
    
    
    (51,772,179
    )Effect of change in valuation allowance
    
    
    (673,630
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447,967
    
    
    
    774,337Other
    
    
    1,202,496
    
    
    
    (1,598,775
    )
    
    
    (1,440,466
    )
    
    
    
    
    
    
    (3,861,596
    )
    
    
    (5,698,341
    )Total income tax under US GAAP
    
    
    (42,770,459
    )
    
    
    (6,487,439
    )
    
    
    (14,939,729
    )
    
    
    (3,357,750
    )
    
    
    (41,818,613
    )
    
    
    (109,373,990
    )
  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, 2007, 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%)
    
    
    (48,687,876
    )
    
    
    (5,299,648
    )
    
    
    (7,142,283
    )
    
    
    (13,674,449
    )
    
    
    (74,804,256
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    (5,611,392
    )
    
    
    (6,932,216
    )
    
    
    (17,294,156
    )
    
    
    (29,837,764
    )Increase (decrease) in rates resulting from:Price-level restatement not accepted for tax purposes
    
    
    (3,864,885
    )
    
    
    (6,541,127
    )
    
    
    
    
    
    
    13,667,135
    
    
    
    3,261,123Non-taxable items
    
    
    15,870,030
    
    
    
    2,951,689
    
    
    
    1,723,074
    
    
    
    734,094
    
    
    
    21,278,887Non-deductable items
    
    
    (37,177,307
    )
    
    
    (2,077,407
    )
    
    
    (19,316,484
    )
    
    
    (13,582,144
    )
    
    
    (72,153,342
    )Prior year income tax
    
    
    4,526,691
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,526,691Effect of change in valuation allowance
    
    
    (224,655
    )
    
    
    
    
    
    
    
    
    
    
    (62,458
    )
    
    
    (287,113
    )Other
    
    
    379,650
    
    
    
    (907,091
    )
    
    
    (1,681,830
    )
    
    
    1,032,817
    
    
    
    (1,176,454
    )Tax benefit (expense) at effective tax rate
    
    
    (69,178,352
    )
    
    
    (17,484,976
    )
    
    
    (33,349,739
    )
    
    
    (29,179,161
    )
    
    
    (149,192,228
    )Total income tax under US GAAP
    
    
    (69,178,352
    )
    
    
    (17,484,976
    )
    
    
    (33,349,739
    )
    
    
    (29,179,161
    )
    
    
    (149,192,228
    )
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 2007Chile
    
    
    Argentina
    
    
    Peru
    
    
    Colombia
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$At Chilean statutory income tax rate (17%)
    
    
    (34,276,952
    )
    
    
    (9,424,122
    )
    
    
    (4,293,336
    )
    
    
    (12,530,379
    )
    
    
    (60,524,789
    )Effect of differences in foreign tax rates
    
    
    
    
    
    
    (9,978,482
    )
    
    
    (3,338,607
    )
    
    
    (12,530,379
    )
    
    
    (25,847,468
    )Increase (decrease) in rates resulting from:Price-level restatement not accepted for tax purposes
    
    
    (13,483,486
    )
    
    
    1,097,453
    
    
    
    (14,337
    )
    
    
    
    
    
    
    (12,400,370
    )Non-taxable items
    
    
    28,202,165
    
    
    
    18,685,974
    
    
    
    1,381,810
    
    
    
    6,828,497
    
    
    
    55,098,446Non-deductable items
    
    
    (37,688,868
    )
    
    
    (13,178,607
    )
    
    
    (15,960,425
    )
    
    
    (29,232,860
    )
    
    
    (96,060,760
    )Prior year income tax
    
    
    749,004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    749,004Effect of change in valuation allowance
    
    
    (2,831,604
    )
    
    
    
    
    
    
    
    
    
    
    25,352,804
    
    
    
    22,521,200Other
    
    
    (465,938
    )
    
    
    
    
    
    
    (781,503
    )
    
    
    409,668
    
    
    
    (837,773
    )Tax benefit (expense) at effective tax rate
    
    
    (59,795,679
    )
    
    
    (12,797,784
    )
    
    
    (23,006,398
    )
    
    
    (21,702,649
    )
    
    
    (117,302,510
    )Total income tax under US GAAP
    
    
    (59,795,679
    )
    
    
    (12,797,784
    )
    
    
    (23,006,398
    )
    
    
    (21,702,649
    )
    
    
    (117,302,510
    )
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Chile
    
    
    179,852,458
    
    
    
    305,362,736
    
    
    
    163,827,488Argentina
    
    
    (19,056,822
    )
    
    
    11,626,953
    
    
    
    37,409,872Peru
    
    
    16,244,728
    
    
    
    42,857,580
    
    
    
