sbsitr2q10_6k.htm - Provided by MZ Technologies
 
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 

For November 5, 2010

(Commission File No. 1-31317)

 

 
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
(Exact name of registrant as specified in its charter)
 
Basic Sanitation Company of the State of Sao Paulo - SABESP
(Translation of Registrant's name into English)
 


Rua Costa Carvalho, 300
São Paulo, S.P., 05429-900
Federative Republic of Brazil
(Address of Registrant's principal executive offices)



Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7)__.

Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):


  

PUBLIC FEDERAL SERVICE

CVM - SECURITIES EXCHANGE COMMISSION

ITR - QUARTERLY INFORMATION          06/30/2010               

COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES 

Corporate Legislation

 

 

REGISTRATION WITH THE CVM DOES NOT IMPLY ANY ANALYSIS OF THE COMPANY. MANAGEMENT IS RESPONSIBLE FOR THE ACCURACY OF THE INFORMATION PROVIDED.
 
               

01.01        - IDENTIFICATION

 

1 - CVM CODE

01444-3

2 - COMPANY’S NAME

CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO

3 -Federal Taxpayers' Registration Number (CNPJ)

43.776.517/0001-80

4 - State Registration Number - NIRE

35300016831

 

01.02        - HEAD OFFICE

 

1 - ADDRESS

Rua Costa Carvalho, 300

2 - SUBURB OR DISTRICT

Pinheiros

3 - POSTAL CODE

05429-900

4 - MUNICIPALITY

São Paulo

5 - STATE

SP

6 - AREA CODE

11

7 - TELEPHONE

3388-8000

8 - TELEPHONE

3388-8200

9 - TELEPHONE

3388-8201

10 - TELEX

 

11 - AREA CODE

11

12 - FAX

3813-0254

13 - FAX

-

14 - FAX

-

 

15 - E-MAIL

sabesp@sabesp.com.br

 

01.03         - INVESTOR RELATIONS OFFICER (Company’s Mail Address)

 

1 - NAME

Rui de Britto Álvares Affonso

2 - ADDRESS

Rua Costa Carvalho, 300

3 - SUBURB OR DISTRICT

Pinheiros

4 - POSTAL CODE

05429-900

5 - MUNICIPALITY

São Paulo

6 - STATE

SP

7 - AREA CODE

11

8 - TELEPHONE

3388-8247

9 - TELEPHONE

  3388-8386

10 - TELEPHONE

 -

11 - TELEX

 

12 - AREA CODE

11

13 - FAX

3815-4465

14 - FAX

-

15 - FAX

-

 

16 - E-MAIL

raffonso@sabesp.com.br

 

01.04         - GENERAL INFORMATION/INDEPENDENT ACCOUNTANT

 

CURRENT YEAR

CURRENT QUARTER

PRIOR QUARTER

1 -BEGINNING

2 - END

3 - QUARTER

4 -BEGINNING

5 - END

6 - QUARTER

7 -BEGINNING

8 - END

01/01/2010

12/31/2010

2

04/01/2010

06/30/2010

1

01/01/2010

03/31/2010

9 - INDEPENDENT ACCOUNTANT

PRICEWATERHOUSECOOPERS INDEPENDENT AUDITORS

10 - CVM CODE

00287-9

11 - PARTNER RESPONSIBLE

VALDIR RENATO COSCODAI

12 - INDIVIDUAL TAXPAYERS' REGISTRATION NUMBER OF THE PARTNER RESPONSIBLE

031.065.768-71

 
Page: 1

 


 
 

01.05         - CAPITAL COMPOSITION

 

NUMBER OF SHARES

(thousand)

1 - CURRENT QUARTER

06/30/2010

2 - PRIOR QUARTER

03/31/2010

3 - SAME QUARTER IN PRIOR YEAR

06/30/2009

Paid-up Capital

1 - Common

227,836

227,836

227,836

2 - Preferred

0

0

0

3 - Total

227,836

227,836

227,836

Treasury Shares

4 - Common

0

0

0

5 - Preferred

0

0

0

6 - Total

0

0

0

 

01.06        - CHARACTERISTICS OF THE COMPANY

 

1 - TYPE OF COMPANY

Commercial, Industrial and Other

2 - SITUATION

Operational

3 - NATURE OF OWNERSHIP

State-owned

4 - ACTIVITY CODE

1160 - Sanitation, Water and Gas Services

5 - MAIN ACTIVITY

Water Capture, Treatment and Distribution; Sewage Collection and Treatment

6 - TYPE OF CONSOLIDATION

Total

7 - TYPE OF REPORT OF INDEPENDENT ACCOUNTANTS

Unqualified

 

01.07         - COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

 

1 - ITEM

2 - CNPJ

3 - NAME

 

01.08        - DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER

 

1 - ITEM

2 - EVENT

3 - DATE OF

APPROVAL

4 - TYPE

5 - DATE OF

PAYMENT

6 - TYPE OF

SHARE

7 - AMOUNT PER SHARE

01

Board of Directors’ Meeting

02/11/2010

Interest on capital

06/28/2010

Registered common

0.1500000000

02

Board of Directors’ Meeting

11/12/2009

Interest on capital

06/28/2010

Registered common

0.9700000000

03

Board of Directors’ Meeting

05/14/2009

Interest on capital

06/28/2010

Registered common

0.6100000000


Page: 2

 
 

01.09        - SUBSCRIBED CAPITAL AND ALTERATIONS IN THE CURRENT YEAR

 

1 - ITEM

2 - DATE OF

ALTERATION

3 - CAPITAL

(R$ thousand)

4 - AMOUNT OF THE

ALTERATION

(R$ thousand)

5 - NATURE OF

ALTERATION

7 - NUMBER OF SHARES

ISSUED

(Thousand)

8 - SHARE PRICE ON ISSUE DATE

(Reais)

 

 

01.10         - INVESTOR RELATIONS OFFICER

 

1 - Date

08/06/2010

2 - SIGNATURE

 

Page: 3

 
02.01 - BALANCE SHEET - ASSETS (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 06/30/2010

4 - 03/31/2010

1

Total assets

22,879,162

21,996,814

1.01

Current assets

3,138,500

2,621,879

1.01.01

Cash and cash equivalents

1,046,840

851,564

1.01.01.01

Cash & Cash Equivalents

1,046,839

851,562

1.01.01.02

Other cash and cash equivalents

1

2

1.01.02

Receivables

1,239,243

1,301,596

1.01.02.01

Trade accounts receivable

1,083,895

1,162,978

1.01.02.02

Sundry receivables

155,348

138,618

1.01.02.02.01

Balances & Transactions with Related Parties

155,348

138,618

1.01.03

Inventories

31,101

34,706

1.01.03.01

Storeroom supplies - operations

31,101

34,706

1.01.04

Other

821,316

434,013

1.01.04.01

Taxes Recoverable

4,773

5,219

1.01.04.02

Deferred Income Taxes & Social Contribution

263,369

250,951

1.01.04.03

Agreement with Sao Paulo City Hall

172,174

136,812

1.01.04.04

Cef  - Debêntures

330,587

0

1.01.04.05

Other receivables

50,413

41,031

1.02

Noncurrent assets

19,740,662

19,374,935

1.02.01

Long-term assets

2,122,317

2,106,504

1.02.01.01

Sundry receivables

2,122,317

2,106,504

1.02.01.01.01

Trade accounts receivable

270,484

274,773

1.02.01.01.02

Balances & Transactions with Related Parties

934,208

945,423

1.02.01.01.03

Indemnities receivable

146,213

146,213

1.02.01.01.04

Escrow deposits

47,682

47,439

1.02.01.01.05

Deferred Income Tax & Social Contribution

620,858

591,286

1.02.01.01.06

Other receivables

102,872

101,370

1.02.01.02

Intercompany receivables

0

0

1.02.01.02.01

Affiliates

0

0

1.02.01.02.02

Subsidiaries

0

0

1.02.01.02.03

Other related parties

0

0

1.02.01.03

Other

0

0

1.02.02

Permanent assets

17,618,345

17,268,431

1.02.02.01

Investments

4,110

4,217

1.02.02.01.01

In affiliated companies

0

0

1.02.02.01.02

In affiliated companies - goodwill

0

0

1.02.02.01.03

In subsidiaries

3,390

3,497

1.02.02.01.04

In subsidiaries - goodwill

0

0

1.02.02.01.05

Other investments

0

0

1.02.02.01.06

Shares in other companies

698

698

1.02.02.01.07

Compulsory deposits - Eletrobrás

22

22


Page: 4
 

 

 

1.02.02.02

Property, plant and equipment

15,969,828

15,682,941

1.02.02.02.01

Property, plant and equipment

11,672,056

11,704,906

1.02.02.02.02

Construction in progress

4,297,772

3,978,035

1.02.02.03

Intangible

1,644,407

1,581,273

1.02.02.04

Deferred charges

0

0

 

Page: 5

 
02.02 - BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ EQUITY (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 06/30/2010

4 - 03/31/2010

2

Total liabilities and shareholders’ equity

22,879,162

21,996,814

2.01

Current liabilities

3,227,622

3,094,479

2.01.01

Loans and financing

646,294

656,451

2.01.02

Debentures

766,660

299,360

2.01.02.01

6th issue of debentures

238,461

232,415

2.01.02.02

8th issue of debentures

442,091

0

2.01.02.03

Interest on debentures

86,108

66,945

2.01.03

Trade accounts payable

175,860

168,563

2.01.04

Taxes payable

168,689

235,429

2.01.04.01

Income tax

42,464

87,205

2.01.04.02

Social contribution tax

15,671

30,529

2.01.04.03

PAES  (tax debt refinancing program)

34,688

34,349

2.01.04.04

COFINS and PASEP (taxes on revenue)

39,885

48,733

2.01.04.05

INSS (Social security contribution)

23,768

22,616

2.01.04.06

Other

12,213

11,997

2.01.05

Dividends payable

0

0

2.01.06

Reserves

713,318

712,270

2.01.06.01

For Tax Contingencies

2,634

436

2.01.06.02

For Civil Contingencies

21,499

18,164

2.01.06.03

For Contingencies with Suppliers

195,169

191,704

2.01.06.04

For Contingencies with Customers

457,984

465,876

2.01.06.05

For Environmental Contingencies

21,813

18,210

2.01.06.06

For Labor Contingencies

14,219

17,880

2.01.07

Intercompany payables

0

0

2.01.08

Other

756,801

1,022,406

2.01.08.01

Payroll and related charges

241,482

234,958

2.01.08.02

Accounts Payable

213,639

193,270

2.01.08.03

Interest on capital payable

56

365,423

2.01.08.04

Deferred taxes

27,134

28,941

2.01.08.05

Refundable amounts

59,837

57,295

2.01.08.06

Program contract commitments

68,207

44,507

2.01.08.07

Other payables

146,446

98,012

2.02

Noncurrent liabilities

8,499,660

8,084,086

2.02.01

Long-term liabilities

8,499,660

8,084,086

2.02.01.01

Loans and financing

3,808,766

4,677,301

2.02.01.02

Debentures

2,210,690

932,760

2.02.01.02.01

8th issue of debentures

0

429,932

2.02.01.02.02

9th issue of debentures

228,335

226,552

2.02.01.02.03

10th issue of debentures

277,435

276,276

2.02.01.02.04

11th issue of debentures

1,204,925

0

 
Page: 6
 

 
 

2.02.01.02.05

12th issue of debentures

499,975

0

2.02.01.03

Reserves

852,695

871,452

2.02.01.03.01

For Tax Contingencies

63,733

27,168

2.02.01.03.02

For Civil Contingencies

154,013

140,616

2.02.01.03.03

For Contingencies with Suppliers

168,279

161,691

2.02.01.03.04

For Contingencies with Customers

346,751

420,205

2.02.01.03.05

For Environmental Contingencies

24,121

34,056

2.02.01.03.06

For Labor Contingencies

95,798

87,716

2.02.01.04

Intercompany payables

0

0

2.02.01.05

Advance for future capital increase

0

0

2.02.01.06

Other

1,627,509

1,602,573

2.02.01.06.01

Deferred taxes

162,600

157,655

2.02.01.06.02

PAES (tax debt refinancing program)

69,375

77,287

2.02.01.06.03

Social security charges

504,114

492,061

2.02.01.06.04

Indemnities

30,847

41,761

2.02.01.06.05

Program contract commitments

102,399

99,501

2.02.01.06.06

Provision for Actuarial Liability Law 4819/58

507,772

520,055

2.02.01.06.07

Private Public Partnership

144,192

104,751

2.02.01.06.08

Other payables

106,210

109,502

2.03

Deferred income

0

0

2.05

Shareholders' equity

11,151,880

10,818,249

2.05.01

Capital

6,203,688

6,203,688

2.05.02

Capital reserves

124,255

124,255

2.05.02.01

Support to projects

108,475

108,475

2.05.02.02

Incentive reserve

15,780

15,780

2.05.03

Revaluation reserves

2,088,454

2,106,063

2.05.03.01

Own assets

2,088,454

2,106,063

2.05.03.02

Subsidiaries/Affiliates

0

0

2.05.04

Profit reserves

2,054,594

2,054,594

2.05.04.01

Legal

378,526

378,526

2.05.04.02

Statutory

0

0

2.05.04.03

For contingencies

0

0

2.05.04.04

Unrealized profit

0

0

2.05.04.05

Profit retention

0

0

2.05.04.06

Special for unpaid dividends

0

0

2.05.04.07

Other profit reserves

1,676,068

1,676,068

2.05.04.07.01

Reserve for investments

1,676,068

1,676,068

2.05.05

Adjustments of Equity Evaluation

0

0

2.05.05.01

Adjustments of Marketable Securities

0

0

2.05.05.02

Accumulated Conversion Adjustments

0

0

2.05.05.03

Business Combination Adjustments

0

0

2.05.06

Retained earnings (accumulated deficit)

680,889

329,649

2.05.07

Advance for future capital increase

0

0

 

Page: 7
 

 
03.01 - STATEMENT OF INCOME (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -04/01/2009

to 06/30/2009

6 -01/01/2009

to 06/30/2009

3.01

Gross revenue from sales and/or services

1,904,453

3,790,061

1,743,652

3,523,019

3.02

Gross revenue deductions

(134,665)

(268,270)

(120,029)

(246,030)

3.03

Net revenue from sales and/or services

1,769,788

3,521,791

1,623,623

3,276,989

3.04

Cost of sales and/or services

(781,247)

(1,503,752)

(830,083)

(1,665,272)

3.05

Gross profit

988,541

2,018,039

793,540

1,611,717

3.06

Operating (expenses) income

(497,047)

(1,055,288)

(150,760)

(569,162)

3.06.01

Selling

(255,450)

(413,925)

(187,307)

(395,823)

3.06.02

General and administrative

(106,815)

(259,261)

(100,884)

(248,606)

3.06.03

Financial

(138,601)

(376,400)

135,165

67,562

3.06.03.01

Financial income

95,980

159,311

56,432

112,834

3.06.03.01.01

Financial income

95,926

159,182

56,487

120,336

3.06.03.01.02

Exchange gains

54

129

(55)

(7,502)

3.06.03.02

Financial expenses

(234,581)

(535,711)

78,733

(45,272)

3.06.03.02.01

Financial expenses

(220,310)

(497,135)

(159,091)

(315,966)

3.06.03.02.02

Exchange losses

(14,271)

(38,576)

237,824

270,694

3.06.04

Other operating income

15,603

22,159

10,541

18,064

3.06.04.01

Other operating income

17,193

24,418

11,615

19,905

3.06.04.02

COFINS and PASEP (taxes on revenue)

(1,590)

(2,259)

(1,074)

(1,841)

3.06.05

Other operating expenses

(11,677)

(27,637)

(8,196)

(10,249)

3.06.05.01

Loss on write-off of property, plant and equipment items

(10,871)

(12,195)

(4,268)

(6,048)

3.06.05.02

Provision for Losses in Tax Incentives

0

0

(300)

(300)

3.06.05.03

Tax Incentives

(754)

(904)

(3,072)

(3,072)

3.06.05.04

Provision for Actuarial Liability Law 4819/58

0

(14,237)

0

0

3.06.05.05

Provision for Loss – Law 4819/58

0

0

0

0

3.06.05.06

Other

(52)

(301)

(556)

(829)

3.06.06

Equity in subsidiaries

(107)

(224)

(79)

(110)

3.07

Income from operations

491,494

962,751

642,780

1,042,555

 
Page: 8

 
 

3.08

Nonoperating income (expenses)

0

0

0

0

3.08.01

Income

0

0

0

0

3.08.02

Expenses

0

0

0

0

3.09

Income before taxes and profit sharing

491,494

962,751

642,780

1,042,555

3.10

Provision for income and social contribution taxes

(198,095)

(435,026)

(200,881)

(337,235)

3.10.01

Provision for income tax

(145,303)

(320,002)

(146,993)

(276,492)

3.10.02

Provision for social contribution tax

(52,792)

(115,024)

(53,888)

(100,743)

3.11

Deferred income tax

40,232

96,518

22,766

55,559

3.11.01

Deferred income tax

29,582

70,969

16,740

40,852

3.11.02

Deferred social contribution tax

10,650

25,549

6,026

14,707

3.12

Statutory profit sharing/contributions

0

0

0

0

3.12.01

Profit sharing

0

0

0

0

3.12.02

Contributions

0

0

0

0

3.13

Reversal of interest on capital

0

0

0

0

3.15

Net income (loss)

333,631

624,243

464,665

720,879

 

Number of shares, former treasury shares (thousand)

227,836

227,836

227,836

227,836

 

EARNINGS PER SHARE (Reais)

1.46435

2.73988

2.03947

3.16403

 

LOSS PER SHARE (Reais)

 

 

 

 

 

 

Page: 9

 
04.01 - STATEMENT OF CASH FLOWS - INDIRECT METHOD (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -01/04/2009

to 06/30/2009

6 - 01/01/2009

to 06/30/2009

4.01

Net  Cash from Operating Activities

155,445

739,669

435,897

1,068,444

4.01.01

Cash Generated from Operations

1,010,421

2,039,783

930,452

1,878,907

4.01.01.01

Net Income before Income Tax and Social Contribution

491,494

962,751

642,780

1,042,555

4.01.01.02

Provision for Contingencies

36,721

213,132

106,720

154,788

4.01.01.03

Reversal of Provision for Losses

310

93

780

1,068

4.01.01.04

Social Security Obligations

16,040

32,181

19,150

38,187

4.01.01.05

Write-off of Fixed Assets

10,871

12,195

4,268

6,048

4.01.01.06

Depreciation and Amortization

150,960

294,808

161,483

323,175

4.01.01.07

Intersts on Loans and Financings Payable

137,071

253,604

111,051

234,322

4.01.01.08

Monetary and Foreign Exchange Variation on Loans and Financings

37,007

87,253

(237,005)

(269,653)

4.01.01.09

Expenses with Interests and Monetary Variations

1,070

2,225

1,467

3,022

4.01.01.10

Income with Interests and Monetary Variations

(33,677)

(43,916)

(1,030)

(9,509)

4.01.01.11

Allowance for Doubtful Accounts

117,744

169,280

75,749

163,149

4.01.01.12

Provision for Term of Adjustment of Conduct (TAC)

9,153

9,153

(17,378)

129,186

4.01.01.13

Equity Result

107

224

79

110

4.01.01.14

Provision for Actuarial Liability Law 4819/58

0

14,237

0

0

4.01.01.15

Other Provisions/Reversals

75

(987)

107

228

4.01.01.16

Provision for PMSP Agreement

35,475

33,550

62,231

62,231

4.01.02

Variation to Assets and Liabilities

(412,825)

(559,587)

(144,631)

(205,902)

4.01.02.01

Accounts Receivable

(12,831)

(51,051)

6,685

(34,445)

4.01.02.02

Balances and Transactions with Related Parties

(2,572)

8,818

(5,382)

69,718

4.01.02.03

Inventories

3,295

8,683

2,303

7,465

4.01.02.04

Taxes Recoverable

446

(1,755)

3,356

1,469

4.01.02.05

Other Accounts Receivable

(376,342)

(413,304)

(25,194)

(18,075)

4.01.02.06

Judicial Deposits

(665)

(1,178)

(20,472)

(14,119)

4.01.02.07

Indemnifications Receivable

0

0

0

2,581

4.01.02.08

Contractors and Suppliers

1,220

(9,851)

(3,709)

(21,469)

 
Page: 10

 
 

4.01.02.09

Salaries, Provisions and Social Security Obligations

(2,629)

(6,780)

494

14,940

4.01.02.10

Provision for Actuarial Liability Law 4819/58

(12,283)

(24,492)

(12,605)

(31,996)

4.01.02.11

Taxes and Contributions Payable

(22,197)

(51,229)

(28,526)

(63,250)

4.01.02.12

Accounts Payable

20,369

19,730

19,721

4,630

4.01.02.13

Other Obligations

40,662

76,165

53,957

54,345

4.01.02.14

Contingencies

(45,311)

(105,173)

(131,122)

(169,204)

4.01.02.15

Pension Plan - Sabesprev Transfer

(3,987)

(8,170)

(4,137)

(8,492)

4.01.03

Others

(442,151)

(740,527)

(349,924)

(604,561)

4.01.03.01

Interests paid

(191,913)

(284,613)

(174,793)

(280,451)

4.01.03.02

Income Tax and Contributions Paid

(250,238)

(455,914)

(175,131)

(324,110)

4.02

Net Cash from Investment Activities

(426,707)

(834,667)

(444,477)

(760,889)

4.02.01

Acquisition of Items of Fixed Assets

(404,294)

(807,511)

(432,878)

(745,057)

4.02.02

Increase in Intangibles

(22,413)

(27,156)

(13,869)

(18,102)

4.02.03

Proceeds received for the Sale of Fixed Assets

0

0

2,270

2,270

4.03

Net Cash from Financing Activities

466,538

372,405

(103,753)

(244,038)

4.03.01

Funding

1,872,185

2,025,282

666,544

844,737

4.03.02

Loan Amortizations

(1,040,280)

(1,2873,491)

(484,966)

(803,444)

4.03.03

Payment of Interests on Shareholders´ Equity

(365,367)

(365,386)

(285,331)

(285,331)

4.04

Foreign Exchange Variation on Cash & Cash Equivalents

0

0

0

0

4.05

Increase(Decrease) in Cash & Cash Equivalents

195,276

277,407

(112,333)

63,517

4.05.01

Beginning Balance of Cash & Cash Equivalents

851,564

769,433

797,909

622,059

4.05.02

Ending Balance of Cash & Cash Equivalents

1,046,840

1,046,840

685,576

685,576

 

 

Page: 11

 
 

