Enel Americas 20F/A 2002 Annual report (foreign) (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

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

ENERSIS S.A.

(Exact name of Registrant as specified in its charter)


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

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


		Name of each exchange
Title of Each Class		on which registered

American Depositary Shares representing Common Stock		New York Stock Exchange
Common Stock, no par value		New York Stock Exchange*
US$ 300,000,000 6.90% Notes due December 1, 2006		New York Stock Exchange
US$ 350,000,000 7.40% Notes due December 1, 2016		New York Stock Exchange
US$ 150,000,000 6.60% Notes due December 1, 2026		New York Stock Exchange

Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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

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

YES [X] NO [ ]

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

ITEM 17 [ ] ITEM 18 [X]

TABLE OF CONTENTS


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

EXPLANATORY NOTE

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

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

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

Item 18. Financial Statements


Index to Financial Statements		Page

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

[DELOITTE & TOUCHE LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders of Enersis S.A.:

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

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

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

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

F-2

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

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

/S/ Deloitte & Touche

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

F-3


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

Report of Independent Auditors

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

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

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

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

Firma miembro de Ernst & Young Global

F-4

[LOGO OF ERNST & YOUNG]

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

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

Firma miembro de Ernst & Young Global

F-5

Back to Index


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

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

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

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

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

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


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

F-6

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

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

(DELOITTE and TOUCHE LOGO)

AUDITORS’ REPORT

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

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

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


		Deloitte & Co. S.R.L. – Registro de Soc. Com. CPCE – Cap. Fed. T° 1 F° 3

F-7

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

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

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


DELOITTE & Co. S.R.L

/s/ CARLOS A. LLOVERAS
CARLOS A. LLOVERAS (Partner)

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[LOGO OF ERNST & YOUNG]	Pistrell, Henry Martin Asociados SRL	Tel:(5411)4318-1600/4311-6644
	25 de Mayo 487 -C 1002ABI	Fax:(5411)4312-8647/4318-1777
	Buenos Aires, Argentina	www.????

REPORT OF INDEPENDENT AUDITORS

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

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

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

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

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


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

F-9

[DELOITTE LOGO]

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

REPORT OF INDEPENDENT AUDITORS

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

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

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

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

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

F-10


Centrais Elétricas Cachoeira Dourada S.A.			2

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

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

/s/ Deloitte Touche Tohmatsu

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

F-11

[DELOITTE LOGO]

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

REPORT OF INDEPENDENT AUDITORS

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

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

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

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

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

F-12


CIEN – Companhia de Interconexão Energética

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

/s/ Deloitte Touche Tohmatsu

January 17, 2003

F-13


Av. Providencia 1760, Pisos 6,7,8 y 9
Santiago
Chile

Tel: (56-2) 270 3000
Fax: (56-2) 374 9177		Deloitte
www.deloitte.cl		& Touche

INDEPENDENT AUDITORS’ REPORT

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

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

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

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

F-14

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

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

/s/ Deloitte & Touche

Santiago, Chile
February 1, 2002

F-15

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


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

Firma miembro de
Andersen Worldwide SC

Report of Independent Accountants

To the Shareholders of Enersis S.A.:

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

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

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

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

F-16

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

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

/s/ Langton Clarke

LANGTON CLARKE

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

F-17

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

ANDERSEN

Pistrelli, Diaz y Asociados

Firma Miembro de Andersen

25 de Mayo 487

1002 Buenos Aires

Argentina

Tel 54 11 4318 1800 4311 8644

Fax 5411 4312 8647 4318 1777

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

(English translation of the report originally issued in Spanish)

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

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

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

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

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

F-18

[LOGO OF ANDERSEN]

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

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


Buenos Aires,		PISTRELLI, DIAZ Y ASOCIADOS
March 8, 2002
		/s/ Ezequiel A. Calciati
		EZEQUIEL A. CALCIATI
		Partner

F-19

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


		LOGO OF ARTHUR
		ANDERSEN

Report of independent Accountants		Arthur Andersen y Cía.Ltda

		Carrera 7 No. 74. 09
		Apartado Aéreo 075874
(Translation of a report originally issued in Spanish- (see Note 2 to the Financial Statements)		Bogota D.C.
		Colombia

		Tel 57 1 546 18 10 • ?48 18 15
		Fax 57 1 2 17 80 58 314 56 56

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

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

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

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


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

F-20

ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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


		As of December 31,

	Note	2001			2002			2002

		ThCh$			ThCh$			ThUS$

ASSETS								(Note 2)

CURRENT ASSETS:
Cash			37,648,796			48,184,878			67,053
Time deposits	4		178,113,234			145,626,894			202,651
Marketable securities			203,072			1,543,290			2,148
Accounts receivable, net	5		550,248,992			458,839,724			638,510
Notes receivable, net	5		5,683,330			5,131,349			7,141
Other accounts receivable, net	5		72,220,719			62,776,096			87,358
Amounts due from related companies	6a		18,019,578			195,398,835			271,912
Inventories	7		77,424,074			60,382,653			84,027
Income taxes recoverable	8a		57,510,102			54,435,976			75,752
Deferred income taxes	8e		24,162,101			51,955,793			72,300
Prepaid expenses			13,971,567			7,666,018			10,668
Other current assets	9		127,241,229			132,021,608			183,718

Total current assets			1,162,446,794			1,223,963,114			1,703,238

PROPERTY, PLANT AND EQUIPMENT, NET	10		9,625,049,659			9,879,458,183			13,748,011

OTHER ASSETS:
Investments in related companies	11		167,448,008			194,164,157			270,194
Investments in other companies	12		149,560,997			159,466,794			221,910
Long-term receivables	5		101,903,562			125,850,513			175,130
Goodwill, net	13a		1,318,832,593			847,513,499			1,179,379
Negative goodwill, net	13b		(181,194,560	)		(95,172,950	)		(132,440	)
Amounts due from related companies	6a		170,667,792			898,167			1,250
Intangibles			71,697,080			80,915,893			112,601
Accumulated amortization			(25,148,069	)		(34,648,290	)		(48,216	)
Other assets	14		198,535,455			238,755,596			332,246

Total other assets			1,972,302,858			1,517,743,379			2,112,054

TOTAL ASSETS			12,759,799,311			12,621,164,676			17,563,303

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

F-21

ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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


		As of December 31,

	Note	2001		2002			2002

		ThCh$		ThCh$			ThCh$

LIABILITIES AND SHAREHOLDERS' EQUITY							(Note 2)

CURRENT LIABILITIES:
Short-term debt due to banks and financial institutions	15a		301,010,064		425,049,260			591,488
Current portion of long-term debt due to banks and financial institutions	15b		425,536,729		605,261,953			842,268
Promissory notes	18		54,630,248		13,189,514			18,354
Current portion of bonds payable	19a		62,848,322		498,501,344			693,702
Current portion of long-term notes payable			26,580,340		41,628,914			57,930
Dividends payable			7,008,951		14,554,203			20,253
Accounts payable			258,955,300		222,075,984			309,036
Short-term notes payable			45,429,070		4,833,074			6,726
Miscellaneous payables			53,324,443		73,417,551			102,166
Amounts payable to related companies	6b		31,120,649		16,285,712			22,663
Accrued expenses	20a		79,920,329		84,930,321			118,187
Withholdings			53,957,592		55,485,759			77,213
Income taxes payable	8a		77,283,022		27,532,029			38,313
Deferred income			11,314,564		9,085,674			12,643
Other current liabilities	17		150,383,758		59,541,957			82,857

Total current liabilities			1,639,303,381		2,151,373,249			2,993,799

LONG-TERM LIABILITIES:
Due to banks and financial institutions	16		1,971,249,920		1,691,338,670			2,353,625
Bonds payable	19b		2,271,468,659		2,097,845,568			2,919,310
Long-term notes payable			215,513,230		220,886,690			307,381
Accounts payable			34,746,948		22,606,529			31,459
Amounts payable to related companies	6b		1,001,707,159		988,291,605			1,375,282
Accrued expenses	20b		234,388,938		226,922,617			315,780
Deferred income taxes	8e		36,059,964		61,740,871			85,917
Other long-term liabilities			67,228,005		103,975,862			144,690

Total long-term liabilities			5,832,362,823		5,413,608,412			7,533,444

MINORITY INTEREST	21a		4,073,571,128		4,050,602,721			5,636,719

COMMITMENTS AND CONTINGENCIES	28
SHAREHOLDERS’ EQUITY:
Paid-in capital, no par value			751,208,197		751,208,197			1,045,363
Additional paid-in capital — share premium			33,370,057		33,370,057			46,437
Other reserves			27,176,075		41,942,477			58,366
Retained earnings			360,653,617		402,807,650			560,537
Net income (loss) for the year			42,154,033		(223,748,087	)		(311,362	)

Total shareholders’ equity			1,214,561,979		1,005,580,294			1,399,341

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			12,759,799,311		12,621,164,676			17,563,303

F-22

ENERSIS S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Years ended December 31,

	Note	2000			2001			2002			2002

		ThCh$			ThCh$			ThCh$			ThCh$

											(Note 2)
OPERATING INCOME:
SALES			2,757,047,098			3,059,380,761			2,485,873,220			3,459,280
COST OF SALES			(1,895,035,057	)		(2,025,312,072	)		(1,730,050,356	)		(2,407,496	)

GROSS PROFIT			862,012,041			1,034,068,689			755,822,864			1,051,784
ADMINISTRATIVE AND SELLING EXPENSES			(309,262,420	)		(279,524,922	)		(223,178,503	)		(310,570	)

OPERATING INCOME			552,749,621			754,543,767			532,644,361			741,214

NON-OPERATING INCOME AND EXPENSE:
Interest income			74,161,853			56,592,832			85,284,624			118,680
Equity in income of related companies	11b		4,547,446			3,629,292			14,996,244			20,868
Other non-operating income	23a		463,501,342			194,693,581			308,143,887			428,805
Equity in losses of related companies	11b		(4,470,693	)		(14,328,089	)		(6,732,461	)		(9,369	)
Amortization of goodwill	13a		(71,713,807	)		(80,576,348	)		(506,344,171	)		(704,616	)
Interest expense			(500,043,818	)		(452,801,275	)		(439,536,318	)		(611,646	)
Other non-operating expenses	23b		(118,890,049	)		(183,929,244	)		(241,196,604	)		(335,643	)
Price-level restatement, net	24		(15,251,993	)		2,175,075			4,964,890			6,909
Exchange difference, net	25		(1,251,722	)		(30,542,651	)		(16,110,247	)		(22,419	)