    23,799,334Brazil (1)
    
    
    29,088,690
    
    
    
    
    
    
    
    Colombia
    
    
    13,203,014
    
    
    
    16,918,991
    
    
    
    73,708,116Total
    
    
    219,332,068
    
    
    
    376,766,260
    
    
    
    298,744,810
 (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. c)
    
    Segment disclosure
    
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
   Chile
    
    
    Argentina
    
    
    Peru
    
    
    Brazil (2)
    
    
    Colombia
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$2005Total revenues
    
    
    600,942,427
    
    
    
    171,933,926
    
    
    
    129,024,151
    
    
    
    45,830,648
    
    
    
    283,741,612
    
    
    
    1,231,472,764Depreciation and amortization
    
    
    84,463,076
    
    
    
    35,835,468
    
    
    
    20,029,435
    
    
    
    12,523,376
    
    
    
    35,395,997
    
    
    
    188,247,352Operating income
    
    
    207,256,178
    
    
    
    14,160,840
    
    
    
    59,020,249
    
    
    
    20,362,601
    
    
    
    132,187,605
    
    
    
    432,987,4732006Total revenues
    
    
    708,515,756
    
    
    
    252,836,716
    
    
    
    180,627,696
    
    
    
    
    
    
    
    294,087,707
    
    
    
    1,436,067,875Depreciation and amortization
    
    
    85,258,947
    
    
    
    37,096,389
    
    
    
    30,990,471
    
    
    
    
    
    
    
    36,123,207
    
    
    
    189,469,014Operating income
    
    
    313,383,057
    
    
    
    38,470,676
    
    
    
    59,644,601
    
    
    
    
    
    
    
    130,307,940
    
    
    
    541,806,274Long lived assets (net) (1)
    
    
    2,552,377,063
    
    
    
    462,617,729
    
    
    
    785,170,582
    
    
    
    
    
    
    
    1,214,339,784
    
    
    
    5,014,505,1582007Total revenues
    
    
    976,559,273
    
    
    
    264,940,755
    
    
    
    167,378,800
    
    
    
    
    
    
    
    318,085,097
    
    
    
    1,726,963,925Depreciation and amortization
    
    
    92,853,502
    
    
    
    36,963,151
    
    
    
    32,653,396
    
    
    
    
    
    
    
    31,727,450
    
    
    
    194,197,499Operating income
    
    
    342,047,212
    
    
    
    22,518,334
    
    
    
    46,010,341
    
    
    
    
    
    
    
    160,254,214
    
    
    
    570,830,101Long lived assets (net) (1)
    
    
    2,513,864,707
    
    
    
    382,560,854
    
    
    
    666,236,213
    
    
    
    
    
    
    
    1,039,142,118
    
    
    
    4,601,803,892
 
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Revenues
    
    
    Long-lived assetsYear ended December 31,
    
    
    As of December 31,2005
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Chile (1)
    
    
    600,942,427
    
    
    
    708,515,756
    
    
    
    976,559,273
    
    
    
    2,552,377,063
    
    
    
    2,513,864,707Argentina
    
    
    171,933,926
    
    
    
    252,836,716
    
    
    
    264,940,755
    
    
    
    462,617,729
    
    
    
    382,560,854Brazil (2)
    
    
    45,830,648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Colombia
    
    
    283,741,612
    
    
    
    294,087,707
    
    
    
    318,085,097
    
    
    
    1,214,339,784
    
    
    
    1,039,142,118Peru
    
    
    129,024,151
    
    
    
    180,627,696
    
    
    
    167,378,800
    
    
    
    785,170,582
    
    
    
    666,236,213Total
    
    
    1,231,472,764
    
    
    
    1,436,067,875
    
    
    
    1,726,963,925
    
    
    
    5,014,505,158
    
    
    
    4,601,803,892
 (1)
    
    The Chile segment includes assets not assigned to specific segments (such as corporate
headquarter)(2)
    
    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) (ii.)) as of October 1,
2005, the Company no longer consolidates the long-lived assets of these subsidiaries.  d)
    
    Concentration of risk:
    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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:e)
    
    Schedule of debt maturity:
  As ofDecember 31,2007ThCh$2008
    
    
    373,473,9042009
    
    
    359,822,6222010
    
    
    97,998,9282011
    
    
    227,492,1082012
    
    
    109,511,5892013 and thereafter
    
    
    840,833,932Total
    
    
    2,009,133,083
 f)
    
    Disclosure regarding interest capitalization under US GAAP:
 Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Interest cost incurred
    
    
    196,057,317
    
    
    
    172,179,554
    
    
    
    170,655,235Interest capitalized
    
    
    
    
    
    
    5,941,629
    
    
    