05.01 - STATEMENT OF CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010  (In thousands of Brazilian reais - R$)       

                    

1 - CODE

2 - DESCRIPTION

3 - CAPITAL STOCK

4 -CAPITAL RESERVES

5 - REVALUATION RESERVES

6 - PROFIT RESERVES

7 -RETAINED EARNINGS/LOSSES

8 -EQUITY ADJUSTMENTS

9 -TOTAL SHAREHOLDERS´ EQUITY

5.01

Beginning Balance

6,203,688

124,255

2,106,063

2,054,594

329,649

0

10,818,249

5.02

Adjustments from Previous Years

0

0

0

0

0

0

0

5.03

Adjusted Balance

6,203,688

124,255

2,106,063

2,054,594

329,649

0

10,818,249

5.04

Profit/Loss for the Period

0

0

0

0

333,631

0

333,631

5.05

Allocations

0

0

0

0

0

0

0

5.05.01

Dividends

0

0

0

0

0

0

0

5.05.02

Interests on Shareholders´ Equity

0

0

0

0

0

0

0

5.05.03

Other Allocations

0

0

0

0

0

0

0

5.06

Realization of Profit Reserves

0

0

0

0

0

0

0

5.07

Equity Adjustments

0

0

0

0

0

0

0

5.07.01

Marketable Securities Adjustments

0

0

0

0

0

0

0

5.07.02

Accumulated Conversion Adjustments

0

0

0

0

0

0

0

5.07.03

Adjustments from Business Combinations

0

0

0

0

0

0

0

5.08

Increase/Decrease in Capital Stock

0

0

0

0

0

0

0

5.09

Capital Reserves Constitution/Realization

0

0

0

0

0

0

0

5.10

Treasury Stock

0

0

0

0

0

0

0

5.11

Other Capital Stock Transactions

0

0

0

0

0

0

0

5.12

Others

0

0

(17,609)

0

17,609

0

0

5.13

Ending Balance

6,203,688

124,255

2,088,454

2,054,594

680,889

0

11,151,880

 
Page: 12

 
 

05.02 - STATEMENT OF CHANGES TO SHAREHOLDERS’ EQUITY FROM 01/01/2010 to 06/30/2010 (In thousands of Brazilian reais - R$)

 

1 - CODE

2 - DESCRIPTION

3 - CAPITAL STOCK

4 -CAPITAL RESERVES

5 - REVALUATION RESERVES

6 - PROFIT RESERVES

7 -RETAINED EARNINGS/LOSSES

8 -EQUITY ADJUSTMENTS

9 -TOTAL SHAREHOLDERS´ EQUITY

5.01

Beginning Balance

6,203,688

124,255

2,145,100

2,054,594

0

0

10,527,637

5.02

Adjustments from Previous Years

0

0

0

0

0

0

0

5.03

Adjusted Balance

6,203,688

124,255

2,145,100

2,054,594

0

0

10,527,637

5.04

Profit/Loss for the Period

0

0

0

0

624,243

0

624,243

5.05

Allocations

0

0

0

0

0

0

0

5.05.01

Dividends

0

0

0

0

0

0

0

5.05.02

Interests on Shareholders´ Equity

0

0

0

0

0

0

0

5.05.03

Other Allocations

0

0

0

0

0

0

0

5.06

Realization of Profit Reserves

0

0

0

0

0

0

0

5.07

Equity Adjustments

0

0

0

0

0

0

0

5.07.01

Marketable Securities Adjustments

0

0

0

0

0

0

0

5.07.02

Accumulated Conversion Adjustments

0

0

0

0

0

0

0

5.07.03

Adjustments from Business Combinations

0

0

0

0

0

0

0

5.08

Increase/Decrease in Capital Stock

0

0

0

0

0

0

0

5.09

Capital Reserves Constitution/Realization

0

0

0

0

0

0

0

5.10

Treasury Stock

0

0

0

0

0

0

0

5.11

Other Capital Stock Transactions

0

0

0

0

0

0

0

5.12

Others

0

0

(56,646)

0

56,646

0

0

5.13

Ending Balance

6,203,688

124,255

2,088,454

2,054,594

680,889

0

11,151,880

 

 

Page: 13

 
08.01 - CONSOLIDATED BALANCE SHEETS - ASSETS (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 06/30/2010

4 - 03/31/2010

1

Total assets

22,879,326

21,997,035

1.01

Current assets

3,139,112

2,622,932

1.01.01

Cash and cash equivalents

1,047,359

852,523

1.01.01.01

Cash & Cash Equivalents

1,047,358

852,521

1.01.01.02

Other cash and cash equivalents

1

2

1.01.02

Receivables

1,239,243

1,301,596

1.01.02.01

Trade accounts receivable

1,083,895

1,162,978

1.01.02.02

Sundry receivables

155,348

138,618

1.01.02.02.01

Balances & Transactions with Related Parties

155,348

138,618

1.01.03

Inventories

31,101

34,706

1.01.03.01

Storeroom supplies - operations

31,101

34,706

1.01.04

Other

821,409

434,107

1.01.04.01

Taxes Recoverable

4,773

5,219

1.01.04.02

Deferred Income Taxes & Social Contribution

263,369

250,951

1.01.04.03

Agreement with Sao Paulo City Hall

172,174

136,812

1.01.04.04

Cef - Debêntures

330,587

0

1.01.04.05

Other receivables

50,506

41,125

1.02

Noncurrent assets

19,740,214

19,374,103

1.02.01

Long-term assets

2,122,317

2,106,504

1.02.01.01

Sundry receivables

2,122,317

2,106,504

1.02.01.01.01

Trade accounts receivable

270,484

274,773

1.02.01.01.02

Balances & Transactions with Related Parties

934,208

945,423

1.02.01.01.03

Indemnities receivable

146,213

146,213

1.02.01.01.04

Escrow deposits

47,682

47,439

1.02.01.01.05

Deferred Income Tax & Social Contribution

620,858

591,286

1.02.01.01.06

Other receivables

102,872

101,370

1.02.01.02

Intercompany receivables

0

0

1.02.01.02.01

Affiliates

0

0

1.02.01.02.02

Subsidiaries

0

0

1.02.01.02.03

Other related parties

0

0

1.02.01.03

Other

0

0

1.02.02

Permanent assets

17,617,897

17,267,599

1.02.02.01

Investments

720

720

1.02.02.01.01

In affiliated companies

0

0

1.02.02.01.02

In subsidiaries

0

0

1.02.02.01.03

Other investments

0

0

1.02.02.01.06

Shares in other companies

698

698

1.02.02.01.07

Compulsory deposits - Eletrobrás

22

22

1.02.02.02

Property, plant and equipment

15,972,770

15,685,606

1.02.02.02.01

Property, plant and equipment

11,674,984

11,707,557

 
Page: 14

 
 

1.02.02.02.02

Construction in progress

4,297,786

3,978,049

1.02.02.03

Intangible

1,644,407

1,581,273

1.02.02.04

Deferred charges

0

0

 

Page: 15

 
08.02 - CONSOLIDATED BALANCE SHEETS - LIABILITIES (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

4 - 06/30/2010

3 - 03/31/2010

2

Total liabilities and shareholders’ equity

22,879,326

21,997,035

2.01

Current liabilities

3,227,786

3,094,700

2.01.01

Loans and financing

646,294

656,451

2.01.02

Debentures

766,660

299,360

2.01.02.01

6th issue of debentures

238,461

232,415

2.01.02.02

8th issue of debentures

442,091

0

2.01.02.03

Interest on debentures

86,108

66,945

2.01.03

Trade accounts payable

175,933

168,704

2.01.04

Taxes payable

168,692

235,433

2.01.04.01

Income tax

42,464

87,205

2.01.04.02

Social contribution tax

15,671

30,529

2.01.04.03

PAES  (tax debt refinancing program)

34,688

34,349

2.01.04.04

COFINS and PASEP (taxes on revenue)

39,885

48,733

2.01.04.05

INSS (Social security contribution)

23,768

22,616

2.01.04.06

Other

12,216

12,001

2.01.05

Dividends payable

0

0

2.01.06

Reserves

713,318

712,270

2.01.06.01

For Tax Contingencies

2,634

436

2.01.06.02

For Civil Contingencies

21,499

18,164

2.01.06.03

For Contingencies with Suppliers

195,169

191,704

2.01.06.04

For Contingencies with Customers

457,984

465,876

2.01.06.05

For Environmental Contingencies

21,813

18,210

2.01.06.06

For Labor Contingencies

14,219

17,880

2.01.07

Intercompany payables

0

0

2.01.08

Other

756,889

1,022,482

2.01.08.01

Payroll and related charges

241,570

235,034

2.01.08.02

Accounts Payable

213,639

193,270

2.01.08.03

Interest on capital payable

56

365,423

2.01.08.04

Deferred taxes

27,134

28,941

2.01.08.05

Refundable amounts

59,837

57,295

2.01.08.06

Program contract commitments

68,207

44,507

2.01.08.07

Other payables

146,446

98,012

2.02

Noncurrent liabilities

8,499,660

8,084,086

2.02.01

Long-term liabilities

8,499,660

8,084,086

2.02.01.01

Loans and financing

3,808,766

4,677,301

2.02.01.02

Debentures

2,210,690

932,760

2.02.01.02.01

8th issue of debentures

0

429,932

2.02.01.02.02

9th issue of debentures

228,355

226,552

2.02.01.02.03

10th issue of debentures

277,435

276,276

2.02.01.02.04

11th issue of debentures

1,204,925

0

2.02.01.02.05

12th issue of debentures

499,975

0

 
Page: 16

 
 

1 - Code

2 - Description

4 - 06/30/2010

3 - 03/31/2010

2.02.01.03

Reserves

852,695

871,452

2.02.01.03.01

For Tax Contingencies

63,733

27,168

2.02.01.03.02

For Civil Contingencies

154,013

140,616

2.02.01.03.03

For Contingencies with Suppliers

168,279

161,691

2.02.01.03.04

For Contingencies with Customers

346,751

420,205

2.02.01.03.05

For Environmental Contingencies

24,121

34,056

2.02.01.03.06

For Labor Contingencies

95,798

87,716

2.02.01.04

Intercompany payables

0

0

2.02.01.05

Advance for future capital increase

0

0

2.02.01.06

Other

1,627,509

1,602,573

2.02.01.06.01

Deferred taxes

162,600

157,655

2.02.01.06.02

PAES (tax debt refinancing program)

69,375

77,287

2.02.01.06.03

Social security charges

504,114

492,061

2.02.01.06.04

Indemnities

30,847

41,761

2.02.01.06.05

Program contract commitments

102,399

99,501

2.02.01.06.06

Provision for Actuarial Liability Law 4819/58

507,772

520,055

2.02.01.06.07

Private Public Partnership

144,192

104,751

2.02.01.06.08

Other payables

106,210

109,502

2.03

Deferred income

0

0

2.04

Interest of non-controlling shareholders

0

0

2.05

Shareholders' equity

11,151,880

10,818,249

2.05.01

Capital

6,203,688

6,203,688

2.05.02

Capital reserves

124,255

124,255

2.05.02.01

Support to projects

108,475

108,475

2.05.02.02

Incentive reserve

15,780

15,780

2.05.03

Revaluation reserves

2,088,454

2,106,063

2.05.03.01

Own assets

2,088,454

2,106,063

2.05.03.02

Subsidiaries/Affiliates

0

0

2.05.04

Profit reserves

2,054,594

2,054,594

2.05.04.01

Legal

378,526

378,526

2.05.04.02

Statutory

0

0

2.05.04.03

For contingencies

0

0

2.05.04.04

Unrealized profit

0

0

2.05.04.05

Profit retention

0

0

2.05.04.06

Special for unpaid dividends

0

0

2.05.04.07

Other profit reserves

1,676,068

1,676,068

2.05.04.07.01

Reserve for investments

1,676,068

1,676,068

2.05.05

Adjustments of Equity Evaluation

0

0

2.05.05.01

Adjustments of Marketable Securities

0

0

2.05.05.02

Accumulated Conversion Adjustments

0

0

2.05.05.03

Business Combination Adjustments

0

0

2.05.06

Retained earnings (accumulated deficit)

680,889

329,649

2.05.07

Advance for future capital increase

0

0

 
Page: 17

 
 

09.01 - CONSOLIDATED STATEMENT OF INCOME (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -04/01/2009

to 06/30/2009

6 - 01/01/2009

to 06/30/2009

3.01

Gross revenue from sales and/or services

1,904,453

3,790,061

1,743,652

3,523,019

3.02

Gross revenue deductions

(134,665)

(268,270)

(120,029)

(246,030)

3.03

Net revenue from sales and/or services

1,769,788

3,521,791

1,623,623

3,276,989

3.04

Cost of sales and/or services

(781,247)

(1,503,752)

(830,083)

(1,665,272)

3.05

Gross profit

988,541

2,018,039

793,540

1,611,717

3.06

Operating (expenses) income

(497,047)

(1,055,288)

(150,760)

(569,162)

3.06.01

Selling

(255,450)

(413,925)

(187,307)

(395,823)

3.06.02

General and administrative

(106,936)

(259,523)

(101,048)

(248,908)

3.06.03

Financial

(138,587)

(376,362)

135,250

67,754

3.06.03.01

Financial income

95,994

159,349

56,517

113,026

3.06.03.01.01

Financial income

95,940

159,220

56,572

120,528

3.06.03.01.02

Exchange gains

54

129

(55)

(7,502)

3.06.03.02

Financial expenses

(234,581)

(535,711)

78,733

(45,272)

3.06.03.02.01

Financial expenses

(220,310)

(497,135)

(159,091)

(315,966)

3.06.03.02.02

Exchange losses

(14,271)

(38,576)

237,824

270,694

3.06.04

Other operating income

15,603

22,159

10,541

18,064

3.06.04.01

Other operating income

17,193

24,418

11,615

19,905

3.06.04.02

COFINS and PASEP (taxes on revenue)

(1,590)

(2,259)

(1,074)

(1,841)

3.06.05

Other operating expenses

(11,677)

(27,637)

(8,196)

(10,249)

3.06.05.01

Loss on write-off of property, plant and equipment items

(10,871)

(12,195)

(4,268)

(6,048)

3.06.05.02

Provision for Losses in Tax Incentives

0

0

(300)

(300)

3.06.05.03

Tax Incentives

(754)

(904)

(3,072)

(3,072)

3.06.05.04

Provision for Actuarial Liability Law 4819/58

0

(14.237)

0

0

3.06.05.05

Provision for Loss – Law 4819/58

0

0

0

0

3.06.05.02

Other

(52)

(301)

(556)

(829)

3.06.06

Equity in subsidiaries

0

0

0

0

3.07

Income from operations

491,494

962,751

642,780

1,042,555

 
Page: 18

 
 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -04/01/2009

to 06/30/2009

6 - 01/01/2009

to 06/30/2009

3.08

Nonoperating income (expenses)

0

0

0

0

3.08.01

Income

0

0

0

0

3.08.02

Expenses

0

0

0

0

3.09

Income before taxes and profit sharing

491,494

962,751

642,780

1,042,555

3.10

Provision for income and social contribution taxes

(198,095)

(435,026)

(200,881)

(377,235)

3.10.01

Provision for income tax

(145,303)

(320,002)

(146,993)

(276,492)

3.10.02

Provision for social contribution tax

(52,792)

(115,024)

(53,888)

(100,743)

3.11

Deferred income tax

40,232

96,518

22,766

55,559

3.11.01

Deferred income tax

29,582

70,969

16,740

40,852

3.11.02

Deferred social contribution tax

10,650

25,549

6,026

14,707

3.12

Statutory profit sharing/contributions

0

0

0

0

3.12.01

Profit sharing

0

0

0

0

3.12.02

Contributions

0

0

0

0

3.13

Reversal of interest on capital

0

0

0

0

3.14

Non-controlling Shareholders Interest

0

0

0

0

3.15

Net income (loss)

333,631

624,243

464,665

720,879

 

Number of shares, former treasury shares (thousand)

227,836

227,836

227,836

227,836

 

EARNINGS PER SHARE (Reais)

1.46435

2.73988

2.03947

3.16403

 

LOSS PER SHARE (Reais)

 

 

 

 

 
Page: 19
 

 
10.01 - CONSOLIDATED STATEMENT OF CASH FLOWS - INDIRECT METHOD (In thousands of Brazilian reais - R$)

 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -04/01/2009

to 06/30/2009

6 - 01/01/2009

to 06/30/2009

4.01

Net  Cash from Operating Activities

155,283

739,401

435,977

1,068,488

4.01.01

Cash Generated from Operations

1,010,315

2,039,560

930,373

1,878,798

4.01.01.01

Net Income before Income Tax and Social Contribution

491,494

962,751

642,780

1,042,555

4.01.01.02

Provision for Contingencies

36,721

213,132

106,720

154,788

4.01.01.03

Reversal of Provision for Losses

310

93

780

1,068

4.01.01.04

Social Security Obligations

16,040

32,181

19,150

38,187

4.01.01.05

Write-off of Fixed Assets

10,871

12,195

4,268

6,048

4.01.01.06

Depreciation and Amortization

150,961

294,809

161,483

323,176

4.01.01.07

Intersts on Loans and Financings Payable

137,071

253,604

111,051

234,322

4.01.01.08

Monetary and Foreign Exchange Variation on Loans and Financings

37,007

87,253

(237,005)

(269,653)

4.01.01.09

Expenses with Interests and Monetary Variations

1,070

2,225

1,467

3,022

4.01.01.10

Income with Interests and Monetary Variations

(33,677)

(43,916)

(1,030)

(9,509)

4.01.01.11

Allowance for Doubtful Accounts

117,744

169,280

75,749

163,149

4.01.01.12

Provision for Term of Adjustment of Conduct (TAC)

9,153

9,153

(17,378)

129,186

4.01.01.13

Provision for Actuarial Liability Law 4819/58

0

14,237

0

0

4.01.01.15

Other Provisions/Reversals

75

(987)

107

228

4.01.01.16

Provision for PMSP Agreement

35,475

33,550

62,231

62,231

4.01.02

Variation to Assets and Liabilities

(412,881)

(559,632)

(144,472)

(205,749)

4.01.02.01

Accounts Receivable

(12,831)

(51,051)

6,685

(34,446)

4.01.02.02

Balances and Transactions with Related Parties

(2,572)

8,818

(5,382)

69,718

4.01.02.03

Inventories

3,295

8,683

2,303

7,465

4.01.02.04

Taxes Recoverable

446

(1,755)

3,356

1,469

4.01.02.05

Other Accounts Receivable

(376,341)

(413,306)

(25,199)

(18,084)

4.01.02.06

Judicial Deposits

(665)

(1,178)

(20,472)

(14,119)

4.01.02.07

Indemnifications Receivable

0

0

0

2,581

4.01.02.08

Contractors and Suppliers

1,152

(9,937)

(3,561)

(21,324)

4.01.02.09

Salaries, Provisions and Social Security Obligations

(2,617)

(6,735)

507

14,959

4.01.02.10

Provision for Actuarial Liability Law 4819/58

(12,283)

(24,492)

(12,605)

(31,966)

 
Page: 20

 
 

1 - Code

2 - Description

3 - 04/01/2010

to 06/30/2010

4 - 01/01/2010

to 06/30/2010

5 -04/01/2009

to 06/30/2009

6 - 01/01/2009

to 06/30/2009

4.01.02.11

Taxes and Contributions Payable

(22,198)

(51,231)

(28,523)

(63,251)

4.01.02.12

Accounts Payable

20,369

19.730

19,721

4,630

4.01.02.13

Other Obligations

40,662

76,165

53,957

54,345

4.01.02.14

Contingencies

(45,311)

(105,173)

(131,122)

(169,204)

4.01.02.15

Pension Plan - Sabesprev Transfer

(3,987)

(8,170)

(4,137)

(8,492)

4.01.03

Others

(442,151)

(740,527)

(349,924)

(604,561)

4.01.03.01

Interests paid

(191,913)

(284,613)

(174,793)

(280,451)

4.01.03.02

Income Tax and Contributions Paid

(250,238)

(455,914)

(175,131)

(324,110)

4.02

Net Cash from Investment Activities

(426,985)

(835,455)

(444,834)

(761,278)

4.02.01

Acquisition of Items of Fixed Assets

(404,572)

(808,299)

(433,235)

(745,446)

4.02.02

Increase in Intangibles

(22,413)

(27,156)

(13,869)

(18,102)

4.02.03

Proceeds from Sale of Fixed Assets

0

0

2,270

2,270

4.03

Net Cash from Financing Activities

466,538

372,405

(103,753)

(244,038)

4.03.01

Funding

1,872,185

2,025,282

666,544

844,737

4.03.02

Loan Amortizations

(1,040,280)

(1,287,491)

(484,966)

(803,444)

4.03.03

Payment of Interests on Shareholders´ Equity

(365,367)

(365,386)

(285,331)

(285,331)

4.04

Foreign Exchange Variation on Cash & Cash Equivalents

0

0

0

0

4.05

Increase(Decrease) in Cash & Cash Equivalents

194,836

276,351

(112,610)

63,172

4.05.01

Beginning Balance of Cash & Cash Equivalents

852,523

771,008

801,514

625,732

4.05.02

Ending Balance of Cash & Cash Equivalents

1,047,359

1,047,359

688,904

688,904

 
Page: 21

 
11.01 - STATEMENT OF CONSOLIDATED CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010 (In thousands of Brazilian reais - R$)

 

1 - CODE

2 - DESCRIPTION

3 - CAPITAL STOCK

4 -CAPITAL RESERVES

5 - REVALUATION RESERVES

6 - PROFIT RESERVES

7 -RETAINED EARNINGS/LOSSES

8 -EQUITY ADJUSTMENTS

9 -TOTAL SHAREHOLDERS´ EQUITY

5.01

Beginning Balance

6,203,688

124,255

2,106,063

2,054,594

329,649

0

10,818,249

5.02

Adjustments from Previous Years

0

0

0

0

0

0

0

5.03

Adjusted Balance

6,203,688

124,255

2,106,063

2,054,594

329,649

0

10,818,249

5.04

Profit/Loss for the Period

0

0

0

0

333,631

0

333,631

5.05

Allocations

0

0

0

0

0

0

0

5.05.01

Dividends

0

0

0

0

0

0

0

5.05.02

Interests on Shareholders´ Equity

0

0

0

0

0

0

0

5.05.03

Other Allocations

0

0

0

0

0

0

0

5.06

Realization of Profit Reserves

0

0

0

0

0

0

0

5.07

Equity Adjustments

0

0

0

0

0

0

0

5.07.01

Marketable Securities Adjustments

0

0

0

0

0

0

0

5.07.02

Accumulated Conversion Adjustments

0

0

0

0

0

0

0

5.07.03

Adjustments from Business Combinations

0

0

0

0

0

0

0

5.08

Increase/Decrease in Capital Stock

0

0

0

0

0

0

0

5.09

Capital Reserves Constitution/Realization

0

0

0

0

0

0

0

5.10

Treasury Stock

0

0

0

0

0

0

0

5.11

Other Capital Stock Transactions

0

0

0

0

0

0

0

5.12

Others

0

0

(17,609)