NON-OPERATING EXPENSE, NET			(169,411,441	)		(505,086,827	)		(796,530,156	)		(1,108,431	)

INCOME (LOSS) BEFORE INCOME TAXES
EXTRAORDINARY ITEMS, MINORITY INTEREST AND AMORTIZATION OF NEGATIVE GOODWILL			383,338,180			249,456,940			(263,885,795	)		(367,217	)
INCOME TAXES	8f		(146,323,505	)		(129,850,137	)		(66,016,985	)		(91,868	)
EXTRAORDINARY ITEMS	26		—			—			(22,375,640	)		(31,137	)

INCOME (LOSS) BEFORE MINORITY INTEREST AND AMORTIZATION OF NEGATIVE GOODWILL			237,014,675			119,606,803			(352,278,420	)		(490,222	)
MINORITY INTEREST	21b		(184,000,228	)		(125,152,619	)		16,282,559			22,658

INCOME BEFORE AMORTIZATION OF NEGATIVE GOODWILL			53,014,447			(5,545,816	)		(335,995,861	)		(467,564	)
AMORTIZATION OF NEGATIVE GOODWILL	13b		42,646,957			47,699,849			112,247,774			156,202

NET INCOME (LOSS) FOR THE YEAR			95,661,404			42,154,033			(223,748,087	)		(311,362	)

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

F-23

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

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


					Additional								Net income
	Number		Paid-in		paid-in		Other			Retained			(loss) for
	of shares		capital		capital		reserves			earnings			the year			Total

	(in thousands)		ThCh$		ThCh$		ThCh$			ThCh$			ThCh$			ThCh$
As of January 1, 2000		6,800,000		398,624,586		24,184,786		23,295,280			330,716,485			(78,158,729	)		698,662,408
Transfer of prior year income to retained earnings		—		—		—		—			(78,158,729	)		78,158,729			—
Price-level restatement of capital		—		22,015,443		1,203,739		1,094,879			11,870,214			—			36,184,275
Changes in equity of affiliates		—		—		—		(18,382,462	)		—			—			(18,382,462	)
Cumulative translation adjustment		—		—		—		1,259,024			—			—			1,259,024
Issuance of shares		1,491,020		286,758,950		6,035,445		—			—			—			292,794,395
Net income for the year		—		—		—		—			—			90,082,590			90,082,590

As of December 31, 2000		8,291,020		707,398,979		31,423,970		7,266,721			264,427,970			90,082,590			1,100,600,230

As of December 31, 2000 (1)		8,291,020		751,208,197		33,370,057		7,716,749			280,803,994			95,661,405			1,168,760,402

As of January 1, 2001		8,291,020		707,398,979		31,423,970		7,266,721			264,427,970			90,082,590			1,100,600,230
Transfer of prior year income to retained earnings		—		—		—		—			90,082,590			(90,082,590	)		—
Dividends		—		—		—		—			(14,976,824	)		—			(14,976,824	)
Price-level restatement of capital		—		21,929,368		974,144		225,268			10,615,407			—			33,744,187
Cumulative translation adjustment		—		—		—		18,892,550			—			—			18,892,550
Net income for the year		—		—		—		—			—			40,926,246			40,926,246

As of December 31, 2001		8,291,020		729,328,347		32,398,114		26,384,539			350,149,143			40,926,246			1,179,186,389

As of December 31, 2001 (1)		8,291,020		751,208,197		33,370,057		27,176,075			360,653,617			42,154,033			1,214,561,979

As of January 1, 2002		8,291,020		729,328,347		32,398,114		26,384,539			350,149,143			40,926,246			1,179,186,389
Transfer of prior year income to retained earnings		—		—		—		—			40,926,246			(40,926,246	)		—
Price-level restatement of capital		—		21,879,850		971,943		791,536			11,732,261			—			35,375,590
Cumulative translation adjustment		—		—		—		14,766,402			—			—			14,766,402
Net loss for the year		—		—		—		—			—			(223,748,087	)		(223,748,087	)

As of December 31, 2002		8,291,020		751,208,197		33,370,057		41,942,477			402,807,650			(223,748,087	)		1,005,580,294

(1)

Restated in thousands of constant Chilean pesos as of December 31, 2002.

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

F-24

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

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


		Years ended December 31,

		2000			2001			2002			2002

		ThCh$			ThCh$			ThCh$			ThUS$

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

Net cash flows provided by operating activities			538,690,849			560,520,990			627,782,332			873,609

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

F-25

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

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


	Years ended December 31,

	2000			2001			2002			2002

	ThCh$			ThCh$			ThCh$			ThUS$

										(Note 2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares		314,324,467			—			—			—
Subsidiary issuance of shares minoritary interest		—			—			1,905,653			2,652
Proceeds from the issuance of debt		1,600,212,553			1,936,899,708			978,914,577			1,362,233
Proceeds from bond issuances		52,538,205			280,374,847			131,515,409			183,014
Other sources of financing		44,863,139			57,920,839			26,348,466			36,666
Distribution of capital in subsidiary		—			—			(119,286,568	)		(165,996	)
Dividends paid		(150,311,417	)		(144,467,460	)		(100,446,315	)		(139,779	)
Payment of debt		(2,123,472,019	)		(1,870,062,467	)		(1,094,545,835	)		(1,523,143	)
Payment of bonds		(210,365,004	)		(74,167,788	)		(29,347,204	)		(40,839	)
Payment of loans obtained from related companies		(157,860,304	)		(100,900,143	)		(44,389,633	)		(61,771	)
Payment of bond issuance costs		—			(996,147	)		(11,140,779	)		(15,503	)
Other disbursements for financing		(184,219,710	)		(43,615,899	)		(24,567,635	)		(34,188	)

Net cash provided by (used) in financing activities		(814,290,090	)		40,985,490			(285,039,864	)		(396,654	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment		140,229,768			19,716,715			22,605,406			31,457
Sale of investment in related companies		518,889,641			—			—			—
Other loans received from related companies		16,355			—			—			—
Proceeds from sales of Transelec		199,277,388			—			—			—
Proceeds from loans obtained from related parties		3,855,665			5,525,961			—			—
Other receipts from investments		15,442,082			13,675,849			18,556,146			25,822
Additions to property, plant and equipment		(343,009,506	)		(341,553,736	)		(317,915,443	)		(442,403	)
Long-term investments		(323,132,841	)		(12,879,738	)		(23,465,277	)		(32,654	)
Investment in financial instruments		(1,899,939	)		—			(724,403	)		(1,008	)
Disbursements for highway construction costs		(27,107,200	)		—			—			—
Other loans granted to related companies		—			(233,615	)		—			—
Other investment disbursements		(5,945,345	)		(187,891,023	)		(35,935,186	)		(50,009	)

Net cash used in investing activities		176,616,068			(503,639,587	)		(336,878,757	)		(468,795	)

POSITIVE (NEGATIVE) NET CASH FLOW FOR THE YEAR		(98,983,173	)		97,866,893			5,863,711			8,160
EFFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS		4,115,441			(74,996	)		(2,499,632	)		(3,478	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(94,867,732	)		97,791,897			3,364,079			4,682
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		214,903,436			120,035,704			217,827,601			303,123

CASH AND CASH EQUIVALENTS AT END OF YEAR		120,035,704			217,827,601			221,191,680			307,805

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

F-26

ENERSIS S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1. Description of Business

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

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

Note 2. Summary of Significant Accounting Policies

(a) General

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

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

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

F-27

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


Balance sheet reclassifications

	Charge				Charge
From	(credit)			To	(credit)

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


Statement of operations reclassifications

	Charge				Charge
From	(credit)			To	(credit)

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


Statement of Cash flow reclassifications

	Charge			Charge
From	(credit)		To	(credit)

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

F-28

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	Percentage participation as of December 31,

Company name	2000		2001		2002

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

(1)		Parent Company of Companhia Energética do Céará S.A. Colelce. The Company obtained shareholder agreements dated June 25, 1999, from Endesa International, the majority shareholder of these companies, giving the Company the right to elect a majority of the Board of Directors. The Superintendency of Securities and Insurance was notified on June 28, 1999 and they do not have market value.

(2)		These companies were merged into other Enersis entities during 2002.

(3)		On January 1 2002, Cía. Americana de Multiservicios Ltda. merged with Cía. Americana de Multiservicios Uno.

F-29

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(4)

Consolidated subsidiaries of Endesa Chile S.A. are detailed as follow:


	Percentage participation as of December 31,

	2000		2001		2002

Company name	Total		Total		Direct		Indirect		Total

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

F-30

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Situation in Argentina

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

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

(b) Periods covered

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

(c) Constant currency restatement

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

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

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

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

F-31

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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


			Change over
			Previous
	Index		November 30,

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

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


			Change over
			Previous
	Index		December 31,

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

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

Index-linked assets and liabilities

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

F-32

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


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

Comparative financial statements

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

Convenience translation to U.S. dollars

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

(d) Assets and liabilities in foreign currencies

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


Currency	Symbol used		2000		2001		2002

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

F-33

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(1)		Units of measurement used by the International Bank for Reconstruction and Development (IBRD) and Interamerican Development Bank (IDB) to express the weighted-average of multicurrency loan obligations granted using fixed currency rates to the US dollar, at a determined date.

(2)		Beginning on January 1, 2002, these currencies will be expressed in the Euro.