    3,634,620
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:g)
    
    Cash flow information
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Operating cash flow Chile GAAP and US GAAP
    
    
    297,086,746
    
    
    
    451,188,230
    
    
    
    419,844,996Cash flow investing activities Chile GAAP
    
    
    (60,439,451
    )
    
    
    (219,636,276
    )
    
    
    (316,194,485
    )Differences between Chilean GAAP and US GAAP:Purchase of marketable securities during period
    
    
    (2,051,639
    )
    
    
    (5,614,355
    )
    
    
    (10,299,039
    )Sale of marketable securities during period
    
    
    774,406
    
    
    
    2,051,639
    
    
    
    5,614,355Cash flow investing activities US GAAP
    
    
    (61,716,684
    )
    
    
    (223,198,992
    )
    
    
    (320,879,169
    )Cash flow financing activities Chile GAAP and US GAAP
    
    
    (402,505,082
    )
    
    
    (146,242,800
    )
    
    
    (146,924,246
    )Net cash flow
    
    
    (167,135,020
    )
    
    
    81,746,438
    
    
    
    (47,958,419
    )Effect of inflation and foreign exchange differences (1)
    
    
    (6,069,724
    )
    
    
    (7,508,827
    )
    
    
    (22,762,635
    )Total change of cash and cash equivalent
    
    
    (173,204,744
    )
    
    
    74,237,611
    
    
    
    (70,721,054
    )Cash
equivalent at the beginning of the period
    
    
    260,373,960
    
    
    
    87,169,216
    
    
    
    161,406,827Cash equivalent at the end of the period
    
    
    87,169,216
    
    
    
    161,406,827
    
    
    
    90,685,773
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Cash and cash equivalents under Chilean GAAP
    
    
    89,220,855
    
    
    
    167,021,182
    
    
    
    100,984,812Elimination of marketable securities
    
    
    (2,051,639
    )
    
    
    (5,614,355
    )
    
    
    (10,299,039
    )Cash and cash equivalents under US GAAP
    
    
    87,169,216
    
    
    
    161,406,827
    
    
    
    90,685,773
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  As of December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Cash
    
    
    10,990,894
    
    
    
    22,936,504
    
    
    
    19,397,212Time deposits and repurchase agreements
    
    
    76,178,322
    
    
    
    138,470,323
    
    
    
    71,288,561Total cash and cash equivalents under US GAAP
    
    
    87,169,216
    
    
    
    161,406,827
    
    
    
    90,685,773
  Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Interest paid during the year,
net of amount capitalized
    
    
    180,652,297
    
    
    
    166,237,925
    
    
    
    170,655,235Income taxes paid during the year
    
    
    63,892,142
    
    
    
    81,639,141
    
    
    
    86,254,037Assets acquired under leasing
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    Under Chilean GAAP in accordance with Technical Bulletin No. 50 Cash flow statement of the
Chilean Association of Accountants, the effects of foreign exchange changes on cash and cash
equivalents are not required to be disclosed separately in the statement of cash flows. Pursuant
to the comprehensive basis of preparation of price-level adjusted financial statements under US
GAAP the effects of foreign exchange gains or losses and effects of inflation on cash and cash
equivalents are separately disclosed as presented in the table below: Year ended December 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Foreign exchange losses
    
    
    (11,355,893
    )
    
    
    (9,675,982
    )
    
    
    (23,628,818
    )Effects of inflation
    
    
    5,286,169
    
    
    
    2,167,155
    
    
    
    866,183Effect of inflation and foreign exchange differences
    
    
    (6,069,724
    )
    
    
    (7,508,827
    )
    
    
    (22,762,635
    )
  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, 2007, 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, repurchase agreements and marketable securities, short-term receivables and
payables
  
    
    Long-term accounts receivable
  Long-term debt
  
    
    Derivative instruments
   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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  As of December 31,2006
    
    
    2007Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Cash
    
    
    22,936,504
    
    
    
    22,936,504
    
    
    
    19,397,212
    
    
    
    19,397,212Time deposits
    
    
    99,136,606
    
    
    
    99,136,606
    
    
    
    44,272,635
    
    
    
    44,272,635Marketable securities
    
    
    5,618,810
    
    
    
    5,618,810
    
    
    
    10,304,785
    
    
    
    10,304,785Repurchase agreements
    
    
    39,333,717
    
    
    
    39,333,717
    
    
    
    27,015,929
    
    
    
    27,015,929Current receivables, net
    
    
    157,721,629
    
    
    
    157,721,629
    
    
    
    211,209,592
    
    
    
    211,209,592Other receivables, net
    
    
    57,855,162
    
    
    
    57,855,162
    
    
    
    60,045,262
    
    
    
