CONTENTS
BALANCE SHEETS .......................................................................................................................................... 2
INCOME STATEMENTS.................................................................................................................................... 4
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY ...................................................................... 5
STATEMENTS OF CASH FLOWS .................................................................................................................... 6
EXPLANATORY NOTES TO THE QUARTERLY INFORMATION (ITR) ......................................................... 8
1) – OPERATIONAL CONTEXT ........................................................................................................................ 8
2) – PRESENTATION OF THE QUARTERLY INFORMATION........................................................................ 9
3) – PRINCIPLES OF CONSOLIDATION ....................................................................................................... 12
4) – CASH AND CASH EQUIVALENTS ......................................................................................................... 13
5) – CONSUMERS AND TRADERS................................................................................................................ 13
6) – TRADERS – TRANSACTIONS IN “FREE ENERGY” ............................................................................. 14
7) – REGULATORY ASSETS AND LIABILITIES, AND THE TARIFF REVIEW ............................................ 14
8) – TAXES SUBJECT TO OFFSETTING ...................................................................................................... 15
9) – TAX CREDITS .......................................................................................................................................... 16
10) – DEPOSITS LINKED TO LEGAL ACTIONS ........................................................................................... 17
11) – INVESTMENTS ....................................................................................................................................... 18
12) – FIXED ASSETS ...................................................................................................................................... 20
13) - INTANGIBLE ........................................................................................................................................... 22
14) – SUPPLIERS ............................................................................................................................................ 23
15) – TAXES, CHARGES AND CONTRIBUTIONS ........................................................................................ 23
16) – LOANS, FINANCINGS AND DEBENTURES ........................................................................................ 24
17) – REGULATORY CHARGES .................................................................................................................... 26
18) – POST-EMPLOYMENT OBLIGATIONS .................................................................................................. 26
19) – CONTINGENCY PROVISIONS .............................................................................................................. 28
20) – STOCKHOLDERS’ EQUITY................................................................................................................... 29
21) – REVENUE FROM SUPPLY OF ELECTRICITY ..................................................................................... 30
22) – REVENUE FOR USE OF THE NETWORK ............................................................................................ 30
23) – DEDUCTIONS FROM OPERATIONAL REVENUE ............................................................................... 30
24) – OPERATIONAL COSTS AND EXPENSES ........................................................................................... 31
25) – NET FINANCIAL EXPENSES ................................................................................................................ 32
26) – RELATED PARTY TRANSACTIONS .................................................................................................... 32
27) – FINANCIAL INSTRUMENTS .................................................................................................................. 34
28) – SUBSEQUENT EVENT .......................................................................................................................... 37
CONSOLIDATED ECONOMIC AND FINANCIAL PERFORMANCE ............................................................. 39
BALANCE SHEETS
ON JUNE 30 AND MARCH 31, 2010
ASSETS
R$ ’000
Consolidated
06/30/2010
03/31/2010
CURRENT
Cash and cash equivalents (Note 4)
Consumers and traders (Note 5)
Concession holders – transport of energy
Taxes subject to offsetting (Note 8)
Traders – Transactions in “Free Energy”
(Note 6)
Tax credits (Note 9)
Inventories
Regulatory assets – Tariff Review (Note 7)
Other credits
TOTAL, CURRENT
NON-CURRENT
Long term assets
Consumers and traders (Note 5)
Tax credits (Note 9)
Taxes subject to offsetting (Note 8)
Deposits linked to legal actions (Note 10)
Receivable from related parties
Regulatory assets – Tariff Review (Note 7)
Other credits
Investments (Note 11)
Fixed assets (Note 12)
Intangible (Note 13)
TOTAL, NON-CURRENT
TOTAL ASSETS
Holding company
06/30/2010
03/31/2010
2,051,502
330,518
118,024
424,165
2,953,159
334,470
70,274
324,654
1,755,513
326,583
70,243
409,853
2,727,833
303,948
70,274
315,845
46,141
20,519
6,752
91,954
117,020
3,206,595
45,175
13,446
5,743
77,746
107,444
3,932,111
46,141
19,508
5,035
91,954
93,767
2,818,597
45,175
13,446
4,435
77,746
86,340
3,645,042
60,133
13,372
106,446
4,067
1,055
23,124
208,197
46,188
64,891
12,625
97,100
16,879
23,423
18,800
279,906
60,133
10,518
104,431
2,905
1,055
7,011
186,053
46,188
64,891
10,518
95,956
9,309
23,423
7,063
257,348
1,737
7,956,333
1,345,688
9,511,955
12,718,550
1,738
7,273,924
822,644
8,378,212
12,310,323
2,488,016
5,373,133
25,996
8,073,198
10,891,795
1,623,910
5,395,084
26,208
7,302,550
10,947,592
The Explanatory Notes are an integral part of the Quarterly Information.
2
BALANCE SHEETS
ON JUNE 30 AND MARCH 31, 2010
LIABILITIES
R$ ’000
Consolidated
06/30/2010
03/31/2010
Holding company
06/30/2010
03/31/2010
CURRENT
Loans and financings (Note 16)
Debentures (Note 16)
Suppliers (Note 14)
Taxes, charges and contributions (Note 15)
Interest on Equity, and dividends, payable
Regulatory liabilities – Tariff Review (Note 7)
Salaries and mandatory charges on payroll
Regulatory charges (Note 17)
Profit shares
Debt to related parties
Post-employment obligations (Note 18)
Other obligations
TOTAL, CURRENT
943,528
119,809
140,420
317,533
110,347
75,568
63,701
47,794
11,988
528
18,340
37,385
1,886,941
865,662
22,863
121,284
233,491
418,304
69,716
47,278
9,901
11,851
18,862
41,166
1,860,378
508,221
121,927
88,195
308,435
110,347
60,064
40,793
11,988
16,907
18,340
111,967
1,397,184
616,703
22,863
83,722
226,292
418,304
67,479
43,386
9,901
21,639
18,862
40,440
1,569,591
NON-CURRENT
Loans and financings (Note 16)
Debentures (Note 16)
Contingency provisions (Note 19)
Post-employment obligations (Note 18)
Taxes, charges and contributions (Note 15)
Regulatory charges (Note 17)
Other obligations
TOTAL, NON-CURRENT
3,154,322
3,185,870
6,125
236,083
146,538
65,410
55,329
6,849,677
2,922,522
3,193,477
10,528
238,714
150,834
61,218
52,382
6,629,675
2,005,480
3,013,049
5,253
236,083
146,532
65,410
40,872
5,512,679
2,031,793
3,025,963
9,699
238,714
150,834
61,218
39,510
5,557,731
3,296,785
266,112
451
418,584
3,981,932
12,718,550
3,296,785
266,112
1,220
256,153
3,820,270
12,310,323
3,296,785
266,112
451
418,584
3,981,932
10,891,795
3,296,785
266,112
1,220
256,153
3,820,270
10,947,592
STOCKHOLDERS’ EQUITY (Note 20)
Registered capital
Profit reserves
Revaluation reserves
Retained earnings
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES
The Explanatory Notes are an integral part of the Quarterly Information.
3
INCOME STATEMENTS
FOR THE HALF-YEAR PERIODS ENDING JUNE 30, 2010 AND 2009
(R$ ’000, except net profit per thousand shares)
Consolidated
06/30/2010
OPERATIONAL REVENUE
Revenue from supply of electricity (Note 21)
Revenue from use of the grid (Note 22)
Other operational revenues
DEDUCTIONS FROM OPERATIONAL REVENUE (Note 23)
NET OPERATIONAL REVENUE
COST OF ELECTRICITY SERVICE
COST OF ELECTRICITY (Note 24)
Charges for the use of the basic transmission grid
Electricity bought for resale
COST OF OPERATION (Note 24)
Personnel and managers
Post-employment obligations
Materials
Raw materials and inputs for generation
Outsourced services
Depreciation and amortization
Operational (provisions) reversals
Royalties for use of water resources
Other costs of operation
TOTAL COST
GROSS PROFIT
PROFIT FROM THE SERVICE (OPERATIONAL PROFIT
BEFORE EQUITY GAINS/LOSSES AND FINANCIAL
REVENUES/EXPENSES)
Equity gain (loss) from subsidiaries
Net financial expenses (Note 25)
PROFIT BEFORE TAXATION AND PROFIT SHARES
Income tax and Social Contribution tax (Note 9 b)
Deferred income tax and Social Contribution tax (Note 9 b)
Employees’ and managers’ profit shares (Note 24)
NET PROFIT FOR THE PERIOD
NET PROFIT PER THOUSAND SHARES, R$
Holding company
06/30/2010
1,740,088
465,609
11,148
2,216,845
(447,350)
1,769,495
1,705,575
271,312
11,554
1,988,441
(448,652)
1,539,789
1,733,621
465,609
11,148
2,210,378
(445,929)
1,764,449
(135,979)
(145,996)
(281,975)
(142,414)
(70,914)
(213,328)
(139,842)
(145,984)
(285,826)
(142,414)
(70,436)
(212,850)
(115,565)
(12,309)
(8,071)
(52,175)
(141,110)
6,395
(65,903)
(22,827)
(411,565)
(110,607)
(9,571)
(6,415)
(4,070)
(42,311)
(112,659)
(500)
(70,090)
(4,965)
(361,188)
(109,983)
(12,309)
(7,334)
(48,234)
(112,273)
6,395
(65,903)
(20,655)
(370,296)
(110,517)
(9,571)
(6,392)
(4,070)
(42,085)
(112,228)
(500)
(70,090)
(4,836)
(360,289)
(693,540)
(574,516)
(656,122)
(573,139)
1,194,979
883,667
1,191,310
(454)
(67,040)
(14,473)
(81,967)
(52)
(81,773)
(10,296)
(92,121)
(454)
(51,892)
(8,028)
(60,374)
(52)
(81,773)
(10,295)
(92,120)
918,536
(200,604)
717,932
1,102,858
(93,222)
1,009,636
823,293
32,847
(157,208)
698,932
1,099,190
3,064
(92,863)
1,009,391
(233,565)
20,165
(16,070)
488,462
(261,788)
(46,993)
(16,217)
684,638
(214,992)
20,592
(16,070)
488,462
168.62
(261,543)
(46,993)
(16,217)
684,638
236.34
The Explanatory Notes are an integral part of the Quarterly Information.
4
06/30/2009
Reclassified
1,716,253
427,412
11,633
2,155,298
(461,255)
1,694,043
1,000,503
OPERATIONAL EXPENSES (Note 24)
Selling expenses
General and administrative expenses
Other operational expenses
06/30/2009
Reclassified
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE QUARTER AND HALF YEAR ENDING JUNE 30, 2010
R$ ’000
BALANCES ON MARCH 31, 2010
Capital increase
Net profit for the period
Allocation of profit
Interest on Equity
Recording of Revaluation reserve
BALANCES ON JUNE 30, 2010
Registered
capital
3,296,785
Profit
reserves
266,112
-
-
3,296,785
266,112
2,896,785
666,112
Revaluation
reserves
1,220
(769)
Retained
earnings
256,153
232,309
(69,878)
-
Total
3,820,270
232,309
(69,878)
(769)
451
418,584
3,981,932
451
451
488,462
(69,878)
418,584
3,562,897
488,462
(69,878)
451
3,981,932
BALANCES ON DECEMBER 31, 2009
Capital increase
Net profit for the period
Interest on Equity
Recording of Revaluation reserve
BALANCES ON JUNE 30, 2010
400,000
3,296,785
(400,000)
266,112
The Explanatory Notes are an integral part of the Quarterly Information.
5
STATEMENTS OF CASH FLOWS
FOR THE HALF-YEAR PERIODS ENDING JUNE 30, 2010 AND 2009
R$ ’000
Consolidated
06/30/2010
06/30/2009
CASH FLOW FROM OPERATIONS
Net profit for the period
Expenses (revenues) not affecting Cash and cash
equivalents
Depreciation and amortization
Net write-offs of fixed assets
Amortization of goodwill on acquisition of subsidiary
Equity gains (losses) in subsidiaries
Interest and Monetary updating – Non-current
Regulatory Assets - Tariff Review
Deferred federal taxes
Provisions for operational losses
Provisions for losses on “Free Energy” transactions
Provision for losses on financial instruments
Post-employment obligations
Other
Holding company
06/30/2010
06/30/2009
488,462
684,638
488,462
684,638
143,347
715
36,844
(20,165)
(5,945)
556
(739)
15,456
658,531
112,815
2,536
(5,664)
(158,090)
46,993
1,173
(8,306)
46,724
14,666
2,195
739,680
112,473
(1,228)
(6,962)
(32,847)
37,336
(20,592)
(5,942)
(168)
15,456
585,988
112,384
2,536
(3,064)
(17,468)
(158,090)
46,993
1,173
(8,306)
46,724
14,666
2,225
724,411
109,398
(114)
(174,484)
(28,917)
25,426
(16,335)
33,354
(51,672)
(65,270)
23,318
(197,862)
59
2,076
(22,685)
3,558
(256,806)
84,207
(92)
(197,028)
(2,516)
26,244
(16,561)
12,875
(92,871)
(64,889)
23,318
(197,596)
59
2,076
(15,560)
(3,946)
(256,538)
NET CASH FROM OPERATIONAL ACTIVITIES
(3,819)
176,122
(24,550)
3,684
104,350
(21,886)
(2,966)
22,468
253,403
860,262
(48,708)
288,976
17,822
(11,420)
44,809
(20,078)
936
(49,248)
223,089
705,963
4,213
199,572
(24,948)
(1,356)
56,676
(21,886)
168
38,385
250,824
743,941
(46,943)
288,164
17,516
(11,420)
44,936
(20,078)
936
(31,186)
241,925
709,798
CASH FLOWS FROM FINANCING ACTIVITIES
Financings obtained
Payments of loans and financings
Interest on Equity, and dividends
NET CASH USED IN FINANCING ACTIVITIES
2,964,315
(2,895,079)
(876,586)
(807,350)
425,853
(31,064)
(492,875)
(98,086)
2,748,281
(2,809,392)
(876,586)
(193,757)
113,979
(30,494)
(492,875)
(409,390)
(Increase) reduction of assets
Consumers and traders
Traders – Transactions in “Free Energy”
Taxes offsetable
Transport of electricity
Tax credits
Payments into Court
Other
Increase (reduction) of liabilities
Suppliers
Taxes and Social Contribution tax
Salaries and mandatory charges on payroll
Regulatory charges
Loans and financings
Post-employment obligations
Losses on financial instruments
Other
6
Consolidated
06/30/2010
06/30/2009
CASH FLOWS FROM INVESTMENT ACTIVITIES
On investments
In fixed assets
Intangible
NET CASH USED IN INVESTMENT ACTIVITIES
(425,340)
(301,253)
(318,532)
(1,045,125)
NET CHANGE IN CASH POSITION
(992,213)
STATEMENT OF CHANGES IN CASH POSITION
At start of period
At end of period
3,043,715
2,051,502
(992,213)
(287)
(249,280)
(249,567)
Holding company
06/30/2010
06/30/2009
(837,710)
(48,368)
871
(885,207)
358,310
(1,078,963)
220,273
862,098
1,220,408
358,310
2,834,476
1,755,513
(1,078,963)
852,213
1,072,486
220,273
The Explanatory Notes are an integral part of the Quarterly Information.
7
(45,203)
(34,932)
(80,135)
EXPLANATORY NOTES TO THE QUARTERLY INFORMATION (ITR)
At June 30, 2010
(Figures are in R$ ’000, except where otherwise stated)
1) – OPERATIONAL CONTEXT
Cemig Geração e Transmissão S.A. (“Cemig GT” or “the Company”) is a Brazilian corporation
registered with the Brazilian Securities Commission (CVM) for listing, and a wholly-owned subsidiary of
Companhia Energética de Minas Gerais – Cemig (“Cemig”). It was created on September 8, 2004, and
started operations on January 1, 2005, as a result of the process of segregation (“unbundling”) of
Cemig’s activities. Its shares are not traded on any exchange.
The objects of Cemig GT are:
i) to study, plan, project, build and commercially operate systems of generation, transmission and
sale of electricity and related services for which concessions are granted, under any form of law, to
it or to companies of which it maintains stockholding control;
ii) to operate in the various fields of energy, from whatever source, with a view to economic and
commercial operation;
iii) to provide consultancy services within its field of operation to companies in and outside Brazil; and
iv) to carry out activities directly or indirectly related to its objects.
Cemig GT has 48 power plants, of which 43 are hydroelectric, four are wind power plants and one is a
thermal plant, and their transmission lines, most of which are part of the Brazilian national generation
and transmission grid system.
The company has stockholdings in the following subsidiaries:

Hidrelétrica Cachoeirão S.A. (jointly controlled, stake 49.00%): Production and sale of electricity as
an independent power producer, through the Cachoeirão hydroelectric power plant located at
Pocrane, in the State of Minas Gerais, with installed capacity of 27MW (not reviewed by external
auditors). The plant began operating in 2009.