0

17,609

0

0

5.13

Ending Balance

6,203,688

124,255

2,088,454

2,054,594

680,889

0

11,151,880

 
Page: 22

 
 

11.02 - STATEMENT OF CONSOLIDATED CHANGES TO SHAREHOLDERS’ EQUITY FROM 01/01/2010 to 06/30/2010 (In thousands of Brazilian reais - R$)

 

1 - CODE

2 - DESCRIPTION

3 - CAPITAL STOCK

4 -CAPITAL RESERVES

5 - REVALUATION RESERVES

6 - PROFIT RESERVES

7 -RETAINED EARNINGS/LOSSES

8 -EQUITY ADJUSTMENTS

9 -TOTAL SHAREHOLDERS´ EQUITY

5.01

Beginning Balance

6,203,688

124,255

2,145,100

2,054,594

0

0

10,527,637

5.02

Adjustments from Previous Years

0

0

0

0

0

0

0

5.03

Adjusted Balance

6,203,688

124,255

2,145,100

2,054,594

0

0

10,527,637

5.04

Profit/Loss for the Period

0

0

0

0

624,243

0

624,243

5.05

Allocations

0

0

0

0

0

0

0

5.05.01

Dividends

0

0

0

0

0

0

0

5.05.02

Interests on Shareholders´ Equity

0

0

0

0

0

0

0

5.05.03

Other Allocations

0

0

0

0

0

0

0

5.06

Realization of Profit Reserves

0

0

0

0

0

0

0

5.07

Equity Adjustments

0

0

0

0

0

0

0

5.07.01

Marketable Securities Adjustments

0

0

0

0

0

0

0

5.07.02

Accumulated Conversion Adjustments

0

0

0

0

0

0

0

5.07.03

Adjustments from Business Combinations

0

0

0

0

0

0

0

5.08

Increase/Decrease in Capital Stock

0

0

0

0

0

0

0

5.09

Capital Reserves Constitution/Realization

0

0

0

0

0

0

0

5.10

Treasury Stock

0

0

0

0

0

0

0

5.11

Other Capital Stock Transactions

0

0

0

0

0

0

0

5.12

Others

0

0

(56,646)

0

56,646

0

0

5.13

Ending Balance

6,203,688

124,255

2,088,454

2,054,594

680,889

0

11,151,880

 
Page: 23

 

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

 

PUBLIC FEDERAL SERVICE
CVM - SECURITIES EXCHANGE COMMISSION
ITR - QUARTERLY INFORMATION
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES

Corporate Law
06/30/2010

 

01444-3 CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO   43.776.517/0001-80

 

06.01 - EXPLANATORY NOTES

                                                 

Amounts in thousands of Brazilian reais - R$, unless otherwise stated

 

 

1.            OPERATIONS

 

Companhia de Saneamento Básico do Estado de São Paulo - Sabesp (the “Sabesp” or “Company”) is a mixed-capital company headquartered in São Paulo, controlled by the São Paulo State Government. The Company is engaged in the provision of basic and environmental sanitation services, as well as suppling treated water on a bulk basis and providing sewage treatment services for another six municipalities of the Greater São Paulo Metropolitan Area.

 

In addition to providing basic sanitation services in the State of São Paulo, SABESP may perform these activities in other states and countries, and can operate in drainage, urban cleaning, solid waste handling and energy markets. The new Sabesp vision sets forth as its objective to be recognized as the company that has universalized the Sanitation services in its area of operation, with focus on the customer, in a sustainable and competitive way, with excellence in environmental solutions.

 

The Company provides water and sewage services in 365 municipalities in the State of São Paulo. It should be highlighted noted that the operations of the municipalities of Itapira, Araçoiaba da Serra, Iperó and Cajobi have ceased temporarily due to judicial orders still in progress. On June 30, 2010, the assets referring to these four municipalities were R$16,470. Nearly all of these assets are result of concessions granted by the municipalities which most of them have a 30-year term. Up to June 30, 2010, 78 concessions were expired and all of them are being negotiated with the municipalities. Between 2010 and 2030, 65 concessions will expire. The remaining concessions are for undetermined period. Up to June 30, 2010 198 program contracts were signed.

 

Management expects that the referred concessions will be renewed or extended, thus there will not be a discontinuity of the water supply and sewage collection in these municipalities. On June 30, 2010 the net book value of the property, plant and equipment used in the 78 municipalities where the concessions are under negotiation totals R$2,086 million and the net revenues for the period ended on June 30, 2010 totals R$463 million.

 

In the municipality of Santos, in the Santista lowland region, which has a significant population, the Company operates supported by a public authorization deed. A similar situation occurs in other municipalities in that region as well as the Ribeira valley region. The Company started to operate after the merger of the companies that formed it.

 

The important changes in regulation of the sanitation sector occurred in 2007 and generated new challenges and opportunities for Sabesp. The regulatory milestone has consolidated the integration between the investments of the service provider and the priorities set forth by the holder of the services, it made the provision of accounts more effective and transparent and increased the security for investments.

 

The Company’s shares have been listed on the “Novo Mercado” (New Market) segment of the BOVESPA (São Paulo Stock Exchange) since April 2002, and on the New York Stock Exchange (NYSE) as ADRs since May 2002.

 

 

Page: 24

 


 

 

All information about areas of concession, number of municipalities, water and sewage volume and other related data disclosed in this report, which does not arise from the accounting and/or financial statements, have not been examined by the independent auditors.

 

 

2.            PRESENTATION OF THE QUARTERLY FINANCIAL STATEMENTS

 

The financial statements have been approved by the Board of Directors on August 5, 2010.

 

(i)            Presentation of the Quarterly Information

 

The Quarterly Information has been prepared and presented consistently with the accounting standards adopted for the preparation of the financial statements of the fiscal year ended on December 31, 2009, as allowed by CVM Resolution 603/99.

 

On June 30, 2010, Management prepared an estimate of the possible effects on shareholders’ equity and on the company’s result for the year, in view of the main accounting statements, interpretations and directions that might impact the Company’s financial statements. These are:

 

CPC 20 – Borrowing Costs, approved by CVM Resolution 577

 

CPC 21 – Interim financial reporting, approved by CVM Resolution 581

 

CPC 22 - Segment Information, approved by CVM Resolution 582

 

CPC 27 – Property, plant end equipment, approved by CVM Resolution 619

 

CPC 33 – Employees’ Benefits, approved by CVM Resolution 600

 

CPC 37 – First time adoption of International Financial Reporting Standards, approved by CVM Resolution 609

 

CPC 38 – Financial Instruments: recognition and measurement, approved by CVM Resolution 604

 

CPC 39 – Financial Instruments: presentation, approved by CVM Resolution 604

 

CPC 40 – Financial Instruments: evidence, approved by CVM Resolution 604

 

- Interpretations:

 

ICPC 01 – Service Concession Arrangements, approved by CVM Resolution 611

 

ICPC 08 – Accounting for proposed dividends, approved by CVM Resolution 601

 

ICPC 11 – Transfer of Assets from Customers, approved by CVM Resolution 620

 

Page: 25

 


 

 

Estimate of possible impacts in the application of the CPC’s:

 

 

June 30, 2010

 

Shareholders’ Equity

 

Result

Beginning Balances before the application of CPC's

11,151,880

 

624,243

Write-off of GESP receivables related to Law 4819/58

(696,283)

 

-

Supplement of Actuarial Obligation

(851,015)

 

(17,392)

Other Adjustments

164,321

 

37,086

Deferred Income Taxes

(683,385)

 

(7,358)

 

 

 

 

Ending Balance after the application of CPC’s

9,085,518

 

636,579

 

Management refined the figures above and concluded a result of the studies regarding disclosures and other related matters. Management will restate the Quarterly Information – ITR in accordance with CVM Resolution 603/09. At present this point, Management do not consider practicable the presentation of this Quarterly Information – ITR in accordance with new CPC´s.

 

(ii)           Consolidated Financial Statements

 

The consolidated financial statements include the financial statements of Sabesp and its subsidiary Sesamm, which has been included in proportion to the Company’s equity interest. The Company maintains the joint shareholder control of the subsidiary, as detailed in Note 7. Fiscal year ends and accounting practices are aligned with the contracting company.

 

Although Sabesp’s equity interest in Sesamm capital stock is not majority interest, the shareholders’ agreement provides for the vetoing power on certain management matters together with OHL Meio Ambiente, Inima S.A.U. – Unipersonal (“Inima”) indicating shared control on Sesamm.  In light of this, the Financial Statements have been presented on a consolidated basis.

 

The consolidation process of the balance sheet and income statement accounts adds up the balances of the assets, liabilities, revenues and expenses according to their nature, complemented by the elimination of the equity interest of the holding company in the capital stock and retained earnings of the subsidiary.

 

3.         CASH & CASH EQUIVALENTS

 

 

HOLDING

 

CONSOLIDATED

 

Jun/10

Mar/10

 

Jun/10

Mar/10

Cash and Bank

70,405

64,691

 

70,455

64,757

Cash Equivalents

976,435

786,873

 

976,904

787,766

 

1,046,840

851,564

 

1,047,359

852,523

 

Page: 26

 

4.            ACCOUNTS RECEIVABLE FROM CUSTOMERS

 

(a)           Balances

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

 

Mar/10

 Private sector

 

 

 

 General and special customers (i) (ii)

774,393

 

803,589

 Agreements (iii)

261,673

 

265,585

 

1,036,066

 

1,069,174

 Government entities

 

 

 

 Municipal

564,260

 

552,913

 Federal

3,097

 

3,764

 Agreements (iii)

151,914

 

150,456

 

719,271

 

707,133

 Bulk sales - Municipal Administration Offices (iv)

 

 

 

 - Guarulhos

439,867

 

418,920

 - Mauá

203,419

 

196,722

 - Mogi das Cruzes

14,204

 

13,958

 - Santo André

457,497

 

442,655

 - São Caetano do Sul

3,623

 

3,477

 - Diadema

140,765

 

136,944

Wholesale total - Municipal City Halls

1,259,375

 

1,212,676

 

 

 

 

 Unbilled supply

338,976

 

347,196

Subtotal

3,353,688

 

3,336,179

Allowance for doubtful accounts

(1,999,309)

 

(1,898,428)

Total

1,354,379

 

1,437,751

 

 

 

 

Current

1,083,895

 

1,162,978

Non-current (v)

270,484

 

274,773

 

(i)            General customers - residential and small and medium-sized companies.

 

(ii)           Special customers - large consumers, commercial, industries, condominiums and special billing consumers (industrial waste, wells, etc.).

 

(iii)          Agreements - installment payments of past-due receivables, plus monetary adjustment and interest.

 

(iv)         Whosale - municipal city halls - The balance of accounts receivable from wholesalers refers to the sale of treated water to the municipalities which are responsible for the distribution, billing and collection from the end consumers, some of these municipalities question judicially the tariffs charged by Sabesp and do not pay the amounts under litigation. The past due amounts that are included in the allowance for doubtful accounts are substantially classified in non-current assets, according to the following table:

 

Page: 27

 

 

 

HOLDING AND CONSOLIDATED

 

2nd Qtr./10

 

1st Qtr./10

Balance at beginning of period

1,212,676

 

1,182,744

Billing for services provided

87,802

 

86,800

Collections - current year’s services

(41,103)

 

(47,905)

Collections - previous year’s services

-

 

(8,963)

Balance at the end of the period

1,259,375

 

1,212,676

Current

72,946

 

60,709

Non-current

1,186,429

 

1,151,967

 

(v)           The non-current portion consists of past-due and renegotiated balances with customers and past-due receivables related to the wholesale of water to municipal authorities and is recorded net of allowance for doubtful accounts.

 

(b)           The aging of trade accounts receivable is as follows:

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

Current

958,807

1,010,570

Past-due:

 

 

Up to 30 days

147,720

149,323

From 31 to 60 days

72,162

68,813

From 61 to 90 days

44,708

51,581

From 91 to 120 days

39,717

39,442

From 121 to 180 days

82,629

72,993

From 181 to 360 days

119,711

102,873

Over 360 days

1,888,234

1,840,584

Total

3,353,688

3,336,179

 

(c)           Allowance for doubtful accounts

 

(i)            The activity of the provision can be presented as follows:

 

 

HOLDING AND CONSOLIDATED

HOLDING

 

2nd Qtr /10

2nd Qtr /09

Beginning balance

1,898,428

1,710,833

 

 

 

Private sector / government entities

61,080

22,891

Bulk sales

39,801

35,634

 

 

 

Additions for the period

100,881

58,525

Ending balance

1,999,309

1,769,358

 

 

 

Current

930,280

833,255

Non-current

1,069,029

936,103

 
Page: 28

 

(ii)           In the Result

 

Probable bad debt of R$ 117,744 (2009 – R$ 75,749) for the second quarter of 2010 has been recorded against income for the period, under “Selling Expenses”.

 

 

HOLDING AND CONSOLIDATED

 

2nd Qtr /10

1st Qtr /10

2nd Qtr /09

1st Qtr /09

Provisions (over 5,000 Brazilian reais)

(153,523)

(207,969)

(113,224)

(218,324)

Recoveries (over 5,000 Brazilian reais)

52,642

62,891

54,699

82,255

Write-offs (lower or equal to 5,000 Brazilian reais)

(40,796)

(76,949)

(42,110)

(80,447)

Recoveries (lower or equal to 5,000 Brazilian reais)

23,933

52,747

24,886

53,367

Expenses

(117,744)

(169,280)

(75,749)

(163,149)

 

 

5.            BALANCES AND TRANSACTIONS WITH RELATED PARTIES

 

The Company is party to transactions with its controlling shareholder, São Paulo State Government (“Gesp”), and companies related to it.

 

(a)           Accounts receivable, interest on capital and operating revenue with the São Paulo State Government

 

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/09

Intercompany receivables

 

 

Current assets:

 

 

Water and sewage services (i)

112,469

95,430

Gesp Agreement (iii), (iv) and (v)

24,437

25,378

Provision for Losses (v)

(12,389)

(12,389)

Reimbursement of additional retirement and pension benefits - Agreement (ii) and (vi)

25,494

25,494

Reimbursement of additional retirement and pension benefits paid - Monthly flow (ii) and (vi)

5,337

4,705

Total current assets

155,348

138,618

Long-term assets:

 

 

Water and sewage services - Gesp Agreement (iii), (iv) and (v)

63,720

68,562

Reimbursement of additional retirement and pension benefits paid - Controversial (ii) and (vi)

496,084

483,800

Provision for Losses - Controversial (vii)

(496,084)

(483,800)

 

 

 

Reimbursement of additional retirement and pension benefits - Agreement (ii) and (vi)

174,205

180,578

Reimbursement of additional retirement and pension benefits - Reservoir (ii) and (vi)

696,283

696,283

Total Non-current

934,208

945,423

Total receivable from shareholder

1,089,556

1,084,041

 

 

 

Provision of water and sewage services

188,237

176,981

Reimbursement of additional retirement and pension benefits

901,319

907,060

 

1,089,556

1,084,041

 

 

 

Interest on capital payable

                -

198,099

 
Page: 29

 

 

Gross revenue from sales and services

 

 

 

2nd Qtr/10

2nd Qtr/09

Water sales

52,062

49,794

Sewage services

44,934

42,465

Receipts

(88,444)

(45,509)

 

 

 

Financial Income

28,517

47,308

 

(i)            Water and sewage services

 

The Company provides water supply and sewage collection services to the State Government and other Companies related to it, under terms and conditions considered by Management as normal in the market, with the exception as to the form of settlement of the trade receivables, that may be settled under the conditions mentioned in items (iii), (iv) and (v).

 

(ii)           Reimbursement of additional retirement and pension benefits paid

 

It refers to amounts of supplemental benefits of retirement and pension plan provided by State of Sao Paulo’s Law nr. 4819/58 (“Benefits”) paid by the Company to former employees or retirees.

 

(iii)          Second Amendment to the Gesp Agreement

 

On December 28, 2007, the Company and the State of São Paulo, by means of the Secretary of Treasury signed the second amendment to the terms of the original Gesp agreement, (1) agreeing with the payment of the remaining balance of the First Amendment, (R$133,709 as at November 30, 2007) to be paid in 60 equal, monthly and consecutive installments, the first one maturing on January 02, 2008. The value of the installments is monetarily adjusted according to the variation of the IPCA-IBGE, added by simple interests of 0.5% per month. Within the balance of this agreement, which installments have been paid monthly up to this point, there is an amount of R$46,244 that the State does not recognize as due. Sabesp has an understanding different from the State regarding this amount, and is not admitting the review of these previously agreed upon values, without the substantiated unequivocal demonstration, of the lack of correspondence between the amounts presented by Sabesp and the services effectively provided. (2) with regards to the overdue and unpaid accounts in the period from March, 2004 to October, 2007, resulting from the provision of water and collection of sewage services in the total of R$256,608, R$236,126 have been received with R$8,093 were transferred to Other Debtors and R$12,389, object of discrepancies about the validation were submitted to ARSESP and are under analysis. At present, differences as to the debtor have been identified, although not regarding the amount of the debt. In case of reclassification of the person responsible for paying the bill, Sabesp transferred the collection to the corresponding Entity. (3) the interests on shareholders’ equity due by Sabesp to the State, referring to the period from March, 2004 to December,

 

Page: 30

 

 

2006, in the amount of R$400,823, restated from June, 2007 to November, 2007 by the Selic rate, were paid in the period from January to March, 2008, (4) the State and Sabesp agreed upon the prompt resumption of the fulfillment of their reciprocal obligations, under the new premises: (a) implementation of the electronic accounts management system to facilitate and speed up the follow-up of the payment processes and the procures of budgeting management; (b) structuring of the Programa of Uso Racional de Agua - PURA, to rationalize the consumption of water and the amount of the water and sewage bills of the responsibility of the State; (c) the establishment, by the State, of criteria in the budgeting of a way to avoid the displacement of amounts in the specific line of water and sewage bills as of 2008; (d) possibility of registration of state entities and bodies in a default system or master file; (e) possibility of interruption of the supply of water to the state entities in case of default in the payment of water and sewage bills.

 

Out of the invoicing of the months of November, 2007 to March, 2010, approximately 95% of the accounts have already been paid by the State Government.

 

(iv)          Third Amendment to Gesp Agreement

 

Gesp, Sabesp and DAEE, on November 17, 2008, entered into the Third Amendment to the Term of Agreement of Payment Commitment, and Other Agreements, where the State confesses to owe Sabesp the amount of R$915,251, monetarily adjusted until September, 2008 by the IPCA-IBGE, corresponding to the Uncontroversial Amount, calculated by FIPECAFI. Sabesp accepts temporarily the Reservoirs as part of the payment of the Uncontroversial Amount and offers to the State a temporary settlement, constituting a financial credit of R$696,283, corresponding to the value of the Reservoirs. The definitive settlement will only occur with the effective transfer of property in the relevant real estate notary. The remaining balance of R$218,967 is being paid in 114 monthly and consecutive installments, in the amount of R$1,920 each, restated annually by the IPCA/FIPE, added by interests of 0.5% p.m., the first installment became due on November 25, 2008.

 

Sabesp and the State are working together on obtaining a legislative authorization in order to make viable the transfer of the Reservoirs to Sabesp, thus overcoming the juridical uncertainty caused by the Public Civil Action, mentioned in item (iii). After publication of the legislative authorization, the transfer of the Reservoirs to Sabesp will occur.

 

The Third Amendment also provides for the regularization of the monthly flow of benefits. While Sabesp is responsible for the monthly payments, by judicial decision, the State reimburses the Company based on criteria identical to those applied to the Uncontroversial Amount. In the absence of an impeditive judicial decision, the State will directly assume the flow of the portion of monthly payments of the part considered uncontroversial.

 

(v)           As mentioned before, on November 17, 2008 the Company and the State executed the 3rd Amendment to GESP Agreement, in such occasion that the amounts called controversial and uncontroversial have been quantified. In such Amendment, efforts have been made to resolve what was called the Controversial Amount of Benefits. According to the fourth clause of this instrument, the Controversial Amount is represented by the difference between the Uncontroversial Amount and the amount effectively paid by the Company as supplemental retirement and pension benefits provided for Law 4819/58, under the original responsibility of the State of Sao Paulo, in the Company’s understanding, although paid by Sabesp until May, 2008, due to judicial order.

 

In executing the Third Amendment, an appreciation of the differences that gave rise to the Controversial Amount of the Benefits provided by Law 4819/58 has been provided. Such expectation was, at that time,

 

Page: 31

 

 

based on the PGE’s will to reanalyze the matter and also, in the Company’s understanding, to the reimbursement based on external legal opinions.

 

However, recent opinions issued by PGE and received on September 4th and 22nd, 2009 and on January 4th, 2010, once again denied the reimbursement of the larger portion of this amount. As a consequence, the management’s understanding has been changed about receiving the Controversial Amount upon a direct negotiation with the State.

 

Although the negotiations with the State are still underway, it is no longer possible to ensure that the Company will recover, in an entirely amicable way, the debts related to the Controversial Amount.

 

Sabesp will not waive the debt that it considers to be legitimately held against the State. In this sense, it shall exhaust all possibilities to resolve the question at a technical and legal level. If the difference persists, the Company shall adopt all necessary measures to safeguard the Company’s interests.

 

In this context, the Company’s management decided to recognize in the 2008 results a provision for losses on the outstanding balance of the controversial amount. This provision, in June 30, 2010 was R$496,084. As a consequence of the recognition of this provision, it was also recorded the obligation related to the actuarial commitment kept with the beneficial owners, which right has been denied by the State, under the way it is paid by Sabesp. On June 30, 2010, the amount of this obligation was R$507,772 (March 31, 2010 – R$520,055). The details of the actuarial obligation are presented in the explanatory note nr. 13.

 

(b)           Cash and cash equivalents

 

The Company’s bank short-term investments accounts with financial institutions controlled by the State Government was R$1,009,639 and R$813,594 on June 30, 2010 and March 31, 2010, respectively. The financial income from such investments was R$28,517 and R$47,308 in the first quarter of 2010 and 2009, respectively. The Company, due to State Decree nº 55,357 of January 18, 2010, must invest its excess resources with financial institutions controlled by the State Government.

