##### Table of Contents



---

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 20-F/A

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2002
OR
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 001-12440

ENERSIS S.A.

(Exact name of Registrant as specified in its charter)


ENERSIS S.A.
(Translation of Registrants name into English)
    
    CHILE
(Jurisdiction of incorporation or organization)


Avenida Santa Rosa 76, Santiago
Santiago, Chile
(Address of principal executive offices)Securities registered or to be registered pursuant to Section 12(b) of the Act:

Name of each exchangeTitle of Each Class
    
    on which registeredAmerican Depositary Shares representing Common Stock
    
    New York Stock ExchangeCommon Stock, no par value
    
    New York Stock Exchange*US$ 300,000,000 6.90% Notes due December 1, 2006
    
    New York Stock ExchangeUS$ 350,000,000 7.40% Notes due December 1, 2016
    
    New York Stock ExchangeUS$ 150,000,000 6.60% Notes due December 1, 2026
    
    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: None

Indicate the number of outstanding shares of each of the issuers classes
of capital or common stock as of the close of the period covered by the annual
report: Shares of Common Stock: 8,291,020,100

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

YES [X]       NO [   ]

Indicate by check mark which financial statements item the registrant has elected to follow:

ITEM 17 [   ]       ITEM 18 [X]



---

---





---

TABLE OF CONTENTS



|                                         |                               |  |  |  |  |  |  | 
|---------------------------------------- | ----------------------------- |  |  |  |  |  |  | 
|                                         | Item 18. Financial Statements
|                                         | Item 19. Exhibits            
|SIGNATURES                              
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER
|CERTIFICATION OF CHIEF FINANCIAL OFFICER
|CERTIFICATION OF CEO AND CFO            



---



##### Table of Contents



EXPLANATORY NOTE

The purpose of this amendment to the Annual Report on Form 20-F for the
year ended December 31, 2002 filed by ENERSIS S.A. (Enersis) on June 30, 2003
(the 2002 Form 20-F) is to include the amended audit reports of Deloitte &
Touche relating to the consolidated financial statements of Enersis as of
December 31, 2002, and for the year then ended, Deloitte & Co. S.R.L. relating
to the consolidated financial statements of Endesa Argentina S.A. as of
December 31, 2002, and for the year then ended, Deloitte Touche Tohmatsu
relating to the financial statements of Centrais Elétricas Cachoeira Dourada
S.A. as of December 31, 2002 and 2001, and for the years then ended, and CIEN 
Companhia de Interconexão Energética as of December 31, 2002, and for the year
then ended. These financial statements were included in our 2002 Form 20-F as
originally filed and the related audit reports were previously filed by us in
the 2002 Form 20-F. Except for the revisions of the above-described audit
reports, no changes have been made to the 2002 Form 20-F.

This 20-F/A consists of a cover page, this explanatory note, Items 18 and
19 (as amended) of the 2002 Form 20-F including our consolidated financial
statements for the three fiscal years ended December 31, 2002, the
above-described audit reports, the signature page and the required
certifications of the principal executive officer and the principal financial
officer of Enersis.

Other than expressly set forth above, thisForm 20-F/Adoes not, and does
not purport to, amend, update or restate the information in any Item of the
2002Form 20-For reflect any events that have occurred after the 2002 Form
20-F was filed.





---



##### Table of Contents






Item 18. Financial Statements

Index to Financial Statements
    
    PageENERSIS S.A. and SubsidiariesAudited Consolidated Financial StatementsReport of Independent AccountantsAmended Audit Report of Deloitte & Touche  Enersis 2002
    
    
    F-2Audit Report of Ernst & Young Ltda.  Endesa-Chile 2002
    
    
    F-4Audit Report of Deloitte & Touche  Endesa Colombia S.A. 2002
    
    
    F-6Amended Audit Report of Deloitte & Touche  Endesa Argentina S.A. 2002
    
    
    F-7Audit Report of Pistrelli, Henry Martin y Asociados S.R.L. (Member
Firm of Ernst & Young Global)  Edesur S.A. 2002
    
    
    F-9Amended Audit Report of Deloitte & Touche  Cachoeira Dourada 2002
    
    
    F-10Amended Audit Report of Deloitte & Touche  CIEN 2002
    
    
    F-12Audit Report of Deloitte & Touche  Endesa-Chile 2001
    
    
    F-14Audit Report of Arthur Andersen Langton Clarke  Enersis S.A. 2001
    
    
    F-16Audit Report of Arthur Andersen  Endesa Argentina S.A. 2001
    
    
    F-18Audit Report of Arthur Andersen  Endesa Colombia S.A. 2001
    
    
    F-20Consolidated Balance Sheets as of December 31, 2001 and 2002
    
    
    F-21Consolidated Statements of Income for the years ended December 31,
2000, 2001 and 2002
    
    
    F-23Consolidated Statements of Changes in Shareholders Equity for the
years ended December 31, 2000, 2001 and 2002
    
    
    F-24Consolidated Statements of Cash Flows for the years ended December 31,
2000, 2001 and 2002
    
    
    F-25Notes to the Consolidated Financial Statements
    
    
    F-27




---



##### Table of Contents



[DELOITTE & TOUCHE LOGO]





REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders of Enersis S.A.:

We have audited the accompanying consolidated balance sheets of Enersis S.A.
and Subsidiaries (the Company) as of December 31, 2002, and the related
consolidated statements of operations, shareholders equity and cash flows for
the year then ended (expressed in constant Chilean pesos). These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We did not audit the 2002 financial statements of certain
subsidiaries and investees, representing 34.44% and 30.40% of consolidated
total assets and consolidated total revenues, respectively. These financial
statements were audited by other auditors, whose reports have been provided to
us. Our opinion, insofar as it relates to the amounts included for these
companies, is based solely on the reports of such other auditors. The
consolidated financial statements of the Company for the years ended December
31, 2000 and 2001, were audited by other auditors who have ceased operations.
Those auditors expressed an unqualified opinion on those financial statements
in their report dated February 26, 2002 and included an explanatory paragraph
that described on uncertainty arising from the effect of the politically and
economically unstable situation in Argentina. Their report referred to other
auditors, who, in turn, referred to other auditors, who have ceased to exist.

We conducted our audit in accordance with generally accepted auditing standards
in Chile and in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit and the reports of the other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audit and the reports of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Enersis S.A. and Subsidiaries as
of December 31, 2002, and the results of their operations and their cash flows
for the year ended December 31, 2002, in conformity with accounting principles
generally accepted in Chile.

Accounting principles generally accepted in Chile vary in certain significant
respects from accounting principles generally accepted in the United States of
America. The application of the latter would have affected the determination
of consolidated net income expressed in Chilean pesos for the year ended
December 31, 2002 and the determination of shareholders equity, also expressed
in Chilean pesos, at December 31, 2002 to the extent summarized in Note 34 to
the consolidated financial statements.

F-2



---



##### Table of Contents



Our audit also comprehended the translation of Chilean Peso amounts into U.S.
dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in Note 2 (c). Such U.S. dollar amounts are
presented solely for the convenience of readers in the United States of
America.

As discussed above, the consolidated financial statements of Enersis S.A. and
Subsidiaries as of December 31, 2001, and for the two years then ended were
audited by other auditors who have ceased operations. As described in Note 34
I (i), these financial statements have been revised to include the transitional
disclosures required by Statement of Financial Accounting Standards (Statement)
No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company
as of January 1, 2002. Our audit procedures with respect to the disclosures in
Note 34 I (i) with respect to 2000 and 2001 included (i) agreeing the
previously reported net income to the previously issued financial statements
and the adjustments to reported net income representing amortization expense
(including any related tax effects) recognized in those periods related to
goodwill, intangible assets that are no longer being amortized, deferred
credits related to an excess over cost, equity method goodwill, and changes in
amortization periods for intangible assets that will continue to be amortized
as a result of initially applying Statement No. 142 (including any related tax
effects) to the Companys underlying records obtained from management, and (ii)
testing the mathematical accuracy of the reconciliation of adjusted net income
to reported net income, and the related earnings-per-share amounts. In our
opinion, the disclosures for 2000 and 2001 in Note 34 I (i) are appropriate.
However, we were not engaged to audit, review, or apply any procedures to the
2000 and 2001 consolidated financial statements of the Company and subsidiaries
other than with respect to such disclosures and, accordingly, we do not express
an opinion or any other form of assurance on the 2000 and 2001 consolidated
financial statements taken as a whole.

/S/ Deloitte & Touche

Santiago, Chile
January 31, 2003
(except for Notes 2(a), 2(c) and 34 for which the dates are June 16, 2003)

F-3



---



##### Table of Contents



[LOGO OF ERNST & YOUNG]
    
    Huérfanos
    
    Teléfono : (56-2) 676 1000Santiago, Chile
    
    Fax           : (56-2) 676 1010Casilla     : 2823


Report of Independent Auditors

To the Board of Directors and Shareholders of
Empresa Nacional de Electricidad S.A. (Endesa-Chile):

We have audited the accompanying consolidated balance sheet of Endesa-Chile and
subsidiaries (the Company) as of December 31, 2002, and the related
consolidated statements of income, changes in shareholders equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit. We did not audit the
financial statements as of December 31, 2002 and for the year then ended of
certain consolidated companies which statements reflect total revenues and
total assets representing of 31.93 percent and 40.06 percent respectively, of
the related consolidated totals. We also did not audit the financial statements
as of December 31, 2002 and for the year then ended of certain investments
accounted for under the equity method, which statements reflect investments and
equity participation in income of 0.87 percent and 61.23 percent, respectively,
of total assets and total net income, respectively. Those statements were
audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for those entities, is
based solely on the reports of the other auditors. The report of other auditors
over the consolidated financial statements of the subsidiary, Endesa Argentina
S.A. and subsidiaries, contains an emphasis paragraph regarding the instability
of the economic and political situation in Argentina.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit and the reports of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Endesa-Chile and subsidiaries
as of December 31, 2002, and the results of their operations and their cash
flows for the year then ended in conformity with accounting principles
generally accepted in Chille.

Firma miembro de Ernst & Young Global

F-4



---



##### Table of Contents



[LOGO OF ERNST & YOUNG]

Accounting principles generally accepted in Chile varyin certain significant
respects from generally accepted accounting principles in the United States of
America. Application of generally accepted accounting principles in the United
States of America would have affected consolidated shareholders equity as of
December 31, 2002 and the consolidated results of operations for the year ended
December 31, 2002, to the extent summarized in Note 34 of the Notes to the
consolidated financial statements.

ERNST & YOUNG LTDA.
/s/ Ernst & Young LTDA.
Santiago, Chile
January 24, 2003
(except for Notes 32 and 34 for which the dates are June 12,2003)

Firma miembro de Ernst & Young Global

F-5



---



##### Table of Contents



Back to Index

Colombia 
Tel : 57 1 546 1810
Fax : 57 1 217 2088www.deloitte.com.co
    
    Deloitte& Touche


Report of Independent Auditors
(Translation of a report originally issued in Spanish)

To the Board of Directors and Shareholders of
Endesa de Colombia S.A.:

We have audited the accompanying consolidated balance sheet of Endesa de
Colombia S.A. and Subsidiaries (the Company) as of December 31, 2002, and the
related consolidated statements of income, changes in shareholders equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of the Company for the year ended at December 31, 2001,
were audited by other auditors who have ceased operations. Those auditors
expressed an unqualified opinion on those financial statements in their report
dated January 18, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Endesa de Colombia S.A. and Subsidiaries as of December 31, 2002, and the
results of their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in Chile.

Accounting principles generally accepted in Chile vary in certain significant
respects from generally accepted accounting principles in the United States of
America. Application of generally accepted accounting principles in the United
States of America would have affected consolidated shareholders equity as of
December 31, 2002 and the consolidated results of operations for the year ended
December 31, 2002, to the extent summarized in Note 27 of the Notes to the
consolidated financial statements.

Carlos Eduardo Tovar
/s/ Carlos Eduardo Tovar
January 17, 2003, Bogotá, Colombia
    
    /s/ Deloitte Colombia LTDA
DELOITTE COLOMBIA LTDA.


F-6



---



##### Table of Contents



Deloitte & Co. S.R.L.
Florida 234, Piso 5°
C1005AAF Buenos Aires
Argentina

Tel.: (54-11) 4320-2700 / 4326-4046
Fax: (54-11) 4325-8081 / 4326-7340
www.deloitte.com.ar

(DELOITTE and TOUCHE LOGO)

AUDITORS REPORT

To the President and the Board of Directors ofEndesa Argentina S.A.

We have audited the accompanying consolidated balance sheet of Endesa Argentina
S.A. and Subsidiaries (the Company) as of December 31, 2002, and the related
consolidated statements of income, changes in shareholders equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Companys Management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of the Company for the year ended at December 31, 2001,
were audited by other auditors who were member firm of a worldwide organization
that has ceased operations. Those auditors expressed an unqualified opinion on
those financial statements in their report dated March 8, 2002, which include
emphasis paragraphs expressing the uncertainty on the Companys capacity to
meet its obligations and continue operations, and to disclose the major effects
that the severe changes made by the Argentinean Government to the economic
model and to the International Exchange Law that had been in force since 1991 might
have on the Company.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Endesa Argentina S.A. and Subsidiaries as of December 31, 2002, and the
consolidated results of their operations and their consolidated cash flows for
the year then ended, in conformity with accounting principles generally
accepted in Chile.

(DELOITTE TOUCHE TOHMATSU LOGO)
    
    Deloitte & Co. S.R.L.  Registro de Soc. Com. CPCE  Cap. Fed. T° 1 F° 3


F-7



---



##### Table of Contents



2.

As described in notes 37 and 38 to the financial statements referred to above,
on January 2002 the Argentine Government approved certain economic measures
with a negative impact on the Argentine economy and on the Company  ́s operations
including: the devaluation of the Argentine peso; the default on the public
external debt; the pesification of assets and liabilities denominated in
foreign currency held in the country; the restriction on transfers of funds
abroad, which require prior authorization from the Central Bank of the Republic
of Argentina; and the pesification of the utilities rates. Taking into account
that the official position of the Argentine Government related to the energy
prices has not been defined yet, and that the rates of utilities renegotiation
has not begun, as of the date of approval of these financial statements the
future evolution of the electrical sector cannot be assessed in the short and
medium term. Also, the Argentine Government continues to issue additional and
supplementary measures, as described in note 28.1 to the financial statements
referred to above, in respect of the Agreement related to the work order No.
4322. As a consequence of the economic crisis, and in particular of the
electrical sector, the Company is in negotiations to reschedule the maturity of
some loans. The above described situations generate uncertainties in respect of
the effects of the measures, to be taken by the Argentine Government related to
the economic policy and, in particular, related to the electrical sector, could
have on the Company  ́s consolidated financial position, the consolidated results
of its operations and its future consolidated cash flows.

Accounting principles generally accepted in Chile vary in certain significant
respects from generally accepted accounting principles in the United States of
America. Application of generally accepted accounting principles in the United
States of America would have affected consolidated shareholders equity as of
December 31, 2002 and the consolidated results of operations for the year ended
December 31, 2002, to the extent summarized in Note 39 to the consolidated
financial statements.

Buenos Aires, January 17, 2003, except for the fifth paragraph for which the
date is April 30, 2003

DELOITTE & Co. S.R.L/s/ CARLOS A. LLOVERASCARLOS A. LLOVERAS
(Partner)


F-8



---



##### Table of Contents



[LOGO OF ERNST & YOUNG]
    
    Pistrell, Henry Martin Asociados SRL
    
    Tel:(5411)4318-1600/4311-664425 de Mayo 487 -C 1002ABI
    
    Fax:(5411)4312-8647/4318-1777Buenos Aires, Argentina
    
    www.????


REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
EMPRESA DISTRIBUIDORA SUR S.A.
(EDESUR S.A.)

We have audited the balance sheet of EDESUR S.A. (an Argentine corporation) as
of December 31, 2002, and the related statements of income, changes in
shareholders equity and cash flows for the year then ended, all expressed in
U.S. dollars (not presented separately herein). Those financial statements are
the responsibility of the Companys management. Our responsibility is to
express an opinion on those financial statements based on our audit.

The financial statements of EDESUR S.A. as of December 31, 2001 and 2000, and
for the years then ended (not presented separately herein), have been audited
by other auditors who have ceased operations. Those auditors expressed an
unqualified opinion on those financial statements in their report dated
February 26, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the 2002 financial statements referred to above (not presented
separated herein) present fairly, in all material respects, the financial
position of EDESUR, S.A. as of December 31, 2002, and the results of the
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles in Chile.

Accounting principles generally accepted in Chile vary in certain significant
respects from generally accepted accounting principles in the United States of
America. Application of generally accepted accounting principles in the United
States of America would have affected shareholders equity as of December 31,
2002 and the results of operations for the year ended December 31, 2002 to the
extent summarized in Note 29 of the Notes to the financial statements.

Buenos Aires, Argentina
February 7, 2003
    
    PISTRELLI HENRY MARTIN Y ASOCIADOS S.R.L
(Member Firm of Ernst & Young Global)
/s/ Enrique C. Grotz
ENRIQUE C. GROTZ
Partner


F-9



---



##### Table of Contents



[DELOITTE LOGO]

(Convenience Translation into English from the Original Report Previously
Issued in Spanish)

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Centrais Elétricas Cachoeira Dourada S.A.
Cachoeira Dourada  GO, Brazil



|1. |  | We have audited the balance sheets of Centrais Elétricas Cachoeira
Dourada S.A. as of December 31, 2002 and 2001, and the related statements
of income and cash flows for the years then ended, as expressed in United
States dollars. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | We conducted our audits in accordance with auditing standards generally
accepted in Brazil and in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Centrais
Elétricas Cachoeira Dourada S.A. as of December 31, 2002 and 2001, and the
results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles and rules of
Superintendencia de Valores y Seguros of Chile, according to the
information included in the instructions and requirements of Endesa Chile
Group, for purposes of consolidation.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | As of December 31, 2002, the Company has recorded, as current and
non-current assets, accounts receivable in the amount of US$14,348
thousand and, as current liabilities, accounts payable in the amount of
US$14,921 thousand, related to energy sale and purchase transactions in
the Electric Energy Wholesale Market  MAE, based on calculations prepared
and released by the MAE and/or based on estimates prepared by the
Companys management. Such amounts may be subject to changes depending on
decisions on judicial lawsuits in progress, filed by sector companies,
relating to interpretations of market regulations in force.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-10



---



##### Table of Contents



Centrais Elétricas Cachoeira Dourada S.A.
    
    
    2




|5. |  | The balance sheet as of December 31, 2002 and the related statements of
income and cash flows for the year then ended are also presented in
Chilean Pesos (CLP$) translated at year-end exchange rates of R$3.5333 =
US$1.00 = CLP$718.61, solely for information purposes.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The accounting practices of the Company used in preparing the
accompanying financial statements conform with accounting practices
adopted in Chile, according to the information included in the
instructions and requirements of Endesa Chile Group for purposes of
consolidation, which vary in certain respects from accounting principles
generally accepted in the United States of America (US GAAP). The
application of the accounting principles generally accepted in the United
States of America would have affected the results of operations for the
years ended December 31, 2002 and 2001 and the shareholders equity of
Centrais Elétricas Cachoeira Dourada S.A. as of December 31, 2002 and
2001, to the extent summarized in Note 22 to the financial statements. As
described in Note 23 to the financial statements, the reported amounts of
shareholders equity as of December 31, 2002 and the results of operations
for the year then ended, under the accounting principles generally
accepted in the United States of America, have been restated.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

/s/ Deloitte Touche Tohmatsu

January 17, 2003 (except for Notes 22 and 23, for which the date is February
17, 2004)

F-11



---



##### Table of Contents



[DELOITTE LOGO]

(Convenience Translation into English from the Original Report Previously
Issued in Spanish)

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
CIEN  Companhia de Interconexão Energética
Rio de Janeiro  RJ, Brazil



|1. |  | We have audited the balance sheet of CIEN  Companhia de Interconexão
Energética as of December 31, 2002, and the related statements of income
and cash flows for the year then ended, as expressed in United States
dollars. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | We conducted our audit in accordance with auditing
standards generally accepted in Brazil and in the United
States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CIEN 
Companhia de Interconexão Energética as of December 31, 2002, and the
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles and rules of
Superintendencia de Valores y Seguros of Chile, according to the
information included in the instructions and requirements of Endesa Chile
Group, for purposes of consolidation.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | As of December 31, 2002, the Company has recorded, as current assets,
accounts receivable in the amount of US$11,928 thousand and, as current
liabilities, accounts payable in the amount of US$15,185 thousand, related
to energy sale and purchase transactions in the Electric Energy Wholesale
Market  MAE, based on calculations prepared and released by the MAE
and/or based on estimates prepared by the Companys management. Such
amounts may be subject to changes depending on decisions on judicial
lawsuits in progress, filed by sector companies, relating to
interpretations of market regulations in force.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-12



---



##### Table of Contents



CIEN  Companhia de Interconexão Energética




|5. |  | The balance sheet as of December 31, 2002 and the related statements of
income and cash flows for the year then ended are also presented in
Chilean Pesos (CLP$) translated at year-end exchange rates of R$3.5333 =
US$1.00 = CLP$718.61, solely for information purposes.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The accounting practices of the Company used in preparing the
accompanying financial statements conform with accounting practices
adopted in Chile, according to the information included in the
instructions and requirements of Endesa Chile Group for purposes of
consolidation, which vary in certain respects from accounting principles
generally accepted in the United States of America (US GAAP). The
application of the accounting principles generally accepted in the United
States of America would have affected the results of operations for the
year ended December 31, 2002 and the shareholders equity of CIEN 
Companhia de Interconexão Energética as of December 31, 2002, to the
extent summarized in Note 24 to the financial statements.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

/s/ Deloitte Touche Tohmatsu

January 17, 2003

F-13



---



##### Table of Contents



Av. Providencia 1760, Pisos 6,7,8 y 9SantiagoChileTel: (56-2) 270 3000Fax: (56-2) 374 9177
    
    Deloittewww.deloitte.cl
    
    & Touche


INDEPENDENT AUDITORS REPORT

To the President and Directors of
Empresa Nacional de Electricidad S.A.

We have audited the consolidated balance sheets of Empresa Nacional de
Electricidad S.A. and Subsidiaries as of December 31, 2001 and 2000 and the
related consolidated statements of income and of cash flows for each of the two
years in the period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements for 2000 and 2001 of
certain consolidated companies, which statements reflect total assets
constituting 41.99% (41.18% in 2000) and total revenues constituting 41.92%
(48.56% in 2000 and 55.06% in 1999) as of December 31, 2001, of the related
consolidated totals. Those financial statements were audited by other auditors
for the purpose of the Companys Chilean annual financial statements and their
reports have been furnished to us. The report of these auditors on the 2001
financial statements of Endesa Argentina S.A. include emphasis paragraphs
expressing the uncertainty on the Argentinean subsidiaries capacity to meet
their obligations and continue operations, and to disclose the major effects
that the severe changes made by the Argentinean Government to the economic
model and to the International Exchange Law that had been in force since 1991
might have on the companies. Our opinion, insofar as it relates to the amounts
included for those companies for 2000 and 2001, is based solely on the reports
of such other auditors. Their report referred to other auditors, one of whom
was a member firm of a worldwide organization that has ceased operations, and
another who has ceased to exist.

We conducted our audits in accordance with auditing standards generally
accepted in Chile and in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the reports of the other auditors provides a reasonable basis for
our opinion.

In our opinion, based on our audits and the reports of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Empresa Nacional de Electricidad
S.A. and subsidiaries as of December 31, 2000 and 2001 and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in Chile.

F-14



---



##### Table of Contents



Accounting principles generally accepted in Chile vary in certain significant
respects from accounting principles generally accepted in the United States of
America. The application of the latter would have affected the determination of
consolidated net income expressed in Chilean pesos for each of the two years in
the period ended at December 31, 2001 and the determination of shareholders
equity, also expressed in Chilean pesos, at December 31, 2000 and 2001 to the
extent summarized in Note 32 to the consolidated financial statements.

As indicated in Note 26, the Company holds direct investments in Argentinean
subsidiaries and indirect investments through the subsidiaries Compañía
Eléctrica Cono Sur S.A. and Inversiones Endesa Norte S.A., whose financial
statements show total assets and revenues amounting to 13.58% and 21.42%,
respectively, of the corresponding consolidated totals. Due to the current
economic situation in Argentina and considering the effects of the application
of the Public Emergency Law referred to in Note 31, these direct and indirect
subsidiaries are exposed to situations that might affect the values of their
assets and liabilities and uncertainties arise with respect to their capacity
to meet their obligations and continue operations. The present financial
statements do not include adjustment that might arise from the resolution of
these uncertainties.

/s/ Deloitte & Touche

Santiago, Chile
February 1, 2002

F-15



---



##### Table of Contents



The Report of Langton Clarke-a member firm of Andersen Worlwide SC, below is a
copy of their previously issued report contained in Enersis S.A. Annual Report
on form 20-F for the year ended December 31, 2001. Langton Clarke  A Member
Firm of Andersen Worldwide SC has ceased operations and has not reissued its
report in connection with this Form 20F.

Langton
    
    Huerfanos 770, Piso 5
    
    Teléfono
    
    (56 2) 676 1000Clarke
    
    Santiago  Chile
    
    Fax
    
    (56 2) 676 1010Langton Clarke Auditores y Consultores
    Limitada


Firma miembro de
Andersen Worldwide SC

Report of Independent Accountants

To the Shareholders of Enersis S.A.:

We have audited the accompanying consolidated balance sheets of Enersis S.A.
and Subsidiaries (the Company) as of December 31, 2000 and 2001, and the
related consolidated statements of income, shareholders equity and cash flows
for each of the three years in the period then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the subsidiary
Endesa-Chile S.A. which statements reflect total revenues of 32 percent, 18
percent, and 23 percent in 1999,2000, and 2001, respectively and total assets
of 30 percent and 30 percent in 2000 and 2001, respectively, of the related
consolidated totals. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for those entities, is based solely on the report of the other
auditors.

We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the report of other auditors provide a reasonable basis for our
opinion.

Accounting practices used by the Company in preparing the accompanying
consolidated financial statements conform with generally accepted accounting
principles in Chile, but do not conform with accounting principles generally
accepted in the United States. A reconciliation of consolidated net income and
shareholders equity, as revised, under accounting principles generally
accepted in Chile to the corresponding amounts that would be reported in
accordance with United States generally accepted accounting principles, except
for the omissions, as allowed pursuant to Item 18 of Form 20-F, of adjustments
necessary to eliminate the effect of price-level changes and the translation of
non-Chilean operations described in Notes 2 (c) and 2 (I), is set forth in Note
33 to these consolidated financial statements.

As described in Notes 11, 31 (a) and 33 (p) to these financial statements, the
Company has significant investments in Argentina, which are affected by the
severe economic and political uncertaities affecting that country and the
devaluation of the Argentine peso. Such investments represent 14 percent of
total assets as of December 31, 2001, 27 percent of total revenues and 21
percent of total operating income for the year ended December 31, 2001.

F-16



---



##### Table of Contents



In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Enersis S.A. and Subsidiaries
as of December 31, 2000 and 2001, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2001 in
conformity with generally accepted accounting principles in Chile.

As described in Note 3, starting January 1, 2000, the Company modified the
method in which income taxes are recorded, recognizing deferred taxes
prospectively.

/s/ Langton Clarke

LANGTON CLARKE

Santiago (Chile)
February 26, 2002
(except for Notes 2 (a), 2 (c), 27, 31 and 33 for which the dates are June 25, 2002)

F-17



---



##### Table of Contents



The report of Pistrelli Diaz y Asociados  A Member Firm of Andersen Worldwide
SC, below is a copy of their previously issued report contained in Endesa Chile
S.A. Annual Report on form 20-F for the year ended December 31, 2001. Pistrelli
Diaz y Asociados  A Member Firm of Andersen Worldwide SC has ceased operations
and has not reissued its report in connection with this Form 20-F

ANDERSENPistrelli, Diaz y AsociadosFirma Miembro de Andersen25 de Mayo 4871002 Buenos AiresArgentinaTel 54 11 4318 1800 4311 8644Fax 5411 4312 8647 4318 1777


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

(English translation of the report originally issued in Spanish)

To the Board of Directors of
ENDESA ARGENTINA S.A:



|1. |  | We have audited the consolidated balance sheets of ENDESA ARGENTINA
S.A. (the Company) and its subsidiaries ENDESA BRASIL
PARTICIPAÇOES LTD., HIDROELECTRICA EL CHOCON S.A., HIDROINVEST S.A.
and CENTRAL COSTANERA S.A. as of December 31, 2001 and 2000, and the
related consolidated statements of income and cash flows for the
years then ended, not presented separately herein, all expressed in
thousands of constant Chilean pesos. Those financial statements are
the responsibility of the Companys Management. Our responsibility
is to express an opinion on those financial statements based on our
audits.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | We conducted our audits in accordance with generally accepted
auditing standards in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by the Management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | As described in note 38 to the financial statements referred to
above (not presented separately herein), in the last few months, a
deep change has been implemented in the economic framework of
Argentina as well as in the Convertibility Law that was in place
since March 1991. The main consequences of the set of measures
adopted by the Argentine Federal Government, which are detailed in
the above mentioned note, have been (a) the devaluation of the
Argentine peso with respect to the US dollar and de-dollarization of
certain assets and liabilities in foreign currency held in the
country; (b) de-dollarization of utilities rates previously
agreed-upon in US dollars and subsequent renegotiation in each
particular case; (c) the implementation of restrictions on the
withdrawal of funds deposited with financial institutions; (d) the
restriction on transfers abroad on account of financial loan
principal service and dividend distributions without prior
authorization from the Central Bank; and (e) the increase in
domestic prices. The future development of the economic crisis may
require further measures from the Argentine Federal Government. The
above mentioned financial statements, should be read taking into
account the issues mentioned above.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | In our opinion, the consolidated financial statements referred to
above (not presented separately herein) present fairly, in all
material respects, the financial position of ENDESA ARGENTINA S.A.
and its subsidiaries ENDESA BRASIL PARTICIPAÇOES LTD.,
HIDROELECTRICA EL CHOCON S.A., HIDROINVEST S.A. and CENTRAL
COSTANERA S.A. as of December 31, 2001 and 2000, and the results of
their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles in Chile.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-18



---



##### Table of Contents



[LOGO OF ANDERSEN]



|5. |  | As described in note 15 to the financial
statements referred to above (not presented
separately herein), as of the date of
issuance thereof, HIDROELECTRICA EL CHOCON
S.A. has been unable to repay yet past-due
corporate bonds amounting to about USD 140
million. In addition, as mentioned in Note
28.2 to the above mentioned financial
statements, as of December 31, 2001, CENTRAL
COSTANERA S.A. does not meet a financial
ratio required by the syndicated bank loan
agreement, recorded under current
liabilities in the amount of about CLP
62,240 million. Considering that this
represents a breach of contractual
provisions for this loan and for other loans
with cross-default clauses, the lenders are
entitled to demand accelerated repayment. As
of December 31, 2001 HIDROELECTRICA EL
CHOCON S.A., HIDROINVEST S.A. and CENTRAL
COSTANERA S.A. have negative working
capital, which creates substantial doubt,
among others, on the ability to pay their
obligations. In addition, due to the
negative exchange rate difference derived
from devaluation mentioned in note 38 to the
above mentioned financial statements, ENDESA
ARGENTINA S.A. and CENTRAL COSTANERA S.A.
could enter into the mandatory dissolution
for loss of capital stock, as provided for
by the Business Associations Law No. 19,550,
which creates substantial doubt, among
others, on the continuity of the operations
of these Companies.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The continuity of the operations of ENDESA
ARGENTINA S.A., HIDROELECTRICA EL CHOCON
S.A., HIDROINVEST S.A., and CENTRAL
COSTANERA S.A. will depend on their ability
to pay their obligations and the ability of
ENDESA ARGENTINA S.A. and CENTRAL COSTANERA
S.A. to restore its capital stock. The
financial statements referred to above have
been prepared assuming that ENDESA ARGENTINA
S.A., HIDROELECTRICA EL CHOCON S.A.,
HIDROINVEST S.A. and CENTRAL COSTANERA S.A.
will continue as going concerns; therefore,
the financial statements referred to above
do not include any adjustments that might
result from the outcome of these
uncertainties.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Buenos Aires,
    
    PISTRELLI, DIAZ Y ASOCIADOSMarch 8, 2002/s/ Ezequiel A. CalciatiEZEQUIEL A. CALCIATIPartner


F-19



---



##### Table of Contents



The report of Arthur Andersen y Cía. Ltda  A Member Firm of Andersen Worldwide
SC, below is a copy of their previously issued report contained in Endesa Chile
S.A. Annual Report on Form 20-F for the year ended December 31, 2001. Arthur
Andersen y Cía. Ltda  A Member Firm of Andersen Worldwide SC has ceased
operations and has not reissued its report in connection with this Form 20F.

LOGO OF ARTHURANDERSENReport of independent Accountants
    
    Arthur Andersen y
Cía.LtdaCarrera 7 No. 74. 09Apartado Aéreo 075874(Translation of a report originally issued in Spanish-
(see Note 2 to the Financial Statements)
    
    Bogota D.C.ColombiaTel 57 1 546 18 10  ?48 18 15Fax 57 1 2 17 80 58 314 56 56


To the Shareholders of
Endesa de Colombia S.A. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Endesa de
Colombia S.A. and Subsidiaries (the Company) as of December 31, 2000 and 2001
and the related consolidated statements of income and cash flows for each of
the two years in the period ended December 31, 2001, all expressed in thousands
of constant Chilean pesos. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Endesa de Colombia
S.A. and its subsidiaries as of December 31, 2001 and 2000, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles in Chile.

/s/ CÉSAR CHENG
    
    /s/ ARTHUR ANDERSEN & CIA LTDA.César Cheng
    
    ARTHUR ANDERSEN & CIA LTDA.January 18, 2002, Bogotá, Colombia


F-20



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002 and thousands of US dollars)

As of December 31,Note
    
    2001
    
    2002
    
    2002ThCh$
    
    ThCh$
    
    ThUS$ASSETS
    
    
    
    
    
    
    
    (Note 2)CURRENT ASSETS:Cash
    
    
    
    
    37,648,796
    
    
    
    48,184,878
    
    
    
    67,053Time deposits
    
    4
    
    
    178,113,234
    
    
    
    145,626,894
    
    
    
    202,651Marketable
securities
    
    
    
    
    203,072
    
    
    
    1,543,290
    
    
    
    2,148Accounts
receivable, net
    
    5
    
    
    550,248,992
    
    
    
    458,839,724
    
    
    
    638,510Notes receivable,
net
    
    5
    
    
    5,683,330
    
    
    
    5,131,349
    
    
    
    7,141Other accounts
receivable, net
    
    5
    
    
    72,220,719
    
    
    
    62,776,096
    
    
    
    87,358Amounts due from
related companies
    
    6a
    
    
    18,019,578
    
    
    
    195,398,835
    
    
    
    271,912Inventories
    
    7
    
    
    77,424,074
    
    
    
    60,382,653
    
    
    
    84,027Income taxes
recoverable
    
    8a
    
    
    57,510,102
    
    
    
    54,435,976
    
    
    
    75,752Deferred income
taxes
    
    8e
    
    
    24,162,101
    
    
    
    51,955,793
    
    
    
    72,300Prepaid expenses
    
    
    
    
    13,971,567
    
    
    
    7,666,018
    
    
    
    10,668Other current assets
    
    9
    
    
    127,241,229
    
    
    
    132,021,608
    
    
    
    183,718Total current assets
    
    
    
    
    1,162,446,794
    
    
    
    1,223,963,114
    
    
    
    1,703,238PROPERTY, PLANT AND
EQUIPMENT, NET
    
    10
    
    
    9,625,049,659
    
    
    
    9,879,458,183
    
    
    
    13,748,011OTHER ASSETS:Investments in
related companies
    
    11
    
    
    167,448,008
    
    
    
    194,164,157
    
    
    
    270,194Investments in
other companies
    
    12
    
    
    149,560,997
    
    
    
    159,466,794
    
    
    
    221,910Long-term
receivables
    
    5
    
    
    101,903,562
    
    
    
    125,850,513
    
    
    
    175,130Goodwill, net
    
    13a
    
    
    1,318,832,593
    
    
    
    847,513,499
    
    
    
    1,179,379Negative goodwill,
net
    
    13b
    
    
    (181,194,560
    )
    
    
    (95,172,950
    )
    
    
    (132,440
    )Amounts due from
related companies
    
    6a
    
    
    170,667,792
    
    
    
    898,167
    
    
    
    1,250Intangibles
    
    
    
    
    71,697,080
    
    
    
    80,915,893
    
    
    
    112,601Accumulated
amortization
    
    
    
    
    (25,148,069
    )
    
    
    (34,648,290
    )
    
    
    (48,216
    )Other assets
    
    14
    
    
    198,535,455
    
    
    
    238,755,596
    
    
    
    332,246Total other assets
    
    
    
    
    1,972,302,858
    
    
    
    1,517,743,379
    
    
    
    2,112,054TOTAL ASSETS
    
    
    
    
    12,759,799,311
    
    
    
    12,621,164,676
    
    
    
    17,563,303


The accompanying notes are an integral part of these consolidated financial
statements

F-21



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002 and thousands of US dollars)

As of December 31,Note
    
    2001
    
    2002
    
    2002ThCh$
    
    ThCh$
    
    ThCh$LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
    
    
    
    
    
    (Note 2)CURRENT LIABILITIES:Short-term debt due
to banks and
financial
institutions
    
    15a
    
    
    301,010,064
    
    
    
    425,049,260
    
    
    
    591,488Current portion of
long-term debt due
to banks and
financial
institutions
    
    15b
    
    
    425,536,729
    
    
    
    605,261,953
    
    
    
    842,268Promissory notes
    
    18
    
    
    54,630,248
    
    
    
    13,189,514
    
    
    
    18,354Current portion of
bonds payable
    
    19a
    
    
    62,848,322
    
    
    
    498,501,344
    
    
    
    693,702Current portion of
long-term notes
payable
    
    
    
    
    26,580,340
    
    
    
    41,628,914
    
    
    
    57,930Dividends payable
    
    
    
    
    7,008,951
    
    
    
    14,554,203
    
    
    
    20,253Accounts payable
    
    
    
    
    258,955,300
    
    
    
    222,075,984
    
    
    
    309,036Short-term notes
payable
    
    
    
    
    45,429,070
    
    
    
    4,833,074
    
    
    
    6,726Miscellaneous
payables
    
    
    
    
    53,324,443
    
    
    
    73,417,551
    
    
    
    102,166Amounts payable to
related companies
    
    6b
    
    
    31,120,649
    
    
    
    16,285,712
    
    
    
    22,663Accrued expenses
    
    20a
    
    
    79,920,329
    
    
    
    84,930,321
    
    
    
    118,187Withholdings
    
    
    
    
    53,957,592
    
    
    
    55,485,759
    
    
    
    77,213Income taxes payable
    
    8a
    
    
    77,283,022
    
    
    
    27,532,029
    
    
    
    38,313Deferred income
    
    
    
    
    11,314,564
    
    
    
    9,085,674
    
    
    
    12,643Other current
liabilities
    
    17
    
    
    150,383,758
    
    
    
    59,541,957
    
    
    
    82,857Total current
liabilities
    
    
    
    
    1,639,303,381
    
    
    
    2,151,373,249
    
    
    
    2,993,799LONG-TERM
LIABILITIES:Due to banks and
financial
institutions
    
    16
    
    
    1,971,249,920
    
    
    
    1,691,338,670
    
    
    
    2,353,625Bonds payable
    
    19b
    
    
    2,271,468,659
    
    
    
    2,097,845,568
    
    
    
    2,919,310Long-term notes
payable
    
    
    
    
    215,513,230
    
    
    
    220,886,690
    
    
    
    307,381Accounts payable
    
    
    
    
    34,746,948
    
    
    
    22,606,529
    
    
    
    31,459Amounts payable to
related companies
    
    6b
    
    
    1,001,707,159
    
    
    
    988,291,605
    
    
    
    1,375,282Accrued expenses
    
    20b
    
    
    234,388,938
    
    
    
    226,922,617
    
    
    
    315,780Deferred income
taxes
    
    8e
    
    
    36,059,964
    
    
    
    61,740,871
    
    
    
    85,917Other long-term
liabilities
    
    
    
    
    67,228,005
    
    
    
    103,975,862
    
    
    
    144,690Total long-term
liabilities
    
    
    
    
    5,832,362,823
    
    
    
    5,413,608,412
    
    
    
    7,533,444MINORITY INTEREST
    
    21a
    
    
    4,073,571,128
    
    
    
    4,050,602,721
    
    
    
    5,636,719COMMITMENTS AND
CONTINGENCIES
    
    28SHAREHOLDERS
EQUITY:Paid-in capital, no
par value
    
    
    
    
    751,208,197
    
    
    
    751,208,197
    
    
    
    1,045,363Additional paid-in
capital  share
premium
    
    
    
    
    33,370,057
    
    
    
    33,370,057
    
    
    
    46,437Other reserves
    
    
    
    
    27,176,075
    
    
    
    41,942,477
    
    
    
    58,366Retained earnings
    
    
    
    
    360,653,617
    
    
    
    402,807,650
    
    
    
    560,537Net income (loss)
for the year
    
    
    
    
    42,154,033
    
    
    
    (223,748,087
    )
    
    
    (311,362
    )Total shareholders
equity
    
    
    
    
    1,214,561,979
    
    
    
    1,005,580,294
    
    
    
    1,399,341TOTAL LIABILITIES
AND SHAREHOLDERS
EQUITY
    
    
    
    
    12,759,799,311
    
    
    
    12,621,164,676
    
    
    
    17,563,303


F-22



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002 and thousands of US dollars)

Years ended December 31,Note
    
    2000
    
    2001
    
    2002
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$(Note 2)OPERATING INCOME:SALES
    
    
    
    
    2,757,047,098
    
    
    
    3,059,380,761
    
    
    
    2,485,873,220
    
    
    
    3,459,280COST OF SALES
    
    
    
    
    (1,895,035,057
    )
    
    
    (2,025,312,072
    )
    
    
    (1,730,050,356
    )
    
    
    (2,407,496
    )GROSS PROFIT
    
    
    
    
    862,012,041
    
    
    
    1,034,068,689
    
    
    
    755,822,864
    
    
    
    1,051,784ADMINISTRATIVE AND
SELLING EXPENSES
    
    
    
    
    (309,262,420
    )
    
    
    (279,524,922
    )
    
    
    (223,178,503
    )
    
    
    (310,570
    )OPERATING INCOME
    
    
    
    
    552,749,621
    
    
    
    754,543,767
    
    
    
    532,644,361
    
    
    
    741,214NON-OPERATING
INCOME AND EXPENSE:Interest income
    
    
    
    
    74,161,853
    
    
    
    56,592,832
    
    
    
    85,284,624
    
    
    
    118,680Equity in income of
related companies
    
    11b
    
    
    4,547,446
    
    
    
    3,629,292
    
    
    
    14,996,244
    
    
    
    20,868Other non-operating
income
    
    23a
    
    
    463,501,342
    
    
    
    194,693,581
    
    
    
    308,143,887
    
    
    
    428,805Equity in losses of
related companies
    
    11b
    
    
    (4,470,693
    )
    
    
    (14,328,089
    )
    
    
    (6,732,461
    )
    
    
    (9,369
    )Amortization of
goodwill
    
    13a
    
    
    (71,713,807
    )
    
    
    (80,576,348
    )
    
    
    (506,344,171
    )
    
    
    (704,616
    )Interest expense
    
    
    
    
    (500,043,818
    )
    
    
    (452,801,275
    )
    
    
    (439,536,318
    )
    
    
    (611,646
    )Other non-operating
expenses
    
    23b
    
    
    (118,890,049
    )
    
    
    (183,929,244
    )
    
    
    (241,196,604
    )
    
    
    (335,643
    )Price-level
restatement, net
    
    24
    
    
    (15,251,993
    )
    
    
    2,175,075
    
    
    
    4,964,890
    
    
    
    6,909Exchange
difference, net
    
    25
    
    
    (1,251,722
    )
    
    
    (30,542,651
    )
    
    
    (16,110,247
    )
    
    
    (22,419
    )NON-OPERATING
EXPENSE, NET
    
    
    
    
    (169,411,441
    )
    
    
    (505,086,827
    )
    
    
    (796,530,156
    )
    
    
    (1,108,431
    )INCOME (LOSS)
BEFORE INCOME TAXESEXTRAORDINARY
ITEMS, MINORITY
INTEREST
AND AMORTIZATION OF
NEGATIVE GOODWILL
    
    
    
    
    383,338,180
    
    
    
    249,456,940
    
    
    
    (263,885,795
    )
    
    
    (367,217
    )INCOME TAXES
    
    8f
    
    
    (146,323,505
    )
    
    
    (129,850,137
    )
    
    
    (66,016,985
    )
    
    
    (91,868
    )EXTRAORDINARY ITEMS
    
    26
    
    
    
    
    
    
    
    
    
    
    (22,375,640
    )
    
    
    (31,137
    )INCOME (LOSS)
BEFORE MINORITY
INTEREST AND
AMORTIZATION OF
NEGATIVE GOODWILL
    
    
    
    
    237,014,675
    
    
    
    119,606,803
    
    
    
    (352,278,420
    )
    
    
    (490,222
    )MINORITY INTEREST
    
    21b
    
    
    (184,000,228
    )
    
    
    (125,152,619
    )
    
    
    16,282,559
    
    
    
    22,658INCOME BEFORE
AMORTIZATION OF
NEGATIVE
GOODWILL
    
    
    
    
    53,014,447
    
    
    
    (5,545,816
    )
    
    
    (335,995,861
    )
    
    
    (467,564
    )AMORTIZATION OF
NEGATIVE GOODWILL
    
    13b
    
    
    42,646,957
    
    
    
    47,699,849
    
    
    
    112,247,774
    
    
    
    156,202NET INCOME (LOSS)
FOR THE YEAR
    
    
    
    
    95,661,404
    
    
    
    42,154,033
    
    
    
    (223,748,087
    )
    
    
    (311,362
    )


The accompanying notes are an integral part of these consolidated financial
statements

F-23



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

(Expressed in thousands of historical Chilean pesos, except as stated)

Additional
    
    
    
    
    
    
    
    
    
    Net incomeNumber
    
    Paid-in
    
    paid-in
    
    Other
    
    Retained
    
    (loss) forof shares
    
    capital
    
    capital
    
    reserves
    
    earnings
    
    the year
    
    Total(inthousands)
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$As of January 1, 2000
    
    
    6,800,000
    
    
    
    398,624,586
    
    
    
    24,184,786
    
    
    
    23,295,280
    
    
    
    330,716,485
    
    
    
    (78,158,729
    )
    
    
    698,662,408Transfer of prior year
income to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78,158,729
    )
    
    
    78,158,729
    
    
    
    Price-level restatement of
capital
    
    
    
    
    
    
    22,015,443
    
    
    
    1,203,739
    
    
    
    1,094,879
    
    
    
    11,870,214
    
    
    
    
    
    
    
    36,184,275Changes in equity of
affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,382,462
    )
    
    
    
    
    
    
    
    
    
    
    (18,382,462
    )Cumulative translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,259,024
    
    
    
    
    
    
    
    
    
    
    
    1,259,024Issuance of shares
    
    
    1,491,020
    
    
    
    286,758,950
    
    
    
    6,035,445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292,794,395Net income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,082,590
    
    
    
    90,082,590As of December 31, 2000
    
    
    8,291,020
    
    
    
    707,398,979
    
    
    
    31,423,970
    
    
    
    7,266,721
    
    
    
    264,427,970
    
    
    
    90,082,590
    
    
    
    1,100,600,230As of December 31, 2000 (1)
    
    
    8,291,020
    
    
    
    751,208,197
    
    
    
    33,370,057
    
    
    
    7,716,749
    
    
    
    280,803,994
    
    
    
    95,661,405
    
    
    
    1,168,760,402As of January 1, 2001
    
    
    8,291,020
    
    
    
    707,398,979
    
    
    
    31,423,970
    
    
    
    7,266,721
    
    
    
    264,427,970
    
    
    
    90,082,590
    
    
    
    1,100,600,230Transfer of prior year
income to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,082,590
    
    
    
    (90,082,590
    )
    
    
    Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,976,824
    )
    
    
    
    
    
    
    (14,976,824
    )Price-level restatement of
capital
    
    
    
    
    
    
    21,929,368
    
    
    
    974,144
    
    
    
    225,268
    
    
    
    10,615,407
    
    
    
    
    
    
    
    33,744,187Cumulative translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,892,550
    
    
    
    
    
    
    
    
    
    
    
    18,892,550Net income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,926,246
    
    
    
    40,926,246As of December 31, 2001
    
    
    8,291,020
    
    
    
    729,328,347
    
    
    
    32,398,114
    
    
    
    26,384,539
    
    
    
    350,149,143
    
    
    
    40,926,246
    
    
    
    1,179,186,389As of December 31, 2001 (1)
    
    
    8,291,020
    
    
    
    751,208,197
    
    
    
    33,370,057
    
    
    
    27,176,075
    
    
    
    360,653,617
    
    
    
    42,154,033
    
    
    
    1,214,561,979As of January 1, 2002
    
    
    8,291,020
    
    
    
    729,328,347
    
    
    
    32,398,114
    
    
    
    26,384,539
    
    
    
    350,149,143
    
    
    
    40,926,246
    
    
    
    1,179,186,389Transfer of prior year
income to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,926,246
    
    
    
    (40,926,246
    )
    
    
    Price-level restatement of
capital
    
    
    
    
    
    
    21,879,850
    
    
    
    971,943
    
    
    
    791,536
    
    
    
    11,732,261
    
    
    
    
    
    
    
    35,375,590Cumulative translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,766,402
    
    
    
    
    
    
    
    
    
    
    
    14,766,402Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (223,748,087
    )
    
    
    (223,748,087
    )As of December 31, 2002
    
    
    8,291,020
    
    
    
    751,208,197
    
    
    
    33,370,057
    
    
    
    41,942,477
    
    
    
    402,807,650
    
    
    
    (223,748,087
    )
    
    
    1,005,580,294




|(1) |  | Restated in thousands of constant Chilean pesos as of December 31, 2002.
|--- |  | ------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial
statements

F-24



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002 and thousands of US dollars)

Years ended December 31,2000
    
    2001
    
    2002
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThUS$(Note 2)CASH FLOWS FROM
OPERATING
ACTIVITIES:Net income (loss)
for the year
    
    
    95,661,405
    
    
    
    42,154,033
    
    
    
    (223,748,087
    )
    
    
    (311,362
    )GAIN (LOSSES) FROM
SALES OF ASSETS:Gain on sale of
property, plant and
equipment
    
    
    (62,896,876
    )
    
    
    (5,734,441
    )
    
    
    (1,095,916
    )
    
    
    (1,525
    )Gain on sale of
investments
    
    
    (208,107,787
    )
    
    
    
    
    
    
    
    
    
    
    Charges (credits)
to income which do
not represent cash
flows:Depreciation
    
    
    400,622,477
    
    
    
    426,020,442
    
    
    
    454,471,134
    
    
    
    632,431Amortization
of
intangibles
    
    
    34,072,887
    
    
    
    8,031,971
    
    
    
    10,389,287
    
    
    
    14,457Write-offs
and accrued
expenses
    
    
    94,139,743
    
    
    
    83,298,120
    
    
    
    55,938,311
    
    
    
    77,842Equity in
income of
related
companies
    
    
    (4,547,446
    )
    
    
    (3,629,292
    )
    
    
    (14,996,244
    )
    
    
    (20,868
    )Equity in
losses of
related
companies
    
    
    4,470,693
    
    
    
    14,328,089
    
    
    
    6,732,461
    
    
    
    9,369Amortization
of goodwill
    
    
    71,713,807
    
    
    
    80,576,348
    
    
    
    506,344,171
    
    
    
    704,616Amortization
of negative
goodwill
    
    
    (42,646,957
    )
    
    
    (47,699,849
    )
    
    
    (112,247,774
    )
    
    
    (156,201
    )Price-level
restatement,
net
    
    
    15,251,993
    
    
    
    (2,175,075
    )
    
    
    (4,964,890
    )
    
    
    (6,909
    )Foreign
currency
translation,
net
    
    
    1,251,722
    
    
    
    30,542,651
    
    
    
    16,110,247
    
    
    
    22,419Other credits
to income
which do not
represent
cash flows
    
    
    (49,576,106
    )
    
    
    (85,418,284
    )
    
    
    (229,054,815
    )
    
    
    (318,747
    )Other charges
to income
which do not
represent
cash flows
    
    
    113,338,851
    
    
    
    69,401,896
    
    
    
    147,655,390
    
    
    
    205,474Changes in assets
which affect cash
flows:Decrease in
trade
receivables
    
    
    (109,394,076
    )
    
    
    119,961,261
    
    
    
    55,973,106
    
    
    
    77,891Decrease in
inventory
    
    
    23,105,545
    
    
    
    1,211,389
    
    
    
    11,768,733
    
    
    
    16,377Decrease
(increase) in
other assets
    
    
    (53,360,920
    )
    
    
    24,428,653
    
    
    
    (23,047,923
    )
    
    
    (32,073
    )Changes in
liabilities which
affect cash flows:Decrease in
accounts
payable
associated
with
operating
results
    
    
    (2,742,827
    )
    
    
    (62,185,972
    )
    
    
    (49,587,699
    )
    
    
    (69,005
    )Increase in
interest
payable
    
    
    99,951,611
    
    
    
    7,825,819
    
    
    
    55,125,046
    
    
    
    76,711Increase
(decrease) in
income tax
payable
    
    
    11,473,486
    
    
    
    (54,073,346
    )
    
    
    (45,838,237
    )
    
    
    (63,787
    )Increase
(decrease) in
other
accounts
payable
associated
with
non-operating
results
    
    
    (75,419,017
    )
    
    
    (93,868,474
    )
    
    
    30,029,884
    
    
    
    41,789Net decrease
in value
added tax and
other similar
taxes payable
    
    
    (1,671,587
    )
    
    
    (117,627,568
    )
    
    
    (1,891,294
    )
    
    
    (2,632
    )Income (loss)
attributable
to minority
interest
    
    
    184,000,228
    
    
    
    125,152,619
    
    
    
    (16,282,559
    )
    
    
    (22,658
    )Net cash flows
provided by
operating
activities
    
    
    538,690,849
    
    
    
    560,520,990
    
    
    
    627,782,332
    
    
    
    873,609


The accompanying notes are an integral part of these consolidated financial
statements

F-25



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002 and thousands of US dollars)

Years ended December 31,2000
    
    2001
    
    2002
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThUS$(Note 2)CASH FLOWS FROM
FINANCING
ACTIVITIES:Issuance of shares
    
    
    314,324,467
    
    
    
    
    
    
    
    
    
    
    
    Subsidiary issuance
of shares
minoritary interest
    
    
    
    
    
    
    
    
    
    
    1,905,653
    
    
    
    2,652Proceeds from the
issuance of debt
    
    
    1,600,212,553
    
    
    
    1,936,899,708
    
    
    
    978,914,577
    
    
    
    1,362,233Proceeds from bond
issuances
    
    
    52,538,205
    
    
    
    280,374,847
    
    
    
    131,515,409
    
    
    
    183,014Other sources of
financing
    
    
    44,863,139
    
    
    
    57,920,839
    
    
    
    26,348,466
    
    
    
    36,666Distribution of
capital in
subsidiary
    
    
    
    
    
    
    
    
    
    
    (119,286,568
    )
    
    
    (165,996
    )Dividends paid
    
    
    (150,311,417
    )
    
    
    (144,467,460
    )
    
    
    (100,446,315
    )
    
    
    (139,779
    )Payment of debt
    
    
    (2,123,472,019
    )
    
    
    (1,870,062,467
    )
    
    
    (1,094,545,835
    )
    
    
    (1,523,143
    )Payment of bonds
    
    
    (210,365,004
    )
    
    
    (74,167,788
    )
    
    
    (29,347,204
    )
    
    
    (40,839
    )Payment of loans
obtained from
related companies
    
    
    (157,860,304
    )
    
    
    (100,900,143
    )
    
    
    (44,389,633
    )
    
    
    (61,771
    )Payment of bond
issuance costs
    
    
    
    
    
    
    (996,147
    )
    
    
    (11,140,779
    )
    
    
    (15,503
    )Other disbursements
for financing
    
    
    (184,219,710
    )
    
    
    (43,615,899
    )
    
    
    (24,567,635
    )
    
    
    (34,188
    )Net cash provided
by (used) in
financing
activities
    
    
    (814,290,090
    )
    
    
    40,985,490
    
    
    
    (285,039,864
    )
    
    
    (396,654
    )CASH FLOWS FROM
INVESTING
ACTIVITIES:Proceeds from sales
of property, plant
and equipment
    
    
    140,229,768
    
    
    
    19,716,715
    
    
    
    22,605,406
    
    
    
    31,457Sale of investment
in related
companies
    
    
    518,889,641
    
    
    
    
    
    
    
    
    
    
    
    Other loans
received from
related companies
    
    
    16,355
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from sales
of Transelec
    
    
    199,277,388
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from loans
obtained from
related parties
    
    
    3,855,665
    
    
    
    5,525,961
    
    
    
    
    
    
    
    Other receipts from
investments
    
    
    15,442,082
    
    
    
    13,675,849
    
    
    
    18,556,146
    
    
    
    25,822Additions to
property, plant and
equipment
    
    
    (343,009,506
    )
    
    
    (341,553,736
    )
    
    
    (317,915,443
    )
    
    
    (442,403
    )Long-term
investments
    
    
    (323,132,841
    )
    
    
    (12,879,738
    )
    
    
    (23,465,277
    )
    
    
    (32,654
    )Investment in
financial
instruments
    
    
    (1,899,939
    )
    
    
    
    
    
    
    (724,403
    )
    
    
    (1,008
    )Disbursements for
highway
construction costs
    
    
    (27,107,200
    )
    
    
    
    
    
    
    
    
    
    
    Other loans granted
to related
companies
    
    
    
    
    
    
    (233,615
    )
    
    
    
    
    
    
    Other investment
disbursements
    
    
    (5,945,345
    )
    
    
    (187,891,023
    )
    
    
    (35,935,186
    )
    
    
    (50,009
    )Net cash used in
investing
activities
    
    
    176,616,068
    
    
    
    (503,639,587
    )
    
    
    (336,878,757
    )
    
    
    (468,795
    )POSITIVE (NEGATIVE)
NET CASH FLOW FOR
THE YEAR
    
    
    (98,983,173
    )
    
    
    97,866,893
    
    
    
    5,863,711
    
    
    
    8,160EFFECT OF
PRICE-LEVEL
RESTATEMENT ON CASH
AND CASH
EQUIVALENTS
    
    
    4,115,441
    
    
    
    (74,996
    )
    
    
    (2,499,632
    )
    
    
    (3,478
    )NET (DECREASE)
INCREASE IN CASH
AND CASH
EQUIVALENTS
    
    
    (94,867,732
    )
    
    
    97,791,897
    
    
    
    3,364,079
    
    
    
    4,682CASH AND CASH
EQUIVALENTS AT
BEGINNING OF YEAR
    
    
    214,903,436
    
    
    
    120,035,704
    
    
    
    217,827,601
    
    
    
    303,123CASH AND CASH
EQUIVALENTS AT END
OF YEAR
    
    
    120,035,704
    
    
    
    217,827,601
    
    
    
    221,191,680
    
    
    
    307,805


The accompanying notes are an integral part of these consolidated financial
statements

F-26



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002, except as stated)

Note 1. Description of Business

Enersis S.A. (the Company) is registered in the Securities Register under
No.0175 and is regulated by the Chilean Superintendency of Securities and
Insurance (the SVS). The Company issued publicly registered American
Depositary Receipts in 1993 and 1996. Enersis S.A. is a reporting company
under the United States Securities and Exchange Act of 1934.

The Companys subsidiaries, Chilectra S.A., Compañía Eléctrica del Río Maipo
S.A. (Río Maipo S.A.) and Empresa Nacional de Electricidad S.A. (Endesa S.A.)
are registered in the Securities Register under No. 0321, 0345, 0114,
respectively.

Note 2. Summary of Significant Accounting Policies

(a) General

The consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in Chile and the
regulations established by the SVS (collectively Chilean GAAP), and the
specific corporate regulations of Law No.18,046, related to the formation,
registration and liquidation of Chilean corporations, among others. Certain
amounts in the prior years financial statements have been reclassified to
conform to the current years presentation.