Central Eólica Praias de Parajuru S.A. (jointly controlled, 49.00% stake): The Praias de Parajuru
Wind Farm, in the municipality of Beberibe in the state of Ceará, Northern Brazil, with installed
capacity of 28.8MW (information not reviewed by external auditors). The wind farm began
production and sale of electricity in August 2009.

Baguari Energia S.A. (jointly controlled, 69.39% stake): Construction, operation, maintenance and
commercial operation of the Baguari Hydroelectric Plant, through its participation in the UHE
Baguari Consortium (Baguari Energia 49.00%, Neoenergia 51.00%), with installed capacity of
140MW (information not reviewed by external auditors), on the Doce River in Governador
Valadares, Minas Gerais State. The various units of this plant started operating in September 2009
through May 2010.

Transmissora Aliança de Energia Elétrica S.A. (“Taesa”) (previously names Terna Participações
S.A.) (jointly controlled, 32.27% stake): Construction, operation and maintenance of electricity
transmission facilities in 11 states of Brazil through the following companies in which it has a
controlling or other interest: TSN – Transmissora Sudeste Nordeste S.A.; Novatrans Energia S.A.;
ETEO – Empresa de Transmissão de Energia do Oeste S.A.; ETAU – Empresa de Transmissão do
Alto Uruguai S.A.; Brasnorte Transmissora de Energia S.A., and Terna Serviços Ltda. These
control an aggregate of more than 3,712km (information not reviewed by external auditors) of high
voltage transmission lines (230 to 500kV), components of the Brazilian National Grid.
8

Transmissora Alterosa de Energia S.A. (“Alterosa”) (jointly-controlled, 36.23% stake): Holds
29.42% of Transmissora Aliança de Energia Elétrica S.A.

Transmissora Alvorada de Energia S.A. (“Alvorada”) (jointly controlled, 74.50% stake): Holds
62.80% of Transmissora Alterosa de Energia S.A.

Central Eólica Praias do Morgado S.A. (jointly controlled, 49% stake): The Praias do Morgado
Wind Farm, in the municipality of Aracaju in the state of Ceará, Northern Brazil, with installed
capacity of 28.8MW (information not reviewed by external auditors). Began operating in April 2010.
Cemig GT has the following subsidiaries at pre-operational stage:

Guanhães Energia S.A. (jointly controlled, 49.00% stake): Production and sale of electricity
through building and commercial operation of the following Small Hydro Plants in Minas Gerais
state: Dores de Guanhães, Senhora do Porto and Jacaré, in the municipality of Dores de
Guanhães; and Fortuna II, in the municipality of Virginópolis. The plants are scheduled to start
operating in 2011, and will have total installed capacity of 44MW (information not reviewed by
external auditors).

Cemig Baguari Energia S.A. (subsidiary, 100% stake): Production and sale of electricity as an
independent power producer, in future projects.

Madeira Energia S.A. (jointly controlled, 10.00% stake, held through the subsidiary Santo Antônio
Energia S.A.): Implementation, construction, operation and commercial operation of the Santo
Antônio Hydroelectric Plant, in the Madeira river basin, in the State of Rondônia, with power of
3,150 MW (information not reviewed by external auditors) and commercial startup scheduled for
2012.

Hidrelétrica Pipoca S.A. (jointly controlled, 49.00% stake): Independent production of electricity,
through construction and commercial operation of the Pipoca Small Hydro Plant, with installed
capacity of 20MW (information not reviewed by external auditors), located on the Manhuaçu River,
in the municipalities of Caratinga and Ipanema, in the State of Minas Gerais. Operational startup
planned for August 2010.

EBTE (Empresa Brasileira de Transmissão de Energia) (jointly-controlled subsidiary, 49% stake):
Holder of public service electricity transmission concession for transmission lines in the state of
Mato Grosso. Operational startup planned for September 2010.