 

(c)           Agreement for the use of reservoirs

 

In its operations, the Company uses the Guarapiranga and Billings reservoirs; should these reservoirs not be available for use to the Company, there could be the need to collect water in more distant places. The Company does not pay any fee for the use of these reservoirs but it is responsible for their maintenance and operating costs.

 

(d)           Agreements with lower tariffs with State and Municipal Government Entities that joined the Rational Water Use Program (PURA).

 

The Company has contracts signed with public entities linked to the State Government and to the municipalities served involving approximately 6.500 properties, which are benefited with a 25% reduction in the tariffs of the services of water supply and sewage collection, when not in default. The contracts provide for the implementation of the rational use of water program, which considers a reduction in the consumption of water.

 

Page: 32

 

 

(e)           Guarantees

 

The State Government grants guarantees for some loans and financings of the Company and does not charge any fee related thereto.

 

(f)           Sesamm

 

On August 15, 2008, the Company, as part of its growing process, together with the companies OHL Médio Ambiente, Inima S.A.U. - Unipersonal (“Inima”), Técnicas y Gestion Medioambiental S.A.U. (“TGM”) and Estudos Tecnicos e Projetos ETEP Ltda. (“ETEP”) organized the company Sesamm - Serviços de Saneamento de Mogi Mirim S/A (“Sesamm” or “Subsidiary”) which corporate objective is the provision of sewage separation system supplementary services to the implementation and implementation and operation of the sewage treatment system of the Municipality of Mogi Mirim, including the disposal of solid waste generated, as per note 7.

 

(g)           Contract of personnel assignment among entities related to GESP

 

The Company has contracts of personnel assignments with entities related to the São Paulo’s State Government, where the expenditures are fully passed on the monetarily reimbursed.

 

On June 30, 2010, the expenditures with employees transferred by Sabesp to other state entities amounted to R$1,485 (June 30, 2009 – R$1,294).

 

In the same period, the expenditures with the employees of other entities at Sabesp’s disposal totaled R$70 (June 30, 2009 - R$78).

 

(h)           Services contracted from entities related to GESP

 

On June 30, 2010 Sabesp had outstanding the balance of R$11,535 payable in relation  to services provided to entities related to São Paulo’s State Government, among which we highlight the services of electric energy supply by Companhia Energetica de Sao Paulo - CESP, totaling 83% of the balance payable.

 

(i)                  Non-operating Assets

 

The Company had, on June 30 and March 31, 2010, the amount of R$25,371 and R$26,411, respectively, mainly related to land granted in free lease [comodato] to Associations, Assistance Entities, Non-Governmental Organizations and to the DAEE – Department of Water and Electric Energy, among others. The land granted to the DAEE amount to R$2,289.

 

(j)            Sabesprev

 

The Company sponsors the defined contribution plan managed by Fundação Sabesp de Seguridade Social - Sabesprev. The net actuarial obligation, recorded up to June 30, 2010, is R$504,114 (March 31, 2010 - R$492,061).

 

Management is making efforts towards maintaining, in permanent basis, the timely payment by the State regarding the transactions between the parties.

 

Page: 33

 
6.            INDEMNIFICATIONS RECEIVABLE

 

Indemnities receivable are a non-current asset that represents amounts receivable from the Municipalities of Diadema and Mauá as an indemnity for their unilateral termination of the concessions for water supply and sewage collection services of the Company in 1995. As of June 30, 2010 and March 31, 2010, this asset amounted to R$146,213 (nominal amounts).

 

Due to these concession agreements, the Company invested in the construction of water and sewage systems in those municipalities in order to meet its concession service commitments. For the unilateral termination of the Diadema and Mauá concessions, the municipalities assumed the responsibility of supplying water and sewage services in those regions. At that time, the Company reclassified the balances of property, plant and equipment related to the assets used in those municipalities to non-current assets (indemnities receivable).

 

The net book value of the items of property, plant and equipment related to the Municipality of Diadema, reclassified in December, 1996, was R$75,231, and the balance of the indemnifications receivable from the Municipality was R$60,295.

 

The net book value of the items of property, plant and equipment related to the Municipality of Maua, reclassified in December, 1999, was R$103,763, and the balance of the indemnifications receivable from the Municipality was R$85,918.

 

The Company’s rights to the recovery of these amounts are being judicially discussed by the municipalities.

 

Sabesp filed lawsuits to collect the amounts due by the municipalities. With regards to Diadema, the execution of the agreement entered with Diadema’s Mayor Office and the Companhia de Saneamento de Diadema – Saned, has started for the payment of the indemnification, the judge of first level accepted the appeals of the Mayor’s Office and extinguished the execution. Sabesp filed an appeal against such sentence and, in December, 2005, partial approval to this appeal was granted to declare the validity of the agreement and determine that the appeals to the execution were once again judged in first level. On December 2007, the decision that accepted the execution of the Saned was rendered, ordering this company to be summoned to pay the full amount of the debt within 15 days under the penalty of fine. The realization of the pledge in cash was approved on Saned’s bank accounts and financial investments (online pledge) up to 10% of the restated amount of the debit, being blocked and withdrawn the amount of R$2,919 in March 3rd, 2009. Later, the Court of Justice determined that the pledge be made upon weekly deposit by Saned of the amount corresponding to 20% on all it receives in its bank accounts and financial investments, such decision still being subject of appeal. Regarding Diadema Mayor’s Office, a new sentence was  given to the appeals to the execution, on October, 2009, recognizing the existence of the right to claim the debt, and affirming that the execution against the Municipality shall be made upon precatory notes (and not by pledge). Sabesp and the Mayor’s Office have appealed against such judgment.

 

On December 29, 2008, Saned and the municipality of Diadema entered into, with the State of Sao Paulo and Sabesp, a Memorandum of Intent with the purpose to prepare studies and conduct negotiations to instruct decisions of Diadema and Sabesp, aiming at the exclusive provision of water and sewage services in the municipality of Diadema.

 

Page: 34

 

 

The parties agreed that the search for a negotiated solution for the currently existing conflicts among the companies is fundamental so that the public service of water supply, sewage collection and treatment have their proper development in Diadema.

 

On January, 2009 the parties presented joint petition requesting the suspension of new pledges for the period of three months in order to try to make an agreement viable. The suspension was granted by the Judge of Public Treasury and, successively renewed, being the last renewal occurred on April, 2010 in face of negotiations for agreement.

 

With regards to Mauá, a first level decision was given determining that the Municipality pays the amount of R$153.2 million as compensation for the damages caused and for loss of profits. The Maua’s City Hall appealed against this decision. On July 2006, the decision was converted in diligence consisting of an expert clarification on the amount of the indemnity for loss of profits and the expert confirmed the amount of the loss of profits determined by the lower court. In August, 2008, the appeal was judged, having fully maintained the conviction imposed in the first level. The Maua Mayor’s Office filed special and extraordinary appeals against the sentence that confirmed its conviction to indemnify Sabesp. Both appeals were not accepted by the Court of Justice, causing the filing of appeals to the Superior Court of Justice and to the Supreme Court. Superior Court of Justice has already denied acceptance to the appeal and confirmed the non admissibility of the special appeal.

 

Based on the opinion of the legal counsels, Management continues to affirm that the Company has legal right to receive the amounts corresponding the indemnification and it continues to monitor the situation of the lawsuits.

 

 

7.            INVESTMENTS

 

 

Mar/10

Equity Result

Jun/10

Sesamm

3,497

(107)

3,390

Others

      720

          - 

      720

Total

4,217

(107)

4,110

 

On August 15, 2008 the company Sesamm - Serviços de Saneamento de Mogi Mirim S/A was formed with a duration term of 30 years counted from the date of signature of the Concession Contract with the municipality. Sesamm’s corporate objective is the provision of sewage separation system supplementary services to the implementation and implementation and operation of the sewage treatment system of the Municipality of Mogi Mirim, including the disposal of the solid waste generated.

 

On June 30, 2010 the Sesamm’s capital stock was R$10,669, divided into 10,669,549 common nominated shares, with no par value, of which Sabesp holds 36% of equity interest.

 

On June 30, 2010 the Sesamm’s operations had not still been initiated.

 

Page: 35

 

 

8.            PROPERTY, PLANT & EQUIPMENT

 

 

HOLDING

 

June/10

Mar/10

 

Cost

Accumulated depreciation

Net

Net

 

In use

 

 

 

 

 Water systems

 

 

 

 

         Land

954,512

-

954,512

954,857

         Buildings

2,700,122

(1,709,210)

990,912

1,006,498

         Connections

1,035,759

(443,872)

591,887

581,482

         Water meters

304,536

(149,633)

154,903

156,754

         Networks

3,499,694

(1,293,979)

2,205,715

2,223,013

         Wells

184,245

(114,258)

69,987

71,860

         Equipment

583,949

(416,082)

167,867

172,005

         Others

18,310

(14,921)

3,389

3,575

 

9,281,127

(4,141,955)

5,139,172

5,170,044

 Sewage systems

 

 

 

 

         Land

346,382

-

346,382

346,382

         Buildings

1,688,027

(742,112)

945,915

925,604

         Connections

952,824

(441,761)

511,063

512,260

         Networks

5,775,638

(1,535,755)

4,239,883

4,251,088

         Equipment

631,364

(477,909)

153,455

156,722

         Others

2,624

(2,133)

491

543

 

9,396,859

(3,199,670)

6,197,189

6,192,599

   General use

 

 

 

 

         Land

91,452

-

91,452

91,093

         Buildings

135,872

(86,933)

48,939

49,443

         Transportation equipment

139,178

(118,045)

21,133

21,546

         Information Technology Equipment

124,845

(90,258)

34,587

33,556

         Furniture, Fixture and Equipment

255,996

(141,783)

114,213

120,215

         Lands granted in free lease

20,488

-

20,488

20,488

         Items granted in free lease

6,816

(1,933)

4,883

5,922

 

774,647

(438,952)

335,695

342,263

Subtotal in operation

19,452,633

(7,780,577)

11,672,056

11,704,906

 

 

 

 

 

Work in progress:

 

 

 

 

         Water systems

1,782,600

-

1,782,600

1,642,695

         Sewage systems

2,502,299

-

2,502,299

2,323,941

         Others

12,873

-

12,873

11,399

Subtotal in progress (d)

4,297,772

-

4,297,772

3,978,035

 

 

 

 

 

Grand Total

23,750,405

(7,780,577)

15,969,828

15,682,941

 

The consolidated balance totals the amount of R$15,972,770, being the difference of R$2,928 referring to the sewage projects and R$14 represented mainly by furniture and fixture and equipment.

 

Page: 36

 

 

The operating fixed assets represent the assets involved in the providing of water supply and sewage collection services. Under the assets originated from contracts negotiated based on financial and economic appraisals, Sabesp holds the possession and management.

 

The concession contracts provide that the assets will be reversed to the conceding power at the end of the period, upon indemnification by the net market value as set forth in each contract. In the program contracts, the indemnification will correspond to the net present value of the cash flow in the remaining period at the date of resume of the services, monetarily restated and added by interests until the date of effective payment.

 

(a)           Depreciation

 

Depreciation is calculated at the following rates:

 

Structure - 2%, connections - 2%, hydrometers - 10%, networks - 2%, wells - 5%, equipment - 5%, transportation equipment - 10%, information technology equipment - 20%, furniture and fixture - 6.7%.

 

(b)           Write-off of Property, Plant and Equipment

 

The Company wrote-off, in the second quarter of 2010 and first semester of 2010, items of property, plant and equipment, in the amount of R$10,871 and R$12,195, respectively (2009 - R$6,538 and R$8,319), resulting in a total loss in the amount of R$4,268 and R$6,048, respectively). R$10,039 and R$11,363 related to the items in operation group, due to obsolescence, thefts and disposals and R$832 referring to discontinued works, unproductive wells, and economically unprofitable projects.

 

(c)           Work in Progress

 

The provision for disbursements from the third quarter of 2010 until 2015, referring to investments already contracted, is approximately R$4,193 million (not audited).

 

(d)          Expropriations

 

As a result of the execution of priority works related to the water and sewage systems there was the need to expropriate properties from third parties those owners shall be reimbursed by amicable or judicial means.

 

The forecast for disbursements to be made after the third quarter, 2010, is approximately R$537 million (not audited), which shall be covered by own resources. The assets object of these lawsuits shall be recorded in the fixed assets when the operation is carried out. In the second quarter of 2010, the amount referring to the expropriations was R$1,201 (in the second quarter of 2009 - R$2,117).

 

(e)           Assets given in Guarantee

 

On June 30, 2010 and March 31, 2010 the Company held assets with a value of R$249,034 given in guarantee to Request of Special Payment in Installment - Paes (Note 12).

 

(f)           Non-operating Assets

 

Page: 37

 

 

The Company had, on June 30, 2010 and March 31, 2010 the amount of R$25,371 and R$26,411 respectively, related mainly to lands granted in free lease to the Associations, Assistance Entities, Non-Governmental Organizations and to the DAEE - Departamento de Aguas e Energia Eletrica, among others.

 

(g)           Revaluation

 

Property, plant and equipment items were revaluated in 1990 and 1991 and have been depreciated at annual rates which take into consideration the estimated remaining economic useful lives.

 

As permitted by CVM Instruction 197/93, the Company did not record a provision for the tax effects (deferred taxes) on the surplus of the revaluation of property, plant and equipment carried out in 1990 and 1991. Had the income tax and social contribution on the revaluation reserve been accounted for, the unrealized amount at June 30, 2010 would be R$321,641 (R$356,354 up to June 30, 2009). The amounts of R$56,646 and R$45,688 from the revaluation reserve were realized in the periods ended on June 30, 2010 and June 30, 2009, respectively.

 

The Company elected to keep the Revaluation Reserve recorded until its respective realization.

 

(h)           Assets totally depreciated in operation

 

On June 30, 2010 and March 31, 2010 the gross book value of the totally depreciated assets that are still in use is R$957,902 and R$930,475, respectively.

 

(i)            PPP – Public Private Partnership

 

Sabesp and CSB – Sistema Produtor Alto Tiete S/A, special purpose company organized by the companies Galvão Engenharia S.A. and Companhia Aguas dop Brasil – CAB Ambiental, executed in June, 2008 the Public Private Partnership contracts of the Sistema Produtor Alto Tiete.

 

The service contract represents a 15-year commitment, during which the works of capacity increase of the Taiaçupeba Water Treatment Station, the construction of large-sized aqueducts and four reservoirs that will have the capacity to store 70 million litres, are provided. In addition to the works, it shall be the company’s responsibility to provide maintenance services to the dams; inspection and maintenance of tunnels and channels; civil and electro-mechanic maintenance in units that integrate the Alto Tiete System; the treatment and final disposal of the mud generated in the production of treated water and other services.

 

The initiative will make investments viable for the realization of a set of works and services that will enhance the offer of water from 10 to 15 thousand litres per second, thus ensuring the regularity of the supply across the region.

 

On June 30, 2010 the book amount recorded in the Company’s fixed assets related to the PPP still under construction is R$206,010 (Mar/2010 – R$166,569).

 

In the period from January to June, 2010 it was paid to CAB the amount of R$25,688, being R$20,115 recorded as expenses and R$5,573 as amortization of expenditures related to the construction.

 

Page: 38

 

 

9.            INTANGIBLE

 

HOLDING AND CONSOLIDATED

 

June/10

Mar/10

Concessions (i)

496,745

501,449

Program contracts (commitments) (ii)

306,534

261,710

License of Use (Software’s) (iii)

6,119

8,056

Program Contracts - investments performed (iv)

833,354

809,097

New Businesses (v)

        1,655

          961

Total

1,644,407

1,581,273

 

(i) Concessions

 

In the period between 1999 and 2006, the negotiations for new concessions were conducted on the basis of the economic and financial results of the transaction, determined in an appraisal report issued by independent experts.

 

The amount determined in the respective contract, after the transaction is closed with the municipal authorities, with payment through Company shares in cash, is recorded in this account and amortized over the period of the related concession (normally 30 years). As of June 30, 2010 and March 31, 2010 there were no amounts pending related to these payments to the municipalities.

 

The net amount shown relates to concessions with the following municipalities:

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

 

Cost

Accumulated amortization

Net

Net

Agudos

10,163

(3,062)

7,101

7,198

Bom Sucesso do Itararé

926

(121)

805

817

Campo Limpo Paulista

21,133

(5,078)

16,055

16,200

Conchas

4,233

(970)

3,263

3,236

Duartina

2,046

(531)

1,515

1,536

Estância de Serra Negra

15,698

(3,403)

12,295

12,436

Itapira

16,360

(1,330)

15,030

15,030

Itararé

6,538

(2,202)

4,336

4,396

Marabá Paulista

1,896

(317)

1,579

1,602

Miguelópolis

11,721

(2,242)

9,479

9,607

Osasco

296,815

(94,898)

201,917

204,468

Paraguaçu Paulista

26,646

(6,206)

20,440

19,985

Paulistânia

222

(51)

171

173

Sandovalina

2,567

(399)

2,168

2,193

Santa Maria da Serra

1,267

(384)

883

826

São Bernardo do Campo

237,464

(50,915)

186,549

188,538

Várzea Paulista

17,948

(4,789)

13,159

13,208

Total

673,643

(176,898)

496,745

501,449

  
Page: 39

 

 

 

The amortization of intangible assets is performed during the effective period of the concession agreements of the related municipalities.

 

In the second quarter of 2010 and 2009, amortization expenses relating to concession intangible rights were R$5,882 and R$5,776, respectively.

 

(ii)           Program Contracts (commitments)

 

Since the regulatory changes, the renewals have occurred by means of program contracts. In some of them the Company assumed commitments to financially participate in social environmental sanitation actions.

 

These commitments were recorded as offset to intangible assets in the amount of R$323,765 (Mar/10 - R$276,373) deducted from the adjustment to present value of R$91,003 at an interest rate of 6% plus IPCA.

 

These assets are being amortized over the duration of the program contract (in their majority on 30 years).

 

The committed amounts are related to the following municipalities:

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

Municipality

Cost

Accumulated amortization

 Net

 Net

Alfredo Marcondes

70

(6)

64

65

Aparecida D’Oeste

45

(3)

42

42

Auriflama

110

(2)

108

109

Avaré

5,000

(333)

4,667

4,708

Bento de Abreu

50

(4)

46

46

Bocaina

800

(67)

733

740

Botucatu

28,979

(161)

28,818

-

Caçapava

9,000

(600)

8,400

8,475

Cajuru

2,236

(12)

2,224

-

Campos do Jordão

3,000

(283)

2,717

2,742

Capão Bonito

2,000

(133)

1,867

1,883

Emilianópolis

112

(10)

102

103

Espírito Santo do Pinhal

5,179

(58)

5,121

5,165

Fartura

243

(16)

227

229

Fernandópolis

9,500

(792)

8,708

8,788

Franca

20,676

(2,010)

18,666

18,838

Indiaporã

250

(17)

233

235

Irapuã

260

(4)

256

258

Jales

4,426

(418)

4,008

4,045

Lorena

9,000

(750)

8,250

8,325

Magda

320

(5)

315

320

Mococa

8,843

(590)

8,253

8,327

Mombuca

197

(16)

181

182

Monte Alto

5,000

(347)

4,653

4,694

Novo Horizonte

5,000

(333)

4,667

4,708

Osvaldo Cruz

2,336

(13)

2,323

-

Pindamonhangaba

16,000

(1,156)

14,844

14,978

Piratininga

350

(24)

326

329

Planalto

39

(4)

35

36

Platina

30

-

30

-

Pongaí

35

(1)

34

35

Quatá

1,000

(17)

983

992

Riolândia

2,643

(176)

2,467

2,489

Santa Rosa do Viterbo

3,696

(31)

3,665

-

São João da Boa Vista

16,700

(1,113)

15,587

15,726

São José dos Campos

142,945

(7,147)

135,798

136,989

São Luiz Paraitinga

600

(50)

550

555

São Manuel

1,300

(87)

1,213

1,224

Tatuí

9,795

(43)

9,752

-

Tupã

5,540

(385)

5,155

5,201

Valentim Gentil

140

(12)

128

129

Zacarias

       320

         (2)

       318

            -

Total

323,765

(17,231)

306,534

261,710

 

Page: 40

 
 

In the second quarter of 2010 and 2009, the amortization expenses related to the commitments of the program contracts were R$2,568 and R$2,246, respectively.

 

The amounts not yet disbursed related to program contracts are recorded under the caption “other obligations” in current liabilities, R$68,207 and non-current liabilities, R$102,399.

 

(iii)          License for Use (Software)

 

The net amount of the amortizations of the license for the use of Software in June 30, 2010 was R$6,119 (Mar/2010 - R$8,056).

 

(iv)          Program Contracts - Investments Performed

 

Refer to renewals of the contracts previously named full concession to operating concession, through program contracts that have the objective of providing municipal public services of supply and sanitation sewage, where the Company has the ownership and management of the assets acquired or constructed during the term of these contracts (30 years).

 

 

 

 

Page: 41

 

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

 

Cost

Accumulated
amortization

 Net

Net

In use

 

 

 

 

Water systems

 

 

 

 

        Land

7,564

(413)

7,151

7,205

        Buildings

49,218

(2,821)

46,397

45,513

        Connections

30,224

(1,608)

28,616

28,753

        Water meters

19,290

(912)

18,378

22,140

        Networks

90,555

(5,005)

85,550

79,607

        Wells

12,508

(680)

11,828

11,831

        Equipment

16,573

(2,057)

14,516

13,623

        Others

1,790

(103)

1,687

5,532

Subtotal

227,722

(13,599)

214,123

214,204

 

 

 

 

 

Sewage systems

 

 

 

 

        Land

2,867

(152)

2,715

2,226

        Buildings

57,018

(3,148)

53,870

46,933

        Connections

38,478

(1,985)

36,493

36,751

        Networks

124,297

(6,741)

117,556

118,453

        Equipment

20,472

(2,502)

17,970

15,568

        Others

2,046

(117)

1,929

9,353

Subtotal

245,178

(14,645)

230,533

229,284

 

 

 

 

 

General use

 

 

 

 

        Land

10

-

10

9

        Buildings

392

(13)

379

378

        Transportation equipment

6,097

(343)

5,754

5,794

        Information Technology Equipment

1,200

(62)

1,138

1,144

        Furniture, Fixture and Equipment

6,219

(470)

5,749

5,806

Subtotal

13,918

(888)

13,030

13,131

Total

486,818

(29,132)

457,686

456,619

 

 

 

 

 

Work in progress:

 

 

 

 

         Water systems

102,379

-

102,379

89,110

         Sewage systems

272,943

-

272,943

263,030

         Others

346

     -

346

      338

Subtotal in progress

375,668

     -

375,668

352,478

Grand Total

862,486

(29,132)

833,354

809,097

 

The amortization of the assets is performed during the effectiveness of the program contract period.