The preparation of financial statements in conformity with Chilean GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosures of contingent assets and
liabilities as of the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

In certain cases generally accepted accounting principles require that assets
or liabilities be recorded or disclosed at their fair values. The fair value
is the amount at which an asset could be bought or sold or the amount at which
a liability could be incurred or settled in a current transaction between
willing parties, other than in a forced or liquidation sale. Where available,
quoted market prices in active markets have
been used as the basis for the measurement; however, where quoted market prices
in active markets are not available, the Company has estimated such values
based on the best information available, including using modeling and other
valuation techniques.

F-27



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Reclassifications For purposes of comparison, the following
reclassifications were made in the 2001 financial statements:

Balance sheet reclassificationsCharge
    
    
    
    ChargeFrom
    
    (credit)
    
    To
    
    (credit)ThCh$
    
    
    
    ThCh$Notes receivable
    
    
    (6,334,876
    )
    
    Other accounts receivable, net
    
    
    6,334,876Goodwill
    
    
    3,391,332
    
    
    Negative goodwill, net
    
    
    (3,391,332
    )Land
    
    
    (34,153,467
    )
    
    Other assets
    
    
    34,153,467Technical appraisal
    
    
    17,117,163
    
    
    Accumulated depreciation
    
    
    (17,117,163
    )Current portion of long-term debtCurrent portion of
    
    
    
    
    
    due to banks and financiallong-term notes payable
    
    
    5,571,195
    
    
    institutions
    
    
    (4,619,536
    )Miscellaneous payables
    
    
    (5,718,123
    )
    
    Other current liabilities
    
    
    4,766,464Due to banks and financial
institutions
    
    
    (17,545,577
    )
    
    Short-term notes payable
    
    
    18,453,424Other long-term liabilities
    
    
    (21,520,395
    )
    
    Bonds payable
    
    
    20,612,548Deficit during development periodOther reserves
    
    
    1,210,739
    
    
    of subsidiary
    
    
    (1,210,739
    )


Statement of operations reclassificationsCharge
    
    
    
    ChargeFrom
    
    (credit)
    
    To
    
    (credit)ThCh$
    
    
    
    ThCh$Other non-operating expenses
    
    
    1,586,072
    
    
    Other non-operating income
    
    
    1,940,610Income taxes
    
    
    (4,444,572
    )
    
    Interest expense
    
    
    3,629,529Deferred income taxes
    
    
    (2,392,830
    )
    
    Foreign currency transalation, net
    
    
    (318,809
    )Amortization of negative
goodwill
    
    
    (248,147
    )
    
    Amortization of goodwill
    
    
    248,147


Statement of Cash flow reclassificationsCharge
    
    
    
    ChargeFrom
    
    (credit)
    
    To
    
    (credit)ThCh$
    
    
    
    ThCh$Payment of bonds
    
    
    85,102,292
    
    
    Other accounts payable associated with non-operating results
    
    
    (102,068,728
    )Other credits to income which do not represent cash flows
    
    
    24,250,320
    
    
    Decrease in income tax payable
    
    
    (7,283,884
    )Other sources of financing
    
    
    27,586,411
    
    
    Other charges to income which do not represent cash flows
    
    
    (17,297,324
    )Other charges to income which do not represent cash flows
    
    
    906,583
    
    
    Other disburments for financing
    
    
    (10,289,087
    )Amortization of intangibles
    
    
    (906,583
    )


F-28



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The accompanying financial statements reflect the consolidated results of
operations of Enersis S.A. and its subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. Investments in companies
in the development stage are accounted for using the equity method, except that
income or losses are included directly in equity instead of being reflected in
the Companys consolidated statement of operations. The Company consolidates
the financial statements of companies in which it controls over 50% of the
voting shares, which are the following:

Percentage participation as of December 31,Company name
    
    2000
    
    2001
    
    2002Total
    
    Total
    
    Direct
    
    Indirect
    
    TotalChilectra S.A.
    
    
    97.97
    
    
    
    98.24
    
    
    
    98.24
    
    
    
    
    
    
    
    98.24Compañía Eléctrica del Río Maipo S.A.
    
    
    98.40
    
    
    
    98.74
    
    
    
    98.74
    
    
    
    
    
    
    
    97.74Synapsis Soluciones y Servicios IT Ltda.
    
    
    99.99
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00Inmobiliaria Manso de Velasco Ltda.
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    
    
    
    
    100.00Cía. Americana de Multiservicios Ltda. (3)
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.93
    
    
    
    0.07
    
    
    
    100.00Endesa Chile S.A. (4)
    
    
    59.98
    
    
    
    59.98
    
    
    
    59.98
    
    
    
    
    
    
    
    59.98Enersis de Argentina S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Enersis International Ltd.
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Inversiones Distrilima S.A.
    
    
    53.93
    
    
    
    54.54
    
    
    
    15.93
    
    
    
    39.75
    
    
    
    55.68Empresa Distribuidora Sur S.A. (Edesur)
    
    
    64.29
    
    
    
    65.09
    
    
    
    16.02
    
    
    
    49.07
    
    
    
    65.09Empresa Eléctrica de Panamá S.A. (3)
    
    
    99.61
    
    
    
    99.67
    
    
    
    
    
    
    
    
    
    
    
    Enersis Investment S.A.
    
    
    100.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interocean Developments Inc. (2)
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    Luz de Bogotá S.A. (1)
    
    
    44.21
    
    
    
    44.66
    
    
    
    25.71
    
    
    
    18.95
    
    
    
    44.66Cerj
    
    
    57.38
    
    
    
    58.16
    
    
    
    20.37
    
    
    
    41.58
    
    
    
    61.95Investluz (1)
    
    
    46.50
    
    
    
    47.02
    
    
    
    15.61
    
    
    
    32.80
    
    
    
    48.41Cía. Americana de Multiservicios Uno Ltda. (3)
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    
    
    
    
    Electric Investment
    
    
    100.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Enersis Energia de Colombia S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00




|(1) |  | Parent Company of Companhia Energética do Céará S.A. Colelce. The Company obtained shareholder agreements dated June 25, 1999, from Endesa International, the majority shareholder of these
companies, giving the Company the right to elect a majority of the Board of Directors. The Superintendency of Securities and Insurance was notified on June 28, 1999 and they do not have market
value.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | These companies were merged into other Enersis entities during 2002.                                                                                                                                                                                                                                                                                                                               
|   
|(3) |  | On January 1 2002, Cía. Americana de Multiservicios Ltda. merged with Cía. Americana de Multiservicios Uno.                                                                                                                                                                                                                                                                                        

F-29



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(4) |  | Consolidated subsidiaries of Endesa Chile S.A. are detailed as follow:
|--- |  | ----------------------------------------------------------------------

Percentage participation as of December 31,2000
    
    2001
    
    2002Company name
    
    Total
    
    Total
    
    Direct
    
    Indirect
    
    TotalEnigesa S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.51
    
    
    
    0.49
    
    
    
    100.00Ingendesa S.A.
    
    
    97.64
    
    
    
    97.64
    
    
    
    96.39
    
    
    
    1.25
    
    
    
    97.64Pehuenche S.A.
    
    
    92.55
    
    
    
    93.66
    
    
    
    92.65
    
    
    
    
    
    
    
    92.65Endesa Argentina S.A.
    
    
    99.99
    
    
    
    99.99
    
    
    
    99.99
    
    
    
    
    
    
    
    99.99Endesa-Chile Internacional
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Pangue S.A.
    
    
    92.48
    
    
    
    92.48
    
    
    
    94.97
    
    
    
    0.02
    
    
    
    94.99Hidroinvest S.A.
    
    
    69.93
    
    
    
    69.93
    
    
    
    
    
    
    
    69.93
    
    
    
    69.93Infraestructura 2000 S.A.
    
    
    60.00
    
    
    
    60.00
    
    
    
    60.00
    
    
    
    
    
    
    
    60.00Hidroeléctrica El Chocón S.A.
    
    
    47.45
    
    
    
    65.19
    
    
    
    
    
    
    
    65.19
    
    
    
    65.19Central Costanera S.A.
    
    
    51.68
    
    
    
    51.93
    
    
    
    
    
    
    
    51.93
    
    
    
    51.93Endesa Brasil Participacoes Ltda.
    
    
    100.00
    
    
    
    100.00
    
    
    
    5.00
    
    
    
    95.00
    
    
    
    100.00Túnel El Melón S.A.
    
    
    99.95
    
    
    
    99.95
    
    
    
    99.95
    
    
    
    
    
    
    
    99.95Soc. Concesionaria Autopista del Sol S.A.
    
    
    60.04
    
    
    
    100.00
    
    
    
    0.10
    
    
    
    99.90
    
    
    
    100.00Inecsa 2000 S.A.
    
    
    58.39
    
    
    
    97.32
    
    
    
    
    
    
    
    97.32
    
    
    
    97.32Soc. Concesionaria Autopista Los Libertadores S.A.
    
    
    58.36
    
    
    
    99.95
    
    
    
    
    
    
    
    99.95
    
    
    
    99.95Compañía Eléctrica Cono Sur S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00Central Hidroeléctrica Betania S.A.
    
    
    85.62
    
    
    
    85.62
    
    
    
    
    
    
    
    85.62
    
    
    
    85.62Endesa de Colombia S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    5.10
    
    
    
    94.90
    
    
    
    100.00Lajas Inversora S.A.
    
    
    92.88
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    100.00Cachoeira Dourada S.A.
    
    
    91.80
    
    
    
    99.51
    
    
    
    
    
    
    
    99.59
    
    
    
    99.59Capital de Energía S.A.
    
    
    43.67
    
    
    
    50.90
    
    
    
    
    
    
    
    50.90
    
    
    
    50.90Emgesa S.A
    
    
    22.41
    
    
    
    51.32
    
    
    
    
    
    
    
    51.32
    
    
    
    51.32Edegel S.A.A
    
    
    37.90
    
    
    
    63.56
    
    
    
    
    
    
    
    63.56
    
    
    
    63.56Generandes Perú S.A.
    
    
    54.26
    
    
    
    59.63
    
    
    
    
    
    
    
    59.63
    
    
    
    59.63Compañía Eléctrica San Isidro S.A.
    
    
    75.00
    
    
    
    75.00
    
    
    
    50.00
    
    
    
    25.00
    
    
    
    75.00Compañía Eléctrica Tarapacá S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.90
    
    
    
    0.10
    
    
    
    100.00Inversiones Endesa Norte S.A.
    
    
    100.00
    
    
    
    100.00
    
    
    
    99.99
    
    
    
    0.01
    
    
    
    100.00


F-30



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Situation in Argentina

In Argentina, at the end of 2001, as a result of the serious economic crisis, a
change in the economic model and the law of convertibility was implemented with
the promulgation of new National Government regulations. This situation gave
rise to, among other consequences: devaluation of the Argentinean peso with
respect to the US dollar and the pesification of certain assets and liabilities
recorded in foreign currency in said country, pesification of public service
tariffs, introduction of deposit withdrawal limitations in financial
institutions, limitations on making certain transfers abroad for capital
services and financial loan interest without prior authorization of the Central
Bank of the Republic of Argentina.

Considering the above mentioned unstable environment, the company performed an
evaluation of the recoverability of its investments in Argentinean companies.
Management believes that the evolution of the aforementioned measures will not
result in significant adjustments different to those recognized in these
financial statements.

(b) Periods covered

These financial statements reflect the Companys financial position as of
December 31, 2001 and 2002, and the results of its operations, the changes in
its shareholders equity and its cash flows for the years ended December 31,
2000, 2001 and 2002.

(c) Constant currency restatement

The cumulative inflation rate in Chile as measured by the Chilean Consumer
Price Index (CPI) for the three-year period ended December 31, 2002 was
approximately 10.8%.

Chilean GAAP requires that the financial statements be restated to reflect the
full effects of loss in the purchasing power of the Chilean peso on the
financial position and results of operations of reporting entities. The method
described below is based on a model that enables calculation of net inflation
gains or losses caused by monetary assets and liabilities exposed to changes in
the purchasing power of local currency. The model prescribes that the
historical cost of all non-monetary accounts be restated for general
price-level changes between the date of origin of each item and the year-end.

The financial statements of the Company have been price-level restated in order
to reflect the effects of the changes in the purchasing power of the Chilean
currency during each year. All non-monetary assets and liabilities, all equity
accounts and income statement accounts have been restated to reflect the
changes in the CPI from the date they were acquired or incurred to year-end
(see also Note 24).

The purchasing power gain or loss included in net income reflects the effects
of Chilean inflation on the monetary assets and liabilities held by the
Company.

F-31



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The restatements were calculated using the official consumer price index of the
National Institute of Statistics and based on the prior month rule, in which
the inflation adjustments are based on the CPI at the close of the month
preceding the close of the respective period or transaction. This index is
considered by the business community, the accounting profession and the Chilean
government to be the index that most closely complies with the technical
requirement to reflect the variation in the general level of prices in Chile,
and consequently it is widely used for financial reporting purposes.

The values of the Chilean consumer price indices used to reflect the effects of
the changes in the purchasing power of the Chilean peso (price-level
restatement) are as follows:

Change overPreviousIndex
    
    November 30,November 30, 2000
    
    
    106.82
    
    
    
    4.7
    %November 30, 2001
    
    
    110.10
    
    
    
    3.1
    %November 30, 2002
    
    
    113.36
    
    
    
    3.0
    %


By way of comparison, the actual values of the Chilean consumer price indices
as of the balance sheet dates are as follows:

Change overPreviousIndex
    
    December 31,December 31, 2000
    
    
    106.94
    
    
    
    4.5
    %December 31, 2001
    
    
    109.76
    
    
    
    2.6
    %December 31, 2002
    
    
    112.86
    
    
    
    2.8
    %


The above-mentioned price-level restatements do not purport to represent
appraisal or replacement values and are only intended to restate all
non-monetary financial statement components in terms of local currency of a
single purchasing power and to include in net income or loss for each year the
gain or loss in purchasing power arising from the holding of monetary assets
and liabilities exposed to the effects of inflation.

Index-linked assets and liabilities

Assets and liabilities that are denominated in index-linked units of account
are stated at the year-end values of the respective units of account. The
principal index-linked unit used in Chile is the Unidad de Fomento (UF),
which is adjusted daily to reflect the changes in Chiles CPI. Certain of the
Companys investments are linked to the UF. As the Companys indexed
liabilities exceed its indexed assets, the increase in the index results in a
net loss on indexation. Values for the UF are as follows (historical Chilean
pesos per UF):

F-32



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Ch$December 31, 2000
    
    
    15,769.92December 31, 2001
    
    
    16,262.66December 31, 2002
    
    
    16,744.12


Comparative financial statements

For comparative purposes, the 2001 consolidated financial statements and the
amounts disclosed in the related Notes have been restated in terms of Chilean
pesos of December 31, 2002, purchasing power.

Convenience translation to U.S. dollars

The financial statements are stated in Chilean pesos. The translations of
Chilean pesos into US dollars are included solely for the convenience of the
reader, using the observed exchange rate reported by the Chilean Central Bank
as of December 31, 2002 of Ch$718.61 to US$1.00. The convenience translations
should not be construed as representations that the Chilean peso amounts have
been, could have been, or could in the future be, converted into US dollars at
this or any other rate of exchange.

(d) Assets and liabilities in foreign currencies

Assets and liabilities denominated in foreign currencies are detailed in Note
30. These amounts have been stated at the observed exchange rates reported by
the Central Bank of Chile as of each year-end as follows:

Currency
    
    Symbol used
    
    2000
    
    2001
    
    2002Ch$
    
    Ch$
    
    Ch$United States dollar (Observed)
    
    US$
    
    
    573.65
    
    
    
    654.79
    
    
    
    718.61British pound sterling
    
    
    £
    
    
    
    856.58
    
    
    
    948.01
    
    
    
    1,152.91Colombian peso
    
    $ Col
    
    
    0.26
    
    
    
    0.29
    
    
    
    0.25New Peruvian sol
    
    Soles
    
    
    162.69
    
    
    
    190.29
    
    
    
    204.73Brazilian real
    
    Rs
    
    
    294.33
    
    
    
    282.97
    
    
    
    203.57Japanese yen
    
    
    ¥
    
    
    
    5.01
    
    
    
    4.99
    
    
    
    6.07Euro
    
    
    
    
    
    
    538.84
    
    
    
    578.18
    
    
    
    752.55French Franc (2)
    
    FFr
    
    
    82.15
    
    
    
    88.36
    
    
    
    Pool Unit (IBRD)(1)
    
    UP
    
    
    7,230,629.88
    
    
    
    7,742,160.26
    
    
    
    9,089,158.76Unidad de Fomento (UF)
    
    UF
    
    
    15,769.92
    
    
    
    16,262.66
    
    
    
    16,744.12Unit of Account (IDB) (1)
    
    UC
    
    
    850.92
    
    
    
    929.26
    
    
    
    1,093.75Argentine peso
    
    $ Arg
    
    
    573.65
    
    
    
    385.17
    
    
    
    219.09


F-33



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(1) |  | Units of measurement used by the International Bank for Reconstruction and
Development (IBRD) and Interamerican Development Bank (IDB) to express the
weighted-average of multicurrency loan obligations granted using fixed
currency rates to the US dollar, at a determined date.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Beginning on January 1, 2002, these currencies will be expressed in the Euro.                                                                                                                                                                                                      

(e) Time deposits and marketable securities

Time deposits are presented at original placement plus accrued interest and UF
indexation adjustments, as applicable. Marketable securities include
investments in quoted shares that are valued at the lower of cost or market
value. The investments are in both short-term highly liquid fixed rate
investment shares and mutual fund units valued at cost plus interest and
indexation or redemption value as appropriate.

(f) Allowance for doubtful accounts

Accounts receivable are classified as current or long-term, depending on their
collection terms. Current and long-term trade accounts receivable, notes
receivable and other receivables are presented net of allowances for doubtful
accounts (see Note 5). Write-offs of uncollectible accounts amounted to
ThCh$121,333,284, ThCh$146,377,134 and ThCh$115,349,531 for the years ended
December 31, 2000, 2001 and 2002, respectively. In addition, the total sum
owed by the companies that have gone into bankruptcy amounting to ThCh$707,755
(ThCh$585,195 in 2001) is included in the bad debts estimation.

(g) Inventories

Inventory of materials in transit, land and operation and maintenance
materials, are valued at the lower of price-level restated cost or net
realizable value. The cost of real estate projects under development, included
in inventory, include the cost of land, demolition, urbanizing, payments to
contractors and other direct costs.

The costs and revenues of construction in progress are accounted for under the
completed contract method in accordance with Technical Bulletin No.39 of the
Chilean Association of Accountants and are included in current assets as their
realization is expected in the short-term.

(h) Property, plant and equipment

Property, plant and equipment are valued at net replacement cost as determined
by the former Superintendency of Electric and Gas Services (SEG) adjusted for
price-level restatement in accordance with D.F.L. No.4 of 1959. The latest
valuation under the D.F.L. 4 was in 1980.

Property, plant and equipment acquired after the latest valuation of net
replacement cost are shown at cost, plus price-level restatement. Interest on
debt directly obtained to finance construction projects is capitalized during
the period of construction (only in power generators).

F-34



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

In 1986, an increase based upon a technical appraisal of property, plant and
equipment was recorded in the manner authorized by the SVS in Circulars No.s
550 and 566 dated October 15 and December 16, 1985, respectively, and
Communication No.4790, dated December 11, 1985.

The Company and its subsidiaries have evaluated the recoverability of the book
value of their property, plant and equipment in accordance with Technical
Bulletin No.33 of the Chilean Accounting Association.

As a result of this evaluation no adjustments have been made at that affect the
book values of these assets, except for adjustments for this concept recorded
in the subsidiaries Centrais Electrica Cachoeira Dourada S.A. and Inmobiliaria
Manso de Velasco Limitada, which are includes in Other non-operating expenses
(See Note 23).

(i) Depreciation

Depreciation expense is calculated on the revalued balances using the
straight-line method over the estimated useful lives of the assets.
Depreciation expense was ThCh$400,622,477 ThCh$426,020,442 and ThCh$454,471,134
as of December 31, 2000, 2001 and 2002, respectively. Depreciation expense of
ThCh$439,903,194, ThCh$413,824,670 ThCh$387,193,626 was included in Cost of
sales and ThCh$14,567,940 ThCh$12,195,772 and ThCh$13,428,851 included in
Administrative and selling expenses, respectively.

(j) Leased assets

The leased assets, whose contracts have financial lease characteristics, are
accounted for as acquisition of property plant and equipment, recognizing the
total obligation and the unrecorded interest. Said assets do
not legally belong to the Company, for which reason, as long as the purchase
option is not exercised, it will not be able to freely dispose of them.

(k) Power installations financed by third parties

As established by D.F.L. 1 of the Ministry of Mines dated September 13, 1982,
power installations financed by third parties are treated as reimbursable
contributions. As such, the installations constructed using this mechanism form
part of the Companys plant and equipment.

Such installations made prior to D.F.L. 1 are deducted from Plant and equipment
and their depreciation is charged to Power installations financed by third
parties.

(l) Investments in related companies

Investments in related companies are included in Other assets using the
equity method. This valuation method recognizes in income the Companys equity
in the net income or loss of each investee on the accrual basis (Note 11).

F-35



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Investments in foreign affiliates are recorded in accordance with Technical
Bulletin No.64 of the Chilean Association of Accountants.

The Company and its subsidiaries have evaluated the recoverability of the book
value of their property, plant and equipment in accordance with Technical
Bulletin No.33 of the Chilean Accounting Association.

As a result of this evaluation no adjustments have been made that affect the
book values of these assets.

(m) Intangibles, other than goodwill

Intangibles, other than goodwill, correspond mainly to easements, adjustments
to carrying value for spum-off assets, and rights for the use of telephone
lines and are amortized in accordance with Technical Bulletin No.55 of the
Chilean Association of Accountants.

(n) Severance indemnity

The severance indemnity that the Company is obliged to pay to its employees
under collective bargaining agreements is stated at the present value of the
benefit under the vested cost method, discounted at 9.5% and assuming an
average employment span which varies based upon years of service with the
Company.

(o) Revenue recognition

This is revenue for electric power generation and distribution, among which are
included energy supplied and unbilled at each year-end, valued at the selling
price using the current rates which has been included in revenue from
operations. The unbilled amount is presented in current assets as trade
receivables and the corresponding cost is included in cost of operations. The
Company also recognizes revenues for amounts received from highway tolls for
motorized vehicles, income related to computer advisory services, engineering
services and sale of materials.

(p) Income tax and deferred income taxes

At December 31, 2000, 2001 and 2002, the Company recorded current tax expense
according to the tax laws and regulations in each country of ThCh$160,193,833,
ThCh$110,987,646 and ThCh$75,089,258, respectively. The Company records income
taxes in accordance with Technical Bulletin No.60 of the Chilean Association of
Accountants, and with circular No.1466 issued on January 27, 2000 by the SVS,
recognizing, using the liability method, recognizing the deferred tax effects
of temporary differences between the financial and tax values of assets and
liabilities using the tax rates to be in effect at the time of reversal.

The requirements of Technical Bulletin N°60 are only applicable for temporary
differences, tax benefits arising from tax losses and other events that create
differences between the accounting and tax bases for assets and liabilities
that arise after January 1, 2000, as a transitional provision, a contra asset
or liability has been recorded offsetting the effects of the deferred tax
assets and

F-36



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

liabilities not recorded prior to January 1, 2000. Such contra asset or
liability must be amortized to income over the estimated average reversal
periods corresponding to the underlying temporary differences to which the
deferred tax asset or liability relates, thereby mitigating the effect of
recording deferred income taxes relating to prior periods that were previously
not recorded.

(q) Accrued vacation expense

In accordance with Technical Bulletin No.47 issued by the Chilean Association
of Accountants, employee vacation expense is recorded on the accrual basis.

(r) Reverse repurchase agreements

Reverse repurchase agreements are included in Other current assets and are
stated at cost plus interest and indexation accrued at year-end, in conformity
with the related contracts.

(s) Statements of cash flows

The Consolidated Statements of Cash Flows have been prepared in accordance with
the indirect method.

Investments considered as cash equivalents, as indicated in point 6.2 of
Technical Bulletin No.50 issued by the Chilean Association of Accountants,
include time deposits, investments in fixed income securities classified as
marketable securities, repurchase agreements classified as other current
assets, and other cash balances classified as other accounts receivable with
maturities less than 90 days.

For classification purposes, cash flows from operations include collections
from clients and payments to suppliers, payroll and taxes.

(t) Financial derivative contracts

As of December 31, 2001 and 2002 the Company and its subsidiary have forward
contracts, currency swaps, and interest rate swaps and collars with several
financial institutions, defined as cover, which are recorded according to
Technical Bulletin No.57 of the Chilean Association of Accountants. Forward
foreign exchange contracts gains and losses are recorded at estimated fair
value with certain gains and
losses deferred as assets or liabilities until settlement if the instrument
qualifies as a hedge and included in earnings as Other non-operating income
and expense.

(u) Goodwill and negative goodwill

Goodwill and negative goodwill are determined according to Circular No.368 of
the SVS. Amortization is determined using the straight-line method,
considering the nature and characteristic of each investment, foreseeable life
of the business and investment return, and does not exceed 20 years.

F-37



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The Company has evaluated the recoverability of its goodwill and negative
goodwill value arising from investments abroad, and in virtue of Technical
Bulletin No.56 of the Chilean Association of Accountants, it has used to IAS 36
Impairment of Assets Value as the appropriate guiding literature.

(v) Pension and post-retirement benefits

Pension and post-retirement benefits are recorded in accordance with the
respective Collective Bargaining Contracts of the employees based on the
actuarially determined projected benefit obligation.

(w) Bonds

Bonds payable are recorded at the face value of the bonds. The difference
between the face value and the placement value, equal to the premium or
discount, is deferred and amortized over the term of the bonds.

(x) Investments in other companies

Investments in other companies are presented at acquisition cost adjusted for
price-level restatement and they do not have market value.

(y) Research and development costs

Costs incurred by the Company in research and development are either general in
nature (water-level studies, hydroelectric research, seismic-activity surveys)
which are expensed as incurred. Costs incurred in performing studies related
to specific construction projects are capitalized.

During 2000, 2001 and 2002 there have been no expenses under this caption.

Note 3. Change in Accounting Principles

There were no changes in accounting principles during 2002 that would affect
the comparison with the prior year financial statements.

F-38



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 4. Time Deposits

Time deposits as of each year-end are as follows:

Annual
    
    ScheduledFinancial Institution
    
    Rate
    
    Maturity
    
    2001
    
    2002%
    
    
    
    ThCh$
    
    ThCh$Banco Bilbao Vizcaya
    
    
    1.28
    
    
    
    30.01.03
    
    
    
    28,873,651
    
    
    
    4,539,102Banco CCF Brasil
    
    
    
    
    
    
    
    
    
    
    812,623
    
    
    
    Banco Colpatria
    
    
    8.50
    
    
    
    02.01.03
    
    
    
    8,654,209
    
    
    
    14,808,363Banco Continental
    
    
    2.42
    
    
    
    01.02.03
    
    
    
    
    
    
    
    3,369,062Banco Crédito del Perú
    
    
    1.13
    
    
    
    03.01.03
    
    
    
    1,762,858
    
    
    
    179,675Banco de Bogotá
    
    
    7.50
    
    
    
    02.01.03
    
    
    
    444,764
    
    
    
    606,954Banco de Chile
    
    
    1.10
    
    
    
    02.01.03
    
    
    
    491,759
    
    
    
    149,484Banco de Chile N.Y
    
    
    1.10
    
    
    
    02.01.03
    
    
    
    3,339,638
    
    
    
    344,943Banco do Brasil
    
    
    18.55
    
    
    
    15.09.03
    
    
    
    
    
    
    
    1,060,351Banco do Estado do Ceará
    
    
    
    
    
    
    
    
    
    
    4,959,682
    
    
    
    Banco Frances
    
    
    25.00
    
    
    
    07.01.03
    
    
    
    
    
    
    
    603,576Banco Ganadero
    
    
    
    
    
    
    
    
    
    
    11,119
    
    
    
    Banco Holandes
    
    
    3.50
    
    
    
    01.01.03
    
    
    
    
    
    
    
    431,741Banco Interbank
    
    
    1.46
    
    
    
    14.01.03
    
    
    
    391,658
    
    
    
    2,862,988Banco Itau
    
    
    3.00
    
    
    
    01.01.03
    
    
    
    
    
    
    
    213,069Banco Liberal
    
    
    
    
    
    
    
    
    
    
    482,268
    
    
    
    Banco Nationale de Paris
    
    
    2.75
    
    
    
    01.01.03
    
    
    
    13,048,776
    
    
    
    693,825Banco Pactual
    
    
    1.46
    
    
    
    01.01.03
    
    
    
    
    
    
    
    2,923,141Banco Provincia Buenos Aires
    
    
    6.50
    
    
    
    02.01.03
    
    
    
    
    
    
    
    650,606Banco Rio
    
    
    7.30
    
    
    
    21.01.03
    
    
    
    9,832
    
    
    
    5,125,732Banco Santander
    
    
    2.90
    
    
    
    02.01.03
    
    
    
    796,736
    
    
    
    2,339,169Banco Santander CDB
    
    
    7.50
    
    
    
    02.01.03
    
    
    
    1,058,196
    
    
    
    4,312Banco Santander Do Brasil
    
    
    18.55
    
    
    
    02.01.03
    
    
    
    909,937
    
    
    
    1,170,656Banco Sudameris
    
    
    
    
    
    
    
    
    
    
    3,800,198
    
    
    
    Banco Tequendama
    
    
    
    
    
    
    
    
    
    
    2,936,874
    
    
    
    Banco Union Colombiano
    
    
    
    
    
    
    
    
    
    
    2,720,943
    
    
    
    Banco Votorantim
    
    
    19.40
    
    
    
    23.09.03
    
    
    
    
    
    
    
    3,228,008Banco Wiese Sudameris
    
    
    1.44
    
    
    
    02.01.03
    
    
    
    166,454
    
    
    
    431,166Bank Boston
    
    
    1.10
    
    
    
    03.01.03
    
    
    
    1,322,428
    
    
    
    94,094Bank of America
    
    
    0.87
    
    
    
    01.01.03
    
    
    
    17,553,537
    
    
    
    5,320,419Banco Credito-Soles
    
    
    1.13
    
    
    
    02.01.03
    
    
    
    
    
    
    
    3,932,045Bonos de Solidaridad
    
    
    10.00
    
    
    
    02.01.03
    
    
    
    675
    
    
    
    1,070Bradesco
    
    
    19.37
    
    
    
    15.09.03
    
    
    
    683,371
    
    
    
    3,764,259Citibank N.Y
    
    
    1.10
    
    
    
    02.01.03
    
    
    
    54,433,352
    
    
    
    55,244,377Cititrust
    
    
    6.24
    
    
    
    02.01.03
    
    
    
    
    
    
    
    56Colcorp S.A.
    
    
    9.00
    
    
    
    03.02.03
    
    
    
    1,673,922
    
    
    
    1,024,239Corficolombia
    
    
    8.12
    
    
    
    02.01.03
    
    
    
    
    
    
    
    3,687,381Corfivalle
    
    
    7.98
    
    
    
    02.01.03
    
    
    
    9,812,357
    
    
    
    3,724,459Corporacion las Villas
    
    
    
    
    
    
    
    
    
    
    3,480,285
    
    
    
    Cuenta Corriente Remunerada
    
    
    
    
    
    
    
    
    
    
    2,749,309
    
    
    
    Encargo Fiduciario Banco Santander
    
    
    6.18
    
    
    
    02.01.03
    
    
    
    
    
    
    
    2,363,837Fiduciaria Banco Colpatria
    
    
    
    
    
    
    
    
    
    
    19,448
    
    
    
    Fiduciaria Banco de Bogotá
    
    
    
    
    
    
    
    
    
    
    6,292,881
    
    
    
    Fiduciaria Bancolombia
    
    
    8.12
    
    
    
    01.01.03
    
    
    
    
    
    
    
    226Fiduciaria Cititrust
    
    
    6.55
    
    
    
    01.01.03
    
    
    
    41,848
    
    
    
    475Fiduciaria de Crédito
    
    
    
    
    
    
    
    
    
    
    297,505
    
    
    
    Fiduciaria de Santander
    
    
    9.00
    
    
    
    02.01.03
    
    
    
    23,540
    
    
    
    161,687Fiduciaria Lloyds Bank
    
    
    
    
    
    
    
    
    
    
    52,337
    
    
    
    Fiduciaria Cancolombia
    
    
    
    
    
    
    
    
    
    
    1,431,793
    
    
    
    Fiducolombia
    
    
    
    
    
    
    
    
    
    
    125,117
    
    
    
    Fiduganadero
    
    
    
    
    
    
    
    
    
    
    774,567
    
    
    
    Fiduoccidente
    
    
    7.73
    
    
    
    02.01.03
    
    
    
    5,070
    
    
    
    9,728Fiduvalle
    
    
    7.66
    
    
    
    01.01.03
    
    
    
    
    
    
    
    761,371HSBC  Bamerindus
    
    
    3.00
    
    
    
    01.01.03
    
    
    
    586,792
    
    
    
    5,450,031Megabanco
    
    
    
    
    
    
    
    
    
    
    42,296
    
    
    
    Merrill Lynch
    
    
    1.50
    
    
    
    06.01.03
    
    
    
    
    
    
    
    8,211,535Suvalor
    
    
    9.04
    
    
    
    02.01.03
    
    
    
    
    
    
    
    4,015,453Time Deposit
    
    
    
    
    
    
    
    
    
    
    1,038,629
    
    
    
    Unibanco
    
    
    7.00
    
    
    
    08.09.03
    
    
    
    
    
    
    
    2,124,229Total
    
    
    
    
    
    
    
    
    
    
    178,113,234
    
    
    
    145,626,894


F-39



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 5. Accounts, Notes and Other Receivables

Current accounts, notes and other receivables and related allowances for
doubtful accounts as of each December 31, are as follows:

As of December 31,Under 90 days
    
    91 days to 1 year
    
    Sub total
    
    Current
    
    Long-term (1)Account
    
    2001
    
    2002
    
    2001
    
    2002
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Accounts receivable
    
    
    576,467,295
    
    
    
    487,395,335
    
    
    
    17,305,993
    
    
    
    76,912,334
    
    
    
    564,307,669
    
    
    
    550,248,992
    
    
    
    458,839,724
    
    
    
    
    
    
    
    Allowance for doubtful
accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,467,945
    )Notes receivable
    
    
    6,295,375
    
    
    
    4,653,993
    
    
    
    407,105
    
    
    
    1,442,684
    
    
    
    6,096,677
    
    
    
    5,683,330
    
    
    
    5,131,349
    
    
    
    
    
    
    
    Allowance for doubtful
accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (965,328
    )Other receivables
    
    
    42,743,736
    
    
    
    53,684,615
    
    
    
    37,770,437
    
    
    
    18,007,739
    
    
    
    71,692,354
    
    
    
    72,220,719
    
    
    
    62,776,096
    
    
    
    101,903,562
    
    
    
    125,850,513Allowance for doubtful
accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,916,258
    )Total
    
    
    
    
    
    
    
    
    
    
    628,153,041
    
    
    
    526,747,169
    
    
    
    101,903,562
    
    
    
    125,850,513




|(1) |  | Include regulatory assets from subsidiaries in Brazil for amounts ThCh$64,879,173 and ThCh$87,285,245 in 2001 and 2002, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------

Current and long-term accounts receivable per country as of each December 31,
are as follows:

As of December 31,Country
    
    2001
    
    2002ThCh$
    
    %
    
    ThCh$
    
    %Chile
    
    
    180,592,722
    
    
    
    24.74
    
    
    
    145,659,152
    
    
    
    22.32Peru
    
    
    40,147,163
    
    
    
    5.50
    
    
    
    58,187,147
    
    
    
    8.92Argentina
    
    
    75,119,315
    
    
    
    10.29
    
    
    
    40,461,768
    
    
    
    6.20Colombia
    
    
    127,104,349
    
    
    
    17.41
    
    
    
    99,788,238
    
    
    
    15.29Brasil (1)
    
    
    307,093,054
    
    
    
    42.06
    
    
    
    308,501,377
    
    
    
    47.27Total
    
    
    730,056,603
    
    
    
    100.00
    
    
    
    652,597,682
    
    
    
    100.00




|(1) |  |  | In accordance with Decree Law No.14 and Resolution No.91 of the Council for Managing the
Electric Energy Crisis (CGCEE), both dated December 21, 2001, and based on Resolution
No.31 of the National Agency of Electric Energy (ANEEL) dated January 24, 2002, the
Companys distribution subsidiaries in Brasil have recognized as of December 31, 2001 and
at March 1, 2002, a regulated asset, which will be recovered through extraordinary
tariffs in order to recover losses experienced during the period of energy rationing from
June 1, 2001 to March 1, 2002.
|--- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Brazilian rationing program came to an end on March 1, 2002, the Brazilian Congress
ratified the law to compensate Brazilian electric companies on April 16, 2002. The law
approved a 2.9% and 7.9% increase for residential and industrial customers, respectively.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | ANNEL subsequently established an 18.6% tariff adjustment for CERJ to be effective on
January 1, 2002; also, ANNEL set a 14.3% tariff adjustment for Coelce (Subsidiary of
Investluz), to become effective on April 22, 2002.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-40



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 6. Transactions with Related Companies

Balances of accounts receivable and payable are as follows at December 31, 2001
and 2002:

(a) Notes and accounts receivable:

As of December 31,Short-term
    
    Long-termCompany
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Aguas Santiago Poniente S.A.
    
    
    2,496,548
    
    
    
    257,796
    
    
    
    
    
    
    
    Atacama Finance Co.
    
    
    4,297,348
    
    
    
    182,046,895
    
    
    
    169,196,652
    
    
    
    Central Geradora Term. de Fortaleza
    
    
    11,383
    
    
    
    3,861
    
    
    
    
    
    
    
    Cía. Interconexión Energética S.A.
    
    
    3,004,871
    
    
    
    4,101,221
    
    
    
    
    
    
    
    37Com. de Energía del Mercosur
    
    
    3,369,682
    
    
    
    4,422,881
    
    
    
    
    
    
    
    Consorcio Energetico Punta Cana-Macao
    
    
    967
    
    
    
    939
    
    
    
    
    
    
    
    Distrilec Inversora S.A.
    
    
    6,810
    
    
    
    7,257
    
    
    
    
    
    
    
    Edenor S.A.
    
    
    187,117
    
    
    
    
    
    
    
    
    
    
    
    Elesur S.A.
    
    
    20,379
    
    
    
    24,217
    
    
    
    
    
    
    
    Empresa Eléctrica de Bogotá S.A.
    
    
    133,978
    
    
    
    171,747
    
    
    
    
    
    
    
    Empresa Eléctrica Piura S.A.
    
    
    100,180
    
    
    
    279,542
    
    
    
    
    
    
    
    Endesa España
    
    
    364,605
    
    
    
    322,122
    
    
    
    
    
    
    
    Endesa Internacional S.A.
    
    
    2,387,673
    
    
    
    1,632,089
    
    
    
    
    
    
    
    Etevensa
    
    
    190,584
    
    
    
    220,020
    
    
    
    
    
    
    
    Fundación Endesa
    
    
    
    
    
    
    165,273
    
    
    
    
    
    
    
    Gasoducto Atacama Generación
    
    
    49,224
    
    
    
    570,445
    
    
    
    
    
    
    
    Gasoducto Tal Tal Ltda.
    
    
    313,819
    
    
    
    144,871
    
    
    
    
    
    
    
    Ingendesa Do Brasil Ltda.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,021Inversiones Electrica Quillota S.A.
    
    
    1,030
    
    
    
    1,000
    
    
    
    
    
    
    
    Sacme S.A.
    
    
    175,047
    
    
    
    101,097
    
    
    
    
    
    
    
    Smartcom S.A.
    
    
    896,261
    
    
    
    619,403
    
    
    
    
    
    
    
    Soc. de Inv. Chispa Uno S.A.
    
    
    830
    
    
    
    1,937
    
    
    
    
    
    
    
    Transmisora Eléctrica de Quillota Ltda.
    
    
    11,242
    
    
    
    304,222
    
    
    
    1,471,140
    
    
    
    882,109Total
    
    
    18,019,578
    
    
    
    195,398,835
    
    
    
    170,667,792
    
    
    
    898,167


F-41



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(b) Notes and accounts payable:

As of December 31,Short-term
    Long-termCompany
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Aguas Santiago Poniente S.A.
    
    
    8
    
    
    
    631
    
    
    
    
    
    
    
    Com. de Energía del Mercosur
    
    
    7,175,604
    
    
    
    760,170
    
    
    
    
    
    
    
    Compañía Transmisión del Mercosur S.A.
    
    
    339,240
    
    
    
    107,045
    
    
    
    
    
    
    
    Electrogas S.A.
    
    
    
    
    
    
    233,837
    
    
    
    
    
    
    
    Elesur S.A.
    
    
    17,289,294
    
    
    
    11,465,695
    
    
    
    984,980,016
    
    
    
    987,371,066Empresa Eléctrica de Bogotá S.A.
    
    
    3,629,114
    
    
    
    1,226,667
    
    
    
    
    
    
    
    920,539Empresa Eléctrica Piura S.A.
    
    
    720,573
    
    
    
    857,426
    
    
    
    
    
    
    
    Endesa Internacional S.A.
    
    
    342,658
    
    
    
    1,109,741
    
    
    
    16,727,143
    
    
    
    Endesa Inversiones Generales S.A.
    
    
    
    
    
    
    8,589
    
    
    
    
    
    
    
    Endesa Servicios
    
    
    
    
    
    
    116,041
    
    
    
    
    
    
    
    Etevensa S.A.
    
    
    1,116,904
    
    
    
    
    
    
    
    
    
    
    
    Gasoducto Tal Tal Ltda.
    
    
    213,599
    
    
    
    160,559
    
    
    
    
    
    
    
    Mundivia S.A.
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    Sacme S.A.
    
    
    185,803
    
    
    
    101,720
    
    
    
    
    
    
    
    Smartcom S.A.
    
    
    65,236
    
    
    
    55,189
    
    
    
    
    
    
    
    Transmisora Eléctrica de Quillota Ltda.
    
    
    42,540
    
    
    
    82,402
    
    
    
    
    
    
    
    Total
    
    
    31,120,649
    
    
    
    16,285,712
    
    
    
    1,001,707,159
    
    
    
    988,291,605


F-42



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(c) Effects in income (expense) in each year are as follows:

Income (expense)Company
    
    Nature of Transaction
    
    2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Atacama Finance Co.
    
    Interest
    
    
    11,022,442
    
    
    
    10,056,288
    
    
    
    6,659,856Monetary correction
    
    
    5,061,400
    
    
    
    4,575,344
    
    
    
    498,688Exchange difference
    
    
    3,790,297
    
    
    
    17,033,254
    
    
    
    11,107,652Central Geradora Term. de Fortaleza
    
    Services
    
    
    
    
    
    
    473,819
    
    
    
    Exchange difference
    
    
    
    
    
    
    (21,636
    )
    
    
    Com. de Energía del Mercosur
    
    Sale of energy
    
    
    
    
    
    
    22,810,613
    
    
    
    19,152,859Purchase of energy
    
    
    
    
    
    
    (15,347,195
    )
    
    
    (1,958,213
    )Interest
    
    
    
    
    
    
    (62,519
    )
    
    
    Services
    
    
    
    
    
    
    73,855
    
    
    
    Com. Transmisión del Mercosur S.A.
    
    Purchase of energy
    
    
    
    
    
    
    (3,985,903
    )
    
    
    (1,397,696
    )Exchange difference
    
    
    
    
    
    
    450
    
    
    
    Monetary correction
    
    
    
    
    
    
    210
    
    
    
    Cía. Interconexión Energética S.A.
    
    Sale of energy
    
    
    39,696,963
    
    
    
    46,839,739
    
    
    
    26,990,992Exchange difference
    
    
    
    
    
    
    (3,523
    )
    
    
    Services
    
    
    471,433
    
    
    
    903,382
    
    
    
    272,906Inversiones Eléctrica Quillota S.A.
    
    Interest
    
    
    132,335
    
    
    
    134,407
    
    
    
    144,050Services
    
    
    (475,445
    )
    
    
    
    
    
    
    5,066Monetary correction
    
    
    
    
    
    
    43,994
    
    
    
    Gasoducto Atacama Generación Ltda.
    
    Services
    
    
    (1,630,310
    )
    
    
    325,374
    
    
    
    585,878Empresa Eléctrica Piura S.A.
    
    Sale of energy
    
    
    2,472,161
    
    
    
    938,354
    
    
    
    1,457,382Purchase of energy
    
    
    
    
    
    
    (9,812,046
    )
    
    
    (9,619,648
    )Services
    
    
    (1,211,356
    )
    
    
    1,213,149
    
    
    
    175,914Exchange difference
    
    
    
    
    
    
    (809
    )
    
    
    Gasoducto Tal Tal Ltda.
    
    Services
    
    
    629,818
    
    
    
    
    
    
    
    40,494Elesur S.A.
    
    Interest
    
    
    (73,502,634
    )
    
    
    (51,512,360
    )
    
    
    (43,408,831
    )Services
    
    
    8,916
    
    
    
    20,478
    
    
    
    15,919Monetary correction
    
    
    (51,798,765
    )
    
    
    (30,547,186
    )
    
    
    (29,082,684
    )Exchange difference
    
    
    
    
    
    
    (753,213
    )
    
    
    Etevensa S.A.
    
    Sale of energy
    
    
    (10,603,289
    )
    
    
    3,063,312
    
    
    
    5,757,877Services
    
    
    (46,175
    )
    
    
    3,247,425
    
    
    
    153,617Exchange difference
    
    
    
    
    
    
    (563
    )
    
    
    Electrogas S.A.
    
    Services
    
    
    (2,319,147
    )
    
    
    (2,449,634
    )
    
    
    (2,978,702
    )Edenor S.A.
    
    Services
    
    
    2,838,831
    
    
    
    4,434,499
    
    
    
    Sales of energy
    
    
    38,725,328
    
    
    
    
    
    
    
    Smartcom S.A.
    
    Services
    
    
    848,613
    
    
    
    4,093,653
    
    
    
    3,407,292Aguas Santiago Poniente S.A.
    
    Interest
    
    
    
    
    
    
    209,426
    
    
    
    70,757Services
    
    
    
    
    
    
    29,798
    
    
    
    32,060Endesa Internacional S.A.
    
    Services
    
    
    (8,389
    )
    
    
    242,914
    
    
    
    182,716Interest
    
    
    (3,013,636
    )
    
    
    (2,193,466
    )
    
    
    (1,026,534
    )Sacme S.A.
    
    Services
    
    
    (772,147
    )
    
    
    (823,528
    )
    
    
    (364,396
    )Gasoducto Atacama y Cía. Ltda.
    
    Services
    
    
    124,963
    
    
    
    
    
    
    
    Empresa Propietaria de la Red
    
    Services
    
    
    
    
    
    
    
    
    
    
    346,994Mundivía S.A.
    
    Services
    
    
    
    
    
    
    61,157
    
    
    
    Soc. de Inv. Chispa Uno S.A.
    
    Services
    
    
    17,788
    
    
    
    6,582
    
    
    
    8,432Total
    
    
    
    
    
    
    (39,540,005
    )
    
    
    3,317,895
    
    
    
    (12,769,303
    )


F-43



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The transfer of short-term funds between related companies, is on the basis of
a current cash account, at a variable interest rate based on market conditions.
The resulting accounts receivable and accounts payable are essentially on 30
day terms, with automatic rollover for the same period and settlement in line
with cash flows.

Conditions of the long-term payables / receivables are as follows:

InterestCompany
    
    Type
    
    Due date
    
    Currency
    
    Capital
    
    rateElesur S.A.
    
    Account payable
    
    May 2004
    
    UF
    
    
    35,827,780
    
    
    
    4.57
    %Account payable
    
    May 2004
    
    UF
    
    
    22,873,999
    
    
    
    1.46
    %Account payable
    
    Aug 2004
    
    UF
    
    
    266,448
    
    
    
    2.95
    %Transmisora Eléctrica de Quillota Ltda.
    
    Account receivable
    
    
    2006
    
    
    UF
    
    
    70,242
    
    
    
    9.00
    %Atacama Finance Co.
    
    Account receivable
    
    
    2003
    
    
    US$
    
    
    250,872,179
    
    
    
    3.33
    %


Note 7. Inventories

Inventories include the following items and are presented net of an allowance
for obsolescence amounting to ThCh$4,104,724 and ThCh$4,342,197 as of December
31, 2001 and 2002, respectively:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Real estate under development
    
    
    27,262,972
    
    
    
    23,804,228Materials in transit
    
    
    499,963
    
    
    
    1,104,204Operation and maintenance materials
    
    
    41,944,252
    
    
    
    32,051,573Other
    
    
    7,716,887
    
    
    
    3,422,648Total
    
    
    77,424,074
    
    
    
    60,382,653


Note 8. Deferred Income Taxes

(a)Income taxes (recoverable) payable as of each year-end are as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Income tax provision  current
    
    
    77,283,022
    
    
    
    27,532,029Recoverable tax credits
    
    
    (57,510,102
    )
    
    
    (54,435,976
    )Total
    
    
    19,772,920
    
    
    
    (26,903,947
    )


F-44



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| | (b) |  | The Company and its subsidiaries incurred taxable losses of ThCh$113,749,137, ThCh$422,072,497 and ThCh$573,346,119 for the years ended December 31, 2000, 2001 and 2002, respectively.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tax loss carryforwards relate primarily to Peruvian, Chilean and Brazilian entities. In accordance with the current enacted tax law in Chile and Brazil, such tax losses may be carried-forward
indefinitely, however Peruvian tax carryforwards, for amount to ThCh$54,887,432 in 2002, expire after five years.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | The balance of taxed retained earnings and the related tax credits are as follows:
| | --- |  | ----------------------------------------------------------------------------------

Year
    
    Amountof loss
    
    CreditThCh$
    
    ThCh$2001
    
    
    (18,159,574
    )
    
    
    2002
    
    
    23,698,947
    
    
    
    4,524,557




| | (d) |  | The net effect of temporary differences resulted in a net charge to income of ThCh$13,870,328 and a net credit of ThCh$18,862,491 and ThCh$9,072,273 during the years ended December 31, 2000, 2001 and
2002, respectively.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) |  | In accordance with BT No.60 and 69 of the Chilean Association of Accountants, and Circular No.1,466 of the SVS, the Company and its subsidiaries have recorded consolidated deferred income taxes as of
December 31, 2001 and 2002 as follows:
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2001
    
    As of December 31, 2002Asset
    
    Liability
    
    Asset
    
    LiabilityShort-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-termThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Allowance for doubtful accounts
    
    
    26,027,011
    
    
    
    12,307,740
    
    
    
    
    
    
    
    
    
    
    
    24,128,592
    
    
    
    8,089,173
    
    
    
    
    
    
    
    Deferred income
    
    
    684,649
    
    
    
    1,822,685
    
    
    
    
    
    
    
    
    
    
    
    921,547
    
    
    
    1,824,544
    
    
    
    
    
    
    
    Vacation accrual
    
    
    1,395,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,211,297
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    
    
    
    
    
    
    
    
    24,954
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Leasing assets
    
    
    
    
    
    
    3,475,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,301,708
    
    
    
    
    
    
    
    Depreciation
    
    
    
    
    
    
    3,500,985
    
    
    
    115,620
    
    
    
    388,240,574
    
    
    
    
    
    
    
    3,730,312
    
    
    
    63,991
    
    
    
    425,486,736Severance indemnities
    
    
    
    
    
    
    4,166
    
    
    
    
    
    
    
    1,954,040
    
    
    
    
    
    
    
    5,248
    
    
    
    
    
    
    
    814,241Other
    
    
    1,507,717
    
    
    
    1,859,468
    
    
    
    6,603,676
    
    
    
    3,707,977
    
    
    
    4,211,789
    
    
    
    2,083,015
    
    
    
    4,376,406
    
    
    
    9,391,056Contingencies
    
    
    4,325,818
    
    
    
    39,102,316
    
    
    
    
    
    
    
    
    
    
    
    6,594,295
    
    
    
    38,042,633
    
    
    
    
    
    
    
    Bond discount
    
    
    
    
    
    
    
    
    
    
    421,131
    
    
    
    1,704,883
    
    
    
    
    
    
    
    
    
    
    
    154,508
    
    
    
    1,717,127Cost of studies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,675,640
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,972,554Finance costs
    
    
    
    
    
    
    194,771
    
    
    
    
    
    
    
    8,304,618
    
    
    
    
    
    
    
    117,034
    
    
    
    
    
    
    
    13,755,855Imputed interest on construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,830,117
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,863,433Deferred charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,510,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actuarial deficit (companies in Brazil)
    
    
    7,487,563
    
    
    
    
    
    
    
    1,230,644
    
    
    
    4,339,981
    
    
    
    6,766,431
    
    
    
    
    
    
    
    
    
    
    
    2,301,708Withholdings
    
    
    566,417
    
    
    
    1,597,733
    
    
    
    5,659
    
    
    
    
    
    
    
    2,391,794
    
    
    
    860,956
    
    
    
    5,494
    
    
    
    193,144Regulated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,828,000
    
    
    
    Derivative contracts
    
    
    2,775
    
    
    
    1,000,985
    
    
    
    
    
    
    
    512,289
    
    
    
    350,818
    
    
    
    234,174
    
    
    
    
    
    
    
    Provision real estate projects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,656,047
    
    
    
    
    
    
    
    
    
    
    
    Materials used
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,349,399
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,086,289Salaries for construction-in-progress
    
    
    
    
    
    
    5,843,294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,926,807
    
    
    
    
    
    
    
    Tax losses
    
    
    2,905,532
    
    
    
    77,167,379
    
    
    
    
    
    
    
    
    
    
    
    15,305,920
    
    
    
    101,162,303
    
    
    
    
    
    
    
    Hid. El Chocón investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,374
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    2,897,754Capitalized expenses
    
    
    
    
    
    
    
    
    
    
    552,418
    
    
    
    4,506,944
    
    
    
    
    
    
    
    
    
    
    
    770,801
    
    
    
    3,112,269Provision for labor benefits
    
    
    306,354
    
    
    
    192,678
    
    
    
    559
    
    
    
    
    
    
    
    447,462
    
    
    
    1,179,874
    
    
    
    517
    
    
    
    516Differences between the financial and
tax value of Río Maipo S.A.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,475,222
    
    
    
    Exchange difference-subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,288,870
    
    
    
    3,866,610
    
    
    
    
    
    
    
    Complementary account, net
    
    
    (12,121,039
    )
    
    
    (49,272,564
    )
    
    
    (28,750
    )
    
    
    (296,221,936
    )
    
    
    (3,647,280
    )
    
    
    (42,168,372
    )
    
    
    (3,187
    )
    
    
    (290,044,693
    )Valuation allowance
    
    
    
    
    
    
    (3,322,326
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,448,901
    )
    
    
    
    
    
    
    Total
    
    
    33,088,012
    
    
    
    95,474,667
    
    
    
    8,925,911
    
    
    
    131,534,631
    
    
    
    62,627,582
    
    
    
    121,807,118
    
    
    
    10,671,789
    
    
    
    183,547,989


F-45



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(f)Income tax benefits (expense) for the years ended December 31, 2000, 2001 and 2002 is as follows:

2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Tax expenseIncome tax provision
    
    
    (160,193,593
    )
    
    
    (114,099,337
    )
    
    
    (74,581,690
    )Adjustment for tax expense-prior year
    
    
    (240
    )
    
    
    3,111,691
    
    
    
    (507,568
    )Subtotal
    
    
    (160,193,833
    )
    
    
    (110,987,646
    )
    
    
    (75,089,258
    )Deferred taxesDeferred taxes
    
    
    (26,988,959
    )
    
    
    (36,891,994
    )
    
    
    24,471,978Benefits for tax losses
    
    
    28,053,730
    
    
    
    13,509,821
    
    
    
    5,043,185Amortization of complementary accounts
    
    
    22,425,461
    
    
    
    6,143,861
    
    
    
    (15,501,218
    )Change in valuation allowance
    
    
    (1,192,554
    )
    
    
    (1,607,004
    )
    
    
    (126,575
    )Other charges or credits
    
    
    (8,427,350
    )
    
    
    (17,175
    )
    
    
    (4,815,097
    )Total
    
    
    (146,323,505
    )
    
    
    (129,850,137
    )
    
    
    (66,016,985
    )


Note 9. Other Current Assets

Other current assets as of each year-end are as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Forward contracts and swaps (1)
    
    
    110,734,637
    
    
    
    72,800,589Guarantees and indemnities
    
    
    1,785,077
    
    
    
    1,183,406Deferred expenses
    
    
    3,115,540
    
    
    
    5,709,113Post-retirement benefits
    
    
    884,210
    
    
    
    908,669Deposits for commitments and guarantees (2)
    
    
    1,656,844
    
    
    
    26,098,519Other accounts receivable
    
    
    3,303,579
    
    
    
    8,399,481Fair value-derivative contracts
    
    
    
    
    
    
    11,603,424Reverse repurchase agreements
    
    
    1,909,395
    
    
    
    Other
    
    
    3,851,947
    
    
    
    5,318,407Total
    
    
    127,241,229
    
    
    
    132,021,608




| | (1) |  | See detail in Note 27.
| | --- |  | ----------------------



| | (2) |  | Infraestructura 2000 S.A. Th$25,342,941 of time deposits in 2002.
| | --- |  | -----------------------------------------------------------------



| |  |  | The balance included under this item corresponds to time deposits invested with funds from the
issuance of bonds and that are to be kept in reserve accounts as agreed in the corresponding
finance contracts. At consolidated level, these time deposits are not restricted.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-46



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 10. Property, Plant and Equipment

The composition of property, plant and equipment as of each year-end is as
follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Land
    
    
    123,257,963
    
    
    
    129,904,787Buildings and infrastructure
    
    
    6,305,284,319
    
    
    
    6,605,971,611Distribution and transmission lines and public lighting
    
    
    4,702,594,096
    
    
    
    5,061,388,676Less: third party contributions
    
    
    (55,731,873
    )
    
    
    (45,056,759
    )Sub-total
    
    
    10,952,146,542
    
    
    
    11,622,303,528Machinery and equipment
    
    
    1,823,140,358
    
    
    
    1,978,358,503Work in progress
    
    
    351,183,870
    
    
    
    364,506,933Construction materials
    
    
    63,882,077
    
    
    
    56,458,627Leased assets
    
    
    2,552,754
    
    
    
    715,141Furniture and fixtures, tools, and computing equipment
    
    
    82,938,365
    
    
    
    79,254,829Vehicles
    
    
    15,595,644
    
    
    
    13,097,921Equipment in transit
    
    
    8,193,631
    
    
    
    7,462,991Other assets
    
    
    13,938,603
    
    
    
    13,364,422Sub-total
    
    
    538,284,944
    
    
    
    534,860,864Technical appraisal
    
    
    697,624,932
    
    
    
    740,645,407Total property, plant and equipment
    
    
    14,134,454,739
    
    
    
    15,006,073,089Less: accumulated depreciation
    
    
    (4,509,405,080
    )
    
    
    (5,126,614,906
    )Total property, plant and equipment, net
    
    
    9,625,049,659
    
    
    
    9,879,458,183


Enersis S.A. and its local subsidiaries have proceeded to carry out an analysis
of the book values of their property, plant and equipment and of the companies
in which it has invested abroad. This analysis is motivated by the appearance
of negative circumstances in the economies of various countries and by the fact
that the property, plant and equipment in these countries are measured in US
dollars. The analysis consisted of evaluating both the recoverability of
property, plant and equipment of these companies, and the recorded goodwill
and negative goodwill, in accordance with accounting principles generally
accepted in Chile.

F-47



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The property, plant and equipment recoverability analysis, as explained in Note
2 h, was carried out considering that when there is evidence that the companys
operations do not permanently have sufficient earnings to cover all costs,
including the depreciation of property, plant and equipment taken as a whole,
and when the book value of said assets exceed its realization value, these
values must be written down to recoverable amounts, charging non operating
income.

The results of this analysis determined that no adjustments affecting the
Company and its Subsidiaries book values of property, plant and equipment are
required, except for adjustments for this concept recorded in the subsidiaries
Centrais Electrica Cachoeira Dourada S.A. and Inmobiliaria Manso de Velasco
Limitada, which are includes in Other non-operating expenses (See Note 23).