(e) Time deposits and marketable securities

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

(f) Allowance for doubtful accounts

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

(g) Inventories

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

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

(h) Property, plant and equipment

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

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

F-34

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

(i) Depreciation

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

(j) Leased assets

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

(k) Power installations financed by third parties

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

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

(l) Investments in related companies

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

F-35

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

(m) Intangibles, other than goodwill

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

(n) Severance indemnity

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

(o) Revenue recognition

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

(p) Income tax and deferred income taxes

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

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

F-36

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

(q) Accrued vacation expense

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

(r) Reverse repurchase agreements

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

(s) Statements of cash flows

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

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

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

(t) Financial derivative contracts

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

(u) Goodwill and negative goodwill

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

F-37

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

(v) Pension and post-retirement benefits

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

(w) Bonds

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

(x) Investments in other companies

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

(y) Research and development costs

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

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

Note 3. Change in Accounting Principles

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

F-38

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 4. Time Deposits

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


	Annual		Scheduled
Financial Institution	Rate		Maturity		2001		2002

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

Total						178,113,234		145,626,894

F-39

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 5. Accounts, Notes and Other Receivables

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


	As of December 31,

	Under 90 days				91 days to 1 year				Sub total			Current				Long-term (1)

Account	2001		2002		2001		2002		2002			2001		2002		2001		2002
	ThCh$		ThCh$		ThCh$		ThCh$		ThCh$			ThCh$		ThCh$		ThCh$		ThCh$
Accounts receivable		576,467,295		487,395,335		17,305,993		76,912,334		564,307,669			550,248,992		458,839,724		—		—
Allowance for doubtful accounts										(105,467,945	)
Notes receivable		6,295,375		4,653,993		407,105		1,442,684		6,096,677			5,683,330		5,131,349		—		—
Allowance for doubtful accounts										(965,328	)
Other receivables		42,743,736		53,684,615		37,770,437		18,007,739		71,692,354			72,220,719		62,776,096		101,903,562		125,850,513
Allowance for doubtful accounts										(8,916,258	)

					Total								628,153,041		526,747,169		101,903,562		125,850,513

(1)

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

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


	As of December 31,

Country	2001				2002

	ThCh$		%		ThCh$		%
Chile		180,592,722		24.74		145,659,152		22.32
Peru		40,147,163		5.50		58,187,147		8.92
Argentina		75,119,315		10.29		40,461,768		6.20
Colombia		127,104,349		17.41		99,788,238		15.29
Brasil (1)		307,093,054		42.06		308,501,377		47.27

Total		730,056,603		100.00		652,597,682		100.00

(1)

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

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

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

F-40

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 6. Transactions with Related Companies

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

(a) Notes and accounts receivable:


	As of December 31,

	Short-term				Long-term

Company	2001		2002		2001		2002

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

Total		18,019,578		195,398,835		170,667,792		898,167

F-41

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b) Notes and accounts payable:


	As of December 31,

	Short-term				Long-term

Company	2001		2002			2001		2002

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

Total		31,120,649		16,285,712			1,001,707,159		988,291,605

F-42

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	Income (expense)

Company	Nature of Transaction	2000			2001			2002

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

Total			(39,540,005	)		3,317,895			(12,769,303	)

F-43

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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


							Interest
Company	Type	Due date		Currency	Capital		rate

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

Note 7. Inventories

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


	As of December 31,

	2001		2002
	ThCh$		ThCh$
Real estate under development		27,262,972		23,804,228
Materials in transit		499,963		1,104,204
Operation and maintenance materials		41,944,252		32,051,573
Other		7,716,887		3,422,648

Total		77,424,074		60,382,653

Note 8. Deferred Income Taxes

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


	As of December 31,

	2001			2002
	ThCh$			ThCh$
Income tax provision — current		77,283,022			27,532,029
Recoverable tax credits		(57,510,102	)		(54,435,976	)

Total		19,772,920			(26,903,947	)

F-44

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b)

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

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

(c)

The balance of taxed retained earnings and the related tax credits are as follows:


Year	Amount
	of loss			Credit

	ThCh$			ThCh$
2001		(18,159,574	)		—
2002		23,698,947			4,524,557

(d)

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

(e)

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


	As of December 31, 2001												As of December 31, 2002

	Asset						Liability						Asset						Liability

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

Total		33,088,012			95,474,667			8,925,911			131,534,631			62,627,582			121,807,118			10,671,789			183,547,989

F-45

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Tax expense

Income tax provision		(160,193,593	)		(114,099,337	)		(74,581,690	)
Adjustment for tax expense-prior year		(240	)		3,111,691			(507,568	)

Subtotal		(160,193,833	)		(110,987,646	)		(75,089,258	)

Deferred taxes
Deferred taxes		(26,988,959	)		(36,891,994	)		24,471,978
Benefits for tax losses		28,053,730			13,509,821			5,043,185
Amortization of complementary accounts		22,425,461			6,143,861			(15,501,218	)
Change in valuation allowance		(1,192,554	)		(1,607,004	)		(126,575	)
Other charges or credits		(8,427,350	)		(17,175	)		(4,815,097	)

Total		(146,323,505	)		(129,850,137	)		(66,016,985	)

Note 9. Other Current Assets

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


	As of December 31,

	2001		2002

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

Total		127,241,229		132,021,608

(1)

See detail in Note 27.

(2)

Infraestructura 2000 S.A. Th$25,342,941 of time deposits in 2002.

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

F-46

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 10. Property, Plant and Equipment

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


	As of December 31,

	2001			2002

	ThCh$			ThCh$
Land		123,257,963			129,904,787

Buildings and infrastructure		6,305,284,319			6,605,971,611
Distribution and transmission lines and public lighting		4,702,594,096			5,061,388,676
Less: third party contributions		(55,731,873	)		(45,056,759	)

Sub-total		10,952,146,542			11,622,303,528

Machinery and equipment		1,823,140,358			1,978,358,503

Work in progress		351,183,870			364,506,933
Construction materials		63,882,077			56,458,627
Leased assets		2,552,754			715,141
Furniture and fixtures, tools, and computing equipment		82,938,365			79,254,829
Vehicles		15,595,644			13,097,921
Equipment in transit		8,193,631			7,462,991
Other assets		13,938,603			13,364,422

Sub-total		538,284,944			534,860,864

Technical appraisal		697,624,932			740,645,407

Total property, plant and equipment		14,134,454,739			15,006,073,089
Less: accumulated depreciation		(4,509,405,080	)		(5,126,614,906	)

Total property, plant and equipment, net		9,625,049,659			9,879,458,183

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

F-47

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

Note 11. Investment in Related Companies

(a)

Investments as of each year-end are as follows:


							Carrying Value				Equity in net income (losses)
	Number of		Percentage		Related
Related Companies	shares		Owned		Equity		2001		2002		2000			2001			2002

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

Total								167,448,008		194,164,157		76,753			(10,698,797	)		8,263,783

(1)

There subsidiaries were in development stage for the years shown and accordingly, were not consolidated under Chilean GAAP.

(b)

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

F-48

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(c)

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

Country

Reporting

Company

of origin

Investment

currency

Liability

ThCh$

Central Hidroeléctrica Betania

Colombia

600,762,975

US$

336,577,165

Cachoeira Dourada

Brasil

430,106,204

US$

530,228,953

Edegel S.A.

Peru

220,917,766

US$

243,486,508

Cía. Interconexión Energética S.A.

Brasil

53,246,687

US$

62,574,905

Atacama Finance Co.

Islas Caymán

2,589,511

US$

1,854,668

Hidroeléctrica El Chocón S.A.

Argentina

212,761,767

US$

121,855,669

Com. de Energía del Mercosur S.A.

Argentina

3,426,316

US$

3,952,377

Central Costanera S.A.

Argentina

89,044,456

US$

65,498,672

Edesur S.A.

Argentina

482,071,599

US$

392,146,648

Edelnor S.A.

Peru

52,786,427

US$

23,385,019

Cía. do Electricidade do Río do Janeiro

Brasil

362,673,182

US$

385,080,177

Codensa S.A.

Colombia

276,586,841

US$

306,287,700

Coelce

Brasil

93,034,182

US$

116,004,085

Total

2,880,007,913

2,588,932,546

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


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

Total		23,465,277

•

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

F-49

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

•

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

•

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

•

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

•

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

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

Note 12. Investments in Other Companies

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


					As of December 31,
	Number of		Percentage
Company	shares		owned		2001		2002

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

Total						149,560,997		159,466,785

F-50

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 13. Goodwill

(a)

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


	As of December 31,

	Amortization									Net balance

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

Total		(71,713,807	)		(80,576,348	)		(506,344,171	)		1,318,832,593		847,513,499

(b)

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


	As of December 31,

	Amortization						Net balance

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

Total		42,646,958		47,699,849		112,247,774		181,194,560		95,172,950

F-51

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(1)

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

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

Note 14. Other Assets

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


	As of December 31,

	2001		2002

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

Total		198,535,455		238,755,596

F-52

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 15. Due to Banks and Financial Institutions

(a)

Short-term debt due to banks and financial institutions:


	Foreign Currency

	US$						Other foreign currencies						Ch$						Total

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

Total		198,358,134			226,280,843			100,287,721			135,580,006			2,364,209			63,188,411			301,010,064			425,049,260

Total Principal		161,053,463			172,781,954			66,462,707			122,203,397			2,364,209			63,024,860			229,880,379			358,010,211

Weighted average annual interest rate		10.98	%		8.14	%		11.28	%		14.84	%		4.62	%		2.48	%		10.99	%		9.42	%


	As of December 31,

	2001		2002
	%		%
Percentage of debt in foreign currency:		99.21		85.13
Percentage of debt in local currency:		0.79		14.87

Total		100.00		100.00

F-53

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b)

Current portion of long-term debt due to banks and financial institutions:


	Foreign Currency

	US$						Euros					Yen						Other foreign currency

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

Total		357,806,670			540,511,420			3,624,390			4,673,051		395,184			46,138,200			8,546,017			12,200,050

Total principal		307,836,499			513,485,849			3,624,390			4,647,499		395,184			45,826,512			8,544,119			8,884,706

Weighted average annual interest rate		6.03	%		3.24	%		4.26	%		3.79%z		0.90	%		2.08	%		8.60	%		8.53	%


	Foreign Currency

	UF						Total

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

Total		55,164,468			1,739,232			425,536,729			605,261,953

Total principal		55,164,468			1,554,097			375,564,660			574,398,663

Weighted average annual interest rate		7.50	%		8.73	%		6.27	%		3.30	%


	As of December 31,

	2001		2002
	%		%
Percentage of debt in foreign currency:		87.04		99.71
Percentage of debt in local currency:		12.96		0.29

Total		100.00		100.00

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

F-54

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	As of December 31, 2002

			After 1 year		After 2 year		After 3 year		After 5 year
			but within		but within		but within		but within
Financial Institution	Currency		2 years		3 years		5 years		10 years

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

Total				1,304,295,688		178,659,287		110,088,658		91,741,247


	As of December 31, 2002
									Annual
							Total		interest			Total
							Long-term		rate			Long-term
Financial Institution	Currency		After 10 years				portion		average			portion - 2001

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

Total				—		6,553,790		1,691,338,670					1,971,249,920


	As of December 31,

	2001		2002

	%		%
Percentage of debt in foreign currency:		97.06		97.13
Percentage of debt in local currency:		2.94		2.87

Total		100.00		100.00

F-55

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 17. Other Current Liabilities

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


	As of December 31,

	2001		2002

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

Total		150,383,758		59,541,957

Note 18. Promissory Notes


						As of December 31,
	Face		Maturity	Interest
Financial Instrument	value		date	rate		2001		2002

	ThCh$			%		ThCh$		ThCh$
2001-029		42,328,262	May 13, 2002		18.13		43,598,110		—
Commercial paper		10,456,868	Feb 01, 2002		8.48		11,032,138		—
Commercial paper		3,030,678	May, 2003		5.00		—		3,089,607
Commercial paper		2,081,801	Aug, 2003		5.25		—		2,124,305
Promissory note-AFR		—	Dec, 2003		10.00		—		122,129
OPP-027/2002		1,000	June, 2003		—		—		3,465,944
Promissory note — Banco Santander		286,299	Jan, 2003		5.00		—		286,299
OPP-058/2002		1,000	Sep, 2003		—		—		4,101,230

Total							54,630,248		13,189,514

F-56

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 19. Bonds Payable

(a)

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


								Par Value
			Face value		Interest		Maturity
Instrument	Series	Currency	outstanding		rate		Date	2001		2002

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

Total									62,848,322		498,501,344

F-57

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b)

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


							Par Value

		Face value			Interest	Maturity
Instrument	Series	outstanding		Currency	rate	Date	2001		2002

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

Total								2,271,468,659		2,097,845,568

(c)

Bonds payable are comprised of the following:

Enersis S.A. Series B1-B2

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


	Total amount		No.of bonds		Face value
Series	In UF		per series		in UF

B1		1,000,000		1,000		1,000
B1		3,000,000		300		10,000
B2		1,000,000		1,000		1,000
B2		1,500,000		150		10,000

F-58

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

ii.