 

(v)  New Businesses

It was signed, in August, 2009, with the Companhia of Saneamento de Alagoas (CASAL), the specialized technical services contract and technology transfer with the purpose to implement a program of loss reduction and revenue evasion of the Municipalty of Maceio, for 60 months.

 

Page: 42

 

 

On June 30, 2010 the amount in progress referring to this contract was R$1,655.

 

10.          LOANS, FINANCINGS & DEBENTURES

 

(i)            Outstanding balance of loans and financings

 

 

HOLDING AND CONSOLIDATED

 

 

 

 

 

Jun/10

Mar/10

 

 

 

 

 

Current

Non-current

Total

Current

Non-current

Total

Guarantees

Final maturity

Annual interest rate

Monetary adjustment

Financial Institution:

 

 

 

 

 

 

 

 

 

 

COUNTRY

 

 

 

 

 

 

 

 

 

 

União Federal / Banco do Brasil

301,904

975,120

1,277,024

295,251

1,051,855

1,347,106

Gov.Est.S.Paulo and own resources

2014

8.50%

UPR

Debentures 6th Issuance

238,461

-

238,461

232,415

-

232,415

Unsecured

2010

11%

IGP-M

Debentures 8th Issuance

442,091

-

442,091

-

429,932

429,932

Unsecured

2011

10.75%

IGP-M

Debentures 9th Issuance

-

228,355

228,355

-

226,552

226,552

Unsecured

2015

CDI+2.75% (1st series) and 12.87% (2nd series)

IPCA

Debentures 10th Issuance

-

277,435

277,435

-

276,276

276,276

Unsecured

2020

TJLP+1.92% (1st series and  3rd series) and 9.53% (2nd series)

IPCA

Debentures 11th Issuance

-

1,204,925

1,204,925

-

-

-

Unsecured

2015

CDI+1.95% (1st series) and CDI+1.4% (2nd series)

 

Debentures 12th Issuance

-

499,975

499,975

-

-

-

Unsecured

2025

TR+9.5%

 

Caixa Econômica Federal

84,076

737,260

821,336

80,940

690,948

771,888

Own Resources

2010/2032

6.8% (weighted)

UPR

Promissory Notes

-

-

-

-

899,207

899,207

 

2015

CDI + 3.5%

 

FIDC - Sabesp I

41,667

-

41,667

55,556

-

55,556

Own Resources

2011

CDI + 0.70%

 

Banco Nacional de Desenvolvimento Econômico e Social - BNDES

43,119

62,241

105,360

42,976

73,102

116,078

Own Resources

2013

3% + TJLP LIMIT 6%

 

Banco Nacional de Desenvolvimento Econômico e Social - BNDES Baixada Santista

-

130,474

130,474

-

130,474

130,474

 

2019

2.5% + TJLP LIMIT 6%

 

Banco Nacional de Desenvolvimento Econômico e Social – BNDES PAC

-

30,001

30,001

-

30,001

30,001

Own Resources

2023

2.15% + TJLP LIMIT 6%

 

Banco Nacional de Desenvolvimento Econômico e Social – BNDES ONDA LIMPA

-

202,973

202,973

-

105,117

105,117

Own Resources

2025

1.92% + TJLP LIMIT 6%

 

Others

3,271

7,374

10,645

3,141

9,513

12,654

 

2010/2018

12% / CDI / TJLP+ 6%

UPR

Interests and charges

132,784

-

132,784

155,117

-

155,117

 

 

 

 

Total Domestic

1,287,373

4,356,133

5,643,506

865,396

3,922,977

4,788,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOREIGN CURRENCY

 

 

 

 

 

 

 

 

 

 

Inter-American Development Bank - BID US$ 354,579 thd. (Mar/10 - US$ 367,680 thd)

66,088

572,687

638,775

65,312

589,525

654,837

Federal

Government

2016/2025

3.00% a 4.13%

(i)

Currency Basket Var. + US$

Euro Bonds - US$ 140,000 thd (Mar/10 - US$ 140,000 thd)

-

252,210

252,210

-

249,340

249,340

 

2016

7.5%

US$

JICA - Yens 21,316,000 thd (Mar/10 - Yens 21,316,000 thd)

-

434,420

434,420

-

406,283

406,283

Federal

Government

2029

1.8% and 2.5% (i)

Yens

BID 1983AB - US$ 250,000 thd (Mar/10 - US$ 250,000 thd.)

43,132

404,006

447,138

-

441,936

441,936

 

2023

2.4% to 2.9% (i)

US$

Interests and charges

16,361

-

16,361

25,103

-

25,103

 

 

 

 

Total International

125,581

1,663,323

1,788,904

90,415

1,687,084

1,777,499

 

 

 

 

TOTAL OF LOANS AND FINANCINGS

1,412,954

6,019,456

7,432,410

955,811

5,610,061

6,565,872

 

 

 

 

 

Parity rates as of June 30, 2010: US$ 1.8015; Yen 0.020380 (March31,2010: US$ 1.7810; Yen 0.019060).

 

On June 30, 2010 the Company did not have short term balances of loans and financings .

 

Page: 43

 

 

 

(i)            The demonstration of the annual interest rates is summarized in the contract’s general chart.

 

 

Jun/10

 

Mar/10

interest rate

 

Current

Non-current

Total

 

Current

Non-current

Total

BID

Contract 713

42,567

276,683

319,250

 

42,060

294,415

336,475

4.13%

BID

Contract 896

5,004

27,523

32,527

 

4,947

29,683

34,630

3.00%

BID

Contract 1212

18,516

268,482

286,998

 

18,305

265,427

283,732

4.02%

Jica Consulting

-

248,711

248,711

 

-

232,602

232,602

1.80%

Jica Work

-

185,709

185,709

 

-

173,681

173,681

2.50%

BID

1983 A

13,858

164,998

178,856

 

-

178,100

178,100

2.90%

Bid

1983 B1

18,015

160,840

178,855

 

-

178,100

178,100

2.60%

BID

1983 B2

11,259

78,168

89,427

 

-

89,050

89,050

2.40%

 

 

(ii) In accordance with the CPC 08 the chart below was prepared with the purpose of showing the annual effects of the financial expenses resulting from funding costs on the effective interest rates.

 

 

2010

2011

2012

2013

2014

2015

2016 and thereafter

Total

Monthly IRR

Debentures - 9th issuance - 1st series

159

318

319

267

-

-

-

1,063

0.26726%

Debentures -
9th issuance - 2nd series

122

245

246

246

247

206

-

1,312

0.017171%

Debentures -
10th issuance - 1st series

18

36

36

36

36

37

181

380

0.003956%

Debentures -
10th issuance - 2nd series

19

39

39

39

39

39

196

410

0.003944%

Debentures -
10th issuance - 3rd series

27

55

55

55

55

55

270

572

0.003966%

Debentures -
11th issuance - 1st series

710

1,422

1,424

1,427

1,430

357

-

6,770

0.014728%

 

Page: 44

 

 

 

 

2010

2011

2012

2013

2014

2015

2016 and thereafter

Total

Monthly IRR

Debentures -
11th issuance - 2nd series

599

1,200

1,204

302

-

-

-

3,305

0.024830%

Debentures -
12th issuance - sole series

1

2

2

2

2

2

14

25

0.000028%

BNDES (National Bank for Economic and Social Development) ONDA LIMPA

13

26

26

26

26

26

236

379

0.002184%

AB Loan A

52

103

103

103

103

104

770

1,338

0.005301%

AB Loan B1

64

129

129

129

129

129

575

1,284

0.006621%

AB Loan B2

39

77

77

78

78

78

188

615

0.007939%

Total

1,823

3,652

3,660

2,710

2,145

1,033

2,430

17,453

 

 

There is no premium when the resources are funded.

 

(iii) On May 3, 2010 occurred the full settlement of the 4th issuance of promissory notes.

 

(iv) 11th Issuance of debentures

 

On March 01, 2010 the Company issued the 11th issuance of debentures and on April 30, 2010 and May 03, 2010 it made the financial settlement of the 1st and 2nd series, respectively, through the Public Offer, which characteristics are:

 

 

1st Series                              

2nd Series                              

CVM Registration

CVM/SRE/DEB/2010/015

CVM/SRE/DEB/2010/016

Quantity

810,000

405,000

Issuance Date

03/01/2010

03/01/2010

Unit Value (R$ thd)

R$1

R$1

Total Value (R$ thd)

R$810,000

R$405,000

Remuneration DI + p.a.

1.95%

1.40%

Remuneration Payment

Semi-annual

Semi-annual

Final Amortization

03/01/2015

03/01/2013

Optional Redemption

As of the 24th month

Not applicable

 

Page: 45

 

 

(v)           12th Issuance of debentures

 

Sabesp issued R$500 million of debentures to the FGTS [Unemployment Fund] in a transaction with the Fund’s Sanitation Portfolio. The proceeds will pay for Sabesp´s works of structuring program, essential to reach the target to universalize the sanitation services in the State of Sao Paulo by 2018. Among the programs that will receive the amount are Vida Nova (Water Sources), Water Metropolitan Program, Sewage Metropolitan Program, Water and Sewage Programs of the Interior and Coastal Area.

 

Initially, R$170 million were released and the remaining amount is invested in a blocked account, whose redemption shall be made in 2 installments, within 6 and 12 months from the date of the transaction, through evidence of the realization of the investments by Sabesp.

 

Among the requirements of the Sanitation Portfolio for approving the transaction is the destination of 60% of the investments bound to the transaction in needing areas.

 

This transaction occurred in June 22, 2010 with the issuance and subscription of the 12th issuance of debentures, through the Public Offer of Restrict Efforts, pursuant CVM Instruction nr. 476, which characteristics are:

 

 

 

Single Series                              

CVM Registration

None

Quantity

500,000

Issuance Date

06/22/2010

Unit Value (R$ thd)

R$1

Total Value (R$ thd)

R$500,000

Remuneration DI + p.a.

9.5%

Remuneration Payment

Monthly, as of 07/2010

Final Amortization

Monthly, as of 07/2014

Optional Redemption

As of the 49th  month

 

 

(iv)          Repayment schedule of loans and financing

 

The total debt volume to be paid through the end of 2010 is R$644,875 and the amount denominated in US dollars is R$49,404 and the amount of R$595,471 refers to the interest and principal of loans denominated in Brazilian reais falling due.

 

Page: 46

 


 

 

 

 

 

 

 

 

 

2016

 

BANK

2010

2011

2012

2013

2014

2015

and thereafter

TOTAL

COUNTRY

 

 

 

 

 

 

 

 

Federal Government/Banco do Brasil

147,754

314,970

342,824

373,142

98,334

-

-

1,277,024

Caixa Econômica Federal (CEF)

41,161

88,178

98,100

99,755

61,318

39,136

393,688

821,336

Debentures

238,461

475,070

235,825

579,389

368,288

391,014

603,195

2,891,242

FIDC - SABESP I

27,778

13,889

-

-

-

-

-

41,667

BNDES (National Bank for Economic and Social Development)

21,424

42,847

36,914

4,175

-

-

-

105,360

BNDES (National Bank for Economic and Social Development) Santos Lowlands

-

-

16,309

16,309

16,309

16,309

65,238

130,474

BNDES (National Bank for Economic and Social Development) PAC

-

1,250

2,500

2,500

2,500

2,500

18,751

30,001

BNDES (National Bank for Economic and Social Development) ONDA LIMPA

-

-

11,710

15,613

15,613

15,613

144,424

202,973

Other

1,713

5,251

384

432

487

549

1,829

10,645

Interest and charges

117,180

15,604

-

-

-

-

-

132,784

Total - Domestic

595,471

957,059

744,566

1,091,315

562,849

465,121

1,227,125

5,643,506

 

 

 

 

 

 

 

 

 

ABROAD

 

 

 

 

 

 

 

 

BID

33,043

66,087

66,087

66,087

66,087

66,087

275,297

638,775

Eurobonds

-

-

-

-

-

-

252,210

252,210

JICA

-

11,741

23,482

23,482

23,482

23,482

328,751

434,420

BID 1983AB

-

42,822

42,822

42,822

42,822

42,822

233,028

447,138

Interest and charges

16,361

-

-

-

-

-

-

16,361

Total Abroad

49,404

120,650

132,391

132,391

132,391

132,391

1,089,286

1,788,904

Grand Total

644,875

1,077,709

876,957

1,223,706

695,240

597,512

2,316,411

7,432,410

 

(v)           Covenants

 

As of June 30, 2010, the Company was compliant with all covenants.

 

 

Page: 47

 

 


 

 

 

11.          DEFERRED TAXES AND CONTRIBUTIONS

 

(a)           Balances

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

In current assets (i)

 

 

Deferred income tax

193,654

184,523

Deferred social contribution tax

  69,715

  66,428

 

263,369

250,951

In non current assets (ii)

 

 

Deferred income tax

456,513

434,769

Deferred social contribution tax

 164,345

156,517

 

620,858

591,286

In current liabilities (iii)

 

 

Deferred income tax

209

209

Deferred social contribution tax

75

75

Deferred PASEP (tax on revenue)

12,320

12,697

Deferred COFINS (tax on revenue)

14,530

15,960

 

27,134

28,941

 In non-current liabilities (iv)

 

 

Deferred income tax

57,064

55,772

Deferred social contribution tax

16,033

15,568

Deferred PASEP (tax on revenue)

22,005

21,436

Deferred COFINS (tax on revenue)

  67,498

64,879

 

162,600

157,655

 

 

HOLDING AND CONSOLIDATED

HOLDING

 

 2nd Qtr/10

 1st sem//10

 2nd Qtr/09

 1st sem//09

To the result of the year

 

 

 

 

 

 

 

 

 

Income tax

(145,303)

(320,002)

(146,993)

(276,492)

Deferred income tax

      29,582

     70,969

     16,740

     40,852

 

(115,721)

(249,033)

(130,253)

(235,640)

 

 

 

 

 

Social contribution tax

(52,792)

(115,024)

(53,888)

(100,743)

Deferred social contribution tax

       10, 650

     25,549

     6,026

   14,707

 

(42,142)

(89,475)

(47,862)

(86,036)

 

(i)            In current assets

 

Substantially calculated based on timing differences of R$774,616 (Mar/2010 - R$738,092).

 

 

Page: 48

 

 


 

 

(ii)           In non-current assets

 

Substantially calculated based on timing differences of R$1,826,052 (Mar/2010 - R$1,739,076) related to the income tax and social contribution.

 

The Company’s Management expects to realize the long term balance, mentioned in item (ii) in 2011 in the same proportion as 2010, and the remaining to be realized in 2012.

 

(iii)          Current Liabilities

 

- Income Tax and Social Contribution

 

Substantially calculated based on timing differences of R$836, relating the income tax and social contribution.

 

- Pasep and Cofins

 

Calculated substantially on billings to government entities. The obligation is determined and the allowance recognized when the service is provided. Settlement is made when the invoices are received.

 

(iv)          In non-current liabilities

 

- Income and social contribution taxes

 

Substantially calculated based on timing differences of R$228,256 (Mar/2010 - R$223,088) relating to the income tax and R$178,149 (Mar/2010 - R$172,981) relating to the social contribution.

 

- Pasep and Cofins

 

Calculated substantially on billings to government entities. The obligation is determined and the allowance recognized when the service is provided. Settlement is made when the invoices are received.

 

(b)           Break-down of deferred taxes and contributions

 

 

HOLDING AND CONSOLIDATED

 

Jun/10

Mar/10

 

 

 

In current assets

 

 

Provisions for contingencies

263,369

250.951

 

 

 

In non-current assets

 

 

Provision for contingencies

325,914

329.167

Provision for social security obligations

168,258

164.160

Others

126,686

  97.959

 

 620,858

 591.286

Total deferred tax assets

884,227

842.237

 

 

 

In current liabilities

 

 

Costs in the issuance of securities

     284

     284

Public entity revenues

26,850

28.657

 

27,134

28.941

In non-current liabilities

 

 

Costs in the issuance of securities

179

699

Public entity revenues

72,919

70.641

Public entity income

  89,502

  86.315

 

162,600

157.655

Total deferred tax liabilities

189,734

186.596

 
   
Page: 49

 
 

(c)           Conciliation of the effective tax rate

 

The amounts recorded as income and social contribution tax expenses in the interim financial statements are reconciled to the statutory rates provided for in law, as shown below:

 

 

HOLDING AND CONSOLIDATED

HOLDING

 

2nd Qtr /10

1st Sem /10

2nd Qtr /09

1st Sem /09

Income before taxes on income

491,494

962,751

642,780

1,042,555

Statutory rate

       34%

         34%

       34%

       34%

Tax expense at statutory rate

(167,108)

(327,335)

(218,545)

(354,469)

Permanent differences

 

 

 

 

Realization of revaluation reserve

(5,987)

(19,260)

(8,169)

(15,534)

Interests on Shareholders’ Equity

-

-

47,253

47,253

Other differences

15,232

8,087

1,346

1,074

Income tax and social contribution

(157,863)

(338,508)

(178,115)

(321,676)

 

 

 

 

 

Current income tax and social contribution

(198,095)

(435,026)

(200,881)

(377,235)

Deferred income tax and social contribution

40,232

96,518

22,766

55,559

Effective tax rate

32%

35%

28%

31%

 

(d) Transitional Taxation Regime – RTT

 

For purposes of calculation of the income tax and social contribution on net income of the fiscal years 2009 and 2008, the Company and its subsidiaries elected the RTT, which allows the legal entity to eliminate the accounting effects of Law 11638/07 and the PM 449/08, converted into Law 11941/09, by means of registration in the actual profit book – LALUR or auxiliary ledgers, without any change to the accounting entries.

 

In 2010, the Company has also adopted the same tax standards adopted in 2008 and 2009, once the RTT shall be in force until the effectiveness of the law that regulates the tax effects of the new accounting methods, seeking tax neutrality.

 

 

Page: 50

 

 

12.          PROGRAM PAES

 

The Company applied for enrollment in PAES on July 15, 2003, in accordance with Law No. 10684 of May 30, 2003, and included in its application the debts related to COFINS and PASEP which were involved in a legal action challenging application of Law 9718/98, and the outstanding balance under the Tax Recovery Program (REFIS). The total amount included in PAES was R$316,953, as follows:

 

Taxes     

Main

    Fines

    Interests

     Total

 

 

 

 

 

Cofins

132,499

13,250

50,994

196,743

Pasep

5,001

509

2,061

7,571

Refis

112,639

         -

          -

112,639

Total

250,139

13,759

53,055

316,953

 

The debt is being paid in 120 months. The amounts paid in the 2nd qtr./10 and 2nd qtr./09 were respectively R$8,644 and R$8,305 and were recorded as financial expenses of R$1,070 in the 2nd qtr/10 and R$1,467 in the 2nd qtr/09. The outstanding balance on June 30, 2010 is R$104,063. The assets given in guarantee for the previous Refis Program, with R$249,034, continue to guarantee the amounts of the Paes Program.

 

 

13.          SOCIAL SECURITY LIABILITIES

 

The Company sponsors Fundação Sabesp de Seguridade Social - Sabesprev, an entity established in August 1990 with the main purpose of managing the pension plan and the welfare program for Sabesp’s employees.

 

(a)           Pension plan benefits:

 

The monthly contributions to the pension fund - defined benefit correspond to 2.1% by the Company and 2.3% by the participants.

 

Participants’ contributions above refer to the average contributions, as the discount amount ranges from 1% to 8.5% depending on the salary bracket.

 

In order to meet the provisions of CVM Resolution No. 371 of December 13, 2000, the amounts of the pension and retirement benefits granted or to be granted, to which employees are entitled after retirement, are presented below.

 

On December 31, 2009, based on an independent report, calculated by the Projected Credit Unit method, the Company had net actuarial obligation of R$480,103, representing the difference between the present value of the Company’s obligations to the participating employees, retired employees, and pensioners, and the value of the related assets.

 

The actuarial liability as of June 30, 2010, is R$504,114 (Mar/10 - R$492,061). This is accounted for in non-current liabilities.

 

Page: 51

 


 

 

The estimated expense for 2010 is R$60,532 (2009 - R$73,086). This was recognized in the period from April to June 2010, in the amount of R$16,041 (April to June 2009 - R$19,152), as shown below:

 

 

 

HOLDING AND CONSOLIDATED

 

 

 

 

 

 

2nd Qtr/10

1st Sem/10

2nd Qtr/09

1st Sem/09

Transfer to Sabesprev

3,987

8,170

4,137

8,492

Actuarial liability recorded

12,054

24,011

15,015

29,696

Total recorded

16,041

32,181

19,152

38,188

 

(b)           Welfare plan

 

The assistance program, which is made up by optional health plans, freely chosen, is also maintained by contributions of the sponsor (to the plan of active employees) and of the participants, which, in the period, were the following:

 

Company: 7.8%, on average, of payroll;

Participating employees: 3.21% of base salary and premiums, equivalent to 2.3% of gross payroll, on average.

 

(c)           Actuarial Obligation I referring to the payment of the benefits of the State Law nr. 4819/58.

 

As described in the explanatory note 5, the Company has been paying, due to judicial decision, the benefits of supplementary retirement of the former employees and pensioners.

 

The benefits plan, as determined by Law nr. 4819/58, includes the supplement of retirement, supplement of retirement for permanent disable and supplementary pensions.

 

This benefit plan does not receive contributions like the Plan managed by SABESPREV does, it therefore, has no asset in guarantee.

 

On June 30, 2010, based on an independent report, issued with base date December 31, 2009, the actuarial commitment referring to future payments of the benefits was R$1,157,095.

 

The actuarial provision herein made in the amount of R$507.7 million corresponds to the controversial portion of such liability not reimbursed by the State.

 

The number of participants of the plan was 2,727. The number of beneficial owners, retirees and pensioners was 2,602.

 

 

14.          PROFIT SHARING

Page: 52

 


 

 

In the quarter ended June 30, 2010 R$14,925 was accrued, which is recorded under payroll and related charges, in current liabilities, related to the period from January to December 2010, based on the attainment of goals set during negotiations between the Company and entities representing the employees.