Note 11. Investment in Related Companies



|(a) |  | Investments as of each year-end are as follows:
|--- |  | -----------------------------------------------

Carrying Value
    
    Equity in net income (losses)Number of

    
    Percentage
    
    RelatedRelated Companies
    
    shares

    
    Owned
    
    Equity
    
    2001
    
    2002
    
    2000
    
    2001
    
    2002%
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Aguas Santiago Poniente S.A. (1)
    
    
    1,031,949
    
    
    
    55.00
    
    
    
    2,270,319
    
    
    
    
    
    
    
    1,248,675
    
    
    
    
    
    
    
    
    
    
    
    Cía. de Interconexión Energética S.A.
    
    
    128,270,527
    
    
    
    45.00
    
    
    
    118,325,971
    
    
    
    50,667,801
    
    
    
    53,246,687
    
    
    
    (1,563,219
    )
    
    
    (5,826,850
    )
    
    
    7,230,684Gas Atacama Generación
    
    
    
    
    
    
    50.00
    
    
    
    67,770,629
    
    
    
    36,300,892
    
    
    
    33,885,315
    
    
    
    (2,595,232
    )
    
    
    (3,441,037
    )
    
    
    (4,793,334
    )Gasoducto Atacama Argentina Ltda.
    
    
    
    
    
    
    50.00
    
    
    
    64,226,451
    
    
    
    27,899,622
    
    
    
    32,113,226
    
    
    
    287,536
    
    
    
    (4,686,666
    )
    
    
    2,386,141Gasoducto Atacama Chile Ltda.
    
    
    
    
    
    
    50.00
    
    
    
    55,859,069
    
    
    
    23,197,393
    
    
    
    27,929,534
    
    
    
    2,953,252
    
    
    
    3,303,780
    
    
    
    3,212,680Inversiones Eléctricas Quillota S.A.
    
    
    608,676
    
    
    
    50.00
    
    
    
    17,127,364
    
    
    
    7,602,220
    
    
    
    8,563,682
    
    
    
    615,927
    
    
    
    (29,794
    )
    
    
    1,310,128Inversiones Electrogas S.A.
    
    
    425
    
    
    
    42.50
    
    
    
    15,712,743
    
    
    
    6,037,668
    
    
    
    6,677,916
    
    
    
    300,236
    
    
    
    34,091
    
    
    
    638,377Com. de Energía del Mercosur S.A.
    
    
    6,305,400
    
    
    
    45.00
    
    
    
    7,614,035
    
    
    
    4,680,261
    
    
    
    3,426,316
    
    
    
    196,295
    
    
    
    48,872
    
    
    
    (1,524,596
    )Transquillota Ltda.
    
    
    
    
    
    
    50.00
    
    
    
    5,032,660
    
    
    
    2,389,373
    
    
    
    2,516,330
    
    
    
    96,666
    
    
    
    87,840
    
    
    
    126,529Atacama Finance Co.
    
    
    3,150,000
    
    
    
    50.00
    
    
    
    5,179,023
    
    
    
    2,555,396
    
    
    
    2,589,511
    
    
    
    90,809
    
    
    
    120,819
    
    
    
    (133,267
    )Endesa Market Place
    
    
    210
    
    
    
    15.00
    
    
    
    3,199,945
    
    
    
    602,376
    
    
    
    479,992
    
    
    
    (312,241
    )
    
    
    (336,407
    )
    
    
    (281,264
    )Sacme S.A.
    
    
    12,000
    
    
    
    50.00
    
    
    
    78,684
    
    
    
    41,818
    
    
    
    39,342
    
    
    
    3,001
    
    
    
    (7,335
    )
    
    
    15,523Consorcio ARA  Ingendesa Ltda.
    
    
    
    
    
    
    
    
    
    
    105,854
    
    
    
    
    
    
    
    52,883
    
    
    
    3,556
    
    
    
    
    
    
    
    56,927Electrogas S.A.
    
    
    85
    
    
    
    0.02
    
    
    
    11,190,123
    
    
    
    2,038
    
    
    
    2,378
    
    
    
    167
    
    
    
    37
    
    
    
    339Distrilec Inversora S.A.
    
    
    4,416,141
    
    
    
    51.50
    
    
    
    
    
    
    
    11,288
    
    
    
    
    
    
    
    
    
    
    
    11,289
    
    
    
    Consorcio Ingendesa  Minmetal Ltda.
    
    
    
    
    
    
    50.00
    
    
    
    3,676
    
    
    
    23,623
    
    
    
    1,838
    
    
    
    
    
    
    
    22,564
    
    
    
    18,916Central Geradora Termelectrica Fortaleza S.A.
    
    
    20,246,908
    
    
    
    48.82
    
    
    
    
    
    
    
    5,386,640
    
    
    
    21,333,090
    
    
    
    
    
    
    
    
    
    
    
    Ingendesa do Brasil Limitada (1)
    
    
    
    
    
    
    100.00
    
    
    
    
    
    
    
    49,599
    
    
    
    57,442
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,448,008
    
    
    
    194,164,157
    
    
    
    76,753
    
    
    
    (10,698,797
    )
    
    
    8,263,783




| | (1) |  | There subsidiaries were in development stage for the years shown and accordingly, were not consolidated under Chilean GAAP.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------



|(b) |  | Income and (losses) recognized by Enersis S.A. based on the participation in the related companies as of December 31, 2002, amounted to ThCh$14,996,244 (ThCh$6,732,461), ThCh$14,328,089 (ThCh$3,629,292) in 2001 and
ThCh$4,547,446 (ThCh$4,470,693) in 2000.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-48



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(c) |  | In accordance with Technical Bulletin No.64 of the Chilean Association of Accountants for the years ended December
31, 2001 and 2002, the Company has recorded foreign exchange gains and losses on liabilities related to net
investments in foreign countries that are denominated in the same currency as the functional currency of those
foreign investments. Such gains and losses are included in the cumulative translation adjustment account in
shareholders equity, and in this way, act as a hedge of the exchange risk affecting the investments. As of
December 31, 2002 the corresponding amounts are as follows:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Country
    
    
    
    
    
    ReportingCompany
    
    of origin
    
    Investment
    
    currency
    
    LiabilityThCh$
    
    
    
    
    
    ThCh$Central Hidroeléctrica
Betania
    
    Colombia
    
    
    600,762,975
    
    
    US$
    
    
    336,577,165Cachoeira Dourada
    
    Brasil
    
    
    430,106,204
    
    
    US$
    
    
    530,228,953Edegel S.A.
    
    Peru
    
    
    220,917,766
    
    
    US$
    
    
    243,486,508Cía.
Interconexión Energética S.A.
    
    Brasil
    
    
    53,246,687
    
    
    US$
    
    
    62,574,905Atacama Finance Co.
    
    Islas Caymán
    
    
    2,589,511
    
    
    US$
    
    
    1,854,668Hidroeléctrica El Chocón
S.A.
    
    Argentina
    
    
    212,761,767
    
    
    US$
    
    
    121,855,669Com.
de Energía del Mercosur S.A.
    
    Argentina
    
    
    3,426,316
    
    
    US$
    
    
    3,952,377Central Costanera S.A.
    
    Argentina
    
    
    89,044,456
    
    
    US$
    
    
    65,498,672Edesur S.A.
    
    Argentina
    
    
    482,071,599
    
    
    US$
    
    
    392,146,648Edelnor S.A.
    
    Peru
    
    
    52,786,427
    
    
    US$
    
    
    23,385,019Cía. do Electricidade do
Río do Janeiro
    
    Brasil
    
    
    362,673,182
    
    
    US$
    
    
    385,080,177Codensa S.A.
    
    Colombia
    
    
    276,586,841
    
    
    US$
    
    
    306,287,700Coelce
    
    Brasil
    
    
    93,034,182
    
    
    US$
    
    
    116,004,085Total
    
    
    
    
    
    
    2,880,007,913
    
    
    
    
    
    
    
    2,588,932,546


The investments made by Enersis S.A. and it affiliates during the year ended
December 31, 2002, amounted to ThCh$23,465,277, which are detailed as follows:

ThCh$Acquisitions:Luz de Río Ltda.
    
    
    61,469Central Termoléctrica Fortaleza S.A.
    
    
    15,480,376Compañía Eléctrica del Río Maipo S.A.
    
    
    1,134Cachoeira Dourada S.A.
    
    
    58,931Aguas Santiago Poniente S.A.
    
    
    1,633,280Pangue S.A.
    
    
    4,998,894Inversiones Distrilima S.A.
    
    
    1,190,289Other
    
    
    40,904Total
    
    
    23,465,277




| |  | In May of 2002, Enersis S.A. acquired 6,824,495
Sociedad Inversiones Distrilima S.A. shares equivalent to 1.14% of issued capital for
US$1,767,761,22 increasing its direct interest from 14.79% to 15.93%.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-49



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | In February and April of 2002 Enersis S.A. made contributions of
US$22,773,195.87 to Central Geradora Termelétrica Fortaleza S.A. for
a capital increase, maintaining its 48.82% interest equivalent to
20,246,908 shares.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | During 2002, Lajas Inversora (Endesa subsidiary) acquired 753,627
(0.0803%) Central Eléctrica Cachoeira Dourada S.A. (Brasil) shares
for Th$58,931, increasing its interest to 99.59% in said company.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On September 13, 2002, Endesa acquired 7,275,433 (2.51%) Pangue S.A.
(Chile) shares for Th$4,998,894, increasing its interest to 94.97%
in said company.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Debenture capitalization in Cerj

On July 11, 2002, the company Luz de Río Ltda. and Endesa
Internacional Energía Ltda., holders of convertible bonds issued by
Companhía de Electricidade do Río de Janeiro, exercised the option
to capitalize their investment. To that effect, 420,705,127,532 no
par value shares were issued.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Said capitalization resulted in a net increase of the consolidated interest in
the company to 61.95%.

Note 12. Investments in Other Companies

Investments in other companies at December 31, 2001 and 2002 are as follows:

As of December 31,Number of
    
    PercentageCompany
    
    shares
    
    owned
    
    2001
    
    2002%
    
    ThCh$
    
    ThCh$Distasa S.A. E.S.P
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    6Emgesa S.A. E.S.P
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    3Club de la Banca y
Comercio
    
    
    2
    
    
    
    0.001
    
    
    
    2,572
    
    
    
    2,699Club Empresarial
    
    
    2
    
    
    
    0.001
    
    
    
    6,328
    
    
    
    6,150Edegas
    
    
    1
    
    
    
    0.010
    
    
    
    2,616
    
    
    
    3,422Empresa Eléctrica
de Aysen S.A
    
    
    2,516,231
    
    
    
    
    
    
    
    1,978,031
    
    
    
    1,978,031Inmobiliaria España
S.A.
    
    
    1
    
    
    
    
    
    
    
    98
    
    
    
    98Inverandes S.A.
    
    
    1,011,899
    
    
    
    
    
    
    
    3,420
    
    
    
    3,420Cooperativa
Eléctrica de
Chillán
    
    
    
    
    
    
    
    
    
    
    12,907
    
    
    
    12,907CDEC-SIC Ltda.
    
    
    
    
    
    
    30.770
    
    
    
    153,100
    
    
    
    223,114Empresa Eléctrica
de Bogotá S.A.
    
    
    12,818,264
    
    
    
    11.000
    
    
    
    147,160,783
    
    
    
    156,799,970Autopista del Río
Maipo S.A.
    
    
    25
    
    
    
    0.200
    
    
    
    4,827
    
    
    
    4,827Financiera
Eléctrica Nacional
    
    
    
    
    
    
    0.100
    
    
    
    124,006
    
    
    
    353,555Saelpa
    
    
    
    
    
    
    
    
    
    
    1,036
    
    
    
    725Teleceara
    
    
    
    
    
    
    
    
    
    
    738
    
    
    
    516Supra CCVM Lltda
    
    
    
    
    
    
    
    
    
    
    37,906
    
    
    
    26,525Banco Destak
    
    
    
    
    
    
    
    
    
    
    61,376
    
    
    
    42,947Menescal Produções
Artisticas
    
    
    
    
    
    
    
    
    
    
    8,344
    
    
    
    5,838Termocartagena
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    6Coger
    
    
    
    
    
    
    
    
    
    
    2,909
    
    
    
    2,035Total
    
    
    
    
    
    
    
    
    
    
    149,560,997
    
    
    
    159,466,785


F-50



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 13. Goodwill



|(a) |  | In accordance with current standards, recognition has been given to the excess of purchase price of the proportional equity
in the net assets acquired (goodwill) in the purchase of shares as of December 31, 2001 and 2002, as follows:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31,Amortization
    
    Net balanceCompany
    
    2000
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Central Costanera S.A. (1)
    
    
    (1,477,224
    )
    
    
    (1,635,472
    )
    
    
    (24,019,065
    )
    
    
    22,542,503Chilectra S.A.
    
    
    (1,040,007
    )
    
    
    (6,178,814
    )
    
    
    (6,244,383
    )
    
    
    112,424,542
    
    
    
    106,276,518Cía. de Electricidade do Río de Janeiro (1)
    
    
    (6,144,427
    )
    
    
    (6,802,644
    )
    
    
    (109,374,320
    )
    
    
    102,650,570
    
    
    
    C. Hidroeléctrica Cachoeira Dourada (1)
    
    
    (3,685,680
    )
    
    
    (4,080,506
    )
    
    
    (69,564,545
    )
    
    
    65,288,089
    
    
    
    Coelce (1)
    
    
    (10,994,059
    )
    
    
    (12,171,789
    )
    
    
    (213,989,455
    )
    
    
    200,834,527
    
    
    
    Codensa
    
    
    (1,515,697
    )
    
    
    (1,677,992
    )
    
    
    (1,787,998
    )
    
    
    26,569,990
    
    
    
    26,522,265Distrilec Inversora S.A. (1)
    
    
    (596,749
    )
    
    
    (660,678
    )
    
    
    (11,642,227
    )
    
    
    10,926,526
    
    
    
    Edegel S.A.
    
    
    (34,232
    )
    
    
    (37,900
    )
    
    
    (41,020
    )
    
    
    609,554
    
    
    
    608,459Edesur S.A. (1)
    
    
    (577,694
    )
    
    
    (639,580
    )
    
    
    (9,483,835
    )
    
    
    8,900,820
    
    
    
    Emgesa S.A.
    
    
    (1,369,908
    )
    
    
    (1,516,659
    )
    
    
    (1,615,435
    )
    
    
    24,013,765
    
    
    
    23,970,674Empresa Eléctrica de Colina S.A.
    
    
    (185,188
    )
    
    
    (185,188
    )
    
    
    (185,188
    )
    
    
    2,731,517
    
    
    
    2,546,329Empresa Eléctrica de Pangue S.A.
    
    
    
    
    
    
    
    
    
    
    (69,692
    )
    
    
    
    
    
    
    3,275,515Endesa (Chile)
    
    
    (42,958,280
    )
    
    
    (42,958,281
    )
    
    
    (42,958,280
    )
    
    
    710,600,834
    
    
    
    667,642,554Gasoducto Atacama y Cía Ltda.
    
    
    (4,772
    )
    
    
    (4,772
    )
    
    
    (4,772
    )
    
    
    81,927
    
    
    
    77,154Hidroeléctrica El Chocón S.A. (1)
    
    
    (507,513
    )
    
    
    (810,026
    )
    
    
    (10,069,320
    )
    
    
    9,450,309
    
    
    
    Hidroinvest S.A. (1)
    
    
    (70,177
    )
    
    
    (77,694
    )
    
    
    (1,379,722
    )
    
    
    1,294,904
    
    
    
    Inversiones Distrilima S.A.
    
    
    (1,272
    )
    
    
    (1,408
    )
    
    
    (1,500
    )
    
    
    18,301
    
    
    
    18,000Investluz S.A. (1)
    
    
    (56,270
    )
    
    
    (62,297
    )
    
    
    (1,095,242
    )
    
    
    1,027,913
    
    
    
    Lajas Inversora S.A. (1)
    
    
    (95,269
    )
    
    
    (105,474
    )
    
    
    (1,798,130
    )
    
    
    1,687,590
    
    
    
    Luz de Bogotá S.A.
    
    
    (363,754
    )
    
    
    (402,719
    )
    
    
    (445,628
    )
    
    
    6,376,384
    
    
    
    6,348,417Cía. Eléctrica del Río Maipo S.A.
    
    
    (35,635
    )
    
    
    (566,455
    )
    
    
    (574,414
    )
    
    
    10,802,028
    
    
    
    10,227,614Total
    
    
    (71,713,807
    )
    
    
    (80,576,348
    )
    
    
    (506,344,171
    )
    
    
    1,318,832,593
    
    
    
    847,513,499




|(b) |  | Following current standards, recognition has been given to the excess of the equity in the net assets
purchased over the purchase price (negative goodwill) in the purchase of shares as of December 31, 2001 and
2002 as follows:
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31,Amortization
    
    Net balanceCompany
    
    2000
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Inversiones Destrilima S.A.
    
    
    
    
    
    
    
    
    
    
    18,366
    
    
    
    
    
    
    
    611,346Hidroeléctrica El Chocón S.A. (1)
    
    
    
    
    
    
    248,147
    
    
    
    3,613,468
    
    
    
    3,391,331
    
    
    
    Synapsis Soluciones y Servicios IT Ltda.
    
    
    15,314
    
    
    
    15,315
    
    
    
    15,315
    
    
    
    156,983
    
    
    
    141,668Edelnor S.A.
    
    
    1,054,693
    
    
    
    1,167,676
    
    
    
    1,244,160
    
    
    
    3,696,809
    
    
    
    2,694,795Central Hidroeléctrica Betania S.A.
    
    
    30,582,139
    
    
    
    33,765,719
    
    
    
    34,886,018
    
    
    
    56,035,189
    
    
    
    24,819,551Cía. Eléctrica Cachoeira Dourada (1)
    
    
    1,773,475
    
    
    
    1,996,761
    
    
    
    36,869,705
    
    
    
    34,362,010
    
    
    
    Edegel S.A.
    
    
    8,564,986
    
    
    
    9,661,331
    
    
    
    10,294,161
    
    
    
    68,866,610
    
    
    
    63,083,303Empresa de Energía de Bogotá S.A.
    
    
    215,999
    
    
    
    239,139
    
    
    
    254,803
    
    
    
    3,826,225
    
    
    
    3,822,287Cía. de Electricidade do Río de Janeiro (1)
    
    
    
    
    
    
    118,238
    
    
    
    15,874,719
    
    
    
    2,246,500
    
    
    
    Coelce (1)
    
    
    440,352
    
    
    
    487,523
    
    
    
    9,177,059
    
    
    
    8,612,903
    
    
    
    Total
    
    
    42,646,958
    
    
    
    47,699,849
    
    
    
    112,247,774
    
    
    
    181,194,560
    
    
    
    95,172,950


F-51



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(1) |  | To carry out the analysis of the recoverability of goodwill and
negative goodwill on investments abroad, as explained in Note 2 u,
the Company used International Accounting Standard (IAS) No.36.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The analysis determined that the impairment of goodwill and negative goodwill
in the companies, related to investments in Argentina and Brazil, is 100%, as,
when comparing cash flows generated by the companies in said countries, such
flows do not cover the recorded goodwill and negative goodwill. Thus, these
balances have been fully amortized, resulting in a higher net charge to income
for the period of ThCh$236,434,558, net of minorities, which is included in
goodwill and negative goodwill amortization in the income statement.

Note 14. Other Assets

Other assets as of each year-end are as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Bond discount
    
    
    23,317,438
    
    
    
    20,817,166Bond issuance cost
    
    
    2,227,309
    
    
    
    11,513,319Forwards contracts and
swaps
    
    
    6,778,289
    
    
    
    9,363,825Deferred expenses
    
    
    29,372,305
    
    
    
    32,395,491Deferred commissions on
foreign currency loans
    
    
    8,504,753
    
    
    
    10,428,709Post-retirement benefits
    
    
    50,753,635
    
    
    
    19,278,057Security deposits for
judicial obligations
    
    
    17,219,611
    
    
    
    23,650,617Recoverable  taxes
    
    
    16,938,241
    
    
    
    14,575,779Reimbursable
contributions
    
    
    1,644,724
    
    
    
    1,445,742Argentinean Goverment
bond (Edesur)
    
    
    6,744,337
    
    
    
    793,976Regulated assets
    
    
    28,334,477
    
    
    
    36,046,501Fair value-derivative
contracts
    
    
    
    
    
    
    51,900,113Others
    
    
    6,700,336
    
    
    
    6,546,301Total
    
    
    198,535,455
    
    
    
    238,755,596


F-52



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 15. Due to Banks and Financial Institutions



|(a) |  | Short-term debt due to banks and financial institutions:
|--- |  | --------------------------------------------------------

Foreign CurrencyUS$
    
    Other foreign currencies
    
    Ch$
    
    TotalFinancial Institution
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Short-term:ABN Amro Bank
    
    
    
    
    
    
    6,557,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,557,278Banco Alfa
    
    
    
    
    
    
    
    
    
    
    9,978,137
    
    
    
    2,914,580
    
    
    
    
    
    
    
    
    
    
    
    9,978,137
    
    
    
    2,914,580Banco Banrisul
    
    
    
    
    
    
    
    
    
    
    2,943,626
    
    
    
    2,033,821
    
    
    
    
    
    
    
    
    
    
    
    2,943,626
    
    
    
    2,033,821Banco Bayernische Landes
    
    
    3,900
    
    
    
    8,744,459
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,900
    
    
    
    8,744,459Banco BBVA Argentaria
    
    
    19,383,881
    
    
    
    15,389,863
    
    
    
    
    
    
    
    7,176,274
    
    
    
    
    
    
    
    
    
    
    
    19,383,881
    
    
    
    22,566,137Banco BBVA BHIF
    
    
    11,690,051
    
    
    
    14,868,221
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    20,387,682
    
    
    
    11,690,311
    
    
    
    35,255,903Banco Beal
    
    
    
    
    
    
    14,077,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,077,559Banco Brasiletros
    
    
    
    
    
    
    
    
    
    
    325,235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,235
    
    
    
    Banco Granahorrar
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,058,544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,058,544Banco Continental  Perú
    
    
    
    
    
    
    8,967
    
    
    
    15,050,838
    
    
    
    3,688,212
    
    
    
    
    
    
    
    
    
    
    
    15,050,838
    
    
    
    3,697,179Banco Continental  Soles
    
    
    6,091,898
    
    
    
    
    
    
    
    
    
    
    
    20,734,860
    
    
    
    
    
    
    
    
    
    
    
    6,091,898
    
    
    
    20,734,860Banco Crédito (Perú)
    
    
    
    
    
    
    
    
    
    
    20,726,463
    
    
    
    20,534,043
    
    
    
    
    
    
    
    
    
    
    
    20,726,463
    
    
    
    20,534,043Banco Crédito Inversiones
    
    
    6,249
    
    
    
    
    
    
    
    4,401,289
    
    
    
    
    
    
    
    
    
    
    
    5,677,901
    
    
    
    4,407,538
    
    
    
    5,677,901Banco de Bogotá
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,605,923
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,605,923Banco de Chile
    
    
    
    
    
    
    1,395,421
    
    
    
    
    
    
    
    53,818
    
    
    
    94
    
    
    
    7,074,827
    
    
    
    94
    
    
    
    8,524,066Banco de Occidente
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,024,251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,024,251Banco Davivienda
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,297,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,297,651Banco Europeu de Investimentos
    
    
    
    
    
    
    986,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986,292Banco Ganadero
    
    
    
    
    
    
    
    
    
    
    8,328,537
    
    
    
    884,609
    
    
    
    
    
    
    
    
    
    
    
    8,328,537
    
    
    
    884,609Banco HBSC
    
    
    
    
    
    
    14,966,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,966,456Banco Itau
    
    
    14,868,328
    
    
    
    17,336,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,868,328
    
    
    
    17,336,064Banco Lloyds
    
    
    12,725,024
    
    
    
    11,001,720
    
    
    
    
    
    
    
    962,348
    
    
    
    
    
    
    
    
    
    
    
    12,725,024
    
    
    
    11,964,068Banco Nationale de Paris
    
    
    5,451,346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,451,346
    
    
    
    Banco Nazionale del Lavoro
    
    
    25,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,998
    
    
    
    Banco Real
    
    
    3,285,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,285,690
    
    
    
    Banco Río
    
    
    15,773,388
    
    
    
    5,169,358
    
    
    
    22,748
    
    
    
    4,638,644
    
    
    
    
    
    
    
    
    
    
    
    15,796,136
    
    
    
    9,808,002Banco Safra
    
    
    4,621,310
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,621,310
    
    
    
    Banco Santander
    
    
    1,505,541
    
    
    
    10,494,702
    
    
    
    8,441,260
    
    
    
    11,236,876
    
    
    
    
    
    
    
    116
    
    
    
    9,946,801
    
    
    
    21,731,694Banco Santander Central Hispano
    
    
    
    
    
    
    88,495
    
    
    
    
    
    
    
    6,756,148
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,844,643Banco Santiago
    
    
    1,407,374
    
    
    
    944,155
    
    
    
    
    
    
    
    
    
    
    
    2,363,855
    
    
    
    30,047,885
    
    
    
    3,771,229
    
    
    
    30,992,040Banco Wiese
    
    
    36,542
    
    
    
    
    
    
    
    23,274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,816
    
    
    
    Bank Boston
    
    
    22,883,118
    
    
    
    21,573,421
    
    
    
    12,840,183
    
    
    
    7,617,506
    
    
    
    
    
    
    
    
    
    
    
    35,723,301
    
    
    
    29,190,927Bank of América
    
    
    18,039,049
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,039,049
    
    
    
    Bank of Tokio
    
    
    129,569
    
    
    
    12,207,873
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,569
    
    
    
    12,207,873Barings
    
    
    6,767,943
    
    
    
    5,034,740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,767,943
    
    
    
    5,034,740Bndes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,797,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,797,550BNP Paribas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,728,888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,728,888Brandesco
    
    
    11,929,665
    
    
    
    4,069,600
    
    
    
    6,643,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,573,087
    
    
    
    4,069,600Caixa General de Depósitos
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,488,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,488,965Chase Manhattan Bank
    
    
    578
    
    
    
    
    
    
    
    2,943,675
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,944,253
    
    
    
    Citibank
    
    
    22,932,354
    
    
    
    17,080,123
    
    
    
    7,618,861
    
    
    
    10,622,525
    
    
    
    
    
    
    
    
    
    
    
    30,551,215
    
    
    
    27,702,648Deutsche Bank
    
    
    3,510,307
    
    
    
    
    
    
    
    173
    
    
    
    723,970
    
    
    
    
    
    
    
    
    
    
    
    3,510,480
    
    
    
    723,970Interbank
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24San Paolo IMI Bank
    
    
    
    
    
    
    40,312,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,312,584Santander Overseas Bank
    
    
    10,119,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,119,892
    
    
    
    Unibanco
    
    
    5,169,139
    
    
    
    3,973,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,169,139
    
    
    
    3,973,468Total
    
    
    198,358,134
    
    
    
    226,280,843
    
    
    
    100,287,721
    
    
    
    135,580,006
    
    
    
    2,364,209
    
    
    
    63,188,411
    
    
    
    301,010,064
    
    
    
    425,049,260Total Principal
    
    
    161,053,463
    
    
    
    172,781,954
    
    
    
    66,462,707
    
    
    
    122,203,397
    
    
    
    2,364,209
    
    
    
    63,024,860
    
    
    
    229,880,379
    
    
    
    358,010,211Weighted average annual interest rate
    
    
    10.98
    %
    
    
    8.14
    %
    
    
    11.28
    %
    
    
    14.84
    %
    
    
    4.62
    %
    
    
    2.48
    %
    
    
    10.99
    %
    
    
    9.42
    %


As of December 31,2001
    
    2002%
    
    %Percentage of debt in foreign
currency:
    
    
    99.21
    
    
    
    85.13Percentage of debt in local currency:
    
    
    0.79
    
    
    
    14.87Total
    
    
    100.00
    
    
    
    100.00


F-53



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(b) |  | Current portion of long-term debt due to banks and financial institutions:
|--- |  | --------------------------------------------------------------------------

Foreign CurrencyUS$
    
    Euros
    
    Yen
    
    Other foreign currencyFinancial Institution
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Current portion of long-term:ABN Amro Bank
    
    
    4,641,206
    
    
    
    2,636,765
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporación Fin. del Valle
    
    
    
    
    
    
    55,827
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Bayernische Landes
    
    
    21,333,470
    
    
    
    5,622,544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco BBVA Bhif
    
    
    586,366
    
    
    
    1,447,394
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Beal
    
    
    15,484,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco de Chile
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco do Brasil
    
    
    147,266
    
    
    
    152,837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    916,285
    
    
    
    Banco do Estado de Ceará
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,865
    
    
    
    882,985Banco do Nordeste do Brasil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,154
    
    
    
    1,987Banco Estado
    
    
    1,654,097
    
    
    
    931,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,548Bancolombia
    
    
    
    
    
    
    107,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco HBSC
    
    
    21,590
    
    
    
    10,824,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Hermes
    
    
    6,577,752
    
    
    
    5,391,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Lloyds
    
    
    
    
    
    
    7,219,445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,067,648
    
    
    
    
    
    
    
    Banco Medio Crédito
    
    
    4,214,536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Nacional Desarrollo
Soc
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    651,402
    
    
    
    2,019,382Banco Real
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470,332Banco Rio
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,896
    
    
    
    Banco Nacional del Lavoro
    
    
    
    
    
    
    171,165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,365,645
    
    
    
    
    
    
    
    2,409Banco San Paolo
    
    
    67,508,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Santander
    
    
    3,744,556
    
    
    
    768,636
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,178,745
    
    
    
    Banesto
    
    
    4,292,992
    
    
    
    4,601,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bank Boston
    
    
    
    
    
    
    600,561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,637,719
    
    
    
    
    
    
    
    Bank of América
    
    
    69,521,918
    
    
    
    97,779,555
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bank of Tokio  Mitsubishi
    
    
    56,082,775
    
    
    
    46,988,580
    
    
    
    
    
    
    
    127,292
    
    
    
    395,184
    
    
    
    14,585,777
    
    
    
    496,814
    
    
    
    Banque Nationale París
    
    
    4,626,119
    
    
    
    11,861,505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    456,684Birf
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,066,471
    
    
    
    Chase Manhattan Bank
    
    
    57,741,816
    
    
    
    596,408
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,195,763BNP Paribas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,615,690Citibank N.A
    
    
    22,631,820
    
    
    
    24,295,402
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dresner B. Luxemburg
    
    
    232,752
    
    
    
    82,932,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Electrobras  Brasil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,969,352
    
    
    
    Eximbank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    459,473Export Develop. Corp.
    
    
    1,681,533
    
    
    
    2,506,978
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J.P.Morgan Chase Bank
    
    
    
    
    
    
    408,710
    
    
    
    3,624,390
    
    
    
    4,545,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kreditanstal Fur Weideraubau
    
    
    403,235
    
    
    
    424,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Midland Bank
    
    
    5,085,611
    
    
    
    5,668,452
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Santander Central Hispano
    
    
    
    
    
    
    215,947,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,481,411
    
    
    
    
    
    
    
    Santander Inv. Bank
    
    
    5,063,018
    
    
    
    6,349,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Scotiabank
    
    
    559,807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Skandinaviska Enskildabnken
    
    
    2,229,111
    
    
    
    2,375,122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Societe Generale
    
    
    1,740,953
    
    
    
    1,845,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unibanco
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,033
    
    
    
    52,797Total
    
    
    357,806,670
    
    
    
    540,511,420
    
    
    
    3,624,390
    
    
    
    4,673,051
    
    
    
    395,184
    
    
    
    46,138,200
    
    
    
    8,546,017
    
    
    
    12,200,050Total principal
    
    
    307,836,499
    
    
    
    513,485,849
    
    
    
    3,624,390
    
    
    
    4,647,499
    
    
    
    395,184
    
    
    
    45,826,512
    
    
    
    8,544,119
    
    
    
    8,884,706Weighted average annual
interest rate
    
    
    6.03
    %
    
    
    3.24
    %
    
    
    4.26
    %
    
    
    3.79%z
    
    
    
    0.90
    %
    
    
    2.08
    %
    
    
    8.60
    %
    
    
    8.53
    %


Foreign CurrencyUF
    
    TotalFinancial Institution
    
    2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Current portion of long-term:ABN Amro Bank
    
    
    
    
    
    
    
    
    
    
    4,641,206
    
    
    
    2,636,765Corporación Fin. del Valle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,827Banco Bayernische Landes
    
    
    
    
    
    
    
    
    
    
    21,333,470
    
    
    
    5,622,544Banco BBVA Bhif
    
    
    
    
    
    
    
    
    
    
    586,366
    
    
    
    1,447,394Banco Beal
    
    
    
    
    
    
    
    
    
    
    15,484,073
    
    
    
    Banco de Chile
    
    
    17,742,450
    
    
    
    
    
    
    
    17,742,450
    
    
    
    Banco do Brasil
    
    
    
    
    
    
    
    
    
    
    1,063,551
    
    
    
    152,837Banco do Estado de Ceará
    
    
    
    
    
    
    
    
    
    
    6,865
    
    
    
    882,985Banco do Nordeste do Brasil
    
    
    
    
    
    
    
    
    
    
    185,154
    
    
    
    1,987Banco Estado
    
    
    19,679,568
    
    
    
    1,739,232
    
    
    
    21,333,665
    
    
    
    2,713,098Bancolombia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,119Banco HBSC
    
    
    
    
    
    
    
    
    
    
    21,590
    
    
    
    10,824,955Banco Hermes
    
    
    
    
    
    
    
    
    
    
    6,577,752
    
    
    
    5,391,528Banco Lloyds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,287,093Banco Medio Crédito
    
    
    
    
    
    
    
    
    
    
    4,214,536
    
    
    
    Banco Nacional Desarrollo
Soc
    
    
    
    
    
    
    
    
    
    
    651,402
    
    
    
    2,019,382Banco Real
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470,332Banco Rio
    
    
    
    
    
    
    
    
    
    
    1,896
    
    
    
    Banco Nacional del Lavoro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,539,219Banco San Paolo
    
    
    
    
    
    
    
    
    
    
    67,508,298
    
    
    
    Banco Santander
    
    
    17,742,450
    
    
    
    
    
    
    
    23,665,751
    
    
    
    768,636Banesto
    
    
    
    
    
    
    
    
    
    
    4,292,992
    
    
    
    4,601,056Bank Boston
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,238,280Bank of América
    
    
    
    
    
    
    
    
    
    
    69,521,918
    
    
    
    97,779,555Bank of Tokio  Mitsubishi
    
    
    
    
    
    
    
    
    
    
    56,974,773
    
    
    
    61,701,649Banque Nationale París
    
    
    
    
    
    
    
    
    
    
    4,626,119
    
    
    
    12,318,189Birf
    
    
    
    
    
    
    
    
    
    
    1,066,471
    
    
    
    Chase Manhattan Bank
    
    
    
    
    
    
    
    
    
    
    57,741,816
    
    
    
    1,792,171BNP Paribas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,615,690Citibank N.A
    
    
    
    
    
    
    
    
    
    
    22,631,820
    
    
    
    24,295,402Dresner B. Luxemburg
    
    
    
    
    
    
    
    
    
    
    232,752
    
    
    
    82,932,830Electrobras  Brasil
    
    
    
    
    
    
    
    
    
    
    2,969,352
    
    
    
    Eximbank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    459,473Export Develop. Corp.
    
    
    
    
    
    
    
    
    
    
    1,681,533
    
    
    
    2,506,978J.P.Morgan Chase Bank
    
    
    
    
    
    
    
    
    
    
    3,624,390
    
    
    
    4,954,469Kreditanstal Fur Weideraubau
    
    
    
    
    
    
    
    
    
    
    403,235
    
    
    
    424,774Midland Bank
    
    
    
    
    
    
    
    
    
    
    5,085,611
    
    
    
    5,668,452Santander Central Hispano
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    222,428,617Santander Inv. Bank
    
    
    
    
    
    
    
    
    
    
    5,063,018
    
    
    
    6,349,226Scotiabank
    
    
    
    
    
    
    
    
    
    
    559,807
    
    
    
    Skandinaviska Enskildabnken
    
    
    
    
    
    
    
    
    
    
    2,229,111
    
    
    
    2,375,122Societe Generale
    
    
    
    
    
    
    
    
    
    
    1,740,953
    
    
    
    1,845,522Unibanco
    
    
    
    
    
    
    
    
    
    
    73,033
    
    
    
    52,797Total
    
    
    55,164,468
    
    
    
    1,739,232
    
    
    
    425,536,729
    
    
    
    605,261,953Total principal
    
    
    55,164,468
    
    
    
    1,554,097
    
    
    
    375,564,660
    
    
    
    574,398,663Weighted average annual
interest rate
    
    
    7.50
    %
    
    
    8.73
    %
    
    
    6.27
    %
    
    
    3.30
    %


As of December 31,2001
    
    2002%
    
    %Percentage of debt in
foreign currency:
    
    
    87.04
    
    
    
    99.71Percentage of debt in local
currency:
    
    
    12.96
    
    
    
    0.29Total
    
    
    100.00
    
    
    
    100.00


In order to develop their investment plans, Enersis S.A., Endesa S.A. (Enersis
subsidiary) and Pehuenche S.A. (Endesa S.A. subsidiary), have obtained
financing from banks and financial institutions or through issuance of
financial instruments, both in the local market and abroad which contain
financial and non-financial covenants.

F-54



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 16. Long-Term Portion of Debt Due to Banks and Financial Institutions

As of December 31, 2002After 1 year
    
    After 2 year
    
    After 3 year
    
    After 5 yearbut within
    
    but within
    
    but within
    
    but withinFinancial Institution
    
    Currency
    
    2 years
    
    3 years
    
    5 years
    
    10 yearsThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$ABN Amro Bank
    
    US$
    
    
    10,060,540
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    71,861,000
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    348,727
    
    
    
    348,727
    
    
    
    697,454
    
    
    
    697,457Banco Bayernische Landes
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco BBVA
    
    US$
    
    
    467,096,500
    
    
    
    
    
    
    
    
    
    
    
    Banco Estado
    
    $ Reaj
    
    
    14,644,588
    
    
    
    39,055,660
    
    
    
    2,936,985
    
    
    
    US$
    
    
    4,604
    
    
    
    
    
    
    
    
    
    
    
    Banco Europeo de Investimentos
    
    US$
    
    
    
    
    
    
    
    
    
    
    11,976,834
    
    
    
    23,953,666Banco do Brasil
    
    Rs
    
    
    1,612,832
    
    
    
    806,416
    
    
    
    1,612,832
    
    
    
    4,032,080US$
    
    
    666,812
    
    
    
    310,166
    
    
    
    543,906
    
    
    
    1,223,757Banco Medio Crédito
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    1,843,524
    
    
    
    1,843,524
    
    
    
    1,843,524
    
    
    
    6,440,033Banco Nacional Desarrollo Soc
    
    Rs
    
    
    924,558
    
    
    
    462,279
    
    
    
    
    
    
    
    Banco Nacional del Lavoro
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Nacionale de Paris
    
    US$
    
    
    10,624,361
    
    
    
    10,624,361
    
    
    
    21,248,722
    
    
    
    16,661,934US$
    
    
    1,927,400
    
    
    
    1,927,400
    
    
    
    3,854,800
    
    
    
    5,895,808Bancolombia
    
    US$
    
    
    
    
    
    
    
    
    
    
    484,743
    
    
    
    Banco Santander
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Scotiabank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Santander Central His
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    287,444,000
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    6,979,153
    
    
    
    
    
    
    
    
    
    
    
    Banesto
    
    US$
    
    
    3,545,818
    
    
    
    3,545,818
    
    
    
    7,091,636
    
    
    
    14,183,276Bank Boston
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bank of America
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bank Tokio  Mitsubishi
    
    US$
    
    
    6,895,050
    
    
    
    6,895,050
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lira
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pound
    
    
    438,973
    
    
    
    438,973
    
    
    
    
    
    
    
    Yen
    
    
    462,018
    
    
    
    462,018
    
    
    
    
    
    
    
    Euros
    
    
    122,980
    
    
    
    122,980
    
    
    
    
    
    
    
    Bco. do Estado de Ceará
    
    Rs
    
    
    145,548
    
    
    
    
    
    
    
    
    
    
    
    Bco. do Nordeste do Brasil
    
    Rs
    
    
    83,792
    
    
    
    34,914
    
    
    
    
    
    
    
    BIRF
    
    
    U.P.
    
    
    
    1,189,530
    
    
    
    
    
    
    
    
    
    
    
    BNDES
    
    Rs
    
    
    
    
    
    
    49,049,488
    
    
    
    
    
    
    
    Rs
    
    
    21,350,096
    
    
    
    7,116,699
    
    
    
    
    
    
    
    10,519,313J.P.Morgan Chase Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    39,523,550
    
    
    
    17,965,250
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Euros
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Citibank N.A
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Citibank N.Y
    
    US$
    
    
    22,584,885
    
    
    
    11,292,443
    
    
    
    
    
    
    
    US$
    
    
    359,305,000
    
    
    
    
    
    
    
    
    
    
    
    Corfinsura
    
    US$
    
    
    
    
    
    
    
    
    
    
    32,609,567
    
    
    
    Electrobas  Brasil
    
    Rs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Export Develop. Corp.
    
    US$
    
    
    987,113
    
    
    
    987,113
    
    
    
    1,974,226
    
    
    
    4,935,565US$
    
    
    1,043,482
    
    
    
    1,043,482
    
    
    
    2,086,964
    
    
    
    2,608,704HBSC Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kreditanstal Fur Weideraubau
    
    US$
    
    
    393,104
    
    
    
    393,104
    
    
    
    786,208
    
    
    
    589,654Lloyds Bank
    
    US$
    
    
    1,135,176
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    1,077,915
    
    
    
    
    
    
    
    
    
    
    
    Midland Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Santander Investment
    
    US$
    
    
    3,664,911
    
    
    
    
    
    
    
    
    
    
    
    Skandinaviska Enskildabnken
    
    US$
    
    
    2,375,122
    
    
    
    2,375,122
    
    
    
    2,375,007
    
    
    
    Dresdner Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Societe Generale
    
    US$
    
    
    1,378,048
    
    
    
    
    
    
    
    
    
    
    
    Unibanco
    
    Rs
    
    
    78,528
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    1,304,295,688
    
    
    
    178,659,287
    
    
    
    110,088,658
    
    
    
    91,741,247


As of December 31, 2002AnnualTotal
    
    interest
    
    TotalLong-term
    
    rate
    
    Long-termFinancial Institution
    
    Currency
    
    After 10 years
    
    portion
    
    average
    
    portion - 2001years
    
    ThCh$
    
    ThCh$
    
    
    
    
    
    ThCh$ABN Amro Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    10,060,540
    
    
    
    2.75
    %
    
    
    1,963,737US$
    
    
    
    
    
    
    
    
    
    
    71,861,000
    
    
    
    2.81
    %
    
    
    67,443,370US$
    
    
    
    
    
    
    
    
    
    
    2,092,365
    
    
    
    2.70
    %
    
    
    Banco Bayernische Landes
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    2,085,128Banco BBVA
    
    US$
    
    
    
    
    
    
    
    
    
    
    467,096,500
    
    
    
    2.66
    %
    
    
    406,852,130Banco Estado
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    56,637,233
    
    
    
    4.32
    %
    
    
    58,028,908US$
    
    
    
    
    
    
    
    
    
    
    4,604
    
    
    
    6.50
    %
    
    
    864,034Banco Europeo de Investimentos
    
    US$
    
    
    
    
    
    
    
    
    
    
    35,930,500
    
    
    
    1.37
    %
    
    
    Banco do Brasil
    
    Rs
    
    
    
    
    
    
    201,601
    
    
    
    8,265,761
    
    
    
    19.13
    %
    
    
    10,016,239US$
    
    
    
    
    
    
    1,802,494
    
    
    
    4,547,135
    
    
    
    4.05
    %
    
    
    4,363,330Banco Medio Crédito
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    35,267,772$ Arg
    
    
    
    
    
    
    
    
    
    
    11,970,605
    
    
    
    1.75
    %
    
    
    Banco Nacional Desarrollo Soc
    
    Rs
    
    
    
    
    
    
    
    
    
    
    1,386,837
    
    
    
    9.04
    %
    
    
    2,548,105Banco Nacional del Lavoro
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    3,303,104Banco Nacionale de Paris
    
    US$
    
    
    
    
    
    
    
    
    
    
    59,159,378
    
    
    
    4.35
    %
    
    
    65,648,923US$
    
    
    
    
    
    
    2,575,466
    
    
    
    16,180,874
    
    
    
    4.70
    %
    
    
    7,477,621Bancolombia
    
    US$
    
    
    
    
    
    
    
    
    
    
    484,743
    
    
    
    3.00
    %
    
    
    7,327,862Banco Santander
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    7,729,276US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    708,728US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    20,680Scotiabank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    130,840,138Banco Santander Central His
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    366,386,108US$
    
    
    
    
    
    
    
    
    
    
    287,444,000
    
    
    
    2.64
    %
    
    
    Yen
    
    
    
    
    
    
    
    
    
    
    6,979,153
    
    
    
    2.09
    %
    
    
    Banesto
    
    US$
    
    
    
    
    
    
    
    
    
    
    28,366,548
    
    
    
    4.30
    %
    
    
    32,850,615Bank Boston
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    14,247,345Bank of America
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    27,584,337Bank Tokio  Mitsubishi
    
    US$
    
    
    
    
    
    
    
    
    
    
    13,790,100
    
    
    
    2.66
    %
    
    
    14,785,268US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    8,138,664US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    19,413,538Lira
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    293,321Pound
    
    
    
    
    
    
    
    
    
    
    877,946
    
    
    
    4.81
    %
    
    
    1,115,357Yen
    
    
    
    
    
    
    
    
    
    
    924,036
    
    
    
    0.89
    %
    
    
    1,173,625Euros
    
    
    
    
    
    
    
    
    
    
    245,960
    
    
    
    4.13
    %
    
    
    Bco. do Estado de Ceará
    
    Rs
    
    
    
    
    
    
    
    
    
    
    145,548
    
    
    
    9.83
    %
    
    
    166,106Bco. do Nordeste do Brasil
    
    Rs
    
    
    
    
    
    
    
    
    
    
    118,706
    
    
    
    8.04
    %
    
    
    221,316BIRF
    
    
    U.P.
    
    
    
    
    
    
    
    
    
    
    
    1,189,530
    
    
    
    5.32
    %
    
    
    2,056,583BNDES
    
    Rs
    
    
    
    
    
    
    
    
    
    
    49,049,488
    
    
    
    10.00
    %
    
    
    9,441,620Rs
    
    
    
    
    
    
    
    
    
    
    38,986,108
    
    
    
    26.00
    %
    
    
    J.P.Morgan Chase Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    74,113US$
    
    
    
    
    
    
    
    
    
    
    57,488,800
    
    
    
    8.53
    %
    
    
    53,954,696US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    5,395,470Euros
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    3,589,264Citibank N.A
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    52,991,219Citibank N.Y
    
    US$
    
    
    
    
    
    
    
    
    
    
    33,877,328
    
    
    
    3.88
    %
    
    
    36,311,511US$
    
    
    
    
    
    
    
    
    
    
    359,305,000
    
    
    
    2.56
    %
    
    
    362,170,897Corfinsura
    
    US$
    
    
    
    
    
    
    
    
    
    
    32,609,567
    
    
    
    12.38
    %
    
    
    Electrobas  Brasil
    
    Rs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    524,017Export Develop. Corp.
    
    US$
    
    
    
    
    
    
    1,974,229
    
    
    
    10,858,246
    
    
    
    2.90
    %
    
    
    6,478,693US$
    
    
    
    
    
    
    
    
    
    
    6,782,632
    
    
    
    2.75
    %
    
    
    7,552,397HBSC Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    10,116,506Kreditanstal Fur Weideraubau
    
    US$
    
    
    
    
    
    
    
    
    
    
    2,162,070
    
    
    
    4.85
    %
    
    
    2,398,095Lloyds Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    1,135,176
    
    
    
    5.75
    %
    
    
    6,744,337US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    1,011,651Yen
    
    
    
    
    
    
    
    
    
    
    1,077,915
    
    
    
    2.09
    %
    
    
    Midland Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    12,525,197Santander Investment
    
    US$
    
    
    
    
    
    
    
    
    
    
    3,664,911
    
    
    
    7.25
    %
    
    
    9,307,185Skandinaviska Enskildabnken
    
    US$
    
    
    
    
    
    
    
    
    
    
    7,125,251
    
    
    
    0.65
    %
    
    
    8,916,338Dresdner Bank
    
    US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    77,627,317Societe Generale
    
    US$
    
    
    
    
    
    
    
    
    
    
    1,378,048
    
    
    
    1.62
    %
    
    
    3,017,776Unibanco
    
    Rs
    
    
    
    
    
    
    
    
    
    
    78,528
    
    
    
    6.54
    %
    
    
    180,353Total
    
    
    
    
    
    
    
    
    
    
    6,553,790
    
    
    
    1,691,338,670
    
    
    
    
    
    
    
    1,971,249,920


As of December 31,2001
    
    2002%
    
    %Percentage of debt in
foreign currency:
    
    
    97.06
    
    
    
    97.13Percentage of debt in local currency:
    
    
    2.94
    
    
    
    2.87Total
    
    
    100.00
    
    
    
    100.00


F-55



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 17. Other Current Liabilities

Other current liabilities at each year-end are as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Advances and guarantee on construction
    
    
    6,803,215
    
    
    
    601,997Taxes payable
    
    
    4,293,154
    
    
    
    2,482,871Contingencies  third party claims
    
    
    11,142,417
    
    
    
    15,212,625Customer advances
    
    
    4,341,372
    
    
    
    3,293,578Losses in excess of insurance settlement
    
    
    
    
    
    
    2,336,683Acrued employes benefits  other
    
    
    3,187,555
    
    
    
    2,228,103Forward contracts and swaps
    
    
    114,377,655
    
    
    
    5,729,893Fair value  derivative contracts
    
    
    
    
    
    
    11,251,521Emergency energy provision (Brazil)
    
    
    1,319,668
    
    
    
    10,708,453Other current liabilities
    
    
    4,918,722
    
    
    
    5,696,233Total
    
    
    150,383,758
    
    
    
    59,541,957


Note 18. Promissory Notes

As of December 31,Face
    
    Maturity
    
    InterestFinancial Instrument
    
    value
    
    date
    
    rate
    
    2001
    
    2002ThCh$
    
    
    
    
    
    %
    
    ThCh$
    
    ThCh$2001-029
    
    
    42,328,262
    
    
    May 13, 2002
    
    
    18.13
    
    
    
    43,598,110
    
    
    
    Commercial paper
    
    
    10,456,868
    
    
    Feb 01, 2002
    
    
    8.48
    
    
    
    11,032,138
    
    
    
    Commercial paper
    
    
    3,030,678
    
    
    May, 2003
    
    
    5.00
    
    
    
    
    
    
    
    3,089,607Commercial paper
    
    
    2,081,801
    
    
    Aug, 2003
    
    
    5.25
    
    
    
    
    
    
    
    2,124,305Promissory note-AFR
    
    
    
    
    
    Dec, 2003
    
    
    10.00
    
    
    
    
    
    
    
    122,129OPP-027/2002
    
    
    1,000
    
    
    June, 2003
    
    
    
    
    
    
    
    
    
    
    3,465,944Promissory note  Banco
Santander
    
    
    286,299
    
    
    Jan, 2003
    
    
    5.00
    
    
    
    
    
    
    
    286,299OPP-058/2002
    
    
    1,000
    
    
    Sep, 2003
    
    
    
    
    
    
    
    
    
    
    4,101,230Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,630,248
    
    
    
    13,189,514


F-56



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 19. Bonds Payable



|(a) |  | Details of the current portion of bonds payable is as follows at each year-end:
|--- |  | -------------------------------------------------------------------------------

Par ValueFace value
    
    Interest
    
    MaturityInstrument
    
    Series
    
    Currency
    
    outstanding
    
    rate
    
    Date
    
    2001
    
    2002ThCh$
    
    %
    
    
    
    ThCh$
    
    ThCh$Bonds  Distrilima
    
    1
    
    Soles
    
    
    49,919,000
    
    
    
    9.61
    
    
    Feb 01, 2011
    
    
    5,827
    
    
    
    5,946Bonds  Distrilima
    
    1st Prog
    
    Soles
    
    
    15,104,316
    
    
    
    7.50
    
    
    Jul 01, 2006
    
    
    577,643
    
    
    
    595,057Bonds  Distrilima
    
    1st Prog
    
    Soles
    
    
    6,134,974
    
    
    
    6.50
    
    
    Jan 01, 2004
    
    
    
    
    
    
    178,340Bonds  Distrilima
    
    1st Prog
    
    Soles
    
    
    4,089,983
    
    
    
    6.34
    
    
    Jan 01, 2004
    
    
    
    
    
    
    49,009Bonds  Distrilima
    
    1st Prog
    
    Soles
    
    
    3,859,972
    
    
    
    7.50
    
    
    Jan 01, 2004
    
    
    
    
    
    
    43,787Bonds  Distrilima
    
    1st Prog
    
    Soles
    
    
    18,949,365
    
    
    
    6.90
    
    
    Oct 10, 2006
    
    
    273,062
    
    
    
    289,297Bond No.269
    
    B1 -- B2
    
    UF
    
    
    2,945,863
    
    
    
    5.63
    
    
    Jun 15, 2009
    
    
    7,338,014
    
    
    
    7,707,332Yankee Bonds  Enersis
    
    1
    
    US$
    
    
    300,000,000
    
    
    
    6.90
    
    
    Nov 21, 2006
    
    
    1,124,617
    
    
    
    1,198,281Yankee Bonds  Enersis
    
    2
    
    US$
    
    
    350,000,000
    
    
    
    7.45
    
    
    Nov 21, 2016
    
    
    1,004,024
    
    
    
    1,069,787Yankee Bonds  Enersis
    
    3
    
    US$
    
    
    150,000,000
    
    
    
    6.63
    
    
    Nov 21, 2026
    
    
    537,860
    
    
    
    573,091Bonds Endesa
    
    1
    
    US$
    
    
    230,000,000
    
    
    
    7.88
    
    
    Feb 01, 2027
    
    
    4,559,675
    
    
    
    4,858,340Bonds Endesa
    
    2
    
    US$
    
    
    220,000,000
    
    
    
    7.33
    
    
    Feb 01, 2037
    
    
    4,528,542
    
    
    
    4,825,168Bonds Endesa
    
    3
    
    US$
    
    
    200,000,000
    
    
    
    8.13
    
    
    Feb 01, 2097
    
    
    947,084
    
    
    
    1,009,124Bonds Endesa
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    7.75
    
    
    July 15, 2008
    
    
    9,582,578
    
    
    
    10,210,249Bonds Endesa
    
    1
    
    US$
    
    
    400,000,000
    
    
    
    8.50
    
    
    Apr 01, 2009
    
    
    5,732,686
    
    
    
    6,108,185Bonds Endesa
    
    E-1, E-2
    
    UF
    
    
    6,000,000
    
    
    
    6.20
    
    
    Aug 01, 2006
    
    
    2,557,305
    
    
    
    2,556,325Bonds Endesa Internacional
    
    C
    
    US$
    
    
    150,000,000
    
    
    
    7.20
    
    
    Apr 01, 2006
    
    
    1,820,971
    
    
    
    1,940,247Bonds Endesa
    
    B-1, B-2
    
    UF
    
    
    750,000
    
    
    
    6.00
    
    
    Oct 01, 2001
    
    
    
    
    
    
    Bonds Endesa
    
    C2; D1, D2
    
    UF
    
    
    1,315,960
    
    
    
    6.80
    
    
    Nov 01, 2010
    
    
    2,332,264
    
    
    
    2,448,643Bonds Pehuenche
    
    1
    
    US$
    
    
    170,000,000
    
    
    
    7.30
    
    
    May 01, 2003
    
    
    1,394,954
    
    
    
    123,650,025Bonds Edegel
    
    1
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    
    
    June 13, 2007
    
    
    139,657
    
    
    
    148,805Bonds Edegel
    
    2
    
    US$
    
    
    30,000,000
    
    
    
    8.41
    
    
    Feb 14, 2007
    
    
    648,384
    
    
    
    690,620Bonds Edegel
    
    3
    
    US$
    
    
    30,000,000
    
    
    
    8.75
    
    
    Jun 03, 2006
    
    
    91,499
    
    
    
    97,493Bonds Edegel
    
    4
    
    US$
    
    
    20,000,000
    
    
    
    8.44
    
    
    Nov 21, 2005
    
    
    123,910
    
    
    
    135,327Bonds Edegel
    
    5
    
    US$
    
    
    10,000,000
    
    
    
    11.50
    
    
    Feb 22, 2003
    
    
    280,254
    
    
    
    7,450,131Bonds Emgesa
    
    B-1
    
    $ Col
    
    
    85,000,000
    
    
    
    15.80
    
    
    Jun 01, 2006
    
    
    1,721,866
    
    
    
    Bonds Emgesa
    
    B-5
    
    $ Col
    
    
    12,750,006
    
    
    
    14.95
    
    
    Oct 09, 2004
    
    
    119,042
    
    
    
    74,909Bonds Emgesa
    
    B-7
    
    $ Col
    
    
    19,500,010
    
    
    
    15.27
    
    
    Oct 09, 2006
    
    
    186,358
    
    
    
    118,162Bonds Emgesa
    
    B-10
    
    $ Col
    
    
    229,825,122
    
    
    
    15.60
    
    
    Oct 09, 2009
    
    
    2,247,058
    
    
    
    1,435,070Bonds Emgesa
    
    C-10
    
    $ Col
    
    
    19,777,918
    
    
    
    10.25
    
    
    Oct 09, 2009
    
    
    136,358
    
    
    
    43,693Bonds Emgesa
    
    B-10 2nd
    
    $ Col
    
    
    273,130
    
    
    
    15.78
    
    
    Nov 09, 2009
    
    
    336,523
    
    
    
    220,970Bonds Emgesa
    
    A-5
    
    $ Col
    
    
    172,858
    
    
    
    8.35
    
    
    Oct 12, 2010
    
    
    228,550
    
    
    
    70,046Bonds Emgesa
    
    B-3
    
    $ Col
    
    
    31,525,018
    
    
    
    14.79
    
    
    Feb 08, 2002
    
    
    9,461,897
    
    
    
    10,162,475Bonds Emgesa
    
    A-1
    
    $ Col
    
    
    15,000,006
    
    
    
    13.95
    
    
    July 09, 2006
    
    
    108,833
    
    
    
    1,426,838Bonds Endesa
    
    F
    
    UF
    
    
    1,500,000
    
    
    
    6.20
    
    
    Aug 01, 2022
    
    
    639,327
    
    
    
    639,081Bonds Emgesa
    
    C-10
    
    $ Col
    
    
    1,245,298
    
    
    
    9.88
    
    
    Oct 10, 2010
    
    
    
    
    
    
    80,679Eurobonds
    
    First
    
    Euro
    
    
    400,000,000
    
    
    
    3.34
    
    
    July 24, 2003
    
    
    2,061,700
    
    
    
    303,740,866Bonds Autopista del Sol S.A.
    
    A-1
    
    UF
    
    
    3,466,160
    
    
    
    5.80
    
    
    Oct 18, 2018
    
    
    
    
    
    
    1,632,119Bonds Autopista del Sol S.A.
    
    A-2
    
    UF
    
    
    861,540
    
    
    
    5.80
    
    
    Oct 19, 2018
    
    
    
    
    
    
    408,030Bonds Autopista del Sol S.A.
    
    B-1
    
    UF
    
    
    964,372
    
    
    
    5.80
    
    
    Oct 20, 2018
    
    
    
    
    
    
    486,834Bonds Autopista del Sol S.A.
    