    60,045,262Amounts due from related companies
    
    
    35,325,944
    
    
    
    35,325,944
    
    
    
    175,950,661
    
    
    
    175,950,661Long term receivables
    
    
    74,178,594
    
    
    
    74,178,594
    
    
    
    83,285,957
    
    
    
    83,285,957Long term amounts due from related companies
    
    
    97,223,162
    
    
    
    97,223,162
    
    
    
    369
    
    
    
    369Derivative contracts (Assets)
    
    
    38,920,789
    
    
    
    38,920,789
    
    
    
    39,432,777
    
    
    
    39,432,777Accounts payable
    
    
    (94,245,000
    )
    
    
    (94,245,000
    )
    
    
    (192,954,223
    )
    
    
    (192,954,223
    )Short term amounts payables to related
companies
    
    
    (8,839,618
    )
    
    
    (8,839,618
    )
    
    
    (15,743,108
    )
    
    
    (15,743,108
    )Debt, notes payable and bonds payable
    
    
    (2,247,299,969
    )
    
    
    (2,491,796,529
    )
    
    
    (2,009,133,083
    )
    
    
    (2,225,731,009
    )Derivative contracts (Liabilities)
    
    
    (25,875,221
    )
    
    
    (25,875,221
    )
    
    
    (21,103,556
    )
    
    
    (21,103,556
    )
  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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:i)
    
    Derivative instruments
    As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Commodity
derivatives  liabilities
    
    
    (8,303,771
    )
    
    
    Embedded derivatives  assets
    
    
    38,920,789
    
    
    
    39,432,777Embedded derivatives  liabilities
    
    
    (17,543,832
    )
    
    
    (20,185,318
    )Financial derivatives  liabilities
    
    
    (27,618
    )
    
    
    (918,238
    )Total derivative adjustment (paragraph I p)
    
    
    13,045,568
    
    
    
    18,329,221Effects of minority interest (paragraph I t)
    
    
    135,386
    
    
    
    141,537Deferred tax effects (paragraph I c)
    
    
    (2,222,441
    )
    
    
    (3,007,053
    )Net effect of adjustment
    
    
    10,958,513
    
    
    
    15,463,705
  F-156




---



##### 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, 2007, except as stated)
 32.
    
    Differences between and United States Generally Accepted Accounting Principles,
continued:
 Commodity derivatives
    Embedded Derivative Contracts
  Net Investment Hedges
    F-157




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
   (a)
    
    Exchange rate risk hedging policy
  (b)
    
    Interest rate risk hedging policy
    Year ended December 31,(in thousands of Ch$)2005
    
    
    2006
    
    
    2007Accounting
    
    Risk
    
    
    Derivative
    
    
    Notional
    
    
    Fair
    
    
    Notional
    
    
    Fair
    
    
    Notional
    
    
    FairClassification
    
    Hedged
    
    
    Instrument
    
    
    Value
    
    
    Value
    
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueCash Flow Hedge
    
    Exchange
    
    CCS
    
    
    
    
    
    
    
    
    
    
    71,473,358
    
    
    
    171,536
    
    
    
    62,111,250
    
    
    
    (3,875,742
    )Interest Rate
    
    Collar
    
    
    56,198,393
    
    
    
    (168,595
    )
    
    
    57,178,686
    
    
    
    
    
    
    
    49,689,000
    
    
    
    (695,646
    )Interest Rate
    
    Swap
    
    
    
    
    
    
    
    
    
    
    51,460,817
    
    
    
    571,787
    
    
    
    41,788,449
    
    
    
    (695,646
    )Investment
    
    Exchange
    
    CCS
    
    
    28,099,196
    
    
    
    (14,218,193
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    84,297,589
    
    
    
    (14,386,788
    )
    
    
    180,112,861
    
    
    
    743,323
    
    
    
    153,588,699
    
    
    
    (5,267,034
    )
  F-158




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting
Principles, continued:
   j)
    
    Reclassifications under US GAAP
   F-159




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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, 2007, 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 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Other operating income under Chilean GAAP
    
    
    36,493,470
    
    
    
    32,185,253
    
    
    
    17,916,307Gain on sale of fixed assets
    
    
    4,466,597
    
    
    
    3,570,995
    
    
    
    449,283Reversal of contingency provision
    
    
    1,164,232
    
    
    
    9,335,150
    
    
    
    878,818Energy and power settlement
    
    
    8,264,845
    
    
    
    5,458,821
    
    
    
    6,460,185Indemnities and commissions
    
    
    2,015,507
    
    
    
    8,572,200
    
    
    
    2,152,944Recovery of expenses and clients portfolio
    
    
    3,682,375
    
    
    
    943,260
    
    
    