 

 

15.          PROVISIONS FOR CONTINGENCIES

 

 

 

Mar/10

 

Additions

 

Deductions

 

Interest, monetary restatements

and reversals

 

Jun/10

Customers

968,512

 

7,484

 

(73,683)

 

(10,484)

 

891,829

Suppliers

354,519

 

1,558

 

(1,327)

 

9,560

 

364,310

Other civil lawsuits

165,651

 

12,036

 

(2,813)

 

12,223

 

187,097

Tax

27,659

 

28,319

 

(299)

 

10,745

 

66,424

Labor

105,596

 

7,034

 

(4,715)

 

2,102

 

110,017

Environmental

 52,266

 

 10,122

 

(14,571)

 

(1,883)

 

 45,934

Subtotal

1,674,203

 

66,553

 

(97,408)

 

22,263

 

1,665,611

Escrow deposits

(90,481)

 

(6,671)

 

 2,242

 

(4,688)

 

(99,598)

Total

1,583,722

 

59,882

 

(95,166)

 

17,575

 

1,566,013

 

Management, based on analysis together with its legal counsels, recorded a provision in amount considered sufficient to face probable losses in judicial law suits. In current liabilities, in the “ Provisions”  item, the amounts related to judicial law suits in phase of execution of sentence present the amount of R$713,318 (Mar/2010 – R$712,270) in non current liabilities, in the “ Provisions”  item, in the amount of R$852,695 (Mar/2010 – R$871,452).

 

(i)            Customers - Approximately 1,380 lawsuits were filed by commercial customers, which claim that their tariffs should be equal to the tariffs of another consumer category, and therefore claim the refund of the amounts collected by Sabesp. The Company was granted both favorable and unfavorable final decisions at several courts, and recognized provisions when the likelihood of loss is considered probable.

 

(ii)           Suppliers - Suppliers’ claims include lawsuits filed by some building companies alleging an underpayment of monetary adjustments, withholding of amounts related to the understatement of official inflation rates after the Real economic plan, and the economic and financial imbalance of the agreements. These lawsuits are in progress at different courts and a provision is recognized when the likelihood of loss is considered probable.

 

(iii)          Other civil lawsuits - refer mainly to indemnity claims for property damage, pain and suffering, and loss of profits allegedly caused to third parties, filed at different court levels, duly accrued when classified as probable losses.

 

(iv)          Tax lawsuits - the provision for tax contingencies refers mainly to issues related to tax collections challenged due to differences in the interpretation of legislation by the Company’s legal counsel, duly accrued when classified as probable losses.

 

 

Page: 53

 

 

 

(v)           Labor lawsuits - the Company is a party to labor lawsuits, involving issues such as overtime, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, and other. Part of the amount involved is in provisional or final execution at various court levels, and thus is classified as a probable loss and accordingly a provision was recognized.

 

(vi)          Environmental lawsuits - refer to several administrative proceedings and lawsuits filed by government entities, including Companhia de Tecnologia de Saneamento Ambiental - Cetesb and the São Paulo State Public Prosecution Office for the imposition of fines for environmental damages allegedly caused by the Company. The amounts recognized in provision do not always represent the final amount to be disbursed as indemnity of alleged damages, in view of the current stage in which such lawsuits are and Management’s impossibility to reasonably estimate the amounts of future disbursements.

 

Lawsuits with possible likelihood of loss

 

The Company is a party to lawsuits and administrative proceedings related to environmental, tax, civil and labor lawsuits, which are considered by its legal counsel as possible losses, and are not recorded in the books. The amount attributed to these lawsuits and proceedings is approximately R$2,222,200 as of June 30, 2010 (Mar/2010 - R$1,975,800).

 

 

16.          SHAREHOLDERS’ EQUITY

 

(a)           Authorized capital

 

The Company is authorized to increase capital up to R$10,000,000, based on a Board of Directors’ resolution, after submission to the Supervisory Boards.

 

(b)           Subscribed and paid-up capital

 

Subscribed and paid-up capital is represented by 227,836,623 registered common shares, with no par value, held as follows:

 

 

 

 

 

 

Number of shares

 

%

State Finance Department

 

114,508,083

 

50.26

Companhia Brasileira de Liquidação e Custódia

 

52,686,737

 

23.12

The Bank Of New York ADR Department (Equivalent in shares) (*)

 

59.979.264

 

26.33

Other

 

662,539

 

0.29

 

 

227,836,623

 

100.00

(*) Each ADR is equal to 2 shares

 

(c)           Payment to shareholders

 

Shareholders are entitled to a minimum mandatory dividend of 25% of the adjusted net income, calculated according to Brazilian Corporate Law. No interests accrue on dividends approved, and the amounts not

 

Page: 54

 

 

claimed within 3 years from the date of the General Shareholders´ Meeting that approved them will prescribe in favor of the Company.

 

The Company attributed in the fiscal year of 2009, as interests on shareholders´ equity considered dividends, R$365,401 net of withholding income tax in the amount of R$28,756 which will be paid on June 28th, 2010. The interests on shareholders´ equity were calculated in accordance with article 9th of Law nr. 9249/95, observing the Long Term Interest Rate – TJLP; for purposes of deductibility in calculating the income tax and social contribution, they were recorded as “Financial Expenses” and later, for purposes of demonstration, are presented in the “ Shareholders´ Equity”.

 

(d)           Capital reserve

 

Capital reserve includes tax incentives and donations through 2007.

 

(e)           Revaluation reserve

 

As provided for by CVM Instruction No. 197/93, the Company decided not to record income and social contribution taxes on the revaluation reserve of property, plant and equipment items recognized in 1991.

 

The reserve is being realized as a contra entry to the caption “retained earnings”, on the same proportion as the depreciation and write-off of the respective assets.

 

The balances of the revaluation reserve will be maintained until their effective realization.

 

(f)           Changes in the caption “retained earnings”

 

 

   Jun/10

 

   Jun/09

Previous Balance

329,649

 

277,876

Realization of Revaluation Reserve

17,609

 

24,026

Current Year’s Results

333,631

 

464,665

Interests on Shareholders’ Equity

-

 

(138,980)

Current Balance

680,889

 

627,587

 

(g)           Reserve for investments

 

The reserve for investments is specifically made up of the portion corresponding to the Company’s own resources that will be used for the expansion of the water supply and sewage sanitation systems.

 

 

17.          FINANCIAL INSTRUMENTS AND RISK

 

(a)           Identification and valuation of the financial instruments

 

The Company operates with several financial instruments with emphasis in cash and cash equivalents, including financial investments and loans and financings, described as follows.

 

Page: 55

 

 

 

The Company did not perform transactions with derivatives in 2010 and 2009.

 

(i)            Cash & cash equivalents, accounts receivable, other current assets and accounts payable

 

The amounts recorded approximate the realization amounts.

 

Cash equivalents correspond to the financial investments expressed in reais and have immediate liquidity.

 

(ii)           Investments

 

These consist, mainly, of the equity interest in the company Sesamm (pursuant Note 7) recorded by the equity method of accounting, in which the Company has strategic interest. Considerations of market value of the shares held are not applicable.

 

(iii)          Loans and Financings

 

In accordance with accounting standards related to the financial instruments, the market values of the projected cash flows, at fair value, of loans and financings on June 30, 2010 are as follows:

 

 

                  Jun/10                

                  Mar/10                

 

Equity amount

Market value

Equity amount

Market value

Banking Loans

 

 

 

 

Foreign Currency (iv)

1,788,904

2,313,570

1,777,499

2,472,689

Debentures (i)

2,977,350

3,342,763

1,232,120

1,495,001

BNDES (ii)

470,914

470,914

382,906

382,906

Others (iii)

2,195,242

2,417,560

3,173,347

3,409,554

 

7,432,410

8,544,807

6,565,872

7,760,150

 

In order to obtain the market values of Financial Instruments, the following criteria have been adopted:

 

(i)                   Debentures are financings considered by the nominal amount restated up to the maturity date, discounted to present value at the forward interest market rates, disclosed by Anbima in the secondary market, having as basis June 30, 2010 and the Company’s security traded in the domestic market.

 

(ii)                 Financings - BNDES, those are instruments considered by the nominal amount restated up to the maturity date, that have as characteristics the indexation to the TJLP, which is a specific modality, not being compared to any other market rate.

Therefore, the Company's choice was to publish as market value the amount accounted as of June 30, 2010.

 

(iii)                Other financings in national currency are considered by the nominal amount restated up to the maturity date, discounted to present value at the forward interest market rates. The forward rates used were obtained at the BM&F website.

 

 

Page: 56

 

 

(iv)               Foreign currency financings are controlled in the original currency, converted at the foreign exchange rate at the date of the balance sheet, discounted to present value using the forward market rate obtained in the Bloomberg, based on the Company’s title in the external market.

 

Additionally, the Company has an instrument indexed to the YEN [JICA (Note 10)], which, in addition of the premises above, was considered in the conversion to present value the parity of the original currency of the instrument related to the dollar.

 

(b)           Market risks

 

(i)            Foreign exchange rate risk

 

This risk results from the possibility of the Company incurring losses due to fluctuations in the foreign exchange rates that impact the balances of loans and financings in foreign currency funded in the market and, consequently, the financial expenses. The Company does not maintain “hedge” or “swap” operations, however, the company performs an active management of the debt, seeking to reduce the exposure in foreign currency, taking advantage of the windows of opportunity, to exchange expensive debts to cheaper debts, reducing the cost by means of anticipation of the maturity dates.

 

A significant portion of the Company’s financial debt was linked to the US dollar and to the Yen, in the total amount of R$1,788,904 (Note 10). The table below summarizes the Company’s exposure to exchange rates at June 30, 2010.

 

 

 

In thousands

 

 

US$

 

Japanese Yen

Loans and financing

 

744,579

 

21,316,000

 

(ii)           Interest rate risk

 

This risk arises from the possibility that the Company may incur losses due to interest rate fluctuations and indices that increase their interest expenses on loans and financing. The Company has not entered into any derivative contract to hedge against this risk; however, it continually monitors market interest rates, in order to evaluate the possible need to replace its debt. As of June 30, 2010, the Company had R$2,093,971 in loans and financing which were obtained at variable interest rates (CDI and TJLP).

 

Another risk faced by the Company is the lack of correlation between the monetary adjustment indices of its debt and those of its receivables. Water supply and sewage treatment tariffs do not necessarily follow the increases in the interest rates affecting the Company’s debt.

 

(iii)          Credit risk

 

Credit risk is mitigated by selling to a geographically dispersed customer base.

 

(c)           Sensitivity analysis

 

 

Page: 57

 

 

Bellow is presented the table demonstrating the sensitivity analysis of the financial instruments that may generate significant impacts to the Company.

 

Under the terms of CVM instruction nr. 475/08, in order to demonstrate the amounts of the main financial liabilities converted at a projected rate for final settlement of each contract, converted to fair value (Scenario I) with 25% appreciation (Scenario II) and 50% appreciation (Scenario III).

 

 

 

2010

Financial Instruments

Risk

Scenario I

R$

Scenario II

R$

Scenario III

R$

Financial Liability

Loans and Financings

 

 

 

 

Banco do Brasil, CEF

Increase in UPR

1,216,546

1,222,369

1,228,191

Debentures

Increase in IGPM

648,451

810,564

972,677

Debentures

Increase in IPCA

140,573

175,716

210,860

BID and Eurobonds

Increase in the US$

793,926

992,407

1,190,888

JICA

Increase in the Yen

99,200

124,000

148,800

 

The indices used for each scenario are based on the number of days to elapse for each contract, the amounts expressed above have been summarized.

 

The rates were projected based on the settlement dates of each financial instrument; the information was obtained out of BM&F website.

 

These sensitivity analysis have the objective to measure the impact of the changes in the market variables on the Company’s financial instruments. Such amounts, when settled, may present values different from those demonstrated above, due to the estimates used in their preparation process.

 

 

18.          OPERATING REVENUE

 

 

2nd Qtr/10

 

1st Sem/10

 

2nd Qtr/09

 

1st Sem /09

 

 

 

 

 

 

 

 

São Paulo’s Metropolitan Region

1,450,278

 

2,836,460

 

1,324,514

 

2,660,352

Regional systems (i)

454,175

 

953,601

 

419,138

 

862,667

Total

1,904,453

 

3,790,061

 

1,743,652

 

3,523,019

 

(i)       Comprises municipalities operating in inland and coastal regions of the State of São Paulo.

 

 

Page: 58

 

 


 
19.          OPERATING COSTS AND EXPENSES

 

 

HOLDING

 

 

 

 

 

 

2nd Qtr/10

1st Sem/10

2nd Qtr/09

1st Sem/09

Cost of sales and services

 

 

 

 

   Payroll and related charges

(265,111)

(507,730)

(268,611)

(648,056)

   General supplies

(29,606)

(60,623)

(33,047)

(64,873)

   Treatment supplies

(31,085)

(67,139)

(33,060)

(71,866)

   Outside services

(169,106)

(302,091)

(205,620)

(309,064)

   Electricity

(129,293)

(258,945)

(121,236)

(237,921)

   General expenses

(11,696)

(22,365)

(11,996)

(21,293)

   Depreciation and amortization

(145,350)

(284,859)

(156,513)

(312,199)

 

(781,247)

(1,503,752)

(830,083)

(1,665,272)

Selling expenses

 

 

 

 

   Payroll and related charges

(50,310)

(95,868)

(48,607)

(112,411)

   General supplies

(1,341)

(2,989)

(2,190)

(3,812)

   Outside services

(68,932)

(111,726)

(43,140)

(82,948)

   Electricity

(189)

(402)

(173)

(341)

   General expenses

(15,731)

(31,193)

(16,186)

(30,892)

   Depreciation and amortization

(1,203)

(2,467)

(1,262)

(2,270)

   Allowance for doubtful accounts, net of recoveries [Note 4 (c(ii))]

(117,744)

(169,280)

(75,749)

(163,149)

 

(255,450)

(413,925)

(187,307)

(395,823)

Administrative expenses:

 

 

 

 

   Payroll and related charges

(43,911)

(77,939)

(43,687)

(88,406)

   General supplies

(1,335)

(3,015)

(1,595)

(2,960)

   Outside services

(36,546)

(76,123)

(27,495)

(65,901)

   Electricity

(294)

(673)

(292)

(498)

   General expenses

(8,611)

(55,210)

(14,091)

(48,104)

   Depreciation and amortization

(4,407)

(7,482)

(3,708)

(8,706)

   Tax expenses

(11,711)

(38,819)

(10,016)

(34,031)

 

(106,815)

(259,261)

(100,884)

(248,606)

Costs, and selling and administrative expenses:

 

 

 

 

   Payroll and related charges

(359,332)

(681,537)

(360,905)

(848,873)

   General supplies

(32,282)

(66,627)

(36,832)

(71,645)

   Treatment supplies

(31,085)

(67,139)

(33,060)

(71,866)

   Outside services

(274,584)

(489,940)

(276,255)

(457,913)

   Electricity

(129,776)

(260,020)

(121,701)

(238,760)

   General expenses

(36,038)

(108,768)

(42,273)

(100,289)

   Depreciation and amortization

(150,960)

(294,808)

(161,483)

(323,175)

   Tax expenses

(11,711)

(38,819)

(10,016)

(34,031)

   Allowance for doubtful accounts, net of recoveries - [Note 4 (c(ii))]

(117,744)

(169,280)

(75,749)

(163,149)

 

(1,143,512)

(2,176,938)

(1,118,274)

(2,309,701)

 
Page: 59

 

 

 

 

HOLDING

 

 

 

 

 

 

2nd Qtr/10

1st Sem/10

2nd Qtr/09

1st Sem/09

Financial expenses:

 

 

 

 

   Interest and charges on loans and financing - local currency

(124,350)

(224,488)

(94,800)

(197,393)

   Interest and charges on loans and financing - foreign currency

(11,798)

(27,481)

(15,201)

(34,972)

   Interest on Shareholders’ Equity

-

-

(138,980)

(138,980)

   Interest on Shareholders’ Equity (reversal)

-

-

138,980

138,980

   Other financial expenses

(35,707)

(68,460)

(29,806)

(46,255)

   Income tax on remittance abroad

(928)

(1,640)

(1,060)

(1,967)

   Monetary variation on loans and financing

(22,805)

(48,837)

(811)

(1,033)

   Other monetary variation

(2,459)

(13,903)

(5,802)

(11,874)

   Provisions for financial contingencies

(22,263)

(112,326)

(11,611)

(22,472)

 

(220,310)

(497,135)

(159,091)

(315,966)

 

 

 

 

 

Financial income:

 

 

 

 

   Monetary variation gains

47,583

70,864

14,011

30,364

   Income from temporary cash investments

28,517

46,221

22,151

47,308

   Interest and others

19,826

42,097

20,325

42,664

 

95,926

159,182

56,487

120,336

 

 

 

 

 

Financial expenses before exchange variations, net

(124,384)

(337,953)

(102,604)

(195,630)

 

 

 

 

 

Exchange variations, net

 

 

 

 

   Exchange variation on loans and financing

(14,202)

(38,416)

237,824

270,694

   Other foreign exchange variations

(69)

(160)

 -

-

   Exchange gains

54

129

(55)

(7,502)

 

(14,217)

(38,447)

237,769

263,192

 

 

 

 

 

Financial expenses, net

(138,601)

(376,400)

135,165

67,562

 

Page: 60

 

 

 

CONSOLIDATED

 

 

 

 

 

 

2nd Qtr/10

1st Sem/10

2nd Qtr/09

1st Sem/09

Cost of sales and services

 

 

 

 

   Payroll and related charges

(265,111)

(507,730)

(268,611)

(648,056)

   General supplies

(29,606)

(60,623)

(33,047)

(64,873)

   Treatment supplies

(31,085)

(67,139)

(33,060)

(71,866)

   Outside services

(169,106)

(302,091)

(205,620)

(309,064)

   Electricity

(129,293)

(258,945)

(121,236)

(237,921)

   General expenses

(11,696)

(22,365)

(11,996)

(21,293)

   Depreciation and amortization

(145,350)

(284,859)

(156,513)

(312,199)

 

(781,247)

(1,503,752)

(830,083)

(1,665,272)

Selling expenses

 

 

 

 

   Payroll and related charges

(50,310)

(95,868)

(48,607)

(112,411)

   General supplies

(1,341)

(2,989)

(2,190)

(3,812)

   Outside services

(68,932)

(111,726)

(43,140)

(82,948)

   Electricity

(189)

(402)

(173)

(341)

   General expenses

(15,731)

(31,193)

(16,186)

(30,892)

   Depreciation and amortization

(1,203)

(2,467)

(1,262)

(2,270)

   Allowance for doubtful accounts, net of recoveries [Note 4 (c(ii))]

(117,744)

(169,280)

(75,749)

(163,149)

 

(255,450)

(413,925)

(187,307)

(395,823)

Administrative expenses:

 

 

 

 

   Payroll and related charges

(43,992)

(78,124)

(43,750)

(88,530)

   General supplies

(1,337)

(3,019)

(1,597)

(2,964)

   Outside services

(36,568)

(76,161)

(27,588)

(66,062)

   Electricity

(294)

(673)

(292)

(498)

   General expenses

(8,626)

(55,244)

(14,093)

(48,112)

   Depreciation and amortization

(4,408)

(7,483)

(3,708)

(8,707)

   Tax expenses

(11,711)

(38,819)

(10,020)

(34,035)

 

(106,936)

(259,523)

(101,048)

(248,908)

Costs, and selling and administrative expenses:

 

 

 

 

   Payroll and related charges

(359,413)

(681,722)

(360,968)

(848,997)

   General supplies

(32,284)

(66,631)

(36,834)

(71,649)

   Treatment supplies

(31,085)

(67,139)

(33,060)

(71,866)

   Outside services

(274,606)

(489,978)

(276,348)

(458,074)

   Electricity

(129,776)

(260,020)

(121,701)

(238,760)

   General expenses

(36,053)

(108,802)

(42,275)

(100,297)

   Depreciation and amortization

(150,961)

(294,809)

(161,483)

(323,176)

   Tax expenses

(11,711)

(38,819)

(10,020)

(34,035)

   Allowance for doubtful accounts, net of recoveries - [Note 4 (c(ii))]

(117,744)

(169,280)

(75,749)

(163,149)

 

(1,143,633)

(2,177,200)

(1,118,438)

(2,310,003)

 
Page: 61

 
 

 

CONSOLIDATED

 

 

 

 

 

 

2nd Qtr/10

1st Sem/10

2nd Qtr/09

1st Sem/09

Financial expenses:

 

 

 

 

   Interest and charges on loans and financing - local currency

(124,350)

(224,488)

(94,800)

(197,393)

   Interest and charges on loans and financing - foreign currency

(11,798)

(27,481)

(15,201)

(34,972)

   Interest on Shareholders’ Equity

-

-

(138,980)

(138,980)

   Interest on Shareholders’ Equity (reversal)

-

-

138,980

138,980

   Other financial expenses

(35,707)

(68,460)

(29,806)

(46,255)

   Income tax on remittance abroad

(928)

(1,640)

(1,060)

(1,967)

   Monetary variation on loans and financing

(22,805)

(48,837)

(811)

(1,033)

   Other monetary variation

(2,459)

(13,903)

(5,802)

(11,874)

   Provisions for financial contingencies

(22,263)

(112,326)

(11,611)

(22,472)

 

(220,310)

(497,135)

(159,091)

(315,966)

 

 

 

 

 

Financial income:

 

 

 

 

   Monetary variation gains

47,583

70,864

14,011

30,364

   Income from temporary cash investments

28,531

46,259

22,236

47,500

   Interest and others

19,826

42,097

20,325

42,664

 

 95,940

159,220

56,572

120,528

 

 

 

 

 

Financial expenses before exchange variations, net

(124,370)

(337,915)

(102,519)

(195,438)

 

 

 

 

 

Exchange variations, net

 

 

 

 

   Exchange variation on loans and financing

(14,202)

(38,416)

237,824

270,694

   Other foreign exchange variations

(69)

(160)

 -

 -

   Exchange gains

54

129

(55)

(7,502)

 

(14,217)

(38,447)

237,769

263,192

 

 

 

 

 

Financial expenses, net

(138,587)

(376,362)

135,250

67,754

 

The consolidated balance includes administrative expenses in the amount of R$262 (2009 – R$302) and net financial expenses of R$38 (2009 –R$192).

 

Page: 62

 


 
20.          OTHER OPERATING INCOME AND EXPENSES

 

The break-down of “other operating income (expenses), net” is the following:

 

 

HOLDING AND CONSOLIDATED

 

 

 

 

 

 

 

 

 

2nd Qtr/10

 

1st Sem/10

 

2nd Qtr/09

 

1st Sem/09

Other operating expenses

17,193

 

24,418

 

11,615

 

19,905

Cofins and Pasep

(1,590)

 

(2,259)

 

(1,074)

 

(1,841)

 

15,603

 

22,159

 

10,541

 

18,064

Other operating expenses

(11,677)

 

(27,637)

 

(8,196)

 

(10,249)

 

 

 

 

 

 

 

 

other operating income (expenses), net

3,926

 

(5,478)

 

2,345

 

7,815

 

Other operating income is comprised of the sale of fixed assets, sales of public notices, as well as indemnifications and reimbursement of expenses, lease of real estate, water for reuse, Pura and Aqua log’s projects and services.