    B-2
    
    UF
    
    
    243,578
    
    
    
    5.80
    
    
    Jan 01, 2018
    
    
    
    
    
    
    122,963Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,848,322
    
    
    
    498,501,344


F-57



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(b) |  | Details of the long-term portion of bonds payable is as follows at each year-end:
|--- |  | ---------------------------------------------------------------------------------

Par ValueFace value
    
    
    
    Interest
    
    MaturityInstrument
    
    Series
    
    outstanding
    
    Currency
    
    rate
    
    Date
    
    2001
    
    2002ThCh$
    
    
    
    %
    
    
    
    ThCh$
    
    ThCh$Bonos Edelnor
    
    Uno
    
    
    825,918
    
    
    Soles
    
    9.61%
    
    01.02.11
    
    
    957,975
    
    
    
    1,000,390Bonos Edelnor
    
    I°Prog
    
    
    15,104,316
    
    
    Soles
    
    VAC + 7,5%
    
    01.07.06
    
    
    15,557,445
    
    
    
    16,482,681Bonos Edelnor
    
    I°Prog
    
    
    18,949,365
    
    
    Soles
    
    VAC + 6,9%
    
    10.10.06
    
    
    19,517,846
    
    
    
    20,677,950Bonos Edelnor
    
    I°Prog
    
    
    6,134,974
    
    
    Soles
    
    6.5%
    
    01.01.04
    
    
    
    
    
    
    6,134,974Bonos Edelnor
    
    I°Prog
    
    
    4,089,983
    
    
    Soles
    
    6.34%
    
    01.01.04
    
    
    
    
    
    
    4,089,983Bonos Edelnor
    
    I°Prog
    
    
    3,859,972
    
    
    Soles
    
    VAC + 7.5%
    
    01.03.07
    
    
    
    
    
    
    3,859,972Yankee Bonds  Enersis
    
    Uno
    
    
    300,000,000
    
    
    US$
    
    0.069
    
    21.11.06
    
    
    202,330,110
    
    
    
    215,583,000Yankee Bonds  Enersis
    
    Dos
    
    
    350,000,000
    
    
    US$
    
    0.0745
    
    21.11.16
    
    
    168,429,026
    
    
    
    179,461,350Yankee Bonds  Enersis
    
    Tres
    
    
    150,000,000
    
    
    US$
    
    0.0663
    
    21.11.26
    
    
    101,165,055
    
    
    
    107,791,500Bono N° 269
    
    B1
    
    
    2,928,543
    
    
    U.F
    
    0.055
    
    15.06.09
    
    
    56,523,126
    
    
    
    49,035,877Bono N° 269
    
    B2
    
    
    2,500,000
    
    
    U.F
    
    0.0575
    
    15.06.22
    
    
    41,876,350
    
    
    
    41,860,300Bonos Endesa
    
    Uno
    
    
    230,000,000
    
    
    US$
    
    0.0788
    
    01.02.27
    
    
    138,853,085
    
    
    
    147,948,145Bonos Endesa
    
    Dos
    
    
    220,000,000
    
    
    US$
    
    0.0733
    
    01.02.37
    
    
    148,375,414
    
    
    
    158,094,200Bonos Endesa
    
    Tres
    
    
    200,000,000
    
    
    US$
    
    0.0813
    
    01.02.97
    
    
    27,257,913
    
    
    
    29,043,342Bonos Endesa
    
    Uno
    
    
    400,000,000
    
    
    US$
    
    0.0775
    
    15.07.08
    
    
    269,773,480
    
    
    
    287,444,000Bonos Endesa
    
    Unica
    
    
    400,000,000
    
    
    US$
    
    0.085
    
    01.04.09
    
    
    269,773,480
    
    
    
    287,444,000Bonos Endesa
    
    E-1 y E-2
    
    
    6,000,000
    
    
    U.F
    
    0.062
    
    01.08.06
    
    
    100,503,239
    
    
    
    100,464,720Bonos Endesa
    
    C2; D1 Y D2
    
    
    1,439,153
    
    
    U.F
    
    0.068
    
    01.11.10
    
    
    22,043,038
    
    
    
    19,831,566Bonos Endesa
    
    F
    
    
    1,500,000
    
    
    U.F
    
    0.062
    
    01.08.22
    
    
    25,125,810
    
    
    
    25,116,180Bonos Pehuenche
    
    Unica
    
    
    170,000,000
    
    
    US$
    
    0.073
    
    01.05.03
    
    
    114,653,729
    
    
    
    Bonos Edegel
    
    Uno
    
    
    30,000,000
    
    
    US$
    
    0.0875
    
    13.08.07
    
    
    20,233,011
    
    
    
    21,558,300Bonos Edegel
    
    Dos
    
    
    30,000,000
    
    
    US$
    
    0.0841
    
    14.02.07
    
    
    20,233,011
    
    
    
    21,558,300Bonos Edegel
    
    Tres
    
    
    30,000,000
    
    
    US$
    
    0.0875
    
    13.06.06
    
    
    20,233,011
    
    
    
    21,558,300Bonos Edegel
    
    Cuatro
    
    
    20,000,000
    
    
    US$
    
    0.0844
    
    21.11.05
    
    
    13,488,674
    
    
    
    14,372,200Bonos Edegel
    
    Cinco A
    
    
    10,000,000
    
    
    Soles
    
    0.1154
    
    22.08.03
    
    
    6,854,001
    
    
    
    Bonos Edegel
    
    Cinco B
    
    
    30,000,000
    
    
    Soles
    
    0.06
    
    22.02.04
    
    
    
    
    
    
    6,134,974Bonos Emgesa
    
    A-1
    
    
    15,000,006
    
    
    $ Col
    
    0.1343
    
    09.07.06
    
    
    4,415,413
    
    
    
    3,762,632Bonos Emgesa
    
    B-1
    
    
    85,000,000
    
    
    $ Col
    
    0.1575
    
    01.07.06
    
    
    25,020,672
    
    
    
    21,321,580Bonos Emgesa
    
    B-5
    
    
    12,750,006
    
    
    $ Col
    
    0.1495
    
    09.10.04
    
    
    3,753,101
    
    
    
    3,198,237Bonos Emgesa
    
    B-7
    
    
    19,500,010
    
    
    $ Col
    
    0.1527
    
    09.10.06
    
    
    5,740,037
    
    
    
    4,891,422Bonos Emgesa
    
    B-10
    
    
    229,825,122
    
    
    $ Col
    
    0.156
    
    09.10.09
    
    
    67,651,483
    
    
    
    57,649,691Bonos Emgesa
    
    C-10
    
    
    19,777,918
    
    
    $ Col
    
    0.1025
    
    09.10.09
    
    
    5,821,842
    
    
    
    5,279,069Bonos Emgesa
    
    B-10 2° emision
    
    
    60,000,031
    
    
    $ Col
    
    0.1578
    
    08.11.09
    
    
    17,661,651
    
    
    
    15,050,527Bonos Autopista del Sol S.A
    
    A-1
    
    
    3,446,160
    
    
    U.F
    
    0.058
    
    15.01.18
    
    
    
    
    
    
    57,702,917Bonos Autopista del Sol S.A
    
    A-2
    
    
    861,540
    
    
    U.F
    
    0.058
    
    15.01.18
    
    
    
    
    
    
    14,425,729Bonos Autopista del Sol S.A
    
    B-1
    
    
    964,372
    
    
    U.F
    
    0.058
    
    15.01.18
    
    
    
    
    
    
    16,147,555Bonos Autopista del Sol S.A
    
    B-2
    
    
    243,578
    
    
    U.F
    
    0.058
    
    15.01.18
    
    
    
    
    
    
    4,078,505Eurobono
    
    Unica
    
    
    400,000,000
    
    
    Euro
    
    0.0334
    
    24.07.03
    
    
    236,481,576
    
    
    
    Bonos Endesa Internacional
    
    Unica
    
    
    150,000,000
    
    
    US$
    
    0.072
    
    01.04.06
    
    
    101,165,055
    
    
    
    107,791,500Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,271,468,659
    
    
    
    2,097,845,568




|(c) |  | Bonds payable are comprised of the following:
|--- |  | ---------------------------------------------



| | i. |  | Enersis S.A. Series B1-B2
| | -- |  | -------------------------

On September 11, 2001, Enersis S.A. registered two series of bearer bonds as of June 14, 2001, as follows:

Total amount
    
    No.of bonds
    
    Face valueSeries
    
    In UF
    
    per series
    
    in UFB1
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    1,000B1
    
    
    3,000,000
    
    
    
    300
    
    
    
    10,000B2
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    1,000B2
    
    
    1,500,000
    
    
    
    150
    
    
    
    10,000


F-58



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The scheduled maturity of the Series B-1 bonds is 8 years, interest and principal payable semi-annually. Annual interest is 5.50%,
compounded semi-annually.

The scheduled maturity of the Series B-2 bonds is 21 years, principal payments beginning after 5 years, interest and principal payable
semi-annually. Annual interest is 5.75%, compounded semi-annually.



| | ii. |  | Enersis S.A. (Yankee Bonds)
| | --- |  | ---------------------------

On November 21, 1996, the Company, acting through its agency in the Cayman Islands, issued corporate notes (Yankee Bonds) for US$800
million in three series, as follows:

Total amount
    
    Years to
    
    Stated annualSeries
    
    In US$
    
    maturity
    
    interest rate1
    
    
    300,000,000
    
    
    
    10
    
    
    
    6.90
    %2
    
    
    350,000,000
    
    
    
    20
    
    
    
    7.40
    %3
    
    
    150,000,000
    
    
    
    30
    
    
    
    6.60
    %


Interest is payable on a semi-annual basis and principal is due upon maturity. The Series 3 bond holders have an option to require the
Company to redeem all or any US$1,000 portion thereof on December 31, 2003 at a redemption price equal to face value.

Repurchase of Yankee Bonds

During November 2001, the Company made a tender offer to repurchase all or a portion of the Series 2 Yankee Bonds. The offer expired
November 21, 2001 and the Company repurchased a total of US$100,266,000 in bonds with accrued interest, at a price of US$95,536,000,
resulting in a gain of US$8,201,000 (ThCh$5,531,051), which is included in other non-operating income (see Note 23a).



| | iii. |  | Edelnor Bonds (Subsidiary of Distrilima S.A.)
| | ---- |  | ---------------------------------------------

First issueDate of Issue
    
    :
    
    March 1, 1996Number of bonds subscribed
    
    :
    
    49,919Face value
    
    :
    
    100 soles eachRedemption term
    
    :
    
    15 yearsInterest rate
    
    :
    
    9.6136% annualInterest payment
    
    :
    
    Annually, on coupon maturityPrincipal amortization
    
    :
    
    Amortization of total principal upon maturity


F-59



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Second issueDate of Issue
    
    :
    
    November 10, 1998Number of bonds subscribed
    
    :
    
    146,300Face value
    
    :
    
    1000 soles eachRedemption term
    
    :
    
    4 yearsInterest rate
    
    :
    
    14.396%Interest payment
    
    :
    
    Accrued and paid within 90 daysAnticipated redemption option
    
    :
    
    Early redemption optionThird issueDate of Issue
    
    :
    
    August 7, 1998Number of bonds subscribed
    
    :
    
    15,000Face value
    
    :
    
    US$1,000 eachRedemption term
    
    :
    
    3 yearsInterest rate
    
    :
    
    7.7%Interest payment
    
    :
    
    Accrued and paid within 90 daysFirst program of Corporate BondsFirst issueDate of Issue
    
    :
    
    October 29, 2001Face value
    
    :
    
    30,000 new soles eachRedemption term
    
    :
    
    2 yearsInterest rate
    
    :
    
    7.5%Interest payment
    
    :
    
    Semi -- annualSecond issueDate of Issue
    
    :
    
    October 19, 2001Number of bonds subscribed
    
    :
    
    20,000Face value
    
    :
    
    5,000 new soles eachRedemption term
    
    :
    
    5 yearsInterest rate
    
    :
    
    6.9%Interest payment
    
    :
    
    Semi -- annualThird issue:Date of issue
    
    :
    
    January 24, 2002Number of bonds subscribed
    
    :
    
    6,000Face value
    
    :
    
    5,000 (new soles each)Redemption term
    
    :
    
    2 yearsInterest rate
    
    :
    
    6.5% annualInterest payment
    
    :
    
    Semi -- annualFourth issue:Date of issue
    
    :
    
    April 24, 2002Number of bonds subscribed
    
    :
    
    4,000Face value
    
    :
    
    5,000 (new soles each)Redemption term
    
    :
    
    2 yearsInterest rate
    
    :
    
    6.34% annualInterest payment
    
    :
    
    Semi -- annual


F-60



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| | iv. |  | Endesa Chile S.A.
| | --- |  | -----------------



| | I |  | Risk rating of the issued bonds is a follows as of the date of December 31, 2002:
| | - |  | ---------------------------------------------------------------------------------

Category- Comisión Clasificadora de Riesgo
    
    AA- Fitch IBCA Chile Clasificadora de Riesgo Ltda.
    
    AA- Clasificadora de Riesgo Humphreys Ltda.
    
    AA


F-61



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

ISSUANCE TERMS

Third Issuance

Issuer
    
    :
    
    Empresa Nacional de Electricidad S.A.Securities issued
    
    :
    
    Bearer bonds in local currency, denominatedin Unidades de FomentoIssuance Value
    
    :
    
    Four million Unidades de Fomento(UF4,000,000) divided into:- Series C-1:  120 bonds at UF10,000 each- Series C-2:  800 bonds at UF1,000 each- Series D-1:  120 bonds at UF10,000 each- Series D-2:  800 bonds at UF1,000 eachIndexation
    
    :
    
    Based on variations in Unidad de Fomento indexAmortization period
    
    :
    
    Series C-1 and C-2:  15 years (5-year graceperiod and 10 years to amortize capital).Series D-1 and D-2:  20 years (5-year graceperiod and 15 years to amortize capital).Capital amortization
    
    :
    
    Series C-1 and C-2:  20 consecutiveinstallments payable semi-annually, startingApril 1, 1996. Series D-1 and D-2: 30consecutive installments payablesemi-annually, starting May 1, 1996.Amortization installments are incrementalEarly Redemption
    
    :
    
    As elected by the issuer, starting May 1,1996 and only on the interest payment andamortization dates.Nominal interest rate
    
    :
    
    6.8% annually upon expiration, compound andactual rate per semester on outstandingcapital, readjusted by the value of theUnidad de Fomento.  The applicablesemi-annual interest rate will be equal to3.34409%.Interest Payments
    
    :
    
    Interest will be paid semi-annually each May1 and November 1, starting May 1, 1991.Accrued interest at the end of the periodamounts to ThCh$245,619 (ThCh$268,716 in2001), and is shown under currentliabilities.Guarantee
    
    :
    
    There is no specific guarantee, however, ageneral guarantee covers all the issuer'sassets.Placement period
    
    :
    
    48 months from the registration date in theChilean Securities Register of theSuperintendency of Securities and Insurance.


F-62



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Fourth IssuanceIssuer
    
    :
    
    Empresa Nacional de Electricidad S.A.Securities issued
    
    :
    
    Bearer bonds in local currency, denominated in Unidadesde FomentoIssuance Value (1)
    
    :
    
    Up to seven and a half million (UF7,500,000) divided into:Series E-1: 1,500 bonds at UF1,000 each.Series E-2:  600 bonds at UF10,000 each.Series F:  200 bonds at UF10,000 each.Readjustment
    
    :
    
    Variation in the UFAmortization period
    
    :
    
    Series E-1 and E-2: August 1, 2006.Series F: August 1, 2022.Early redemption
    
    :
    
    Only in the Series F case, beginning February 1, 2012.Nominal interest rate
    
    :
    
    6.2% annually, compounded semi-annually and effective onthe outstanding capital adjusted for the value of theUnidad de fomento.  The semi-annual interest rate will be3.0534%.Interest payments
    
    :
    
    Accrued interest as of December 31, 2002 amounts toThCh$3,195,406 (ThCh%3,196,631 in 2001) which is shownunder current liabilities.Guarantee
    
    :
    
    There is no specific guarantee; however, a generalguarantee covers all the issuer's assetsPlacement period
    
    :
    
    36 months from the registration date in the ChileanSecurities Register of the Superintendency of Securitiesand Insurance




---

|(1) |  | Through a currency swap, the UF debt was changed to US dollars, leaving a net position of
ThCh$2,192,610 as of December 31, 2002 which is included in other assets.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | II |  | The Company has issued and placed three public offerings of bonds in the international
market as follows:
| | -- |  | ---------------------------------------------------------------------------------------------------------

First IssuanceIssuer
    
    :
    
    Empresa Nacional de Electricidad S.A.Securities issued
    
    :
    
    Marketable securities denominated inUS$(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$200,000,000Readjustment
    
    :
    
    Variation in the US Dollar


F-63



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Amortization period
    
    :
    
    Series 1 matures on February 1, 2027:Series 2 matures on February 1, 2037(Put Option on February 1, period 2009,on which date the holders may redeem100% of bonds plus accrued interest).Series 3 matures on February 1, 2097.Nominal interest rate
    
    :
    
    Series 1:  7.875% annuallySeries 2:  7.325% annuallySeries 3:  8.125% annuallyInterest Payments
    
    :
    
    Interest will be paid semi-annuallyeach February 1 and August 1 annually,starting January 27, 1997.  Accruedinterest as of the year end amounts toThCh$15,114,018 (ThCh$14,184,888 in2001), which is shown under currentliabilities.Second IssuanceIssuer
    
    :
    
    Empresa Nacional de Electricidad S.A.Securities issued
    
    :
    
    Marketable securities denominated in US$(Yankeebonds) in the US market.Issuance Value
    
    :
    
    Four hundred million US Dollars (US$400,000,000) :Readjustment
    
    :
    
    Variation in the US DollarCapital amortization
    
    :
    
    Series 1 matures on July 15, 2008 periodNominal interest rate
    
    :
    
    Series 1:  7.75% annuallyInterest Payments
    
    :
    
    Interest will be paid semi-annually each January15 and July 15 annually, starting January 15,1999.  Accrued interest as of the year endamounts to ThCh$10,210,249 (ThCh$9,582,578 in2001), which is shown under current liabilities.Third IssuanceIssuer
    
    :
    
    Empresa Nacional de Electricidad S.A.Securities issued
    
    :
    
    Marketable securities denominated in US$(Yankeebonds) in the US market.Issuance Value
    
    :
    
    Four hundred million US Dollars (US$400,000,000) :Readjustment
    
    :
    
    Variation in the US DollarCapital amortization
    
    :
    
    Series 1 matures on April 1, 2009.Nominal interest rate
    
    :
    
    Series 1:  8.502% annuallyInterest Payments
    
    :
    
    Interest will be paid semi-annually each October1 and April 1 annually, starting October 1, 1999.Accrued interest as of the year end amounts toThCh$6,108,185 and ThCh$5,732,686 in 2002 and2001, respectively, which is shown under currentliabilities.


F-64



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The risk rating of these bonds is as follows as of the date of these financial
statements:

Category- Standard & Poors
    
    BBB- Moodys Investors Services
    
    Baa3- Fitch
    
    BBB+


Repurchase of Yankee Bonds

Endesa Chile Internacional, a 100% subsidiary of Endesa, made a tender offer in
November 2001, for the total or partial purchase, in cash, of the following
bond issue in US dollar (Yankee Bonds) made by its parent company, Endesa.



| |  | Series 1: ThCh$230,000 at 30 years, maturing in 2027.
|- |  | -----------------------------------------------------



| |  | Series 3: ThCh$200,000 at 100 years, maturing in 2097.
|- |  | ------------------------------------------------------

As a result of the offer which expired on November 21, 2001, series 1 and
series 2 bonds, for ThUS$21,324 and ThUS$134,828, respectively, were purchased,
whose nominal values amounted to ThUS$24,119 and ThUS$159,584 for each series,
resulting in a non-operating gain of ThUS$27,551 (ThCh$18,581,792), which is
included in other non-operating income. (See Note 23 (a)).



|v. |  | Subsidiaries of Endesa S.A.
|-- |  | ---------------------------



|I |  | Endesa Chile Internacional issued Yankee Bonds on April 1, 1996.
|- |  | ----------------------------------------------------------------

Risk rating of the bond issuance is as follows as of December 31, 2002:

Category- Standard & Poors
    
    BBB- Moodys Investors Services
    
    Baa3


ISSUANCE TERMS

First IssuanceIssuer
    
    :
    
    Endesa Chile Internacional.Securities issued
    
    :
    
    Marketable securities denominated in US$(150,000 bonds).Issuance Value
    
    :
    
    One hundred and fifty million Dollars (US$150,000,000):Capital amortization
    
    :
    
    Maturity as of April 1, 2006Nominal interest rate
    
    :
    
    7.2% annually in arrears.Interest Payments
    
    :
    
    Interest will be paid semi-annually in arrears startingOctober 1, 1996.  Accrued interest as of the year endamounts to ThCh$1,940,247 (ThCh$1,820,971 in 2001) andis shown under current liabilities.Guarantee
    
    :
    
    Guarantee from Empresa Nacional de Electricidad S.A.


As of July 24, 2000, the first issue of Eurobonds (European Medium Term Note
Programme) was registered in England for 1,000 million Euros.

F-65



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

ISSUANCE TERMS

First RegistrationSecurities registered
    
    :
    
    1,000 million EurosIssuance value
    
    :
    
    Euros 400,000,000 (*)Capital amortización
    
    :
    
    Principal due July 24, 2003Nominal interest rate
    
    :
    
    Euribor + 0.80Interest payments
    
    :
    
    Quarterly beginning October 24, 2000in arrears.  Accrued interest as ofthe year end amounts toThCh$2,310,497 (ThCh$2,061,701 in2001) and is shown in currentliabilities.Guarantee
    
    :
    
    Empresa Nacional de Electricidad S.A.




---

|(*) |  | By way of a swap operation, the debt in Euro was changed to US dollars.
|--- |  | -----------------------------------------------------------------------



|II |  | Empresa Eléctrica Pehuenche S.A. issued bonds on May 2, 1996.
|-- |  | -------------------------------------------------------------

First IssuanceIssuer
    
    :
    
    Empresa Eléctrica Pehuenche S.A.Securities issued
    
    :
    
    Marketable securities denominated in US$.Issuance Value
    
    :
    
    One hundred and seventy million USDollars (US$170,000,000)Capital amortization
    
    :
    
    Maturity as of May 1, 2003Nominal interest rate
    
    :
    
    7.3% annuallyInterest payments
    
    :
    
    Interest will be paid semi-annually inarrears, starting November 1, 1996.Accrued interest as of the year endamounts to ThCh$1,486,325(ThCh$1,394,954 in 2001) and is shown inCurrent Liabilities.




|III |  | Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000
and November 27, 2000 and August 22, 2001 as per the following:
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

First IssuanceIssuer
    
    :
    
    Edegel S.A.Securities issued
    
    :
    
    Marketable securities denominated in US$(120,000 bonds).Issuance value
    
    :
    
    US$120,000,000Capital amortization
    
    :
    
    June 3, 2006, February 14, 2007, June 13, 2007,November 26, 2005 and August 22, 2003, respectively.Nominal interest rate
    
    :
    
    8.75%, 8.41%, 8.75%, 8.4375% and 11.50% annuallyInterest payments
    
    :
    
    Interest will be paid semi-annually, starting December3, 1999.  Accrued interest as of the year-end amountsto ThCh$1,367,515 ThCh$1,283,703 in 2001) and is shownin other current liabilities.


F-66



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|IV. |  | Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001 as per the following:
|--- |  | ----------------------------------------------------------------------------------

First IssuanceIssuer
    
    :
    
    Emgesa S.A.Securities issued
    
    :
    
    Marketable securities denominated in Colombian pesosIssuance Value
    
    :
    
    $Col 530,000,000Capital amortization
    
    :
    
    Maturities as of 2002, 2004, 2006, 2007, 2009 and2010 for $Col 1,525,000; $Col 15,000,000; $Col85,000,000; $Col 81,407,744; $Col 19,500,000; $Col297,567,256 and $Col 30,000,000 respectivelyInterest nominal rate
    
    :
    
    15.5% annual average rateInterest payment
    
    :
    
    Interest will be paid semi-annually. Accruedinterest as of the year end amounts toThCh$5,385,981 (ThCh$5,715,660 in 2001) and isshown under current liabilities.




|V. |  | Sociedad Concesionaria Autopista del Sol S.A. issued bonds on March 8, 2002.
|-- |  | ----------------------------------------------------------------------------

First IssuanceIssuer
    
    :
    
    Sociedad Concesionaria Autopista del Sol S.A.Securities issued
    
    :
    
    Bearer bonds in local currency, denominatedin Unidades de FomentoIssuance Value
    
    :
    
    U.F. 5,540,000 divided into:Series A -- 1  U.F.3,460,000Series A -- 2  U.F.865,000Series B -- 1  U.F.970,000Series B -- 1  U.F.245,000Indexation
    
    :
    
    Variation in the U.F.Amortization period
    
    :
    
    16 yearsCapital amortization
    
    :
    
    Semi - annually and consecutiveInterest nominal rate
    
    :
    
    5.8% annually in arrears, compounded semi -annually on outstanding capital, readjustedfor the value of the Unidad de Fomento.  Theapplicable semi-annual rate will be equal to2.8591%Interest payment
    
    :
    
    Interest will be paid semi-annually eachJanuary 15 and July 15 starting January 15,2003.  Accrued interest at the year endamounts to ThCh$2,427,752 and is show incurrent liabilities


Bond discounts of Enersis S.A. and its affiliates of ThCh$23,317,438 and
ThCh$20,817,166 as of December 31, 2001 and 2002, respectively are included in
Other Assets (see Note 14).

F-67



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 20. Accrued Expenses



|(a) |  | Short-term accruals:
|--- |  | --------------------

Accrued expenses included in current liabilities as of each year-end are as
follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Bonus and other
employee benefits
    
    
    29,586,443
    
    
    
    26,911,641Litigation and
contingencies
    
    
    21,817,851
    
    
    
    21,256,038Construction and
other
    
    
    7,757,541
    
    
    
    7,173,039Energy purchases
and other
    
    
    10,004,985
    
    
    
    14,461,761Income tax
installments and
other taxes
    
    
    192,034
    
    
    
    198,643Pension accruals
    
    
    1,282,688
    
    
    
    1,793,090Suppliers and
services
    
    
    2,891,319
    
    
    
    6,294,182Other accruals
    
    
    6,387,468
    
    
    
    6,841,927Total
    
    
    79,920,329
    
    
    
    84,930,321


During the 2002 period, bad debts write-offs for an amount of ThCh$1,297,010
(ThCh$6,340,092 in 2001) were made.



|(b) |  | Long-term accruals:
|--- |  | -------------------

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Provision for contingencies
and lawsuits
    
    
    143,903
    
    
    
    1,131,005Advance monthly corporate
and other taxes
    
    
    10,659,029
    
    
    
    7,000,596Post-retirement
benefits-Chilean
subsidiaries
    
    
    8,686,281
    
    
    
    10,352,416Severance indemnity
    
    
    7,091,909
    
    
    
    8,589,109Labour contingencies (Cerj)
    
    
    83,342,951
    
    
    
    87,993,076Post-retirement benefits
(Cerj Coelce)
    
    
    80,089,342
    
    
    
    38,637,287Post-retirement
benefits-foreign
subsidiaries
    
    
    44,375,523
    
    
    
    71,228,212Others
    
    
    
    
    
    
    1,990,916Total
    
    
    234,388,938
    
    
    
    226,922,617


Long-term accruals include employee severance indemnities, calculated in
accordance with the policy described in Note 2n. An analysis of the changes in
the accruals in each year is as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Opening balance as
of January 1
    
    
    6,396,342
    
    
    
    7,377,430Increase in accrual
    
    
    2,352,065
    
    
    
    2,072,912Transfer to
short-term
    
    
    (276,711
    )
    
    
    82,969Payments during the
year
    
    
    (1,379,787
    )
    
    
    (944,202
    )Total
    
    
    7,091,909
    
    
    
    8,589,109


F-68



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 21. 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, 2001
    
    As of December 31, 2002Company
    
    Equity
    
    Participation
    
    Total
    
    Equity
    
    Participation
    
    TotalThCh$
    
    %
    
    ThCh$
    
    ThCh$
    
    %
    
    ThCh$Autopista Los Libertadores S.A.
    
    
    25,296,795
    
    
    
    0.05
    %
    
    
    12,648
    
    
    
    25,213,021
    
    
    
    0.05
    %
    
    
    12,607Cam Argentina S.A. (Ex  M.Velasco
Arg.)
    
    
    687,066
    
    
    
    0.10
    %
    
    
    687
    
    
    
    545,460
    
    
    
    0.10
    %
    
    
    545Cam Colombia S.A.
    
    
    1,081,791
    
    
    
    0.001
    %
    
    
    14
    
    
    
    1,864,792
    
    
    
    0.001
    %
    
    
    25Capital de Energía S.A.
    
    
    534,797,609
    
    
    
    49.10
    %
    
    
    262,585,626
    
    
    
    566,223,719
    
    
    
    49.10
    %
    
    
    278,015,846Central Hidroeléctrica Betania S.A.
    
    
    494,429,051
    
    
    
    14.38
    %
    
    
    71,088,020
    
    
    
    519,458,738
    
    
    
    14.38
    %
    
    
    74,686,738Central Cachoeira Dourada
    
    
    499,191,115
    
    
    
    0.49
    %
    
    
    2,452,676
    
    
    
    486,715,435
    
    
    
    0.41
    %
    
    
    1,982,200Central Costanera S.A.
    
    
    137,706,613
    
    
    
    48.07
    %
    
    
    66,192,075
    
    
    
    171,461,783
    
    
    
    48.07
    %
    
    
    82,417,327Cía. do Electricidade do Río do
Janeiro
    
    
    489,488,446
    
    
    
    41.25
    %
    
    
    201,912,651
    
    
    
    579,561,108
    
    
    
    37.42
    %
    
    
    216,887,924Chilectra S.A.
    
    
    498,295,654
    
    
    
    1.76
    %
    
    
    8,770,774
    
    
    
    421,691,742
    
    
    
    1.76
    %
    
    
    7,366,481Cía. Eléctrica San Isidro S.A.
    
    
    30,362,233
    
    
    
    50.00
    %
    
    
    15,181,116
    
    
    
    34,217,794
    
    
    
    50.00
    %
    
    
    17,108,897Cía. Peruana de Electricidad S.A.
    
    
    39,939,117
    
    
    
    49.00
    %
    
    
    19,565,417
    
    
    
    43,202,088
    
    
    
    49.00
    %
    
    
    21,169,023Codensa S.A.
    
    
    1,112,677,346
    
    
    
    51.52
    %
    
    
    573,222,783
    
    
    
    1,009,464,988
    
    
    
    51.52
    %
    
    
    520,777,588Companhia Energetica Do Ceara -
Coelce
    
    
    658,685,746
    
    
    
    43.41
    %
    
    
    285,937,346
    
    
    
    694,587,778
    
    
    
    43.41
    %
    
    
    301,522,520Compañía Eléctrica del Río Maipo S.A.
    
    
    22,260,807
    
    
    
    1.26
    %
    
    
    279,942
    
    
    
    22,623,680
    
    
    
    1.26
    %
    
    
    284,505Constructora y Proyectos Los
Maitenes S.A.
    
    
    936,792
    
    
    
    45.00
    %
    
    
    421,556
    
    
    
    349,958
    
    
    
    45.00
    %
    
    
    157,481Edegel S.A.
    
    
    661,672,216
    
    
    
    36.44
    %
    
    
    241,138,499
    
    
    
    680,564,639
    
    
    
    36.44
    %
    
    
    248,023,616Edelnor S.A.
    
    
    272,154,844
    
    
    
    40.00
    %
    
    
    108,861,938
    
    
    
    292,048,556
    
    
    
    40.00
    %
    
    
    116,819,422Edesur S.A.
    
    
    677,251,928
    
    
    
    34.11
    %
    
    
    230,997,210
    
    
    
    729,817,969
    
    
    
    34.11
    %
    
    
    248,926,444Emgesa S.A.
    
    
    919,463,877
    
    
    
    51.52
    %
    
    
    473,679,287
    
    
    
    963,653,136
    
    
    
    51.52
    %
    
    
    496,444,223Empresa Eléctrica Pangue S.A.
    
    
    59,573,673
    
    
    
    7.52
    %
    
    
    4,479,940
    
    
    
    74,436,633
    
    
    
    5.01
    %
    
    
    3,729,275Endesa
    
    
    1,446,549,434
    
    
    
    40.02
    %
    
    
    578,895,713
    
    
    
    1,430,635,320
    
    
    
    40.02
    %
    
    
    572,527,032Endesa Argentina S.A.
    
    
    30,646,605
    
    
    
    0.01
    %
    
    
    3,064
    
    
    
    21,798,627
    
    
    
    0.01
    %
    
    
    2,180Generandes Perú S.A.
    
    
    351,973,200
    
    
    
    40.37
    %
    
    
    142,088,131
    
    
    
    369,454,446
    
    
    
    40.37
    %
    
    
    149,145,139Hidroeléctrica El Chocón S.A.
    
    
    237,400,257
    
    
    
    34.81
    %
    
    
    82,639,029
    
    
    
    227,177,787
    
    
    
    34.81
    %
    
    
    79,080,588Hidroinvest S.A.
    
    
    111,674,081
    
    
    
    30.07
    %
    
    
    33,580,396
    
    
    
    92,470,425
    
    
    
    30.07
    %
    
    
    27,805,857Inecsa 2000 S.A.
    
    
    25,510,699
    
    
    
    2.68
    %
    
    
    683,687
    
    
    
    25,412,375
    
    
    
    2.68
    %
    
    
    681,052Infraestructura 2000 S.A.
    
    
    63,589,515
    
    
    
    40.00
    %
    
    
    25,435,806
    
    
    
    64,002,478
    
    
    
    40.00
    %
    
    
    25,600,991Ingendesa S.A.
    
    
    2,480,040
    
    
    
    2.36
    %
    
    
    58,591
    
    
    
    2,266,772
    
    
    
    2.36
    %
    
    
    53,552Inmobiliaria Centro Nuevo Ltda.
    
    
    (12,043
    )
    
    
    0.08
    %
    
    
    (9
    )
    
    
    (13,327
    )
    
    
    0.08
    %
    
    
    (10
    )Inmobiliaria y Constructora Stgo
2000 Ltda.
    
    
    74,764
    
    
    
    7.50
    %
    
    
    5,607
    
    
    
    80,994
    
    
    
    7.50
    %
    
    
    6,075Inversiones Distrilima S.A.
    
    
    159,715,296
    
    
    
    32.75
    %
    
    
    52,306,760
    
    
    
    172,793,816
    
    
    
    31.61
    %
    
    
    54,620,126Investluz S.A.
    
    
    532,119,077
    
    
    
    37.55
    %
    
    
    199,810,714
    
    
    
    357,552,300
    
    
    
    37.55
    %
    
    
    134,260,889Luz de Bogotá S.A.
    
    
    643,243,838
    
    
    
    55.00
    %
    
    
    353,784,118
    
    
    
    600,529,806
    
    
    
    55.00
    %
    
    
    330,291,399Empresa Eléctrica Pehuenche S.A.
    
    
    177,950,062
    
    
    
    6.34
    %
    
    
    11,282,034
    
    
    
    182,901,476
    
    
    
    7.35
    %
    
    
    13,443,258Soc. Agrícola de Cameros Ltda.
    
    
    6,066,690
    
    
    
    42.50
    %
    
    
    2,578,343
    
    
    
    6,936,375
    
    
    
    42.50
    %
    
    
    2,947,959Soc. Agrícola Pastos Verdes Ltda.
    
    
    52,532,429
    
    
    
    45.00
    %
    
    
    23,639,595
    
    
    
    52,902,360
    
    
    
    45.00
    %
    
    
    23,806,062Túnel El Melón S.A.
    
    
    (1,313,139
    )
    
    
    0.05
    %
    
    
    (656
    )
    
    
    (4,230,882
    )
    
    
    0.05
    %
    
    
    (2,115
    )Total
    
    
    
    
    
    
    
    
    
    
    4,073,571,128
    
    
    
    
    
    
    
    
    
    
    
    4,050,602,721


F-69



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(b) |  | Minority shareholders participation in the net (income) or loss of the Companys subsidiaries as of each year-end is as
follows:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2000
    
    Year-ended December 31, 2001
    
    Year-ended December 31, 2002Company
    
    Net income
    
    Participation
    
    Total
    
    Net income
    
    Participation
    
    Total
    
    Net income
    
    Participation
    
    TotalThCh$
    
    %
    
    ThCh$
    
    ThCh$
    
    %
    
    ThCh$
    
    ThCh$
    
    %
    
    ThCh$Autopista Los Libertadores
S.A.
    
    
    139,949
    
    
    
    0.050
    
    
    
    70
    
    
    
    (45,093
    )
    
    
    0.05
    %
    
    
    (23
    )
    
    
    83,773
    
    
    
    0.05
    %
    
    
    42Cam Argentina S.A. (Ex -
M.Velasco Arg.)
    
    
    202,967
    
    
    
    0.100
    
    
    
    203
    
    
    
    1,428,756
    
    
    
    0.10
    %
    
    
    1,429
    
    
    
    186,609
    
    
    
    0.10
    %
    
    
    187Cam Colombia S.A.
    
    
    (56,653
    )
    
    
    0.001
    
    
    
    (40,934
    )
    
    
    (414,777
    )
    
    
    0.001
    %
    
    
    (5
    )
    
    
    (712,142
    )
    
    
    0.001
    %
    
    
    (9
    )Capital de Energía S.A.
    
    
    20,837,378
    
    
    
    49.000
    
    
    
    10,210,316
    
    
    
    (8,602,334
    )
    
    
    49.10
    %
    
    
    (4,223,747
    )
    
    
    (23,671,013
    )
    
    
    49.10
    %
    
    
    (11,622,467
    )Central Hidroeléctrica
Betania S.A.
    
    
    (6,921,376
    )
    
    
    14.380
    
    
    
    (995,142
    )
    
    
    8,666,017
    
    
    
    14.38
    %
    
    
    1,245,983
    
    
    
    7,354,973
    
    
    
    14.38
    %
    
    
    1,057,483Central Cachoeira Dourada
    
    
    24,007,006
    
    
    
    1.160
    
    
    
    279,281
    
    
    
    (25,841,820
    )
    
    
    0.49
    %
    
    
    (126,969
    )
    
    
    35,501,840
    
    
    
    0.41
    %
    
    
    144,585Central Costanera S.A.
    
    
    16,524,363
    
    
    
    48.320
    
    
    
    7,984,572
    
    
    
    11,567,900
    
    
    
    48.07
    %
    
    
    5,560,396
    
    
    
    (24,735,275
    )
    
    
    48.07
    %
    
    
    (11,889,619
    )Central Termoeléctrica
Buenos Aires S.A.
    
    
    978,864
    
    
    
    22.170
    
    
    
    217,014
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    Inm. Centro Nuevo
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,285
    
    
    
    0.08
    %
    
    
    1Cía. do Electricidade do
Río do Janeiro
    
    
    (5,078,215
    )
    
    
    41.250
    
    
    
    (3,548,717
    )
    
    
    3,400,351
    
    
    
    41.25
    %
    
    
    1,402,635
    
    
    
    9,012,430
    
    
    
    37.42
    %
    
    
    3,372,704Chilectra S.A.
    
    
    66,966,267
    
    
    
    2.030
    
    
    
    18,070,116
    
    
    
    (73,185,248
    )
    
    
    1.76
    %
    
    
    (1,382,051
    )
    
    
    31,001,664
    
    
    
    1.76
    %
    
    
    541,744Cía. Eléctrica San Isidro
S.A.
    
    
    2,476,112
    
    
    
    50.000
    
    
    
    1,238,057
    
    
    
    101,281
    
    
    
    50.00
    %
    
    
    50,641
    
    
    
    (5,250,225
    )
    
    
    50.00
    %
    
    
    (2,625,113
    )Cía. Peruana de
Electricidad S.A.
    
    
    1,974,335
    
    
    
    49.000
    
    
    
    967,424
    
    
    
    (3,074,599
    )
    
    
    49.00
    %
    
    
    (1,506,554
    )
    
    
    (3,258,139
    )
    
    
    49.00
    %
    
    
    (1,596,488
    )Codensa S.A.
    
    
    21,605,936
    
    
    
    51.520
    
    
    
    12,306,264
    
    
    
    (22,798,893
    )
    
    
    51.52
    %
    
    
    (11,745,404
    )
    
    
    6,655,951
    
    
    
    51.52
    %
    
    
    3,429,146Companhia Energetica Do
Ceara  Coelce
    
    
    18,918,834
    
    
    
    43.410
    
    
    
    8,212,719
    
    
    
    (13,440,399
    )
    
    
    43.41
    %
    
    
    (5,834,514
    )
    
    
    (20,351,782
    )
    
    
    43.41
    %
    
    
    (8,834,766
    )Compañía Eléctrica del Río
Maipo S.A.
    
    
    10,165,435
    
    
    
    1.610
    
    
    
    1,508,429
    
    
    
    (9,261,986
    )
    
    
    1.26
    %
    
    
    (133,933
    )
    
    
    (11,727,292
    )
    
    
    1.26
    %
    
    
    (147,477
    )Constructora y Proyectos
Los Maitenes S.A.
    
    
    (46,357
    )
    
    
    45.000
    
    
    
    (20,861
    )
    
    
    494,907
    
    
    
    45.00
    %
    
    
    222,708
    
    
    
    586,836
    
    
    
    45.00
    %
    
    
    264,076Edegel S.A.
    
    
    33,815,692
    
    
    
    30.160
    
    
    
    10,197,629
    
    
    
    (28,636,179
    )
    
    
    36.44
    %
    
    
    (10,436,112
    )
    
    
    (4,554,496
    )
    
    
    36.44
    %
    
    
    (1,659,831
    )Edelnor S.A.
    
    
    11,511,204
    
    
    
    40.000
    
    
    
    4,604,481
    
    
    
    (18,672,139
    )
    
    
    40.00
    %
    
    
    (7,468,855
    )
    
    
    (19,759,294
    )
    
    
    40.00
    %
    
    
    (7,903,718
    )Edesur S.A.
    
    
    60,280,290
    
    
    
    34.110
    
    
    
    21,734,633
    
    
    
    (83,679,490
    )
    
    
    34.11
    %
    
    
    (28,541,415
    )
    
    
    (8,205,141
    )
    
    
    34.11
    %
    
    
    (2,798,611
    )Emgesa S.A.
    
    
    37,682,800
    
    
    
    51.520
    
    
    
    19,412,352
    
    
    
    (18,796,538
    )
    
    
    51.52
    %
    
    
    (9,683,394
    )
    
    
    (56,168,714
    )
    
    
    51.52
    %
    
    
    (28,936,380
    )Empresa Eléctrica Pangue
S.A.
    
    
    (2,073,199
    )
    
    
    7.520
    
    
    
    (155,905
    )
    
    
    (6,568,538
    )
    
    
    7.52
    %
    
    
    (493,954
    )
    
    
    (18,850,842
    )
    
    
    5.01
    %
    
    
    (944,427
    )Endesa S.A.
    
    
    114,924,893
    
    
    
    40.020
    
    
    
    45,991,879
    
    
    
    (72,160,018
    )
    
    
    40.02
    %
    
    
    (28,877,772
    )
    
    
    9,319,056
    
    
    
    40.02
    %
    
    
    3,729,400Endesa Argentina S.A.
    
    
    3,695,025
    
    
    
    0.010
    
    
    
    370
    
    
    
    10,823,292
    
    
    
    0.01
    %
    
    
    1,083
    
    
    
    10,781,159
    
    
    
    0.01
    %
    
    
    1,078Generandes Perú S.A.
    
    
    35,191,253
    
    
    
    45.740
    
    
    
    16,095,423
    
    
    
    (27,929,472
    )
    
    
    40.37
    %
    
    
    (11,274,854
    )
    
    
    (13,105,328
    )
    
    
    40.37
    %
    
    
    (5,290,492
    )Hidroeléctrica El Chocón
S.A.
    
    
    10,022,417
    
    
    
    34.810
    
    
    
    3,488,804
    
    
    
    (8,929,943
    )
    
    
    34.81
    %
    
    
    (3,108,513
    )
    
    
    25,772,502
    
    
    
    34.81
    %
    
    
    8,971,408Hidroinvest S.A.
    
    
    2,916,610
    
    
    
    30.070
    
    
    
    877,024
    
    
    
    (2,636,004
    )
    
    
    30.07
    %
    
    
    (792,647
    )
    
    
    26,502,276
    
    
    
    30.07
    %
    
    
    7,969,234Inecsa 2000 S.A.
    
    
    101,580
    
    
    
    2.680
    
    
    
    2,722
    
    
    
    (32,301
    )
    
    
    2.68
    %
    
    
    (865
    )
    
    
    98,323
    
    
    
    2.68
    %
    
    
    2,635Infraestructura 2000 S.A.
    
    
    450,056
    
    
    
    40.000
    
    
    
    180,022
    
    
    
    (996,272
    )
    
    
    40.00
    %
    
    
    (398,509
    )
    
    
    (412,963
    )
    
    
    40.00
    %
    
    
    (165,185
    )Ingendesa S.A.
    
    
    931,578
    
    
    
    2.360
    
    
    
    22,008
    
    
    
    (873,679
    )
    
    
    2.36
    %
    
    
    (20,640
    )
    
    
    (923,250
    )
    
    
    2.36
    %
    
    
    (21,812
    )Inmobiliaria Centro Nuevo
Ltda.
    
    
    2,685
    
    
    
    7.500
    
    
    
    203
    
    
    
    (1,449
    )
    
    
    0.08
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inmobiliaria y Constructora
Stgo. 2000 Ltda.
    
    
    (1,449
    )
    
    
    0.080
    
    
    
    (1
    )
    
    
    (2,763
    )
    
    
    7.50
    %
    
    
    (207
    )
    
    
    (6,231
    )
    
    
    7.50
    %
    
    
    (468
    )Inversiones Distrilima S.A.
    
    
    7,932,094
    
    
    
    32.750
    
    
    
    2,597,761
    
    
    
    (12,342,281
    )
    
    
    32.75
    %
    
    
    (4,042,097
    )
    
    
    (13,071,302
    )
    
    
    31.61
    %
    
    
    (4,131,839
    )Investluz S.A.
    
    
    (7,276,872
    )
    
    
    37.550
    
    
    
    (2,732,466
    )
    
    
    11,720,860
    
    
    
    37.55
    %
    
    
    4,401,183
    
    
    
    198,253,211
    
    
    
    37.55
    %
    
    
    74,444,081Luz de Bogotá S.A.
    
    
    10,536,326
    
    
    
    55.000
    
    
    
    5,794,979
    
    
    
    (11,524,049
    )
    
    
    55.00
    %
    
    
    (6,338,227
    )
    
    
    4,512,003
    
    
    
    55.00
    %
    
    
    2,481,602Empresa Eléctrica Pehuenche
S.A.
    
    
    (6,344,120
    )
    
    
    7.450
    
    
    
    (472,637
    )
    
    
    (4,963,596
    )
    
    
    6.34
    %
    
    
    (314,692
    )
    
    
    (20,012,133
    )
    
    
    7.35
    %
    
    
    (1,470,892
    )Soc. Agrícola de Cameros
Ltda.
    
    
    (1,860
    )
    
    
    42.470
    
    
    
    (790
    )
    
    
    165,481
    
    
    
    42.50
    %
    
    
    70,329
    
    
    
    (104,616
    )
    
    
    42.50
    %
    
    
    (44,462
    )Soc. Agrícola Pastos Verdes
Ltda.
    
    
    (57,795
    )
    
    
    45.000
    
    
    
    (26,006
    )
    
    
    (3,031,153
    )
    
    
    45.00
    %
    
    
    (1,364,019
    )
    
    
    (98,333
    )
    
    
    45.00
    %
    
    
    (44,250
    )Túnel El Melón S.A.
    
    
    (2,315,999
    )
    
    
    0.050
    
    
    
    (1,068
    )
    
    
    1,932,383
    
    
    
    0.05
    %
    
    
    966
    
    
    
    2,917,743
    
    
    
    0.05
    %
    
    
    1,459Total
    
    
    
    
    
    
    
    
    
    
    184,000,228
    
    
    
    
    
    
    
    
    
    
    
    (125,152,619
    )
    
    
    
    
    
    
    
    
    
    
    16,282,559


F-70



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 22. Shareholders Equity



|(a) |  | Dividends
|--- |  | ---------

There are no restrictions on the payment of dividends. The following
dividends were paid as of each year-end:

Dividend Number
    
    Payment date
    
    Historical value
    
    Type of dividend
    Related toCh$ per share71
    
    April 2001
    
    
    1.806391
    
    
    Final
    
    
    2000




|(b) |  | Number of shares
|--- |  | ----------------

As of December 31, 2000, 2001 and 2002Number of sharesSeries
    
    Subscribed
    
    Paid
    
    With voteFirst
    
    
    8,291,020,100
    
    
    
    8,291,020,100
    
    
    
    8,291,020,100




|(c) |  | Subscribed and paid capital is as follows as of the year-end:
|--- |  | -------------------------------------------------------------

As of December 31, 2000, 2001 and 2002CapitalSeries
    
    subscribed
    
    
    
    
    
    Capital paidThCh$
    
    
    
    
    
    ThCh$First
    
    
    751,208,197
    
    
    
    
    
    
    
    751,208,197




|(d) |  | Other reserves
|--- |  | --------------

Other reserves are composed of the following as of December 31, 2000, 2001
and 2002:

2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Accumulated net losses of
development-stage
subsidiaries
    
    
    
    
    
    
    (308,094
    )
    
    
    (4,937,110
    )Reserve for transaction
entities using remeasurement
method
    
    
    2,337,516
    
    
    
    2,318,686
    
    
    
    1,177,508Reserve for accumulated
conversion differences
    
    
    4,929,205
    
    
    
    24,373,947
    
    
    
    45,702,079Total (historical Chilean
pesos)
    
    
    7,266,721
    
    
    
    26,384,539
    
    
    
    41,942,477Total, as restated (1)
    
    
    7,716,749
    
    
    
    27,176,075
    
    
    
    41,942,477




---

|(1) |  | Restated in thousands of constant Chilean pesos as of December 31, 2002.
|--- |  | ------------------------------------------------------------------------

F-71



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Detail of changes in the reserve for accumulated conversion differences is as
follows for the year ended December 31, 2001 and 2002:

Initial
    
    Reserve
    
    
    
    
    
    Finalbalance
    
    for assets
    
    Reserve for liabilities
    
    balanceThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$2001Cumulative
translation
adjustment
    
    
    5,234,472
    
    
    
    133,093,729
    
    
    
    (113,223,032
    )
    
    
    25,105,1692002Cumulative
translation
adjustment
    
    
    25,105,169
    
    
    
    96,536,552
    
    
    
    (75,939,638
    )
    
    
    45,702,079


The detail of the accumulated conversion difference reserve at December 31,
2000, 2001 and 2002 is as follows:

As of December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Enersis Energía de Colombia
S.A.
    
    
    
    
    
    
    
    
    
    
    19,753Distrilec Inversora S.A.
    
    
    303,852
    
    
    
    1,230,145
    
    
    
    2,494,214Inversiones Distrilima S.A.
    
    
    845,972
    
    
    
    2,048,579
    
    
    
    3,034,207Cía. Peruana de
Electricidad S.A.
    
    
    1,853,416
    
    
    
    3,755,485
    
    
    
    5,027,002Edesur S.A.
    
    
    1,236,498
    
    
    
    7,936,100
    
    
    
    13,222,829Cía. de Electricidade do
Río de Janeiro
    
    
    935,165
    
    
    
    4,205,754
    
    
    
    10,996,981Luz de Bogotá S.A.
    
    
    
    
    
    
    1,407,698
    
    
    
    2,370,986Investluz S.A.
    
    
    59,569
    
    
    
    4,579,207
    
    
    
    7,012,529Endesa Market Place S.A.
    
    
    
    
    
    
    103,883
    
    
    
    280,302Endesa-Chile Subsidiary
    
    
    
    
    
    
    (161,682
    )
    
    
    Central Geradora
Termoelétrica Fortaleza
S.A.
    
    
    
    
    
    
    
    
    
    
    1,243,276Total
    
    
    5,234,472
    
    
    
    25,105,169
    
    
    
    45,702,079




|(e) |  | Net losses from operations and accumulated net income (losses) of development-stage subsidiaries are as follows:
|--- |  | ----------------------------------------------------------------------------------------------------------------

As of December 31, 2002Net income (losses)Company
    
    Of the period
    
    AccumulatedThCh$
    
    ThCh$Compañía Eléctrica Taltal
Ltda.
    
    
    
    
    
    
    146,371Central Geradora
Termoelectrica Fortaleza
S.A.
    
    
    (939,553
    )
    
    
    (1,302,505
    )Aguas Santiago Poniente S.A.
    
    
    (111,586
    )
    
    
    (111,586
    )Infraestructura 2000 S.A.
    
    
    
    
    
    
    347,252Gas Atacama Generación
    
    
    
    
    
    
    811,149Ingendesa (Ingendesa do
Brasil)
    
    
    1,451
    
    
    
    (46,306
    )Enigesa (Ingendesa do
Brasil)
    
    
    19
    
    
    
    (642
    )Cía. Eléctrica Conosur S.A.
(CIEN)
    
    
    (4,780,843
    )
    
    
    (4,780,843
    )Total
    
    
    (5,830,512
    )
    
    
    (4,937,110
    )


F-72



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 23. Other Income and Expenses



|a. |  | The detail of other non-operating income in each year is as follows:
|-- |  | --------------------------------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Adjustments to investments in
related companies
    
    
    11,545,770
    
    
    
    3,253,049
    
    
    
    512,200Gain on sale of property, plant and
equipment
    
    
    98,540,540
    
    
    
    12,845,817
    
    
    
    6,131,310Gain on forward contracts and swaps
    
    
    7,744,183
    
    
    
    17,822,984
    
    
    
    4,815,297Services  proyects and inspections
    
    
    31,360,163
    
    
    
    9,251,066
    
    
    
    14,382,141Penalties charged to contractors and
suppliers
    
    
    6,106,866
    
    
    
    15,141,355
    
    
    
    10,129,602CDEC-SING power settlement gain
    
    
    8,334,080
    
    
    
    6,487,257
    
    
    
    11,153,158Public lighting and telephone lines
    
    
    
    
    
    
    13,963,267
    
    
    
    13,525,674Gain on sale of investments
    
    
    208,107,787
    
    
    
    3,163,324
    
    
    
    Cost recoveries
    
    
    12,778,359
    
    
    
    6,349,126
    
    
    
    5,112,788Recoverable taxes
    
    
    4,203,502
    
    
    
    8,116,807
    
    
    
    6,387,623Effect of application of BT 64 (1)
    
    
    44,329,990
    
    
    
    62,673,747
    
    
    
    210,813,735Comahue fourth line income
    
    
    13,032,224
    
    
    
    411,352
    
    
    
    337,450Gain on repurchase of bonds
    
    
    
    
    
    
    24,112,843
    
    
    
    Dividend from investees
    
    
    
    
    
    
    5,425,032
    
    
    
    10,732,246Other
    
    
    17,417,878
    
    
    
    5,676,555
    
    
    
    14,110,663Total
    
    
    463,501,342
    
    
    
    194,693,581
    
    
    
    308,143,887




|b. |  | Other non-operating expenses in each year are as follows:
|-- |  | ---------------------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Adjustments to investments in related companies
    
    
    11,068,850
    
    
    
    2,181,904
    
    
    
    4,166,463Cost of sales  materials
    
    
    5,480,701
    
    
    
    14,806,557
    
    
    
    11,254,237Cost of projects, inspections and other
    
    
    22,901,666
    
    
    
    8,290,316
    
    
    
    5,255,189Effect of application of BT 64 (1)
    
    
    4,826,202
    
    
    
    39,426,469
    
    
    
    30,767,763Contingencies and litigation
    
    
    9,937,236
    
    
    
    35,163,985
    
    
    
    48,293,521Deferred expense amortization
    
    
    29,667,643
    
    
    
    1,224,252
    
    
    
    9,133,401SIC power settlement loss
    
    
    9,771,881
    
    
    
    9,450,051
    
    
    
    16,978,444Loss on forward contracts
    
    
    3,254,625
    
    
    
    23,575,152
    
    
    
    Pension plan expense
    
    
    6,205,758
    
    
    
    22,407,456
    
    
    
    5,745,126Penalties and fines
    
    
    2,672,151
    
    
    
    15,663,147
    
    
    
    13,018,169Sales tax adjustment (Brazil)
    
    
    
    
    
    
    
    
    
    
    6,731,332Argentinean Government bond-market value adjustment
    
    
    
    
    
    
    
    
    
    
    5,103,764Provision for real estate projects
    
    
    
    
    
    
    
    
    
    
    16,600,195Provision for write off-work in progress
    
    
    
    
    
    
    
    
    
    
    46,311,933Other
    
    
    13,103,336
    
    
    
    11,739,955
    
    
    
    21,837,067Total
    
    
    118,890,049
    
    
    
    183,929,244
    
    
    
    241,196,604




---

|(1) |  | These amounts correspond to the net adjustments related to the translation of financial statements of foreign affiliates from the respective local country
currency to US Dollars.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-73



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 24. Price-level Restatement

The (charge) credit to income for price-level restatement as of each year-end
is as follows:

As of December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$AssetsInventory
    
    
    289,029
    
    
    
    679,797
    
    
    
    1,081,801Current assets
    
    
    13,397,412
    
    
    
    86,825
    
    
    
    6,108,070Accounts receivable
from subsidiaries
    
    
    5,061,400
    
    
    
    4,575,344
    
    
    
    5,032,682Property, plant and
equipment
    
    
    102,746,124
    
    
    
    69,607,844
    
    
    
    71,181,494Investment in
subsidiaries
    
    
    10,754,175
    
    
    
    30,582,762
    
    
    
    35,860,652Amortization of
goodwill
    
    
    36,887,897
    
    
    
    27,626,882
    
    
    
    25,787,859Other assets
    
    
    21,363,984
    
    
    
    25,101,509
    
    
    
    2,282,536Net credit  assets
    
    
    190,500,021
    
    
    
    158,260,963
    
    
    
    147,335,094Liabilities and
Shareholders
equityShareholders equity
    
    
    (38,425,168
    )
    
    
    (34,756,513
    )
    
    
    (35,375,590
    )Current and
long-term
liabilities
    
    
    (128,254,204
    )
    
    
    (95,013,142
    )
    
    
    (86,890,351
    )Minority interest
    
    
    15,247,338
    
    
    
    6,517,278
    
    
    
    5,418,099Accounts payable to
subsidiaries
    
    
    (51,798,765
    )
    
    
    (30,547,186
    )
    
    
    (24,050,002
    )Non-monetary
liabilities
    
    
    210,397
    
    
    
    (679,233
    )
    
    
    (51,951
    )Net
charge-liabilities
and shareholders
equity accounts
    
    
    (203,020,402
    )
    
    
    (154,478,796
    )
    
    
    (140,949,795
    )Price-level
restatement of the
income statement
    
    
    (2,731,612
    )
    
    
    (1,607,092
    )
    
    
    (1,420,409
    )Net credits to
income
    
    
    (15,251,993
    )
    
    
    2,175,075
    
    
    
    4,964,890


F-74



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 25. Exchange Differences

The (charge) credit to income for foreign currency translation as of each
year-end is as follows:

As of December 31,Assets
    
    Currency
    
    2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Current assetsCash
    
    US$
    
    
    (65,615
    )
    
    
    1,495,922
    
    
    
    2,671,496Other
    
    
    (268
    )
    
    
    (56,291
    )
    
    
    (13,698
    )Time deposits
    
    US$
    
    
    
    
    
    
    202,284
    
    
    
    264,124Other
    
    
    
    
    
    
    (77,389
    )
    
    
    (31,054
    )Marketable securities
    
    US$
    
    
    
    
    
    
    11,797,767
    
    
    
    6,855,639Other
    
    
    
    
    
    
    (1,886
    )
    
    
    Accounts receivable, net
    
    US$
    
    
    25,951
    
    
    
    104,099
    
    
    
    489,200Other
    
    
    
    
    
    
    (48,663
    )
    
    
    Other accounts receivable,
net
    
    US$
    
    
    21,741
    
    
    
    1,124,688
    
    
    
    218,125Other
    
    
    81,745
    
    
    
    52,495
    
    
    
    42,536Inventory
    
    Other
    
    
    
    
    
    
    (11,824
    )
    
    
    Prepaid expenses
    
    US$
    
    
    156,908
    
    
    
    168,986
    
    
    
    29,442Other
    
    
    
    
    
    
    (2,365
    )
    
    
    Other current assets
    
    US$
    
    
    285,338
    
    
    
    11,521,079
    
    
    
    (136,043
    )Other
    
    
    9,696
    
    
    
    (264,455
    )
    
    
    (140,837
    )Non-current assets
    
    
    
    
    
    
    Long-term receivables
    
    US$
    
    
    (18,507
    )
    
    
    1,054,144
    
    
    
    599,944Other
    
    
    1,569
    
    
    
    277,166
    
    
    
    202,009Amounts due from related
companies
    
    US$
    
    
    6,387,947
    
    
    
    17,033,254
    
    
    
    11,082,499Deferred expenses
    
    US$
    
    
    1,044,069
    
    
    
    246,859
    
    
    
    228,059Other assets
    
    US$
    
    
    
    
    
    
    28,336,082
    
    
    
    6,541,035Forward contracts and swaps
    
    US$
    
    
    28,122,985
    
    
    
    36,011,211
    
    
    
    16,037,562Total gain
    
    
    
    
    
    
    36,053,559
    
    
    
    108,963,163
    
    
    
    44,940,038


As of December 31,Liabilities
    
    Currency
    
    2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Current liabilitiesShort-term debt due to
banks and financial
institutions
    
    US$
    
    
    (368,116
    )
    
    
    (6,823,954
    )
    
    
    (2,633,314
    )Other
    
    
    (245,995
    )
    
    
    (1,890
    )
    
    
    Current portion of
long-term debt due to banks
and financial institutions
    
    US$
    
    
    (299,187
    )
    
    
    (2,346,817
    )
    
    
    3,552,078Yen
    
    
    
    
    
    
    26,250
    
    
    
    (71,707
    )Other
    
    
    
    
    
    
    (63,570
    )
    
    
    (242,103
    )Euro
    
    
    
    
    
    
    
    
    
    
    (26,128
    )Current portion of bonds
payable
    
    US$
    
    
    
    
    
    
    (3,831,594
    )
    
    
    (2,102,419
    )US$
    
    
    (479,233
    )
    
    
    (1,426,092
    )
    
    
    (856,727
    )Current portion of notes
payable
    
    Other
    
    
    
    
    
    
    19,127
    
    
    
    Dividends payable
    
    Other
    
    
    
    
    
    
    101
    
    
    
    1,840Accounts payable
    
    US$
    
    
    
    
    
    
    284,714
    
    
    
    472,907Other
    
    
    
    
    
    
    193,407
    
    
    
    (861,657
    )Notes payable
    
    US$-
    
    
    
    
    
    
    (307,780
    )
    
    
    Other
    
    
    
    
    
    
    (81,896
    )
    
    
    Miscellaneous payables
    
    US$
    
    
    (544,449
    )
    
    
    (430,288
    )
    
    
    (649,158
    )Other
    
    
    (39,597
    )
    
    
    195,405
    
    
    
    Other current liabilities
    
    US$
    
    
    
    
    
    
    (921,658
    )
    
    
    83,986Other
    
    
    
    
    
    
    (11,922
    )
    
    
    Accrued expenses
    
    US$
    
    
    (3,441
    )
    
    
    37,716
    
    
    
    (103
    )Other
    
    
    
    
    
    
    (29,947
    )
    
    
    Deferred income
    
    US$
    
    
    
    
    
    
    (56,780
    )
    
    
    (362,291
    )Long-term liabilitiesDue to banks and financial
institutions
    
    US$
    
    
    (13,949,405
    )
    
    
    (42,070,677
    )
    
    
    (22,646,874
    )Yen
    
    
    29,438
    
    
    
    22,840
    
    
    
    (180,770
    )Euro
    
    
    
    
    
    
    
    
    
    
    (60,487
    )Other
    
    
    925
    
    
    
    (246,923
    )
    
    
    (368,719
    )Bonds payable
    
    US$
    
    
    (13,294,614
    )
    
    
    (52,035,450
    )
    
    
    (24,995,100
    )Notes payable
    
    US$
    
    
    (2,236,806
    )
    
    
    (6,734,909
    )
    
    
    (2,814,391
    )Accounts payable
    
    US$
    
    
    (223,869
    )
    
    
    (995,614
    )
    
    
    358,233Other long-term liabilities
    
    US$
    
    
    (5,648,107
    )
    
    
    (21,897,139
    )
    
    
    (6,647,384
    )Other
    
    
    (2,825
    )
    
    
    29,525
    
    
    
    3Total loss
    
    
    
    
    
    
    (37,305,281
    )
    
    
    (139,505,815
    )
    
    
    (61,050,285
    )Exchange difference  net
loss
    
    
    
    
    
    
    (1,251,722
    )
    
    
    (30,542,652
    )
    
    
    (16,110,247
    )


Note 26. Extraordinary Items

In this item, the Company shows the net equity 1.2% tax, in accordance with
decree N°1,949 of August 29, 2002 of the Republic of Colombia; a tax that will
be used for said countrys democratic security.