Enersis S.A. (Yankee Bonds)

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


	Total amount		Years to		Stated annual
Series	In US$		maturity		interest rate

1		300,000,000		10		6.90	%
2		350,000,000		20		7.40	%
3		150,000,000		30		6.60	%

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

Repurchase of Yankee Bonds

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

iii.

Edelnor Bonds (Subsidiary of Distrilima S.A.)


First issue
Date of Issue	:	March 1, 1996
Number of bonds subscribed	:	49,919
Face value	:	100 soles each
Redemption term	:	15 years
Interest rate	:	9.6136% annual
Interest payment	:	Annually, on coupon maturity
Principal amortization	:	Amortization of total principal upon maturity

F-59

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


Second issue
Date of Issue	:		November 10, 1998
Number of bonds subscribed	:		146,300
Face value	:		1000 soles each
Redemption term	:		4 years
Interest rate	:		14.396%
Interest payment	:		Accrued and paid within 90 days
Anticipated redemption option	:		Early redemption option

Third issue
Date of Issue	:		August 7, 1998
Number of bonds subscribed	:		15,000
Face value	:		US$1,000 each
Redemption term	:		3 years
Interest rate	:		7.7%
Interest payment	:		Accrued and paid within 90 days

First program of Corporate Bonds
First issue
Date of Issue	:		October 29, 2001
Face value	:		30,000 new soles each
Redemption term	:		2 years
Interest rate	:		7.5%
Interest payment	:		Semi -- annual

Second issue
Date of Issue	:		October 19, 2001
Number of bonds subscribed	:	��	20,000
Face value	:		5,000 new soles each
Redemption term	:		5 years
Interest rate	:		6.9%
Interest payment	:		Semi -- annual

Third issue:
Date of issue	:		January 24, 2002
Number of bonds subscribed	:		6,000
Face value	:		5,000 (new soles each)
Redemption term	:		2 years
Interest rate	:		6.5% annual
Interest payment	:		Semi -- annual

Fourth issue:
Date of issue	:		April 24, 2002
Number of bonds subscribed	:		4,000
Face value	:		5,000 (new soles each)
Redemption term	:		2 years
Interest rate	:		6.34% annual
Interest payment	:		Semi -- annual

F-60

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

iv.

Endesa Chile S.A.

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


		Category

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

F-61

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

ISSUANCE TERMS

Third Issuance


Issuer	:	Empresa Nacional de Electricidad S.A.
Securities issued	:	Bearer bonds in local currency, denominated
		in Unidades de Fomento
Issuance Value	:	Four million Unidades de Fomento
		(UF4,000,000) divided into:
		- Series C-1: 120 bonds at UF10,000 each
		- Series C-2: 800 bonds at UF1,000 each
		- Series D-1: 120 bonds at UF10,000 each
		- Series D-2: 800 bonds at UF1,000 each
Indexation	:	Based on variations in Unidad de Fomento index
Amortization period	:	Series C-1 and C-2: 15 years (5-year grace
		period and 10 years to amortize capital).
		Series D-1 and D-2: 20 years (5-year grace
		period and 15 years to amortize capital).
Capital amortization	:	Series C-1 and C-2: 20 consecutive
		installments payable semi-annually, starting
		April 1, 1996. Series D-1 and D-2: 30
		consecutive installments payable
		semi-annually, starting May 1, 1996.
		Amortization installments are incremental
Early Redemption	:	As elected by the issuer, starting May 1,
		1996 and only on the interest payment and
		amortization dates.
Nominal interest rate	:	6.8% annually upon expiration, compound and
		actual rate per semester on outstanding
		capital, readjusted by the value of the
		Unidad de Fomento. The applicable
		semi-annual interest rate will be equal to
		3.34409%.
Interest Payments	:	Interest will be paid semi-annually each May
		1 and November 1, starting May 1, 1991.
		Accrued interest at the end of the period
		amounts to ThCh$245,619 (ThCh$268,716 in
		2001), and is shown under current
		liabilities.
Guarantee	:	There is no specific guarantee, however, a
		general guarantee covers all the issuer's
		assets.
Placement period	:	48 months from the registration date in the
		Chilean Securities Register of the
		Superintendency of Securities and Insurance.

F-62

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


Fourth Issuance
Issuer	:	Empresa Nacional de Electricidad S.A.
Securities issued	:	Bearer bonds in local currency, denominated in Unidades
		de Fomento
Issuance Value (1)	:	Up to seven and a half million (UF7,500,000) divided into:
		Series E-1: 1,500 bonds at UF1,000 each.
		Series E-2: 600 bonds at UF10,000 each.
		Series F: 200 bonds at UF10,000 each.
Readjustment	:	Variation in the UF
Amortization period	:	Series E-1 and E-2: August 1, 2006.
		Series F: August 1, 2022.
Early redemption	:	Only in the Series F case, beginning February 1, 2012.
Nominal interest rate	:	6.2% annually, compounded semi-annually and effective on
		the outstanding capital adjusted for the value of the
		Unidad de fomento. The semi-annual interest rate will be
		3.0534%.
Interest payments	:	Accrued interest as of December 31, 2002 amounts to
		ThCh$3,195,406 (ThCh%3,196,631 in 2001) which is shown
		under current liabilities.
Guarantee	:	There is no specific guarantee; however, a general
		guarantee covers all the issuer's assets
Placement period	:	36 months from the registration date in the Chilean
		Securities Register of the Superintendency of Securities
		and Insurance

(1)

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

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


First Issuance
Issuer	:	Empresa Nacional de Electricidad S.A.
Securities issued	:	Marketable securities denominated in
		US$(Yankee bonds) in the US market.
Issuance Value	:	Six hundred and fifty million US Dollars
		(US$650,000,000) divided into:
		Series 1: US$230,000,000
		Series 2: US$220,000,000
		Series 3: US$200,000,000
Readjustment	:	Variation in the US Dollar

F-63

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


Amortization period	:	Series 1 matures on February 1, 2027:
		Series 2 matures on February 1, 2037
		(Put Option on February 1, period 2009,
		on which date the holders may redeem
		100% of bonds plus accrued interest).
		Series 3 matures on February 1, 2097.
Nominal interest rate	:	Series 1: 7.875% annually
		Series 2: 7.325% annually
		Series 3: 8.125% annually
Interest Payments	:	Interest will be paid semi-annually
		each February 1 and August 1 annually,
		starting January 27, 1997. Accrued
		interest as of the year end amounts to
		ThCh$15,114,018 (ThCh$14,184,888 in
		2001), which is shown under current
		liabilities.
Second Issuance
Issuer	:	Empresa Nacional de Electricidad S.A.
Securities issued	:	Marketable securities denominated in US$(Yankee
		bonds) in the US market.
Issuance Value	:	Four hundred million US Dollars (US$400,000,000) :
Readjustment	:	Variation in the US Dollar
Capital amortization	:	Series 1 matures on July 15, 2008 period
Nominal interest rate	:	Series 1: 7.75% annually
Interest Payments	:	Interest will be paid semi-annually each January
		15 and July 15 annually, starting January 15,
		1999. Accrued interest as of the year end
		amounts to ThCh$10,210,249 (ThCh$9,582,578 in
		2001), which is shown under current liabilities.
Third Issuance
Issuer	:	Empresa Nacional de Electricidad S.A.
Securities issued	:	Marketable securities denominated in US$(Yankee
		bonds) in the US market.
Issuance Value	:	Four hundred million US Dollars (US$400,000,000) :
Readjustment	:	Variation in the US Dollar
Capital amortization	:	Series 1 matures on April 1, 2009.
Nominal interest rate	:	Series 1: 8.502% annually
Interest Payments	:	Interest will be paid semi-annually each October
		1 and April 1 annually, starting October 1, 1999.
		Accrued interest as of the year end amounts to
		ThCh$6,108,185 and ThCh$5,732,686 in 2002 and
		2001, respectively, which is shown under current
		liabilities.

F-64

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


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

Repurchase of Yankee Bonds

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

•

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

•

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

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

Subsidiaries of Endesa S.A.

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

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


		Category

- Standard & Poor’s		BBB
- Moodys Investors Services		Baa3

ISSUANCE TERMS


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

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

F-65

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

ISSUANCE TERMS


First Registration
Securities registered	:	1,000 million Euros
Issuance value	:	Euros 400,000,000 (*)
Capital amortización	:	Principal due July 24, 2003
Nominal interest rate	:	Euribor + 0.80
Interest payments	:	Quarterly beginning October 24, 2000
		in arrears. Accrued interest as of
		the year end amounts to
		ThCh$2,310,497 (ThCh$2,061,701 in
		2001) and is shown in current
		liabilities.
Guarantee	:	Empresa Nacional de Electricidad S.A.

(*)

By way of a swap operation, the debt in Euro was changed to US dollars.

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


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

III

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


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

F-66

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

IV.

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


First Issuance
Issuer	:	Emgesa S.A.
Securities issued	:	Marketable securities denominated in Colombian pesos
Issuance Value	:	$Col 530,000,000
Capital amortization	:	Maturities as of 2002, 2004, 2006, 2007, 2009 and
		2010 for $Col 1,525,000; $Col 15,000,000; $Col
		85,000,000; $Col 81,407,744; $Col 19,500,000; $Col
		297,567,256 and $Col 30,000,000 respectively
Interest nominal rate	:	15.5% annual average rate
Interest payment	:	Interest will be paid semi-annually. Accrued
		interest as of the year end amounts to
		ThCh$5,385,981 (ThCh$5,715,660 in 2001) and is
		shown under current liabilities.