    2,371,522Gains on service and other contracts
    
    
    846,397
    
    
    
    585,843
    
    
    
    212,788Total reclassifications
    
    
    20,439,953
    
    
    
    28,466,269
    
    
    
    12,525,540Total other operating income as classified under US GAAP but
calculated in accordance with Chilean GAAP
    
    
    16,053,517
    
    
    
    3,718,984
    
    
    
    5,390,767
 (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 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Other operating expenses under Chilean GAAP
    
    
    58,760,333
    
    
    
    46,791,732
    
    
    
    85,250,850Loss on sale of fixed assets
    
    
    428,712
    
    
    
    186,442
    
    
    
    70,319Retirement benefits and severance indemnities
    
    
    931,913
    
    
    
    1,153,881
    
    
    
    780,756Board of directors compensation
    
    
    250,748
    
    
    
    258,793
    
    
    
    271,434Contingencies and litigation
    
    
    17,541,387
    
    
    
    8,823,290
    
    
    
    12,128,496Energy and power settlement
    
    
    9,329,382
    
    
    
    7,052,490
    
    
    
    8,503,789Costs of sales of materials and fixed assets
    
    
    244,979
    
    
    
    599,107
    
    
    
    Total reclassifications
    
    
    28,727,121
    
    
    
    18,074,003
    
    
    
    21,754,794Total other operating expenses as classified under US GAAP but
calculated in accordance with Chilean GAAP
    
    
    30,033,212
    
    
    
    28,717,729
    
    
    
    63,496,056
  F-160




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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, 2007, 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 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Sales
    
    
    1,231,472,764
    
    
    
    1,436,067,876
    
    
    
    1,726,963,925Costs of sales
    
    
    (730,300,570
    )
    
    
    (836,165,783
    )
    
    
    (1,093,500,021
    )Administrative and selling expenses
    
    
    (71,029,320
    )
    
    
    (59,841,916
    )
    
    
    (58,320,502
    )Other operating income
    
    
    20,439,953
    
    
    
    28,466,269
    
    
    
    12,525,540Operating income
    
    
    450,582,827
    
    
    
    568,526,446
    
    
    
    587,668,942Non-operating income and expenses, net
    
    
    (156,951,143
    )
    
    
    (178,531,902
    )
    
    
    (193,819,704
    )Income taxes
    
    
    (109,373,990
    )
    
    
    (149,192,228
    )
    
    
    (117,302,510
    )Minority interest
    
    
    (57,855,411
    )
    
    
    (63,259,825
    )
    
    
    (61,666,706
    )Equity participation in income of related companies, net
    
    
    (16,444,205
    )
    
    
    50,031,541
    
    
    
    (33,437,722
    )Income from continuing operations before cumulative
effect of change in accounting principle
    
    
    109,958,078
    
    
    
    227,574,032
    
    
    
    181,442,300Net income
    
    
    109,958,078
    
    
    
    227,574,032
    
    
    
    181,442,300Other comprehensive income (loss):Gain (loss) on hedge of the foreign currency exposure
of net investment in foreign operations
    
    
    (16,593,126
    )
    
    
    3,231,768
    
    
    
    (14,945,898
    )Cumulative translation adjustment
    
    
    15,635,734
    
    
    
    (3,128,220
    )
    
    
    10,897,348Amortization of FAS 158 adjustment Endesa Brasil
    
    
    
    
    
    
    
    
    
    
    (650,735
    )Fair value change in hedging instruments
    
    
    (147,876
    )
    
    
    (22,922
    )
    
    
    (895,316
    )Comprehensive income
    
    
    108,852,810
    
    
    
    227,654,658
    
    
    
    175,847,699
  F-161




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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, 2007, 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. Goodwill related to investments
accounted for under the equity method under US GAAP would be shown as part of investments in
related companies, rather than being recorded under goodwill under Chilean GAAP. Until
December 31, 2006, investments in subsidiaries in the development stage would be consolidated
under US GAAP, as opposed to being presented as equity method investees, under Chilean GAAP
(see also Note 3).
  As of December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Current assets
    
    
    449,280,959
    
    
    
    673,638,325Property, plant, and equipment
    
    
    6,924,911,386
    
    
    
    6,720,441,556Accumulated depreciation of property, plant and equipment
    
    
    (2,851,748,156
    )
    
    
    (2,869,938,016
    )Property, plant, and equipment, net
    
    
    4,073,163,230
    
    
    
    3,850,503,540Goodwill, net
    
    
    39,977,360
    
    
    
    35,388,832Other assets
    
    
    802,463,367
    
    
    
    567,015,965Total assets
    
    
    5,364,884,916
    
    
    