Central Eólica Volta do Rio S.A. (jointly controlled, 49% stake): The Volta do Rio Wind Farm, in
the municipality of Aracaju in the state of Ceará, Northern Brazil, with installed capacity of 42MW
(information not reviewed by external auditors), was scheduled to begin production and sale of
electricity in August 2010.
2) – PRESENTATION OF THE QUARTERLY INFORMATION
2.1) – Presentation of the Quarterly Information
The Quarterly Information (ITR), both for the holding company, and for the consolidated results, was
prepared according to Brazilian accounting practices, comprising: the Brazilian Corporate Law; the
statements, orientations and interpretations issued by the Brazilian Accounting Statements Committee;
rules of the Brazilian Securities Commission (CVM – Comissão de Valores Mobiliários); and rules of
the specific legislation applicable to holders of Brazilian electricity concessions, issued by the Brazilian
National Electricity Agency, Aneel.
9
This Quarterly Information (ITR) has been prepared according to principles, practices and criteria
consistent with those adopted in the preparation of the annual financial statements at December 31,
2009. Hence this Quarterly Information should be read in conjunction with those annual financial
statements.
The reclassifications made to the balances of June 30, 2009 for the purposes of comparability in
compliance with the change in the Electricity Public Service Accounting Manual (MCSPEE) are as
follows:
Original line
Consolidated
(R$)
Holding
company
(R$)
Reclassified to
Other operational expenses
Other operational expenses
8,093
8,093
8,093
8,093
Deductions from revenue
Emergency Acquisition
Charge
Consolidated
(R$)
(8,093)
(8,093)
Holding
company
(R$)
(8,093)
(8,093)
2.2) Application of the new accounting rules starting in 2010
Continuing the process, begun in 2008, of harmonizing Brazilian accounting practices with
International Financial Reporting Standards (IFRS), issued by the IASB, the CPC issued several
statements in 2009, with obligatory application for the business years starting on or after January 1,
2010, backdated to 2009 for the purposes of comparability.
However, as allowed by CVM Decision 603, of November 10, 2009, as amended by CVM Decision
626 of March 31, 2010, the company opted to present its quarterly information using Brazilian
accounting principles up to December 31, 2009.
The Company is in the process of assessing the possible effects of application of the technical
statements so far issued and has concluded, preliminarily, that the main effects will arise from the
application of the following rules:
Technical Interpretation ICPC 01 – Concession contracts: This establishes the general principles for
recognition and measurement of obligations and the respective rights of concession contracts. Under
ICPC 01, the remuneration received or receivable by the concession holder is to be recorded at fair
value, corresponding to rights held in relation to a financial asset and/or an intangible asset. At present
it is not possible to estimate the effects arising from the application of this rule, since the concepts
introduced are still being studied for the purposes of application, but adjustments are expected, arising
from the reclassification of fixed assets as intangible and/or financial assets, recognition of
construction revenue, and treatment of obligations linked to the concession.
CPC Statement 17 – Construction Contracts: This establishes the accounting treatment for revenues
and expenses associated with construction contracts. The applicability of this accounting statement is
directly related to resolution of doubts arising from Technical Interpretation ICPC 01, since the
recognition of this revenue is not provided for in the tariff regulatory environment. Thus, the company
believes that it is not possible, in the present scenario, to securely quantify the impact of adoption of
the said statement.
Statement CPC 30 – Revenues: This sets out the accounting treatment of revenues that arise from
certain types of transaction and event: sale of goods, provision of services; and the use, by third
parties, of other assets of the entity that generate profits, royalties and dividends. The applicability of
this accounting statement is directly related to the resolution of doubts arising from Technical
Interpretation ICPC 01, since the recognition of this revenue is not provided for in the tariff regulatory
environment. Thus, the company believes that it is not possible, in the present scenario, to securely
quantify the impact of adoption of the said statement.
Statement CPC 24 – Subsequent event, and ICPC 08 – Accounting of the proposal for payment of
dividends: Management has the obligation to propose distribution of the profits at the end of the
business year. This distribution can be changed by the stockholders. Thus, according to CPC 24 the
10
part of the proposed dividends that is not declared and is in excess of the obligatory minimum dividend
and the interest on equity shall be maintained within Stockholders’ equity and shall not be recognized
as a liability at the end of the period. Dividends that are additional to the minimum shall be posted in
liabilities as and when they are approved by the competent bodies of the company.
Statement CPC 43 – This establishes the criteria for the initial adoption of CPCs 15 to 40, and
specifies that the exceptions in relation to the international rules are limited to the maintenance of
equity income in the individual financial statements that have investments valued by the equity method
and maintenance of the deferred asset formed up to December 31, 2008, until its entire amortization.
At present, in Brazil, regulatory assets and liabilities are recorded, and when the regulator establishes
criteria for allocation of revenue or expense to subsequent periods, a regulatory asset or liability is
recognized. At present these regulatory assets and liabilities represent a difference between generally
accepted accounting principles adopted in Brazil, and IFRS. The IASB is preparing an interpretation
which could change the treatment of regulatory assets and liabilities in IFRS. Cemig’s management is
awaiting the result of this new interpretation by the IASB, to assess its possible effects on financial
statements prepared in accordance with accounting practices adopted in Brazil.
The Company is participating in the discussions and debates in the market, especially in the
professional organizations of the accounting sector and with the regulators in relation to the
interpretations on the criteria for application of these Statements, among which we highlight Technical
Interpretation ICPC 01, and these parties may possibly make a position statement on specific aspects
for application in the electricity sector. At this moment, due to the conceptual doubts that have given
rise to differing interpretations as to the correct application of these rules in the Brazilian regulatory
environment, and until there is a better understanding on the practical application of the Statements,
we believe it is not possible yet to quantify the possible effects on the financial statements with a
reasonable degree of certainty.
2.3) Transmission revenue – Criteria for recognition
On October 14, 2009 the CVM, through a decision of its Council, ordered that the electricity
transmission service concession holders controlled by Taesa should, as from the first disclosure of
ITRs of 2010, change the accounting treatment to be adopted in accounting of the revenue, with
effects backdated in 2009 only for the purposes of comparability, Taesa being exempted from having
to restate its accounting statements for the previous business years.
Considering that Cemig GT and the transmission companies of the TBE Group have electricity
transmission concession contracts similar to those of Taesa, they too should adopt the same
procedures ordered by the CVM.
On May 4, 2010, the CVM, through its Official Letter SEP/GEA 189/10, authorized non-application of
this new practice for the ITRs to be published during the 2010 business year, allowing it to be adopted
only after the business year ending December 31, 2010, jointly with the other accounting
pronouncements that have effect in 2010.
It has not been possible to evaluate the impact on the Stockholders’ equity of concession holders
arising from the “linearization” of revenue, due to the conceptual doubts that have given rise to differing
interpretations as to the correct application of Technical Interpretation ICPC 01 – Concession
contracts, and its interaction with CPC 17 – Construction contracts and CPC 30 – Revenues, in the
regulatory environment, as described above.
11
3) – PRINCIPLES OF CONSOLIDATION
In the consolidation of the financial statements of the subsidiaries and jointly-controlled subsidiaries
mentioned in Explanatory Note 1, the jointly-controlled subsidiaries are consolidated based on the
method of proportional consolidation, applicable to each component of the financial statements of the
subsidiaries. All the subsidiaries, including those that are jointly controlled, follow accounting practices
that are consistent with those of the holding company.
Direct stake in total
capital, %
Subsidiaries
Cemig Baguari Energia S.A.
Jointly-controlled subsidiaries
Hidrelétrica Cachoeirão S.A.
Guanhães Energia S.A.
Hidrelétrica Pipoca S.A.
Madeira Energia S.A.
Baguari Energia S.A.
Empresa Brasileira de Transmissão de Energia S.A.
Central Eólica Praias de Parajuru S.A.
Central Eólica Volta do Rio S.A.
Central Eólica Praias de Morgado S.A.
Transmissora Aliança de Energia Elétrica S.A.
Transmissora Alterosa de Energia S.A.
Transmissora Alvorada de Energia S.A.
06/30/2010
03/31/2010
100.00
100.00
49.00
49.00
49.00
10.00
69.39
49.00
49.00
49.00
49.00
32.27
36.23
74.50
49.00
49.00
49.00
10.00
69.39
49.00
49.00
49.00
49.00
32.27
49.00
-
In the consolidation, the interests of the holding company in the Stockholders’ equity of the controlled
companies, and material balances of assets, liabilities, revenues and expenses arising from
transactions effected between the companies, have been eliminated.
The references made in this Quarterly Information of the subsidiaries and of the jointly-controlled
subsidiaries are realized in proportion to the Company’s stake.
The dates of the accounting statements of the subsidiaries and jointly-controlled subsidiaries used for
calculation of equity gains (losses) and consolidation coincide with those of the holding company.
In accordance with CVM Instruction 408, the Consolidated Quarterly Information includes the balances
and the transactions of the exclusive investment funds, comprising public and private debt securities
and debentures of companies with minimum risk rating A+(bra) (Brazilian long-term rating), ensuring
high liquidity of the securities.
The exclusive fund, the financial statements of which are regularly reviewed/audited, is subject to
obligations, restricted to payment for services provided for administration of the assets, attributed to
operation of investments, such as custody fees, audit fees and other expenses. There are no
significant financial obligations, nor assets of the unit holders to guarantee these obligations.
12
4) – CASH AND CASH EQUIVALENTS
Consolidated
06/30/2010
03/31/2010
Bank accounts
Cash investments
Bank certificates of deposit
Treasury Financial Notes (LFTs)
National Treasury Notes (LTNs)
Other
Holding company
06/30/2010
03/31/2010
17,937
11,797
10,360
9,511
1,748,075
183,882
101,608
2,033,565
2,051,502
2,749,524
55,385
43,486
92,967
2,941,362
2,953,159
1,647,349
13,354
84,450
1,745,153
1,755,513
2,596,701
38,256
83,365
2,718,322
2,727,833
The cash investments are transactions carried out with Brazilian institutions, and international financial
institutions with branch offices in Brazil, at normal market conditions and rates. They are highly liquid,
promptly convertible into a known amount of cash, and are subject to an insignificant risk of change in
value. Bank Certificates of Deposit (CBDs), with fixed or floating rates, and Time Deposits with Special
Guarantee (DPGEs) are remunerated at a percentage (varying from 100% to 110%) of the CDI rate
published by Cetip (the Custody and Settlement Chamber).
5) – CONSUMERS AND TRADERS
Consumer type
Holding company
Industrial
Commercial, services and others
Wholesale supply to other concession holders
Provision for doubtful receivables
Up to 90
days past
due
Balances
not yet due
Over 90
days past
due
Total
06/30/2010
03/31/2010
152,115
756
109,476
-
13,706
36,587
-
6,173
9,690
(1,920)
171,994
756
155,753
(1,920)
177,601
174,907
(2,372)
262,347
50,293
13,943
326,583
350,136
665
1,924
-
1,346
-
-
665
3,270
-
1,821
1,623
27,078
Subsidiaries
Industrial
Commercial, services and others
Wholesale supply to other concession holders
Total, consolidated
2,589
1,346
-
3,935
30,522
264,936
51,639
13,943
330,518
380,658
330,518
334,470
-
46,188
Current
Non-current
The Company makes provisions for doubtful receivables through individual analysis of clients’
outstanding balances, taking into account the history of default, negotiations in progress and the
existence of any real guarantees.
The Provision for doubtful receivables is considered to be sufficient to cover any losses in the
realization of these assets.
13
6) – TRADERS – TRANSACTIONS IN “FREE ENERGY”
Cemig GT’s obligations and rights in relation to the transactions in “Free Energy” in the Electricity
Trading Chamber (“CCEE”) during the Rationing Program are as follows:
Consolidated and Holding
company
06/30/2010
03/31/2010
Current assets
Amounts to be received from distributors
46,141
45,175
46,141
45,175
The amounts to be received in Assets refer to the difference between the prices paid by the Company
in the transactions in energy on the CCEE, during the period when the Rationing Program was in
force, and the price of R$ 49.26/MWh. This difference is to be reimbursed through the amounts raised
by means of the RTE, as defined in the General Agreement for the Electricity Sector.
In accordance with Aneel Resolution 36 of January 29, 2003, the electricity distributors have since
March 2003 raised the amounts obtained monthly by means of the RTE and passed them through to
the generators and distributors who have amounts to be received, among which the Company is
included.
On January 12, 2010, Aneel published Normative Resolution 387, establishing that the balances of
payments due for “Free Energy” and Loss of Revenue, after completion of the collection of the
Extraordinary Tariff Recomposition (RTE) in distributors’ retail supply tariffs, should be recalculated
using a new method.
The final passthrough of “Free Energy” amounts will be the sum of the monthly differences, positive or
negative, between the passthroughs for Free Energy made in accordance with certain defined criteria,
and the passthroughs already made, plus financial remuneration at the Selic rate, from the date of
occurrence of the difference up to the date of completion of the charging of the RTE within retail supply
tariffs.
The rights of Cemig GT are updated by the variation in the Selic rate plus 1.00% interest per year.
The conclusion of certain court proceedings in progress, brought by market agents, in relation to
interpretation of the rules in force at the time of the transactions on the CCEE, could result in changes
in the amounts recorded.
7) – REGULATORY ASSETS AND LIABILITIES, AND THE TARIFF REVIEW
First Tariff Review
Cemig GT’s first Tariff Review was approved by the Council of Aneel on June 17, 2009. In it Aneel set
the percentage for repositioning of the Company’s Permitted Annual Revenue (RAP) at 5.35%,
backdated to 2005.
On June 1, 2010, Aneel granted and partially approved the Administrative Appeal filed by the
Company, ordering revision of the repositioning in its first periodic Tariff Review, from 5.35% to 6.96%,
for the following reasons:
(i) costs incurred in preparation of the evaluation report, in the amount of R$ 978;
(ii) alteration of the Net Remuneration Basis by R$ 1,140;
(iii) inclusion of the Sector Charges on the difference between Revenues applied for in the last
four cycles and the result of Financial updating, due to the alteration of the profile of
Authorized Facilities, of R$ 8,424.
14
Aneel additionally established a financial component of R$ 168,632 to be paid to the Company as the
“Adjustment Portion” (“PA”) in 24 months.
This is the backdated effect of the tariff repositioning over the period from July 1, 2005 to June 30,
2009, plus the R$ 10,542 arising from the Administrative Appeal. The first part, of R$ 85,732, was
incorporated into the adjustment for the 2009–10 cycle, and the second part, of R$ 93,009, will be
compensated in the 2010–11 adjustment.
Second Tariff Review
On June 8, 2010, Aneel homologated the result of the Second Tariff Review of Cemig GT, which set
the repositioning of the Permitted Annual Revenue (RAP) at a negative percentage, –15.88%,
backdated to June 2009. This resulted in a requirement for reimbursement of R$ 75,568, to the users
of the Transmission System, during the July 2010 to July 2011 tariff cycle. The Company recorded this
amount as a reduction of revenue in the second quarter of 2010.
As and when amounts of the “Adjustment Portion” relating to the 1st and 2nd Tariff Reviews are
received through the tariff, the Company transfers the corresponding amount recorded in Assets to the
Income statement.
8) – TAXES SUBJECT TO OFFSETTING
Consolidated
06/30/2010
Current
ICMS tax recoverable
Income tax
Social Contribution tax
Pasep tax
Cofins tax
Other
Non-current
ICMS tax recoverable
Income tax
Pasep tax
Cofins tax
Holding company
03/31/2010
06/30/2010
03/31/2010
40,397
278,480
81,689
4,175
19,072
352
37,928
206,538
57,307
4,009
18,244
628
38,677
269,688
80,866
3,664
16,800
158
37,719
200,702
56,667
3,691
16,926
140
424,165
324,654
409,853
315,845
8,223
2,373
2,776
8,223
1,626
495
2,281
7,742
495
2,281
7,742
495
2,281
13,372
12,625
10,518
10,518
437,537
337,279
420,371
326,363
The balances of income tax and Social Contribution tax refer to tax credits in corporate income tax
returns of previous years, and advance payments made in 2010, which will be offset against federal
taxes payable to be calculated for the year, posted in Taxes and contributions.
The credits of ICMS tax recoverable arise from acquisitions of fixed assets, and can be used for
offsetting over 48 months.
The credits of Pasep and Cofins taxes recoverable arise from acquisitions of fixed assets, and can be
offset in 48 months.
15
9) – TAX CREDITS
a) Deferred income tax and Social Contribution tax:
The company has recorded credits of income tax, constituted at the rate of 25.00%, and Social
Contribution tax, at the rate of 9.00%, as follows:
Consolidated
06/30/2010
Tax credits on temporary differences:
Post-employment obligations
Provision for Pasep and Cofins taxes – Extraordinary Tariff Recomposition
Provision for doubtful receivables
Financial instruments
FX variation
Contingencies
Taxes with demandability suspended
Other
Current assets
Non-current assets
03/31/2010
17,751
1,741
643
14,316
35,585
1,786
3,962
4,868
18,262
4,348
797
14,282
35,584
3,298
1,766
80,652
78,337
20,519
60,133
13,446
64,891
At its meeting on March 23, 2010, the Board of Directors approved the technical study prepared by the
CFO’s Department on the forecasts for future profitability adjusted to present value, which show
capacity for realization of the deferred tax asset in a maximum period of 10 years, as defined in CVM
Instruction 371. This study was also submitted to examination by Cemig’s Audit Board on March 4,
2010.
In accordance with the Company’s estimates, future taxable profits enable the deferred tax asset
existing on June 30, 2010 to be realized as follows:
Consolidated
06/30/2010
8,746
23,043
18,925
12,995
8,069
5,325
3,549
80,652
2010
2011
2012
2013
2014
2015 to 2017
2018 to 2020
16
b) Reconciliation of the expense on income tax and the Social Contribution tax:
This table shows the reconciliation of the nominal expenses on income tax (rate 25%) and Social
Contribution tax (rate 9%) with the expense shown in the Income statement:
Consolidated
06/30/2010
Profit before income tax and Social Contribution tax
Income tax and Social Contribution – nominal expense
Tax effects applicable to:
Interest on Equity
Employees’ profit shares
Tax incentive amounts
Equity gain (loss) from subsidiaries
Non-deductible contributions and donations
Adjustment in income tax and Social Contribution – prior
business year
Tax credits not recognized
Other
Income tax and Social Contribution tax
Holding company
06/30/2009
06/30/2010
06/30/2009
717,932
(244,096)
1,009,636
(343,276)
698,933
(237,637)
1,009,391
(343,193)
23,759
5,464
10,829
(1,587)
-
36,426
5,514
3,720
(856)
(11,423)
23,759
5,464
6,402
11,960
(1,587)
-
36,426
5,514
3,720
1,042
(856)
(11,423)
388
(8,157)
(213,400)
229
885
(308,781)
388
(3,151)
(194,400)
229
5
(308,536)
Corporate income tax incentive enjoyed by Taesa (Transmissora Aliança de Energia Elétrica S.A.)
The National Integration Ministry, through Adene, the federal Agency for Development of the
Northeast; and Ada, the federal Agency for the Development of the Amazon Region, issued official
position statements granting to some of the subsidiaries of Taesa tax benefits in relation to 75% of the
income tax payable for the activity carried out in the region.
10) – DEPOSITS LINKED TO LEGAL ACTIONS
“Deposits linked to legal actions” refers principally to employment-law actions and matters related to
tax obligations.
The main payments into court refer to tax obligations relating to income tax withheld at source on
Interest on Equity, and to exclusion of amounts of ICMS tax from the amount taxable by PIS and
Cofins tax.
Consolidated
06/30/2010
03/31/2010
Holding company
06/30/2010
03/31/2010
Employment law cases
34,440
34,158
34,362
34,116
Tax obligations
Income tax on Interest on Equity
Pasep and Cofins
Other
8,014
60,440
1,835
8,014
52,480
1,465
8,014
60,153
988
8,014
52,314
983
Other
1,717
983
914
529
106,446
97,100
104,431
95,956
The balances of deposits paid into court in relation to the Pasep and Cofins taxes have provisions
corresponding to the payment obligations, recorded in Taxes, charges and contributions. For more
details, see Explanatory Note 15.
17
11) – INVESTMENTS
Consolidated
06/30/2010
In subsidiary and jointly controlled companies
Hidrelétrica Cachoeirão S.A.
Guanhães Energia S.A.
Hidrelétrica Pipoca S.A
Cemig Baguari Energia S.A.
Baguari Energia S.A.
EBTE
Central Eólica Praias de Parajuru S.A.
Central Eólica Volta do Rio S.A.
Central Eólica Praias de Morgado S.A.
TAESA
Transmissora Alterosa
Transmissora Alvorada
Goodwill on acquisition of stake in TAESA
Goodwill on acquisition of the stake in Praias de Parajuru
Goodwill on acquisition of the stake in Volta do Rio
Goodwill on acquisition of the stake in Praias de Morgado
Other
Holding company
03/31/2010
06/30/2010
-
03/31/2010
1,737
1,738
23,887
10,261
17,087
6
181,115
91,385
32,093
58,734
26,549
720,766
366,879
473,577
383,547
29,606
28,548
42,238
1,738
22,605
10,226
17,389
18
180,797
76,685
34,337
59,056
26,860
696,873
9,629
386,754
29,802
28,548
42,593
1,738
1,737
1,738
2,488,016
1,623,910
-
a) The main information on the investees is as follows:
At June 30, 2010
January to June 2010
Registered
Stockholders’
equity
Profit
Jointly-controlled subsidiaries
No. of shares
Stake, %
capital
Hidrelétrica Cachoeirão
Guanhães Energia
Hidrelétrica Pipoca
Cemig Baguari Energia
Madeira Energia
Baguari Energia
EBTE
Central Eólica Praias de
Parajuru
Central Eólica Volta do Rio
Central Eólica Praias de
Morgado
Taesa
Transmissora Alterosa
Transmissora Alvorada
35,000,000
52,000,000
35,382,415
1,000
100,000
1,000,000
49,604,465
49.00
49.00
49.00
100.00
10.00
69.39
49.00
35,000
19,608
40,610
1
100
10
156,499
48,749
20,941
34,872
6
(166,430)
260,982
186,499
-
5,049
1,333
(2,259)
(12)
(102,261)
(119)
-
70,560,000
117,230,000
49.00
49.00
70,560
117,230
65,495
119,866
-
(5,789)
(941)
52,960,000
263,498,907
641,026,832
471,647,403
49.00
32.27
36.23
74.50
52,960
1,312,536
1,023,155
633,084
54,182
2,019,847
1,012,543
635,674
-
(788)
145,884
(7,500)
2,591
18
Dividends
(Loss)
At June 30, 2009
Jointly-controlled
subsidiaries
Hidrelétrica Cachoeirão
Guanhães Energia
Hidrelétrica Pipoca
Madeira Energia
Cemig Baguari Energia
Baguari Energia
EBTE
No. of shares
35,000,000
52,000,000
35,382,415
100,000
1,000
1,000,000
49,604,465
Registered
capital
Stake, %
49.00
49.00
49.00
10.00
100.00
69.39
49.00
January to June 2009
Stockholders
’ equity
Dividends
41,507
19,608
38,952
100
1
236,702
49,604
-
6,313
431
(24,842)
-
Other
06/30/2010
35,000
19,608
35,382
100
1
10
49,604
Profit
(Loss)
The movement of investments in subsidiaries is as follows:
Injections of
03/31/2010
Hidrelétrica Cachoeirão
Guanhães Energia
Hidrelétrica Pipoca
Cemig Baguari Energia
Madeira Energia
Baguari Energia
EBTE
Central Eólica Praias de
Parajuru
Central Eólica Volta do Rio
Central Eólica Praias de
Morgado
TAESA
Transmissora Alterosa
Transmissora Alvorada
Equity gain
capital /
Dividends
(loss)
acquisitions
proposed
22,605
10,226
1,282
35
(296)
(12)
(4,950)
(43)
-
358
14,700
-
17,389
18
180,797
76,685
(6)
4,950
3
-
17,087
6
181,115
91,385
34,337
59,056
(2,193)
(322)
-
-
(51)
-
32,093
58,734
26,860
696,873
9,629
-
(311)