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


First Issuance
Issuer	:	Sociedad Concesionaria Autopista del Sol S.A.
Securities issued	:	Bearer bonds in local currency, denominated
		in Unidades de Fomento
Issuance Value	:	U.F. 5,540,000 divided into:
		Series A -- 1 U.F.3,460,000
		Series A -- 2 U.F.865,000
		Series B -- 1 U.F.970,000
		Series B -- 1 U.F.245,000
Indexation	:	Variation in the U.F.
Amortization period	:	16 years
Capital amortization	:	Semi - annually and consecutive
Interest nominal rate	:	5.8% annually in arrears, compounded semi -
		annually on outstanding capital, readjusted
		for the value of the Unidad de Fomento. The
		applicable semi-annual rate will be equal to
		2.8591%
Interest payment	:	Interest will be paid semi-annually each
		January 15 and July 15 starting January 15,
		2003. Accrued interest at the year end
		amounts to ThCh$2,427,752 and is show in
		current liabilities

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

F-67

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 20. Accrued Expenses

(a)

Short-term accruals:

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


	As of December 31,

	2001		2002

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

Total		79,920,329		84,930,321

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

(b)

Long-term accruals:


	As of December 31,

	2001		2002

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

Total		234,388,938		226,922,617

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


	As of December 31,

	2001			2002

	ThCh$			ThCh$
Opening balance as of January 1		6,396,342			7,377,430
Increase in accrual		2,352,065			2,072,912
Transfer to short-term		(276,711	)		82,969
Payments during the year		(1,379,787	)		(944,202	)

Total		7,091,909			8,589,109

F-68

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 21. Minority Interest

(a)

Minority shareholders’ participation in the shareholders’ equity of the Company’s subsidiaries as of each year-end is as follows:


	As of December 31, 2001									As of December 31, 2002

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

Total								4,073,571,128									4,050,602,721

F-69

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b)

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


	As of December 31, 2000									Year-ended December 31, 2001									Year-ended December 31, 2002

Company	Net income			Participation			Total			Net income			Participation			Total			Net income			Participation			Total

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

Total								184,000,228									(125,152,619	)								16,282,559

F-70

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 22. Shareholders’ Equity

(a)

Dividends

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

Dividend Number

Payment date

Historical value

Type of dividend

Related to

Ch$ per share

April 2001

1.806391

Final

2000

(b)

Number of shares

As of December 31, 2000, 2001 and 2002

Number of shares

Series

Subscribed

Paid

With vote

First

8,291,020,100

(c)

Subscribed and paid capital is as follows as of the year-end:

As of December 31, 2000, 2001 and 2002

Capital

Series

subscribed

Capital paid

ThCh$

First

751,208,197

(d)

Other reserves

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


	2000		2001			2002
	ThCh$		ThCh$			ThCh$

Accumulated net losses of development-stage subsidiaries		—		(308,094	)		(4,937,110	)
Reserve for transaction entities using remeasurement method		2,337,516		2,318,686			1,177,508
Reserve for accumulated conversion differences		4,929,205		24,373,947			45,702,079

Total (historical Chilean pesos)		7,266,721		26,384,539			41,942,477

Total, as restated (1)		7,716,749		27,176,075			41,942,477

(1)

Restated in thousands of constant Chilean pesos as of December 31, 2002.

F-71

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	Initial		Reserve					Final
	balance		for assets		Reserve for liabilities			balance

	ThCh$		ThCh$		ThCh$			ThCh$
2001
Cumulative translation adjustment		5,234,472		133,093,729		(113,223,032	)		25,105,169

2002
Cumulative translation adjustment		25,105,169		96,536,552		(75,939,638	)		45,702,079

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


	As of December 31,

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

Total		5,234,472		25,105,169			45,702,079

(e)

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


	As of December 31, 2002
	Net income (losses)

Company	Of the period			Accumulated
	ThCh$			ThCh$
Compañía Eléctrica Taltal Ltda.		—			146,371
Central Geradora Termoelectrica Fortaleza S.A.		(939,553	)		(1,302,505	)
Aguas Santiago Poniente S.A.		(111,586	)		(111,586	)
Infraestructura 2000 S.A.		—			347,252
Gas Atacama Generación		—			811,149
Ingendesa (Ingendesa do Brasil)		1,451			(46,306	)
Enigesa (Ingendesa do Brasil)		19			(642	)
Cía. Eléctrica Conosur S.A. (CIEN)		(4,780,843	)		(4,780,843	)

Total		(5,830,512	)		(4,937,110	)

F-72

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 23. Other Income and Expenses

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


	Year ended December 31,

	2000		2001		2002

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

Total		463,501,342		194,693,581		308,143,887

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


	Year ended December 31,

	2000		2001		2002

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

Total		118,890,049		183,929,244		241,196,604

(1)

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

F-73

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 24. Price-level Restatement

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


	As of December 31,

	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Assets
Inventory		289,029			679,797			1,081,801
Current assets		13,397,412			86,825			6,108,070
Accounts receivable from subsidiaries		5,061,400			4,575,344			5,032,682
Property, plant and equipment		102,746,124			69,607,844			71,181,494
Investment in subsidiaries		10,754,175			30,582,762			35,860,652
Amortization of goodwill		36,887,897			27,626,882			25,787,859
Other assets		21,363,984			25,101,509			2,282,536

Net credit — assets		190,500,021			158,260,963			147,335,094

Liabilities and Shareholders’ equity
Shareholders’ equity		(38,425,168	)		(34,756,513	)		(35,375,590	)
Current and long-term liabilities		(128,254,204	)		(95,013,142	)		(86,890,351	)
Minority interest		15,247,338			6,517,278			5,418,099
Accounts payable to subsidiaries		(51,798,765	)		(30,547,186	)		(24,050,002	)
Non-monetary liabilities		210,397			(679,233	)		(51,951	)

Net charge-liabilities and shareholders’ equity accounts		(203,020,402	)		(154,478,796	)		(140,949,795	)

Price-level restatement of the income statement		(2,731,612	)		(1,607,092	)		(1,420,409	)

Net credits to income		(15,251,993	)		2,175,075			4,964,890

F-74

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 25. Exchange Differences

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


	As of December 31,

Assets	Currency	2000			2001			2002

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

Total gain			36,053,559			108,963,163			44,940,038


	As of December 31,

Liabilities	Currency	2000			2001			2002

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

Total loss			(37,305,281	)		(139,505,815	)		(61,050,285	)

Exchange difference — net loss			(1,251,722	)		(30,542,652	)		(16,110,247	)

Note 26. Extraordinary Items

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

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


Company	ThCh$

Central Hidroeléctrica de Betania S.A.		2,025,115
Capital de Energía S.A.		67,124
Emgesa S.A.		8,837,853
Cam Colombia S.A.		33,540
Codensa S.A.		11,412,008

Total		22,375,640

F-75

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 27. Financial Derivatives

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

As of December 31, 2002

Nominal

Date of

Sales/

Hedged

Initial hedged

Closing hedged

Type(1)

amount

Maturity

Item

Purchase

Item

amount

US$

ThCh$

COLLAR

50,000,000

II quarter 2004

Interest rate

P/S

Bank obligations

35,930,500

COLLAR

400,000,000

III quarter 2004

Interest rate

P/S

Bank obligations

287,444,000

COLLAR

50,000,000

III quarter 2005

Interest rate

P/S

Bank obligations

35,930,500

COLLAR

250,000,000

I quarter 2006

Interest rate

P/S

Bank obligations

179,652,500

COLLAR

850,000,000

II quarter 2006

Interest rate

P/S

Bank obligations

610,818,500

7,000,000

I quarter 2003

Exchange rate

Accounts payable

5,030,270

88,000,000

I quarter 2003

Exchange rate

Bank obligations

293,192,880

77,755,000

I quarter 2003

Exchange rate

Bank obligations

48,413,946

53,869,310

154,600,000

II quarter 2003

Exchange rate

Yankee Bonds/Bank obligation

111,096,962

68,400,000

II quarter 2003

Exchange rate

Bank obligations

49,153,068

93,000,000

II quarter 2003

Exchange rate

Bank obligations

788,315,170

15,000,000

lI quarter 2003

Exchange rate

Accounts payable

10,779,150

108,000,000

IV quarter 2003

Exchange rate

Bank obligations

78,783,930

23,084,000

I quarter 2004

Exchange rate

Bank obligations

13,945,714

16,086,072

100,000,000

I quarter 2003

Interest rate

P/S

Bonds

71,861,000

100,000,000

I quarter 2003

Interest rate

P/S

Bank obligations

71,861,000

4,253,031

I quarter 2003

Interest rate

Accounts payable

3,056,270

44,229,017

I quarter 2003

Exchange rate

Bank obligations

31,783,414

95,000,000

II quarter 2003

Exchange rate

Bank obligations

68,267,950

61,703,496

20,150,000

II quarter 2003

Interest rate

Bonds

14,479,992

58,453,199

II quarter 2003

Interest rate

Bank obligations

42,005,053

381,200,000

III quarter 2003

Exchange rate

P/S

Bonds

273,934,132

1,708,667

III quarter 2003

Exchange rate

Bank obligations

1,227,865

6,668,000

IV quarter 2003

Interest rate

Bank obligations

4,545,759

17,520,000

IV quarter 2003

Interest rate

Bank obligations

12,590,047

94,696,298

I quarter 2004

Interest rate

Bank obligations

68,049,707

50,000,000

I quarter 2004

Interest rate

P/S

Bank obligations

35,930,500

41,932,249

II quarter 2004

Exchange rate

Bank obligations

30,132,934

50,000,000

II quarter 2004

Interest rate

P/S

Bank obligations

35,930,500

50,000,000

III quarter 2004

Interest rate

P/S

Bank obligations

35,930,500

33,600,000

II quarter 2005

Interest rate

Bank obligations

24,145,296

50,000,000

II quarter 2006

Interest rate

Bank obligations

35,930,500

144,470,000

III quarter 2006

Currency

Bonds

103,021,045

50,000,000

III quarter 2006

Currency

Bonds

35,529,359

81,905,702

II quarter 2009

Exchange rate

Bonds

56,637,729

(1)

Fr = Forward, S = Swap

F-76

ENERSIS S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

Note 28. Commitments and Contingencies

Direct guarantees held by third parties:

Garantías Directas

Committed assets

Accounting

Guarantee

Subsidiary

Type of guarantee

Type

Currency

value

Cía. de Telecomunicaciones de Chile

Enersis S.A.