At December 31, 2002, the subsidiaries paying this tax and the corresponding
amounts are as follows:

Company
    
    ThCh$Central Hidroeléctrica de Betania S.A.
    
    
    2,025,115Capital de Energía S.A.
    
    
    67,124Emgesa S.A.
    
    
    8,837,853Cam Colombia S.A.
    
    
    33,540Codensa S.A.
    
    
    11,412,008Total
    
    
    22,375,640


F-75



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 27. Financial Derivatives

As of December 31, 2002 the Company and its subsidiaries held the following
financial derivative contracts with financial institutions with the object of
decreasing exposure to interest rate and foreign currency risk, as follows:

As of December 31, 2002Nominal
    
    Date of
    
    
    
    
    
    Sales/
    
    Hedged
    
    Initial hedged
    
    Closing hedgedType(1)
    
    amount
    
    Maturity
    
    Item
    
    Purchase
    
    Item
    
    amount
    
    amountUS$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ThCh$
    
    ThCh$COLLAR
    
    
    50,000,000
    
    
    II quarter 2004
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500COLLAR
    
    
    400,000,000
    
    
    III quarter 2004
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    287,444,000
    
    
    
    287,444,000COLLAR
    
    
    50,000,000
    
    
    III quarter 2005
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500COLLAR
    
    
    250,000,000
    
    
    I quarter 2006
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    179,652,500
    
    
    
    179,652,500COLLAR
    
    
    850,000,000
    
    
    II quarter 2006
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    610,818,500
    
    
    
    610,818,500FR
    
    
    7,000,000
    
    
    I quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Accounts payable
    
    
    5,030,270
    
    
    
    5,030,270FR
    
    
    88,000,000
    
    
    I quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    293,192,880
    
    
    
    293,192,880FR
    
    
    77,755,000
    
    
    I quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    48,413,946
    
    
    
    53,869,310FR
    
    
    154,600,000
    
    
    II quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Yankee Bonds/Bank obligation
    
    
    111,096,962
    
    
    
    111,096,962FR
    
    
    68,400,000
    
    
    II quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    49,153,068
    
    
    
    49,153,068FR
    
    
    93,000,000
    
    
    II quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    788,315,170
    
    
    
    788,315,170FR
    
    
    15,000,000
    
    
    lI quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Accounts payable
    
    
    10,779,150
    
    
    
    10,779,150FR
    
    
    108,000,000
    
    
    IV quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    78,783,930
    
    
    
    78,783,930FR
    
    
    23,084,000
    
    
    I quarter 2004
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    13,945,714
    
    
    
    16,086,072S
    
    
    100,000,000
    
    
    I quarter 2003
    
    Interest rate
    
    
    P/S
    
    
    Bonds
    
    
    71,861,000
    
    
    
    71,861,000S
    
    
    100,000,000
    
    
    I quarter 2003
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    71,861,000
    
    
    
    71,861,000S
    
    
    4,253,031
    
    
    I quarter 2003
    
    Interest rate
    
    
    P
    
    
    Accounts payable
    
    
    3,056,270
    
    
    
    3,056,270S
    
    
    44,229,017
    
    
    I quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    31,783,414
    
    
    
    31,783,414S
    
    
    95,000,000
    
    
    II quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    68,267,950
    
    
    
    61,703,496S
    
    
    20,150,000
    
    
    II quarter 2003
    
    Interest rate
    
    
    P
    
    
    Bonds
    
    
    14,479,992
    
    
    
    14,479,992S
    
    
    58,453,199
    
    
    II quarter 2003
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    42,005,053
    
    
    
    42,005,053S
    
    
    381,200,000
    
    
    III quarter 2003
    
    Exchange rate
    
    
    P/S
    
    
    Bonds
    
    
    273,934,132
    
    
    
    273,934,132S
    
    
    1,708,667
    
    
    III quarter 2003
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    1,227,865
    
    
    
    1,227,865S
    
    
    6,668,000
    
    
    IV quarter 2003
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    4,545,759
    
    
    
    4,545,759S
    
    
    17,520,000
    
    
    IV quarter 2003
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    12,590,047
    
    
    
    12,590,047S
    
    
    94,696,298
    
    
    I quarter 2004
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    68,049,707
    
    
    
    68,049,707S
    
    
    50,000,000
    
    
    I quarter 2004
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500S
    
    
    41,932,249
    
    
    II quarter 2004
    
    Exchange rate
    
    
    P
    
    
    Bank obligations
    
    
    30,132,934
    
    
    
    30,132,934S
    
    
    50,000,000
    
    
    II quarter 2004
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500S
    
    
    50,000,000
    
    
    III quarter 2004
    
    Interest rate
    
    
    P/S
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500S
    
    
    33,600,000
    
    
    II quarter 2005
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    24,145,296
    
    
    
    24,145,296S
    
    
    50,000,000
    
    
    II quarter 2006
    
    Interest rate
    
    
    P
    
    
    Bank obligations
    
    
    35,930,500
    
    
    
    35,930,500S
    
    
    144,470,000
    
    
    III quarter 2006
    
    Currency
    
    
    P
    
    
    Bonds
    
    
    103,021,045
    
    
    
    103,021,045S
    
    
    50,000,000
    
    
    III quarter 2006
    
    Currency
    
    
    S
    
    
    Bonds
    
    
    35,529,359
    
    
    
    35,529,359S
    
    
    81,905,702
    
    
    II quarter 2009
    
    Exchange rate
    
    
    P
    
    
    Bonds
    
    
    56,637,729
    
    
    
    56,637,729




---

|(1) |  | Fr = Forward, S = Swap
|--- |  | ----------------------

F-76



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements  (Continued)

Note 28. Commitments and Contingencies

Direct guarantees held by third parties:

Garantías Directas

Committed assetsAccountingGuarantee
    
    Subsidiary
    
    Type of guarantee
    
    Type
    
    Currency
    
    valueCía. de
Telecomunicaciones
de Chile
    
    Enersis S.A.
    
    Pledge
    
    Promissory note UF
    
    ThCh$
    
    
    1,675Public Works Bureau
    
    Autopista del Sol
    
    Complian. Operat. ctto. Conc
    
    
    
    ThCh$
    
    
    654,208Banco Estado de
Chile
    
    Pehuenche S.A.
    
    Chat. Mortg. Whithout
conveyan
    
    Equipment
    
    ThCh$
    
    
    12,030,211Director Customs
Office of Chile
    
    Pehuenche S.A.
    
    Bank bond
    
    
    
    ThCh$
    
    
    Director Customs
Office of Chile
    
    Pangue S.A.
    
    Bill of exchange
    
    
    
    ThCh$
    
    
    64,675Creditors Banks
    
    Pangue S.A.
    
    Mortgage and pledge
    
    Real estate prop. and Equip
    
    ThCh$
    
    
    83,976,230Mitsubishi Corp.
    
    San Isidro S.A.
    
    Chattel mortgage
    
    Facilities
    
    ThCh$
    
    
    76,193,289Public Works Bureau
    
    Autop. Los Libertadores
    
    Construction compliance
concession contract
    
    Invest. Works of concession
    
    ThCh$
ThCh$
    
    
    Public Works Bureau
    
    Autop. Los Libertadores
    
    Construction compliance
concession contract
    
    Operation of concession
    
    ThCh$
ThCh$
    
    
    2,632,804Tax Authorities of
Chile
    
    Celta S.A.
    
    Bond
    
    Bond
    
    ThCh$
    
    
    172,681Banco Estado de
Chile
    
    Tunel el Melón
    
    Pledge over 45% of income
minim. guaranteed
    
    
    
    ThCh$
ThCh$
    
    
    1,351,074FSA Inc
    
    Infraestructura 2000 S.A.
    
    Pledge
    
    Shares
    
    ThCh$
    
    
    35,476,728FSA Inc
    
    Autopista del Sol
    
    Pledge
    
    
    
    ThCh$
    
    
    22,580,871Soc. de Energía de
la Rep.Arg. S.A.
    
    EASA
    
    Pledge
    
    Shares
    
    ThCh$
ThCh$
    
    
    68,033,383


Pending balanceat December 31,
    
    Release of guaranteesGuarantee
    
    Subsidiary
    
    Type of guarantee
    
    Currency
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005Cía. de
Telecomunicaciones
de Chile
    
    Enersis S.A.
    
    Pledge
    
    ThCh$
    
    
    1,675
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Public Works Bureau
    
    Autopista del Sol
    
    Complian. Operat. ctto. conc
    
    ThCh$
    
    
    654,208
    
    
    
    654,208
    
    
    
    
    
    
    
    
    
    
    Banco Estado de Chile
    
    Pehuenche S.A.
    
    Chat. Mortg. Whithout
conveyan
    
    ThCh$
    
    
    2,518,131
    
    
    
    935,922
    
    
    
    
    
    
    
    12,030,211
    
    
    Director Customs
Office of Chile
    
    Pehuenche S.A.
    
    Bank bond
    
    ThCh$
    
    
    46,536
    
    
    
    49,584
    
    
    
    
    
    
    
    
    
    
    Director Customs
Office of Chile
    
    Pangue S.A.
    
    Bill of exchange
    
    ThCh$
    
    
    60,699
    
    
    
    64,675
    
    
    
    
    
    
    
    64,675
    
    
    Creditors Banks
    
    Pangue S.A.
    
    Mortgage and ledge
    
    ThCh$
    
    
    23,032,252
    
    
    
    20,231,494
    
    
    
    3,811,708
    
    
    
    3,811,708
    
    
    3,811,708Mitsubishi Corp.
    
    San Isidro S.A.
    
    Chattel mortgage
    
    ThCh$
    
    
    
    
    
    
    71,509,333
    
    
    
    
    
    
    
    
    
    
    Public Works Bureau
    
    Autop. Los
Libertadores
    
    Construction compliance
concession contract
    
    ThCh$
ThCh$
    
    
    822,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Public Works Bureau
    
    Autop. Los
Libertadores
    
    Construction compliance
concession contract
    
    ThCh$
ThCh$
    
    
    2,632,804
    
    
    
    2,632,804
    
    
    
    2,632,804
    
    
    
    
    
    
    Tax Authorities of
Chile
    
    Celta S.A.
    
    Bond
    
    ThCh$
    
    
    
    
    
    
    
    
    
    
    Según Op
    
    
    
    
    
    
    Banco Estado de
Chile
    
    Tunel el Melón
    
    Pledge over 45% of income
minim. guaranteed
    
    ThCh$
ThCh$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FSA Inc
    
    Infraestructura
2000 S.A.
    
    Pledge
    
    ThCh$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FSA Inc
    
    Autopista del Sol
    
    Pledge
    
    ThCh$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soc. de Energía de
la Rep.Arg. S.A.
    
    EASA
    
    Pledge
    
    ThCh$
ThCh$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


Indirect guarantees held by third parties:

Committed assetsAccountingGuarantee
    
    Subsidiary
    
    Type of guarantee
    
    Type
    
    Currency
    
    valueChase Manhattan Bank
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    CitbanK N.A.
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    359,688,633CitbanK N.A.
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    Midlanbank
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    5,668,452B. Santander C. Hispano
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    110,922,308J.P. Morgan and CSF Boston
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    109,731,747Banco San Paolo
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    BNP
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    151,870,433BBVA
    
    Endesa Chile International
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    151,870,433Mitsubishi Co.
    
    Cía. Eléctrica San Isidro S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    49,098,687B. Santander C. Hispano
    
    Cía. Eléctrica Tarapacá S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    768,635Chase Manhattan Bank
    
    Cía. Eléctrica Tarapacá S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    Banco Español de Crédito
    
    Cía. Eléctrica Tarapacá S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    32,967,603ABN Amro Bank
    
    Cía. Eléctrica Tarapacá S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    4,267,923B. Estado de Chile and Santander
    
    Autopista Del Sol S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    Chase Manhattan Bank
    
    Endesa Colombia S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    205,521,266B. Santander C. Hispano
    
    Cía. Eléctrica Conosur S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    137,655,836Banco de Santiago y de Chile
    
    Autopista Del Sol S.A
    
    Subsidiary
    
    Guarantor
    
    ThCh$
    
    
    


Pending balance
    
    Liberación deat December 31,
    
    garantíasGuarantee
    
    Subsidiary
    
    Type of guarantee
    
    Currency
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006Chase Manhattan Bank
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    39,711,918
    
    
    
    
    
    
    
    
    
    
    
    359,688,633
    
    
    
    
    
    
    CitbanK N.A
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    337,769,295
    
    
    
    359,688,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CitbanK N.A
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    25,177,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Midlanbank
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    17,610,807
    
    
    
    5,668,452
    
    
    
    5,668,452
    
    
    
    
    
    
    
    
    
    
    B. Santander C.
Hispano
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    131,241,462
    
    
    
    110,922,308
    
    
    
    110,922,308
    
    
    
    
    
    
    
    
    
    
    J.P. Morgan and CSF
Boston
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    102,986,026
    
    
    
    109,731,747
    
    
    
    
    
    
    
    
    
    
    
    109,731,747
    
    
    Banco San Paolo
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    67,508,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BNP
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    129,594,668
    
    
    
    151,870,433
    
    
    
    151,870,433
    
    
    
    
    
    
    
    
    
    
    BBVA
    
    Endesa Chile
International
    
    Subsidiary
    
    ThCh$
    
    
    129,561,158
    
    
    
    151,870,433
    
    
    
    151,870,433
    
    
    
    
    
    
    
    
    
    
    Mitsubishi Co.
    
    Cía. Eléctrica San
Isidro S.A.
    
    Subsidiary
    
    ThCh$
    
    
    53,760,423
    
    
    
    49,098,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,098,687B. Santander C.
Hispano
    
    Cía. Eléctrica
Tarapacá S.A.
    
    Subsidiary
    
    ThCh$
    
    
    2,197,072
    
    
    
    768,635
    
    
    
    768,635
    
    
    
    
    
    
    
    
    
    
    Chase Manhattan Bank
    
    Cía. Eléctrica
Tarapacá S.A.
    
    Subsidiary
    
    ThCh$
    
    
    2,744,283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Banco Español de
Crédito
    
    Cía. Eléctrica
Tarapacá S.A.
    
    Subsidiary
    
    ThCh$
    
    
    37,143,610
    
    
    
    32,967,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,967,603ABN Amro Bank
    
    Cía. Eléctrica
Tarapacá S.A.
    
    Subsidiary
    
    ThCh$
    
    
    6,090,065
    
    
    
    4,267,923
    
    
    
    
    
    
    
    4,267,923
    
    
    
    
    
    
    B. Estado de Chile
and Santander
    
    Autopista Del Sol
S.A.
    
    Subsidiary
    
    ThCh$
    
    
    53,417,472
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chase Manhattan Bank
    
    Endesa Colombia S.A.
    
    Subsidiary
    
    ThCh$
    
    
    182,078,243
    
    
    
    205,521,266
    
    
    
    205,521,266
    
    
    
    
    
    
    
    
    
    
    B. Santander C.
Hispano
    
    Cía. Eléctrica
Conosur S.A.
    
    Subsidiary
    
    ThCh$
    
    
    124,119,900
    
    
    
    137,655,836
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,655,836Banco de Santiago y
de Chile
    
    Autopista Del Sol
S.A.
    
    Subsidiary
    
    ThCh$
    
    
    65,796,196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


F-77



---



##### Table of Contents



Litigation and other legal actions:

Enersis S.A. Individual



|i. |  | On May 30, 2000 Pérez Companc S.A., today PECOM ENERGIA S.A. and PCI
Power Edesur Holding Limited (together, PECOM) commenced an action
against Endesa-Chile, Chilectra and Enersis (together, Enersis
Group) before the Arbitration Court of the International Chamber of
Commerce, Paris, France. PECOM has petitioned the court to either:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Recognize its alleged right to nominate both a director and an
alternate director in addition to the directors whom it already has
the right to nominate in Distrilec Inversora; or State that PECOM
and the Enersis Group should each have an equal number of directors
in Distrilec Inversora.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On August 2, 2000, Enersis Group contested PECOMs action and
presented a counterclaim requesting the court to terminate several
agreements among the parties. Likewise, PECOM requested to be
compensated by the Enersis Group if the agreements among the parties
are terminated. Based on the provisional estimates made by PECOM,
the Arbitration Court determined that the amount of the process is
between US$180-200 million. The parties have presented their
arguments, evidence and final allegations. The Arbitration Court
issued and arbitration award on September 2, 2002, ruling that
Enersis Group and PECOM keep their rights to nominate equal number
of board members in Distrilec Inversora S.A. and rejecting not only
the Enersis Groups counterclaim, but also Epsoms claim for a
compensation of approximately US$200 millions. Enersis Group
challenged the arbitration award through an appeal for annulment,
which was filed before the Uruguayan Court of Appeals. The Republic
of Uruguay is the domicile established by the Arbitration Court for
all legal purposes. The Uruguayan Court of Appeals has concluded
the probative period and is working on the final judgment. This
final judgment is expected in the second semester of 2003.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | In 1992, Enersis, which was at that time principally engaged in
electricity distribution through Chilectra, became subject to an
antitrust claim relating to its acquisition of an interest in
Endesa-Chile because of alleged anticompetitive integration of
distribution and generation businesses purportedly resulting from
that acquisition. In June 1992, the Chilean Supreme Court ruled in
favor of Enersis, holding that its ownership of Endesa-Chile did not
violate antitrust laws. The Supreme Court also permitted Enersis to
increase its ownership percentage of Endesa-Chile to the maximum
permitted by Endesa-Chiles by-laws, which was then 26%. The Court
recommended that the Fiscal Nacional Económico (the Fiscal), a
semi-autonomous prosecutor for antitrust matters, monitor the
activities of companies involved in the electricity sector to ensure
free competition.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In 1995, as a consequence of Enersis acquisition of additional
shares of Endesa-Chile, the Fiscal submitted a request to the
Comisión Resolutiva, a judicial and administrative body having
jurisdiction over compliance with Chiles antitrust laws, for an
evidentiary review of the generation, transmission and distribution
businesses of Chilectra, Endesa-Chile and Endesa-Chiles
transmission subsidiary, Transelec. In September 1995, the Fiscal
requested that the Comisión Resolutiva commence discovery on the two
issues the Fiscal deemed relevant:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-78



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | whether, in the then current structure of the SIC, there was a vertical and/or
horizontal integration of companies participating in generation, transmission and
distribution activities that had a restrictive effect on electricity markets; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | whether divestiture of one or more of the businesses was advisable.
|- |  | -------------------------------------------------------------------



| |  | On December 26, 1995, the Comisión Resolutiva notified Enersis that the Fiscal had
added Enersis as a party because of its acquisition of additional shares of
Endesa-Chile although Enersis had not previously been notified of this antitrust
process. The Fiscal contended that Enersis ownership interests in Chilectra and
Endesa-Chile increased the vertical integration of companies participating in the
electricity market. On June 11, 1997, the Comisión Resolutiva unanimously ruled in
favor of Enersis and refused the request of the Fiscal. The matter was not appealed
and the period during which an appeal before the Chilean Supreme Court could have
been brought expired.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Notwithstanding this favorable outcome, the Comisión Resolutiva issued the following
prescriptions, which were required to be implemented within a reasonable time:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | that the government issue rules under the Chilean Electricity Law to enhance
competition and to decrease ambiguity of the rules governing the electricity sector;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | that Transelec be transformed into a sociedad anónima abierta, or a publicly held
limited liability stock company subject to public reporting requirements under the
supervision of the SVS, that the stockholder base of Transelec be broadened to
include other parties, and that Transelec become the owner, rather than the lessee,
of the assets it operates; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | that distribution companies submit their power and energy contracts to public bidding.
|- |  | --------------------------------------------------------------------------------------



| |  | On September 10, 1998, the Reglamento de Servicios Eléctricos was enacted, which
together with DFL No. 1, regulates the Chilean electricity sector. Among other
things, these regulations now require that distribution companies submit their power
and energy contracts to public bidding.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In 1998, Endesa-Chile transferred approximately US$300 million of transmission assets
to Transelec pursuant to a capital increase of Transelec. During 2000, Endesa-Chile
divested itself of Transelec (see Item 4. Information on the Company-A. History and
development of the company -Description of Business-Introduction-Sale of Transelec).
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On April 27, 1999, the Fiscal submitted a third request to the Comisión Resolutiva
seeking to prohibit Enersis from increasing its share ownership in Endesa-Chile from
the then current 25.3%. He also requested an injunction to halt the Chilean auction
related to the cash tender offers by Enersis to purchase an incremental stake in
Endesa-Chile (the Cash Tender Offers). The Fiscal asserted, among other things,
that control of Endesa-Chile by Enersis would be contrary to Chilean antitrust law
since it would create a monopolistic cartel in the electricity sector of the Chilean
economy that would hinder competition. The Comisión Resolutiva, initially decided to
issue an injunction to halt the purchase of shares of Endesa-Chile by Enersis, and to
prohibit Enersis, directly or indirectly through any related party, from increasing
its 25.3% stake in Endesa-Chile for so long as the injunction was in effect or until
the Comisión Resolutiva decided otherwise.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-79



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | On May 10, 1999, the Comisión Resolutiva reversed its April 1999
decision, lifted the injunction, and issued new precautionary
measures to replace prior resolutions. The new precautionary
measures will remain in effect until a final decree is issued or
until the Comisión Resolutiva decides otherwise. These
precautionary measures include:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the shares of Endesa-Chile sold in excess of our then current 25.3%
could be acquired solely and exclusively by Enersis and could only
be registered in our name;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | we are prohibited from transferring, pledging, disposing or
agreeing to accept any type of action that could restrict the
disposition of, in any manner, any shares of Endesa-Chile acquired
in excess of our then current 25.3% stake unless authorized by the
Comisión Resolutiva; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Enersis and Endesa-Chile were prohibited from having common members
on their respective boards of directors and not only from having
common or related independent auditing firms, but also from having
common or related accounting supervisors.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In September 2001, the parties presented their final allegations.
The final resolution was issued in October 30, 2002 under
Resolution No. 667. According to such final resolution, the
Comisión Resolutiva ruled in favor of Enersis and rejected the
request of divestiture formulated by the Fiscal. Nonetheless, the
aforesaid resolution incorporated as permanent restrictions to
Enersis, Chilectra and Endesa-Chile some of the precautionary
measures which were imposed on May 10, 1999. Chilectra, which was
not formerly contemplated in the precautionary measures, was
included among such permanent restrictions. Those permanent
restrictions are the following: Enersis, Chilectra and
Endesa-Chile are prohibited from having common members on their
respective board of directors, from having common or related
independent auditing firms, and from having common or related
accounting supervisors. The resolution also established, among
others, restrictions such as a prohibition of merging certain
companies controlled by Enersis which are, respectively, dedicated
to activities of generation and distribution without the approval
of the Comisión Resolutiva, and the obligation for Enersis,
Endesa-Chile and Chilectra to stay registered before the
Superintendency of Securities and Insurance.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | Accusation filed by Empresa Nacional de Telecomunicaciones S.A.
(ENTEL) before the Resolutive Commission against Enersis S.A.,
started by presentment dated May 13, 2002. The aim was to inform
the Commission about the data transmission services provided
through the electric networks by Compañía Americana de
Multiservicios Limitada, Enersis S.A.s subsidiary, so as to take
the necessary protection measures to guarantee free competition.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Commission requested the Telecommunications Under-department
some information, which was provided through a report dated May 31,
2002.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  | On June 5, 2002, Enersis S.A. answered ENTELs presentment,
requesting that the precautionary measures requested by ENTEL be
rejected because they are contrary to law and unnecessary and,
also, because if they were accepted they would establish an entry
barrier to the industry and postpone the investments necessary for
rendering the aforementioned services.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-80



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | The issuance of a report by the Economic National Legal Department is pending, as well
as the resolution of the precautionary measures requested by ENTEL.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On July 19 of the current year, the Resolutive Commission acknowledged the Economic
Legal National Department report, resolving to thoroughly investigate the matter and
rejecting the precautionary measure requested.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On September 25, 2002, the case was heard and the trial turned into a judicial decision.
| |  | ----------------------------------------------------------------------------------------



|iv. |  | Other Lawsuits
|--- |  | --------------



| |  | As of December 31, 2002 there are others certain complaints against the Company for
damage, labor lawsuits, economic protection appeals and Internal Revenue Service review,
and in the managements opinion and that of in-house legal counsel, the risk of the
Company being ordered to pay indemnities in the amounts claimed in the above mentioned
lawsuits is remote. Therefore no provision has been set up for the indemnities being
claimed.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Enersis Distribution Electricity Subsidiaries
| |  | ----------------------------------------------



| |  | As of December 31, 2002, there are certain complaints against the Enersis Subsidiaries
Chilectra S.A., Compañía Eléctrica del Río Maipo S.A. e Inmobiliaria Manso de Velasco
Limitada for damages, which management believes are not significant based on reports
from its legal counsel or for which same of the Companys has made provisions up to the
corresponding insurance coverage deductibles.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Cerj S.A.
| |  | ---------



| |  | On the basis of management estimates and of the legal counsels opinion, Cerj
established a provision of ThCh$87,670,420 of which ThUS$25,013,377 corresponds to labor
lawsuits related to overtime, unjustified layoffs, hardship pay jobs, ThCh$15,817,325 to
civil lawsuits filed by former clients, for interest and penalties charged on late
payments of energy bills; ThCh$47,162,374 to tax lawsuits, related to collection of
taxes and penalties.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Endesa-Chile Individual
| |  | -----------------------



| |  | Pending litigation
| |  | ------------------



| |  | There is litigation pending against Endesa-Chile, for which defenses have been filed,
totaling ThCh$2,242,254 and ThCh$1,895,083 as of December 31, 2001 and 2002,
respectively.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other litigation
| |  | ----------------



|i. |  | Court : Supreme Court of Argentina
Process number : 2753-4000/97
Cause : Dirección Provincial de Rentas, Provincia de Neuquén versus TGN (Transportadora de Gas del Norte S.A.).
Resolution regarding Stamp Tax sum that eventually should be paid jointly by TGN and ENDESA.
Process status : TGN requested a precautionary measure before the Supreme Court of Argentina to paralyze the proceeding filed by the Province of Neuquen, which was
accepted. Therefore the administrative complaint proceeding is paralyzed.
Amounts involved: ThCh$3,054,897 ($Arg 13,943,572.54) (Includes tax, interest and fines).
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-81



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|ii. |  | Court : Arbitration Court
Process number : N/A
Cause : On December 27, 2001, Empresa Nacional de Electricidad S.A.
was notified of an arbitration to resolve controversies related to
insurance policy N°94.676, issued by Compañía de Seguros Generales
Consorcio Allianz, currently AGF/Allianz Chile Compañía de Seguros
Generales S.A., in favor of Endesa, for the construction of the
Ralco Hydroelectric Plant.
Process status : Claimant and the Insurance Company have a period
of 20 days to corroborate the complaint.
Amounts involved: ThCh$22,995,520 (ThUS$32,000).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | A severe and protracted drought during 1998 and the first half of
2000 affected the operations in Chile adversely. The severity of
the drought coupled with delays in the planned operation of a large
gas-fired plant belonging to Colbún, one of Endesa-Chiles
competitors, led the Ministry of the Economy to decree rationing
periods.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Chilean government imposed electricity rationing during three
periods in 1998 and 1999. During these periods, Endesa-Chile and
other hydroelectric generators were required by law to purchase
energy from thermal electric generators with surplus energy.
Chiles Electricity Law calls for a failure cost to be imposed on
generators who do not fulfill their contractual obligations during
rationing periods. Failure cost is calculated and set by the NEC
and penalizes generators who cannot meet their contractual
commitments. Transactions between electricity generators who have
a surplus and those who have a deficit must be carried out at the
cost of failure in those node locations and during the hours when
the energy supplied is not enough to satisfy demand.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The first rationing decree was issued for the period between
November 13, 1998 and December 31, 1998, though actual rationing
took place for only 14 days during this period. Under the then
prevailing Chilean Electricity Law, a drought as severe as the one
that occurred in 1968-69 constituted force majeure. Because the
drought in 1998 was the worst in recorded history, Endesa-Chile
argued that the force majeure exemption should be applied and
disputed the applicability of failure cost during the first
rationing period. The dispute was settled on March 26, 1999 by the
Ministry of Economy, which held that those transactions carried out
in the spot market between generation companies in those node
locations and during the hours when the energy supplied was not
enough to satisfy the demand had to be calculated based on failure
costs. However, the Ministry of Economy did not establish the
appropriate procedures to calculate these failure costs but instead
left the matter to be resolved by the SICs dispatch center. As of
the date of this annual report, no such procedures have been
established.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The second rationing decree period began on April 30, 1999 and was
eventually superseded by a third rationing decree which began on
June 12, 1999 and was extended to August 31, 1999. In the interim,
on June 8, 1999, the Electricity Law was amended and, as a result,
extreme hydrological conditions were no longer deemed to constitute
force majeure. In addition, the amended Electricity Law provided
for the compensation (there is no maximum level of compensation) of
customers in the event of rationing occurring as a result of any
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-82



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | hydrological event. It also provided for the payment of fines by
electricity generators of up to a maximum amount of approximately
US$5 million per breach resulting from inadequate supply to the
electricity system. In respect of the third rationing decree
period Endesa-Chile paid US$2.3 million by way of compensation to
customers in 1999. The amount paid was based on the days and hours
in which rationing actually occurred. Endesa-Chile contested the
payments on the grounds that their power purchase agreements with
the distribution companies, who in turn provide the electricity to
the final clients, were executed prior to the enactment of the
amendment to the Electricity Law and that the amendment could not
be applied retroactively to pre-existing contracts. The Chilean
courts are currently reviewing this case.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Notwithstanding Endesa-Chiles position, the regulatory authorities
have asserted that the compensation payments made during the third
rationing decree were insufficient. Endesa-Chile has contested
this assertion, but as of the date of this annual report, there has
been no definitive resolution or statement issued by the
authorities on this matter.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Endesa-Chile Subsidiaries
| |  | -------------------------



| |  | Pehuenche S.A.
| |  | --------------



|i. |  | Court : 20th Civil Courthouse of Santiago
Process number : 5863-2001
Cause : Empresa Eléctrica Pehuenche S.A. versus Empresa Eléctrica
Colbún S.A. This complaint is for services rendered by Pehuenche
S.A. to Colbún during the drought period.
Process status : Currently in the evidence term
Amounts involved: ThCh$1,437,200 (ThUS$2,000).
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | Court : Court of Appeals of Talca
Process number : 39945
Cause : Asociación del Canal Maule versus DGA Resolution 1768 dated
November 1984 related to the approval of reservoir works and
building of the Colbún power plant. Pehuenche also filed a
complaint to reinforce the claim of the irrigation subscribers that
it is the obligation of Colbun S.A. to operate a reservoir above an
elevation of 425 meters above sea level.
Process status : Resolution was passed rejecting the complaint.
Amounts involved: Undeterminable.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | Actions were filed related to the payment of compensation as per
Supreme Decree N°287, dated 1999 and issued by the Ministry of
Economy, Development and Reconstruction and modification of Art. 99
bis of DFL N°1/82 of Mining Law.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-83



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|iv. |  | Court : 24th Civil Court of Santiago
Process number : 3908-99
Cause : A precautionary prejudicial measure was presented and was denied by the Tribunal.
In the same proceeding Pehuenche presented an ordinary public law motion to vacate against
Sociedad Austral de Electricidad S.A.
Process status : Sentence was passed on December 10, 2002 pending notification of verdict.
Amounts involved: Undeterminable.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|v. |  | Court : 17th Civil Courthouse of Santiago
Process number : 3940-99
Cause : Pehuenche versus Chilectra S.A. A precautionary prejudicial measure was presented
and denied by the Tribunal. Pehuenche presented in the same case, an ordinary demand to
annul public right against Chilectra S.A.
Process status : Pending judgment of the court.
Amounts involved: Undeterminable.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|vi. |  | Court : 20th Civil Courthouse of Santiago
Process number : 4005-99
Cause : A precautionary prejudicial measure was presented and denied by the Tribunal.
Pehuenche presented in the same case, an ordinary public law motion to vacate against
Empresa Eléctrica Atacama S.A.
Process status : Judgment pronouncement pending.
Amounts involved: Undeterminable.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|vii. |  | Court : Santiago Court of Appeals
Process number : 6515-99
Cause : CDEC-SIC failure to provide timely information to the CNE. Resolution 1,557 dated
October 1, 1999. The State Defense Council made itself a party to the case.
Process status : Expert Appraisal.
Amounts involved: Five fines for a total of 1,610 Units of Tax Measurement (UTM) or
ThCh$47,316.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|viii. |  | Court : 5th Civil Courthouse of Santiago
Process number : 2272-99
Cause : Resolution 631 dated April 27, 1999, for not establishing Dispatch Center before
January 1, 1999. The court informed a resolution that it received the case for trial.
Pending official letter to the Superintendency of Electricity and Fuels (SEC).
Process status : Verdict notification pending.
Amounts involved: Fine of ThCh$14,695 (500 UTM).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ix. |  | Court : 16th Civil Courthouse of Santiago
Process number : 4164-97
Cause : Claim against Resolution 856, resulting in a fine imposed on October 16, 1997, for
failure on May 11, 1997.
Process status : Rejected recourse, pending appeal.
Amounts involved: Fine of ThCh$13,225 (450 UTM).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-84



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|x. |  | Court : 16th Civil Courthouse of Santiago
Process number : 1928-98
Cause : Claim against Resolution 331 dated May 8, 1998, for failure on October 13, 1997.
Process status : Rejected recourse, pending appeal.
Amounts involved: Fine of ThCh$8,817 (300 UTM).
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|xi. |  | Court : SEC
Process number : N/A
Cause : Reposition appeal before the SEC for Resolution 805 dated May 2, 2000 for a
fine for failure on July 14, 1999.
Process status : Pending resolution.
Amounts involved: Fine of ThCh$141,067 (400 UTA).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|xii. |  | Court : 3rd Local Police Court of Santiago
Process number : 50419-AGO
Cause : SERNAC with Pehuenche, claim for lack of electrical supply
Process status : Pending sentence.
Amounts involved: Undeterminable.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|xiii. |  | Court : 5th Labor Court of Santiago
Process number : 2923-2001
Cause : Labor lawsuit for work accident. There are incidents of former adjudication
and prescription pending verdict. Second petition verdict confirming First Petition
verdict. Pending confirmation of appeal for dismissal.
Process status : Pending confirmation of appeal for dismissal.
Amounts involved: Undeterminable.
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Empresa Eléctrica Pangue S.A.



|i. |  | Court: 1st Civil Court of Santiago
Process number : 1294-99
Cause : Claim against Resolution SEC 415 dated March 12, 1999 which
fined Pangue for not complying with Article 9 of rationing Decree
640, which is to inform the SEC of normal customer consumption of
its customers. Pangue made itself a party before the Court of
Appeals. A motion to vacate was filed before the Supreme Court.
Process status : Pending hearing.
Amounts involved: Fine of ThCh$294 (10 UTM).
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | Court: 1st Civil Court of Santiago
Process number : 2273-99
Cause : Claim against SEC Resolution N°631 dated April 27, 1999 that
fined Pangue for infraction of Article 183 of the Regulation when it
did not build an independent Dispatch and Control Center.
Process status : On June 16, 2002, a judgment was passed ordering a
fine to be paid. Pending official notification of judgment.
Amounts involved: Fine of ThCh$14,695 (500 UTM).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-85



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|iii. |  | Court: 23rd Court
Process number : 4293-97
Cause : Claim against SEC Resolution N°856 dated October 16, 1997, which
fined for a blackout on May 1, 1997.
Process status : Verdict notification pending.
Amounts involved: Fine of ThCh$13,225 (450 UTM).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iv. |  | Court: 23rd Court
Process number : 1910-98
Cause : Claim against SEC Resolution N°331 dated May 8, 1998 that fined
Pangue for a blackout on October 13, 1997. The Tribunal rejected the
recourse in its verdict dated July 30, 1999.
Process status : Appealed to the Court of Appeals and is pending hearing.
Amounts involved: Fine of ThCh$14,695 (500 UTM).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|v. |  | Court: Superintendency of Energy and Fuels (SEC)
Process number : N/A
Cause : Appeal to set aside before the SEC by SEC Resolution N°740 dated
April 26, 2000 which fined Pangue for blackout on July 14, 1999.
Process status : Pending resolution.
Amounts involved: Fine of ThCh$105,800 (300 UTA).
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|vi. |  | Court: 18th Civil Court of Santiago
Process number : 3886-99
Cause : Ordinary public right annulment complaint. Request to annul
obligation to pay compensation to regulated price users derived from
electric rationing decree N°287 issued by the Ministry of Economy.
Process status : Judgment pronouncement pending
Amounts involved: Undeterminable.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|vii. |  | There are 37 administrative oppositions presented by Pangue S.A. before
the Provincial Government of Malleco, to the corresponding requests of
diverse individuals to regularize water use rights in the Commune of
Lonquimay.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

San Isidro S.A.



|i. |  | Court: 7th Civil Court of Santiago
Process number : 2195-99
Cause: Resolution No. 628 dated April 27, 1999 for infraction of
Article 183 of Supreme Decree 327, issued by the Chilean Ministry of
Economy, by not establishing the independent Dispatch and Control
Center before January 1, 1999.
Process status: Pending judgment of the Court.
Amounts involved: Fine of ThCh$14,695 (500 UTM).
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-86



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|ii. |  | Court: Superintendency of Energy and Fuels (SEC)
Process number : N/A
Cause : Appeal to set aside before the SEC for SEC Resolution N°719
dated April 24, 2000, which fined San Isidro ThCh$52,900 (150 UTA),
for blackout on July 14, 1999.
Process status : Pending administrative resolution.
Amounts involved: Fine of ThCh$52,900 (150 UTA).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compañía Eléctrica de Tarapacá S.A.  Celta



|i. |  | Court: Superintendency of Energy and Fuels (SEC)
Process number: Official Letter 4966
Cause : Formulation of SEC charges, dated August 3, 2000 for SING
blackout on September 23, 1999.
Process status : Pending SEC Resolution.
Amounts involved: Undeterminable.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | Court: 20th Civil Court of Santiago
Process number: 2760-2000
Cause: Verification of Credit in Inmobiliaria La Cascada Agreement.
Process status: Report No. 1 was received from the Liquidating
Commission. A first distribution of funds from the sale of goods
took place, Celta received ThCh$60,557.
Amounts involved: ThCh$203,718.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | Court: 30th Civil Court of Santiago
Process number: 4061-2002
Cause: Lawsuit for annulment and other actions filed by Sociedad
Punta de Lobos S.A. against Endesa-Chile, Celta and the Chilean
Government. The complaint requests that any attempted assignment,
transfer, or any legal action presented by Endesa-Chile to Celta be
rejected with respect to the marine concession granted to
Endesa-Chile in the Punta Patache sector. It also requests that the
concession be taken away from Endesa-Chile due to alleged
violations of the laws that regulate marine concessions, and that
all assets constructed on the concession lands be converted to
property of the Government. Endesa-Chile contends that the
plaintiff lacks a legal interest in its claim due to the fact that
it is not a party to the concession contract.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Process status: On August 28, 2002 the Tribunal declared as a
precautionary measure the prohibition to take action or execute
contracts in respect to the marine concession granted to
Endesa-Chile and in respect to the real estate which by nature
composes or forms part of that concession.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Amounts involved: If a forfeiture of the marine concession is
declared, the dock installation would be affected, which has a
value of US$15,000,000 and would become the property of the
government, seriously affecting the operation of Celtas thermal
power plant.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-87



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|iv. |  | Court: 12th Civil Court of Santiago
Process number: 5237-2002
Cause: Lawsuit against Empresas Eléctricas del Norte Grande S.A.
(EDELNOR et al, including Celta) for reimbursement of compensation
paid by the electrical distributors Empresa Eléctrica de Arica S.A.,
Empresa Eléctrica de Iquique S.A. and Empresa Eléctrica de
Antofagasta S.A., to their customers due to the blackout on July 25,
1999 of the Sistema Interconectado del Norte Grande (SING). The
complaint is directed against EDELNOR, Electroandina, Norgener, AES
Gener and Celta to jointly reimburse the electrical distributors.
Process status: Court resolution pending regarding pleas filed by
the defendants that the case is without merit. Outcome of the
lawsuit if taken to trial is not determinable.
Amounts involved: ThCh$64,269.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Infraestructura Dos Mil S.A.
| |  | ----------------------------



| |  | Court: 18th Civil Court of Santiago
Process number: 6504-2002
Cause: There is a public law motion to nullify public right filed
on December 23, 2002 by Infraestructura Dos Mil S.A. against the
Chilean government,
Process status: Pending resolution by the State Defense Council.
Amounts involved: N/A
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sociedad Concesionaria Autopista del Sol S.A.
| |  | ---------------------------------------------



| |  | There are lawsuits pending against the company, for which the
corresponding defense has been filed. The total amount is for
ThCh$447,800.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | Inecsa Dos Mil S.A.
| |  | -------------------



| |  | On July 17, 2000, the Chilean Ministry of Public Works filed suit to
annul the public right to bidding for the Northeast Santiago Access
project. As of December 31, 2002 the courts have suspended this
lawsuit and any contingent payouts are undeterminable.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sociedad Concesionaria Autopista Los Libertadores S.A.
| |  | ------------------------------------------------------



| |  | There are pending lawsuits against the company, for which the
corresponding defense has been filed, in the aggregate amount of
ThCh$2,200,830.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | Hidroeléctrica El Chocón S.A.
| |  | -----------------------------



| |  | On December 28, 2000 the Federal Public Revenues Administration 
General Tax Services (FPRA-GTS) notified Hidroeléctrica El Chocon
S.A. that it owed ThCh$374,218 of taxes related to failure to
withhold income tax on certain payments made abroad for a bank loan
obtained in 1994. It was also determined that Hidroeléctrica El
Chocón S.A. must pay ThCh$850,224 for related accrued interest
calculated as of December 20, 2000. Hidroeléctrica El Chocón S.A.
did not make these payments as it considered them relating to
foreign source
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-88



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | income and therefore not subject to taxes. Hidroelectrica El Chocon S.A.
entered a plea in which it objected to payment of the taxes. FPRA-GTS has also
fined Hidroeléctrica El Chocón S.A. ThCh$261,953 which Hidroeléctrica El Chocón
S.A appealed by on February 20, 2001.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On December 28, 2000 Hidroeléctrica El Chocón S.A. was notified that it owed
accrued interest related to value-added-tax for the period from December 1993
to July 1995 amounting to ThCh$169,331 as of December 11, 2000, as well as an
imposed fine of ThCh$213,771. On February 20, 2001 Hidroeléctrica El Chocón
S.A. filed an appeal with the courts under the premise that Chilean law does
not require payment of fines, including accrued interests, for obligations or
infractions committed before July 31, 1995.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On June 26, 2000, Hidroeléctrica El Chocón S.A. was notified of a lawsuit for
interest to be paid related to royalties, initially amounting to ThCh$335,636.
Additionally, on September 27, 2000, the Company was notified of a new
complaint from the province of Neuquén against the State and hydroelectric
generators of Comahue to obtain royalties earned on accumulated funds in the
Salex Account. The complaint does not state the precise amount or date as of
which the sums claimed are considered as owed, but seeks charges from each
generator equal to 12% of the funds contributed to the account.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On December 28, 2001 Hidroeléctrica El Chocón S.A. received notification from
the Provincial Revenue Services of Buenos Aires that it owed ThCh$229,520 for
tax on gross income for the fiscal periods from February 1995 to December 1998
and that the fine was 10% of the allegedly unpaid amount. On January 15, 2002,
Hidroeléctrica El Chocón S.A. filed an appeal citing erroneous computation of
the amount owed and other reasons as to why the taxes were not applicable.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Hidroinvest S.A.
| |  | ----------------



| |  | On December 27, 2000 Hidroinvest S.A. was notified that it owed tax of
ThCh$831,397 for gains realized in 1993 on the difference between the
acquisition cost and transfer price of bonds, accrued interest of
ThCh$1,788,336 and related fines of ThCh$581,978. On February 19, 2001,
Hidroinvest S.A. filed an appeal to the notice.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Central Costanera S.A.
| |  | ----------------------



| |  | Central Costanera S.A. has a debt obligation corresponding to an agreement
related to Work Order No. 4322 (the Agreement). Central Costanera S.A. has
fixed the obligation at one peso equal to one US dollar in accordance with
applicable laws. However, certain laws have exempted certain obligations from
this fixed exchange rate, and should the Secretary of Energy rule that the
obligations of Central Costanera S.A be exempted, an appeal would be filed.
Central Costanera S.A. would to have to pay an additional ThCh$26,228,000 in
the event of an unfavorable ruling.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-89



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Edegel S.A.



|i. |  | Court: Peruvian Federal Court
Process number: N/A
Cause: From November 2000 to October 2001, the Peruvian tax
authority, the National Superintendency of Tax Administration
(SUNAT) audited the income taxes and general sales taxes of Edegel
S.A. from 1995 to 1999. As a result of the audits, in December
2001, SUNAT imposed back taxes and related fines.
Process status: In November 2002, the Government Court issued its
verdict indicating that: SUNAT would have to once again audit
Edegel S.A. related to rejected expenses for amortization of
negative goodwill.
Amounts involved : As of December 31, 2002, provisions for these
contingencies have been made amounting to ThCh$11,354,000 (US$15.8
million).
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | Lawsuits have been filed by ESSALUD for payment of contributions
amounting to ThCh$3,025,000 (US$4.21 million). In the opinion of
Management and their external legal counsel, it is probable that
these proceedings will be resolved in favor of the Edegel S.A.;
thus no liabilities have been recorded as of December 31, 2002 and
2001.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Claims have been filed against Talleres Mayopampa S.A. amounting to
ThCh$417,512 (US$581,000). The subsidiary has filed the
corresponding countersuits and appeals, which have not yet been
settled. In the opinion of Management and external legal counsel,
these actions neither independently nor jointly will have a
significant adverse effect on the financial position, results of
operations or liquidity of Edegel S.A.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | A lawsuit has been filed by Edegel S.A.s workers union, which
seeks an increase in revenue sharing from the current 5%, as
required by law, to 10%, which would mean doubling the payments
already made in 1994, 1995 and 1996, meaning additional aggregate
payments of ThCh$3,353,753 (US$4,667,000). On August 24, 2000, the
lawsuit was ruled unfounded, but on December 12, 2000 a second
ruling reversed that ruling. In the opinion of Management and
external legal counsel, the final resolution will be favorable to
Edegel S.A., and therefore no liabilities have been recorded
related to this lawsuit as of December 31, 2002 and 2001.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Central Hidroeléctrica de Betania S.A.



| |  | Tax contingencies
| |  | -----------------



|i. |  | - Presumptive income tax contingency  In 1997, 1998 and 1999
Betania was exempted from paying taxes under the presumptive income
tax system  a system which calculates taxes payable on concepts
other than net income  due to a regulation passed by the
Administration of National Taxes (DIAN) in 1995. Since Betania had
tax losses for those years, no taxes were paid. That regulation was
modified in 1999, which resulted in Betania qualifying for the
presumptive income tax system, which means that according the DIAN
it should have paid taxes in 1997 and 1998 amounting to
ThCh$25,118,828 (including interest in the amount of ThCh$10,524,298
and sanctions of ThCh$8,987,422). Betania
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-90



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | believes that the conclusions of DIAN were unfounded and, therefore
on September 13, 2002 filed a complaint before the Administrative
Court of Huila. Since then, DIAN has ruled against the petition to
reconsider the income tax payable for 1997, while for the 1998
period, DIAN has yet to respond. As of December 31, 2002 Betania
recorded a provision amounting to ThCh$6,521,895 to cover this
contingency.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii. |  | DIAN reviewed Betanias calculation of its ordinary income tax
payable for 1997 and 1998 and declared that Betania owes
ThCh$12,174 and ThCh$47,836 for 1997 and 1998, respectively,
including tax, sanctions and estimated overdue interest. In 1997
and 1998 the Company has been audited both in the calculation of
its ordinary income as well as presumptive income, therefore it
should be noted that only the greater of the two becomes taxable
net income on which the corresponding taxes, sanctions and interest
must be paid.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | DIAN notified Betania that it owes ThCh$19,399 related to the
incorrect calculation of income for 1999. Betania has requested
that DIAN reconsider the validity of its calculation.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other contingencies:
| |  | --------------------



|iv. |  | As of December 31, 2002, amounts demanded in lawsuits relating to
administrative, civil and labor litigations amounted to
ThCh$5,590,769, and there exist other lawsuits for undetermined
amounts. Based on the evaluation of the probability of success in
the defense of these suits, ThCh$1,005,512 has been provisioned as
of December 31, 2002, to cover probable losses due to these
contingencies.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Restrictions:

Enersis S.A.

The Companys loan agreements establish an obligation to comply with the
following financial ratios, on a consolidated level:



| |  | The ratio between debt and debt plus equity, is not to exceed 0.7;
|- |  | ------------------------------------------------------------------



| |  | The ratio between operational cash flow and payment of debt interest, is not to be less than 2.4;
|- |  | -------------------------------------------------------------------------------------------------



| |  | Net tangible equity is not to be less than ThCh$753,485,400 (UF45 million);
|- |  | ---------------------------------------------------------------------------



| |  | Assets corresponding to companies whose business is regulated, is not to be less than 50% of
total consolidated assets.
|- |  | -----------------------------------------------------------------------------------------------------------------------

As of December 31, 2001 and 2002 all these obligations have been met.

Chilectra S.A.

The Company did not have any management restrictions or financial covenants
during the years ended December 31, 2001 and 2002.

The Company holds long-term energy purchase contracts with Endesa, Gener S.A.,
Pangue S.A., Colbún Machicura S.A., Carbomet Energía S.A., Empresa Eléctrica
Puyehue S.A. (formerly Pilmaiquén), Sociedad Canalistas del Maipo and
Iberoamerica de Energía IBENER S.A., the terms of which extend to beyond 2002,
in order to ensure its supply and corresponding cost.

F-91



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Compañía Eléctrica del Río Maipo S.A.

The Company holds signed energy purchase contracts with Chilectra S.A. and
Gener S.A., in order to assure its supply and corresponding cost.

The Company does not have any management restrictions or financial covenants
during the years ended December 31, 2001 and 2002.

Endesa S.A.

On a consolidated level, Endesa must comply with financial covenants and
requirements derived from loan agreements with financial institutions, among
which are the following:



| |  | Must have gross Cash Flows equal to or greater than 13% of the
average consolidated financial debt for terms beyond one year, plus
short-term bank debt if its term is extendable to more than one
year, obtained according to the debt reflected in the consolidated
financial statements at the closing date of the last four quarters.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Must have gross Cash Flow equal to or greater than 1.9 times the
consolidated financial expenses, obtained according to the expenses
reflected in the consolidated financial statements at the closing
date of the last four quarters.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The financial debt for terms greater than one year, plus short-term
bank debt if its term is extendable to more than one year, cannot
exceed 58% of the sum of shareholders equity, plus minority
interests, plus the financial debt for terms greater than one year
and short-term bank debt.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2001 and 2002 al these obligations have been met.

Pehuenche S.A.

The Santander Investment Bank Ltd. and the Chase Manhattan Bank N.A., in
relation to loans granted to the Company, place obligations and restrictions on
Pehuenche S.A., some of which are of a financial nature, such as: long-term
financial liabilities not exceeding 1.5 times the shareholders equity, and a
minimum company equity of ThCh$159,069,140 (UF9,500,000).

Infraestructura Dos Mil S.A.

With the bond placement by the subsidiary, concession holder Autopista Del Sol
S.A., Infraestructura Dos Mil S.A., concurred as Sponsor to the contracts of
said transaction, committing itself to comply with the restrictions to the
transfer of its interest in the bond issuer. Also, Infraestructura Dos Mil
S.A., is not able to carry out major changes in its assets without the written
authorization of the insurance company guaranteeing the issuance (FSA Inc).
Likewise, the shares of the concession holding company Autopista de Sol S.A.
owned by Infraestructura Dos Mil S.A. were pledged in favor of FSA Inc.

F-92



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | Sociedad Concesionaria Autopista del Sol S.A.
| |  | ---------------------------------------------



| |  | In virtue of the bond issuance contract, Sociedad Concesionaria Autopista del Sol
S.A. must meet certain financial ratios based on the generation of operating cash
flows. Additionally, the Company must request authorization from the insurer to
obtain additional financing.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other restrictions
| |  | ------------------



| |  | As a common and habitual practice for some bank loan debts and also in capital
markets, a substantial portion of Enersis S.A.s financial indebtedness is subject
to cross-failure provisions. Some failures of Endesa-Chile or of its subsidiaries,
if not corrected in time (as to those specific provisions allowing a period of time
to correct the problem), might result in the cross-failure at the Endesa-Chile and
Enersis S.A. level., and, in this case, some sixty percent of Enersis S.A.s
consolidated liabilities might eventually become on demand. On the other hand,
certain failures of a distribution subsidiary, if not corrected in time, would not
affect Endesa-Chile, and the amount at risk of Enersis S.A.s consolidated
liabilities would decrease by thirty percent.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loan agreements include clauses should the risk category of the debt expressed in
US dollars fall below the investment grade level, according to the risk
classification agency determining the applicable margin of the interest rate
(which, for practical purposes hereof, is S & P). Should the long-term US dollar
unsecured debt fall into a non-investment grade category, or below BBB 
according to the nomenclature used by S & P, then, the obligation to prepay all the
outstanding principal existing under these loans within the following sixty days,
unless agreed upon otherwise by the parties, arises. At December 31, 2002,
ThCh$1,052,045,040 (US$1,464 million) of the Companys borrowings and
ThCh$515,961,980 (US$718 million) of Endesa-Chiles loan agreements, include
compulsory prepayment clauses under the mentioned circumstances.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | There exist no clauses in the loan agreements for additional penalties if the
Company if it is ranked below the Investment Grade level. Because of the above,
no provisions have been recorded for said item.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | At December 31 2002, these obligations and restrictions have been fully met.
| |  | ----------------------------------------------------------------------------

Note 29. Sureties Obtained from Third Parties

Chilectra S.A.

The Company presents among its current liabilities, deposits received in cash
for the use of temporary connections by customers of the company for
ThCh$44,929 and ThCh$126,805 at December 31, 2002 and 2001, respectively.

F-93



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Inmobiliaria Manso de Velasco Ltda.

The Company has received guarantees from third parties to guarantee obligations
incurred in the acquisition of assets of ThCh$27,544,077 (MUF1,645) as of
December 31, 2002.

Compañía Americana de Multiservicios Ltda.

The Company has delivered bank bonds for ThCh$734,870 and has received bank
bonds for ThCh$1,511,865.

Endesa S.A.

The Company has received performance bonds from contractors and third parties
to guarantee jobs and construction (mainly the Ralco Project), for
ThCh$24,799,372 as of December 31, 2002 (ThCh$29,321,593 in 2001).

The Company has delivered performance bonds in favor of third parties to
guarantee compliance with works, and contracts for ThCh$1,122,609.

San Isidro S.A.

Documents in guarantee received for ThCh$4,676,984 as of December 31, 2002
(ThCh$4,386,107 in 2001).

Compañía Eléctrica de Tarapacá S.A.

The Company has received documents in guarantee for ThCh$287,026 as of December
31, 2002 (ThCh$920,761 in 2001).

Sociedad Concesionaria Autopista Los Libertadores S.A.

The Company has deposits and performance bonds for UF25,495 as of December 31, 2002.

Sociedad Concesionaria Autopista del Sol S.A.

The Company has deposits and performance bonds for UF27,395 as of December 31,
2002.

Pangue S.A.

The Company has received bank issued performance bonds from contractors for
ThCh$8,879 as of December 31, 2002 (ThCh$4,386,107 in 2001).

Synapsis, Soluciones y Servicios IT Limitada

At December 31, 2002, bank bonds issued amount to ThCh$1,018,136
(ThCh$1,806,488 in 2001). The documents received as guarantees in 2002 amount
to ThCh$102,417 (ThCh$479,225 in 2001).