    5,126,546,662Current liabilities
    
    
    532,221,971
    
    
    
    733,064,885Long-term liabilities
    
    
    2,367,599,177
    
    
    
    2,047,131,737Minority interest
    
    
    914,224,624
    
    
    
    749,511,772Shareholders equity
    
    
    1,550,839,144
    
    
    
    1,596,838,268Total liabilities and shareholders equity
    
    
    5,364,884,916
    
    
    
    5,126,546,662
  F-162




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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, 2007, 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
  i)
    
    Electrical rate service
  ii)
    
    Medical benefits
  iii)
    
    Supplementary pension benefits
 Institución de
Previsión Social
 iv)
    
    Workers compensation benefits
   F-163




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
  Pensions Benefits
    
    
    Other BenefitsForeign
    
    
    Chilean
    
    
    Foreign2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Changes in benefit obligationsObligations as of January 1
    
    
    (18,661,369
    )
    
    
    (19,620,129
    )
    
    
    (10,371,267
    )
    
    
    (10,832,882
    )
    
    
    (2,002,078
    )
    
    
    (1,832,134
    )Foreign exchange effect
    
    
    (1,111,303
    )
    
    
    848,339
    
    
    
    
    
    
    
    
    
    
    
    125,892
    
    
    
    79,162Net periodic expense
    
    
    (2,053,395
    )
    
    
    (1,633,782
    )
    
    
    (1,644,516
    )
    
    
    (1,480,715
    )
    
    
    (135,221
    )
    
    
    (28,375
    )Benefits paid
    
    
    2,205,938
    
    
    
    2,123,243
    
    
    
    1,182,901
    
    
    
    2,391,563
    
    
    
    179,273
    
    
    
    169,678Projected benefit obligation
as of December 31
    
    
    (19,620,129
    )
    
    
    (18,282,329
    )
    
    
    (10,832,882
    )
    
    
    (9,922,034
    )
    
    
    (1,832,134
    )
    
    
    (1,611,669
    )Funded Status of the PlansProjected Benefit Obligation
    
    
    (19,620,129
    )
    
    
    (18,282,329
    )
    
    
    (10,832,882
    )
    
    
    (9,922,034
    )
    
    
    (1,832,134
    )
    
    
    (1,611,669
    )Fair value of plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Funded status
    
    
    (19,620,129
    )
    
    
    (18,282,329
    )
    
    
    (10,832,882
    )
    
    
    (9,922,034
    )
    
    
    (1,832,134
    )
    
    
    (1,611,669
    )Unrecognized net lossNet amount recognized
    
    
    (19,620,129
    )
    
    
    (18,282,329
    )
    
    
    (10,832,882
    )
    
    
    (9,922,034
    )
    
    
    (1,832,134
    )
    
    
    (1,611,669
    )Accumulated benefit obligation
    
    
    (19,620,129
    )
    
    
    (18,282,329
    )
    
    
    (10,832,882
    )
    
    
    (9,922,034
    )
    
    
    (1,832,134
    )
    
    
    (1,611,669
    )
 Pension BenefitsForeign2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Assumptions as of December 31Weighted-average discount rate
    
    
    11.20
    %
    
    
    10.4
    %
    
    
    9.8
    %Weighted-average salary increase
    
    
    6.10
    %
    
    
    5.3
    %
    
    
    4.8
    %Weighted-average return on plan assets
    
    
    
    
    
    
    
    
    
    
    Components of net periodic
Benefits expensesService cost
    
    
    (101,671
    )
    
    
    (58,537
    )
    
    
    (62,376
    )Interest cost
    
    
    (2,109,250
    )
    
    
    (2,088,656
    )
    
    
    (1,813,555
    )Expected return on assets
    
    
    
    
    
    
    
    
    
    
    Actuarial gain (loss)
    
    
    (100,123
    )
    
    
    93,798
    
    
    
    242,149Net periodic expenses
    
    
    (2,311,044
    )
    
    
    (2,053,395
    )
    
    
    (1,633,782
    )
  F-164




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
 Other BenefitsChilean
    
    
    Foreign2005
    
    
    2006
    
    
    2007
    
    
    2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Assumptions as of December 31Weighted-average discount rate
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    12.00
    %
    
    
    10.40
    %
    
    
    9.8
    %Weighted-average salary
increase
    
    
    4.00
    %
    
    
    3.50
    %
    
    
    3.50
    %
    
    
    6.90
    %
    
    
    5.30
    %
    
    
    4.8
    %Components of net periodic
Benefits expensesService cost
    
    
    75,629
    
    
    
    (133,431
    )
    
    
    (7,436
    )
    
    
    (13,575
    )
    
    
    (5,155
    )
    