 

The other operating expenses comprise: (i) the write-off of items of fixed assets by obsolescence, deactivated works, unproductive wells, economically unfeasible projects and loss with fixed assets and (ii) provision referring to the actuarial obligation of State Law 4819/58 (note 5(vii)).

 

 

21.          AGREEMENT WITH THE MUNICIPALITY OF SÃO PAULO

 

On November 14, 2007, the Company and the Municipality of Paulo (the Parties) entered into an Agreement to establish the conditions that ensure the stability in the providing of water supply and sewage, and environmental utility services in the city of São Paulo, the main provisions of which are as follows:

 

1. The Parties made the commitment to take basic sanitation and environmental actions, complementary to the actions of the Municipality of São Paulo, by investing in the deployment and continuity of programs such as: “Programa Córrego Limpo” (Clean River Program) and “Programa de Uso Racional da Água - PURA” (Rational Water Use Program), the purpose of which is to ensure a decrease in water consumption by City government units, ensuring water supply to and the quality of living of the population;

 

2. Starting November 14, 2007, Agreement date, all the amounts paid by the Municipality of São Paulo to SABESP, referring to consumption by City departments, agencies, and foundations, net of taxes, will be used in basic sanitation and environmental actions in the Municipality;

 

3. The Municipality made the commitment to resume the payment of consumption bills issued by SABESP, starting November 14, 2007, the date of this Agreement’s execution;

 

On June 23, 2010 the State of Sao Paulo, through its Governor, the Municipality of Sao Paulo and the Regulating Agency of Sanitation and Energy – ARSESP entered into the Agreement provided in the initial instrument, signed in November 14, 2007.

 

Page: 63

 

 

The Agreement, signed in June 23, 2010 has as object to share the responsibility for offering the service of water supply and sanitation sewage in the capital, in the next 30 years, extendable for equal period. Additionally, it attributes to Sabesp exclusivity in the provision of services and defines ARSESP as responsible for the regulating functions, including tariff, control and inspection of services.

 

Also on June 23, 2010 it was signed the “Agreement of Provision of Public Services of Water Supply and Sanitation Sewage”. The Agreement was entered into between the State of Sao Paulo, the Municipality of Sao Paulo and Sabesp, for the period of 30 years, extendable for equal period, encompassing the following activities:

  1. the protection of mananciais, in articulation with other bodies of the State and the Municipality;
  2. capitation, adduction and treatment of gross water;
  3. collection, transportation and final disposal of sanitation sewage; and
  4. adoption of other actions of basic and environmental sanitation.

 

The municipal law 14934/09 authorized the municipal executive power to execute the abovementioned instruments with the signatories also mentioned above.

 

 

22.          STATEMENT OF VALUE ADDED - DVA

 

The statement of value-added, prepared in accordance with CVM Resolution nr. 557/08 (CPC 09) presents the result of the period under the generation and distribution of wealth point of view, where four main beneficiaries of the wealth generation by the activities are: the employees, the government, capital of third parties and the shareholders’ capital.

 

 

Explanatory Note

HOLDING

CONSOLIDATED

 

1st Sem/10

 

1st Sem /09

 

1st Sem /10

 

1st Sem /09

 

 

 

 

 

 

 

 

 

1 - Revenues

1.1)     Revenues from Products and Services

18

3,790,061

 

3,523,019

 

3,790,061

 

3,523,019

1.2)     Other revenues

20

24,418

 

19,905

 

24,418

 

19,905

1.3)     Revenues related to the construction of own assets

 

150,303

 

(51,991)

 

150,303

 

(51,991)

1.4)     Allowance for doubtful accounts - set up

19

(169,280)

 

(163,149)

 

(169,280)

 

(163,149)

 

 

3,795,502

 

3,327,784

 

3,795,502

 

3,327,784

 

 

 

 

 

 

 

 

 

2 - Inputs acquired from third parties

 

 

 

 

 

 

 

 

2.1)      Cost of sale and services provided

 

(689,483)

 

(687,853)

 

(689,482)

 

(687,853)

2.2)      Supplies, electricity and power, third party’s services and others

 

(299,162)

 

(249,731)

 

(299,224)

 

(249,892)

2.3)      Other operating expenses

20

(27,637)

 

(10,249)

 

(27,637)

 

(10,249)

 

 

(1,016,282)

 

(947,833)

 

(1,016,343)

 

(947,994)

 

 

 

 

 

 

 

 

 

3 - Gross Value Added (1-2)

 

2,779,220

 

2,379,951

 

2,779,159

 

2,379,790

 

 

 

 

 

 

 

 

 

4 - Retentions

 

 

 

 

 

 

 

 

4.1)      Depreciation and Amortization

 

(295,596)

 

(324,108)

 

(295,597)

 

(324,109)

 

 

 

 

 

 

 

 

 

5 - Net value added produced by the Company (3-4)

 

2,483,624

 

2,055,843

 

2,483,562

 

2,055,681

 

 

 

 

 

 

 

 

 

6 - Value added produced in transfer

 

 

 

 

 

 

 

 

6.1)      Equity result

 

(224)

 

(110)

 

-

 

-

6.2)      Financial income

19

159,311

 

112,834

 

159,349

 

113,026

 

 

159,087

 

112,724

 

159,349

 

113,026

 

 

 

 

 

 

 

 

 

7 - Value added to allocate

 

2,642,711

 

2,168,567

 

2,642,911

 

2,168,707

 
Page: 64

 

 

 

Explanatory Note 

HOLDING

 

CONSOLIDATED

    1st Sem/10       1st Sem/09       1st Sem/10       1st Sem/09    

8 - Value added allocated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.1)      Personnel

 

 

 

 

 

 

 

 

 

8.1.1  Direct compensation

 

434,340

16.4%

463,282

21.4%

434,492

16.4%

463,377

21.4%

8.1.2   Benefits

 

134,475

5.1%

160,402

7.4%

134,479

5.1%

160,408

7.4%

8.1.3   FGTS

 

41,538

1.6%

159,720

7.4%

41,546

1.6%

159,727

7.4%

 

 

610,353

23.1%

783,404

36.2%

610,517

23.1%

783,512

36.2%

8.2)     Taxes, fees and contributions

 

 

 

 

 

 

 

 

 

8.2.1   Federal

 

740,085

28.0%

698,842

32.2%

740,106

28.0%

698,863

32.2%

8.2.2   State

 

19,060

0.7%

19,438

0.9%

19,060

0.7%

19,438

0.9%

8.2.3   Municipal

 

20,597

0.8%

15,345

0.7%

20,598

0.8%

15,345

0.7%

 

 

779,742

29.5%

733,625

33.8%

779,764

29.5%

733,646

33.8%

 

 

 

 

 

 

 

 

 

 

8.3)     Remuneration of Third Parties’ Capital

 

 

 

 

 

 

 

 

 

8.3.1   Interests, foreign exchange and monetary variation

 

612,447

23.2%

(82,087)

-3.8%

612,447

23.2%

(82,087)

-3.8%

8.3.2   Lease

 

15,926

0.6%

12,746

0.6%

15,940

0.6%

12,757

0.6%

 

 

628,373

23.8%

(69,341)

-3.2%

628,387

23.8%

(69,330)

-3.2%

 

 

 

 

 

 

 

 

 

 

8.4)     Compensation of shareholders’ equity

 

 

 

 

 

 

 

 

 

8.4.1   Interests on shareholders’ equity

 

-

0.0%

138,980

6.4%

-

0.0%

138,980

6.4%

8.4.2   Retained earnings

 

624,243

23.6%

581,899

26.8%

624,243

23.6%

581,899

26.8%

 

 

624,243

23.6%

720,879

33.2%

624,243

23.6%

720,879

33.2%

 

 

 

 

 

 

 

 

 

 

Value added allocated

 

2,642,711

100.0%

2,168,567

100.0%

2,642,911

100.0%

2,168,707

100.0%

 

23.          SUBSEQUENT EVENTS

 

SABESPREV

 

In order to resolve the technical deficit of the Define Benefit Plan, that on December 31 was R$582,819, in July 8, 2010 the new plan “SABESPREV MAIS” in the modality of Defined Contribution – CD, was approved by the National Superintendence of Supplemental Pension – PREVIC.

 

The deficit calculated will be settled by the Sponsor and by the participants in the same proportion of their normal contribution. The participants of the current Defined Benefit – BD plan shall have the option to migrate to the new CD plan. The Sponsor will make additional contributions as a way to incentive the migration from BD plan to CD plan.

 

In the new plan, the Sponsor will continue to make monthly contributions to the individual account, in amount equal to the participant´s basic contribution.

 

Management is not able, at this moment, to foresee the eventual impacts as a result of this change. On June 30, 2010, the actuarial obligation recognized in the balance sheets is R$504,114, which shall be reverted, together with the deferred income tax and social contribution (R$171,399), proportionally to the adhesion of the participants and to the new actuarial calculation to be prepared.

 

Page: 65

 

PUBLIC FEDERAL SERVICE
CVM - SECURITIES EXCHANGE COMMISSION
ITR - QUARTERLY INFORMATION
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES

Corporate Law
06/30/2010

 

01444-3 CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO 43.776.517/0001-80

 

07.01 - COMMENTS ON THE COMPANY'S PERFORMANCE IN THE QUARTER

 

 

 

1. Financial Highlights

 

In millions of R$

 

 

 

Variation

 

 

Variation

 

2Q09

2Q10

R$

%

Jan-Jun/09

Jan-Jun/10

R$

%

(+) Gross operating revenues

1,743.7

1,904.5

160.8

9.2

3,523.0

3,790.1

267.1

7.6

(-) COFINS and PASEP

120.0

134.7

14.7

12.3

246.0

268.3

22.3

9.1

(=) Net operating revenues

1,623.7

1,769.8

146.1

9.0

3,277.0

3,521.8

244.8

7.5

(-) Costs and expenses

1,118.3

1,143.5

25.2

2.3

2,309.7

2,176.9

(132.8)

(5.7)

(+) Equity result

(0.1)

(0.1)

-

-

(0.1)

(0.2)

(0.1)

100.0

(=) Income before financial expenses (EBIT*)

505.3

626.2

120.9

23.9

967.2

1,344.7

377.5

39.0

(+) Depreciation and amortization

161.5

151.0

(10.5)

(6.5)

323.2

294.8

(28.4)

(8.8)

(=) EBITDA**

666.8

777.2

110.4

16.6

1,290.4

1,639.5

349.1

27.1

EBITDA Margin %

41.1

43.9

 

 

39.4

46.6

 

 

Net income

464.7

333.6

(131.1)

(28.2)

720.9

624.2

(96.7)

-

Net income per one thousand shares in R$

2.04

1.46

 

 

3.16

2.74

 

 

(*) Earnings before interest and taxes on income;

(**) Earnings before interest, taxes, depreciation and amortization;

 

In the 2Q10, the net operating revenue totaled R$1.8 billion, 9.0% growth in relation to 2Q09. Costs and expenses, in the amount of R$1.1 billion suffered a 2.3% in relation to the 2Q09. EBITDA increased from R$666.8 million to R$777.2 million in the 2Q10, with 16.6% increase.

 

EBIT presented a 23.9% growth, from R$505.3 million in the 2Q09 to R$626.2 million in the 2Q10

 

 

2. Gross operating revenue

 

In the 2Q10, the gross operating revenue presented a R$160.8 million increase, or 9.2%, from R$1.7 billion in 2Q09 to R$1.9 billion in 2Q10. The main factors responsible for such variance were the tariff adjustment of 4.43% applied in September, 2009 and the growth of volume billed in 4.0% as compared to the same quarter of 2009.

 

3. Volume invoiced

 

The following charts are demonstrated the volumes invoiced of water and sewage, according to the category of use and region, in the 2Q09, 2Q10, 1S09 and 1S10.

 

QUARTER

 

VOLUME INVOICED (1) WATER AND SEWAGE PER CATEGORY OF USE - millions of m3

 

Water

Sewage

Water + Sewage

By Category

2Q09

2Q10

Var. %

2Q09

2Q10

Var. %

2Q09

2Q10

Var. %

Residential

344.3

356.8

3.6

278.2

290.1

4.3

622.5

646.9

3.9

Commercial

38.7

40.3

4.1

35.9

37.7

5.0

74.6

78.0

4.6

Industrial

8.5

9.2

8.2

8.7

9.3

6.9

17.2

18.5

7.6

Public

12.4

13.2

6.5

10.1

10.6

5.0

22.5

23.8

5.8

Total Retail

403.9

419.5

3.9

332.9

347.7

4.5

736.8

767.2

4.1

 
 
Page: 66

 
 

VOLUME INVOICED (1) WATER AND SEWAGE PER CATEGORY OF USE - millions of m3

 

Water

Sewage

Water + Sewage

Wholesale

71.7

73.4

2.4

6.7

7.2

7.5

78.4

80.6

2.8

Reuse Water

 0.1

0.1

-

-

-

-

0.1

0.1

-

Grand Total

475.7

493.0

3.6

339.6

354.9

4.5

815.3

847.9

4.0

 

SEMESTER

 

VOLUME INVOICED (1) WATER AND SEWAGE PER CATEGORY OF USE - millions of m3

 

Water

Sewage

Water + Sewage

By Category

1S09

1S10

Var. %

1S09

1S10

Var. %

1S09

1S10

Var. %

Residential

696.3

721.3

3.6

560.1

584.2

4.3

1,256.4

1,305.5

3.9

Commercial

77.2

80.6

4.4

71.3

74.7

4.8

148.5

155.3

4.6

Industrial

16.8

18.2

8.3

16.8

18.6

10.7

33.6

36.8

9.5

Public

23.3

24.4

4.7

19.1

19.7

3.1

42.4

44.1

4.0

Total Retail

813.6

844.5

3.8

667.3

697.2

4.5

1,480.9

1,541.7

4.1

Wholesale

143.5

145.9

1.7

14.6

15.3

4.8

158.1

161.2

2.0

Reuse Water

 0.1

0.2

-

-

-

-

0.1

0.2

-

Grand Total

957.2

990.6

3.5

681.9

712.5

4.5

1,639.1

1,703.1

3.9

 

QUARTER

 

VOLUME INVOICED (1) WATER AND SEWAGE PER REGION - millions of m3

 

Water

Sewage

Water + Sewage

Per Region

2Q09

2Q10

Var. %

2Q09

2Q10

Var. %

2Q09

2Q10

Var. %

Metropolitan

269.3

278.8

3.5

266.7

236.2

4.2

496.0

515.0

3.8

Regional (2)

134.6

140.7

4.5

106.2

11.5

5.0

240.8

252.2

4.7

Total retail

403.9

419.5

3.9

332.9

347.7

4.5

736.8

767.2

4.1

Bulk

71.7

73.4

2.4

6.7

7.2

7.5

78.4

80.6

2.8

Reuse Water

 0.1

0.1

-

-

-

-

0.1

0.1

-

Grand Total

475.7

493.0

3.6

339.6

354.9

4.5

815.3

847.9

4.0

 

SEMESTER

 

VOLUME INVOICED (1) WATER AND SEWAGE PER REGION - millions of m3

 

Water

Sewage

Water + Sewage

Per Region

1S09

1S10

Var. %

1S09

1S10

Var. %

1S09

1S10

Var. %

Metropolitan

539.0

555.9

3.1

451.7

469.9

4.0

990.7

1,025.8

3.5

Regional (2)

274.6

288.6

5.1

215.6

227.3

5.4

490.2

515.9

5.2

Total retail

813.6

844.5

3.8

667.3

697.2

4.5

1,480.9

1,541.7

4.1

Bulk

143.5

145.9

1.7

14.6

15.3

4.8

158.1

161.2

2.0

Reuse Water

 0.1

0.2

-

-

-

-

0.1

0.2

-

Grand Total

957.2

990.6

3.5

681.9

712.5

4.5

1,639.1

1,703.1

3.9

 

(1) Not audited

(2) Comprised by the coastal region and country side

 

 

Page: 67

 


 
 

4. Costs, selling and administrative expenses

 

In the 2Q10, the costs of products and services provided, administrative and commercial expenses, had an increase of 2.3%, corresponding to R$2.55 million. The participation of the costs and expenses in the net revenue decreased from 68.9% in the 2Q09 to 64.6% in the 2Q10.

In millions of R$

 

 

 

Variation

 

 

Variation

 

2Q09

2Q10

R$

%

Jan-Jun/09

Jan-Jun/10

R$

%

Payroll and related charges

360.9

359.3

(1.6)

(0.4)

848.9

681.5

(167.4)

(19.7)

General supplies

36.8

32.3

(4.5)

(12.2)

71.6

66.6

(5.0)

(7.0)

Treatment supplies

33.1

31.1

(2.0)

(6.0)

71.9

67.2

(4.7)

(6.5)

Outside services

276.3

274.6

(1.7)

(0.6)

457.9

489.9

32.0

7.0

Electricity

121.7

129.8

8.1

6.7

238.8

260.0

21.2

8.9

General expenses

42.3

36.0

(6.3)

(14.9)

100.3

108.8

8.5

8.5

Tax expenses

10.0

11.7

1.7

17.0

34.0

38.8

4.8

14.1

Subtotal

881.1

874.8

(6.3)

(0.7)

1,823.4

1,712.8

(110.6)

(6.1)

Depreciation and amortization

161.5

151.0

(10.5)

(6.5)

323.2

294.8

(28.4)

(8.8)

Credits write-off

75.7

117.7

42.0

55.5

163.1

169.3

6.2

3.8

Costs, and administrative and selling expenses

1,118.3

1,143.5

25.2

2.3

2,309.7

2,176.9

(132.8)

(5.7)

Percentage of Net Revenue (%)

68.9

64.6

 

 

70.5

61.8

 

 

 

4.1. Salaries and payroll charges

 

In 2Q10 salaries and payroll charges increased by R$1.6 million or 0.4%, going from R$360.9 million to R$359.3 million as a result of the following factors:

 

·         Reduction in headcount in function of the layoffs (TAC + 2% of the headcount) occurred from April/09 to June/10 with 2,387 dismissals; and

 

·         This reduction was partially offset by 6.69% salary adjustment since May, 2009 and 5.05% since May, 2010.

 

In the 1st semester of 2010, there was a reduction of R$167.4 million, caused by the provision made in the 1Q09, that did not occur in 2010. Even excluding the effect of the TAC of R$146.6 million, there was a decrease of R$20.8 million, or 3.0%.

 

4.2. General Supplies

 

In the 2Q10 there was a decrease of R$4.5 million, or 12.2%, when compared to the same period previous year, from R$36.8 million to R$32.3 million. The main factors that caused this variance were: i) lower expenses with maintenance materials in the adductor systems, water and sewage treatment stations and elevation stations in the Metropolitan Region of Sao Paulo – RMSP, in the amount of R$3.1 million; and ii) expenditures with fuels and lubricants of vehicles in the amount of R$1.2 million, as a consequence of lower consumption of fuels in function of the reallocation of new vehicles and increase in demand of outsourced services like the Global R and Global Sourcing.

 

4.3. Treatment Materials

 

 

Page: 68

 


 
The expenditures in 2Q10 were lower than 2Q09 by R$2.0 million, or 6.0%, going from R$33.1 million to R$31.1 million. This variance is related to the following factors:

 

·         Decrease of R$4.5 million in function of lower consumption of aluminum poly-chloride by approximately 45% and replacement of aluminum sulfide. Despite the consumption of aluminum sulfide has grown approximately 30%, the average cost of the product dropped 54%, which contributed significantly in the reduction of the expenditures for the period; and

 

·         Increase of R$2.6 million as a result of the price adjustment of chlorine and ferric chlorite since November, 2009 and increase in the consumption of some products such as: i) activate charcoal, in function of the climatic and water source conditions, as well as the proliferation of algae in the Reservoirs that serve Alto Tiete Producer System; ii) beginning of the use of hydrogen peroxide in Santos, Praia Grande and Sao Vicente; iii) poly-electrolytes, in function of the entrance into operations of the centrifuges in the Barueri system.

 

4.4. Services

 

In the 2Q10, this item presented a decrease of R$1.7 million, or 0.6%, from R$276.3 million to R$274.6 million. The main factors that contributed to this variance were:

 

·         Decrease of R$26.8 million in the provision made in the 2Q09, referring to the actions set forth in the agreement signed between Sabesp and the PMSP; and

 

·         Appropriation of the expenditures incurred in two quarters, made in the 2Q09, when the accounting for the public private partnership – PPP of Alto Tiete started, as opposed to the recognition of the expenditures of only one quarter in the 2Q10, resulting in a reduction of R$6.1 million.

 

Disregarding the effects of these provisions, the third party services account would have presented a growth of R$31.2 million, that is, a 11.3% increase.

 

The following services presented increase:

 

·         Broadcasting of advertising campaigns focused in social environmental actions, such as: Planeta Sustentavel, Jornal SPTV – Globo, TV Record Media Project, among others, in the amount of R$8.5 million, recurring for upcoming quarters;

 

·         Maintenance of networks and connections of water and sewage in the amount of R$8.2 million, in function of the increase in demand and contractual amounts based on the Global Sourcing of the municipalities of the Regional Systems and the increase in the executions of services of the maintenances in the RMSP, in addition to the enhancement of the actions to meet the demands of the Corrego Limpo Program with the Sao Paulo Municipal Hall – PMSP and actions to optimize the systems of sanitation sewage in Santos Lowlands;

 

·         Contracting of consulting firms, advisory and specialized services in the amount of R$4.1 million comprising: supply of information and hydrological forecasts in real time, fauna and flora survey for obtaining environmental permits of Rio Taiaçupeba basin, tele-service in the municipalities that comprise the Regional Systems – Contact Center R, development services of the new “virtual agency” and bills management system, update of the technical registry of the geographic information system – SIGNOS (inventory of distributions networks, adduction, collection and treatment), among others;

 

Page: 69

 
 

·         Reading of hydrometers and delivery of bills in the amount of R$3.8 million, resulting from the increase in the number of connections and use of new technologies, that allow higher safety and agility in the system of issuance and reading of bills, in addition to the delivery of water bills in some Business Units by postage in the mails;

 

·         Pavement services and replacement of sidewalks in the amount of R$3.2 million;

 

·         Lease of vehicles in the amount of R$1.1 million, with large concentration of delivery of vehicle since the 2nd semester of 2009 in replacement to the own fleet;

 

·         Expenditures with freights and transportations in the amount of R$1.1 million due to the outsourcing of the transportation of chemical products, recurring for upcoming quarters; and

 

·         Expenses of R$1.0 million with the implementation of the Program of Rational Use of Water – PURA in the municipal schools in function of the agreement signed between Sabesp and PMSP.