23,893

1,432

1,931

20,446

  355,818

471,646

842,522

-




1,134,475




 -
23,887
10,261
-
26,549
720,766
366,879
473,577
4,896

2,002,339
b) Acquisition of a complementary stake in Transmissora Aliança de Energia Elétrica –TAESA
On May 6, 2010 the Company made a public offer to acquire shares and units from minority
stockholders, through Transmissora Alterosa de Energia Elétrica. The transaction resulted in the
acquisition of 86.17% of the shares until then held by the minority stockholders, corresponding to
29.42% of the total capital of Taesa, for R$ 1,001,851 (R$ 15.57 per share).
A premium of R$ 523,367 was ascertained, corresponding to the added value of the concessions. The
goodwill will be amortized over the remaining period of validity of the concessions.
With this transaction the company, together with Fundo de Investimentos em Participação Coliseu,
concluded the process of acquisition of Transmissora Aliança de Energia Elétrica - Taesa (formerly
Terna Participações) Some of the minority stockholders did not accept the public offer to acquire
shares, and 4.72% of the shares of Taesa remained in circulation in the market.
c) Goodwill on acquisitions of equity interests
The goodwill on the acquisition of the wind generation companies is the difference between the
amount paid and the book value of the interest in the Stockholders’ equity of the jointly-controlled
subsidiaries, arising from the added value of the concession. The goodwill will be amortized over the
remaining period of validity of the concessions.
19
12) – FIXED ASSETS
06/30/2010
Holding company
In service
- Generation
Land
Reservoirs, dams and water courses
Buildings, works and improvements
Machinery and equipment
Vehicles
Furniture and utensils
- Transmission
Land
Buildings, works and improvements
Machinery and equipment
Vehicles
Furniture and utensils
- Management
Land
Buildings, works and improvements
Machinery and equipment
Vehicles
Furniture and utensils
- Activities not linked to the concession
Land
Reservoirs, dams and water courses
Buildings, works and improvements
Machinery and equipment
Vehicles
Furniture and utensils
Historic cost
9,197,443
6,757,298
196,325
3,672,393
780,331
2,103,317
2,352
2,580
1,350,267
03/31/2010
Accumulated
depreciation
Net value
Net value
(4,016,791)
5,180,652
5,198,645
(3,115,843)
3,641,455
3,665,533
(1,481,848)
(379,036)
(1,250,579)
(1,965)
(2,415)
196,325
2,190,545
401,295
852,738
387
165
196,216
2,209,522
405,880
853,254
494
167
(711,519)
638,748
634,837
2,139
108,658
1,237,642
811
1,017
(62,722)
(647,696)
(258)
(843)
2,139
45,936
589,946
553
174
2,138
46,844
585,142
530
183
69,876
(39,388)
30,488
21,792
458
13,896
31,905
20,627
2,990
(7,834)
(20,639)
(8,032)
(2,883)
458
6,062
11,266
12,595
107
458
6,053
12,020
3,165
96
1,020,002
(150,041)
869,961
876,483
(37,919)
(28,773)
(82,870)
(40)
(439)
50,820
244,399
165,088
409,113
17
524
50,820
245,885
166,434
412,781
18
545
50,820
282,318
193,861
491,983
57
963
In progress
- Generation
- Transmission
- Management
- Activities not linked to the concession
242,345
-
242,345
240,628
106,112
129,176
5,041
2,016
-
106,112
129,176
5,041
2,016
115,477
109,072
14,568
1,511
Total PP&E
“Special Obligations” linked to the
concession
Net fixed assets – Holding company
9,439,788
5,422,953
5,439,273
(49,820)
9,389,968
20
(4,016,791)
(4,016,791)
(49,820)
5,373,177
(44,189)
5,395,084
06/30/2010
Subsidiaries
In service
- Generation
- Transmission (*)
- Management
- Activities not linked to the concession
In progress
- Generation
- Transmission
- Management
- Activities Not Linked to the Concession
Total of fixed assets, Subsidiaries
“Special Obligations” linked to the
concession
Net fixed assets – Subsidiaries
Net fixed assets – Consolidated
Historic cost
03/31/2010
Accumulated
depreciation
Net value
Net value
1,901,146
(309,564)
1,591,582
1,017,506
296,073
1,596,179
6,512
2,382
(5,650)
(301,723)
(1,981)
(210)
290,423
1,294,456
4,531
2,172
288,997
724,638
2,656
1,215
992,626
-
992,626
861,937
602,843
203,718
4,902
181,163
-
602,843
203,718
4,902
181,163
498,148
180,383
2,591
180,815
2,893,772
(309,564)
2,584,208
1,879,443
(1,148)
96
(1,052)
(603)
2,892,624
(309,468)
2,583,156
1,878,840
12,282,592
(4,326,259)
7,956,333
7,273,924
(*) The increase in Transmission assets in the quarter substantially comprises the increase of the stockholding
interest in Taesa.
“Special obligations linked to the concession” refers basically to contributions by consumers for
carrying out of works necessary to meet requests for supply of electricity.
Some land sites and buildings of the subsidiaries, registered in Fixed assets – Administration, were
given in guarantee for lawsuits involving tax, employment-law, civil disputes and other contingencies,
in the net amount of R$ 896 on June 30, 2010 (R$ 909 on March 31, 2010), net of depreciation.
The company has not identified any indications of recoverable loss of value of its fixed assets. The
concession contracts specify that at the end of the period of each concession the Concession-granting
Power will decide the amount to be indemnified to the Company. As a result Management believes
that the accounting value of fixed assets that are not depreciated at the end of the concession period
will be reimbursed by the Concession-granting Power.
Under Articles 63 and 64 of Decree 41019 of February 26, 1957, goods and facilities used in
generation and transmission are linked to those services, and cannot be withdrawn, disposed of,
assigned or given in mortgage guarantee without the prior express authorization of the Regulator.
Aneel Resolution 20/99 provides regulations for de-linking of assets of public electricity service
concessions, granting prior authorization for de-linking of assets that are not appropriate for serving
the concession, when destined for disposal, and require the proceeds to be deposited in a linked bank
account, to be applied in the concession.
21
13) - INTANGIBLE
Holding company
In service – Useful life defined
Balance on
03/31/2010
Written
off
Additions
Amortizations
Balance on
06/30/2010
Transfers
21,623
1,372
-
(366)
-
22,629
Software use rights
4,087
1,371
-
(277)
-
5,181
Brands and patents
4
-
-
-
-
4
17,532
1
-
(89)
-
17,444
4,585
-
-
-
(1,261)
3,324
4,585
-
-
-
(1,261)
3,324
26,208
1,372
-
(366)
(1,261)
25,953
Temporary easements
In progress
Assets in formation
TOTAL INTANGIBLE ASSETS
Consolidated
Balance on
03/31/2010
Written
off
Additions
Amortizations
Balance on
06/30/2010
Transfers
In service – Useful life defined
Software use rights
Brands and patents
4,110
1,287
-
(194)
-
5,203
17
5
-
-
-
22
29,090
5,173
-
(89)
-
34,174
2,683
-
-
(149)
(792)
1,742
-
-
-
-
-
-
Temporary easements
Other
Right to commercial operation
of public service concession
Praia do Morgado Wind Farm
42,593
-
-
(355)
-
42,238
Central Eólica Praias de
Parajuru
Central Eólica Volta do Rio
29,802
-
-
(195)
-
29,607
28,548
-
-
-
-
28,548
Transmissora Alterosa de
Energia S.A.
Total, Intangible, in service
678,407
523,367
-
(3,765)
-
1,198,009
815,250
529,832
-
(4,747)
-
1,339,543
7,394
-
-
-
-
7,394
7,394
-
-
-
(1,249)
6,145
822,644
529,832
-
(4,747)
(1,249)
1,345,688
In progress
Assets in formation
Total, Intangible, in progress
TOTAL INTANGIBLE ASSETS,
HOLDING COMPANY
The intangible assets Software use rights, Brands and patents, Temporary easements, and others, are
amortizable by the linear method, and the rates used are those defined by Aneel Normative Resolution
367/09, of June 2, 2009.
Company has not identified indications of this recoverable loss of value of its intangible assets that
have defined useful life, and are being amortized over the period of the concession or over periods
specified by Aneel.
The amount of intangible assets in service and totally amortized was R$ 19,207 on June 30, 2010 and
R$ 18,064 on March 31, 2010.
22
14) – SUPPLIERS
Consolidated
06/30/2010
03/31/2010
Current
Wholesale supply and transport of electricity
Wholesale market – CCEE
Cemig D
Furnas
CTEEP – Cia. Trans. Energia Elétrica Paulista
CHESF – Cia. Hidroelétrica do São Francisco
Eletronorte – Centrais Elétricas do Norte do Brasil
Eletrosul – Centrais Elétricas
União Com. de Energia Elétrica
Petrobras Com. de Energia Ltda
Other generators and distributors
2,330
3,122
4,068
3,051
2,783
2,354
2,128
46,232
66,068
74,352
140,420
Materials and services
2,330
4,156
4,121
3,072
2,800
1,985
1,948
5,965
8,925
31,309
66,611
54,673
121,284
Holding company
06/30/2010
03/31/2010
2,330
3,122
4,068
3,051
2,783
2,354
2,128
40,808
60,644
27,551
88,195
2,330
4,156
4,121
3,072
2,800
1,985
1,948
5,965
8,925
26,009
61,311
22,411
83,722
The conclusion of certain court proceedings in progress, brought by market agents, in relation to the
interpretation of the rules in force at the time of the realization of the transactions in the ambit of the
CCEE / MAE during the period of rationing, may result in changes in the amounts recorded. See
further information in Explanatory Note 19.
15) – TAXES, CHARGES AND CONTRIBUTIONS
Consolidated
06/30/2010
03/31/2010
Current
Income tax
Social Contribution tax
ICMS tax
Cofins tax
Pasep tax
Social security system
Other
Deferred obligations
Income tax
Social Contribution tax
Cofins tax
Pasep tax
Holding company
06/30/2010
03/31/2010
165,092
58,863
31,998
21,671
9,962
3,497
2,504
293,587
89,582
33,526
26,168
21,930
10,018
3,733
4,298
189,255
161,022
56,491
31,769
20,787
9,770
3,147
1,503
284,489
87,923
31,891
25,932
21,361
9,894
3,472
1,583
182,056
13,841
4,983
4,208
914
23,946
317,533
25,570
9,205
7,773
1,688
44,236
233,491
13,841
4,983
4,208
914
23,946
308,435
25,570
9,205
7,773
1,688
44,236
226,292
51,852
11,257
63,109
44,979
9,765
54,744
51,852
11,257
63,109
44,979
9,765
54,744
61,345
22,084
83,429
146,538
464,071
68,207
24,555
2,734
594
96,090
150,834
384,325
61,341
22,082
83,423
146,532
454,967
68,207
24,555
2,734
594
96,090
150,834
377,126
Non-current
Cofins tax
Pasep tax
Deferred obligations
Income tax
Social Contribution tax
Cofins tax
Pasep tax
23
The “Deferred obligations” under Current are basically the assets and liabilities linked to the General
Agreement for the Electricity Sector and other regulatory issues, and become due as and when those
assets and liabilities are realized.
The non-current deferred obligations for income tax and the Social Contribution tax refer substantially
to the recording of financial instruments (FX variation, and hedge transactions) by the cash method,
which are payable, or create redemption value, as and when realized.
The non-current Pasep and Cofins liabilities refer substantially to assets and liabilities linked to
regulatory issues, which become payable as and when they are realized.
The non-current obligations for Pasep and Cofins taxes refer to the legal action challenging the
constitutionality of the inclusion of ICMS tax in the taxable amount for these taxes, and applying for
offsetting of the amounts paid in the last 10 years. The Company obtained a Court injunction enabling
it not to make the payment and authorizing payment into Court, starting from 2008.
16) – LOANS, FINANCINGS AND DEBENTURES
Consolidated
06/30/2010
FINANCING SOURCES
FOREIGN CURRENCY
BNP Paribas
BNP Paribas
Brazilian Development Bank (BNDES)
Debt in foreign currency
BRAZILIAN CURRENCY
Banco Credit Suisse First Boston S.A.
Banco do Brasil
Banco do Brasil
Banco do Brasil
Banco do Brasil
Banco Itaú - BBA
Banco Votorantim S.A.
Banco Votorantim S.A.
Brazilian Development Bank (BNDES)
Bradesco S.A.
Bradesco S.A.
Debentures (1)
Debentures – Minas Gerais state government
(1) (2)
Debentures (1) (3)
Debentures (1) (3)
Debentures (1) (3)
Debentures
Eletrobrás
Santander do Brasil S.A.
Unibanco S.A.
BNDES (3)
Debentures (3)
CEF S.A.
CEF S.A.
CEF S.A.
BNDES
Syndicate of banks
BNDES
BNDES
Syndicate of banks
BNDES
Syndicate of banks
Other
Debt in Brazilian currency
Overall total, consolidated
(1)
(2)
(3)
(*)
(**)
Principal
maturity
Annual
financial cost
(%)
Currency
2010
2012
2017
Libor + 1.875
5.89
3.51
US$
Euro
UMBndes
Current
Noncurrent
Total
03/31/2010
Total
2,567
2,455
5,022
2,567
2,455
5,022
6,056
5,394
26,544
37,994
2010
2012
2013
2013
2014
2013
2010
2013
2026
2013
2014
2011
106.00 of CDI
110.00 of CDI
CDI + 1.70
107.60 of CDI
104.10 of CDI
CDI + 1.70
113.50 of CDI
CDI + 1.70
TJLP + 2.34
CDI + 1.70
CDI + 1.70
104.00 of CDI
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
253,565
27,014
487
15,748
53,427
25,154
866
9,077
42,058
549
14,157
484,111
61,094
30,000
900,000
121,375
2,326
115,097
97,687
1,365
238,816
737,676
88,108
30,487
915,748
174,802
25,154
3,192
124,174
139,745
1,914
252,973
75,182
752,908
94,011
32,594
933,496
177,169
25,735
3,110
124,146
142,556
1,865
247,273
2031
2015
2015
2012
2012
IGP-M
IPCA + 7.68 (*)
0.042 (**)
CDI + 0.90(*)
0.1051(**)
Finel + 7.50 a
8.50
CDI + 1.70
CDI + 1.70
TJLP+2.40
IPCA
TJLP+3.50
TJLP+3.50
TJLP+3.50
TJLP
113% of CDI
TJLP +2.56
TJLP
113% of CDI
TJLP
113% of CDI
Various
R$
R$
R$
R$
R$
39,520
(475)
68,250
(1,643)
39,301
1,171,517
(1,688)
1,566,000
(896)
39,301
1,211,037
(2,163)
1,634,250
(2,539)
38,161
1,173,749
(2,379)
1,595,307
(3,285)
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
R$
12,461
8,214
57,648
6,195
5,186
8,073
33,450189,227
2,694
14,266
80,713
11,048
62,509
21,833
1,060,771
1,063,338
30,113
21,206
130,632
313,435
172,820
60,916
50,133
85,162
228,400-
42,574
29,420
188,280
313,435
172,820
67,111
55,319
93,235
261,850189,227
52,589
111,677
80,713
86,489
62,509
217,401
7,398,508
7,403,530
45,434
29,934
188,515
266,795
167,514
65,284
55,717
90,824
243,086
184,598
51,518
2013
2013
2013
2033
2013
2022
2021
2022
2018
2010
2024
2018
2010
2018
2010
Various
49,895
97,411
75,441
196,068
6,337,737
6,340,192
Nominal, unsecured, book-entry debentures not convertible into shares, without preference.
Contracts adjusted to present value, as per changes to the Corporate Law made by Law 11.638/07.
Contracts with rates and amounts adjusted in accordance with CPC 08.
Contractual rate.
Effective rate of the cost of the transaction.
24
165,714
6,966,530
7,004,524
The consolidated composition of loans, by currency and indexor, with the respective amortization, is as
follows:
2010
Currency
Euro
Indexor
UMBndes
IGP-M inflation index
Eletrobrás Finel internal index
IPCA (Expanded Consumer
Price Index)
Interbank CD (CDI)
URTJ
2011
2012
2013
2014
2015
2017 and
subsequent
years
2016
Total
1,339
2,456
1,227
-
-
-
-
-
5,022
1,339
2,456
1,227
-
-
-
-
-
5,022
2,805
-
5,708
-
6,289
-
6,929
-
6,230
12,461
12,461
11,422
7,527
-
8,246
-
7,684
-
806
39,301
-
45,994
39,301
42,574
26,866 13,238
863,748 663,681
113,561
2,270,665
59,785
445,828
-
1,169,829
-
302,830
2,375
1,184
-
47,562 96,391
947,211 791,479
948,550 793,935
103,787
109,614
2,506,763 1,067,320
2,507,990 1,067,320
132,272
442,629
442,629
137,488
1,317,938
1,317,938
127,111
135,979
135,979
535,126
575,233
575,233
1,383,278
4,598,010
1,289,351
7,398,508
7,403,530
The principal currencies and indexors used for monetary updating of loans and financings had the
following variations:
Currency
Euro
Change in
quarter ended
06/30/2010
%
Change in fullyear 2010
%
(8.44)
(12.09)
Indexor
IGP-M
Finel
CDI
Change in
quarter ended
06/30/2010
%
2.83
0.56
2.18
Change in fullyear 2010
%
5.68
1.12
4.25
The movement on loans and financings was as follows:
Consolidated
7,004,524
378,771
60,474
21,449
168,032
(3,525)
(102,452)
(124,407)
664
7,403,530
Balance at March 31, 2010
Initial balance – acquisition of subsidiaries
Loans and financings obtained
Monetary and FX variation
Financial charges provisioned
Adjustment to present value
Financial charges paid
Amortization of financings
Other
Balance at June 30, 2010
Holding company
5,697,322
19,663
127,421
(3,525)
(88,230)
(104,937)
963
5,648,677
Restrictive covenant clauses
Cemig GT has loans and financings with restrictive covenants, as follows:
Description of the restrictive covenant
Less than or equal to 3.36
Less than or equal to 3.25
Less than or equal to 90%
Less than or equal to 53%
Greater than or equal to 2.8
Greater than or equal to 2.0
Less than or equal to 60%
Debt / Ebitda
Net debt / Ebitda
Current debt / Ebitda
Debt / (Stockholders’ equity + Debt)
Ebitda / Costs of debt
Ebitda / Financial revenues
Capital expenditure / Ebitda
Net debt =
Ebitda =
Index required
Total debt, less cash position, less tradable securities.
Earnings before interest, taxes (on profit), depreciation and amortization.
Specific criteria for the calculation of Ebitda are made in some contracts, with some variations from this formula.
25
One of the restrictive covenants mentioned above was not complied with, as follows:
Description of the restrictive
covenant
Index required
Position on 30.06.2010
Debt / (Stockholders' equity + Debt)
Less than or equal to 53%
58.65%
The company obtained consent from its creditors that they would not exercise their rights to demand
immediate or early payment of amounts owed until December 31, 2010. The financings are classified
as Current liabilities and Non-current liabilities, in accordance with the original terms of the contract, in
view of those consents having been obtained.
The financing contracts of Taesa have restrictive covenants relating to debt servicing coverage
indices. On June 30, 2010, Taesa and its subsidiaries had debt servicing coverage indices that
complied with the contractually established limits.
Madeira Energia has a loan contracted with the BNDES and with Banco da Amazônia S.A with
restrictive covenant clauses that were fully complied with on June 30, 2010.
17) – REGULATORY CHARGES
Consolidated
06/30/2010
03/31/2010
Global Reversion Reserve – RGR
Fuel Consumption Account – CCC
Energy Development Account – CDE
ANEEL inspection charge
Alternative Energy Program – Proinfa
National Scientific and Technological Development Fund –
FNDCT
Research and development
Energy system expansion research
Current liabilities
Non-current liabilities
Holding company
06/30/2010
03/31/2010
18,488
5,066
5,949
1,783
3,187
19,465
4,998
5,921
1,705
3,195
17,581
5,066
5,949
1,605
3,187
18,954
4,998
5,921
1,605
3,195
1,825
75,943
963
113,204
1,831
70,400
981
108,496
1,666
70,316
833
106,203
1,831
67,184
916
104,604
47,794
65,410
47,278
61,218
40,793
65,410
43,386
61,218
18) – POST-EMPLOYMENT OBLIGATIONS
Cemig GT is one of the sponsors of Forluz, the Forluminas Social Security Foundation (Fundação
Forluminas de Seguridade Social), a non-profit legal entity whose object is to provide its associates
and participants and their dependents and beneficiaries with a financial income supplementing
retirement and pension, in accordance with the private pension plan to which they are linked.
Forluz makes the following supplementary pension benefit plans available to its participants:
The Mixed Benefits Plan (“Plan B”): A defined-contribution plan at the stage of accumulation of funds,
for retirement benefits for normal time of service, and defined-benefit coverage for disability or death of
participants still in active employment, and also receipt of benefits for time of contribution. The
contributions of the Sponsors are equal to the basic monthly contributions of the participants, and this
is the only plan open for joining by new participants.
Cemig GT’s contribution to this plan is 27.52% for the portion with defined benefit characteristics,
relating to the coverage for invalidity or death of a participant still working, and this is used for
amortization of the defined obligations through an actuarial calculation. The remaining 72.48%, relating