Pledge

Promissory note UF

ThCh$

1,675

Public Works Bureau

Autopista del Sol

Complian. Operat. ctto. Conc

ThCh$

654,208

Banco Estado de Chile

Pehuenche S.A.

Chat. Mortg. Whithout conveyan

Equipment

ThCh$

12,030,211

Director Customs Office of Chile

Pehuenche S.A.

Bank bond

ThCh$

—

Director Customs Office of Chile

Pangue S.A.

Bill of exchange

ThCh$

64,675

Creditors Banks

Pangue S.A.

Mortgage and pledge

Real estate prop. and Equip

ThCh$

83,976,230

Mitsubishi Corp.

San Isidro S.A.

Chattel mortgage

Facilities

ThCh$

76,193,289

Public Works Bureau

Autop. Los Libertadores

Construction compliance concession contract

Invest. Works of concession

ThCh$
ThCh$

—

Public Works Bureau

Autop. Los Libertadores

Construction compliance concession contract

Operation of concession

ThCh$
ThCh$

2,632,804

Tax Authorities of Chile

Celta S.A.

Bond

ThCh$

172,681

Banco Estado de Chile

Tunel el Melón

Pledge over 45% of income minim. guaranteed

ThCh$
ThCh$

1,351,074

FSA Inc

Infraestructura 2000 S.A.

Pledge

ThCh$

35,476,728

FSA Inc

Autopista del Sol

Pledge

ThCh$

22,580,871

Soc. de Energía de la Rep.Arg. S.A.

EASA

Pledge

ThCh$
ThCh$

68,033,383


			Pending balance
			at December 31,					Release of guarantees

Guarantee	Subsidiary	Type of guarantee	Currency	2001		2002		2003		2004		2005

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

Indirect guarantees held by third parties:

Committed assets

Accounting

Guarantee

Subsidiary

Type of guarantee

Type

Currency

value

Chase Manhattan Bank

Endesa Chile International

Subsidiary

Guarantor

ThCh$

—

CitbanK N.A.

Endesa Chile International

Subsidiary

Guarantor

ThCh$

359,688,633

CitbanK N.A.

Endesa Chile International

Subsidiary

Guarantor

ThCh$

—

Midlanbank

Endesa Chile International

Subsidiary

Guarantor

ThCh$

5,668,452

B. Santander C. Hispano

Endesa Chile International

Subsidiary

Guarantor

ThCh$

110,922,308

J.P. Morgan and CSF Boston

Endesa Chile International

Subsidiary

Guarantor

ThCh$

109,731,747

Banco San Paolo

Endesa Chile International

Subsidiary

Guarantor

ThCh$

—

BNP

Endesa Chile International

Subsidiary

Guarantor

ThCh$

151,870,433

BBVA

Endesa Chile International

Subsidiary

Guarantor

ThCh$

151,870,433

Mitsubishi Co.

Cía. Eléctrica San Isidro S.A

Subsidiary

Guarantor

ThCh$

49,098,687

B. Santander C. Hispano

Cía. Eléctrica Tarapacá S.A

Subsidiary

Guarantor

ThCh$

768,635

Chase Manhattan Bank

Cía. Eléctrica Tarapacá S.A

Subsidiary

Guarantor

ThCh$

—

Banco Español de Crédito

Cía. Eléctrica Tarapacá S.A

Subsidiary

Guarantor

ThCh$

32,967,603

ABN Amro Bank

Cía. Eléctrica Tarapacá S.A

Subsidiary

Guarantor

ThCh$

4,267,923

B. Estado de Chile and Santander

Autopista Del Sol S.A

Subsidiary

Guarantor

ThCh$

—

Chase Manhattan Bank

Endesa Colombia S.A

Subsidiary

Guarantor

ThCh$

205,521,266

B. Santander C. Hispano

Cía. Eléctrica Conosur S.A

Subsidiary

Guarantor

ThCh$

137,655,836

Banco de Santiago y de Chile

Autopista Del Sol S.A

Subsidiary

Guarantor

ThCh$

—


			Pending balance					Liberación de
			at December 31,					garantías

Guarantee	Subsidiary	Type of guarantee	Currency	2001		2002		2003		2004		2005		2006

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

F-77

Litigation and other legal actions:

Enersis S.A. Individual

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

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

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

ii.

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

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

F-78

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

•

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

•

whether divestiture of one or more of the businesses was advisable.

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

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

•

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

•

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

•

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

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

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

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

F-79

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

•

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

•

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

•

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

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

iii.

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

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

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

F-80

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

iv.

Other Lawsuits

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

Enersis’ Distribution Electricity Subsidiaries

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

Cerj S.A.

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

Endesa-Chile Individual

Pending litigation

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

Other litigation

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

F-81

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

ii.

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

iii.

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

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

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

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

F-82

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

Endesa-Chile Subsidiaries

Pehuenche S.A.

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

ii.

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

iii.

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

F-83

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

iv.

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

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

vi.

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

vii.

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

viii.

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

ix.

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

F-84

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

xi.

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

xii.

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

xiii.

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

Empresa Eléctrica Pangue S.A.

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

ii.

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

iii.

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

iv.

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

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

vi.

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

vii.

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

San Isidro S.A.

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

ii.

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

Compañía Eléctrica de Tarapacá S.A. — Celta

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

ii.

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

iii.

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

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

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

iv.

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

Infraestructura Dos Mil S.A.

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

Sociedad Concesionaria Autopista del Sol S.A.

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

Inecsa Dos Mil S.A.

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

Sociedad Concesionaria Autopista Los Libertadores S.A.

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

Hidroeléctrica El Chocón S.A.

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

F-88

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

Hidroinvest S.A.

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

Central Costanera S.A.

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Edegel S.A.

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

ii.

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

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

iii.

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

Central Hidroeléctrica de Betania S.A.

Tax contingencies

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

ii.

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

iii.

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

Other contingencies:

iv.

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

Restrictions:

Enersis S.A.

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

•

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

•

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

•

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

•

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

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

Chilectra S.A.

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

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Compañía Eléctrica del Río Maipo S.A.

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

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

Endesa S.A.

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

•

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

•

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

•

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

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

Pehuenche S.A.

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

Infraestructura Dos Mil S.A.

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Sociedad Concesionaria Autopista del Sol S.A.

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

Other restrictions

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

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

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

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

Note 29. Sureties Obtained from Third Parties

Chilectra S.A.

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Inmobiliaria Manso de Velasco Ltda.

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

Compañía Americana de Multiservicios Ltda.

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

Endesa S.A.

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

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

San Isidro S.A.

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

Compañía Eléctrica de Tarapacá S.A.

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

Sociedad Concesionaria Autopista Los Libertadores S.A.

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

Sociedad Concesionaria Autopista del Sol S.A.

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

Pangue S.A.

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

Synapsis, Soluciones y Servicios IT Limitada

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

F-94

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 30. Foreign Currencies

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

(a) Current assets


		As of December 31,

Account	Currency	2001		2002

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

Subtotal			844,118,143		722,102,231

F-95

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


		As of December 31,

Account	Currency	2001		2002

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

Subtotal			318,328,651		501,860,883

Total current assets			1,162,446,794		1,223,963,114

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(b) Property, plant and equipment


		As of December 31,

Account	Currency	2001			2002

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

Total property, plant and equipment			9,625,049,660			9,879,458,183

F-97

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(c) Other assets


			As of December 31,

Account	Currency		2001			2002

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

Total other assets				1,972,302,857			1,517,743,379

F-98

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(d) Total assets


		As of December 31,

Account	Currency	2001		2002

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

Total assets			12,759,799,311		12,621,164,676

(e) Current liabilities


		Within 90 days										91 days to 1 year

		As of December 31, 2001					As of December 31, 2002					As of December 31, 2001					As of December 31, 2002

				Avg					Avg					Avg					Avg
	Currency	Amount		Rate			Amount		Rate			Amount		Rate			Amount		Rate

Account		ThCh$		%			ThCh$		%			ThCh$		%			ThCh$		%
	$ Reaj		—		—			—		—			—		—			—		—
Short-term debt due to banks and financial institutions	$ no Reaj		2,364,209		4.62	%		60,842,208		2.48	%		—		—			2,346,203		2.48	%
	US$		112,879,158		10.98	%		113,666,867		8.14	%		85,478,976		10.98	%		112,613,976		8.14	%
	Euro		2,943,675		4.35	%		4,542,783		4.38	%		—		—			—		—
	Yen		—		—			—		—			—		—			—		—
	$ Col		—		—			7,602,894		14.35	%		11,282,293		15.00	%		43,699,361		14.75	%
	Soles		24,696,590		12.20	%		37,190,394		8.68	%		29,199,298		12.20	%		14,525,801		4.07	%
	$ Arg		22,748		6.80	%		16,254,518		6.00	%		—		—			3,018,304		6.00	%
	Reales		32,143,117		15.50	%		8,745,951		9.24	%		—		—			—		—

	$ no Reaj		—		—			—		—			—		—			—		—
	$ no Reaj		—		—			—		2.21	%		—		—			—		—
Current portion of long-term debt due to banks and financial institutions	$ Reaj		53,549,447		7.50	%		313,051		8.73	%		1,615,021		7.50	%		1,426,181		8.73	%
	US$		44,023,022		5.17	%		207,929,156		3.24	%		313,783,648		6.15	%		332,582,264		3.24	%
	Euro		—		—			—		—			3,624,390		4.26	%		4,673,051		3.79	%
	Yen		—		—			39,191,269		2.08	%		395,184		0.90	%		6,946,931		2.08	%
	Soles		—		—			—		—			—		—			—		—
	$ Arg		1,896		8.60	%		1,365,862		22.75	%		—		—			655,929		1.75	%
	Reales		5,638,384		15.50	%		2,136,708		11.23	%		1,342,452		15.50	%		5,154,483		11.23	%
	U.P		—		—			—		—			1,066,471		5.32	%		1,195,763		5.32	%
	Pound		—		—			—		—			394,123		5.38	%		456,684		4.81	%
	Other		—		—			—		—			102,691		4.44	%		1,234,621		—

Promissory notes	$ Reaj		5,086,095		10.00	%		122,129		10.00	%		5,946,043		6.92	%		—		—
	Soles		—		—			5,603,166		4.50	%		—		—			7,464,219		4.50	%
	Other		—		—			—		—			43,598,110		18.13	%		—		—