F-94



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 30. Foreign Currencies

As of December 31, 2001 and 2002, foreign currency denominated assets and
liabilities are as follows:

(a) Current assets

As of December 31,Account
    
    Currency
    
    2001
    
    2002ThCh$
    
    ThCh$Cash
    
    UF
    
    
    498,849
    
    
    
    45,990Ch$
    
    
    6,954,506
    
    
    
    US$
    
    
    2,348,900
    
    
    
    5,731,512Euro
    
    
    
    
    
    
    2,139,191Yen
    
    
    285
    
    
    
    326$ Col
    
    
    12,631,156
    
    
    
    12,399,246Soles
    
    
    1,884,656
    
    
    
    1,273,600$ Arg
    
    
    2,243,026
    
    
    
    4,467,055Reales
    
    
    11,087,418
    
    
    
    22,127,958Time deposits
    
    US$
    
    
    115,975,839
    
    
    
    75,154,206$ Col
    
    
    47,474,350
    
    
    
    31,582,158Soles
    
    
    852,201
    
    
    
    4,856,855$ Arg
    
    
    3,289,380
    
    
    
    9,413,216Reales
    
    
    10,521,464
    
    
    
    24,620,459Marketable securities
    
    Ch$
    
    
    4,823
    
    
    
    4,822US$
    
    
    198,249
    
    
    
    1,264,075$ Col
    
    
    
    
    
    
    274,393Accounts receivable, net
    
    UF
    
    
    7,521,141
    
    
    
    6,605,028Ch$
    
    
    95,627,381
    
    
    
    105,038,323US$
    
    
    10,419,409
    
    
    
    6,738,638$ Col
    
    
    103,526,327
    
    
    
    79,625,850Soles
    
    
    30,682,183
    
    
    
    35,764,701$ Arg
    
    
    70,062,837
    
    
    
    42,172,533Reales
    
    
    232,409,714
    
    
    
    182,894,651Notes receivable
    
    Ch$
    
    
    3,037,324
    
    
    
    2,125,118US$
    
    
    763,309
    
    
    
    1,108,267$ Arg
    
    
    54,956
    
    
    
    25,028Reales
    
    
    1,827,741
    
    
    
    1,872,936Other receivables
    
    UF
    
    
    3,638,662
    
    
    
    57,647Ch$
    
    
    10,826,719
    
    
    
    11,843,434US$
    
    
    8,885,323
    
    
    
    3,413,113$ Col
    
    
    19,294,694
    
    
    
    14,381,770Soles
    
    
    7,008,783
    
    
    
    10,462,278$ Arg
    
    
    2,985,430
    
    
    
    1,256,478Reales
    
    
    18,544,773
    
    
    
    20,201,788U.C
    
    
    1,036,335
    
    
    
    1,159,588Subtotal
    
    
    
    
    844,118,143
    
    
    
    722,102,231


F-95



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

As of December 31,Account
    
    Currency
    
    2001
    
    2002ThCh$
    
    ThCh$Amounts due from
related companies
    
    Ch$
    
    
    3,768,124
    
    
    
    1,899,674US$
    
    
    7,265,042
    
    
    
    184,198,792$ Col
    
    
    133,978
    
    
    
    171,747Soles
    
    
    477,881
    
    
    
    499,562$ Arg
    
    
    6,374,553
    
    
    
    4,523,978Reales
    
    
    
    
    
    
    4,105,082Inventories, net
    
    Ch$
    
    
    44,895,120
    
    
    
    35,357,403$ Col
    
    
    12,827,697
    
    
    
    8,864,940Soles
    
    
    13,479,412
    
    
    
    12,534,464$ Arg
    
    
    4,913,469
    
    
    
    1,958,287Reales
    
    
    1,308,376
    
    
    
    1,667,559Income taxes
recoverable
    
    Ch$
    
    
    33,613,125
    
    
    
    27,521,833$Col
    
    
    1,359,672
    
    
    
    473,718Soles
    
    
    214,438
    
    
    
    229,625$ Arg
    
    
    13,763,334
    
    
    
    10,743,267Reales
    
    
    8,559,533
    
    
    
    15,467,533Prepaid expenses
and other
    
    UF
    
    
    810
    
    
    
    Ch$
    
    
    668,627
    
    
    
    928,209US$
    
    
    3,372,247
    
    
    
    2,570,012$ Col
    
    
    167,469
    
    
    
    124,219Soles
    
    
    1,227,529
    
    
    
    553,358$ Arg
    
    
    962,081
    
    
    
    479,327Reales
    
    
    7,572,804
    
    
    
    3,010,893Deferred income
taxes
    
    Ch$
    
    
    5,005,415
    
    
    
    22,814,199$ Col
    
    
    
    
    
    
    1,151,172$ Arg
    
    
    1,722,188
    
    
    
    7,429,959Reales
    
    
    17,434,498
    
    
    
    20,560,463Other current assets
    
    UF
    
    
    127,694
    
    
    
    693,297Ch$
    
    
    15,498,661
    
    
    
    43,131,732US$
    
    
    110,876,213
    
    
    
    38,147,413$ Col
    
    
    
    
    
    
    888,202Soles
    
    
    
    
    
    
    400,509$ Arg
    
    
    472,013
    
    
    
    3,001,474Reales
    
    
    266,648
    
    
    
    45,758,981Subtotal
    
    
    
    
    318,328,651
    
    
    
    501,860,883Total current assets
    
    
    
    
    1,162,446,794
    
    
    
    1,223,963,114


F-96



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(b) Property, plant and equipment

As of December 31,Account
    
    Currency
    
    2001
    
    2002ThCh$
    
    ThCh$Land
    
    Ch$
    
    
    42,596,302
    
    
    
    41,451,908$ Col
    
    
    31,886,463
    
    
    
    34,137,051Soles
    
    
    9,523,636
    
    
    
    10,210,210$ Arg
    
    
    9,540,763
    
    
    
    9,940,165Reales
    
    
    29,710,800
    
    
    
    34,165,453Buildings, infrastructure
and work in progress
    
    Ch$
    
    
    3,647,155,601
    
    
    
    3,750,803,720$ Col
    
    
    3,012,920,159
    
    
    
    3,259,152,642Soles
    
    
    1,107,370,586
    
    
    
    1,176,938,743$ Arg
    
    
    1,539,453,777
    
    
    
    1,643,686,859Reales
    
    
    1,645,246,419
    
    
    
    1,791,721,564Machinery and equipment
    
    Ch$
    
    
    53,173,353
    
    
    
    55,260,210$ Col
    
    
    24,566,761
    
    
    
    15,475,472Soles
    
    
    419,732,507
    
    
    
    457,417,069$ Arg
    
    
    736,699,370
    
    
    
    781,090,841Reales
    
    
    588,968,367
    
    
    
    669,114,911Other plant and equipment
    
    Ch$
    
    
    85,747,968
    
    
    
    119,396,976$ Col
    
    
    8,340,278
    
    
    
    4,099,024Soles
    
    
    49,196,813
    
    
    
    59,948,689$ Arg
    
    
    159,950,550
    
    
    
    161,835,159Reales
    
    
    235,049,335
    
    
    
    189,581,016Technical appraisal
    
    Ch$
    
    
    26,643,651
    
    
    
    25,917,954$ Col
    
    
    64,759,545
    
    
    
    73,406,012Soles
    
    
    475,304,698
    
    
    
    505,989,949Reales
    
    
    130,917,038
    
    
    
    135,331,492Accumulated depreciation
    
    Ch$
    
    
    (1,493,173,888
    )
    
    
    (1,570,010,403
    )$ Col
    
    
    (563,059,689
    )
    
    
    (709,129,647
    )Soles
    
    
    (886,968,669
    )
    
    
    (974,745,107
    )$ Arg
    
    
    (880,473,038
    )
    
    
    (1,213,704,900
    )Reales
    
    
    (685,729,796
    )
    
    
    (659,024,849
    )Total property, plant and
equipment
    
    
    
    
    9,625,049,660
    
    
    
    9,879,458,183


F-97



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(c) Other assets

As of December 31,Account
    
    Currency
    
    2001
    
    2002ThCh$
    
    ThCh$Investments in related
companies
    
    Ch$
    
    
    103,502,429
    
    
    
    113,436,968US$
    
    
    63,903,764
    
    
    
    80,687,847$ Arg
    
    
    41,815
    
    
    
    39,342Investments in other
companies
    
    Ch$
    
    
    2,152,383
    
    
    
    2,222,396$ Col
    
    
    147,284,788
    
    
    
    157,153,540Soles
    
    
    11,516
    
    
    
    12,271Reales
    
    
    112,310
    
    
    
    78,587Goodwill, net
    
    Ch$
    
    
    840,970,393
    
    
    
    790,045,684US$
    
    
    247,066,350
    
    
    
    6,974,876$ Col
    
    
    26,569,990
    
    
    
    50,492,939Soles
    
    
    
    
    
    
    $ Arg
    
    
    
    
    
    
    Reales
    
    
    204,225,860
    
    
    
    Negative goodwill, net
    
    Ch$
    
    
    (156,983
    )
    
    
    (141,668
    )US$
    
    
    (36,608,510
    )
    
    
    (611,346
    )$ Col
    
    
    (59,861,413
    )
    
    
    (28,641,838
    )Soles
    
    
    (72,563,419
    )
    
    
    (2,694,795
    )Reales
    
    
    (12,004,235
    )
    
    
    (63,083,303
    )Long-term accounts
receivable
    
    UF
    
    
    8,228,092
    
    
    
    1,522,452Ch$
    
    
    2,963,790
    
    
    
    2,049,474US$
    
    
    25,698,682
    
    
    
    7,137,749$ Col
    
    
    4,283,328
    
    
    
    6,552,426Soles
    
    
    2,456,197
    
    
    
    1,744,678$ Arg
    
    
    2,016,092
    
    
    
    2,098,185Reales
    
    
    54,310,825
    
    
    
    103,634,188U.C
    
    
    1,946,556
    
    
    
    1,111,361Amounts due from related
companies
    
    Ch$
    
    
    1,471,140
    
    
    
    882,109US$
    
    
    169,196,652
    
    
    
    Reales
    
    
    
    
    
    
    16,058Other assets
    
    UF
    
    
    3,661,762
    
    
    
    2,961,502Ch$
    
    
    37,004,148
    
    
    
    92,875,289US$
    
    
    44,408,302
    
    
    
    23,091,955$ Col
    
    
    43,811,194
    
    
    
    38,697,375Soles
    
    
    4,202,184
    
    
    
    4,614,807$ Arg
    
    
    921,919
    
    
    
    8,899,892Reales
    
    
    111,074,956
    
    
    
    113,882,379Total other assets
    
    
    
    
    1,972,302,857
    
    
    
    1,517,743,379


F-98



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(d) Total assets

As of December 31,Account
    
    Currency
    
    2001
    
    2002ThCh$
    
    ThCh$Total assets by currency
    
    UF
    
    
    23,677,010
    
    
    
    11,291,688Ch$
    
    
    3,569,950,112
    
    
    
    3,582,702,998US$
    
    
    742,529,646
    
    
    
    526,451,759Euro
    
    
    
    
    
    
    525,982Yen
    
    
    285
    
    
    
    326$ Col
    
    
    2,938,572,897
    
    
    
    3,052,761,648Soles
    
    
    1,165,780,722
    
    
    
    1,306,348,863$ Arg
    
    
    1,704,890,900
    
    
    
    2,400,792,004Reales
    
    
    2,611,414,848
    
    
    
    1,738,018,459U.C
    
    
    2,982,891
    
    
    
    2,270,949Total assets
    
    
    
    
    12,759,799,311
    
    
    
    12,621,164,676


(e) Current liabilities

Within 90 days
    
    91 days to 1 yearAs of
December 31, 2001
    
    As of
December 31, 2002
    
    As of
December 31, 2001
    
    As of
December 31, 2002Avg
    
    
    
    
    
    Avg
    
    
    
    
    
    Avg
    
    
    
    AvgCurrency
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateAccount
    
    
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %$ Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term debt due to banks and
financial institutions
    
    $ no Reaj
    
    
    2,364,209
    
    
    
    4.62
    %
    
    
    60,842,208
    
    
    
    2.48
    %
    
    
    
    
    
    
    
    
    
    
    2,346,203
    
    
    
    2.48
    %US$
    
    
    112,879,158
    
    
    
    10.98
    %
    
    
    113,666,867
    
    
    
    8.14
    %
    
    
    85,478,976
    
    
    
    10.98
    %
    
    
    112,613,976
    
    
    
    8.14
    %Euro
    
    
    2,943,675
    
    
    
    4.35
    %
    
    
    4,542,783
    
    
    
    4.38
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    7,602,894
    
    
    
    14.35
    %
    
    
    11,282,293
    
    
    
    15.00
    %
    
    
    43,699,361
    
    
    
    14.75
    %Soles
    
    
    24,696,590
    
    
    
    12.20
    %
    
    
    37,190,394
    
    
    
    8.68
    %
    
    
    29,199,298
    
    
    
    12.20
    %
    
    
    14,525,801
    
    
    
    4.07
    %$ Arg
    
    
    22,748
    
    
    
    6.80
    %
    
    
    16,254,518
    
    
    
    6.00
    %
    
    
    
    
    
    
    
    
    
    
    3,018,304
    
    
    
    6.00
    %Reales
    
    
    32,143,117
    
    
    
    15.50
    %
    
    
    8,745,951
    
    
    
    9.24
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.21
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Current portion of long-term debt
due to banks and financial
institutions
    
    $ Reaj
    
    
    53,549,447
    
    
    
    7.50
    %
    
    
    313,051
    
    
    
    8.73
    %
    
    
    1,615,021
    
    
    
    7.50
    %
    
    
    1,426,181
    
    
    
    8.73
    %US$
    
    
    44,023,022
    
    
    
    5.17
    %
    
    
    207,929,156
    
    
    
    3.24
    %
    
    
    313,783,648
    
    
    
    6.15
    %
    
    
    332,582,264
    
    
    
    3.24
    %Euro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,624,390
    
    
    
    4.26
    %
    
    
    4,673,051
    
    
    
    3.79
    %Yen
    
    
    
    
    
    
    
    
    
    
    39,191,269
    
    
    
    2.08
    %
    
    
    395,184
    
    
    
    0.90
    %
    
    
    6,946,931
    
    
    
    2.08
    %Soles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    1,896
    
    
    
    8.60
    %
    
    
    1,365,862
    
    
    
    22.75
    %
    
    
    
    
    
    
    
    
    
    
    655,929
    
    
    
    1.75
    %Reales
    
    
    5,638,384
    
    
    
    15.50
    %
    
    
    2,136,708
    
    
    
    11.23
    %
    
    
    1,342,452
    
    
    
    15.50
    %
    
    
    5,154,483
    
    
    
    11.23
    %U.P
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,066,471
    
    
    
    5.32
    %
    
    
    1,195,763
    
    
    
    5.32
    %Pound
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394,123
    
    
    
    5.38
    %
    
    
    456,684
    
    
    
    4.81
    %Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,691
    
    
    
    4.44
    %
    
    
    1,234,621
    
    
    
    Promissory notes
    
    $ Reaj
    
    
    5,086,095
    
    
    
    10.00
    %
    
    
    122,129
    
    
    
    10.00
    %
    
    
    5,946,043
    
    
    
    6.92
    %
    
    
    
    
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    5,603,166
    
    
    
    4.50
    %
    
    
    
    
    
    
    
    
    
    
    7,464,219
    
    
    
    4.50
    %Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,598,110
    
    
    
    18.13
    %
    
    
    
    
    
    
    Current portion of bonds payable
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,866,910
    
    
    
    5.80
    %
    
    
    16,001,327
    
    
    
    5.80
    %US$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,236,441
    
    
    
    7.06
    %
    
    
    156,514,742
    
    
    
    7.06
    %Euro
    
    
    2,061,700
    
    
    
    3.34
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    303,740,866
    
    
    
    3.34
    %$ Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,546,485
    
    
    
    13.70
    %
    
    
    13,501,963
    
    
    
    13.70
    %Other
    
    
    856,532
    
    
    
    10.00
    %
    
    
    1,161,436
    
    
    
    7.28
    %
    
    
    280,254
    
    
    
    11.50
    %
    
    
    7,581,010
    
    
    
    13.70
    %Current portion of long-term notes
payable
    
    $ no Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,293
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    18,039,328
    
    
    
    7.40
    %
    
    
    29,756,019
    
    
    
    9.00
    %
    
    
    8,450,719
    
    
    
    7.20
    %
    
    
    11,872,895
    
    
    
    9.00
    %$ Arg
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends payable
    
    $ no Reaj
    
    
    484,283
    
    
    
    
    
    
    
    428,445
    
    
    
    
    
    
    
    1,426,171
    
    
    
    
    
    
    
    972,422
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    8,285,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    36,707
    
    
    
    
    
    
    
    18,529
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    1,444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    5,060,346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,122,352
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    727,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


F-99



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Within 90 days
    
    91 days to 1 yearAs of
December 31, 2001
    
    As of
December 31, 2002
    
    As of
December 31, 2001
    
    As of
December 31, 2002Avg
    
    
    
    
    
    Avg
    
    
    
    
    
    Avg
    
    
    
    
    
    AvgCurrency
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateAccount
    
    
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %Accounts payable
    
    $ no Reaj
    
    
    48,354,696
    
    
    
    
    
    
    
    54,262,880
    
    
    
    
    
    
    
    4,328,842
    
    
    
    
    
    
    
    5,812,077
    
    
    
    9.00
    %US$
    
    
    14,703,322
    
    
    
    
    
    
    
    12,342,737
    
    
    
    
    
    
    
    1,740,700
    
    
    
    
    
    
    
    1,123,669
    
    
    
    Euro
    
    
    137,924
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    20,517,413
    
    
    
    
    
    
    
    27,173,942
    
    
    
    
    
    
    
    8,982,460
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    19,275,090
    
    
    
    
    
    
    
    23,788,231
    
    
    
    
    
    
    
    2,026,856
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    44,832,831
    
    
    
    
    
    
    
    26,949,437
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    93,916,602
    
    
    
    
    
    
    
    59,659,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    10,963,983
    
    
    
    
    
    
    
    138,564
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term notes
payables
    
    $ no Reaj
    
    
    216
    
    
    
    
    
    
    
    571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    45,428,854
    
    
    
    
    
    
    
    1,056,663
    
    
    
    16.89
    %
    
    
    
    
    
    
    
    
    
    
    3,775,840
    
    
    
    16.89
    %U.P
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
payables
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,334
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    15,105,006
    
    
    
    
    
    
    
    9,244,324
    
    
    
    
    
    
    
    156,864
    
    
    
    
    
    
    
    416,874
    
    
    
    US$
    
    
    11,929,531
    
    
    
    
    
    
    
    8,228,015
    
    
    
    
    
    
    
    71,993
    
    
    
    
    
    
    
    8,648,943
    
    
    
    $ Col
    
    
    9,077,611
    
    
    
    
    
    
    
    22,549,403
    
    
    
    
    
    
    
    71,686
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    3,185,984
    
    
    
    
    
    
    
    5,838,886
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,338,473
    
    
    
    $ Arg
    
    
    105,397
    
    
    
    
    
    
    
    3,054
    
    
    
    
    
    
    
    4,395
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    13,531,642
    
    
    
    
    
    
    
    6,773,826
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    375,753
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amounts payable to
related companies
    
    $ Reaj
    
    
    17,289,294
    
    
    
    
    
    
    
    11,465,695
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    321,383
    
    
    
    9.14
    %
    
    
    532,618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    528,537
    
    
    
    8.49
    %
    
    
    1,234,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    1,226,667
    
    
    
    
    
    
    
    3,629,114
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,837,477
    
    
    
    
    
    
    
    857,426
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    7,514,844
    
    
    
    
    
    
    
    968,935
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued expenses
    
    $Reaj
    
    
    
    
    
    
    
    
    
    
    14,153
    
    
    
    
    
    
    
    8,375
    
    
    
    
    
    
    
    8,372
    
    
    
    $ no Reaj
    
    
    16,211,086
    
    
    
    
    
    
    
    12,393,170
    
    
    
    
    
    
    
    20,763,097
    
    
    
    
    
    
    
    28,578,032
    
    
    
    US$
    
    
    
    
    
    
    
    
    
    
    101,572
    
    
    
    
    
    
    
    186,815
    
    
    
    
    
    
    
    89,246
    
    
    
    $ Col
    
    
    5,127,068
    
    
    
    
    
    
    
    13,279,185
    
    
    
    
    
    
    
    3,219,760
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    1,649,379
    
    
    
    
    
    
    
    2,315,644
    
    
    
    
    
    
    
    1,708,400
    
    
    
    
    
    
    
    2,228,091
    
    
    
    $ Arg
    
    
    4,531,574
    
    
    
    
    
    
    
    2,133,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    26,514,775
    
    
    
    
    
    
    
    23,708,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    80,987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Withholdings
    
    $ no Reaj
    
    
    5,881,699
    
    
    
    
    
    
    
    7,127,750
    
    
    
    
    
    
    
    978,146
    
    
    
    
    
    
    
    1,427,600
    
    
    
    $ Col
    
    
    1,830,706
    
    
    
    
    
    
    
    1,872,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    2,534,964
    
    
    
    
    
    
    
    5,113,011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    17,117,232
    
    
    
    
    
    
    
    10,827,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    25,614,845
    
    
    
    
    
    
    
    29,114,712
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    2,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax payable
    
    $ no Reaj
    
    
    430,473
    
    
    
    
    
    
    
    537,181
    
    
    
    
    
    
    
    9,038,936
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    15,582,792
    
    
    
    
    
    
    
    19,911,919
    
    
    
    
    
    
    
    2,948,539
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    158,987
    
    
    
    
    
    
    
    683
    
    
    
    
    
    
    
    5,765,990
    
    
    
    
    
    
    
    2,638,436
    
    
    
    $ Arg
    
    
    10,192,095
    
    
    
    
    
    
    
    3,332,909
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    33,165,210
    
    
    
    
    
    
    
    1,110,901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred income
    
    $ Reaj
    
    
    252,972
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    1,497,876
    
    
    
    
    
    
    
    5,816,007
    
    
    
    
    
    
    
    3,680,493
    
    
    
    
    
    
    
    2,856,011
    
    
    
    US$
    
    
    411,679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,471,544
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    413,656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other current
liabilities
    
    $ Reaj
    
    
    108,399,353
    
    
    
    2.70
    %
    
    
    3,317
    
    
    
    
    
    
    
    7,108
    
    
    
    
    
    
    
    5,769
    
    
    
    $ no Reaj
    
    
    69,101
    
    
    
    
    
    
    
    456,200
    
    
    
    
    
    
    
    5,817,634
    
    
    
    
    
    
    
    5,473,134
    
    
    
    US$
    
    
    1,193,328
    
    
    
    
    
    
    
    15,111,509
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,973
    
    
    
    $ Col
    
    
    2,621,386
    
    
    
    
    
    
    
    1,996,817
    
    
    
    
    
    
    
    1,029,544
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    45,345
    
    
    
    
    
    
    
    50,146
    
    
    
    
    
    
    
    5,718,123
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    13,478,269
    
    
    
    
    
    
    
    15,875,558
    
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    12,004,488
    
    
    
    
    
    
    
    20,281,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current
liabilities by
currency
    
    $ Reaj
    
    
    184,577,161
    
    
    
    
    
    
    
    11,918,345
    
    
    
    
    
    
    
    20,527,792
    
    
    
    
    
    
    
    17,441,649$ no Reaj
    
    
    90,720,028
    
    
    
    
    
    
    
    151,641,354
    
    
    
    
    
    
    
    46,280,476
    
    
    
    
    
    
    
    47,882,353US$
    
    
    203,707,905
    
    
    
    
    
    
    
    653,397,898
    
    
    
    
    
    
    
    447,701,090
    
    
    
    
    
    
    
    366,156,187Euro
    
    
    5,143,299
    
    
    
    
    
    
    
    4,542,783
    
    
    
    
    
    
    
    3,624,390
    
    
    
    
    
    
    
    308,413,917Yen
    
    
    
    
    
    
    
    
    
    
    39,191,269
    
    
    
    
    
    
    
    395,184
    
    
    
    
    
    
    
    6,946,931$ Col
    
    
    69,303,461
    
    
    
    
    
    
    
    104,312,240
    
    
    
    
    
    
    
    31,163,396
    
    
    
    
    
    
    
    57,201,324Soles
    
    
    54,277,055
    
    
    
    
    
    
    
    81,937,552
    
    
    
    
    
    
    
    44,418,667
    
    
    
    
    
    
    
    38,325,899Reales
    
    
    293,018,263
    
    
    
    
    
    
    
    152,587,392
    
    
    
    
    
    
    
    44,940,561
    
    
    
    
    
    
    
    13,052,675$ Arg
    
    
    97,798,330
    
    
    
    
    
    
    
    77,711,633
    
    
    
    
    
    
    
    4,474
    
    
    
    
    
    
    
    3,674,233U.P
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,066,471
    
    
    
    
    
    
    
    1,195,763Libra
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394,123
    
    
    
    
    
    
    
    456,684Others
    
    
    
    
    
    
    
    
    
    
    12,150,547
    
    
    
    
    
    
    
    241,255
    
    
    
    
    
    
    
    1,234,621Total current
liabilities
    
    
    
    
    998,545,502
    
    
    
    
    
    
    
    1,289,391,013
    
    
    
    
    
    
    
    640,757,879
    
    
    
    
    
    
    
    861,982,236


F-100



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(f) Long-term liabilities, December 31, 2002

1 to 3 years
    
    3 to 5 years
    
    5 to 10 years
    
    More than 10 yearsAmount
    
    Avg Rate
    
    Amount
    
    Avg Rate
    
    Amount
    
    Avg Rate
    
    Amount
    
    Avg RateAccount
    
    Currency
    
    ThCh$
    
    %
    
    M$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %Due to banks and financial
institutions
    
    $ Reaj
    
    
    53,700,248
    
    
    
    3.66
    %
    
    
    2,936,985
    
    
    
    3.66
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    1,332,607,989
    
    
    
    3.19
    %
    
    
    103,695,317
    
    
    
    3.19
    %
    
    
    70,749,821
    
    
    
    3.19
    %
    
    
    6,352,189
    
    
    
    3.19
    %Euro
    
    
    245,960
    
    
    
    4.13
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    8,981,104
    
    
    
    1.96
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    3,687,048
    
    
    
    1.75
    %
    
    
    1,843,524
    
    
    
    1.75
    %
    
    
    6,440,033
    
    
    
    1.75
    %
    
    
    
    
    
    
    Reales
    
    
    81,665,150
    
    
    
    17.11
    %
    
    
    1,612,832
    
    
    
    11.23
    %
    
    
    14,551,393
    
    
    
    11.23
    %
    
    
    201,601
    
    
    
    11.23
    %U.P
    
    
    
    1,189,530
    
    
    
    5.32
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Libra
    
    
    877,946
    
    
    
    4.81
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    100,464,720
    
    
    
    6.20
    %
    
    
    68,867,443
    
    
    
    6.00
    %
    
    
    159,331,186
    
    
    
    6.00
    %US$
    
    
    337,746,700
    
    
    
    7.00
    %
    
    
    352,118,900
    
    
    
    8.06
    %
    
    
    287,444,000
    
    
    
    8.50
    %
    
    
    622,338,537
    
    
    
    8.06
    %Euro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    33,173,871
    
    
    
    14.35
    %
    
    
    77,979,287
    
    
    
    14.35
    %
    
    
    
    
    
    
    Soles
    
    
    53,520,562
    
    
    
    7.19
    %
    
    
    3,859,972
    
    
    
    7.19
    %
    
    
    1,000,390
    
    
    
    7.19
    %
    
    
    
    
    
    
    Long-term notes payable
    
    US$
    
    
    44,459,671
    
    
    
    7.50
    %
    
    
    41,870,347
    
    
    
    7.50
    %
    
    
    59,468,978
    
    
    
    7.50
    %
    
    
    
    
    
    
    Reales
    
    
    61,538,872
    
    
    
    9.50
    %
    
    
    4,601,606
    
    
    
    9.50
    %
    
    
    8,700,083
    
    
    
    9.50
    %
    
    
    247,133
    
    
    
    9.50
    %Accounts payable
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,781
    
    
    
    $ no Reaj
    
    
    2,130,335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,546
    
    
    
    US$
    
    
    7,144,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,535,563
    
    
    
    9.48
    %
    
    
    
    
    
    
    Reales
    
    
    2,584,264
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amounts payable to related
companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Reaj
    
    
    988,291,605
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued expenses
    
    $ Reaj
    
    
    
    
    
    
    
    
    
    
    57,281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ no Reaj
    
    
    3,496,393
    
    
    
    
    
    
    
    3,256,075
    
    
    
    
    
    
    
    7,608,279
    
    
    
    
    
    
    
    7,451,115
    
    
    
    US$
    
    
    3,732,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,686,226
    
    
    
    Reales
    
    
    839,764
    
    
    
    
    
    
    
    81,582,060
    
    
    
    
    
    
    
    2,099,410
    
    
    
    
    
    
    
    49,113,709
    
    
    
    Deferred income taxes
    
    $ no Reaj
    
    
    9,390,063
    
    
    
    
    
    
    
    3,745,511
    
    
    
    
    
    
    
    13,997,687
    
    
    
    
    
    
    
    28,873,945
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,588,783
    
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    1,224,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    197,179
    
    
    
    
    
    
    
    131,452
    
    
    
    
    
    
    
    591,537
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    $ Reaj
    
    
    10,805
    
    
    
    
    
    
    
    10,015
    
    
    
    
    
    
    
    467,614
    
    
    
    10.10
    %
    
    
    
    
    
    
    $ no Reaj
    
    
    4,264,255
    
    
    
    4.55
    %
    
    
    14,800,247
    
    
    
    4.55
    %
    
    
    4,683,227
    
    
    
    
    
    
    
    13,681,297
    
    
    
    4.55
    %US$
    
    
    38,021,057
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    4,611,282
    
    
    
    
    
    
    
    256,932
    
    
    
    
    
    
    
    2,213,674
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    7,456,475
    
    
    
    
    
    
    
    114,044
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    13,384,938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
by currency
    
    $ Reaj
    
    
    1,042,002,658
    
    
    
    
    
    
    
    103,469,001
    
    
    
    
    
    
    
    69,335,057
    
    
    
    
    
    
    
    159,492,967$ no Reaj
    
    
    19,281,046
    
    
    
    
    
    
    
    21,801,833
    
    
    
    
    
    
    
    26,289,193
    
    
    
    
    
    
    
    50,056,903US$
    
    
    1,763,711,762
    
    
    
    
    
    
    
    497,684,564
    
    
    
    
    
    
    
    428,198,362
    
    
    
    
    
    
    
    628,690,726Euro
    
    
    245,960
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    8,981,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    33,173,871
    
    
    
    
    
    
    
    77,979,287
    
    
    
    
    
    
    
    71,275,009Soles
    
    
    58,131,844
    
    
    
    
    
    
    
    5,341,618
    
    
    
    
    
    
    
    3,214,064
    
    
    
    
    
    
    
    $ Arg
    
    
    11,340,702
    
    
    
    
    
    
    
    2,089,020
    
    
    
    
    
    
    
    7,031,570
    
    
    
    
    
    
    
    Reales
    
    
    160,012,988
    
    
    
    
    
    
    
    87,796,498
    
    
    
    
    
    
    
    25,350,886
    
    
    
    
    
    
    
    49,562,443U.P
    
    
    
    1,189,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Libra
    
    
    877,946
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term libilities
    
    
    
    
    
    
    3,065,775,540
    
    
    
    
    
    
    
    751,356,405
    
    
    
    
    
    
    
    637,398,419
    
    
    
    
    
    
    
    959,078,048


F-101



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(g) Long-term liabilities, December 31, 2001

1 to 3 years
    
    3 to 5 years
    
    5 to 10 years
    
    More than 10 yearsAmount
    
    Avg Rate
    
    Amount
    
    Avg Rate
    
    Amount
    
    Avg Rate
    
    Amount
    
    Avg RateAccount
    
    Currency
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %
    
    ThCh$
    
    %Due to banks and financial
institutions
    
    UF
    
    
    37,847,407
    
    
    
    7.44
    
    
    
    20,181,502
    
    
    
    6.93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    1,627,504,159
    
    
    
    4.01
    
    
    
    137,113,532
    
    
    
    4.01
    
    
    
    82,407,322
    
    
    
    4.04
    
    
    
    20,913,779
    
    
    
    1.75Yen
    
    
    782,417
    
    
    
    0.90
    
    
    
    391,208
    
    
    
    0.90
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    15,012,070
    
    
    
    12.00
    
    
    
    2,521,157
    
    
    
    12.00
    
    
    
    4,409,782
    
    
    
    10.93
    
    
    
    1,154,746
    
    
    
    10.93U.P
    
    
    
    2,056,583
    
    
    
    5.32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Libra
    
    
    743,571
    
    
    
    5.38
    
    
    
    371,786
    
    
    
    5.38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    195,548
    
    
    
    4.44
    
    
    
    97,774
    
    
    
    4.44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonds payable
    
    UF
    
    
    19,905,268
    
    
    
    6.30
    
    
    
    123,534,041
    
    
    
    6.30
    
    
    
    54,429,823
    
    
    
    6.30
    
    
    
    48,202,431
    
    
    
    6.30US$
    
    
    196,325,358
    
    
    
    7.90
    
    
    
    249,540,469
    
    
    
    7.90
    
    
    
    242,796,132
    
    
    
    7.90
    
    
    
    934,156,095
    
    
    
    7.90Euro
    
    
    257,094,126
    
    
    
    3.34
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    
    
    
    
    
    
    
    
    130,064,199
    
    
    
    13.70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    
    
    
    
    
    
    
    
    36,033,266
    
    
    
    7.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes payable
    
    US$
    
    
    55,606,642
    
    
    
    7.13
    
    
    
    42,364,204
    
    
    
    7.13
    
    
    
    71,079,080
    
    
    
    7.13
    
    
    
    14,706,614
    
    
    
    7.13Reales
    
    
    35,644,558
    
    
    
    10.27
    
    
    
    4,590,609
    
    
    
    10.27
    
    
    
    9,974,947
    
    
    
    10.27
    
    
    
    
    
    
    
    Accounts payable
    
    UF
    
    
    77,590
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,599
    
    
    
    Ch$
    
    
    2,122,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,406
    
    
    
    US$
    
    
    23,496,465
    
    
    
    6.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    443,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    8,407,133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amounts payable to related
parties
    
    UF
    
    
    984,980,016
    
    
    
    4.90
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US$
    
    
    16,727,142
    
    
    
    7.07
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued expenses
    
    Ch$
    
    
    2,466,172
    
    
    
    
    
    
    
    2,499,291
    
    
    
    
    
    
    
    4,888,461
    
    
    
    
    
    
    
    6,405,087
    
    
    
    9.50$ Col
    
    
    
    
    
    
    
    
    
    
    16,984,432
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,734,446
    
    
    
    Reales
    
    
    8,935,898
    
    
    
    10.00
    
    
    
    143,792,604
    
    
    
    10.00
    
    
    
    1,785,890
    
    
    
    10.00
    
    
    
    5,896,656
    
    
    
    10.00Deferred income taxes
    
    Ch$
    
    
    10,254,481
    
    
    
    
    
    
    
    5,471,684
    
    
    
    
    
    
    
    13,704,756
    
    
    
    
    
    
    
    6,629,043
    
    
    
    Reimbursabe employee taxes
    
    UF
    
    
    7,527
    
    
    
    
    
    
    
    9,108
    
    
    
    
    
    
    
    480,589
    
    
    
    10.00
    
    
    
    
    
    
    
    Ch$
    
    
    4,368,898
    
    
    
    
    
    
    
    2,133,845
    
    
    
    
    
    
    
    886,535
    
    
    
    
    
    
    
    2,388,266
    
    
    
    Soles
    
    
    3,112,468
    
    
    
    
    
    
    
    362,744
    
    
    
    
    
    
    
    2,022,283
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities
    
    UF
    
    
    507
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    
    
    10,664,329
    
    
    
    
    
    
    
    1,116,412
    
    
    
    
    
    
    
    2,473,437
    
    
    
    
    
    
    
    
    
    
    
    Soles
    
    
    3,053,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Arg
    
    
    8,743,924
    
    
    
    
    
    
    
    1,494,952
    
    
    
    
    
    
    
    1,637,101
    
    
    
    
    
    
    
    
    
    
    
    Reales
    
    
    751,115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
By currency
    
    UF
    
    
    1,042,818,315
    
    
    
    
    
    
    
    143,724,651
    
    
    
    
    
    
    
    54,910,411
    
    
    
    
    
    
    
    48,384,031Ch$
    
    
    29,876,420
    
    
    
    
    
    
    
    11,221,232
    
    
    
    
    
    
    
    21,953,189
    
    
    
    
    
    
    
    15,440,802US$
    
    
    1,919,659,972
    
    
    
    
    
    
    
    429,018,205
    
    
    
    
    
    
    
    396,282,535
    
    
    
    
    
    
    
    969,776,488Euro
    
    
    257,094,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yen
    
    
    782,417
    
    
    
    
    
    
    
    391,208
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $ Col
    
    
    443,215
    
    
    
    
    
    
    
    147,048,631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,734,446Soles
    
    
    6,166,036
    
    
    
    
    
    
    
    36,396,010
    
    
    
    
    
    
    
    2,022,283
    
    
    
    
    
    
    
    $ Arg
    
    
    8,743,924
    
    
    
    
    
    
    
    1,494,952
    
    
    
    
    
    
    
    1,637,101
    
    
    
    
    
    
    
    Reales
    
    
    68,750,774
    
    
    
    
    
    
    
    150,904,370
    
    
    
    
    
    
    
    16,170,620
    
    
    
    
    
    
    
    7,051,403U.P
    
    
    
    2,056,583
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Libra
    
    
    743,571
    
    
    
    
    
    
    
    371,786
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    195,548
    
    
    
    
    
    
    
    97,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term liabilities
    
    
    
    
    
    
    3,337,330,901
    
    
    
    
    
    
    
    920,668,819
    
    
    
    
    
    
    
    492,976,139
    
    
    
    
    
    
    
    1,081,387,170


F-102



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 31. Sanctions

Endesa Chile

On February 22, 2002, the Superintendency of Securities and Insurance, through
Executive Resolution N°044, censured Mr. Héctor López Vilaseco, the companys
Chief Executive Office, for infringement of what is provided in Section III of
Form Letter N°1,481, dated May 25, 2000, for having tardily submitted to the
Superintendency of Securities and Insurance the list of the companys
shareholders at December 31, 2001.

Neither the Company nor its Board of Directors has been fined by the
Superintendency of Securities and Insurance or any other administrative
authority.

Note 32. Subsequent Events

Enersis S. A.

On December 10, 2002, a Special General Shareholders Meeting of Cerj, an
Enersis S.A. subsidiary, was held, where a capital increase was approved for
Cerj, in an amount of ThUS$105,000, approximately.

This increase took place on January 10, 2003, through the issuance and
subscription of 770,833,333,333 new ordinary shares, at a value of R$0.48 in
one thousand-share batches, totaling the ThUS$100,000 approved at the Meeting,
with the Companys capital amounting to ThUS$259,085.

With this operation, the percentage of direct participation held by Enersis
S.A., through its agency, will increase from 20.38% to 40.03%.

As a relevant event on January 15, 2003, it was reported that Enersis S.A.s
Board of Directors, at a special meeting held on that day, agreed to take note
that the Company will make accounting adjustments and special charges in its
balance sheet for its investments in its Chilean and foreign subsidiaries for a
total amount of US$387 million, in its equivalent in Chilean pesos. These
special adjustments are reflected in income for 2002.

Such special adjustments and charges have no impact on the Companys cash flow
and will be reflected in Enersis 2002 financial statements. The special
adjustments and charges made as well as the provisions made at November 30,
2002, are detailed as follows: (the figures shown correspond to the impact on
Enersis S.A.s financial statements):

Generation:Brazil
    
    US$60 millionArgentina
    
    US$23 millionTotal Generation
    
    US$83 million


F-103



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Distribution:Brazil
    
    US$255 millionArgentina
    
    US$26 millionTotal distribution
    
    US$281 millionServices:Chile
    
    US$23 millionTotal services:
    
    US$23 millionTotal adjustment
    
    US$387 million


It must be noted that, of the US$387 million, US$329 million will be from the
acceleration of the amortization of the net balance of negative goodwill and
goodwill of investments made in Brazil and Argentina in generation and
distribution.

Subtracted from the figure above are the provisions made at November 30, 2002,
as shown below:

Brazil
    
    US$81 millionArgentina
    
    US$l6 millionTotal Provisions
    
    US$97 million


In view of the above, and having considered these provisions, the effect of the
adjustments and special charges on the companys income will amount to the
equivalent in Chilean pesos of US$290 million, approximately.

In the period between January 1, 2003 and the date of presentation of these
financial statements, no other significant event that might affect their
presentation has occurred.

Note 33. Environment

Edesur S.A.

As of December 31, 2002, the Company incurred environmental expenses of
ThCh$59,645 and investments of ThCh$15,809.

Endesa S.A.

During the period from January 1 to December 31, 2002, the Company and its
subsidiaries have made disbursements for a value of ThCh$3,786,874, which
mainly correspond to:



| |  | Operating expenses: corresponding to studies, follow-up procedures
and laboratory analysis (ThCh$323,387 expenses in 2002), Environment
Law N°99 (Colombia) and ISO 14,001 certification in Central
Costanera and El Chocón (US$955,245).
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Investments related to the following projects:
|- |  | ----------------------------------------------



| |  |  | Central Ralcos environmental program.
| | - |  | --------------------------------------



| |  |  | Central San Isidro, Pangue, Tal Tal,
Pehuenche, Loma Alta and Curilligue
environmental management system (EMS)
installation and its ISO 14,001
certification.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

F-104



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Note 34. Differences between Chilean and United States Generally Accepted Accounting Principles

Chilean GAAP varies in certain important respects from U.S. GAAP. Such
differences involve certain methods for measuring the amounts shown in the
financial statements.

Differences in Measurement Methods

The principal differences between Chilean GAAP and U.S. GAAP are described
below together with an explanation, where appropriate, of the method used in
the determination of the adjustments that affect net income and total
stockholders equity. References below to SFAS are to Statements of
Financial Accounting Standards issued by the Financial Accounting Standards
Board in the United States.

(a) Inflation accounting

The cumulative inflation rate in Chile as measured by the Consumer Price Index
for the three-year period ended December 31, 2002 was approximately 11.2%.
Pursuant to Chilean GAAP, the Companys financial statements recognize certain
effects of inflation. The inclusion of price-level adjustments in the
accompanying consolidated financial statements is considered appropriate under
the prolonged inflationary conditions affecting the Chilean economy even though
the cumulative inflation rate for the last three years does not exceed 100%.
As allowed pursuant to Form-20-F the reconciliation included herein of
consolidated net income, comprehensive income and shareholders equity, as
determined in accordance with U.S. GAAP, excludes adjustments attributable to
the effect of differences between the accounting for inflation under Chilean
GAAP versus U.S. GAAP.

(b) Reversal of revaluation of property, plant and equipment

In accordance with standards issued by the SVS., certain property, plant and
equipment are recorded in the financial statements at amounts determined in
accordance with a technical appraisal. The difference between the carrying
value and the revalued amount is included in shareholders equity, beginning in
1989, in Other reserves, and is subject to adjustments for price-level
restatement and depreciation. Revaluation of property, plant and equipment is
an accounting principle not generally accepted under U.S. GAAP, therefore, the
effects of the reversal of this revaluation, as well as of the related
accumulated depreciation and depreciation expense are included in paragraph
(bb) below.

(c) Depreciation of property, plant and equipment

Under Chilean GAAP, certain costs related to the cost of acquisition of Edesur
S.A., at the time of the acquisitions in 1992 and 1994 by Distrilec Inversora
S.A., were charged to earnings as incurred. Under U.S. GAAP, these costs would
have been included in the purchase price and would have been allocated to the
net assets acquired based upon fair values. For purposes of the reconciliation
to U.S. GAAP, these costs were considered to be a part a property, plant, and
equipment, the primary assets of Edesur S.A.

F-105



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

As discussed in paragraph (i), under Chilean GAAP, assets acquired and
liabilities assumed are recorded at their carrying value, and the excess of the
purchase price over the carrying value is recorded as goodwill. Under U.S.
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 is recorded as
goodwill. As part of the purchase of the majority ownership interest in
Endesa-Chile, under U.S. GAAP, the cost of the purchase price would have been
allocated to the fair value of property, plant and equipment.

The effect on shareholders equity and net income for the years presented is
included in paragraph (bb) below.

(d) Intangibles

Under Chilean GAAP, the Company has recorded intangible assets relating to the
transfer of revalued assets which originate in the predecessor company,
Compañía Chilena de Distribución Eléctrica S.A. at the time of the Companys
formation. Under U.S: GAAP, such intangible assets would not have been
recorded as the assets would have been recorded at the Predecessor Companys
carrying values. The effects of adjusting shareholders equity for the
intangible asset net of accumulated amortization, inclusive of accumulated
price-level restatement, and net income statement for the annual amortization
expense are included in paragraph (bb) below.

(e) Deferred income taxes

Under Chilean GAAP, until December 31, 1999, deferred income taxes were
recorded based on non-recurring timing differences between the recognition of
income and expense items for financial statement and tax purposes.
Accordingly, there was an orientation toward the income statement focusing on
differences in the timing of recognition of revenues and expenses in pre-tax
accounting income and taxable income. Chilean GAAP also permitted not
providing for deferred income taxes where a deferred tax asset or liability,
was either offsetting or not expected to be realized. Starting January 1,
2000, the Company recorded income taxes in accordance with Technical Bulletin
No. 60 of the Chilean Association of Accountants, recognizing, using the
liability method, the deferred tax effects of temporary differences between the
financial and tax values of assets and liabilities. As a transitional
provision, a contra (referred to as complementary) asset or liability has
been recorded offsetting the effects of the deferred tax assets and liabilities
not recorded prior to January 1, 2000. Such complementary asset or liability
are being amortized to income over the estimated average reversal periods
corresponding to the underlying temporary differences to which the deferred tax
asset or liability relates.

Under U.S. GAAP, companies must account for deferred taxes in accordance with
SFAS No. 109, which requires an asset and liability approach for financial
accounting and reporting of income taxes, under the following basic principles:



|i. |  | A deferred tax liability or asset is recognized for the estimated
future tax effects attributable to temporary differences and tax
loss carryforwards.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

F-106



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|ii. |  | 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.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|iii. |  | 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.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Temporary differences are defined as any difference between the financial
reporting basis and the tax basis of an asset and liability that at some future
date will reverse, thereby resulting in taxable income or expense. Temporary
differences ordinarily become taxable or deductible when the related asset is
recovered or the related liability is settled. A deferred tax liability or
asset represents the amount of taxes payable or refundable in future years as a
result of temporary differences at the end of the current year.

The principal difference relates to 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.
The effect of these differences on the net income and shareholders equity of
the Company is included in paragraph (bb) below.

(f) Severance indemnity

As described in Note 2 n, under the Companys employment contracts, it has
committed to provide a lump sum payment to each employee at the end of their
employment, whether due to death, termination, resignation or retirement.
Those obligations are calculated based on the present value of the liability
determined at each year-end based on the current salary and average service
life of each employee. The Company and certain of its subsidiaries used a real
discount rate of 9.5% for the years ended December 31, 2001 and 2002, and
assumed an average service life which varies based upon years of service with
the Company. The real annual discount rate does not include a projection of
inflation and, accordingly, future salary increases are also excluded from the
calculation of the obligation, because all such future increases are expected
to approximate the increase in inflation over a long-term period.

Under US GAAP, this arrangement is considered to be a termination indemnity
plan and should therefore be accounted for in accordance with SFAS No. 87,
Employers Accounting for Pensions. The liability would be measured by
projecting future expected payments using an assumed salary progression rate
and discounting the resulting amounts to their present value. In practice, the
Company believes that the salary progression rate will not differ significantly
from the general inflation rate. The application of U.S. GAAP would no have
produced results materially different from the acceptable method under Chilean
GAAP.

F-107



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(g) Pension and post-retirement benefits

The Company has obligations related to complementary pension plan benefits and
other post-retirement benefits as stipulated in collective bargaining
agreements. Under U.S. GAAP, post-retirement employee benefits have been
accounted for in accordance with SFAS No. 87 and SFAS No. 106. The effects of
accounting for post-retirement benefits under U.S. GAAP have been presented in
paragraph (bb).

(h) Investments in related companies

The Companys equity share of the effect of the adjustments from Chilean GAAP
to U.S. GAAP of equity accounted investees is included in paragraph (bb) below.
The principal U.S. GAAP adjustments affecting the Companys equity investees
are as follows:



|(a) |  | The recording of pension benefits in accordance with SFAS No. 87.
|--- |  | -----------------------------------------------------------------



|(b) |  | Reversal of complementary accounts (asset or liability) recorded as a
transitional provision as of January 1, 2000.
|--- |  | -------------------------------------------------------------------------------------------------------------------



|(c) |  | Organizational costs deferred under Chilean GAAP that, under U.S. GAAP,
should have been included in income.
|--- |  | ------------------------------------------------------------------------------------------------------------



|(d) |  | For the year beginning January 1, 2001, the recording of derivative
instruments in accordance with SFAS No. 133.
|--- |  | ----------------------------------------------------------------------------------------------------------------



|(e) |  | The deferred income tax effects of adjustments (a), (c) and (d).
|--- |  | ----------------------------------------------------------------



|(i) |  | Goodwill and long-lived assets
|--- |  | ------------------------------



|(i) |  | Under Chilean GAAP, assets
acquired and liabilities assumed
are recorded at their carrying
value, and the excess of the
purchase price over the carrying
value are recorded as goodwill.
Circular No. 1358, dated
December 3, 1997 issued by the
SVS, extended the maximum
amortization period of goodwill
to 20 years form the previous 10
years.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Under U.S. 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. Up until
December 31, 2001, the Company
amortized goodwill on a
straight-line basis over the
estimated useful lives of the
assets, ranging from 20 to 40
years. Goodwill acquired after
June 30, 2001 is not amortized
(see Note 34 II (o)). In
accordance with SFAS No. 142,
the Company discounted
amortizing goodwill on January
1, 2002. The effects of
recording the different
amortization periods and
reversing the amortization of
goodwill for 2002 are included
in paragraph (bb) below.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) |  | Under Chilean GAAP, the Company
has evaluated the carrying
amount of goodwill net of
negative goodwill for
impairment. The measurement of
the impairment loss was based on
the fair value of the investment
which the Company determined
using a discounted cash flow
approach and recent comparable
transactions in the market. In
order to estimate fair value,
the Company made assumptions
about future events that are
highly uncertain at the time of
estimation. The results of this
analysis showed that the
goodwill and negative goodwill
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-108



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | associated with investments in Argentina and Brazil were impaired because estimated future discounted cash flows were not
sufficient to recover goodwill and negative goodwill. During 2002, under Chilean GAAP the Company recorded a net charge related
to its investments in Central Costanera S.A., Hidroeléctrica El Chocón S.A., Hidroinvest S.A., Lajas Inversora S.A., Central
Eléctrica Cachoeira Dourada S.A., Cía. de Electricidade do Rio de Janeiro S.A., Coelce S.A., Distrelec Inversora S.A., Edesur
S.A., and Investluz S.A., in the amount of ThCh$236,434,558 net minority interest, to write-off all amounts of goodwill and
negative goodwill, see Note 13.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In accordance with U.S. GAAP, the Company adopted SFAS No. 142 Goodwill and Other Intangible Assets, (SFAS No. 142) as of
January 1, 2002. SFAS 142 applies to all goodwill and intangible assets acquired in a business combination. Under the new
standard, all goodwill, including that acquired before initial application of the standard, and indefinite-lived intangible
assets are not amortized, as of the effective date but must be tested for impairment at least annually. The transitional
impairment test required by the standard was performed and no adjustment for impairment was required. However, based on
subsequent testing of the Companys investments in Argentina and Brazil performed as of December 31, 2002, it was determined
that these investments were impaired. The following net effects are included in the net income (loss) and shareholders equity
reconciliation to U.S. GAAP under paragraph (bb) below:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | the reversal of goodwill amortization related to reporting units that were not found to be impaired under U.S.
GAAP for the year ended December 31, 2002, and adjustment of amortization goodwill which is different in amount
because of goodwill basis differences in 2000 and 2001.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | the adjustment to record the reversal of the impairment recorded under Chilean GAAP during 2002, which is
different in amount because of goodwill basis differences,
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | the adjustment to record the impairment under US GAAP from investment in Argentina and Brazil.
| | --- |  | ----------------------------------------------------------------------------------------------



| |  | The adjustment as of each year are as follows:
| |  | ----------------------------------------------

As of December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Adjustment of goodwill amortization
    
    
    (7,541,119
    )
    
    
    (1,099,881
    )
    
    
    53,928,310Reversal of impairment record under
Chilean GAAP
    
    
    
    
    
    
    
    
    
    
    452,415,861Impaiment of goodwill under US GAAP
    
    
    
    
    
    
    
    
    
    
    (600,380,013
    )Totals
    
    
    (7,541,119
    )
    
    
    (1,099,881
    )
    
    
    (94,035,842
    )


F-109



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | Had we adopted SFAS No 142 effective January 1, 2000 and accordingly not amortized goodwill for the years ended December 31, 2001 and 2000 our net gain (loss) and basic income (loss) per share should have been as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Net income (loss) under US GAAP
    
    
    74,431,407
    
    
    
    3,088,583
    
    
    
    (329,910,417
    )Goodwill amortization under US GAAP
    
    
    (79,254,926
    )
    
    
    (81,676,229
    )
    
    
    Adjusted net income (loss) under US GAAP
    
    
    153,686,333
    
    
    
    84,764,812
    
    
    
    (329,910,417
    )


2000
    
    2001
    
    2002Ch$
    
    Ch$
    
    Ch$Basic earnings per share:Reported net income (loss)
    
    
    10.4
    
    
    
    0.4
    
    
    
    (39.8
    )Goodwill amortization
    
    
    (11.0
    )
    
    
    (9.9
    )
    
    
    Adjusted net income (loss)
    
    
    21.4
    
    
    
    10.3
    
    
    
    (39.8
    )




|(iii) |  | The company has considered important factors, which could trigger an impairment review, such the following:
|----- |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Significant underperformance relative to expected historical or projected future operating results;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | Significant changes in the manner of use of the acquired assets or the strategy for our overall business; and
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | Significant negative industry or economic trends
| | - |  | ------------------------------------------------



| |  |  | In accordance with SFAS No.121, Accounting for the Impairment of Long-Lived Assets and for Long Lived Assets to Be Disposed Of during 2000 and 2001, which was superceded by SFAS No.144, Accounting for the Impairment or Disposa1 of
Long-Lived Assets beginning in 2002, the Company eva1uates the carrying amount of property, plant and equipment and other long-lived assets, in relation to the operating performance and future undiscounted cash flows of the underlying
business. These standards require that an impairment loss be recognized in the event that facts and circumstances indicate that the carrying amount of an asset may not be fully recoverable. Impairment is recorded based on an estimate of
future discounted cash flows, as compared to current carrying amounts. For the years ended December 31, 2000, 2001, and 2002, no additional amounts were recorded for impairment under U.S. GAAP, except for adjustments for this concept
recorded under Chilean GAAP in the subsidiaries Centrais Eléctrica Cachoeira Dourada S.A. and Inmobiliaria Manso de Velasco Limitada, which are included in other non-operating expenses (see Note 23). This amount are reclassified to operating
income for US GAAP purposes.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-110



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(j) Negative Goodwill

Under Chilean GAAP, the excess of the carrying value of the assets assumed in a
business combination over the purchase price is recorded as negative goodwill.
Circular No. 1358, dated December 3, 1997 issued by the SVS, extended the
maximum amortization period of negative goodwill to 20 years from the previous
5 years. Under U.S. GAAP, the fair values of the assets acquired less the fair
values of the liabilities assumed in excess of over the purchase price is
allocated proportionately to reduce the values assigned to non-current assets.
If the allocation reduces the non-current monetary assets to zero, the
remainder of the excess is recorded as a deferred credit account called
negative goodwill upon adoption of SFAS 142 in January 1, 2002 the excess will
no longer be deferred but recognized immediately in income. The effect of
reducing depreciation expense, due to the proportionate allocation of the
excess purchase price to property, plant and equipment, as compared to the
amortization of negative goodwill under Chilean GAAP and the reversal of
negative goodwill write-offs described in paragraph (i), which did not meet the
U.S. GAAP impairment criteria for long-lived assets under SFAS No. 144
described above, and conforming depreciation methods are included in paragraph
(bb) below.

(k) Capitalized interest and exchange differences

In accordance with Chilean GAAP, the Company has capitalized both interest on
debt directly related to property, plant and equipment under construction and
finance costs corresponding to exchange differences generated by the loans
associated with such assets. The capitalization of interest costs associated
with projects under construction is optional when incurred on debt that is not
directly related to such projects.

Under U.S. GAAP, the capitalization of interest on qualifying assets under
construction is required, regardless of whether interest is associated with
debt directly related to a project. In addition, under U.S. GAAP, foreign
translation exchange differences may not be capitalized. The accounting
differences between Chilean and U.S. GAAP for financing costs and the related
depreciation expense are included in the reconciliation to U.S. GAAP under
paragraph (bb) below.

(l) Accumulated deficit during the development stage

Under Chilean GAAP, the losses incurred during the development stage of
subsidiary companies is recorded directly in the parent companys equity.
Under U.S. GAAP, such costs must be charged to income as incurred. The effects
are included in paragraph (bb) below.

(m) Minimum dividend

As required by the Chilean Companies Act, unless otherwise decided by the
unanimous vote of the holders of issued and subscribed shares, the Company must
distribute a cash dividend in an amount equal to at least 30% of its net income
for each year as determined in accordance with Chilean GAAP, unless and except
to the extent the Company has unabsorbed prior year losses. Since the payment
of the 30% dividend out of each years income is required by Chilean law, an
accrual has been made in the reconciliation in paragraph (bb) below to reflect
the unrecorded dividend liability

F-111



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

for 2001, whenever and to the extent the recorded interim dividends do not
reach to 30% minimum dividend.

In April 2002, the meeting of shareholders decided, that dividends would
consist of the income from normal company operations defined as income before
amortization of negative goodwill in the income statement. Therefore, the
distributable profit at December 31, 2001 was zero, necessitating a reversal of
the prior year accrual under U.S. GAAP.

(n) Capitalized general and administrative expenses

Until 1993, Endesa-Chile capitalized a portion of its administrative and
selling expenses as part of the cost of construction in progress because a
substantial portion of the efforts of management were involved in the
administration of major projects. Under U.S. GAAP, general and administrative
expenses are charged to expense unless they can be directly identified with the
supervision of the construction of specific projects. The effects of
eliminating capitalized general and administrative expenses and the related
depreciation for U.S. GAAP purposes are shown below under paragraph (bb).

(o) Involuntary employee termination benefits

Under Chilean GAAP, the Argentine subsidiaries, Central Costanera and
Hidroelectricidad, recorded an accrual of certain involuntary employees
termination benefits related to the restructuring plan announced in 1997.
Since that date employees have continued to be made redundant pursuant to this
plan. In accordance with U.S. GAAP, at that time in order to recognize a
liability at the balance sheet date for the cost to terminate employees
involuntarily, there must be a plan that specifically includes notification to
employees prior to the balance sheet date. As of December 31, 2002, this
requirement had not been met. The effect of eliminating the accrued liability
recognized is presented in paragraph (bb) below.

(p) Adjustment in selling price of investment

Under Chilean GAAP, pursuant to the share transaction contract entered into in
1995 between Endesa-Chile and Endesa Overseas Co. with Enersis Intemational
Limited, Chilectra S.A. and Chilectra IntemationaI Limited, Endesa Argentina
recognized income related to an adjustment of the share purchase price. Under
U.S. GAAP, the contingent price adjustment would be considered a part of the
purchase price, and would therefore be offset against the amount of goodwill
that was originally determined. As described in paragraph (i), the Company determined goodwill amounts recorded in
investments in Argentina were impaired as of December 31, 2002, thus the
adjustment in selling price of investment is a basis difference between Chilean
and U.S. GAAP that will be eliminated after the impairment charge is recorded.
The effects of the adjustments to conform to U.S. GAAP are included under
paragraph (bb) below.