to the portion of the plan with defined-contribution characteristics, goes to the nominal accounts of the
26
participants and is recognized in the income statement for the year in accordance with the payments
made by the Company, under Personnel expenses.
Hence, the obligations for payment of supplementary pension benefits under the Mixed Plan, with
defined contribution characteristics, and their respective assets, in the amount of R$ 664,491, are not
presented in this Explanatory Note.
Pension Benefits Balances Plan (“Plan A”): This includes all the currently employed and assisted
participants who opted to migrate from the previous Defined Benefit Plan, and are entitled to a benefit
proportional to those balances. For participants who are still working, this benefit has been deferred to
the retirement date.
Defined Benefit Plan: This is the benefit plan adopted by Forluz up to 1998, which complements the
amount of the Official Social Security benefit so as to result in the average real salary of the
employee’s last three working years in the Company. Two active employees and 10 retirees or
pension holders are inscribed in this plan.
Independently from the plans made available by Forluz, Cemig GT also maintains payments for part of
the life insurance premium for retirees, and contributes to a health plan and a dental plan for the
employees, retirees and dependents, which are administered by Forluz.
Separation of the Health Plan
On August 26, 2008 the Executive Council of Forluz, complying with orders issued by the Private
Pension Plans Authority (SPC), decided to transfer management of the Cemig Integrated Health Plan
(PSI) to a separate entity to be created for that purpose. The reason for the decision was the SPC’s
belief that it would be impossible to maintain those participants in the Health Plan who were not also
inscribed in the pension and retirement plans. To protect the interests of its participants, and also to
comply with the SPC’s ruling, Forluz opted to separate the activities, keeping the present dental and
pension plans within itself. The period planned for conclusion of the process of separation of the
health plan is 2010 months, during which time all the existing coverage and benefits will be
maintained.
Amortization of actuarial obligations
Part of the actuarial obligation for post-employment benefits, in the amount of R$ 202,589 on June 30,
2010 (R$ 204,241 on March 31, 2010), was recognized as an obligation payable by the Company and
will be amortized by June 2024, through monthly installments calculated by the system of constant
installments (the so-called “Price” table). Part of the amounts is adjusted annually based on the
actuarial indexor of the defined benefit plan (the index for salary adjustment of the employees of
Cemig, Cemig GT and Cemig D, excluding productivity); and, for the Balances Plan, is adjusted by
the IPCA (Amplified National Consumer Price) Index published by Ipead, plus 6% per year.
The liabilities and expenses recognized by the Company in connection with the Supplementary
Retirement Plan, Health Plan and Life Insurance Plan are adjusted in accordance with the terms of
CVM Decision CVM 371/00 and an Opinion prepared by independent actuaries. Hence the financial
updating of the obligation in the debt agreed with Forluz mentioned in the previous paragraph does not
produce accounting effects in the Income statement of Cemig GT. The amounts recognized on June
30, 2010 are given below.
27
The movement in net liabilities has been as follows:
Net liabilities on March 31, 2010
Expense recognized in the Income
statement
Contributions paid
Net liabilities on June 30, 2010
Pension plans and
retirement
supplement plans
58,468
Current liabilities
Non-current liabilities
Health
plan
84,642
Dental
plan
4,508
Life
insurance
109,958
Total
257,576
1,382
(7,740)
52,110
3,772
(2,521)
85,893
224
(44)
4,688
2,350
(576)
111,732
7,728
(10,881)
254,423
18,340
33,770
85,893
4,688
111,732
18,340
236,083
19) – CONTINGENCY PROVISIONS
The Company makes contingency provisions for legal actions in which the chances of loss are
assessed as “probable”, as follows:
Balance on
03/31/2010
Employment law cases
Various
442
Personal damages, Tariff increases
Environmental
Other
7,767
1,388
9,155
Tax
Other
102
102
Regulatory
ANEEL
Total
9,699
Balance on
03/31/2010
Employment law cases
Various
Personal damages, Tariff increases
Environmental
Other
Tax
Other
Regulatory
ANEEL
Total
442
8,537
1,447
9,984
102
102
10,528
Holding company
Additions
(reversal)
Written off
42
Balance on
06/30/2010
-
(4,488)
81
(4,407)
-
(4,365)
(102)
(102)
-
21
(81)
21
5,253
Consolidated
Additions
(reversal)
Written off
42
Balance on
06/30/2010
-
(4,488)
124
(4,364)
-
(4,322)
484
3,279
1,469
4,748
-
484
4,049
1,571
5,620
(102)
(102)
-
21
(81)
21
6,125
Environmental administrative proceedings
Cemig GT was served an infringement notice by the Minas Gerais State Forests Institute (IEF),
alleging that it omitted to take measures to protect the fish population, causing fish deaths, as a result
of the flow and operation of the machinery of the Três Marias Hydroelectric Plant. The Company
presented a defense, and rates the risk of loss in this action as “probable”, in the amount of R$ 3,279 –
which is duly provisioned.
28
Legal actions with risk of loss classified as “possible”
Cemig GT and its subsidiaries are disputing legal actions of an employment-law, civil or tax nature, the
chances of loss in which have been estimated as “possible”. These are periodically reassessed, and
do not require the constitution of a provision in the Income statement. They are as follows:
Social Security and tax obligations – indemnity for the "Anuênio".
In 2006, Cemig GT paid an indemnity to its employees, in the amount of R$ 41,660, in exchange for
their rights to future payments known as the “Anuênio”, which would have been incorporated into
salaries over a future period. The company did not pay income tax nor Social Security contributions in
relation to these amounts because it considered that these obligations are not applicable to amounts
paid as an indemnity. However, to avoid the risk of a future fine arising from a differing interpretation
by the federal tax authority and the National Social Security Institution (INSS), the Company decided to
apply for an order of Mandamus, which allowed payment into Court of the potential obligations, in the
amount of R$ 28,716. These are posted in Deposits connected to legal actions. The Company
believes that it has arguments of merit for defense. No provision was made for any losses in this
matter.
Regulatory contingency – CCEE
In an action dating from August 2002, AES Sul Distribuidora challenged in the courts the criteria for
accounting of electricity sale transactions in the wholesale electricity market during the period of
rationing. It obtained a judgment in its favor in February 2006, which orders Aneel, working with the
CCEE, to comply with AES’s claim and recalculate the settlement of the transactions during the
rationing period leaving out of account Aneel’s Dispatch No. 288/2002. This was to be put into effect
in the CCEE as from November 2008, resulting in an additional disbursement for Cemig, for the
expense on purchase of energy in the spot market, in the CCEE, in the amount of approximately
R$ 103,718 on June 30, 2010 (R$ 99,032 on March 30, 2010). On November 9, 2008, the Company
obtained an injunction in the Regional Federal Appeal Court suspending the obligatory nature of the
requirement to deposit the amount owed arising from the Special Financial Settlement carried out by
the CCEE. Due to the above, no provision is constituted for this dispute, since the Company believes it
has arguments on the merit for defense against this claim. It rates the chances of loss in this matter as
“possible”.
20) – STOCKHOLDERS’ EQUITY
On June 30, 2010 the registered capital of Cemig GT was R$ 3,296,785, represented by
2,896,785,358 nominal common shares, without par value, wholly owned by Cemig (Companhia
Energética de Minas Gerais – Cemig).
In a meeting held on April 16, 2010, the Board of Directors of Cemig GT approved payment of Interest
on Equity, imputed against the minimum obligatory dividend of the year 2010, in the amount of
R$ 69,878, to be paid in 2011.
The tax benefits arising from payment of Interest on Equity were R$ 23,759. These are recognized in
the income statement in the 2010 business year.
29
21) – REVENUE FROM SUPPLY OF ELECTRICITY
This table shows supply of electricity by type of consumer:
Industrial
Commercial
Retail supply not invoiced, net
Consolidated
(Not reviewed by external auditors)
Number of consumers
MWh
06/30/2010
06/30/2009
06/30/2010
06/30/2009
174
134
8,676,079
8,143,796
12
1
20,552
2,145
186
135
8,696,631
8,145,941
Wholesale supply to other
concession holders (*)
Transactions in energy on the CCEE
Sales under the Proinfa program
Total
45
231
42
177
7,102,695
2,235,078
17,692
18,052,096
7,349,143
1,028,658
16,523,742
R$
06/30/2010
971,348
5,999
13,409
990,756
06/30/2009
869,014
6,233
(32,365)
842,882
658,521
62,664
4,312
1,716,253
803,879
93,327
1,740,088
( * ) Includes Contracts for Sale of Electricity in the Regulated Market (CCEARs), and “bilateral contracts” with other agents.
22) – REVENUE FOR USE OF THE NETWORK
This is the tariff charged to agents in the electricity sector, including Free Consumers connected to the
high voltage network, for use of the basic transmission grid owned by the Company, which is part of
the Brazilian national grid. Supply of electricity to the Brazilian grid system is recorded when it takes
place, and invoiced monthly, in accordance with the reimbursements specified in the concession
contract. Under some of these contracts the revenue to be reimbursed in the last 15 years of the
concession will be 50% less than in the first 15 years. The company recognizes the reimbursements of
these concessions in accordance with each governing contract.
Consolidated
06/30/2010
06/30/2009
Revenue from use of the basic network
System connection revenue
Transmission Tariff Review
441,839
50,159
(64,586)
243,189
64,330
158,090
427,412
465,609
The amounts recorded under Transmission Tariff Review are described in more detail in Explanatory Note 7.
23) – DEDUCTIONS FROM OPERATIONAL REVENUE
Consolidated
06/30/2010
06/30/2009
Reclassified
Taxes on revenue
ICMS tax
Cofins tax
PIS and Pasep taxes
ISS value added tax on services
Other
Charges to the consumer
Global Reversion Reserve – RGR
CDE – Energy Development Account
Fuel Consumption Account – CCC
Research and Development – P&D
National Scientific and Technological Development
Fund – FNDCT
Energy System Expansion Research – EPE
Emergency Acquisition Charge
30
Holding company
06/30/2010
06/30/2009
Reclassified
172,199
152,155
33,030
263
357,647
163,812
151,871
38,184
226
142
354,235
171,318
146,911
31,894
256
350,379
162,769
151,677
38,142
226
352,814
44,619
17,903
15,148
7,140
44,276
12,268
11,316
6,761
40,780
17,901
15,147
5,647
44,276
12,268
11,316
6,761
5,647
2,823
10,328
6,934
3,467
8,093
5,647
2,823
10,328
6,934
3,467
8,093
103,608
93,115
98,273
93,115
461,255
447,350
448,652
445,929
24) – OPERATIONAL COSTS AND EXPENSES
Consolidated
06/30/2010
06/30/2009
Reclassified
Personnel
Post-employment obligations
Materials
Raw materials and inputs for generation
Outsourced services
Depreciation and amortization
Royalties for use of water resources
Operational (provisions /) reversals
Charges for the use of the basic transmission grid
Electricity bought for resale
Other operational expenses, net
a)
146,069
15,456
8,681
76,253
143,347
65,963
(5,945)
135,979
145,996
43,708
775,507
PERSONNEL EXPENSES
Remuneration and salary-related charges and expenses
Supplementary pension contributions – Defined contribution
plan
Assistance benefits
( - ) Personnel costs transferred to Works in progress
PDV Temporary Voluntary Retirement Program
Holding company
06/30/2010
06/30/2009
Reclassified
169,432
14,666
6,692
4,070
52,892
112,815
70,090
552
142,414
70,914
22,100
666,637
138,101
15,456
8,006
56,837
112,473
65,903
(5,942)
139,842
145,984
39,836
716,496
Consolidated
06/30/2010
06/30/2009
169,342
14,666
6,669
4,070
52,666
112,384
70,090
552
142,414
70,436
21,970
665,259
Holding company
06/30/2010 06/30/2009
124,248
117,860
116,346
117,770
7,648
12,872
144,768
(3,783)
140,985
5,084
7,775
12,519
138,154
(5,925)
132,229
37,203
7,648
12,806
136,800
(3,783)
133,017
5,084
7,775
12,519
138,064
(5,925)
132,139
37,203
146,069
169,432
138,101
169,342
The PDV Temporary Voluntary Retirement Program
In April 2009 Cemig GT put in place a temporary Voluntary Retirement Program – named the PDV –
which employees were able to join between April 22 and June 5, 2009.
The financial incentive for employees who subscribed to the PDV program was an indemnity varying
between 3 and 16 times the employee’s monthly remuneration, according to criteria set in the
Program’s regulations, among which the main factor is the time of contribution remaining for
qualification for full retirement benefits under the National Social Security program. Another of the
incentives is payment of the contribution to the pension fund and the National Social Security System
up to the date when the employee would meet the requirements for retirement benefits under the
National System (limited to 5 years), and deposit of the extra payment of 40% on the balance of the
FGTS fund (the payment that would be obligatory if the contract were being rescinded by the
employer).
Additionally, Cemig GT guarantees full payment of the costs of the group life insurance plan (for 6
months) and the health plan (for 12 months), from the date of the employee leaving the Company,
which must be between June 2009 and September 2010.
A total of 249 employees of the Company subscribed to the program. An expense relating to the
financial incentives, in the amount of R$ 46,183, was recognized, the greater part of it in the 2009
business year.
31
Consolidated
06/30/2010
06/30/2009
b) OUTSOURCED SERVICES
Communication
Maintenance and conservation of facilities and electrical
equipment
Building conservation and cleaning
Contracted labor
Freight and airfares
Accommodation and meals
Security services
Consultancy
Maintenance and conservation of furniture and utensils
Maintenance and conservation of vehicles
Electricity
Environment
Other
Holding company
06/30/2010
06/30/2009
3,233
2,032
2,327
2,032
9,954
9,167
1,895
2,137
2,312
4,560
14,557
1,089
2,255
2,143
7,957
14,994
76,253
4,425
8,360
3,330
1,774
2,215
4,030
1,680
1,166
1,679
2,273
6,562
13,366
52,892
7,441
8,706
1,783
1,700
2,287
4,550
2,188
1,088
2,090
1,909
7,777
12,991
56,837
4,425
8,360
3,330
1,774
2,215
4,030
1,680
1,166
1,679
2,273
6,562
13,140
52,666
Consolidated
06/30/2010
06/30/2009
06/30/2010
06/30/2009
25) – NET FINANCIAL EXPENSES
FINANCIAL REVENUES
Revenue from cash investments
Arrears penalty payments on electricity bills
Monetary updating on items under the General
Agreement for the Electricity Sector
FX variations
Pasep and Cofins taxes on financial revenues
Gains on financial instruments (Note 27)
Adjustment to present value
Other
FINANCIAL EXPENSES
Charges on loans and financings
Monetary updating on loans and financings
FX variations
Monetary updating – CCEE
Losses on financial instruments (Note 27)
Provisions for losses on “Free Energy” transactions
Adjustment to present value
Other
NET FINANCIAL EXPENSES
Holding company
120,578
3,396
63,399
980
113,608
3,393
63,219
980
74
1,348
(554)
739
11,816
13,960
151,357
2,219
29,438
(208)
1,869
931
11,392
110,020
1,891
1,348
(547)
648
11,816
13,324
145,481
2,219
29,438
(203)
1,869
931
11,391
109,844
(298,122)
(30,025)
(730)
(556)
(431)
(22,097)
(351,961)
(200,604)
(152,530)
(8)
(4,013)
(48,593)
8,306
(4,571)
(1,833)
(203,242)
(93,222)
(252,600)
(30,025)
(730)
(44)
(480)
(431)
(18,379)
(302,689)
(157,208)
(150,753)
(8)
(4,013)
(48,593)
8,306
(4,571)
(3,075)
(202,707)
(92,863)
26) – RELATED PARTY TRANSACTIONS
As mentioned in Explanatory Note 1, Cemig GT is a wholly-owned subsidiary of Companhia
Energética de Minas Gerais – Cemig, of which the controlling stockholder is the government of the
Brazilian State of Minas Gerais.
Cemig GT and Light are also subsidiaries of Cemig.
32
Cemig GT’s principal balances and transactions with related parties are:
ASSETS
COMPANIES
LIABILITIES
REVENUES
EXPENSES
06/30/2010
03/31/2010
06/30/2010
03/31/2010
06/30/2010
06/30/2009
06/30/2010
06/30/2009
-
-
110,347
418,304
-
-
-
-
-
-
3
12
-
-
-
-
2,663
2,663
-
-
-
-
-
-
Cemig
Current
Interest on Equity, and dividends
Affiliates and holding company
Non-current
Affiliates and holding company
Cemig Distribuição S.A.
Current
Affiliates and holding company
Revenue from supply of electricity (1)
Charges for Wholesale Transmission
-
-
261
10,703
-
-
12,283
13,012
271
-
142,979
117,297
42,280
-
18,630
-
15,297
14,042
3,122
4,156
-
-
-
-
228
6,633
-
-
-
-
-
-
-
-
102
-
9,956
8,935
-
-
140
554
1
4
-
4
-
40,397
37,928
31,998
26,168
(172,199)
(163,812)
-
-
8,223
8,223
-
-
-
-
-
-
39,301
38,161
-
-
2,248
(1,998)
-
-
18,340
18,862
-
-
(15,456)
(14,666)
-
-
4,749
10,310
-
-
-
-
236,083
238,714
-
-
-
-
-
-
-
-
(7,648)
(7,775)
-
-
-
-
-
-
(1,762)
(1,574)
13
13
Non-current
Affiliates and holding company
Light S.A.
Current
Revenue from supply of electricity (1)
Charges for Wholesale Transmission
Minas Gerais state government
Current
Taxes, charges and contributions – ICMS
tax (4)
Non-current
Taxes offsetable – ICMS (4)
Debentures (2)
-
-
Forluz
Current
Post-employment obligations – current
(3)
Other
-
-
Non-current
Post-employment obligations – noncurrent (3)
Personnel expenses (5)
Current administration expense (6)
-
-
OTHER
Non-current
Affiliates and subsidiaries / parent
company
-
-
Main material comments on the above transactions:
(1) The Company has contracts for sale of electricity with Cemig Distribuição (Cemig Distribution, or “Cemig D”) and Light,
arising from the 2005 public auction of current existing generation capacity, for 8 years’ supply, with annual price
adjustment by the IGP-M inflation index.
( 2) Private issue of a total of R$ 120,000 in non-convertible debentures, value updated by the IGP–M inflation index, for
completion of the Irapé hydroelectric plant, with redemption after 25 years from the issue date.
(3) The contracts of Forluz are updated by the Amplified Consumer Price Index (IPCA), calculated by the Brazilian Geography
and Statistics Institute (IBGE) (see Explanatory Note 16) and will be amortized up to the business year of 2024.
(4) The transactions in ICMS tax posted in the financial statements refer to transactions for sale of electricity and are carried
out in conformity with the specific legislation of the State of Minas Gerais.
(5) Cemig’s contributions to the Pension Fund related to the employees participating in the Mixed Plan (see Explanatory Note
18), calculated on the monthly remunerations in accordance with the regulations of the Fund.
(6) Funds for annual current administrative costs of the Pension Fund in accordance with the specific legislation of the sector.
The amounts are estimated as a percentage of the Company’s total payroll.
For more information on the main transactions, see Explanatory Notes 8, 15, 16, 18, 21, 24 and 25.
33
-
27) – FINANCIAL INSTRUMENTS
The financial instruments used by the Company are restricted to Cash and cash equivalents,