    
    (5,354
    )Interest cost
    
    
    (548,632
    )
    
    
    (887,240
    )
    
    
    (306,026
    )
    
    
    (418,416
    )
    
    
    (199,816
    )
    
    
    (173,704
    )Expected return on assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actuarial gain (loss)
    
    
    (1,379,264
    )
    
    
    (623,845
    )
    
    
    (1,167,253
    )
    
    
    1,738,832
    
    
    
    69,750
    
    
    
    150,683Net periodic expenses
    
    
    (1,852,267
    )
    
    
    (1,644,516
    )
    
    
    (1,480,715
    )
    
    
    1,306,841
    
    
    
    (135,221
    )
    
    
    (28,375
    )
  As of December 31,2007ThCh$2008
    
    
    2,494,3872009
    
    
    2,944,5062010
    
    
    2,755,9982011
    
    
    2,450,0912012
    
    
    2,018,122Thereafter
    
    
    17,152,929Total
    
    
    29,816,033
  F-165




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:l)
    
    Comprehensive income (loss)
   2005Foreign
    
    
    Chilean GAAP
    
    
    
    
    
    
    Fair valuecurrency
    
    
    cumulative
    
    
    Effect of US
    
    
    change oftranslation
    
    
    translation
    
    
    GAAP
    
    
    financialadjustment
    
    
    adjustment
    
    
    adjustments on
    
    
    instruments
    
    
    Accumulatedrelated to
    
    
    related to
    
    
    cumulative
    
    
    used in
    
    
    OtherChilean
    
    
    foreign
    
    
    translation
    
    
    cash-flow
    
    
    Comprehensiveentities
    
    
    subsidiaries
    
    
    adjustment
    
    
    hedges
    
    
    (Loss)Beginning balance
    
    
    (21,452,965
    )
    
    
    (22,249,573
    )
    
    
    28,725,905
    
    
    
    
    
    
    
    (14,976,633
    )Credit (charge) for
the period
    
    
    (16,593,126
    )
    
    
    (10,136,079
    )
    
    
    25,771,813
    
    
    
    (147,876
    )
    
    
    (1,105,268
    )Ending balance
    
    
    (38,046,091
    )
    
    
    (32,385,652
    )
    
    
    54,497,718
    
    
    
    (147,876
    )
    
    
    (16,081,901
    )
 2006Foreign
    
    
    Chilean GAAP
    
    
    
    
    
    
    
    
    
    
    Fair valuecurrency
    
    
    cumulative
    
    
    Effect of US
    
    
    
    
    
    
    change oftranslation
    
    
    translation
    
    
    GAAP
    
    
    Application
    
    
    financial
    
    
    Accumulatedadjustment
    
    
    adjustment
    
    
    adjustments on
    
    
    of FAS 158
    
    
    instruments
    
    
    Otherrelated to
    
    
    related to
    
    
    cumulative
    
    
    Endesa Brasil
    
    
    used in
    
    
    ComprehensiveChilean
    
    
    foreign
    
    
    translation
    
    
    (See note
    
    
    cash-flow
    
    
    Incomeentities
    
    
    subsidiaries
    
    
    adjustment
    
    
    32 I f)
    
    
    hedges
    
    
    (Loss)Beginning balance
    
    
    (38,046,091
    )
    
    
    (32,385,652
    )
    
    
    54,497,718
    
    
    
    
    
    
    
    (147,876
    )
    
    
    (16,081,901
    )Credit (charge) for
the period
    
    
    3,231,768
    
    
    
    1,815,523
    
    
    
    (4,943,743
    )
    
    
    3,083,974
    
    
    
    (22,922
    )
    
    
    3,164,600Ending balance
    
    
    (34,814,323
    )
    
    
    (30,570,129
    )
    
    
    49,553,975
    
    
    
    3,083,974
    
    
    
    (170,798
    )
    
    
    (12,917,301
    )
 2007Foreign
    
    
    Chilean GAAP
    
    
    
    
    
    
    
    
    
    
    Fair valuecurrency
    
    
    cumulative
    
    
    Effect of US
    
    
    
    
    
    
    change oftranslation
    
    
    translation
    
    
    GAAP
    
    
    
    
    
    
    financial
    
    
    Accumulatedadjustment
    
    
    adjustment
    
    
    adjustments on
    
    
    FAS 158
    
    
    instruments
    
    
    Otherrelated to
    
    
    related to
    
    
    cumulative
    
    
    Endesa Brasil
    
    
    used in
    
    
    ComprehensiveChilean
    
    
    foreign
    
    
    translation
    
    
    (See note
    
    
    cash-flow
    
    
    Incomeentities
    
    
    subsidiaries
    
    
    adjustment
    
    
    32 I f)
    
    
    hedges
    
    
    (Loss)Beginning balance
    
    
    (34,814,323
    )
    