F-112



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(q) Elimination of capitalized legal reserve

Under Chilean GAAP, the Company capitalized interest to property, plant and
equipment as a result of the creation of a legal reserve specifically permitted
in Brazil for the electricity industry. Under U.S. GAAP, interest capitalized
must be based on actual interest incurred, and as such the effects of the
elimination of the interest capitalized to property, plant and equipment and
the effects on depreciation expense are included in paragraph (bb) below.

(r) Organizational and start-up costs

Certain costs related to the organization and creation of certain subsidiaries
of the Company are deferred and capitalized under Chilean GAAP and amortized.
Under U.S. GAAP, such organizational and start-up costs may not be deferred and
must be included in income as incurred. The effects of the difference are
included in paragraph (bb) below.

(s) Translation of Financial Statements of Investments Outside of Chile

Under Chilean GAAP, in accordance with Technical Bulletin 64 (B.T. 64) the
financial statements of foreign subsidiaries that operate in countries exposed
to significant risks (unstable countries), and that are not considered to be
an extension of the parent companys operations, are remeasured into US
dollars. The Companys foreign subsidiaries in Argentina, Perú, Brazil, and
Colombia all meet the criteria of foreign subsidiaries that operate in
countries exposed to significant risks under BT 64, and are remeasured into US
dollars. The Company has remeasured its foreign subsidiaries into US dollars
under this requirement as follows:



| |  | 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.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

Under BT 64, the investment in the foreign subsidiary is price-level restated,
the effects of which are reflected in income, while the effects of the foreign
exchange gains or losses between the Chilean Peso and the US dollar on the
foreign investment measured in US dollars, are reflected in equity in the
account Cumulative Translation Adjustment.

The amount of foreign exchange gain included in income that is attributable to
operations in unstable countries because these amounts have been remeasured
into US dollars was ThCh$39,503,788, ThCh$23,247,278 and ThCh$180,045,972 for the years ended December 31, 2000,
2001 and 2002, respectively (See Note 23 (a)).

In the opinion of the Company, the foreign currency translation procedures
described above are part of the comprehensive basis of preparation of
price-level adjusted financial statements required by Chilean GAAP. Inclusion
of inflation and translation effects in the financial statements is considered
appropriate under the inflationary conditions that have historically affected
the Chilean

F-113



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

economy, and accordingly, are not eliminated in the reconciliation to U.S. GAAP
as permitted by Form 20-F.

(t) Derivative instruments

Under Chilean GAAP, forward foreign exchange contracts and currency swaps are
used to hedge existing balance sheet risks or fair value hedges, while
interest swaps and collars are used to hedge against future transaction risks
or cash flow hedges. Fair value hedges are recorded at fair values with
losses recorded at the time of their estimation and gains deferred until the
transaction date or to the extent losses have been previously recorded, while
gains and losses from cash flow hedges are deferred as either an assets or a
liability until the transaction date. The hedging criteria and documentation
requirements under Chilean GAAP are less onerous than U.S. GAAP. Realized
gains and losses are recorded in Other non-operating income and expense.

Prior to January 1, 2001. under U.S. GAAP, contracts that were designated and
effective as hedges of existing assets and liabilities were recorded at the
closing spot exchange rate and included in earnings with the initial discount
or premium is amortized over the life of the contract as interest expense.
However, contracts not designated or effective as hedges were recorded at fair
value with the unrealized gains and losses recognized in income. For contracts
with fair values different from the values of the contracts at the closing spot
exchange rate, a difference between U.S. and Chilean GAAP resulted. The
effects of the difference were not considered material to the consolidated
financial statements and accordingly were not previously included in paragraph
(bb) below.

Currently under U.S. GAAP, the accounting for derivative instruments is
described in SFAS No. 133 Accounting for Certain Derivative Instruments and
Certain Hedging Activities (SFAS No. 133) and other complementary rules and
amendments. SFAS No. 133, as amended, establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative instruments fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative instruments gains
and losses to offset related results on the hedged item in the income
statement, to the extent effective, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.

The Company adopted SFAS No. 133, as amended, on January 1, 2001. SFAS No. 133
required that as of the date of initial adoption, the difference between the
market value of derivative instruments recorded on the balance sheet and the
previous carrying amount of those derivatives be reported in net income or
other comprehensive income, as appropriate, as the cumulative effect of a
change in accounting principle in accordance with Accounting Principles Board
Opinion No. 20, Accounting Changes. Statement 133 cannot be applied
retroactively. SFAS No. 133 must be applied to (a) derivative instruments and
(b) certain embedded derivative instruments. As permitted under this standard, the Company
has applied SFAS No. 133 to only those embedded instruments that were issued,
acquired, or substantively modified after January 1, 1999.

F-114



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

SFAS No. 133, in part, allows special hedge accounting for fair value and
cash flow hedges. SFAS No. 133 provides that the gain or loss on a derivative
instrument designated and qualifying as a fair value hedging instrument as
well as the offsetting loss or gain on the hedged item attributable to the
hedged risk be recognized currently in earnings in the same accounting period.
The accounting standard provides that the effective portion of the gain or loss
on a derivative instrument designated and qualifying as a cash flow hedging
instrument be reported as a component of other comprehensive income and be
reclassified into earnings in the same period or periods during which the
hedged forecasted transaction affects earnings. The remaining gain or loss on
the derivative instrument, if any, must be recognized currently in earnings.
While the Company enters into derivatives for the purpose of mitigating its
global financial and commodity risks, these operations do not meet the
documentation requirements to qualify for hedge accounting under U.S. GAAP.
Therefore changes in the respective fair values of all derivatives are reported
in earnings when they occur.

Current Chilean accounting rules do not consider the existence of derivative
instruments embedded in other contracts and therefore they are not reflected in
the financial statements. For U.S. GAAP purposes, certain implicit or explicit
terms included in host contracts that affect some or all of the cash flows or
the value of other exchanges required by the contract in a manner similar to a
derivative instrument, must be separated from the host contract and accounted
for at fair value. The Company separately measures embedded derivatives as
freestanding derivatives instruments at their estimated fair values recognizing
changes in earnings when they occur.

Estimates of fair values of financial instruments for which no quoted prices or
secondary market exists have been made using valuation techniques such as
forward pricing models, present value of estimated future cash flows, and other
modeling techniques. These estimates of fair value include assumptions made by
the Company about market variables that may change in the future. Changes in
assumptions could have a significant impact on the estimate of fair values
disclosed. As a result such fair value amounts are subject to significant
volatility and are highly dependent on the quality of the assumptions used.

The Company is also exposed to foreign currency risk arising from long-term
debt denominated in foreign currencies, the majority of which is the US dollar.
This risk is mitigated, as a substantial portion of the Companys revenues are
either directly or indirectly linked to the US dollar. Additionally, the
Company records the foreign exchange gains and losses on liabilities related to
net investments in foreign countries which are denominated in the same currency
as the functional currency of those foreign investments. Such unrealized gains
and losses are included in the cumulative translation adjustment account in
shareholders equity, and in this way act as a net investment hedge of the
exchange risk affecting the investments (see Note 11 (c) and Note 22 (e) for
further detail). The Company also uses short duration forward foreign currency
contracts and swaps, and cross-currency swaps, where possible, to manage its
risk related to foreign currency fluctuations.

The effect of adopting SFAS No. 133 as of January 1, 2001, resulted in a
cumulative effect on net income of ThCh$21,015,046 net of deferred taxes for
ThCh$46,575,921 and minority interest for ThCh$62,621,442, which is presented
under the caption Cumulative effect of changes in

F-115



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

accounting principles, the effects of the adjustment with respect to financial
derivatives, commodity derivatives, and embedded derivatives for the year ended
December 31, 2002 is included in the net income and shareholders equity
reconciliation to U.S. GAAP under paragraph (bb) below.

(u) Fair value of long-term debt assumed

As discussed in paragraph (i), under Chilean GAAP, assets acquired and
liabilities assumed are recorded at their carrying value, and the excess of the
purchased price over the carrying value are recorded as goodwill. Under U.S.
GAAP, assets acquired and liabilities assumed are recorded at their estimated
fair values, and the excess of the purchased price over the estimated fair
value of the net identifiable assets and liabilities acquired are recorded as
goodwill. As part of the purchase of the majority ownership interest in
Endesa-Chile, under U.S: GAAP, the cost of the purchase price would have been
allocated to the fair value of long-term debt. The effect on shareholders
equity and net income for the years presented is included in paragraph (bb)
below.

(v) Sale of subsidiaries

This corresponds to the reversal of the December 31, 1999 accumulated
adjustments to U.S. GAAP which under U.S. GAAP would have been included in the
determination of any gain or loss on sale made in connection with the
subsidiaries Compañía Nacional de Transmisión Eléctrica S.A. (Transelec), Aguas
Cordillera S.A., and Aguas Puerto S.A., as these subsidiaries were sold during
2000.

(w) Deferred income

During 2000, fiber optic cable was contributed to the Company in return for
granting the contributing company access to the fiber optic network after
installation in the Companys electricity distribution system. Under Chilean
GAAP, the contributed assets were recorded at their fair market value, with a
corresponding credit recognized as income in 2000. Under U.S. GAAP, this item,
the amount was deferred and amortize over the life of the related service
contract. This adjustment reverses the gain under Chile GAAP and records the
amortization of the deferred income under U.S. GAAP. The effect on
shareholders equity and net income for the years presented is included in (bb)
below.

(x) Regulated assets and deferred costs

The electricity sector in Chile and other countries of operation in Latin
America is regulated pursuant to the Chilean and other country electricity
laws. Most of the Companys sales are subject to node price regulation, which
is designed to ensure an adequate supply of energy at reasonable, determined
prices, which considers a variety of factors. The marginal cost pricing model
is not solely based upon costs incurred by the Company, and as a result, the
requirements of U.S. GAAP under SFAS No.71, Accounting for the Effects of
Certain Types of Regulation, related to a businesses whose rates are regulated
are not applicable to the Companys financial statements, except for the
Companys operations in Brazil as described below.

F-116



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

As a result of changes in Brazilian Electricity Laws and Regulations, the
Companys distribution subsidiaries in Brazil, Companhia de Electricidad do Rio
de Janeiro (Cerj) and Companhia Energética do Ceará (Coalce), are subject to
the provisions of SFAS No. 71 beginning on January 1, 2001. With the new
regulations issued by the National Agency of Electrictric Energy (ANEEL), the
rate-setting structure in Brazil is now designed to provide recovery for
allowable costs incurred, which will be recovered through future increases in
energy tariffs in order to recover losses experienced during the period of
Brazilian Federal Government mandated energy rationing from June 1, 2001 to
December 31, 2001. The Company estimates costs will be recovered over a period
estimated to be three years (as described in Note 5).

Accordingly, the Company capitalizes incurred costs as deferred regulatory
assets when there is a probable expectation that future revenue equal to the
costs incurred will be billed and collected as a direct result of the inclusion
of the costs in an increased rate set by the regulator. The deferred
regulatory asset is eliminated when the Company collects the related costs
through billings to customers. ANEEL perform a rate review on an annual basis.
If ANEEL excludes all or part of a cost from recovery, that portion of the
deferred regulatory assets is impaired and is accordingly reduced to the extent
of the excluded cost. The Company has recorded deferred regulatory assets,
which it expects to pass on to its customers in accordance with and subject to
regulatory provisions.

The regulations also included certain VPA costs, which are certain that each
distribution company is permitted to defer and pass on the their customers
using future rate adjustments. VPA costs are limited by concession contracts
to the cost of purchased power and certain other costs and taxes. Due to
uncertainly in the Brazilian economy, ANEEL delayed the approval of such VPA
rate increases. An Executive Order in October 2001 created a tracking account
mechanism, in order to calculate the variation in the VPA costs for future rate
adjustment calculation purposes. The Company has not recognized any regulatory
assets for VPA costs incurred prior to 2001, because costs incurred prior to
January 1, 2001, are not recoverable through the tracking account.

Under Chilean GAAP, the Company recognized revenue and deferred costs related
to the regulated assets. Under U.S. GAAP, in accordance with Emerging Issues
Taskforce (EITF) No. 92-7, Accounting by Rate Regulated Utilities for the
Effects of Certain Alternate Revenue Programs, revenue amounts not expected to
be collected within 24 months, have been deferred. The effect of deferring
revenues expected to be collected after two years is included in (bb) below.

(y) Reorganization of subsidiaries

Corresponds to the reorganization of the Companys subsidiaries Central
Costanera and Central Buenos Aires (CBA) during 2001, in which Central
Costanera acquired the minority interest in CBA from third parties and
exchanged shares with Endesa Argentina. Under Chilean GAAP, the Company
recorded the goodwill for the proportional minority interest acquired as the
difference between the purchase price and the carrying values of the assets
acquired and liabilities assumed. Under U.S. GAAP, the proportional fair value
of the assets acquired compared to the purchase price is recorded as goodwill.
The effect on shareholders equity is included in (bb) below.

F-117



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(z) |  | Assets held for sale
|--- |  | --------------------

Under Chilean GAAP the Company records divestitures of investments or assets in
the year in which they occur. Under U.S. GAAP, in accordance with SFAS No.
144,long-lived assets for which there is a plan to sell the assets within the
following year, shall be disclosed separately from the Companys other assets,
provided all the criteria are met. Additionally, long-lived assets classified
as held for sale must be measured at the lower of their carrying amount or fair
value less cost to sell. Long-lived assets shall not be depreciated while they
are classified as held for sale, while interest and other expenses attributable
to the liabilities of a disposal group classified as held for sale shall
continue to be accrued.

The Companys Board of Directors approved a plan to sell a number of the
Companys assets during October 2002. The following assets to be sold meet the
definition of segments, reporting units or long-lived assets held for sale:



| |  |  | Compañía Eléctrica del Río Maipo S.A.
| | - |  | -------------------------------------



| |  |  | Central Canutillar power plant
| | - |  | ------------------------------



| |  |  | Gas Atacama transmission lines
| | - |  | ------------------------------



| |  |  | CELTA transmission lines
| | - |  | ------------------------



| |  |  | Infraestructura 2000 S.A.
| | - |  | -------------------------

The Company evaluated the carrying values of all assets held for sale,
recording a loss to the extent that one of the assets fair values less cost to
sell was lower than the carrying value of those assets. Additionally, the
Company ceased recording depreciation expense once the assets met the
qualification criteria of held for sale, which varied from October to December
2002, no impairment was required to these assets as of December 31, 2002. The
effect of these adjustments is included in the net income and shareholders
equity reconciliation to U.S. GAAP under paragraph (bb) below.



|(aa) |  | Elimination of discontinued operations
|---- |  | --------------------------------------

Under Chilean GAAP, no restatement to the financial statement information
presented in previous years is required after a divestiture has occurred.
Under US GAAP, in accordance with SFAS No. 144, the discontinued operations of
a component must be retroactively separated from the continuing operations of
an entity, when the operations and cash flows of a component which will be
eliminated from the ongoing operations of an entity as a result of a disposal
transaction will not have any significant continuing involvement in the
operations of a component after the disposal transaction.

The Company evaluated whether any of the assets held for sale met either
criteria, noting that the transmission lines and power plant are not
components, as they are included as a part of larger cash flow generating
groups, and the operations of these assets cannot be separated from their
respective groups. Additionally, Endesa-Chile plans to continue generating
revenues from Canutillar through a purchase power agreement, management
agreement, and a transmission leasing arrangement with the future buyer.
Infraestructura 2000 S.A. does meet the conditions for discontinued operations
because it has distinct and separable financial results from operations and
cash flows. As a result of the disposal the results of operations of the
reporting unit have been eliminated from the ongoing operations of Enersis, as
Enersis will not have any continuing involvement in the operations of
Infraestructura 2000 S.A. after it is sold. The Rio Maipo facility was
classified as held for sale on December 31, 2002. In April, 2003, the
Company sold facility. In accordance with SFAS 144, the Company determined
that the Rio Maipo did not must the criteria to be classified as a discontinued
operations as of the Enersis will have a significant continuing involvement
through continuing sales to Rio Maipo though its subsidiary Endesa  Chile.
The effect of restating discontinued operations is included in the net income
reconciliation to U.S. GAAP under paragraph (bb) below.

F-118



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(bb) |  | Effect of conforming to U.S. GAAP
|---- |  | ---------------------------------

The reconciliation of reported net income required to conform with U.S. GAAP is
as follows:

For the year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Net income (loss)
in accordance with
Chilean GAAP
    
    
    95,661,404
    
    
    
    42,154,033
    
    
    
    (223,748,087
    )Reversal of
amortization of
revaluation of
property, plant and
equipment
(paragraph b)
    
    
    2,597,035
    
    
    
    1,899,779
    
    
    
    3,336,808Depreciation of
property, plant and
equipment and
difference in fixed
assets value at
acquisition date
(paragraph c)
    
    
    (1,459,538
    )
    
    
    (1,845,429
    )
    
    
    (5,455,684
    )Amortization of
intangibles
(paragraph d)
    
    
    1,373,576
    
    
    
    191,035
    
    
    
    121,840Deferred income
taxes (paragraph e)
    
    
    (69,517,707
    )
    
    
    (28,618,834
    )
    
    
    (21,149,128
    )Pension and
post-retirement
benefits (paragraph
g)
    
    
    (11,014,880
    )
    
    
    3,738,634
    
    
    
    23,130,027Investments in
related companies
(paragraph h)
    
    
    
    
    
    
    (18,119,651
    )
    
    
    20,860,935Amortization and
impairment of
goodwill (paragraph
i)
    
    
    (7,541,119
    )
    
    
    (1,099,881
    )
    
    
    (94,035,842
    )Amortization of
negative goodwill
(paragraph j)
    
    
    (19,035,079
    )
    
    
    (26,903,634
    )
    
    
    (82,314,299
    )Capitalized
interest and
exchange
differences
(paragraph k)
    
    
    34,392,221
    
    
    
    4,887,915
    
    
    
    (32,529,417
    )Accumulated deficit
during the
development stage
(paragraph l)
    
    
    156,769
    
    
    
    (411,369
    )
    
    
    (5,830,512
    )Capitalized general
and administrative
expenses (paragraph
n)
    
    
    (1,614,199
    )
    
    
    (126,967
    )
    
    
    1,958,425Involuntary
employee
termination
benefits (paragraph
o)
    
    
    (2,693,048
    )
    
    
    (8,797
    )
    
    
    (347,089
    )Adjustment in
selling price of
investment
(paragraph p)
    
    
    133,953
    
    
    
    (76,429
    )
    
    
    4,491,313Elimination of
amortization of
capitalized legal
reserve (paragraph
q)
    
    
    (3,338,239
    )
    
    
    591,479
    
    
    
    903,367Amortization of
organizational and
start-up costs
(paragraph r)
    
    
    821,187
    
    
    
    3,960,274
    
    
    
    5,365,083Derivative
instruments
(paragraph t)
    
    
    
    
    
    
    65,189,655
    
    
    
    (78,076,325
    )Fair value of
long-term debt
assumed (paragraph
u)
    
    
    133,411
    
    
    
    (174,229
    )
    
    
    (91,559
    )Sale of
subsidiaries
(paragraph v)
    
    
    21,574,004
    
    
    
    
    
    
    
    Deferred income
(paragraph w)
    
    
    (3,212,407
    )
    
    
    165,419
    
    
    
    274,829Regulated assets
(paragraph x)
    
    
    
    
    
    
    (41,903,240
    )
    
    
    (51,237,932
    )Reorganization of
subsidiaries
(paragraph y)
    
    
    
    
    
    
    
    
    
    
    (319,781
    )Asset held for sale
(paragraph z)
    
    
    
    
    
    
    
    
    
    
    (887,241
    )Reclassification of
discontinued
operations
(paragraph aa)
    
    
    (161,966
    )
    
    
    (358,538
    )
    
    
    (148,617
    )Effects of minority
interest on the
U.S. GAAP
adjustments
    
    
    58,059,875
    
    
    
    (4,203,667
    )
    
    
    127,629,376Deferred tax
effects on the U.S
GAAP adjustments
    
    
    (21,143,846
    )
    
    
    (17,138,430
    )
    
    
    78,023,974Reclassification
extraordinary gain
    
    
    
    
    
    
    (24,112,843
    )
    
    
    Net income (loss)
in accordance with
U.S. GAAP before
effect of
discontinued
operations,
extraordinary gain
and cumulative
effect of change in
accounting
principle
    
    
    74,171,407
    
    
    
    (42,323,715
    )
    
    
    (330,075,536
    )Income from
discontinued
operations net of
taxes and minority
interest (paragraph
aa)
    
    
    260,000
    
    
    
    284,410
    
    
    
    165,119Net income (loss)
in accordance with
U.S. GAAP before
effect of
extraordinary gain
and cumulative
effect of change in
accounting
principle
    
    
    74,431,407
    
    
    
    (42,039,305
    )
    
    
    (329,910,417
    )Extraordinary gain
(net of taxes)
    
    
    
    
    
    
    24,112,843Net income (loss)
in accordance with
U.S. GAAP before
cumulative effect
of change in
accounting
principle
    
    
    74,431,407
    
    
    
    (17,926,462
    )
    
    
    (329,910,417
    )Cumulative effect
of change in
accounting
principle, net of
the tax and
minority interest
    
    
    
    
    
    
    21,015,045
    
    
    
    Net income (loss)
in accordance with
U.S. GAAP
    
    
    74,431,407
    
    
    
    3,088,583
    
    
    
    (329,910,417
    )Other comprehensive
income (loss):Cumulative
translation
adjustment
determined under
Chilean GAAP
    
    
    1,336,996
    
    
    
    19,459,326
    
    
    
    20,596,914Cumulative
translation
adjustment related
to U.S GAAP
adjustments
    
    
    (4,410,079
    )
    
    
    (3,494,198
    )
    
    
    (12,536,493
    )Comprehensive
income (loss) in
accordance with
U.S.GAAP
    
    
    71,358,324
    
    
    
    19,053,711
    
    
    
    (321,849,996
    )


F-119



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The reconciliation to conform shareholders equity amounts to U.S. GAAP is as
follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Shareholders equity
in accordance with
Chilean GAAP
    
    
    1,214,561,981
    
    
    
    1,005,580,294Reversal of
revaluation of
property, plant and
equipment net of
accumulated
amortization
revaluation of
property, plant and
equipment (paragraph
b)
    
    
    (17,254,120
    )
    
    
    (14,150,945
    )Depreciation of
property, plant and
equipment and
difference in fixed
asset value at
acquisition date
(paragraph c)
    
    
    763,072
    
    
    
    (3,065,017
    )Intangibles
(paragraph d)
    
    
    (1,218,399
    )
    
    
    (1,096,559
    )Deferred income taxes
(paragraph e)
    
    
    (244,411,924
    )
    
    
    (277,953,317
    )Pension and
post-retirement
benefits (paragraph
g)
    
    
    (48,110,011
    )
    
    
    (29,532,561
    )Investments in
related companies
(paragraph h and
paragraph z)
    
    
    (17,385,748
    )
    
    
    4,286,240Goodwill (paragraph i)
    
    
    326,090,688
    
    
    
    236,394,374Negative goodwill
(paragraph j)
    
    
    (205,876,773
    )
    
    
    (298,291,399
    )Capitalized interest
and exchange
differences
(paragraph k)
    
    
    44,949,920
    
    
    
    16,939,438Minimum dividend
(paragraph m)
    
    
    (12,646,210
    )
    
    
    Capitalized general
and administrative
expenses (paragraph
n)
    
    
    (27,225,414
    )
    
    
    (25,675,535
    )Reversal of accrual
of certain
involuntary employee
termination benefits
(paragraph o)
    
    
    412,753
    
    
    
    92,700Adjustment in selling
price of investment
(paragraph p)
    
    
    (4,215,211
    )
    
    
    Elimination of
capitalized legal
reserve (paragraph q)
    
    
    (9,378,001
    )
    
    
    (9,362,051
    )Amortization
organizational and
start-up costs
(paragraph r)
    
    
    (39,325,555
    )
    
    
    (37,681,753
    )Derivative
instruments
(paragraph t)
    
    
    210,367,650
    
    
    
    149,900,318Fair value of
long-term debt
assumed (paragraph u)
    
    
    1,357,440
    
    
    
    1,265,881Reorganization of
subsidiaries
(paragraph y)
    
    
    5,997,065
    
    
    
    6,070,100Asset held for sale
(paragraph z)
    
    
    
    
    
    
    (887,241
    )Deferred income
(paragraph w)
    
    
    (3,391,114
    )
    
    
    (3,437,112
    )Regulated assets
(paragraph x)
    
    
    (41,903,240
    )
    
    
    (97,106,372
    )Effects of minority
interest on the U.S
GAAP adjustments
    
    
    96,667,003
    
    
    
    225,171,613Elimination of result
of discontinuing
operations
    
    
    
    
    
    
    724,763Deferred tax effects
on the U.S. GAAP
adjustments
    
    
    (74,152,019
    )
    
    
    (2,715,812
    )Shareholders equity
in accordance with
U.S. GAAP
    
    
    1,154,673,833
    
    
    
    845,470,047


The changes in shareholders equity in U.S. GAAP as of each year-end are as
follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Shareholders equity
in accordance with
U.S. GAAP  January
1,
    
    
    1,131,339,028
    
    
    
    1,154,673,833Dividends paid
during the year
    
    
    (15,426,129
    )
    
    
    Reversal of
dividends payable
as of previous
balance sheet date
    
    
    28,698,421
    
    
    
    12,646,210Minimum dividend
(paragraph m)
    
    
    (12,646,210
    )
    
    
    Cumulative
translation
adjustment
    
    
    15,965,128
    
    
    
    8,060,421Reorganization of
subsidiaries
(paragraph y)
    
    
    3,655,011
    
    
    
    Net income (loss)
in accordance with
U.S. GAAP for the
year
    
    
    3,088,584
    
    
    
    (329,910,417
    )Shareholders equity
in accordance with
U.S.GAAP-December
31,
    
    
    1,154,673,833
    
    
    
    845,470,047


F-120



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

II. Additional disclosure requirements:



|(a) |  | Goodwill and negative goodwill
|--- |  | ------------------------------

The following is an analysis of goodwill and negative goodwill, determined on
Chilean GAAP basis, as of December 31, 2001 and 2002, respectively:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Goodwill
    
    
    1,652,861,416
    
    
    
    1,235,470,632Less: accumulated amortization
    
    
    (334,028,823
    )
    
    
    (387,957,133
    )Goodwill, net
    
    
    1,318,832,593
    
    
    
    847,513,499Negative goodwill
    
    
    (382,125,693
    )
    
    
    (342,816,906
    )Less: accumulated amortization
    
    
    200,931,133
    
    
    
    247,643,956Negative goodwill, net
    
    
    (181,194,560
    )
    
    
    (95,172,950
    )




|(b) |  | Basis and diluted earnings per share:
|--- |  | -------------------------------------

For the year ended December 31,2000
    
    2001
    
    2002Ch$
    
    Ch$
    
    Ch$Chilean GAAP (loss) earnings per
share
    
    
    13.32
    
    
    
    5.08
    
    
    
    (26.99
    )U.S. GAAP (loss) earnings per share:U.S. GAAP (loss) earnings per share
before effect of discontinued
operations, extraordinary gain and
cumulative effect of change in
accounting principle
    
    
    10.33
    
    
    
    (5.10
    )
    
    
    (39.81
    )Discontinued operations (net of tax)
    
    
    0.04
    
    
    
    0.03
    
    
    
    0.02U.S. GAAP (loss) earnings per share
before effect of extraordinary gain
and cumulative effect of change in
accounting principle
    
    
    10.37
    
    
    
    (5.07
    )
    
    
    (39.79
    )Extraordinary gain (net of tax)
    
    
    
    
    
    
    2.91
    
    
    
    U.S. GAAP (loss) earnings per share
before cumulative effect of change
in accounting principle
    
    
    10.37
    
    
    
    (2.16
    )
    
    
    (39.79
    )Cumulative effect of change in
accounting principle (net of tax)
    
    
    
    
    
    
    2.53
    
    
    
    Basic and diluted U.S. GAAP (loss)
earnings per share
    
    
    10.37
    
    
    
    0.37
    
    
    
    (39.79
    )Weighted average number of common
shares outstanding (000s)
    
    
    7,180,409
    
    
    
    8,291,020
    
    
    
    8,291,020




|(1) |  | The earnings per share figures for both U.S. GAAP and Chilean GAAP purposes have been calculated by dividing the respective earnings (loss) amounts in accordance with U.S.
GAAP and Chilean GAAP, respectively, by the weighted average number of common shares outstanding during the year. The Company has not issued convertible debt or equity
securities. Consequently, there are no potentially dilutive effects on the earnings per share of the Company.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-121



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(c) |  | Income taxes:
|--- |  | -------------

The provision (benefit) for income taxes charged to the results of operations
determined in accordance with U.S. GAAP is a follows:

2000Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under
Chilean GAAPCurrent income taxes
as determined under
Chilean GAAP (1)
    
    
    65,016,882
    
    
    
    38,213,657
    
    
    
    1,288,064
    
    
    
    21,480,003
    
    
    
    33,103,382
    
    
    
    321,727
    
    
    
    159,423,715Deferred income taxes
as determined under
Chilean GAAP
    
    
    (8,963,932
    )
    
    
    661,396
    
    
    
    16,646,200
    
    
    
    (23,941,812
    )
    
    
    (1,705,564
    )
    
    
    
    
    
    
    (17,303,712
    )Total income tax
provision under
Chilean GAAP
    
    
    56,052,950
    
    
    
    38,875,053
    
    
    
    17,934,264
    
    
    
    (2,461,809
    )
    
    
    31,397,818
    
    
    
    321,727
    
    
    
    142,120,003U.S. GAAP adjustments:Deferred tax effect
of applying SFAS No
109
    
    
    9,209,924
    
    
    
    (5,563,761
    )
    
    
    10,295,909
    
    
    
    54,698,116
    
    
    
    877,519
    
    
    
    
    
    
    
    69,517,707Deferred tax effect
of adjustments to
U.S. GAAP
    
    
    (331,518
    )
    
    
    5,685,557
    
    
    
    78,602
    
    
    
    15,804,001
    
    
    
    
    
    
    
    
    
    
    
    21,236,642Total U.S. GAAP
adjustments
    
    
    8,878,406
    
    
    
    121,796
    
    
    
    10,374,511
    
    
    
    70,502,117
    
    
    
    877,519
    
    
    
    
    
    
    
    90,754,349Total Income tax provision
under U.S. GAAP
    
    
    64,931,356
    
    
    
    38,996,849
    
    
    
    28,308,775
    
    
    
    68,040,308
    
    
    
    32,275,337
    
    
    
    321,727
    
    
    
    232,874,352


2001Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under
Chilean GAAPCurrent income taxes
as determined under
Chilean GAAP (1)
    
    
    12,794,860
    
    
    
    45,203,098
    
    
    
    8,212,337
    
    
    
    22,660,803
    
    
    
    31,499,043
    
    
    
    71,781
    
    
    
    120,441,922Deferred income taxes
as determined under
Chilean GAAP
    
    
    6,062,958
    
    
    
    2,397,955
    
    
    
    13,173,620
    
    
    
    (13,678,191
    )
    
    
    172,468
    
    
    
    
    
    
    
    8,128,810Total income tax
provision under
Chilean GAAP
    
    
    18,857,818
    
    
    
    47,601,053
    
    
    
    21,385,957
    
    
    
    8,982,612
    
    
    
    31,671,511
    
    
    
    71,781
    
    
    
    128,570,732U.S. GAAP adjustments:Deferred tax effect
of applying SFAS No
109
    
    
    994,832
    
    
    
    23,387,331
    
    
    
    690,007
    
    
    
    3,382,515
    
    
    
    164,149
    
    
    
    
    
    
    
    28,618,834Deferred tax effect
of adjustments to
U.S. GAAP
    
    
    (2,963,740
    )
    
    
    3,033,510
    
    
    
    (776,899
    )
    
    
    (6,378,222
    )
    
    
    24,355,649
    
    
    
    
    
    
    
    17,270,298Deferred tax effect
of comulative effect
of change in
accounting principle
    
    
    (1,841,380
    )
    
    
    41,529,856
    
    
    
    214,348
    
    
    
    (203,244
    )
    
    
    6,876,341
    
    
    
    
    
    
    
    46,575,921Total U.S. GAAP
adjustments:
    
    
    (3,810,288
    )
    
    
    67,950,697
    
    
    
    127,456
    
    
    
    (3,198,951
    )
    
    
    31,396,139
    
    
    
    
    
    
    
    92,465,053Total Income tax provision
under U.S. GAAP
    
    
    15,047,530
    
    
    
    115,551,750
    
    
    
    21,513,413
    
    
    
    5,783,661
    
    
    
    63,067,650
    
    
    
    71,781
    
    
    
    221,035,785


2002Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Income tax provision under
Chilean GAAPCurrent income taxes
as determined under
Chilean GAAP
    
    
    13,292,208
    
    
    
    (62,123
    )
    
    
    12,661,339
    
    
    
    2,602,883
    
    
    
    45,248,145
    
    
    
    
    
    
    
    73,742,452Deferred income taxes
as determined under
Chilean GAAP
    
    
    3,214,739
    
    
    
    (34,075,899
    )
    
    
    30,322,409
    
    
    
    (5,879,658
    )
    
    
    (1,307,058
    )
    
    
    
    
    
    
    (7,725,467
    )Total income tax
provision under
Chilean GAAP
    
    
    16,506,947
    
    
    
    (34,138,022
    )
    
    
    42,983,748
    
    
    
    (3,276,775
    )
    
    
    43,941,087
    
    
    
    
    
    
    
    66,016,985U.S. GAAP adjustments:Deferred tax effect
of applying SFAS No
109
    
    
    2,298,780
    
    
    
    (30,426,372
    )
    
    
    21,488,911
    
    
    
    24,299,705
    
    
    
    3,488,104
    
    
    
    
    
    
    
    21,149,128Deferred tax effect
of adjustments to
U.S. GAAP
    
    
    (13,217,783
    )
    
    
    13,786,982
    
    
    
    (21,585,415
    )
    
    
    (20,363,366
    )
    
    
    (36,644,392
    )
    
    
    
    
    
    
    (78,023,974
    )Total U.S. GAAP
adjustments:
    
    
    (10,919,003
    )
    
    
    (16,639,390
    )
    
    
    (96,504
    )
    
    
    3,936,339
    
    
    
    (33,156,288
    )
    
    
    
    
    
    
    (56,874,846
    )Total Income tax provision
under U.S. GAAP
    
    
    5,587,944
    
    
    
    (50,777,412
    )
    
    
    42,887,244
    
    
    
    659,564
    
    
    
    10,784,799
    
    
    
    
    
    
    
    9,142,139




|(1) |  | The income tax provisions under Chilean GAAP for the years ended December 31, 2000 and 2001 are stated
net of income tax recovery of ThCh$4,207,583 and ThCh$8,116,807.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-122



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Deferred tax assets (liabilities) as of balance sheet dates are summarized s
follows:

As of December 31, 2001
    
    As of December 31, 2002SFAS No. 109
    
    
    
    
    
    
    
    
    
    SFAS No. 109Applied to
    
    SFAS No.
    
    Total
    
    Applied to
    
    SFAS No.
    
    TotalChilean
    
    109 applied
    
    Deferred
    
    Chilean
    
    109 applied
    
    DeferredGAAP
    
    to U.S. GAAP
    
    Taxes under
    
    GAAP
    
    to U.S. GAAP
    
    Taxes underBalances
    
    Adjustments
    
    SFAS No. 109
    
    Balances
    
    Adjustments
    
    SFAS No. 109ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Deferred income tax assetsProperty, plant and
equipment
    
    
    6,976,342
    
    
    
    4,386,013
    
    
    
    11,362,355
    
    
    
    6,032,020
    
    
    
    13,837,806
    
    
    
    19,869,826Regulated assets and
related deferred cost
(conpanies in Brazil)
    
    
    
    
    
    
    14,247,101
    
    
    
    14,247,101
    
    
    
    
    
    
    
    33,016,167
    
    
    
    33,016,167Negative goodwill
    
    
    
    
    
    
    8,406,250
    
    
    
    8,406,250
    
    
    
    
    
    
    
    22,148,453
    
    
    
    22,148,453Allowance for doubtful
accounts
    
    
    38,334,751
    
    
    
    
    
    
    
    38,334,751
    
    
    
    32,217,765
    
    
    
    
    
    
    
    32,217,765Actuarial deficit
(companies in Brazil)
    
    
    7,487,563
    
    
    
    
    
    
    
    7,487,563
    
    
    
    6,766,431
    
    
    
    
    
    
    
    6,766,431Deferred income
    
    
    2,507,334
    
    
    
    1,152,980
    
    
    
    3,660,314
    
    
    
    2,746,091
    
    
    
    1,168,618
    
    
    
    3,914,709With-holdings
    
    
    2,164,150
    
    
    
    
    
    
    
    2,164,150
    
    
    
    3,252,750
    
    
    
    
    
    
    
    3,252,750Provision real estate
projects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,656,047
    
    
    
    
    
    
    
    2,656,047Derivative contracts
    
    
    1,003,760
    
    
    
    7,555,125
    
    
    
    8,558,885
    
    
    
    584,992
    
    
    
    8,998,383
    
    
    
    9,583,375Severance indemnities
    
    
    4,166
    
    
    
    
    
    
    
    4,166
    
    
    
    5,248
    
    
    
    415,266
    
    
    
    420,514Vacation accrual
    
    
    1,395,215
    
    
    
    
    
    
    
    1,395,215
    
    
    
    1,211,297
    
    
    
    
    
    
    
    1,211,297Post retirement benefits
    
    
    499,032
    
    
    
    16,365,659
    
    
    
    16,864,691
    
    
    
    1,627,336
    
    
    
    10,850,823
    
    
    
    12,478,159Tax loss carryforwards (1)
    
    
    80,072,911
    
    
    
    
    
    
    
    80,072,911
    
    
    
    116,468,223
    
    
    
    
    
    
    
    116,468,223Contingencies
    
    
    46,795,319
    
    
    
    
    
    
    
    46,795,319
    
    
    
    50,931,732
    
    
    
    
    
    
    
    50,931,732Finance costs
    
    
    194,771
    
    
    
    
    
    
    
    194,771
    
    
    
    117,034
    
    
    
    
    
    
    
    117,034Salaries for
construction-in progress
    
    
    5,843,294
    
    
    
    
    
    
    
    5,843,294
    
    
    
    3,926,807
    
    
    
    5,583,440
    
    
    
    9,510,247Exchange difference
-subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,155,480
    
    
    
    
    
    
    
    5,155,480Valuation allowance
    
    
    (3,322,326
    )
    
    
    
    
    
    
    (3,322,326
    )
    
    
    (3,448,901
    )
    
    
    
    
    
    
    (3,448,901
    )Total deferred income tax
assets
    
    
    189,956,282
    
    
    
    52,113,128
    
    
    
    242,069,410
    
    
    
    230,250,352
    
    
    
    96,018,956
    
    
    
    326,269,308Deferred income tax
liabilitiesNegative goodwill
    
    
    
    
    
    
    1,927,532
    
    
    
    1,927,532
    
    
    
    
    
    
    
    
    
    
    
    Property, plant and
equipment
    
    
    388,356,194
    
    
    
    6,019,514
    
    
    
    394,375,708
    
    
    
    459,271,816
    
    
    
    5,229,011
    
    
    
    464,500,827Severance indemnities
    
    
    1,954,040
    
    
    
    
    
    
    
    1,954,040
    
    
    
    814,241
    
    
    
    
    
    
    
    814,241Intangibles
    
    
    24,954
    
    
    
    
    
    
    
    24,954
    
    
    
    
    
    
    
    
    
    
    
    Regulated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,828,000
    
    
    
    
    
    
    
    3,828,000Deferred charges
    
    
    1,510,731
    
    
    
    
    
    
    
    1,510,731
    
    
    
    
    
    
    
    
    
    
    
    Actuarial deficit
(companies in Brazil)
    
    
    5,570,625
    
    
    
    
    
    
    
    5,570,625
    
    
    
    2,301,708
    
    
    
    
    
    
    
    2,301,708Finance costs
    
    
    8,304,618
    
    
    
    
    
    
    
    8,304,618
    
    
    
    13,755,855
    
    
    
    
    
    
    
    13,755,855Derivative contracts
    
    
    512,289
    
    
    
    86,306,393
    
    
    
    86,818,682
    
    
    
    
    
    
    
    69,744,951
    
    
    
    69,744,951Bond discount
    
    
    2,126,014
    
    
    
    
    
    
    
    2,126,014
    
    
    
    1,871,635
    
    
    
    
    
    
    
    1,871,635Cost of studies
    
    
    4,675,640
    
    
    
    
    
    
    
    4,675,640
    
    
    
    7,972,554
    
    
    
    
    
    
    
    7,972,554Imputed interest on
construction
    
    
    4,830,117
    
    
    
    
    
    
    
    4,830,117
    
    
    
    4,863,433
    
    
    
    
    
    
    
    4,863,433With-holdings
    
    
    5,659
    
    
    
    
    
    
    
    5,659
    
    
    
    198,638
    
    
    
    
    
    
    
    198,638Materials used
    
    
    3,349,399
    
    
    
    
    
    
    
    3,349,399
    
    
    
    1,086,289
    
    
    
    
    
    
    
    1,086,289Hid. El Chocón investment
    
    
    119,374
    
    
    
    
    
    
    
    119,374
    
    
    
    2,897,791
    
    
    
    
    
    
    
    2,897,791Capitalized expenses
    
    
    5,059,362
    
    
    
    
    
    
    
    5,059,362
    
    
    
    3,883,070
    
    
    
    
    
    
    
    3,883,070Capitalized interest
    
    
    
    
    
    
    26,738,515
    
    
    
    26,738,515
    
    
    
    
    
    
    
    20,896,091
    
    
    
    20,896,091Post retirement benefits
    
    
    559
    
    
    
    8,255
    
    
    
    8,814
    
    
    
    1,033
    
    
    
    525,304
    
    
    
    526,337Contingencies
    
    
    10,311,653
    
    
    
    
    
    
    
    10,311,653
    
    
    
    13,767,462
    
    
    
    
    
    
    
    13,767,462Others
    
    
    
    
    
    
    229,961
    
    
    
    229,961
    
    
    
    
    
    
    
    2,339,411
    
    
    
    2,339,411Differences between the
financial and tax value of
Río Maipo S.A.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,475,222
    
    
    
    
    
    
    
    1,475,222Total deferred income tax
liabilities
    
    
    436,711,228
    
    
    
    121,230,170
    
    
    
    557,941,398
    
    
    
    517,988,747
    
    
    
    98,734,768
    
    
    
    616,723,515Net deferred assets
(liabilities)
    
    
    (246,754,946
    )
    
    
    (69,117,042
    )
    
    
    (315,871,988
    )
    
    
    (287,738,395
    )
    
    
    (2,715,812
    )
    
    
    (290,454,207
    )




|(1) |  | Tax loss carryforwards relate primarily to Peruvian, Chilean and Brazilian entities. In accordance with the
current enacted tax law in Chile and Brazil, such tax losses may be carried-forward indefinitely, however
Peruvian tax carryforwards expire after five years.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-123



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

A reconciliation of the Chilean Statutory Income Tax rate to the Companys
effective tax rate on net income is as follows:

2000Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Statutory Chilean
tax
    
    
    42,274,015
    
    
    
    20,326,388
    
    
    
    12,194,040
    
    
    
    6,526,106
    
    
    
    16,240,891
    
    
    
    (32,646,249
    )
    
    
    64,915,191Effect of higher
foreign tax rates
    
    
    
    
    
    
    18,710,018
    
    
    
    8,064,200
    
    
    
    1,091,686
    
    
    
    8,940,850
    
    
    
    (3,439,430
    )
    
    
    33,367,324Increase (decrease)
in rates resulting
from:Price-level
restatement not
accepted for tax
purposes
    
    
    8,795,897
    
    
    
    (305,904
    )
    
    
    2,898,307
    
    
    
    (5,955,061
    )
    
    
    4,666,333
    
    
    
    
    
    
    
    10,099,572Non-taxable items
    
    
    (24,795,443
    )
    
    
    267,276
    
    
    
    4,808,544
    
    
    
    2,240,689
    
    
    
    5,065,308
    
    
    
    36,085,678
    
    
    
    23,672,052Non-deductible items
    
    
    40,180,413
    
    
    
    6,590,676
    
    
    
    
    
    
    
    (8,077,733
    )
    
    
    (887,189
    )
    
    
    
    
    
    
    37,806,167Prior years income
tax
    
    
    (1,575,934
    )
    
    
    (6,157,565
    )
    
    
    343,646
    
    
    
    69,386,194
    
    
    
    
    
    
    
    
    
    
    
    61,996,341Other
    
    
    52,408
    
    
    
    (434,042
    )
    
    
    39
    
    
    
    2,828,427
    
    
    
    (1,750,855
    )
    
    
    321,727
    
    
    
    1,017,704Tax expense at
effective tax rate
    
    
    64,931,356
    
    
    
    38,996,847
    
    
    
    28,308,776
    
    
    
    68,040,308
    
    
    
    32,275,338
    
    
    
    321,726
    
    
    
    232,874,351


2001Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Statutory Chilean
tax
    
    
    35,207,167
    
    
    
    33,046,613
    
    
    
    8,262,496
    
    
    
    (750,031
    )
    
    
    19,766,103
    
    
    
    (32,573,861
    )
    
    
    62,958,487Effect of higher
foreign tax rates
    
    
    
    
    
    
    63,649,632
    
    
    
    16,461,874
    
    
    
    1,640,641
    
    
    
    30,099,172
    
    
    
    (6,560,221
    )
    
    
    105,291,098Increase (decrease)
in rates resulting
from:Price-level
restatement not
accepted for tax
purposes
    
    
    10,831,171
    
    
    
    (471,398
    )
    
    
    (472,813
    )
    
    
    (1,154,998
    )
    
    
    14,976,551
    
    
    
    
    
    
    
    23,708,513Non-taxable items
    
    
    (21,005,978
    )
    
    
    12,895,204
    
    
    
    4,689,412
    
    
    
    94,672
    
    
    
    
    
    
    
    39,134,083
    
    
    
    35,807,393Non-deductible items
    
    
    (24,172,189
    )
    
    
    20,330,824
    
    
    
    (7,574,107
    )
    
    
    (316,500
    )
    
    
    (719,668
    )
    
    
    
    
    
    
    (12,451,640
    )Prior years income
tax
    
    
    1,986,643
    
    
    
    
    
    
    
    401,288
    
    
    
    (2,163,759
    )
    
    
    
    
    
    
    
    
    
    
    224,172Effect of Chilean
tax rate increase
    
    
    8,212,618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,212,618Other
    
    
    3,988,096
    
    
    
    (13,899,124
    )
    
    
    (254,737
    )
    
    
    8,433,636
    
    
    
    (1,054,508
    )
    
    
    71,781
    
    
    
    (2,714,856
    )Tax expense at
effective tax rate
    
    
    15,047,528
    
    
    
    115,551,751
    
    
    
    21,513,413
    
    
    
    5,783,661
    
    
    
    63,067,650
    
    
    
    71,782
    
    
    
    221,035,785


2002Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    Other
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Statutory Chilean
tax
    
    
    (66,503,282
    )
    
    
    165,774
    
    
    
    12,985,063
    
    
    
    (74,011,455
    )
    
    
    6,766,510
    
    
    
    
    
    
    
    (120,597,390
    )Effect of higher
foreign tax rates
    
    
    426,279
    
    
    
    196,856
    
    
    
    14,202,414
    
    
    
    (57,760,020
    )
    
    
    (6,900,286
    )
    
    
    
    
    
    
    (49,834,757
    )Increase (decrease)
in rates resulting
from:Price-level
restatement not
accepted for tax
purposes
    
    
    6,829,025
    
    
    
    (23,354,798
    )
    
    
    565,546
    
    
    
    1,932,546
    
    
    
    13,543,094
    
    
    
    
    
    
    
    (484,587
    )Non-taxable items
    
    
    (1,268,782
    )
    
    
    7,828,561
    
    
    
    8,312,037
    
    
    
    43,976,453
    
    
    
    (199
    )
    
    
    
    
    
    
    58,848,070Non-deductible items
    
    
    64,855,138
    
    
    
    (35,286,731
    )
    
    
    6,987,296
    
    
    
    87,266,915
    
    
    
    (4,057,934
    )
    
    
    
    
    
    
    119,764,684Prior years income
tax
    
    
    2,669,791
    
    
    
    
    
    
    
    1,354,580
    
    
    
    
    
    
    
    (509,651
    )
    
    
    
    
    
    
    3,514,720Other
    
    
    (1,420,225
    )
    
    
    (327,074
    )
    
    
    (1,519,692
    )
    
    
    (744,875
    )
    
    
    1,943,265
    
    
    
    
    
    
    
    (2,068,601
    )Tax (benefit)
expense at
effective tax rate
    
    
    5,587,944
    
    
    
    (50,777,412
    )
    
    
    42,887,244
    
    
    
    659,564
    
    
    
    10,784,799
    
    
    
    
    
    
    
    9,142,139


F-124



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(d) Acquisitions

In May of 2002, Enersis S.A. acquired 6,824,495 Sociedad Inversiones Distrilima
S.A. shares equivalent to 1.14% of issued capital for US$1,767,761.22
increasing its direct interest from 14.79% to 15.93%.

In February and April of 2002 Enersis S.A. made contributions of
US$22,773,195.87 to Central Generadora Termelétrica Fortalez S.A. for a capital
increase, maintaining its 48.82% interest equivalent to 20,246,908 shares.

During 2002, Lajas Inversora (Endesa subsidiary) acquired 753,627 (0.0803%) of
Central Eléctrica Cachoeira Dourada S.A. (Brasil) shares for Th$58,931,
increasing its interest to 99.59% in said Company.

On September 13, 2002, Endesa acquired 7,275,433 (2.51%) Pangue S.A. (Chile)
shares for Th$4,998,894, increasing its interest to 94.97% in said Company.

Debenture capitalization in Cerj
On July 11, 2002, the Company Luz de Río Ltda. and Endesa International Energía
Ltda., holders of convertible bonds issued by Companhía de Electricidade do Río
de Janeiro, exercised the option to capitalize their investment. To that
effect, 420,705,127,532 no par value shares were issued.

During the year ended December 31, 2001, the Company did not have significant
acquisitions.

For acquisitions accounted as a business combination using the purchase method,
assets and liabilities have been consolidated as of the purchase date and
earnings from the acquisitions have been included in consolidated earnings of
the Company from to the purchase date.



|(e) |  | Segment disclosures
|--- |  | -------------------

The Company is primarily engaged in the distribution, generation and
transmission of electricity in Chile, Argentina, Brazil, Colombia and Perú.
Enersis provides these and other services through four business segments:



| |  | Generation
|- |  | ----------



| |  | Distribution
|- |  | ------------



| |  | Engineering Services and Real State
|- |  | -----------------------------------



| |  | Corporate and other
|- |  | -------------------

F-125



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Generation involves the generation of electricity primarily through its
subsidiary Endesa-Chile. Distribution involves the supply of electricity to
regulated and unregulated customers. Engineering Services and Real Estate
includes engineering services and real estate development. Corporate and other
includes computer-related data processing services and the sale of
electric-related supplies and equipment. The Companys reportable segments are
strategic business units that offer different products and services and are
managed separately. The methods of revenue recognition by segment are as
follows:



| |  | Generation
|- |  | ----------

Revenue is recognized when energy and power output is delivered and capacity is
provided at rates specified under contract terms or prevailing market rates.



| |  | Distribution  Operating Revenues
|- |  | ---------------------------------

Revenue is recognized when energy and power is provided at rates specified
under contract terms or prevailing market rates.



| |  | Distribution  Non Operating Revenues
|- |  | -------------------------------------

Revenue is recognized as services are provided, such as public light posts,
telephone poles, and other services related to distribution services.



| |  | Engineering Services and Real Estate
|- |  | ------------------------------------

Revenue is recognized as services are provided, or when projects are sold.



| |  | Corporate and Other
|- |  | -------------------

Revenue is recognized as services are provided, or when supplies or equipment
are sold.

F-126



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The following segment information has been disclosed in accordance with U.S.
reporting requirements, however, the information presented has been determined
in accordance with Chilean GAAP:

Engineeringservices and
    
    Corparate2000
    
    Generation
    
    Distribution
    
    real estate
    
    and other
    
    Eliminations
    
    ConsolidatedThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Sales to
unaffilated
customers
    
    
    700,831,148
    
    
    
    1,972,978,680
    
    
    
    47,820,038
    
    
    
    35,417,231
    
    
    
    
    
    
    
    2,757,047,097Intersegment sales
    
    
    236,819,167
    
    
    
    29,428,862
    
    
    
    32,294,269
    
    
    
    25,803,150
    
    
    
    (324,345,448
    )Total revenues
    
    
    937,650,315
    
    
    
    2,002,407,542
    
    
    
    80,114,307
    
    
    
    61,220,381
    
    
    
    (324,345,448
    )
    
    
    2,757,047,097Operating income
    
    
    266,929,009
    
    
    
    271,970,486
    
    
    
    14,955,921
    
    
    
    (8,807,981
    )
    
    
    7,702,184
    
    
    
    552,749,619Participation in
net income of
affialate companies
    
    
    
    
    
    
    
    
    
    
    3,556
    
    
    
    73,197
    
    
    
    
    
    
    
    76,753Depreciation and
amortization
    
    
    169,553,126
    
    
    
    243,552,307
    
    
    
    1,264,335
    
    
    
    49,658,881
    
    
    
    (266,434
    )
    
    
    463,762,215Identifiable assets
including
investment in
related companies
    
    
    6,016,567,836
    
    
    
    6,005,278,026
    
    
    
    143,109,885
    
    
    
    4,729,152,140
    
    
    
    (5,138,754,125
    )
    
    
    11,755,353,762Capital expenditures
    
    
    89,662,770
    
    
    
    250,520,763
    
    
    
    1,028,999
    
    
    
    1,796,973
    
    
    
    
    
    
    
    343,009,505


Engineeringservices and
    
    Corparate2001
    
    Generation
    
    Distribution
    
    real estate
    
    and other
    
    Eliminations
    
    ConsolidatedThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Sales to
unaffilated
customers
    
    
    836,144,871
    
    
    
    2,126,128,164
    
    
    
    35,046,655
    
    
    
    62,061,071
    
    
    
    
    
    
    
    3,059,380,761Intersegment sales
    
    
    209,134,449
    
    
    
    43,705,715
    
    
    
    28,336,648
    
    
    
    30,562,731
    
    
    
    (311,739,543
    )Total revenues
    
    
    1,045,279,320
    
    
    
    2,169,833,879
    
    
    
    63,383,303
    
    
    
    92,623,802
    
    
    
    (311,739,543
    )
    
    
    3,059,380,761Operating income
    
    
    347,975,163
    
    
    
    386,500,673
    
    
    
    10,133,274
    
    
    
    (4,545,293
    )
    
    
    14,479,950
    
    
    
    754,543,767Participation in
net income of
affialate companies
    
    
    (10,355,056
    )
    
    
    
    
    
    
    
    
    
    
    (343,742
    )
    
    
    
    
    
    
    (10,698,798
    )Depreciation and
amortization
    
    
    150,091,696
    
    
    
    260,276,949
    
    
    
    1,241,298
    
    
    
    56,491,985
    
    
    
    (266,433
    )
    
    
    467,835,495Identifiable assets
including
investment in
related companies
    
    
    6,361,571,367
    
    
    
    6,310,062,578
    
    
    
    135,386,583
    
    
    
    4,945,729,831
    
    
    
    (4,992,951,048
    )
    
    
    12,759,799,311Capital expenditures
    
    
    (52,972,422
    )
    
    
    (287,990,889
    )
    
    
    (415,494
    )
    
    
    (174,931
    )
    
    
    
    
    
    
    (341,553,736
    )


Engineeringservices and
    
    Corparate2002
    
    Generation
    
    Distribution
    
    real estate
    
    and other
    
    Eliminations
    
    ConsolidatedThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Sales to
unaffiliated
customers
    
    
    724,708,753
    
    
    
    1,712,052,829
    
    
    
    34,157,580
    
    
    
    14,954,058
    
    
    
    
    
    
    
    2,485,873,220Intersegment sales
    
    
    213,390,398
    
    
    
    50,057,741
    
    
    
    71,166,328
    
    
    
    42,859,584
    
    
    
    (377,474,051
    )Total revenues
    
    
    938,099,151
    
    
    
    1,762,110,570
    
    
    
    105,323,908
    
    
    
    57,813,642
    
    
    
    (377,474,051
    )
    
    
    2,485,873,220Operating income
    
    
    336,622,006
    
    
    
    183,495,124
    
    
    
    13,379,302
    
    
    
    (111,044
    )
    
    
    (741,027
    )
    
    
    532,644,361Participation in
net income of
affiliate companies
    
    
    8,541,745
    
    
    
    
    
    
    
    
    
    
    
    (277,962
    )
    
    
    
    
    
    
    8,263,783Depreciation and
amortization
    
    
    221,359,385
    
    
    
    512,547,464
    
    
    
    1,411,217
    
    
    
    110,822,164
    
    
    
    12,816,588
    
    
    
    858,956,818Identifiable assets
including
investment in
related companies
    
    
    6,524,201,396
    
    
    
    6,105,423,113
    
    
    
    140,950,745
    
    
    
    4,294,946,364
    
    
    
    (4,444,356,942
    )
    
    
    12,621,164,676Capital expenditures
    
    
    134,858,115
    
    
    
    181,859,234
    
    
    
    755,092
    
    
    
    443,002
    
    
    
    
    
    
    
    317,915,443


F-127



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

A summary of activities by geographic area is as follows:

Chile
    
    Argentina
    
    Perú
    
    Brazil
    
    Colombia
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$2000Total revenues
    
    
    699,239,131
    
    
    
    759,355,551
    
    
    
    233,989,079
    
    
    
    634,011,382
    
    
    
    430,451,955
    
    
    
    2,757,047,098Long lived assets (net) (1)
    
    
    2,803,069,054
    
    
    
    1,440,626,633
    
    
    
    1,064,776,614
    
    
    
    1,254,692,103
    
    
    
    2,381,648,403
    
    
    
    8,944,812,8072001Total revenues
    
    
    805,112,327
    
    
    
    827,352,863
    
    
    
    265,489,142
    
    
    
    691,658,117
    
    
    
    469,768,312
    
    
    
    3,059,380,761Long lived assets (net) (1)
    
    
    2,365,838,917
    
    
    
    1,562,886,168
    
    
    
    1,173,962,317
    
    
    
    1,944,053,053
    
    
    
    2,578,309,204
    
    
    
    9,625,049,6592002Total revenues
    
    
    799,462,080
    
    
    
    297,634,006
    
    
    
    292,427,127
    
    
    
    624,290,007
    
    
    
    472,060,000
    
    
    
    2,485,873,220Long lived assets (net) (1)
    
    
    2,374,734,591
    
    
    
    1,551,821,292
    
    
    
    1,235,792,237
    
    
    
    2,039,631,354
    
    
    
    2,677,478,709
    
    
    
    9,879,458,183




---

|(1) |  | Long-lived assets include property, plant and equipment.
|--- |  | --------------------------------------------------------



|(f) |  | Concentration of risk:
|--- |  | ----------------------

The Company does not believe that it is exposed to any unusual credit risk from
any single customer. The Companys debtors are dependent on the economy in
Latin America, which could make them vulnerable to downturns in the economic
activity in the countries in which the Company operates.