Consumers and traders, Loans and financings, Obligations under debentures, and currency swaps –
the gains and losses obtained on the transactions are registered in full by the accrual method.
The Company’s financial instruments were recorded at fair value and are classified as follows:
-
-
Financial instruments recorded at fair value through the income statement: In this category are
Cash investments and Derivative investments (mentioned in item “b”). They are valued at fair
value and the gains or losses are recognized directly in the Income statement.
Receivables: Credits owed by consumers and traders are in this category. They are recognized at
their nominal realization value, similar to the fair values.
Loans and financings, and Obligations under debentures: These are measured at the amortized
cost using the effective interest rates method.
a) Management of risks
Corporate risk management is a management tool that is part of the practices of Corporate
Governance, aligned with the process of Planning, which sets the strategic objectives of the
Company’s business.
The Company has a Financial Risks Management Committee, the purpose of which is to implement
guidelines and monitor the financial risk of transactions that might negatively affect the Company’s
liquidity and/or profitability, recommending hedge/protection strategies in relation to foreign exchange,
interest rate and inflation risks. These have effects that are in line with the Company’s strategy.
A key aim of the Financial Risks Management Committee is to give predictability to the Company’s
Cash flow and position for a maximum of 12 months, taking into account the economic scenario
published by a contracted firm of external consultants.
The principal risks to which the Company is exposed are as follows:
Exchange rate risk
Cemig GT’s exposure to the risk of increased in exchange rates is as follows:
Consolidated and Holding
company
06/30/2010
03/31/2010
EXPOSURE TO EXCHANGE RATES
US dollar
Loans and financings (Note 16)
(–) Contracted hedges / swaps (*)
-
6,056
75,000
81,056
Euro
Loans and financings (Note 16)
5,022
5,394
Other foreign currencies
Loans and financings (Note 16)
Net liability exposure
5,022
26,544
112,994
(*) Includes the contracted transaction for R$ 75,000.
Sensitivity analysis
The Company estimates that, in a probable scenario, the appreciation of the exchange rates of foreign
currencies against the Real at the end of June 30, 2011 will be 3.03% (1 Euro = R$ 2.271). The
Company has made a sensitivity analysis of the effects on its results arising from increases of 25%
34
and 50% in the exchange rate, in relation to the scenario that it rates as “probable” – considering these
alternative scenarios as “possible” and “remote”, respectively.
Risk: FX exposure
Present
exposure
“Probable”
scenario
“Possible” scenario:
FX depreciation
25%
“Remote” scenario:
FX depreciation
50%
5,022
5,174
6,468
7,761
5,022
5,174
6,468
7,761
(1,446)
(2,739)
Euro
Loans and financings (Note 16)
Net liability exposure
Net effect of exchange rate depreciation
(152)
Interest rate risk
On June 30, 2010, Cemig GT was not exposed to the risk of increase in foreign interest rates. On
March 31, 2010, this exposure was R$ 6,056, with an effect on Loans and financings in foreign
currency with floating interest rates (Libor).
In relation to the risk of increase in domestic Brazilian interest rates, the Company’s exposure arises
from its net liabilities indexed to variation in interest rates, which are as follows:
Consolidated
06/30/2010
03/31/2010
EXPOSURE TO BRAZILIAN INTEREST RATES
Holding company
06/30/2010
03/31/2010
Assets
2,033,565
46,141
2,941,362
45,175
1,745,153
46,141
2,718,322
45,175
2,079,706
2,986,537
1,791,294
2,763,497
(4,598,010)
(4,500,658)
(4,219,208)
(4,296,370)
(2,518,304)
(1,514,121)
(2,427,914)
(1,532,873)
Cash investments (Note 4)
Regulatory Assets (Note 6)
Liabilities
Loans and financings (Note 16)
Net liability exposure
Sensitivity analysis
In relation to the risk of increase in the Selic interest rate, considered to be the most significant interest
rate risk, the Company estimates that, in a probable scenario, the Selic rate on June 30, 2011 will be
12.75%. The Company has made a sensitivity analysis of the effects on its results arising from
increases of 25% and 50% in the Selic rate, in relation to the scenario that it considers as “probable” –
considering these alternative scenarios as “possible” and “remote”, respectively.
Variation in the CDI rate accompanies the variation in the Selic rate.
Risk: Increase in Brazilian domestic
interest rates
Present
exposure
Selic 10.25%
“Probable”
scenario:
Selic 12.75%
“Possible
scenario:
Selic
15.9375%
“Remote”
scenario:
Selic 19.125%
Assets
Cash investments
Liabilities
Loans
Net liability exposure
2,033,565
2,292,845
2,357,664
2,422,484
2,033,565
2,292,845
2,357,664
2,422,484
(4,598,010)
(5,184,256)
(5,330,818)
(5,477,379)
(2,564,445))
(2,891,411)
(2,973,154)
(3,054,895)
(292,492)
(365,615)
(438,738)
Net effect of the variation in the Selic rate
35
Credit risk
The risk arising from the possibility of Cemig GT and its subsidiaries incurring losses as a result of
difficulty in receiving amounts billed to its clients is considered to be low. The Company carries out
monitoring for the purpose of reducing default, on an individual basis, with its consumers. Negotiations
are also entered into to make possible receipt of any receivables that are in arrears.
In relation to the risk of losses resulting from insolvency of a financial institution, a Cash Investment
Policy has been in force since 2004 in which each institution is analyzed on criteria of current liquidity,
degree of leverage, percentage of default, profitability and analysis by three financial risk rating
agencies. The institutions receive maximum limits of allocation of funds, that are reviewed periodically
or in the event of any change in the macroeconomic scenario of the Brazilian economy.
Energy scarcity risk
The electricity sold is generated, almost entirely, by hydroelectric power plants. A prolonged period of
scarcity of rainfall could result in reduction of the volume of water in the reservoirs of the generation
plants, and/or limiting recovery of their volume, and resulting in losses as a result of increased costs of
acquisition of electricity, or reduction of revenues in the event of adoption of a renewed rationing
program, like the one put in place by the federal government in 2001.
Risk of early maturity of debt
The Company has contracts for loans and financings, with restrictive covenant clauses normally
applicable to these types of operation, related to economic and financial indices, cash flow and other
indicators meeting certain levels. Non-compliance with these covenants could result in early maturity of
debt. Some of these restrictive covenants were not met on June 30, 2010, and the Company obtained
formal consent (waiver) from the creditors (Note 16), to the effect that they will not demand early
maturity of the obligation.
Risk of non-renewal of concessions
The Company has concessions for commercial operation of generation and transmission services, and
its Management expects that they will be renewed by Aneel and/or the Mining and Energy Ministry. If
the regulatory bodies do not grant the applications for renewals of these concessions, or if they decide
to renew them upon imposition of additional costs for the Company (‘concessions for consideration’) or
setting of a price ceiling, the present levels of profitability and activity could be altered.
The company did not suffer any significant negative impact in the year as a result of events related to
the risks described above.
b) Financial instruments – derivatives
The derivative instruments contracted by Cemig GT and its subsidiaries have the purpose of
protecting their operations against the risks arising from foreign exchange variation and are not used
for speculative purposes.
The Company has a Financial Risks Management Committee, created to monitor the financial risks in
relation to volatility and trends of inflation indices, exchange rates and interest rates that affect its
financial transactions and which could negatively affect its liquidity and profitability. Another aim of this
Committee is to implement the guidelines for proactive operation in relation to the environment of
financial risks when implementing Action Plans.
Value and type of margin guarantees
The Company does not make margin deposits for derivative instruments.
36
Method of calculation of the fair value of positions
The fair value of cash investments is calculated taking into consideration the market prices of the
security, or market information that makes such calculation possible, taking into account future fixedincome market and FX rates applicable to similar securities. The market value of the security
corresponds to its maturity value brought to present value by the discount factor obtained from the
market yield curve in Reais.
This table shows the derivative instruments contracted by Cemig GT on June 30, 2010.
Unrealized loss
Receivable by
Cemig GT/
subsidiaries
Payable by
Cemig GT/
subsidiaries
Maturities
– period
Trading
market
In R$ or US$:
Greater of:
48.00% of CDI rate
or monthly FX
variation
April 2010
Over-thecounter
-
In R$:
5.86% fixed-rate
December
2012
Over-thecounter
R$120,000
Value of principal
contracted*
06/30/2010
03/31/2010
Accumulated effect
Amount according to
contract
06/30/2010
03/31/2010
Fair value
06/30/2010 03/31/2010
Amount
received
06/30/2010
Amount
paid
06/30/2010
-
Cemig GT
In R$:
106.00% of
CDI rate
R$75,000
-
100
-
100
-
466
1,313
466
1,313
18,044
(18,224)
466
1,413
466
1,413
18,044
(18,224)
Madeira Energia
In R$:
IGP–M index
R$120,000
The counterparty of the Company’s derivatives operation is the bank Santander–ABN; the contracts
are swaps of indexors.
There is no sensitivity analysis, due to the rate being pre-fixed.
28) – SUBSEQUENT EVENT
Acquisition of stockholding
On August 6, 2010, Transmissora Aliança de Energia Elétrica S.A. (“Taesa”), in which Cemig’s
wholly-owned subsidiary Cemig GT holds 48% of the voting stock, signed a Share Purchase
Agreement with CYMI Holding S.A. (“CYMI”), governing the acquisition by Taesa of:
(i) 49.99% of the voting stock of NTE – Nordeste Transmissora de Energia Elétrica S.A.;
(ii) 49.90% of the voting stock of STE – Sul Transmissora de Energia Elétrica S.A.; and
(iii) 40% of the voting stock of IEMG – Interligação Elétrica de Minas Gerais S.A.;
– all of which are transmission companies holding public service electricity transmission concessions.
For the acquisition of the stakes in these transmission companies Taesa will pay a total of R$ 275,470.
The acquisition price will be updated by the accumulated variation of the Selic Rate between the date
of signature of the Share Purchase Agreement and the business day immediately preceding the date
of completion of the actual acquisition of the shares by Taesa.
Conclusion of the transaction and actual acquisition of the shares by Taesa are subject to several prior
conditions being met, in particular:
(i) Non-exercise, by the other stockholders of the transmission companies, of any right of
preference or first refusal on the shares to be acquired;
(ii) approval by the General Meetings of Stockholders of the Vendor and of Taesa;
(iii) approval by the Brazilian National Electricity Agency (Aneel).
Also, the transaction will also be submitted to the Brazilian Monopolies Council, CADE, in accordance
with Law 8884/94.
37
Under the stockholders’ agreements between the current stockholders of the transmission companies,
the remaining stockholders have a “tag-along” right – the right of joint sale – on the same terms as
those specified in the Share Purchase Agreement.
Closing of public distribution of the first issue of debentures issued by Transmissora Aliança
de Energia Elétrica S.A.
On July 20, 2010 Transmissora Aliança de Energia Elétrica S.A. registered with the CVM the closing
of the public distribution of 60,000 non-convertible, unsecured debentures, in two series, of the Issuer’s
first issue, the first series being of 34,500 debentures and the second series of 25,500 debentures, all
nominal and of the book-entry type, with nominal unit value of R$ 10 on the Issue Date, comprising a
total of R$ 600,000. The Offering was approved by an Extraordinary General Meeting of Stockholders
held on June 1, 2010.
38
CONSOLIDATED ECONOMIC AND FINANCIAL PERFORMANCE
(Figures are in R$ ’000 unless otherwise indicated.)
Net profit for the period
Cemig GT reported net profit of R$ 488,462 in the first half of 2010 (1H10), 28.65% less than the net
profit of R$ 684,638 reported for the first half of 2009 (1H09). This reflects an increase of 4.26% in net
operational revenue, associated with an increase of 16.33% in operational costs and expenses. See
further comments below in this report.
Ebitda (method of calculation not reviewed by external auditors)
Cemig GT’s Ebitda in 1Q10 was higher than in 1Q09:
EBITDA - R$ ’000
06/30/2010
Net profit
+ Current and deferred income tax and Social Contribution tax
+ Employees’ and managers’ shares in results
+ Financial revenues (expenses)
+ Depreciation and amortization
= EBITDA
06/30/2009
Change, %
488,462
684,638
(28.65)
213,400
308,781
(30.89)
16,070
16,217
200,604
93,222
143,347
112,815
1,061,883
1,215,673
(0.91)
115.19
27.06
(12.65)
Non-recurring items:
+ Periodic Tariff Review – Tariff Repositioning
+ PDV Temporary Voluntary Retirement Program
– Review of Transmission Revenue – Technical Note 214/2009
= ADJUSTED EBITDA
EBITDA
1,400
-
5,084
37,203
(86.33)
-
(158,090)
-
1,131,553
1,094,786
3.36
ADJUSTED EBITDA
80%
1,216
1,200
64,586
1,400
1,200
1,062
60%
1,000
80%
1,095
1,132
60%
1,000
800
800
40%
40%
600
600
400
400
20%
20%
200
200
-
-
0%
1st Half 2009
Ebitda, R$ ’000
0%
1st Half 2009
1st Half 2010
Ebitda, R$ ’000
Ebitda margin
1st Half 2010
Ebitda margin
The lower Ebitda in 1H10 than in 1H09 mainly reflects net operational revenue 4.26% lower, and
operational costs and expenses (excluding effects of depreciation and amortization) 14.14% higher.
Due to the higher operational expenses, Ebitda margin was lower in 2010, at 62.69%, than in 2009
(68.39%). Adjusted for non-recurring items, Ebitda was 3.36% higher year-on-year, and adjusted
Ebitda margin was 66.80% in 2010, vs. 61.87% in 2009.
39
Revenue from supply of electricity
Gross revenue from supply of electricity in the first half of 2010 was R$ 1,716,253, 1.37% lower than in
1H09 (R$ 1,740,088).
This result was mainly due to a lower quantity of electricity supply to other concession holders, and
recognition on an expense of R$ 64,586, arising from the periodic review of the transmission tariff,
recorded in June 2010, to reflect the negative repositioning of the tariff level – a reduction of 15.88%,
backdated to July 2009. These effects were partially compensated by revenue from supply to free
consumers 17.54% higher year-on-year, and a higher volume of electricity traded in the Electricity
Trading Chamber (CEEE). The higher revenue from free consumers reflects: the higher quantity of
electricity traded – an increase of 6.76%, reflecting the recovery in industrial activity – and also
migration of clients from the captive market to the status of free consumers, in which they can buy from
incentive-bearing sources, in both the commercial and industrial consumer categories; and the
increase in the average price per MWh, partly due to the annual adjustment of those contracts, most of
which are indexed to the IGP-M inflation index. Revenue in the first half of 2010 was R$ 990,756,
compared to R$ 842,882 in the first half of 2009.
The quantity of electricity sold to other concession holders, and under ‘bilateral contracts’, was 3.35%
lower. This mainly reflects the lower volume of electricity traded in the Regulated Market (CCEAR
contracts), due to completion of contracts, and redirection to free consumer clients.
Revenue from use of the network
This revenue is primarily for use, by generation and distribution companies that are participants in the
Brazilian grid system, of the facilities that make up the basic transmission network of Cemig GT; the
amounts are set by a resolution of the regulator, Aneel.
Revenue in the first half of 2010 was R$ 427,412, compared to R$ 465,609 in the first half of 2009 – a
reduction of 8.20%. This primarily reflects:
 Recognition of revenue of R$ 158,090 in the first half of 2009, arising from the Review of the
Company’s transmission tariffs in 2009.
 Recognition, in the first half of 2010, of an expense of R$ 64,586, arising from the periodic
Review of the transmission tariff in 2010.
 acquisition of the electricity transmission company Taesa.
For more information please see Explanatory Note 7 and 11 to the Consolidated Financial Statements.
Deductions from operational revenues
Deductions from operational revenues totaled R$ 461,255 in 1H10, compared to R$ 447,350 in 1H09,
an increase of 3.11%. Main year-on-year variations in the deductions from revenue were:
The Fuel Consumption Account – CCC
The deduction from revenue relating to the CCC in 1H10 was R$ 15,148, compared to R$ 11,316 in
1H09, an increase of 33.86%. This is a contribution for the costs of operation of the thermal plants in
the national grid and in the isolated systems. It is shared between electricity concession holders, on a
basis set by an Aneel Resolution. Cemig GT merely passes through this cost, to Eletrobrás, after
charging it to Free Consumers on their invoices for use of the grid.
CDE – Energy Development Account
The deduction from revenue relating to the CDE was R$ 17,903 in 1H10, compared to R$ 12,268 in
1H09, representing an increase of 45.93%. These payments are specified by a Resolution issued by
the regulator, Aneel. Cemig GT merely passes on this cost, to Eletrobrás, after charging it to Free
Consumers on their invoices for use of the grid.
40
The other deductions from revenue are for taxes that are calculated as a percentage of invoiced
revenue – hence their variations are substantially the same in percentage terms as the changes in
revenue.
Operational costs and expenses
Operational costs and expenses (excluding Net financial revenue/expenses) in the first half of 2010
totaled R$ 775,507, 16.33% more than in 1H09 (R$ 666,637). For further information on the
composition of operational costs and expenses, please see Explanatory Note 24 to the Quarterly
Information.
The main year-on-year variations in Operational revenue and expenses were:
Personnel
Personnel expenses in 1H 2010 were R$ 146,069, 13.79% less than in 1H09 (R$ 169,432).
This mainly reflects the expense on the PDV Voluntary Retirement Program, of R$ 37,203 in 1H09,
compared to R$ 5,084 in 1H10, associated with the lower number of employees – which was reduced
from 2,117 in June 2009 to 1,934 in June 2010.
Electricity bought for resale
The expense on this account in first half 2010 was R$ 145,996, 105.88% more than the figure of
R$ 70,914 for this account in the first half of 2009. The difference reflects higher purchases of
electricity, related to sales activity.
Outsourced services
The expense on outsourced services in 1H10 was R$ 76,253, compared to R$ 52,892 in 1H09, an
increase of 44.17% – the highest variations being in expenditure on consultancy and installation of
electrical equipment, as follows:

Expenses on consultancy were 766.49% higher in 1H10, at R$ 14,557, than in 1H09
(R$ 1,680). The majority of these expenses were for contracting of services related to analysis
of acquisitions of new projects.

The expense on services of maintenance and conservation of electrical facilities and
equipment in 1H10 was R$ 9,954, 124.95% higher than in 1H09 (R$ 4,425). This variation
arises principally from: the Company’s higher volume of activity; adjustment of contracts; and
consolidation of the companies acquired in the second half of 2009.
A breakdown of outsourced services is given in Explanatory Note 24 to the Quarterly Information.
Depreciation and Amortization
The expense on depreciation and amortization in 1H10 was R$ 143,347, 27.06% more than the
expense of R$ 112,815 posted for 1H09. This increase is substantially due to the consolidation of the
companies acquired in the second half of 2009.
Other operational expenses
The net expense under this heading in the first half of 2010 was R$ 43,708, 97,77% more than in 1H09
(R$ 22,100). This reflects the increased expenditure on paid concessions, leasing and rentals, and
insurance.
41
Financial revenues (expenses)
The company posted net financial expenses of R$ 200,604 in 1H10, 115.19% more than the net
financial expenses reported for 1H09, of R$ 93,222. The items comprising the financial result with the
highest variations are listed below:

Revenue from cash investments 90.19% higher, at R$ 120,578 in 1H10, than in 1H09
(R$ 63,399) – due to the higher volume of cash invested in 1H10.