Current portion of bonds payable	$ Reaj		—		—			—		—			12,866,910		5.80	%		16,001,327		5.80	%
	US$		—		—			—		—			32,236,441		7.06	%		156,514,742		7.06	%
	Euro		2,061,700		3.34	%		—		—			—		—			303,740,866		3.34	%
	$ Col		—		—			—		—			14,546,485		13.70	%		13,501,963		13.70	%
	Other		856,532		10.00	%		1,161,436		7.28	%		280,254		11.50	%		7,581,010		13.70	%

Current portion of long-term notes payable	$ no Reaj		—		—			—		—			90,293		—			—		—
	US$		18,039,328		7.40	%		29,756,019		9.00	%		8,450,719		7.20	%		11,872,895		9.00	%
	$ Arg		—		—			—		—			—		—			—		—
	Other		—		—			—		—			—		—			—		—

Dividends payable	$ no Reaj		484,283		—			428,445		—			1,426,171		—			972,422		—
	$ Col		—		—			8,285,187		—			—		—			—		—
	Soles		36,707		—			18,529		—			—		—			—		—
	$ Arg		1,444		—			—		—			—		—			—		—
	Reales		5,060,346		—			—		—			—		—			4,122,352		—
	Other		—		—			727,268		—			—		—			—		—

F-99

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


		Within 90 days										91 days to 1 year

		As of December 31, 2001					As of December 31, 2002					As of December 31, 2001				As of December 31, 2002

				Avg					Avg					Avg				Avg
	Currency	Amount		Rate			Amount		Rate			Amount		Rate		Amount		Rate

Account		ThCh$		%			ThCh$		%			ThCh$		%		ThCh$		%
Accounts payable	$ no Reaj		48,354,696		—			54,262,880		—			4,328,842		—		5,812,077		9.00	%
	US$		14,703,322		—			12,342,737		—			1,740,700		—		1,123,669		—
	Euro		137,924		—			—		—			—		—		—		—
	$ Col		20,517,413		—			27,173,942		—			8,982,460		—		—		—
	Soles		19,275,090		—			23,788,231		—			2,026,856		—		—		—
	$ Arg		44,832,831		—			26,949,437		—			—		—		—		—
	Reales		93,916,602		—			59,659,028		—			—		—		—		—
	Other		—		—			10,963,983		—			138,564		—		—		—

	$ no Reaj		—		—			—		—			—		—		—		—
Short-term notes payables	$ no Reaj		216		—			571		—			—		—		—		—
	Reales		45,428,854		—			1,056,663		16.89	%		—		—		3,775,840		16.89	%
	U.P		—		—			—		—			—		—

Miscellaneous payables	$ Reaj		—		—			—		—			84,334		—		—		—
	$ no Reaj		15,105,006		—			9,244,324		—			156,864		—		416,874		—
	US$		11,929,531		—			8,228,015		—			71,993		—		8,648,943		—
	$ Col		9,077,611		—			22,549,403		—			71,686		—		—		—
	Soles		3,185,984		—			5,838,886		—			—		—		11,338,473		—
	$ Arg		105,397		—			3,054		—			4,395		—		—		—
	Reales		13,531,642		—			6,773,826		—			—		—		—		—
	Other		—		—			375,753		—			—		—		—		—

Amounts payable to related companies	$ Reaj		17,289,294		—			11,465,695		—			—		—		—		—
	$ no Reaj		321,383		9.14	%		532,618		—			—		—		—		—
	US$		528,537		8.49	%		1,234,371		—			—		—		—		—
	$ Col		—		—			1,226,667		—			3,629,114		—		—		—
	Soles		1,837,477		—			857,426		—			—		—		—		—	��
	$ Arg		7,514,844		—			968,935		—			—		—		—		—

Accrued expenses	$Reaj		—		—			14,153		—			8,375		—		8,372		—
	$ no Reaj		16,211,086		—			12,393,170		—			20,763,097		—		28,578,032		—
	US$		—		—			101,572		—			186,815		—		89,246		—
	$ Col		5,127,068		—			13,279,185		—			3,219,760		—		—		—
	Soles		1,649,379		—			2,315,644		—			1,708,400		—		2,228,091		—
	$ Arg		4,531,574		—			2,133,800		—			—		—		—		—
	Reales		26,514,775		—			23,708,069		—			—		—		—		—
	Other		—		—			80,987		—			—		—		—		—

Withholdings	$ no Reaj		5,881,699		—			7,127,750		—			978,146		—		1,427,600		—
	$ Col		1,830,706		—			1,872,570		—			—		—		—		—
	Soles		2,534,964		—			5,113,011		—			—		—		—		—
	$ Arg		17,117,232		—			10,827,560		—			—		—		—		—
	Reales		25,614,845		—			29,114,712		—			—		—		—		—
	Other		—					2,556		—			—				—		—

Income tax payable	$ no Reaj		430,473		—			537,181		—			9,038,936		—		—		—
	$ Col		15,582,792		—			19,911,919		—			2,948,539		—		—		—
	Soles		158,987		—			683		—			5,765,990		—		2,638,436		—
	$ Arg		10,192,095		—			3,332,909		—			—		—		—		—
	Reales		33,165,210		—			1,110,901		—			—		—		—		—

Deferred income	$ Reaj		252,972		—			—		—			—		—		—		—
	$ no Reaj		1,497,876		—			5,816,007		—			3,680,493		—		2,856,011		—
	US$		411,679		—			—		—			5,471,544		—		—		—
	$ Col		—		—			413,656		—			—		—		—		—

Other current liabilities	$ Reaj		108,399,353		2.70	%		3,317		—			7,108		—		5,769		—
	$ no Reaj		69,101		—			456,200		—			5,817,634		—		5,473,134		—
	US$		1,193,328		—			15,111,509		—			—		—		287,973		—
	$ Col		2,621,386		—			1,996,817		—			1,029,544		—		—		—
	Soles		45,345		—			50,146		—			5,718,123		—		—		—
	$ Arg		13,478,269		—			15,875,558		—			79		—		—		—
	Reales		12,004,488		—			20,281,534		—			—		—		—

Total current liabilities by currency	$ Reaj		184,577,161					11,918,345					20,527,792				17,441,649
	$ no Reaj		90,720,028					151,641,354					46,280,476				47,882,353
	US$		203,707,905					653,397,898					447,701,090				366,156,187
	Euro		5,143,299					4,542,783					3,624,390				308,413,917
	Yen		—					39,191,269					395,184				6,946,931
	$ Col		69,303,461					104,312,240					31,163,396				57,201,324
	Soles		54,277,055					81,937,552					44,418,667				38,325,899
	Reales		293,018,263					152,587,392					44,940,561				13,052,675
	$ Arg		97,798,330					77,711,633					4,474				3,674,233
	U.P		—					—					1,066,471				1,195,763
	Libra		—					—					394,123				456,684
	Others		—					12,150,547					241,255				1,234,621

Total current liabilities			998,545,502					1,289,391,013					640,757,879				861,982,236

F-100

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


			1 to 3 years					3 to 5 years					5 to 10 years					More than 10 years

			Amount		Avg Rate			Amount		Avg Rate			Amount		Avg Rate			Amount		Avg Rate
Account	Currency		ThCh$		%			M$		%			ThCh$		%			ThCh$		%

Due to banks and financial institutions	$ Reaj			53,700,248		3.66	%		2,936,985		3.66	%		—		—			—		—
	US$			1,332,607,989		3.19	%		103,695,317		3.19	%		70,749,821		3.19	%		6,352,189		3.19	%
	Euro			245,960		4.13	%		—		—			—		—			—		—
	Yen			8,981,104		1.96	%		—		—			—		—			—		—
	$ Arg			3,687,048		1.75	%		1,843,524		1.75	%		6,440,033		1.75	%		—		—
	Reales			81,665,150		17.11	%		1,612,832		11.23	%		14,551,393		11.23	%		201,601		11.23	%
		U.P		1,189,530		5.32	%		—		—			—		—			—		—
	Libra			877,946		4.81	%		—		—			—		—			—		—

Bonds payable	$ Reaj			—		—			100,464,720		6.20	%		68,867,443		6.00	%		159,331,186		6.00	%
	US$			337,746,700		7.00	%		352,118,900		8.06	%		287,444,000		8.50	%		622,338,537		8.06	%
	Euro			—		—			—		—			—		—			—		—
	$ Col			—		—			33,173,871		14.35	%		77,979,287		14.35	%		—		—
	Soles			53,520,562		7.19	%		3,859,972		7.19	%		1,000,390		7.19	%		—		—

Long-term notes payable	US$			44,459,671		7.50	%		41,870,347		7.50	%		59,468,978		7.50	%		—		—
	Reales			61,538,872		9.50	%		4,601,606		9.50	%		8,700,083		9.50	%		247,133		9.50	%

Accounts payable	$ Reaj			—		—			—		—			—		—			161,781		—
	$ no Reaj			2,130,335		—			—		—			—		—			50,546		—
	US$			7,144,040		—			—		—			10,535,563		9.48	%		—		—
	Reales			2,584,264		—			—		—			—		—			—		—

Amounts payable to related companies						—					—					—					—
	$ Reaj			988,291,605		3.33	%		—		—			—		—			—		—
	$ Col			—		—			—		—			—		—			—		—

Accrued expenses	$ Reaj			—		—			57,281		—			—		—			—		—
	$ no Reaj			3,496,393		—			3,256,075		—			7,608,279		—			7,451,115		—
	US$			3,732,305		—			—		—			—		—			—		—
	$ Col			—		—			—		—			—		—			67,686,226		—
	Reales			839,764		—			81,582,060		—			2,099,410		—			49,113,709		—

Deferred income taxes	$ no Reaj			9,390,063		—			3,745,511		—			13,997,687		—			28,873,945		—
	$ Col			—		—			—		—			—		—			3,588,783		—
	Soles			—		—			1,224,714		—			—		—			—		—
	$ Arg			197,179		—			131,452		—			591,537		—			—		—
	Reales			—		—			—		—			—		—			—		—

Other long-term liabilities	$ Reaj			10,805		—			10,015		—			467,614		10.10	%		—		—
	$ no Reaj			4,264,255		4.55	%		14,800,247		4.55	%		4,683,227		—			13,681,297		4.55	%
	US$			38,021,057		—			—		—			—		—			—		—
	Soles			4,611,282		—			256,932		—			2,213,674		—			—		—
	$ Arg			7,456,475		—			114,044		—			—		—			—		—
	Reales			13,384,938		—			—		—			—		—			—		—

Total long-term liabilities by currency	$ Reaj			1,042,002,658					103,469,001					69,335,057					159,492,967
	$ no Reaj			19,281,046					21,801,833					26,289,193					50,056,903
	US$			1,763,711,762					497,684,564					428,198,362					628,690,726
	Euro			245,960					—					—					—
	Yen			8,981,104					—					—					—
	$ Col			—					33,173,871					77,979,287					71,275,009
	Soles			58,131,844					5,341,618					3,214,064					—
	$ Arg			11,340,702					2,089,020					7,031,570					—
	Reales			160,012,988					87,796,498					25,350,886					49,562,443
		U.P		1,189,530					—					—					—
	Libra			877,946					—					—					—
	Other			—					—					—					—

Total long-term libilities				3,065,775,540					751,356,405					637,398,419					959,078,048

F-101

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


			1 to 3 years				3 to 5 years				5 to 10 years				More than 10 years

			Amount		Avg Rate		Amount		Avg Rate		Amount		Avg Rate		Amount		Avg Rate
Account	Currency		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

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

Total long-term liabilities				3,337,330,901				920,668,819				492,976,139				1,081,387,170

F-102

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Note 31. Sanctions

Endesa Chile

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

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

Note 32. Subsequent Events

Enersis S. A.