No single customers accounted for more than 10% of revenues for the years
ending December 31, 2001 and 2002.



|(g) |  | Schedule of debt maturity:
|--- |  | --------------------------

Following is a schedule of debt maturity in each of the next five years and
thereafter:

ThCh$2003
    
    
    1,558,378,0972004
    
    
    2,355,368,8232005
    
    
    177,943,4972006
    
    
    611,688,7512007
    
    
    155,949,924Thereafter
    
    
    1,518,063,448Total
    
    
    6,377,392,540


F-128



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(h) |  | Disclosure regarding interest capitalization:
|--- |  | ---------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Interest cost incurred
    
    
    520,328,589
    
    
    
    457,221,298
    
    
    
    446,064,039Interest capitalized under Chilean GAAP
    
    
    21,323,611
    
    
    
    24,250,320
    
    
    
    19,467,730Interest capitalized under U.S. GAAP
    
    
    55,715,832
    
    
    
    29,138,235
    
    
    
    23,656,508




|(i) |  | Cash flow information:
|--- |  | ----------------------



| | (i) |  | The statement of cash flows under Chile GAAP differs in certain respects from the presentation of a statement of cash flow under U.S. GAAP as follows:
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Cash provided by operating activities under Chilean GAAP
    
    
    538,690,847
    
    
    
    662,920,609
    
    
    
    627,782,332Development stage companies
    
    
    
    
    
    
    1,303,896Cash provided by (used in) operating activities under U.S. GAAP
    
    
    538,690,847
    
    
    
    664,224,505
    
    
    
    627,782,332Cash provided by (used in) financing activities under Chilean GAAP
    
    
    (814,290,090
    )
    
    
    (61,414,127
    )
    
    
    (285,039,864
    )Development stage companies
    
    
    
    
    
    
    (985,718
    )Repurchase of Yankee Bonds
    
    
    
    
    
    
    (177,168,871
    )Cash provided by (used in) financing activities under U.S. GAAP
    
    
    (814,290,090
    )
    
    
    (239,568,716
    )
    
    
    (285,039,864
    )Cash provided by (used in) investing activities under Chilean GAAP
    
    
    176,616,070
    
    
    
    (503,639,589
    )
    
    
    (336,878,757
    )Development stage companies
    
    
    
    
    
    
    (310,893
    )Repurchase of Yankee Bonds
    
    
    
    
    
    
    177,168,871Time deposits (1)
    
    
    
    
    
    
    
    
    
    
    (10,176,847
    )Cash provided by (used in) investing activities under U.S. GAAP
    
    
    176,616,070
    
    
    
    (326,781,611
    )
    
    
    (347,055,604
    )




---

|(1) |  | Time deposits with maturities longer than 90 days
|--- |  | -------------------------------------------------



| | (ii) |  | Cash and cash equivalents includes all highly liquid debt instruments purchased with a maturity of three months or less:
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    28,073,249
    
    
    
    37,648,796
    
    
    
    48,184,878Time deposits
    
    
    79,697,694
    
    
    
    178,113,234
    
    
    
    135,450,047Marketable securities
    
    
    
    
    
    
    198,248
    
    
    
    1,543,290Other current assets
    
    
    12,264,761
    
    
    
    1,867,323
    
    
    
    25,836,618Total cash and cash equivalents
    
    
    120,035,704
    
    
    
    217,827,601
    
    
    
    211,014,833


F-129



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| | (iii) |  | Additional disclosures required under U.S. GAAP are as follows:
| | ----- |  | ---------------------------------------------------------------

Year ended December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Interest paid during the year
    
    
    381,782,050
    
    
    
    405,238,393
    
    
    
    455,550,047Income taxes paid during the year
    
    
    154,341,501
    
    
    
    132,198,412
    
    
    
    136,413,682Assets acquired under capital leasing
    
    
    2,314,164
    
    
    
    238,590
    
    
    
    




|(j) |  | Disclosures about fair value of financial instruments
|--- |  | -----------------------------------------------------

The following methods and assumption were used to estimate the fair value of
each class of financial instruments as of December 31, 2001 and 2002 for which
it is practicable to estimate that value:



| |  | Cash
|- |  | ----

The fair value of the Companys cash is equal to its carrying value.



| |  | Time deposits
|- |  | -------------

The fair value of time deposits approximates carrying value due to the relatively short-term nature.



| |  | Marketable securities
|- |  | ---------------------

The fair value of marketable securities is based on quoted market prices of the common stock held
and approximates carrying value.



| |  | Long-term accounts receivable
|- |  | -----------------------------

The fair value of long-term accounts receivable was estimated using the interest rates that are
currently offered for loans with similar terms and remaining maturities.



| |  | Long-term debt
|- |  | --------------

The fair value of long-term debt was based on rates currently available to the Company for debt
with similar terms and remaining maturities.



| |  | Derivative instruments
|- |  | ----------------------

Estimates of fair values of derivative instruments for which no quoted prices or secondary market
exists have been made using valuation techniques such as forward pricing models, present value of
estimated future cash flows, and other modeling techniques. These estimates of fair value include
assumptions made by the Company about market variables that may

F-130



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

change in the future. Changes in assumptions could have a significant impact on the estimate of fair values disclosed. As a result such fair
value amounts are subject to significant volatility and are highly dependent on the qualify of the assumptions used.

The estimated fair values of the Companys financial instruments compared to Chilean GAAP carrying amounts are as follows:

As of December 31,2001
    
    2002Carrying
    
    Fair
    
    Carrying
    
    Fairamount
    
    Value
    
    amount
    
    ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    37,648,796
    
    
    
    37,648,796
    
    
    
    48,184,878
    
    
    
    48,184,878Time deposits
    
    
    178,113,234
    
    
    
    178,113,234
    
    
    
    145,626,894
    
    
    
    145,626,894Marketable securities
    
    
    203,072
    
    
    
    203,072
    
    
    
    1,543,290
    
    
    
    1,543,290Accounts receivable
    
    
    550,248,992
    
    
    
    550,248,992
    
    
    
    458,839,724
    
    
    
    458,839,724Notes receivable, net
    
    
    12,018,206
    
    
    
    12,018,206
    
    
    
    5,131,349
    
    
    
    5,131,349Other accounts receivable, net
    
    
    65,885,843
    
    
    
    65,885,843
    
    
    
    62,776,096
    
    
    
    62,776,096Amounts due from related companies
    
    
    188,687,370
    
    
    
    188,687,370
    
    
    
    196,297,002
    
    
    
    196,297,002Long-term accounts recievable
    
    
    101,903,562
    
    
    
    101,903,562
    
    
    
    125,850,513
    
    
    
    125,850,513Accounts payable and other
    
    
    (265,964,525
    )
    
    
    (265,964,525
    )
    
    
    (236,630,187
    )
    
    
    (236,630,187
    )Notes payable
    
    
    (279,395,725
    )
    
    
    (279,395,725
    )
    
    
    (225,719,764
    )
    
    
    (225,719,764
    )long-term debt
    
    
    (6,232,523,988
    )
    
    
    (6,191,284,245
    )
    
    
    (6,377,392,540
    )
    
    
    (6,342,731,573
    )Derivatives instruments
    
    
    (79,982,358
    )
    
    
    130,385,292
    
    
    
    128,686,537
    
    
    
    128,686,537




|(k) |  | Derivative instruments
|--- |  | ----------------------

The Company is exposed to the impact of market fluctuations in the price of
electricity, primary materials such as natural gas, petroleum, coal, and other
energy-related products, interest rates, and foreign exchange rates. The
Company employs policies and procedures to manage its risks associated with
these market fluctuation on a global basis through strategic contract
selection, fixed-rate and variable-rate portfolio targets, net investment
hedges, and financial derivatives. All derivatives that do not qualify for the
normal purchase and sales exemption under SFAS No. 133 are recorded at their
fair value. On the date that swaps, futures, forwards or option contracts are
entered into, the Company designates the derivatives as a hedge, if the
documentation is not appropriate to designate as a hedge the derivatives
mark-to-market adjustment flows through the income statement. The Company does
not have the appropriate documentation in place to designate contracts as
hedges of a forecasted transaction or future cash flows (cash flow hedge) or as
a hedge of a recognized assets, liability or firm commitment (fair value
hedge).

The Company has classified its derivatives into the following general
categories: commodity derivatives, embedded derivatives, and financial
derivatives. Certain energy and other contracts for the Companys operations
in Chile are denominated in the US dollar. According to SFAS No. 133, an
embedded foreign currency derivative should be separated from the host contract
because none of the applicable exclusions are met (See Embedded Derivative
Contracts below). For purposes of evaluating the functional currency of the
Companys subsidiaries in Argentina, Perú, Brazil, and Colombia, the Company
applied BT 64, consistent with the methodology described in paragraph (s), thus
the functional currency of these subsidiaries was the US dollar as these
subsidiaries were remeasured into US dollars because foreign subsidiaries
operate in countries exposed to significant risks as determined under BT 64.

F-131



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The following is a summary of the Companys adjustment to fair values for all
identified derivative contracts at the date of implementation of SFAS No. 133
on January 1, 2001 and as the year-ended December 31, 2001 and 2002.

As of January 1, 2001Distribution
    
    Generation
    
    TotalThCh$
    
    ThCh$
    
    ThCh$Commodity derivatives
    
    
    16,330,955
    
    
    
    127,914,469
    
    
    
    144,245,424Embedded derivatives
    
    
    25,266
    
    
    
    (8,631,797
    )
    
    
    (8,606,531
    )Financial derivatives
    
    
    (1,650,130
    )
    
    
    (3,776,374
    )
    
    
    (5,426,504
    )14,706,091
    
    
    
    115,506,298
    
    
    
    130,212,389Effects of minority interest
    
    
    (7,947,755
    )
    
    
    (54,673,667
    )
    
    
    (62,621,422
    )Deferred tax effects
    
    
    (5,185,287
    )
    
    
    (41,390,634
    )
    
    
    (46,575,921
    )Cumulative change in accounting
principle
    
    
    1,573,049
    
    
    
    19,441,997
    
    
    
    21,015,046


As of December 31, 2001Distribution
    
    Generation
    
    TotalThCh$
    
    ThCh$
    
    ThCh$Commodity
derivatives
    
    
    80,927,204
    
    
    
    135,782,017
    
    
    
    216,709,221Embedded derivatives
    
    
    (23,089,669
    )
    
    
    (3,876,022
    )
    
    
    (26,965,691
    )Financial
derivatives
    
    
    352,726
    
    
    
    (19,026,564
    )
    
    
    (18,673,838
    )58,190,261
    
    
    
    112,879,431
    
    
    
    171,069,692Investment in
related companies
    
    
    
    
    
    
    39,297,958
    
    
    
    39,297,958Derivative
instruments
U.S.GAAP
Shareholders equity
adjustment
    
    
    58,190,261
    
    
    
    152,177,389
    
    
    
    210,367,650


As of December 31, 2002Distribution
    
    Generation
    
    TotalThCh$
    
    ThCh$
    
    ThCh$Commodity
derivatives
    
    
    (11,240,489
    )
    
    
    218,474,062
    
    
    
    207,233,573Embedded derivatives
    
    
    262,190
    
    
    
    (12,209,854
    )
    
    
    (11,947,664
    )Financial
derivatives
    
    
    (28,432,901
    )
    
    
    (16,952,690
    )
    
    
    (45,385,591
    )(39,411,200
    )
    
    
    189,311,518
    
    
    
    149,900,318Investment in
related companies
    
    
    
    
    
    
    7,649,226
    
    
    
    7,649,226Derivative
instruments
U.S.GAAP
Shareholders equity
adjustment
    
    
    (39,411,200
    )
    
    
    196,960,744
    
    
    
    157,549,544


F-132



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Certain Companys generation and distribution commodity contracts could be seen
as contracts that meet the definition of a derivative under SFAS No. 133 and
would be required to be accounted for at fair value. These conditions are (i)
have an underlying, which is the market price of power at the delivery location
and a notional amount specified in the contract; (ii) have no initial payment
on entering into the contract; and (iii) do not have a net settlement provision
have has the characteristic of net settlement because power is readily
convertible to cash, as it is both fungible and actively traded in the country
of generation or country of distribution.

The Company assessed that its commodity contracts that are requirements
contracts do no meet the above definition because the contracts do not have
notional amounts, as they only have maximum amounts or no specified amounts,
and do not include an implicit or explicit minimum amount in a settlement or a
default clause. A requirements contract allows the purchaser to use as many
units of power as required to satisfy
its actual needs for power during the period of the contract, and the party is
not permitted to buy more than its actual needs.

The Company concluded that all of its power is readily convertible to cash as
energy is actively traded, or the Company has access, to markets where energy
is actively traded. However, only certain participants have access to the
energy markets, thus determination as to whether energy could be considered
readily convertible to cash was analyzed on a country by country basis.
Currently, Chilean distributors do not have access to the Chilean spot market,
however this could change in the future if energy regulations are changed. The
Company has also concluded that multiple-delivery long-term power contracts
meet the net settlement characteristic. Management multiple-delivery long-term
power contracts are readily convertible to cash because the Company operates in
countries with active spot markets, that although they contain varying levels
of liquidity, can rapidly absorb the contracts quantities at each delivery
date without significantly affecting the price, and thus meet the definition of
net settlement, consequently these contracts are accounted as derivatives that
under SFAS No.133.

The Companys Argentine generation entities have access to the Brazilian energy
market through an interconnection system between the two markets. In order to
calculate the fair values of the purchase and sale contracts related to the
energy to be sold in the Brazilian market, the Argentine market prices were
used. The Company believes this is the best measure for fair value, because in
the event that the Brazilian market prices are below the cost to produce the
energy in Argentina, the Company will sell the energy in Argentina and purchase
the energy from the spot market in Brazil. Additionally, the interconnection
line was established to sell energy generated in Argentina in the Brazilian
market, as the Brazilian energy market heavily relies on hydro-electric
generation and has historically had significant problems with meeting its
energy needs economically due to lack of rainfall.

Because both the purchases and sales interconnection contracts are for periods
up to 20 years in complex markets, where no similar term forward market
information is available, the Company has estimated such values based on the
best information available, including using modeling and other valuation
techniques. The Company has recorded the best estimate of fair value, however
with different assumptions such as interest rates, inflation rates, exchange
rates, electricity rates, and increases in cost trends, materially different
fair values could result. As a result such estimates are highly volatile and
dependent upon the assumptions used. The assumption to measure the fair value

F-133



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

of these interconnection related contracts using the Argentine market prices
has a significant effect on the Companys net income and shareholder equity.

If Brazilian market prices had been used instead of Argentine prices estimated
fair values of the related energy contracts a significantly different fair
value would result. The Company considers the Argentine prices to be the
correct benchmark to value the fair value of the interconnection contracts
because the Company does not have concessions to sell the Argentine generated
energy in the Brazilian market to any parties other than those currently
contracted. Therefore the Company views the interconnection as an extension of
the Argentine market and as a more appropriate measure of the fair value of
energy.

Such values are included in the reconciliation to U.S. GAAP in paragraph (bb).

Embedded Derivative Contracts

The Company enters into certain contracts that have embedded features that are
not clearly and closely related to the host contract. As specified in SFAS No.
133, bifurcation analysis focuses on whether the economic characteristics and
risks of the embedded derivative are clearly and closely related to the
economic characteristics and risks of the host contract. In certain identified
contracts, the host service contract and the embedded feature are not indexed
to the same underlying and changes in the price or value of service will not
always correspond to changes in the price of the commodity to which the
contract is indexed. U.S. GAAP requires embedded features to be measured at
fair value as freestanding instruments. Unless the embedded contracts are
remeasured at fair value under otherwise applicable GAAP, the embedded feature
must be valued at fair value with changes in fair value reported in earnings as
they occur.

Embedded foreign currency derivative instruments are not separated from the
host contract and considered a derivative instrument if the host contract is
not a financia1 instrument and it requires payments denominated in either: (1)
the functional currency of any substantial patty to the contract. (2) the local
currency of any substantial party to the contract, (3) the currency used
because the primary economic environment is highly inflationary, or (4) the
currency in which the good or service is routinely denominated in international
commerce.

Financia1 Derivatives

Changes in interest rates expose the Company to risk as a result of its
portfolio of fixed-rate and variable rate debt. The Company manages interest
rate risk exposure on a global basis by limiting its variable rate and
fixed-rate exposures to certain variable/fixed mixes set by policy.

The Company manages interest rate risk through the use of interest rate swaps
and collars and cross-currency swaps. The Company does not enter into
financia1 instruments for trading or speculative purposes.

Net lnvestment Hedges

The Company is also exposed to foreign currency risk arising from long-term
debt denominated in foreign currencies, the majority of which is the US dollar.
This risk is mitigated, as a substantial portion of the Companys revenues are
either directly or indirectly linked to the US dollar. Additionally, the
Company records the foreign exchange gains and losses on liabilities related to
net investments in foreign countries which

F-134



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

are denominated in the same currency as the functional currency of those
foreign investments. Such unrealized gains and losses are included in the
cumulative translation adjustment account in shareholders equity, and in this
way act as a net investment hedge of the exchange risk affecting the
investments (see Note ll (c) and Note 22 (f) for further detail). The Company
also uses short duration forward foreign currency contracts and swaps, and
cross-currency swaps, where possible, to manage its risk related to foreign
currency fluctuations. These contracts are considered cover contracts under
Chilean GAAP. In accordance with Chilean GAAP the gain and losses on these
contracts are deferred until realized as assets or liabilities.

For U.S. GAAP purposes, as the Company has not met the requirements for
designating these derivatives contracts as hedges, the contracts are recorded
at fair value in the balance sheet with any unrealized gain and/or losses being
directly recorded in the income statement.



|(l) |  | Reclassification to U.S. GAAP
|--- |  | -----------------------------

Certain reclassifications would be made to the Chilean GAAP income statement in
order to present Chilean GAAP amounts in accordance with presentation
requirements under U.S. GAAP. Amortization of negative goodwill, amortization
of goodwill, and certain other non-operating income and expense, would be
included in operating income. Recoverable taxes included in other
non-operating revenues would be recorded as part of income taxes under U.S.
GAAP. The gain from the repurchase of Yankee bonds by Enersis S.A. and Endesa
Chile S.A. included in non-operating income under Chilean GAAP would be
presented as an extraordinary gain according to U.S. GAAP. Equity
participation in income or losses of related companies included in
non-operating income would be presented after income taxes and minority
interest in accordance with U.S. GAAP. The following reclassifications
included in the column labeled Reclassifications disclose amounts using a
U.S. GAAP presentation, although the amounts displayed have been determined in
accordance with Chilean GAAP:

Year ended December 31, 2000Chilean GAAP
    
    
    
    
    
    U.S. GAAPThCh$
    
    ThCh$
    
    ThCh$Operating income
    
    
    552,749,621
    
    
    
    258,352,632
    
    
    
    811,102,252Non-operating
expense, net
    
    
    (169,411,441
    )
    
    
    (219,985,929
    )
    
    
    (389,397,370
    )Income taxes
    
    
    (146,323,505
    )
    
    
    4,203,502
    
    
    
    (142,120,003
    )Minority interest
    
    
    (184,000,228
    )
    
    
    
    
    
    
    (184,000,228
    )Equity
participation in
income of related
companies, net
    
    
    
    
    
    
    76,753
    
    
    
    76,753Amortization of
negative goodwill
    
    
    42,646,957
    
    
    
    (42,646,957
    )
    
    
    Net income
    
    
    95,661,405
    
    
    
    
    
    
    
    95,661,405


F-135



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Year ended December 31, 2001Chilean GAAP
    
    
    
    
    
    U.S. GAAPThCh$
    
    ThCh$
    
    ThCh$Operating income
    
    
    754,543,767
    
    
    
    (84,016,035
    )
    
    
    670,527,732Non-operating
expense, net
    
    
    (498,001,278
    )
    
    
    109,936,884
    
    
    
    (388,064,394
    )Income taxes
    
    
    (136,687,539
    )
    
    
    8,116,807
    
    
    
    (128,570,732
    )Minority interest
    
    
    (125,152,619
    )
    
    
    
    
    
    
    (125,152,619
    )Equity
participation in
income of related
companies, net
    
    
    
    
    
    
    (10,698,797
    )
    
    
    (10,698,797
    )Amortization of
negative goodwill
    
    
    47,451,702
    
    
    
    (47,451,702
    )
    
    
    0Net income before
extraordinary gain
    
    
    42,154,033
    
    
    
    (24,112,843
    )
    
    
    18,041,190Extraordinary gain
    
    
    
    
    
    
    24,112,843
    
    
    
    24,112,843Net income
    
    
    42,154,033
    
    
    
    
    
    
    
    42,154,033


Year ended December 31, 2002Chilean GAAP
    
    
    
    
    
    U.S. GAAPThCh$
    
    ThCh$
    
    ThCh$Operating income
    
    
    532,644,361
    
    
    
    (443,002,361
    )
    
    
    89,642,000Non-operating
expense, net
    
    
    (796,530,156
    )
    
    
    540,598,729
    
    
    
    (255,931,427
    )Income taxes
    
    
    (66,016,985
    )
    
    
    (15,988,017
    )
    
    
    (82,005,002
    )Minority interest
    
    
    16,282,559
    
    
    
    
    
    
    
    16,282,559Equity
participation in
income of related
companies, net
    
    
    
    
    
    
    8,263,783
    
    
    
    8,263,783Amortization of
negative goodwill
    
    
    112,247,774
    
    
    
    (112,247,774
    )
    
    
    Net loss before
extraordinary items
    
    
    (201,372,447
    )
    
    
    (22,375,640
    )
    
    
    (223,748,087
    )Extraordinary items
    
    
    (22,375,640
    )
    
    
    22,375,640
    
    
    
    Net loss
    
    
    (223,748,087
    )
    
    
    
    
    
    
    (223,748,087
    )


Certain reclassifications would be made to the Chilean GAAP balance sheet in
order to present Chilean GAAP amounts in accordance with presentation
requirements under U.S. GAAP. Deferred taxes from depreciation differences
that are recorded as short-term under Chilean GAAP would be recorded as
long-term under U.S. GAAP. Real estate properties under development and
construction-in-progress are included in current assets as inventory in Chilean
GAAP and under U.S. GAAP such assets would have been included as property,
plant and equipment. Additionally, the regulated asset recorded during 2001 by
Coelce and Cerj, Brazilian subsidiaries, has been partially recorded in trade
receivables and an additional component was recorded in current assets by
Coelce under Chilean GAAP. However, under U.S. GAAP the presentation of these
regulated assets should be classified as non-current assets as the recovery of
these assets is not expected in the short term. These reclassifications
exclude consolidation of development stage companies, the effect of which is
immaterial.

F-136



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The effect of the following reclassifications included in the column labeled
Reclassifications discloses amounts using a U.S. GAAP presentation although
the amounts displayed have been determined in accordance with Chilean GAAP:

Year ended December 31, 2001Chilean GAAP
    
    Reclassification
    
    U.S. GAAPThCh$
    
    ThCh$
    
    ThCh$Current assets
    
    
    1,162,446,794
    
    
    
    (211,305,194
    )
    
    
    951,141,600Property, plant an
equipment, net
    
    
    9,625,049,659
    
    
    
    27,262,972
    
    
    
    9,652,312,631Other assets
    
    
    1,972,302,858
    
    
    
    (52,706,143
    )
    
    
    1,919,596,715Total assets
    
    
    12,759,799,311
    
    
    
    (236,748,365
    )
    
    
    12,523,050,946Current liabilities
    
    
    1,639,303,381
    
    
    
    (110,607,126
    )
    
    
    1,528,696,255Long-term liabilities
    
    
    5,832,362,823
    
    
    
    (126,141,239
    )
    
    
    5,706,221,584Minority interest
    
    
    4,073,571,128
    
    
    
    
    
    
    
    4,073,571,128Shareholderss equity
    
    
    1,214,561,979
    
    
    
    
    
    
    
    1,214,561,979Total liabilities and
shareholders equity
    
    
    12,759,799,311
    
    
    
    (236,748,365
    )
    
    
    12,523,050,946


Year ended December 31, 2002Chilean GAAP
    
    Reclassification
    
    U.S. GAAPThCh$
    
    ThCh$
    
    ThCh$Current assets
    
    
    1,223,963,114
    
    
    
    (84,691,477
    )
    
    
    1,139,271,637Property, plant an
equipment, net
    
    
    9,879,458,183
    
    
    
    23,804,228
    
    
    
    9,903,262,411Other assets
    
    
    1,517,743,379
    
    
    
    (24,600,329
    )
    
    
    1,493,143,050Total assets
    
    
    12,621,164,676
    
    
    
    (85,487,578
    )
    
    
    12,535,677,098Current liabilities
    
    
    2,151,373,249
    
    
    
    (28,554,145
    )
    
    
    2,122,819,104Long-term liabilities
    
    
    5,413,608,412
    
    
    
    (56,933,433
    )
    
    
    5,356,674,979Minority interest
    
    
    4,050,602,721
    
    
    
    
    
    
    
    4,050,602,721Shareholderss equity
    
    
    1,005,580,294
    
    
    
    
    
    
    
    1,005,580,294Total liabilities and
shareholders equity
    
    
    12,621,164,676
    
    
    
    (85,487,578
    )
    
    
    12,535,677,098


(m) Employee Benefit Plans

Enersis S.A. and its subsidiaries sponsor various benefit plans for its current
and retired employees. A description of such benefits follows:

Severance indemnities

The provision for severance indemnities, included in the account Accrued
expenses short and long-term is calculated in accordance with the policy set
forth in Note 2 (n), using the current salary levels of all employees covered
under the severance indemnities agreement, an assumed discount

F-137



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

rate of 9.5% for the years ended December 31,1999,2000 and 2001, and an
estimated average service period based on the years of services for the
Company.

Benefits for Retired Personnel

Other benefits provided to certain retired personnel of Enersis include
electrical service rate subsidies, additional medical insurance and additional
post-retirement benefits. Descriptions of these benefits for retired personnel
are as follows:



|i) |  | Electrical rate service
|-- |  | -----------------------

This benefit is extended only to certain retired personnel of Enersis. These
electric rate subsidies result in the eligible retired employees paying a
percentage of their total monthly electricity costs, with Enersis paying the
difference.



|ii) |  | Medical benefits
|--- |  | ----------------

This benefit provides supplementary health insurance, which covers a portion of
health benefits not covered under the institutional health benefits maintained
by employees of Enersis. This benefit expires at the time of death of the
pensioner.



|iii) |  | Supplementary pension benefits
|---- |  | ------------------------------

Eligible employees are able to receive a monthly amount designed to cover a
portion of the difference between their salary at the point of retirement and
the theoretical pension that would have been received had the employee reached
the legal retirement age of the Instituciónde Previsión Social(Institute of
Social Welfare). This benefit expires upon the death of the pensioner for the
Enersis employee, however, continues to cover the surviving-spouse in the case
of employees of the subsidiary Endesa-Chile.



|iv) |  | Workers compensation benefits
|--- |  | ------------------------------

Employees that were entitled to Workers compensation insurance in prior years
for work related accidents receive benefits from the Company as such insurance
has expired. This benefit continues at the time of death of the pensioner, to
cover the surviving-spouse.

The Company has recognized liabilities related to complementary pension plan
benefits and other postretirement benefits as stipulated in collective
bargaining agreements. Under U.S. GAAP, post-retirement employee benefits have
been accounted for in accordance with SFAS No. 87 and SFAS No. 106, with
inclusion of prior-period amounts in current years income as the amounts are
not considered significant to the overall financia1 statement presentation.
The effects of accounting for post-retirement benefits under U.S. GAAP have
been presented in paragraph (bb), above. The following data are presented
under U.S. GAAP for Companys post-retirement benefit plans.

F-138



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Pension Benefits
    
    Other Benefits2001
    
    2002
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Changes in benefit (obligations)Benefit (obligations) at January 1
    
    
    (127,276,623
    )
    
    
    (158,318,450
    )
    
    
    (5,630,758
    )
    
    
    (18,790,555
    )Price-level restatement
    
    
    3,826,939
    
    
    
    4,141,331
    
    
    
    136,056
    
    
    
    468,722Foreign exchange effect
    
    
    
    
    
    
    (15,743,272
    )
    
    
    (2,514,206
    )
    
    
    Net periodic expense
    
    
    (14,783,599
    )
    
    
    (13,649,465
    )
    
    
    (12,326,341
    )
    
    
    (18,982,900
    )Benefits paid
    
    
    1,130,278
    
    
    
    14,647,166
    
    
    
    906,077
    
    
    
    (170,245
    )Company contributions
    
    
    8,250,286
    
    
    
    32,554,873
    
    
    
    
    
    
    
    4,029,429Benefit (obligations) at December 31
    
    
    (144,595,992
    )
    
    
    (123,138,751
    )
    
    
    (16,914,966
    )
    
    
    (33,445,549
    )Funded Status of the PlansProyected Benefit Obligation
    
    
    (224,243,937
    )
    
    
    (208,863,000
    )
    
    
    (19,442,624
    )
    
    
    (33,293,198
    )Fair value of the plans assets
    
    
    93,527,895
    
    
    
    93,196,829Funded Status
    
    
    (130,716,041
    )
    
    
    (115,666,171
    )
    
    
    (19,442,624
    )
    
    
    (33,293,198
    )Unrecognized loss
    
    
    (30,531,801
    )
    
    
    (17,138,790
    )
    
    
    
    
    
    
    (13,056,708
    )Unrecognized net transition obligation
    
    
    16,651,850
    
    
    
    9,666,203
    
    
    
    2,527,658
    
    
    
    12,904,357Net liability recorded under U.S. GAAP
    
    
    (144,595,992
    )
    
    
    (123,138,758
    )
    
    
    (16,914,966
    )
    
    
    (33,445,549
    )


Adjustment required to reflect minimum liability:

Additional minimum liability
    
    
    (291,282
    )
    
    
    (2,299,601
    )Intangible asset
    
    
    291,282
    
    
    
    2,299,601Balance of additional liability
    
    
    
    
    
    
    


PensionBenefitsChange in the plan assets
    
    2002ThCh$Fair value of plans assets, January 1
    
    
    86,445,632Foreign exchange effect
    
    
    (19,338,142
    )Actual return on the plan assets
    
    
    28,063,671Employer contributions
    
    
    13,665,577Plan participant contributions
    
    
    4,110,398Benefits paid
    
    
    (19,750,307
    )Fair value of plans assets, December 31
    
    
    93,196,829


F-139



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

Pension Benefits
    
    Other BenefitsAssumptions as of December 31
    
    2000
    
    2001
    
    2002
    
    2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Discount rate
    
    
    15.0
    %
    
    
    12.2
    %
    
    
    12.97
    %
    
    
    9.5
    %
    
    
    11.8
    %
    
    
    11
    %Salary increase
    
    
    9.6
    %
    
    
    7.0
    %
    
    
    6.86
    %
    
    
    
    
    
    
    
    
    
    
    Return on plan assets
    
    
    10.4
    %
    
    
    10.4
    %
    
    
    10.96
    %
    
    
    
    
    
    
    
    
    
    
    Components of net periodicBenefits expensesService cost
    
    
    (748,873
    )
    
    
    (697,719
    )
    
    
    (905,752
    )
    
    
    1,272,083
    
    
    
    (11,129,179
    )
    
    
    (4,407,258
    )Interest cost
    
    
    (16,106,429
    )
    
    
    (23,595,153
    )
    
    
    (13,605,434
    )
    
    
    (716,812
    )
    
    
    (986,524
    )
    
    
    (2,586,994
    )Expected return on assets
    
    
    1,026,865
    
    
    
    15,826,320
    
    
    
    6,541,907
    
    
    
    
    
    
    
    Amortization gain (loss)
    
    
    6,101,489
    
    
    
    (3,838,806
    )
    
    
    (4,040,437
    )
    
    
    
    
    
    
    
    
    
    
    (10,120,907
    )Amortization of transition
asset
    
    
    (1,482,653
    )
    
    
    (2,478,241
    )
    
    
    (1,639,750
    )
    
    
    217,167
    
    
    
    (210,638
    )
    
    
    (1,867,741
    )Net periodic expenses
    
    
    (11,209,601
    )
    
    
    (14,783,599
    )
    
    
    (13,649,466
    )
    
    
    772,438
    
    
    
    (12,326,341
    )
    
    
    (18,982,900
    )


(n) Comprehensive income (loss)

In accordance with U.S. GAAP, the Company reports a measure of all changes in
shareholders equity that result from transactions and other economic events of
the period other-than transactions with owners (comprehensive income).
Comprehensive income is the total of net income and other non-owner equity
transactions that result in changes in net shareholders equity.

The following represents accumulated other comprehensive income balances as of
December 31, 2000, 2001 and 2002 (in thousands of constant Chilean pesos as of
December 31,2002).

2000Effect of U.S. GAAPChilean GAAP
    
    adjustments oncumulative
    
    cumulative
    
    Accumulated othertranslation
    
    translation
    
    comprehensiveadjustment
    
    adjustment
    
    income (loss)ThCh$
    
    ThCh$
    
    ThCh$Beginning balance
    
    
    8,454,732
    
    
    
    4,135,642
    
    
    
    12,590,374Credit (charge) for
the period
    
    
    1,336,996
    
    
    
    (4,410,079
    )
    
    
    (3,073,083
    )Ending balance
    
    
    9,791,728
    
    
    
    (274,437
    )
    
    
    9,517,291


2001Effect of U.S. GAAPChilean GAAP
    
    adjustments oncumulative
    
    cumulative
    
    Accumulated othertranslation
    
    translation
    
    comprehensiveadjustment
    
    adjustment
    
    income (loss)ThCh$
    
    ThCh$
    
    ThCh$Beginning balance
    
    
    9,791,728
    
    
    
    (274,437
    )
    
    
    9,517,291Credit (charge) for
the period
    
    
    19,459,327
    
    
    
    (3,494,199
    )
    
    
    15,965,128Ending balance
    
    
    29,251,055
    
    
    
    (3,768,636
    )
    
    
    25,482,419


F-140



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

2002Effect of U.S. GAAPChilean GAAP
    
    adjustments oncumulative
    
    cumulative
    
    Accumulated othertranslation
    
    translation
    
    comprehensiveadjustment
    
    adjustment
    
    income (loss)ThCh$
    
    ThCh$
    
    ThCh$Beginning balance
    
    
    29,251,055
    
    
    
    (3,768,636
    )
    
    
    25,482,419Credit (charge) for the
period
    
    
    20,596,914
    
    
    
    (12,536,493
    )
    
    
    8,060,421Ending balance
    
    
    49,847,969
    
    
    
    (16,305,129
    )
    
    
    33,542,840


(o) Discontinued operations

In October of 2001, the FASB issued SFAS No. 144 which is effective for fiscal
years beginning after December 15, 2001. SFAS No. 144 establishes accounting
and reporting standards for the impairment and disposal of long-lived assets
and discontinued operations. The Company adopted SFAS No. 144 in 2002. All
prior year reporting periods have been restated to reflect the adoption. The
application of this statement resulted in the classification, and separate
financial presentation of certain entities as discontinued operations, the
results of which are not included in continuing operations. There was no
impairment of assets related to discontinued operations, as their fair value
exceeded their carrying value. Fair values used in these calculations has been
determined by using the agreed upon sales prices.

In 2002, the Endesa Chile (Enersis Subsidiary) committed to a plan to dispose
the 60% equity participation it held in the consolidated subsidiary,
Infraestructura Dos Mil S.A. It was accounted for as discontinued operations
in accordance with SFAS No. 144 and, accordingly, amounts in reconciliation of
net income to US GAAP and the additional disclosure notes required under US
GAAP for all periods shown, reflect that component as a discontinued operation.

F-141



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The net sales from discontinued operations for the years 2000, 2001 and 2002
were ThCh$15,081,812, ThCh$20,150,123 and ThCh$20,202,007, respectively. The
major classes of discontinued consolidated assets, consolidated liabilities and
minority interest included in the Chilean GAAP Endesa Chile consolidated
Balance Sheet are as follows:

As of December 31,2001
    
    2002ThCh$
    
    ThCh$Assets:Cash
    
    
    543,989
    
    
    
    190,065Account receivable,
net
    
    
    7,276,944
    
    
    
    14,769,412Other current assets
    
    
    2,556,811
    
    
    
    35,355,119Property, plant and
equipment, net
    
    
    177,536,030
    
    
    
    168,496,330Intangibles
    
    
    21,445
    
    
    
    34,420Other assets
    
    
    2,517,470
    
    
    
    18,055,721Total assets of
discontinued
operations
    
    
    190,452,689
    
    
    
    236,901,067Liabilities:Current liabilities
    
    
    122,970,123
    
    
    
    74,178,107Long term
liabilities
    
    
    2,621,183
    
    
    
    97,156,269Income taxes
payable (including
deferred)
    
    
    536,942
    
    
    
    835,078Minority interest
    
    
    734,927
    
    
    
    729,136Total liabilities
and minority
interest of
discontinued
operations
    
    
    126,863,175
    
    
    
    172,898,590


The major classes of consolidated revenues and expenses included in the Chilean
GAAP Enersis consolidated Income Statement are as follows:

As of December 31,2000
    
    2001
    
    2002ThCh$
    
    ThCh$
    
    ThCh$Sales
    
    
    15,081,812
    
    
    
    20,150,123
    
    
    
    20,202,007Costs of sales
    
    
    (8,689,379
    )
    
    
    (10,457,778
    )
    
    
    (9,961,732
    )Gross profit
    
    
    6,392,433
    
    
    
    9,692,345
    
    
    
    10,240,275Administrative and
selling expenses
    
    
    (985,710
    )
    
    
    (1,291,432
    )
    
    
    (1,309,638
    )Operating income
    
    
    5,406,723
    
    
    
    8,400,913
    
    
    
    8,930,637Non operating
(loss) income
    
    
    (4,836,751
    )
    
    
    (7,003,803
    )
    
    
    (7,501,002
    )Income before taxes
and minority
interest
    
    
    569,972
    
    
    
    1,397,110
    
    
    
    1,429,635Income tax
    
    
    155,745
    
    
    
    (605,137
    )
    
    
    (972,455
    )Minority interest
    
    
    (465,717
    )
    
    
    (507,563
    )
    
    
    (292,061
    )Net income for the
year
    
    
    260,000
    
    
    
    284,410
    
    
    
    165,119


F-142



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(p) Goodwill and intangible assets

As discussed in paragraph (i), Enersis S.A. adopted SFAS 142, which requires
companies to stop amortizing goodwill and certain intangible assets with an
indefinite useful life. Instead, FAS 142 requires that goodwill and intangible
assets deemed to have an indefinite useful life be reviewed for impairment upon
adoption of SFAS 142, effective January 1, 2002 and annually thereafter. Under
SFAS 142, goodwill impairment is deemed to exist if the net book value of a
reporting unit exceeds its estimated fair value. The Companys reporting units
are at the operating subsidiary level. This methodology differs from Enersiss
previous policy, as provided under accounting standards existing at that time
of using undiscounted cash flows on an enterprise-wide basis to determine if
goodwill was recoverable. Upon adoption of SFAS 142 in 2002, the Company has
recognized a non-cash charge of ThCh$600,380,013 to reduce the carrying value
of goodwill.

In calculating the impairment charge, the fair value of the impaired reporting
units underlying the segments were estimated using discounted cash flow
methodology. The ThCh$600,380,013 goodwill impairment is associated entirely
with goodwill associated with investments in Argentina and Brazil. The
impairment reflects the decline in the Companys revenues and forecasted cash
flows in their Argentina and Brazilian subsidiaries and the increase in
inflation and interest rates and decreasing expectations of the currencies in
Argentina and Brazil. Prior to performing the review for impairment, SFAS 142
required that all goodwill deemed to be related to the entity as a whole be
assigned to all of the Companys reporting units, including the reporting units
of the acquirer.

A summary of the changes in the Companys goodwill under U.S. GAAP during the
year ended December 31, 2002, by country of operation is as follows:

GoodwillJanuary 1,
    
    
    
    
    
    Translation
    
    
    
    
    
    December 31,2002 (1)
    
    Acquisitions
    
    adjustment
    
    Impairment
    
    2002ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Chile
    
    
    998,343,122
    
    
    
    3,333,940
    
    
    
    
    
    
    
    (1,713,130
    )
    
    
    999,963,932Argentina
    
    
    83,196,029
    
    
    
    
    
    
    
    6,624,271
    
    
    
    (89,820,300
    )
    
    
    Brazil
    
    
    482,974,835
    
    
    
    
    
    
    
    25,871,748
    
    
    
    (508,846,583
    )
    
    
    Colombia
    
    
    60,415,564
    
    
    
    
    
    
    
    2,225,133
    
    
    
    
    
    
    
    62,640,697Peru
    
    
    19,993,731
    
    
    
    
    
    
    
    1,309,513
    
    
    
    
    
    
    
    21,303,244Total
    
    
    1,644,923,281
    
    
    
    3,333,940
    
    
    
    36,030,665
    
    
    
    (600,380,013
    )
    
    
    1,083,907,873




|(1) |  | In thousands of constant Chilean pesos as of December 31, 2002, using exchange rate of Ch$718,61 per US$
|--- |  | --------------------------------------------------------------------------------------------------------

The Companys intangible assets were ThCh$71,697,080 and ThCh$80,915,893 and
related accumulated amortization were ThCh$25,148,069 and ThCh$34,648,290 as of
December 31, 2001 and 2002, respectively. There is no difference between
Chilean and U.S. GAAP in the amortization of intangible assets because all of
the Companys intangible assets are subject to amortization, since they relate
to finite contracts or concessions.

F-143



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

(q) Recent accounting pronouncements

In January 2003, the Chilean Association of Accountants issued Technical
Bulletin No. 72, Combinación de Negocios Inversiones Permanentes y
Consolidación de Estados Financieros. This standard complements or replaces
existing accounting literature for business combinations under Chilean GAAP,
and requires all acquisitions initiated after January 1, 2003 to be accounted
for using the purchase method based on fair values of assets acquired and
liabilities assumed. In addition, in exceptional cases, the pooling-of-interest
method may be used in reorganizations between related parties or for those
transactions, where there is no clear acquirer. Technical Bulletin No. 72
continues to require the amortization of goodwill, and specifies the
requirement for an impairment test. Notwithstanding any future transactions,
the adoption of Technical Bulletin No. 72 is not expected to have a significant
effect on the results of operations, financial position or cash flows of the
Company.

In June 2001 the Financia1 Accounting Standards Board issued Statement of
Financia1 Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143). This standard requires that obligations
associated with the retirement of tangible long-lived assets be recorded as
liabilities when those obligations are incurred, with the amount of the
liability initially measured at fair value. Upon initially recognizing a
liability for an asset retirement obligation, an entity must capitalize the
cost by recognizing an increase in the carrying amount of the related
long-lived asset. Over time, this liability is accreted to its present value,
and the capitalized cost is depreciated over the useful life of the related
asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
If the Company reported in accordance with U.S. GAAP, the Company would be
required to adopt SFAS No. 143 effective January 1, 2003. The Company expects
that the adoption of this statement will not result in a significant difference
between Chilean GAAP and US GAAP in future periods, however the Company is
still assessing the impact.

In April 2002, the FASB issued Statement of Financia1 Accounting Standards No.
145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. This statement rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishments of Debt, and
an amendment of that Statement, Statement No. 64, Extinguishments of Debt Made
to Satisfy Sinking-Fund Requirements This Statement also amends other
existing authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed conditions.
The provisions of SFAS 145 related to the rescission of SFAS No. 4 shall be
applied in fiscal years beginning after May 15, 2002, although early
application is encouraged. Any gain or loss on extinguishments of debt that
was classified as an extraordinary item in prior periods presented that does
not meet the criteria in APB Opinion 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions for
classification as an extraordinary item shall be reclassified. Debt
extinguishments used as part of an entitys risk management strategy represent
one example of debt extinguishments that do not meet the criteria for
classification as extraordinary items in APB Opinion No. 30. The Company will
apply SFAS 145 beginning January 1, 2003. The Companys application of SFAS
145 will require the reclassification of the extraordinary gain on early
retirement of Yankee bonds of

F-144



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

ThCh$23,410,527 (as presented in Note 34 l(l) to other non-operating income, so
upon application there will be no presentational difference between Chile and
U.S. GAAP for the early extinguishments of debt.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS No.
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at fair value only when the
liability is incurred, not when it is planned. The Company is required to
adopt the provisions of SFAS No. 146 for exit or disposal activities that are
initiated after December 31, 2002 and does not expect the adoption to have a
material impact on the Companys results of operations or financial position.

In April 2003, the Financial Accounting Standards Board (FASB) issued Statement
N°149 (SFAS N°149), Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. FAS N° 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS N°133. SFAS N°149 is applied
prospectively and is effective for contracts entered into or modified after
June 30, 2003, except for SFAS N°133 implementation issues that have been
effective for fiscal quarters that began prior to June 15, 2003, and certain
provisions relating to forward purchases or sales of when-issued securities or
other securities that do not yet exist. Enersis is evaluating the effect, if
any, that SFAS N°149 will have on its results of operating its financial
position and its cash flows.

In June, 2003, the Financial Accounting Standards Board (FASB)issued
Statement of Financial Accounting Standards No. 150 (SFAS No. 150),
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. This Statement clarifies classification and
measurement of certain financial instruments with characteristics of both
liabilities and equity. It requires classification of financial instruments
within a companys scope as liabilities. Such financial instruments may
include mandatorily redeemable shares, financial instruments which embody an obligation
to repurchase shares or require issuer to settle the obligation by transferring
assets, or financial instruments that embody an unconditional obligation, or,
in certain circumstances, an unconditional obligation. The Company believes
that the adoption of this pronouncement will not have an impact on its
statements of financial condition, its statements of operations or cash flows.

In January, 2003, Emerging Issues Task Force (EITF) 00-21, Revenue
Arrangements with Multiple Deliverables, was issued , which is applicable for
all revenue arrangements of this nature entered into after June 15, 2003. This
EITF applies to all deliverables within contractually binding arrangements in
all industries in which a vendor will perform multiple revenue-generating
activities with certain exceptions. The application guidance contains guidance
on 1) how these arrangements should be measured; 2) whether the arrangement
should be divided into separate units of accounting, and 3) how the arrangement
consideration should be allocated among the separate units of accounting. The
Company believes that the issuance of this EITF will have no impact on its
statements of financial condition, its statements of operations or cash flows.

F-145



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). The Interpretation will
significantly change current practice in the accounting for, and disclosure of,
guarantees. In general, the Interpretation applies to contracts or
indemnification agreements that contingently require the guarantor to make
payments to the guaranteed party based on changes in an underlying that is
related to an asset, liability, or an equity security of the guaranteed party.
Guarantees meeting the characteristics described in the Interpretation, are
required to be initially recorded at fair value, which is different from the
general current practice of recording a liability only when a loss is probable
and reasonably estimable, as those terms are defined in FASB Statement No. 5,
Accounting for Contingencies. The Interpretation also requires a guarantor to
make significant new disclosures for virtually all guarantees even when the
likelihood of the guarantors having to make payments under the guarantee is
remote. The Interpretations disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The Interpretations initial recognition and initial measurement
provisions are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002, irrespective of the guarantors fiscal
year-end. The Company has implemented FIN 45 during December 31, 2002, noting
no adjustments to US GAAP were necessary as the fair values of all direct and
indirect guarantees were zero, see Note 28 for a detail of the Companys
guarantees.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities-an interpretation of ARB 51, to expand upon and
strengthen existing accounting guidance that addresses when a company should
include in its financial statements the assets, liabilities and activities of
another entity. Many variable interest entities have commonly been referred to
as special-purpose entities or off-balance sheet structures, but the guidance
applies to a larger population of entities. In general, a variable interest
entity is a corporation, partnership, trust, or any other legal structure used
for business purposes that either (a) does not have equity investors with
voting rights or (b) has equity investors that do not provide sufficient
financial resources for the entity to support its activities. The Company must
apply Interpretation No. 46 immediately to variable interest entities created
after January 31, 2003 and apply it to existing variable interest entities in
the first fiscal year or interim period beginning after June 15, 2003. The
Company does not expect the interpretation to have a material impact on the
Companys results of operation or financial position.



|(r |  | Subsequent events
|-- |  | -----------------



|(1) |  | During January 2003, the governor of the State of Paraná in Brazil
suspended payment and announced its intention to cancel or
renegotiate the long-term energy contracts between Copel and
Endesa-Chiles equity method investment, CIEN. The 20-year
long-term contracts were negotiated during almost two years of
negotiations and aim to relieve the energy-suppy shortages in
Brazil, and were complied with through December 31, 2002. An
investment of more than US$700 million was made to build the
Interconnection-line between Brazil and Argentina. During 2002,
approximately R$1.2 billion (or approximately US$340 million) of
energy was sold by CIEN to Copel through the long-term energy
contracts. CIEN has notified the Ministry of Mines and Energy and
the Electric Energy Regulatory Agency (ANEEL) of Copels default.
CIEN has 20-year long-term energy purchase commitments in Argentina
to satisfy the supply contracts with Copel. Additionally, the
estimated fair value of these long-
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-146



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



| |  | term energy contracts with Copel was US$350 million as of December
31, 2002, and any changes or cancellation of the contracts would
likely have a material impact in the Companys consolidated net
income and shareholders equity.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | On March 28, 2003, Enersis announced that the board of directors
awarded the sale of its 98.7% equity stake in Río Maipo to CGE
Distribución S.A. for US$203 million. Enersis shareholders
approved the sale of Río Maipo at a March 31, 2003 Extraordinary
Shareholders Meeting. Enersis estimates that the sale of Río Maipo
will contribute US$126 million before taxes to its income statement
for the year ended December 31, 2003, and expects to apply the
proceeds of this sale to reduce its debt. On April 30, 2003, Río
Maipo was sold for US$203 million, including US$33 million in debt.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | On March 31, 2003, at an Extraordinary Shareholders Meeting,
Enersis management approved a capital increase for the equivalent
of up to US$2 billion. The capital increase, which commenced on May
31, 2003, already allowed for the capitalization of all of
Endesa-Spains loan to Enersis (with a face value of approximately
US$1.37 billion), and will allow the capitalization of Enersis
local bonds (with a face value of approximately US$151 million), as
well as the subscription of shares for cash. All existing
shareholders, other than Endesa-Spain, will have two pre-emptive
rights periods in which they are allowed to subscribe their pro rata
equity shares, or sell their rights in the market. Endesa-Spain
exercised its rights on June 2, 2003, and has voluntarily excluded
itself from the second pre-emptive rights period. The new shares to
be offered in the capital increase will not be registered with the
Securities and Exchange Commission (the SEC), and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the U.S.
Securities Act of 1933, as amended. Enersis shareholders approved
the removal of the 65% maximum limit that a single shareholder was
permitted to own in Enersis.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | In April 2003, CELG initiated legal proceedings against Cachoeira
Dourada and ANEEL demanding the annulment of the energy sale
contract signed with Cachoeira Dourada in 1998, alleging, among
other things, that the contract is extremely onerous and damaging to
the financial stability of CELG, causing it supposed damages of
approximately US$250 million from 1997 to 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | CELG obtained a preliminary and provisional judgment that suspends
the effects of the contract and authorizes CELG to stop payments,
also provisionally, of the amounts contractually due to Cachoeira
Dourada which correspond to the energy sale price.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Both Cachoeira Dourada and ANEEL presented their defenses and legal
argument against the decision to suspend the contract. All parties
are waiting for the judge to decide whether or not to confirm the
preliminary decision of suspending the effects of the contract.
Should the judge confirm the decision to suspend the effects of the
contract, Cachoeira Dourada and ANEEL will have the opportunity to
appeal to an appropriate authority.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Both Cachoeira Dourada and its lawyers believe that there is a high
probability of obtaining a favorable final decision.
| |  | ------------------------------------------------------------------------------------------------------------------------

F-147



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)



|(5) |  | On April 8, 2003 Endesa Chile (Enersis Subsidiary) sold 285
kilometers of 220 kV transmission lines to Transelec for US$32
million (approximately ThCh$22,400,000). The carrying value of net
assets under Chilean GAAP sold amounted to ThCh$21,562,962 as of
December 31, 2002. Additionally, GasAtacama Generación Limitada, of
which Endesa Chile has a 50% participation, sold 673 kilometers of
220 kV line transmission lines for approximately US$78 million
(ThCh$54,600,000 approximately). The carrying value of net assets
under Chilean GAAP sold amounted to ThCh$53,458,465 as of December
31, 2002. In both cases, the transaction included the transfer of
the respective substations.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) |  | On April 25, 2003, Enersis, Endesa-Chile, Enersis Internacional,
Chilectra Internacional, and Chilectra filed an action before the
Centro Internacional de Arreglo de Diferencias relativas a
Inversiones (CIADI) in Washington, D.C., requesting an arbitration
for resolving a dispute with the Republic of Argentina. The grounds
of this action are the damages suffered by the investments of
Enersis and our subsidiaries in Argentina, as a consequence of the
approval of Economic Emergency Law, Decree N°214/2002, Decree
N°293/2002 and Resolution N°38/2002 of the Ministry of Economy. The
outcome of these new rules has been a complete new legal framework
for the Argentine investments of Enersis and its subsidiaries, which
originally date back to September 1992. The original commitments
assumed by the Republic of Argentina regarding these investments
have not been met. The arbitration action argues that the Republic
of Argentinas failure to comply with its commitments in relation to
our investments by the part of the Republic of Argentina is against
the letter and the spirit of the Treaty.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) |  | On April 30, 2003 Endesa Chile (Enersis Subsidiary) sold Canutillar
Plant to Cenelca S.A. for US$174 million (approximately
ThCh$121,800,000). The carrying value of net assets sold under
Chilean GAAP amounted to ThCh$125,925,381 as of December 31, 2002
and its installed capacity was 172 MW.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) |  | In May 2003 Chilectra increased its interest in Cerj in Brazil from
33.4% to 41.2% through a capital increase to which Enersis
subscribed in January 2003, and later sold a share to Chilectra.
Its interest in Coelce in Brazil was also indirectly increased,
through Cerj, from 12.8% to 14.4%. Chilectra also owns a 9.9%
interest in Codensa in Colombia and a 15.6% interest in Edelnor in
Peru.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) |  | On May 15, 2003, Enersis and Endesa-Chile refinanced US$2.33 billion
in syndicated loans and bilateral credit agreements structured as:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  | a US$200 million Senior Secured Syndicated Term
Loan Facility for Enersis and a US$1,388 billion
Senior Secured Syndication Term Loan Facility for
Enersis, acting through its Cayman Islands Branch
(the Enersis Facility) each for five years; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a US$743 million Senior Guaranteed Syndicated Term
Loan Facility for Endesa-Chile, acting through its
Cayman Islands Branch (the Endesa-Chile
Facility, and together with the Enersis Facility,
the Facilities).
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-148



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Continued)

The refinancing of bank obligations with the Facilities has allowed Enersis and
Endesa-Chile to: (a) make payments for the bond maturities and put option
coming due in 2003 for a total of US$701 million, (b) lengthen the maturity
profile of our debt, (c) allow a greater period of time before amortizing
principal payments on our debt and (d) provide better conditions for the
planned capital increase process.

The following table shows the effects that would have been recognized under
Chilean GAAP from the refinancing of liabilities mentioned before.

As of December 31, 2002Before
    
    Afterrefinancing
    
    refinancingThCh$
    
    ThCh$CURRENT LIABILITIES:Short-term debt due to banks and financial institutions
    
    
    425,049,260
    
    
    
    384,736,676Current portion of long-term debt due to banks and financial institutions
    
    
    605,261,953
    
    
    
    226,914,211Other current liabilities
    
    
    1,121,062,036
    
    
    
    1,121,062,036Total current liabilities
    
    
    2,151,373,249
    
    
    
    1,732,712,923LONG-TERM LIABILITIES:Due to banks and financial institutions
    
    
    1,691,338,670
    
    
    
    2,109,998,996Other long-term liabilities
    
    
    3,722,269,742
    
    
    
    3,722,269,742Total long-term liabilities
    
    
    5,413,608,412
    
    
    
    5,832,268,738




|(10) |  | On May 15, 2003 the Supreme Court of Chile made its final verdict as a
consequence of an appeal against Resolution No. 667, ruling in favor of Enersis
and confirming Resolution No. 667 from Comisión Resolutiva.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On May 28, 2003, a private complaint against Enersis was filed with the
Comisión Resolutiva alleging that Enersis has failed to comply with Resolution
No. 667 since Enersis, Endesa-Chile and Chilectra have supposedly shared
finance, auditing and communication departments. The complaint alleges that by
joining these departments, Enersis is frustrating the Comisión Resolutivas
objective of preventing energy companies from sharing essential information and
keeping the electricity business of generation and distribution independent.
Enersis believes that the Comisión Resolutivas investigation will not lead to
a prohibition of Enersiss control over the energy distribution and generation
markets, because we believe this matter was clearly resolved by Resolution
No.667.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-149



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Concluded)



|(11) |  | The Sixth Civil Court of Santiago recently issued its ruling in
relation to a lawsuit opposing the Ralco Project filed by a group
of people belonging to the Pehuenche ethnic group. The lower
courts sentence concludes that the voluntary procedure undertaken
by Endesa-Chile for the assessment of the environmental impact of
the Ralco Project is null since, in the courts opinion, CONAMA,
the Environmental Government Agency, was not legally entitled to
assess the environmental impact study presented by the Company to
CONAMA. Both defendants, the Company and CONAMA, consider this
questioning of the legitimacy of the process is unjustified. The
resolution dictated by the Sixth Civil Court of Santiago does not
imply the penalization of the project, which to date has achieved
more than 80% completion.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |  | On May 30, 2003, the plaintiffs requested the suspension of the
Ralco Project, which was rejected by the court. Instead, of
suspending the entire project, the judge ruled that the flooding of
the dam should not proceed. Endesa plans to appeal this ruling
before the Appeals Court of Santiago.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-150



---



##### Table of Contents



ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Concluded)

Schedule II  Valuation and Qualifying Accounts

Additionscharged to
    
    
    
    
    
    
    
    
    
    BalanceBalance at beginning
    
    costs and
    
    
    
    
    
    
    
    
    
    at end ofof period
    
    expenses
    
    Deductions
    
    Others
    
    periodThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$December 31, 2000Allowance for doubtful accounts receivable
    
    
    78,303,154
    
    
    
    64,414,380
    
    
    
    (10,600,402
    )
    
    
    (10,783,848
    )
    
    
    121,333,284December 31, 2001Allowance for doubtful accounts receivable
    
    
    121,333,284
    
    
    
    42,858,379
    
    
    
    (6,340,092
    )
    
    
    (11,474,437
    )
    
    
    146,377,134December 31, 2002Allowance for doubtful accounts receivable
    
    
    146,377,134
    
    
    
    18,798,815
    
    
    
    (1,297,010
    )
    
    
    (48,529,408
    )
    
    
    115,349,531


F-151



---



##### Table of Contents






Item 19. Exhibits

Exhibit
    
    Description1.1
    
    By-laws (Estatutos) of ENERSIS S.A., as amended, (incorporated by reference to Exhibit
1.1 of our 2002 Annual Report on Form 20-F filed with the Securities and Exchange Commission
on June 30, 2003)1.2
    
    By-laws (Estatutos) of ENERSIS S.A., as amended (English translation) (incorporated by
reference to Exhibit 1.2 of our 2002 Annual Report on Form 20-F filed with the Securities
and Exchange Commission on June 30, 2003)4.1
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Interocean Development Inc. (Spanish version) (incorporated by reference to Exhibit 10.1
of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June
30, 2000)4.2
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Interocean Development Inc. (English version) (incorporated by reference to Exhibit 10.2
of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June
30, 2000)4.3
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Enersis Investment S.A. (Spanish version) (incorporated by reference to Exhibit 10.3 of
our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30,
2000)4.4
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Enersis Investment S.A. (English version) (incorporated by reference to Exhibit 10.4 of
our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30,
2000)4.5
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Empresa Eléctrica de Panamá S.A. (Spanish version) (incorporated by reference to Exhibit
10.5 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on
June 30, 2000)4.6
    
    Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A.
and Empresa Eléctrica de Panamá S.A. (English version) (incorporated by reference to Exhibit
10.6 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on
June 30, 2000)4.7
    
    Credit Agreement among ENERSIS S.A, Banco Bilbao Vizcaya Argentaria, S.A., Citigroup
Global Markets Inc., Dresdner Kleinwort Wasserstein Securities LLC, Santander Central
Hispano Investment Securities Inc., various lenders and Citibank N.A., as administrative
agent, dated May 12, 2003 (incorporated by reference to Exhibit 4.7 of our 2002 Annual
Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)8.1
    
    List of Subsidiaries (incorporated by reference to Exhibit 8.1 of our 2002 Annual Report
on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)99.1
    
    Section 302 Certification of Chief Executive Officer.99.2
    
    Section 302 Certification of Chief Financial Officer.99.3
    
    Section 906 Certifications of Chief Executive Officer and Chief Financial Officer.


We will furnish to the Securities and Exchange Commission, upon request,
copies of any unfiled instruments that define the rights of holders of
long-term debt of ENERSIS S.A.



---



##### Table of Contents






SIGNATURES

The registrant certifies that it meets all of the requirements for filing
on Form 20-F/A and that it has duly caused and authorized the undersigned to
sign this amendment to the annual report on its behalf.

ENERSIS S.A.By:
    
    /s/ Mario ValcarceName: Mario ValcarceTitle: Chief Executive Officer


Date: February 19, 2004