    
    (30,570,129
    )
    
    
    49,553,975
    
    
    
    3,083,974
    
    
    
    (170,798
    )
    
    
    (12,917,301
    )Credit (charge) for
the period
    
    
    (14,945,898
    )
    
    
    (12,842,584
    )
    
    
    23,762,854
    
    
    
    (650,735
    )
    
    
    (895,316
    )
    
    
    (5,571,679
    )Ending balance
    
    
    (49,760,221
    )
    
    
    (43,412,713
    )
    
    
    73,316,829
    
    
    
    2,433,239
    
    
    
    (1,066,114
    )
    
    
    (18,488,980
    )
  F-166




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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, 2007, 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 31,2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Current assets
    
    
    663,589,338
    
    
    
    830,816,480
    
    
    
    1,067,461,864Non-current assets
    
    
    2,820,294,877
    
    
    
    2,986,634,314
    
    
    
    3,063,009,328Total assets
    
    
    3,483,884,215
    
    
    
    3,817,450,794
    
    
    
    4,130,471,192Current liabilities
    
    
    715,793,443
    
    
    
    761,029,375
    
    
    
    1,012,686,896Non-current liabilities
    
    
    1,104,340,743
    
    
    
    1,728,133,139
    
    
    
    1,697,249,247Total liabilities
    
    
    1,820,134,186
    
    
    
    2,489,162,514
    
    
    
    2,709,936,143Net sales
    
    
    376,982,897
    
    
    
    1,455,289,830
    
    
    
    1,631,673,481Gross profit
    
    
    114,584,166
    
    
    
    402,612,624
    
    
    
    147,883,953Net income
    
    
    67,404,121
    
    
    
    111,375,353
    
    
    
    109,292,626Endesa Chiles
participation in net
income
    
    
    29,434,697
    
    
    
    45,249,373
    
    
    
    38,450,339
  F-167




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:o)
    
    Restrictions which limit the payment of dividends by the registrant
  Proportionate Shareof Restricted NetSubsidiary
    
    AssetsThCh$Pangue
    
    
    41,180,301Edegel S.A.
    
    
    56,694,853El Chocón
    
    
    71,093,965Total
    
    
    168,969,119
   F-168




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:p)
    
    Capital lease obligations
  Year ended December 31,2006
    
    
    2007ThCh$
    
    
    ThCh$Short-term:Lease obligations
    
    
    16,491,226
    
    
    
    10,929,406Less: interest expense
    
    
    (10,253,751
    )
    
    
    (3,947,938
    )Net short-term lease obligations
    
    
    6,237,475
    
    
    
    6,981,468Long-term:Lease obligations
    
    
    132,415,674
    
    
    
    72,782,298Less interest expense
    
    
    (43,679,563
    )
    
    
    (16,842,559
    )Net long-term lease obligations
    
    
    88,736,111
    
    
    
    55,939,739Weighted-average interest rate
    
    
    8.47
    %
    
    
    7.00
    %
  Year endedDecember 31,2007ThCh$2008
    
    
    10,929,4062009
    
    
    9,038,7802010
    
    
    10,375,9952011
    
    
    8,736,1602012
    
    
    21,217,4812013 and thereafter
    
    
    23,413,882Total
    
    
    83,711,704
  F-169




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:q)
    
    Available for sale securities
   Grossunrealized
    
    
    FairCost
    
    
    gains
    
    
    valueThCh$
    
    
    ThCh$
    
    
    ThCh$Securities available-for-sale at December 31, 2005
    
    
    2,051,639
    
    
    
    
    
    
    
    2,051,639Securities available-for-sale at December 31, 2006
    
    
    5,614,355
    
    
    
    
    
    
    
    5,614,355Securities available-for-sale at December 31, 2007
    
    
    10,299,039
    
    
    
    
    
    
    
    10,299,039
  2005
    
    
    2006
    
    
    2007ThCh$
    
    
    ThCh$
    
    
    ThCh$Proceeds from sales
    
    
    774,406
    
    
    
    2,051,639
    
    
    
    5,614,355
   F-170




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:r)
    
    Recent accounting pronouncements
        F-171




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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, 2007, except as stated)
 32.
    
    Differences between Chilean and United States Generally Accepted Accounting Principles,
continued:
        F-172




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    Description1.1
    
    
    Bylaws (Estatutos) of Empress Nacional de Electricidad S.A., as amended.*8.1
    
    
    List of Subsidiaries as of December 31, 2007.12.1
    
    
    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.
 
 *
    
    Incorporated by reference to Endesa Chile Form 20-F for the year ended December 31, 2006.