Higher expenses on charges for loans and financings, of R$ 298,122 in the first half of 2010,
vs. R$ 152,530 in the same period of 2009. This reflects the entry of new financings, one of
the most important being the issue of R$ 2,700,000 in Promissory Notes in October 2009,
settled in March 2010, and the raising of funds by a debenture issue in March 2010, of the
same amount, the proceeds of which were used to settle the Promissory Notes.

Expense on FX variation in loans and financings in Brazilian currency of R$ 30,025, in
1H2010, arising from the variation of the inflation indices used as indexors for the company’s
contracts for loans, financings and debentures, in 1H10.

Net gain of R$ 618 on currency variations in 1H10, compared to a net gain of R$ 29,430 in
1H09, reflecting effects on foreign currency loans and financings indexed to the US dollar and
the yen. This is mainly due to the different variations in the exchange rates for dollar and the
yen in the two periods. The US dollar appreciated against the Real by 3.46% in 1H10, but
depreciated by 16.49% in 1H09. The yen appreciated against the Real by 8.35% in 1H10, but
depreciated by 21.45% in 1H09.
For a breakdown of financial revenues and expenses, please see Explanatory Note 25 to the Quarterly
Information.
Income tax and Social Contribution tax
In 1H10, Cemig GT posted expenses for income tax and the Social Contribution tax of R$ 213,400,
representing 29.72% of the pre-tax profit of R$ 717,932. In 1H09, the Company posted expenses on
income tax and the Social Contribution tax of R$ 308,781, representing 30.58% of the pre-tax profit of
R$ 1,009,636. These effective rates are reconciled with the nominal rates in Explanatory Note 9 to the
Quarterly Information. )_++
In 1H10 the Company allocated R$ 69,878 to payment of Interest on Equity, resulting in a tax benefit
of R$ 23,759. In 1H09 the Company had allocated R$ 107,136 to Interest on Equity, resulting in a tax
benefit of R$ 36,426.
42
INCOME STATEMENTS FOR THE SECOND QUARTERS OF 2010 AND 2009
Second
quarter 10
OPERATIONAL REVENUE
Revenue from supply of electricity
Revenue from use of the network
Other operational revenues
Gross operational revenue
Deductions from operational revenue
Net operational revenue
Second
quarter 09
Change, %
878,987
970,940
(9.47)
194,463
314,579
(38.18)
5,582
5,496
1.56
1,079,032
1,291,015
(16.42)
(234,593)
(245,706)
(4.52)
844,439
1,045,309
(19.22)
OPERATIONAL COSTS AND EXPENSES
Personnel
(73,982)
(105,356)
(29.78)
Forluz post-employment obligations
(7,728)
(7,333)
5.39
Materials
(4,582)
(3,743)
22.42
Raw materials and inputs
-
(4,070)
(100.00)
Outsourced services
(41,389)
(28,354)
45.97
Depreciation and amortization
(74,176)
(56,789)
30.62
Royalties for use of water resources
(30,578)
(35,323)
(13.43)
5,518
(804)
(786.32)
Electricity bought for resale
(72,223)
(43,724)
65.18
Charges for the use of the basic transmission grid
(71,831)
(70,120)
2.44
(28,130)
(16,521)
70.27
(399,101)
(372,137)
7.25
Operational provisions
Other expenses, net
Operational profit
445,338
NET FINANCIAL EXPENSES
(122,501)
673,172
(33.84)
(43,032)
184.67
Profit before income tax and Social Contribution tax
322,837
630,140
(48.77)
Income tax and Social Contribution tax
(81,354)
(172,140)
(52.74)
(9,174)
(5,774)
58.88
Profit shares
Net profit for the period
232,309
452,226
(48.63)
Profit for the quarter
For the second quarter of 2010 (2Q10), Cemig GT reported net profit of R$ 232,309, 48.63% less than
the net profit of R$ 452,226 reported for 2Q09.)
This basically reflects net operational revenue 19.22% lower, operational expenses 7.25% higher, and
net financial expenses 184.67% higher. Another factor in the lower profit in 2H10 than 2H09 was the
expense of R$ 64,586 posted in June 2010, arising from the periodic Review of the transmission tariff,
which set a reduction of 15.88%, backdated to July 2009. See further comments on this below in this
report.
43
Ebitda (method of calculation not reviewed by external auditors)
Cemig GT’s Ebitda was 28.83% lower in 2Q10 than 2Q09: Adjusted for non-recurring items, Ebitda
was 3.83% lower.
EBITDA
2Q10
Net profit
452,226
(48.63)
81,354
172,140
(52.74)
9,174
5,774
58.88
122,501
43,032
184.67
74,176
56,789
30.62
519,514
729,961
(28.83)
+ Profit shares
+ Depreciation and amortization
= EBITDA
Change %
232,309
+ Current and deferred income tax and Social Contribution tax
+ – Financial revenues (expenses)
2Q09
Non-recurring items:
+ Periodic Tariff Review – Tariff Repositioning
64,586
-
1,930
37,524
+ PDV and PPD Voluntary Retirement Programs
– Review of Transmission Revenue – Technical Note 214/2009
-
= ADJUSTED EBITDA
800
(158,090)
586,030
EBITDA
(94.86)
-
609,395
(3.83)
ADJUSTED EBITDA
80%
730
750
80%
609
600
586
600
60%
520
60%
450
400
40%
40%
300
200
20%
-
0%
2nd Quarter 2009
Ebitda, R$ ’000
20%
150
-
2nd Quarter 2010
0%
2nd Quarter 2009
2nd Quarter 2010
Ebitda, R$ ’000
Ebitda margin
Ebitda margin
The lower Ebitda in 2Q10 than in 2Q09 mainly reflects net revenue 19.22% lower, associated with
operational expenses (excluding effects of depreciation and amortization) 3.04% higher. The resulting
Ebitda margin, at 61.52% in 2Q10, was lower than in 2Q09 (69.83%). Adjusted for non-recurring items,
Ebitda was only 3.83% lower year-on-year, and adjusted Ebitda margin was higher in 2Q10, at
69.40%, than in 2Q09 (58.30%).
Revenue from supply of electricity
MWh (**)
2Q10
Industrial
Commercial
Uninvoiced supply, net
Wholesale supply to other
concession holders (*)
Transactions in electricity on the
CCEE
Sales under Proinfa program
Total
R$
2Q09
Change, %
2Q10
2Q09
Change, %
4,510,973
4,006,327
12.60
497,844
433,566
14,190
2,145
561.54
4,922
6,233
(21.03)
14.83
(8,634)
(307.62)
-
-
-
17,926
4,525,163
4,008,472
12.89
520,692
431,165
20.76
3,435,310
4,337,061
(20.79)
329,484
520,963
(36.75)
1,120,848
255,298
27,046
18,813
43.76
339.04
7,300
-
-
1,765
-
9,088,621
8,600,831
5.67
878,987
970,941
( * ) Includes Contracts for Sale of Energy in the Regulated Market (CCEARs) and ‘bilateral contracts’ with other agents.
( ** ) Information in MWh has not been reviewed by external auditors.
44
(9.47)
Gross revenue from electricity supply in 2Q10 was R$ 878,987, 9.47% less than in 2Q09
(R$ 970,941).
This result was mainly due to a lower quantity of electricity supply to other concession holders, and
recognition of an expense of R$ 64,586, arising from the Periodic Review of the Transmission Tariff,
recorded in June 2010, to reflect the negative repositioning of the tariff level – a reduction of 15.88%,
backdated to July 2009. These effects were partially compensated by revenue from supply to free
consumers 20.76% higher year-on-year, which in turn was partly due to volume of energy traded with
Free Consumers being 12.89% higher, and partly due to the average price per MWh being higher, in
part due to the annual adjustment to these contracts − most of them are indexed to the IGP-M index.
Revenue from Free Consumers in 2Q10 was R$ 520,692 in 2Q10, compared to R$ 431,165 in 2Q09.
The quantity of electricity sold to other concession holders, and under ‘bilateral contracts’, was 20.79%
lower. This reflects a lower volume of electricity traded in the Regulated Market (CCEAR contracts),
due to completion of contracts, and redirection to clients.
Revenue from use of the network
This revenue is primarily for use, by generation and distribution companies that are participants in the
Brazilian grid system, of the facilities that make up the basic transmission network of Cemig GT; the
amounts are set by a resolution of the regulator, Aneel.
Revenue from use of the network in 2Q10 totaled R$ 194,463, 38.18% less than in 2Q09
(R$ 314,579). The lower figure primarily reflects:
 Recognition of revenue of R$ 158,090 in the second half of 2009, arising from the Review of
the Company’s transmission tariffs in 2009.
 Recognition, in the first half of 2010, of an expense of R$ 64,586, arising from the periodic
Review of the transmission tariff in 2010.
 acquisition of the electricity transmission company Taesa.
Deductions from operational revenue
2Q10
2Q09
Change, %
ICMS tax
Cofins tax
PIS and Pasep taxes
ISS value added tax on services
Other
90,866
75,809
16,456
126
-
82,329
91,127
24,999
113
142
10.37
(16.81)
(34.17)
11.50
-
183,257
198,710
(7.78)
21,515
9,315
7,925
3,609
2,710
1,354
4,908
24,507
6,472
5,967
3,939
4,112
(12.21)
43.93
32.81
(8.38)
(34.10)
(32.27)
-
Global Reversion Reserve – RGR
Energy Development Account – CDE
Fuel Consumption Account – CCC
Research and Development – P&D
National Scientific and Technological Development Fund (FNDCT)
Energy System Expansion Research – EPE
Emergency Acquisition Charge
51,336
1,999
46,996
234,593
245,706
9.23
(4.52)
Main year-on-year differences in the deductions from revenue were:
Global Reversion Reserve – RGR
This deduction from revenue was 12.21% lower in 2Q10 than 2Q09. This is a non-controllable cost:
the expense recognized in the income statement is the amount passed on to the tariff.
45
Fuel Consumption Account – CCC
This is a contribution for the costs of operation of the thermal plants in the national grid and in the
isolated systems. It is shared between electricity concession holders, on a basis set by an Aneel
Resolution. This is charged to Free Consumers, on their invoice for use of the basic grid, and passed
on to Eletrobrás: hence Cemig GT acts only as an agent to pass on this cost. Cemig GT’s quota of
contribution to the CCC in 2Q10 was 32.81% more than in 2Q09.
CDE – Energy Development Account
Payments of the CDE are specified by Aneel Resolution, and were 43.93% higher in 2Q10 than in
2Q09. Cemig GT merely passes on this cost, to Eletrobrás, after charging it to Free Consumers on
their invoices for use of the grid.
The other deductions from revenue are for taxes that are calculated as a percentage of invoiced
revenue. Hence their variations are substantially the same in percentage terms as the changes in
revenue.
Operational costs and expenses
Operational costs and expenses (excluding Financial revenue (expenses)) totaled R$ 399,101 in
2Q10, 7.25% more than in 2Q09 (R$ 372,137).
The higher figure is mainly due to electricity bought for resale, outsourced services and depreciation
and amortization, the effect being partially offset by lower personnel expenses.
The main year-on-year variations in Operational revenue and expenses were:
Personnel
Personnel expenses totaled R$ 73,982 in 2Q10, 29.78% lower than in 2Q09 (R$ 105,356). This is due,
substantially, to the expense recorded for the Voluntary Retirement Program in 2Q10 being R$ 1,930,
compared to an expense of R$ 37,524 in 2Q09.
Outsourced services
The expense on outsourced services in 1Q10 was R$ 41,389, compared to R$ 28,354 in 2Q09, an
increase of 45.97% – the highest variations being in expenditure on consultancy and installation of
electrical equipment, as follows:


Expenses on consultancy were 168.74% higher in 2Q10, at R$ 1,900, than in 2Q09 (R$ 707).
The majority of these expenses were for contracting of services related to analysis of
acquisitions of new projects.
The expense on maintenance and conservation of electrical facilities and equipment in 2Q10
was R$ 2,982, an increase of 219.27% from 2Q09 (R$ 934). This difference arises mainly
from: the Company’s higher volume of activity; adjustment of contracts; and consolidation of
the companies acquired in the second half of 2009.
A breakdown of outsourced services is given in Explanatory Note 24 to the Quarterly Information.
Raw materials and inputs for generation
This expense was R$ 4,070 in the second quarter of 2009, for purchase of fuel for the Igarapé thermal
plant, which was dispatched in 2008 due to low reservoir levels.
Electricity bought for resale
The expense on electricity bought for resale in 2Q10 was R$ 72,223, 65.18% more than the expense
of R$ 43,724 in 2Q09. This reflects higher purchase and sale of electricity in 2010.
46
Depreciation and amortization
Depreciation and amortization expenses in 2Q10 totaled R$ 74,176, 30.62% more than in 1Q09
(R$ 56,789). This increase is substantially due to the consolidation of the companies acquired in the
second half of 2009.
Financial revenues (expenses)
2Q10
FINANCIAL REVENUES
Revenue from cash investments
Arrears penalty payments on electricity bills
Monetary updating on items under the General Agreement for the
Electricity Sector
FX variations
Pasep and Cofins taxes on financial revenues
Gains on financial instruments
Adjustment to present value
Other
2Q09
Change, %
54,522
598
34,491
272
58.08
119.85
662
1,008
(34.33)
523
(371)
392
6,531
8,547
71,404
18,858
(96)
1,049
317
5,467
61,366
(97.23)
286.46
(62.63)
1.960.25
56.34
16.36
(157,725)
(17,352)
(1)
(175)
(71,682)
(1,481)
(6)
(28,076)
120.03
(83.33)
(99.38)
(3)
(18,649)
(193,905)
(122,501)
(416)
(2,464)
(273)
(104,398)
(43,032)
(99.88)
6.731.14
85.74
184.67
FINANCIAL EXPENSES
Charges on loans and financings
Monetary updating on loans and financings
Monetary updating – CCEE
FX variations
Losses on financial instruments
Provision for losses on recovery of the Extraordinary Tariff
Recomposition – RTE
Adjustment to present value
Other
Financial revenues (expenses) in 2Q10 were significantly different from 2Q09 – with financial
expenses of R$ 122,501 in 2010, compared to financial expenses of R$ 43,032 in 2009. Main factors
were:

Revenue from cash investments R$ 20,031 higher in 2Q10, due to a higher volume of cash
invested.

Higher expenses on charges for loans and financings, at R$ 157,725 in the second quarter of
2010, vs. R$ 71,682 in the same period of 2009. This reflects the entry of new funds, mainly
from the Company’s debenture issue in 2Q10.

An expense of R$ 17,352 on monetary updating on loans and financings in Brazilian currency,
in 2Q10. This is mainly due to the IGP–M index, which posted inflation of 1.53% in the quarter.
Income tax and Social Contribution tax
In 2Q10 Cemig GT’s expenses on income tax and the Social Contribution tax were R$ 81,354, on pretax profit of R$ 322,837, a percentage of 25.20%.
In 2Q09 the Company’s expenses on income tax and the Social Contribution tax were R$ 172,140, on
pre-tax profit of R$ 630,140 before tax effects, a percentage of 27.32%.
Tax advantages of R$ 23,759 in 2Q10, and R$ 36,426 in 2Q09, resulted from payment of Interest on
Equity.
47