 

4.5  Electric Energy

 

In the 2Q10, this item presented increase of R$8.1 million or 6.7%, from R$121.7 million to R$129.8 million.

 

This result is associated to the following factors:

 

·         Tariff adjustment with impact to the average price of 5.6% in the tariff of the captive market, which represents 77% of the installed capacity with electric energy, influencing in the weighted average tariff increase between the captive market and the free market around 5.8%; and

 

·         Increase in cost between the markets with weighted average of 6.7%.

 

 

Participation(%)

Cost Variance (%)

Weighted Average (%)

Free Market

23.0

12.0

2.8

Captive Market

77.0

5.0

3.9

Weighted Average

 

 

6.7

 

4.6. General Expenses

 

In the 2Q10 there was a decrease of R$6.3 million or 14.9%, from R$42.3 million to R$36.0 million, in function of the decrease in the provision for judicial contingencies, institutional support, among others.  

 

4.7. Depreciation and Amortization

 

This item presented a decrease of R$10.5 million or 6.5%, from R$161.5 million to R$151.0 million. This variance is due mainly to the review of the estimate, with increase in the useful life of assets, recurring for upcoming quarters.

 

4.8. Credit Write-offs

 

 

Page: 70

 


 
In the 2Q10, the write-offs of credits presented an increase of R$42.0 million, or 55.5%, from R$75.7 million to R$117.7 million, mainly for the need for supplement occurred in the 2Q10 of past due debts of PMSP.

 

4.9. Tax Expenses

 

In the 2Q10 there was an increase of R$1.7 million, or 17.0%, in view of the payment of Property Tax – IPTU to the municipality of Sao Paulo.

 

5. Other operating income and expenses

 

5.1. Other operating income

 

This saw an increase of R$5.6 million or 48.3% in the 2Q10 mainly due to the revenue generated through PURA and the transfer of resources made by the federal public entity OGU (Union General Budget) Sanitation is Life program. 

 

5.2. Other operating expenses

 

This saw an increase of R$3.5 million, or 42.7% due to:

 

·         Increase of R$7.5 million resulting from write-offs of assets; and

·         Decrease of R$2.3 million for the destination of tax incentives occurred in the 2Q09.

 

6. Financial Income and Expenses

R$ million

 

2Q09

2Q10

Variation

%

Financial expenses

 

 

 

 

Interest and charges on domestic loans and financing

94.8

124.3

29.5

31.1

Interest and charges on foreign loans and financing

15.2

11.8

(3.4)

(22.4)

Interest on court-ordered indemnities, net of provisions

33.9

45.3

11.4

33.6

Other financial expenses

8.6

13.6

5.0

58.1

Total financial expenses

152.5

195.0

42.5

27.9

Financial income

42.5

48.3

5.8

13.6

Financial expenses, net of income

110.0

146.7

36.7

33.4

 

In the 2Q10 there was an increase of R$42.5 million, or 27.9%, described as follows:

 

·         Increase in interests of R$29.5 million, in loans and financings due to the 10th issuance of debentures occurred in November, 2009, to the 11th issuance of debentures occurred in March, 2010, 12th issuance of debentures occurred in June, 2010 and to the new contracts with Caixa Economica Federal executed in May, 2010; and

 

·         Interests on judicial proceedings in the amount of R$11.4 million.

 

6.2. Financial income

 

Page: 71

 
The financial income presented an increase of R$5.8 million, resulting from higher volume of financial investments.

 

 

7. Income and expenses with monetary variation

R$ million

 

2Q09

2Q10

Variation

%

Monetary variation on loans and financing

0.8

22.8

22.0

-

Exchange variation on loans and financing

(237.8)

14.2

252.0

(106.0)

Other monetary variations

5.8

2.5

(3.3)

(56.9)

Positive monetary variations

(231.2)

39.5

270.7

(117.1)

Negative monetary variations

14.0

47.6

33.6

240.0

Net monetary variations

(245.2)

(8.1)

237.1

(96.7)

 

7.1. Expenses with monetary variation

 

The effect of foreign exchange income in the 2Q10 was R$270.7 million higher than the same period of last year. This variance is due to:

 

·         The foreign exchange on external loans and financings generated a negative impact in the amount of R$252.0 million resulting from the 1.2% appreciation of the North-American dollar in the 2Q10 versus a 15.7% depreciation in the 2Q09.

 

·         The monetary variations on internal loans and financings presented R$22.0 million increase, due mainly to:

 

·         R$23.3 million increase due to the positive variation of the IGPM by 2.84% in the 2Q10 versus a negative variance of 0.32% in the previous period; and

 

·         R$1.3 million reduction of the TR in the 2Q10 of 0.11%, as compared with the previous period of 0.16%.

 

·         Other monetary variances on indemnification of judicial law suits with increase of R$3.3 million.

 

7.2. Income from monetary variance

 

The income from monetary variance presented an increase of R$33.6 million as a result from the following factors:

 

·         Restatement referring to parcel payment agreements of tariff debts with clients in the amount of R$5.0 million;

 

·         Restatement of deposits referring to judicial proceedings in the amount of R$7.8 million; and

 

·         Monetary variation referring to the funding of the 11th issuance of debentures in the amount of R$20.6 million, caused by the change in the UP (Unit Price) value between the issuance date and the effective settlement.

 

 

Page: 72

 
8. Operating Indicators

 

Sabesp continues to work strongly towards fighting losses of water, with the constant reduction of the loss index, which went from 26.7% in the 2Q09 to 25.8% in the 2Q10.

 

Operational Indicators

2Q09

2Q10

Variation %

Water connections (1)

7,037

7,207

2.4

Sewage connections (1)

5,427

5,609

3.4

Population directly served by water supply (2)

23.2

23.4

0.9

Population served by sewage collection (2)

19.3

19.7

2.1

Number of employees

15,834

15,095

(4.7)

Water volume produced (3)

1,423.8

1,463.3

2.8

Water loss (%)

26.7

25.8

(3.4)

 

(1) In 1,000 units at the end of the period

(2) In millions of inhabitants at the end of the period. Wholesale supply not included.

(3) In million of m3 accumulated at the end of period.

* Not audited

 

 

Page: 73

 


 

PUBLIC FEDERAL SERVICE
CVM - SECURITIES EXCHANGE COMMISSION
ITR - QUARTERLY INFORMATION
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES

Corporate Law
06/30/2010

 

 

01444-3 CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO 43.776.517/0001-80

 

12.01 - COMMENTS ON THE COMPANY’S CONSOLIDATED PERFORMANCE IN THE QUARTER

 

 

 

See comments on the Company’s performance.

 

 

Page: 74

 


 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

01

2 - ORDER No.

6

3 - REGISTRATION Nº. AT CVM

CVM/SRE/DEB/2004/033

4 - REGISTRATION DATE AT CVM

09/17/2004

5 - SERIES ISSUED

2

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

09/01/2004

9 - MATURITY DATE

09/01/2010

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

IGPM + 11%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,443.40

14 - AMOUNT ISSUED              (Million Reais)

259,696

15 - NO. OF SECURITIES ISSUED    (UNIT)

179,920

16 - OUTSTANDING SECURITIES   (UNIT)

179,920

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

09/01/2010

 

Page: 75

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

02

2 - ORDER No.

8

3 - REGISTRATION Nº. AT CVM

CVM/SRE/DEB/2005/033

4 - REGISTRATION DATE AT CVM

06/22/2005

5 - SERIES ISSUED

2

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

06/01/2005

9 - MATURITY DATE

06/01/2011

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

IGPM + 10.75%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,273.39

14 - AMOUNT ISSUED              (Million Reais)

445,686

15 - NO. OF SECURITIES ISSUED    (UNIT)

350,000

16 - OUTSTANDING SECURITIES   (UNIT)

350,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

06/01/2010

 

Page: 76

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

03

2 - ORDER No.

9

3 - REGISTRATION Nº. AT CVM

CVM/SRE/DEB/2008/029

4 - REGISTRATION DATE AT CVM

10/23/2008

5 - SERIES ISSUED

1

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

10/15/2008

9 - MATURITY DATE

10/15/2013

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

DI + 2.75%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,024.52

14 - AMOUNT ISSUED              (Million Reais)

102,452

15 - NO. OF SECURITIES ISSUED    (UNIT)

100,000

16 - OUTSTANDING SECURITIES   (UNIT)

100,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

10/15/2010

 

Page: 77

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

04

2 - ORDER No.

9

3 - REGISTRATION Nº. AT CVM

CVM/SRE/DEB/2008/030

4 - REGISTRATION DATE AT CVM

10/23/2008

5 - SERIES ISSUED

2

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

10/15/2008

9 - MATURITY DATE

10/15/2015

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

IPCA + 12.87%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,185.53

14 - AMOUNT ISSUED              (Million Reais)

142,263

15 - NO. OF SECURITIES ISSUED    (UNIT)

120,000

16 - OUTSTANDING SECURITIES   (UNIT)

120,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

10/15/2010

 

Page: 78

 


 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

05

2 - ORDER No.

10

3 - REGISTRATION Nº. AT CVM

PRIVATE ISSUANCE

4 - REGISTRATION DATE AT CVM

 

5 - SERIES ISSUED

1

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PRIVATE

8 - ISSUE DATE

11/15/2009

9 - MATURITY DATE

11/15/2020

10 - TYPE OF DEBENTURE

REAL

11 - EFFECTIVE YIELD CONDITION

TJLP + 1.92%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

2,779,471.00

14 - AMOUNT ISSUED              (Million Reais)

77,825

15 - NO. OF SECURITIES ISSUED    (UNIT)

28

16 - OUTSTANDING SECURITIES   (UNIT)

28

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

08/15/2010

 

Page: 79

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

06

2 - ORDER No.

10

3 - REGISTRATION Nº. AT CVM

PRIVATE ISSUANCE

4 - REGISTRATION DATE AT CVM

 

5 - SERIES ISSUED

2

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PRIVATE

8 - ISSUE DATE

11/15/2009

9 - MATURITY DATE

12/15/2020

10 - TYPE OF DEBENTURE

REAL

11 - EFFECTIVE YIELD CONDITION

IPCA + 9.53%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

2,901,656.00

14 - AMOUNT ISSUED              (Million Reais)

87,049

15 - NO. OF SECURITIES ISSUED    (UNIT)

30

16 - OUTSTANDING SECURITIES   (UNIT)

30

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

11/15/2010

 

Page: 80

 
 

14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

07

2 - ORDER No.

10

3 - REGISTRATION Nº. AT CVM

PRIVATE ISSUANCE

4 - REGISTRATION DATE AT CVM

 

5 - SERIES ISSUED

3

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PRIVATE

8 - ISSUE DATE

11/15/2009

9 - MATURITY DATE

11/15/2020

10 - TYPE OF DEBENTURE

REAL

11 - EFFECTIVE YIELD CONDITION

TJLP + 1.92%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

2,779,471.00

14 - AMOUNT ISSUED              (Million Reais)

116,737

15 - NO. OF SECURITIES ISSUED    (UNIT)

42

16 - OUTSTANDING SECURITIES   (UNIT)

42

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

08/15/2010

 

Page: 81

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

08

2 - ORDER No.

11

3 - REGISTRATION Nº. AT CVM

CVM/SER/DEB/2010/015

4 - REGISTRATION DATE AT CVM

04/21/2010

5 - SERIES ISSUED

1

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

03/01/2010

9 - MATURITY DATE

03/01/2015

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

DI+1.95%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,036.20

14 - AMOUNT ISSUED              (Million Reais)

839,322

15 - NO. OF SECURITIES ISSUED    (UNIT)

810,000

16 - OUTSTANDING SECURITIES   (UNIT)

810,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

09/01/2010

 

 

Page: 82

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

09

2 - ORDER No.

11

3 - REGISTRATION Nº. AT CVM

CVM/SER/DEB/2010/016

4 - REGISTRATION DATE AT CVM

04/21/2010

5 - SERIES ISSUED

2

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

03/01/2010

9 - MATURITY DATE

03/01/2013

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

DI+1.40%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,034.33

14 - AMOUNT ISSUED              (Million Reais)

418,903

15 - NO. OF SECURITIES ISSUED    (UNIT)

405,000

16 - OUTSTANDING SECURITIES   (UNIT)

405,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

09/01/2010

 

Page: 83

 
14.01 - CHARACTERISTICS of the PUBLIC OR PRIVATE ISSUE OF DEBENTURES

 

1- ITEM

10

2 - ORDER No.

12

3 - REGISTRATION Nº. AT CVM

NO REGISTRATION (CVM Instr. 476/09)

4 - REGISTRATION DATE AT CVM

06/23/2010

5 - SERIES ISSUED

UN

6 - TYPE OF ISSUE

SIMPLE

7 - ISSUED NATURE

PUBLIC

8 - ISSUE DATE

06/22/2010

9 - MATURITY DATE

06/01/2025

10 - TYPE OF DEBENTURE

WITHOUT PREFERENCE

11 - EFFECTIVE YIELD CONDITION

TR+9.5%

12 - PREMIUM/DISCOUNT

 

13 - NOMINAL AMOUNT                 (Reais)

1,002.47

14 - AMOUNT ISSUED              (Million Reais)

501,235

15 - NO. OF SECURITIES ISSUED    (UNIT)

500,000

16 - OUTSTANDING SECURITIES   (UNIT)

500,000

17 - TREASURY SECURITIES          (UNIT)

0

18 - REDEEMED SECURITIES         (UNIT)

0

19 - CONVERTED SECURITIES       (UNIT)

0

20 - SECURITIES TO BE PLACED    (UNIT)

0

21 - LAST RENEGOTIATION DATE

 

22 - DATE OF NEXT EVENT

07/01/2010

 

Page: 84

 

 

PUBLIC FEDERAL SERVICE
CVM - SECURITIES EXCHANGE COMMISSION
ITR - QUARTERLY INFORMATION
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES

Corporate Law
06/30/2010

 

01444-3 CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO 43.776.517/0001-80

 

20.01 - OTHER INFORMATION CONSIDERED MATERIAL BY THE COMPANY

 

1.   CHANGE IN THE INTEREST HELD BY THE CONTROLLING SHAREHOLDER, DIRECTORS AND OFFICERS

 

CONSOLIDATED SHAREHOLDING POSITION OF CONTROLLING SHAREHOLDER, DIRECTORS AND OFFICERS AND OUTSTANDING SHARES

Position at June 30, 2010

Shareholder

Number of Common Shares

(In units)

%

Total Number

 of Shares

(In units)

%

Controlling Shareholder

 

 

 

 

State Finance Department

114,508,083

50.3%

114,508,083

50.3%

Management

 

 

 

 

Board of Directors

5,209

       0

5,209

       0

Executive Board

                       -

     -

                     -

     -

 

 

 

 

 

Supervisory Board

                       -

     -

                     -

     -

 

 

 

 

 

Treasury Shares

                       -

     -

                     -

     -

 

 

 

 

 

Other Shareholders

 

 

 

 

 

 

 

 

 

Total

114,513,292

50.3%

114,513,292

50.3%

 

 

 

 

 

Outstanding Shares

113,323,331

49.7%

      113,323,331

49.7%

 

 

CONSOLIDATED SHAREHOLDING POSITION OF CONTROLLING SHAREHOLDER, DIRECTORS AND OFFICERS AND OUTSTANDING SHARES

Position at June 30, 2009

Shareholder

Number de Common Shares

(In units)

%

Number Total

 de Ações

(In units)

%

Controlling Shareholder

 

 

 

 

State Finance Department

114,508,085

50.3%

114,508,085

50.3%

Management

 

 

 

 

Board of Directors

5,210

       0

5,210

       0

Executive Board

                       -

     -

                     -

     -

 

 

 

 

 

Supervisory Board

                       -

     -

                     -

     -

 

 

 

 

 

Treasury Shares

                       -

     -

                     -

     -

 

 

 

 

 

Other Shareholders

 

 

 

 

 

 

 

 

 

Total

114,513,295

50.3%

114,513,295

50.3%

 

 

 

 

 

Outstanding Shares

113,323,328

49.7%

113,323,328

49.7%

 

Page: 85

 

 

 

2.   SHAREHOLDING POSITION

 

 

SHAREHOLDING POSITION OF HOLDERS OF MORE THAN 5% OF SHARES OF EACH CATEGORY AND CLASS OF SHARES OF THE COMPANY, UP TO THE LEVEL OF INDIVIDUAL

 

Company:

 

CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO

Position at June 30, 2010

(In Shares)

 

Common Shares

Total

Shareholder

Number

%

Number

%

State Finance Department

114,508,083

50.3

114,508,083

50.3

 

3.      ARBITRATION COMMITMENT CLAUSE

 

The Company, its shareholders, Managers and member of the fiscal council undertake to resolve, by arbitration, any and all dispute or controversy that may arise between them, related to or arising from, specially, the application, effectiveness, interpretation, violation and its effects, of the provisions included in Law 6404/76, in its by-laws, in the norms issued by the National Monetary Council, by the Central Bank of Brazil and by the Brazilian Securities and Exchange Commission, as well as in other norms applicable to the operation of the capital markets in general, in addition to those contained in the Listing Regulation of the New Market, the Contract of Participation in the New Market and the Arbitration Regulation of the Arbitration Chamber of the Market, to be conducted with the Arbitration Chamber of the Market organized by BM&BOVESPA in accordance with the Regulation of such Chamber, observed the exception applicable to the unavailable rights.

 

Page: 86

 

PUBLIC FEDERAL SERVICE
CVM - SECURITIES EXCHANGE COMMISSION
ITR - QUARTERLY INFORMATION
COMMERCIAL, INDUSTRIAL AND OTHER COMPANIES

Corporate Law
06/30/2010

 

01444-3 CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO   43.776.517/0001-80

 

21.01 - REPORT ON THE LIMITED REVIEW - UNQUALIFIED

 

 

 

 

 

Review Report of Independent
Accountants

 

 

 

To the Board of Directors and Shareholders

Companhia de Saneamento Básico do
Estado de São Paulo - SABESP

 

 

 

 

1             We have reviewed the accounting information included in the Quarterly Information (ITR) of Companhia de Saneamento Básico do Estado de São Paulo – SABESP (“Company”) and subsidiary (parent company and consolidated), for the quarter ended June 30, 2010, comprising the balance sheets and the statements of income, of changes in shareholders’ equity, of cash flows and of value added, explanatory notes and the performance report. This Quarterly Information is the responsibility of the Company’s management.

 

2             Our review was carried out in accordance with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting Council (CFC), and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Company with regard to the main criteria adopted for the preparation of the Quarterly Information; and (b) a review of information and of subsequent events which have, or could have, significant effects on the financial position and operations of the Company and its subsidiary.

 

3             Based on our limited review, we are not aware of any material modifications that should be made to the quarterly information referred to above in order that it be stated in accordance with the accounting practices adopted in Brazil applicable to the preparation of the Quarterly Information, consistent with the standards issued by the Brazilian Securities Commission (CVM).

 

4             As mentioned in Note 2, the CVM has approved several Pronouncements, Interpretations and Technical Guidance issued by the Brazilian Accounting Pronouncements Committee (CPC) to be effective as from 2010, which altered the accounting practices adopted in Brazil. As permitted by CVM Resolution No. 603/09, the Company’s management has opted to present its Quarterly Information by using the accounting standards adopted in Brazil until December 31, 2009. As required by said Resolution, Note 2 to the Quarterly Information discloses this fact and also provides a description of the main changes that may have an impact on the Company's year-end financial statements, as well as an estimate of their possible effects on shareholders' equity and results of operations.

 

Page: 87

 
 

5             As mentioned in Note 5, the Company and the Government of the State of São Paulo entered into an agreement to settle the so-called “uncontroversial amount”, referring to the reimbursement of payments related to retirement and pension plans paid by the Company, in the name and on account  of the Government of the State of São Paulo. The recovery of this asset may be influenced by: (a) the resolution of legal uncertainties caused by public action and legislative authorization related to the transfer of reservoirs to the Company, amounting to R$ 696,283 thousand, and (b) the financial collection of other amounts, amounting R$ 205,036 thousand.

 

São Paulo, August 6, 2010

 

 

 

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

 

 

 

Valdir Renato Coscodai

Contador CRC 1SP165875/O-6

 

 

Page: 88

 

 

 


 
 

INDEX

 

Group

Table

Description

Page

01

01

IDENTIFICATION

1

01

02

REGISTERED OFFICE

1

01

03

INVESTOR RELATIONS OFFICER (Company’s mailing address)

1

01

04

ITR REFERENCE

1

01

05

CAPITAL STOCK

2

01

06

COMPANY’S CHARACTERISTICS

2

01

07

COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

2

01

08

PROCEEDS IN CASH

2

01

09

PAID-IN CAPITAL AND CHANGES IN THE CURRENT FISCAL YEAR

3

01

10

INVESTOR RELATIONS OFFICER

3

02

01

BALANCE SHEETS - ASSETS

4

02

02

BALANCE SHEETS - LIABILITIES

6

03

01

STATEMENT OF INCOME

8

04

01

04 -STATEMENT OF CASH FLOWS

10

05

01

05 -STATEMENT OF CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010

12

05

02

05 -STATEMENT OF CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010

13

08

01

CONSOLIDATED BALANCE SHEETS - ASSETS

14

08

02

CONSOLIDATED BALANCE SHEETS - LIABILITIES

16

09

01

CONSOLIDATED STATEMENT OF INCOME

18

10

01

10.01 -CONSOLIDATED STATEMENT OF CASH FLOWS

20

11

01

11 - STATEMENT OF CONSOLIDATED CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010

22

11

02

11 - STATEMENT OF CONSOLIDATED CHANGES TO SHAREHOLDERS’ EQUITY FROM 04/01/2010 to 06/30/2010

23

06

01

EXPLANATORY NOTES

24

07

01

COMMENTS ON THE COMPANY’S PERFORMANCE IN THE QUARTER

66

12

01

COMMENTS ON THE COMPANY’S CONSOLIDATED PERFORMANCE IN THE QUARTER

74

14

01

CHARACTERISTICS OF THE PUBLIC OR PRIVATE ISSUANCE OF DEBENTURES

75

20

01

OTHER INFORMATION THAT THE COMPANY DEEMS RELEVANT

85

21

01

REPORT ON THE LIMITED REVIEW

87

 

Page: 89

 
SIGNATURE  
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city São Paulo, Brazil.
Date: November 5, 2010
 
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
By: /s/ Rui de Britto Álvares Affonso

 
Name: Rui de Britto Álvares Affonso
Title: Chief Financial Officer and Investor Relations Officer
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.