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

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

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

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

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


Generation:
Brazil		US$60 million
Argentina		US$23 million
Total Generation		US$83 million

F-103

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


Distribution:
Brazil		US$255 million
Argentina		US$26 million
Total distribution		US$281 million

Services:
Chile		US$23 million
Total services:		US$23 million

Total adjustment		US$387 million

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

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


Brazil		US$81 million
Argentina		US$l6 million
Total Provisions		US$97 million

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

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

Note 33. Environment

Edesur S.A.

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

Endesa S.A.

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

•

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

•

Investments related to the following projects:

•

Central Ralco’s environmental program.

•

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

F-104

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

Differences in Measurement Methods

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

(a) Inflation accounting

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

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

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

(c) Depreciation of property, plant and equipment

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

F-105

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

(d) Intangibles

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

(e) Deferred income taxes

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

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

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

F-106

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

ii.

The measurement of deferred tax liabilities and assets is based on the provisions of the enacted tax law. The effects of future changes in tax laws or rates are not anticipated.

iii.

The measurement of deferred tax assets are reduced by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

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

The principal difference relates to the reversal of the complementary assets and liabilities recorded as a transitional provision for unrecorded deferred taxes as of January 1, 2000 and their corresponding amortization into income. The effect of these differences on the net income and shareholders’ equity of the Company is included in paragraph (bb) below.

(f) Severance indemnity

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

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

F-107

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(g) Pension and post-retirement benefits

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

(h) Investments in related companies

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

(a)

The recording of pension benefits in accordance with SFAS No. 87.

(b)

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

(c)

Organizational costs deferred under Chilean GAAP that, under U.S. GAAP, should have been included in income.

(d)

For the year beginning January 1, 2001, the recording of derivative instruments in accordance with SFAS No. 133.

(e)

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

(i)

Goodwill and long-lived assets

(i)

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

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

(ii)

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

F-108

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

(a)

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

(b)

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

(c)

the adjustment to record the impairment under US GAAP from investment in Argentina and Brazil.

The adjustment as of each year are as follows:


	As of December 31,

	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Adjustment of goodwill amortization		(7,541,119	)		(1,099,881	)		53,928,310
Reversal of impairment record under Chilean GAAP								452,415,861
Impaiment of goodwill under US GAAP								(600,380,013	)

Totals		(7,541,119	)		(1,099,881	)		(94,035,842	)

F-109

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Net income (loss) under US GAAP		74,431,407			3,088,583			(329,910,417	)
Goodwill amortization under US GAAP		(79,254,926	)		(81,676,229	)		—

Adjusted net income (loss) under US GAAP		153,686,333			84,764,812			(329,910,417	)


		2000			2001			2002

		Ch$			Ch$			Ch$
Basic earnings per share:
	Reported net income (loss)		10.4			0.4			(39.8	)
	Goodwill amortization		(11.0	)		(9.9	)		—

	Adjusted net income (loss)		21.4			10.3			(39.8	)

(iii)

The company has considered important factors, which could trigger an impairment review, such the following:

•

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

•

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

•

Significant negative industry or economic trends

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

F-110

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(j) Negative Goodwill

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

(k) Capitalized interest and exchange differences

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

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

(l) Accumulated deficit during the development stage

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

(m) Minimum dividend

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

F-111

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

(n) Capitalized general and administrative expenses

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

(o) Involuntary employee termination benefits

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

(p) Adjustment in selling price of investment

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

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ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(q) Elimination of capitalized legal reserve

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

(r) Organizational and start-up costs

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

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

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

•

Monetary assets and liabilities are translated at year-end rates of exchange between the US dollar and the local currency.

•

All non-monetary assets and liabilities and shareholder’s equity are translated at historical rates of exchange between the US dollar and the local currency.

•

Income and expense accounts are translated at average rates of exchange between the US dollar and local currency.

•

The effects of any exchange rate fluctuations between the local currency and the US dollar are included in the results of operations for the period.

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

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

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

F-113

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

(t) Derivative instruments

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

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

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

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

F-114

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

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

F-115

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

(u) Fair value of long-term debt assumed

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

(v) Sale of subsidiaries

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

(w) Deferred income

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

(x) Regulated assets and deferred costs

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

F-116

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

(y) Reorganization of subsidiaries

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

F-117

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(z)

Assets held for sale

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

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

•

Compañía Eléctrica del Río Maipo S.A.

•

Central Canutillar power plant

•

Gas Atacama transmission lines

•

CELTA transmission lines

•

Infraestructura 2000 S.A.

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

(aa)

Elimination of discontinued operations

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

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

F-118

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(bb)

Effect of conforming to U.S. GAAP

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


	For the year ended December 31,

	2000			2001			2002

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

Net income (loss) in accordance with U.S. GAAP before effect of discontinued operations, extraordinary gain and cumulative effect of change in accounting principle		74,171,407			(42,323,715	)		(330,075,536	)

Income from discontinued operations net of taxes and minority interest (paragraph aa)		260,000			284,410			165,119

Net income (loss) in accordance with U.S. GAAP before effect of extraordinary gain and cumulative effect of change in accounting principle		74,431,407			(42,039,305	)		(329,910,417	)

Extraordinary gain (net of taxes)					24,112,843
Net income (loss) in accordance with U.S. GAAP before cumulative effect of change in accounting principle		74,431,407			(17,926,462	)		(329,910,417	)

Cumulative effect of change in accounting principle, net of the tax and minority interest		—			21,015,045			—

Net income (loss) in accordance with U.S. GAAP		74,431,407			3,088,583			(329,910,417	)

Other comprehensive income (loss):
Cumulative translation adjustment determined under Chilean GAAP		1,336,996			19,459,326			20,596,914
Cumulative translation adjustment related to U.S GAAP adjustments		(4,410,079	)		(3,494,198	)		(12,536,493	)

Comprehensive income (loss) in accordance with U.S.GAAP		71,358,324			19,053,711			(321,849,996	)

F-119

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	As of December 31,

	2001			2002

	ThCh$			ThCh$
Shareholders’ equity in accordance with Chilean GAAP		1,214,561,981			1,005,580,294
Reversal of revaluation of property, plant and equipment net of accumulated amortization revaluation of property, plant and equipment (paragraph b)		(17,254,120	)		(14,150,945	)
Depreciation of property, plant and equipment and difference in fixed asset value at acquisition date (paragraph c)		763,072			(3,065,017	)
Intangibles (paragraph d)		(1,218,399	)		(1,096,559	)
Deferred income taxes (paragraph e)		(244,411,924	)		(277,953,317	)
Pension and post-retirement benefits (paragraph g)		(48,110,011	)		(29,532,561	)
Investments in related companies (paragraph h and paragraph z)		(17,385,748	)		4,286,240
Goodwill (paragraph i)		326,090,688			236,394,374
Negative goodwill (paragraph j)		(205,876,773	)		(298,291,399	)
Capitalized interest and exchange differences (paragraph k)		44,949,920			16,939,438
Minimum dividend (paragraph m)		(12,646,210	)		—
Capitalized general and administrative expenses (paragraph n)		(27,225,414	)		(25,675,535	)
Reversal of accrual of certain involuntary employee termination benefits (paragraph o)		412,753			92,700
Adjustment in selling price of investment (paragraph p)		(4,215,211	)		—
Elimination of capitalized legal reserve (paragraph q)		(9,378,001	)		(9,362,051	)
Amortization organizational and start-up costs (paragraph r)		(39,325,555	)		(37,681,753	)
Derivative instruments (paragraph t)		210,367,650			149,900,318
Fair value of long-term debt assumed (paragraph u)		1,357,440			1,265,881
Reorganization of subsidiaries (paragraph y)		5,997,065			6,070,100
Asset held for sale (paragraph z)		—			(887,241	)
Deferred income (paragraph w)		(3,391,114	)		(3,437,112	)
Regulated assets (paragraph x)		(41,903,240	)		(97,106,372	)
Effects of minority interest on the U.S GAAP adjustments		96,667,003			225,171,613
Elimination of result of discontinuing operations		—			724,763
Deferred tax effects on the U.S. GAAP adjustments		(74,152,019	)		(2,715,812	)

Shareholders’ equity in accordance with U.S. GAAP		1,154,673,833			845,470,047

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


	As of December 31,

	2001			2002

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

Shareholders equity in accordance with U.S.GAAP-December 31,		1,154,673,833			845,470,047

F-120

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

II. Additional disclosure requirements:

(a)

Goodwill and negative goodwill

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


	As of December 31,

	2001			2002

	ThCh$			ThCh$
Goodwill		1,652,861,416			1,235,470,632
Less: accumulated amortization		(334,028,823	)		(387,957,133	)

Goodwill, net		1,318,832,593			847,513,499

Negative goodwill		(382,125,693	)		(342,816,906	)
Less: accumulated amortization		200,931,133			247,643,956

Negative goodwill, net		(181,194,560	)		(95,172,950	)

(b)

Basis and diluted earnings per share:


	For the year ended December 31,

	2000		2001			2002

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

(1)

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

F-121

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(c)

Income taxes:

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


		2000

		Chile			Argentina			Perú		Brazil			Colombia			Other		Total

		ThCh$			ThCh$			ThCh$		ThCh$			ThCh$			ThCh$		ThCh$
Income tax provision under Chilean GAAP
	Current income taxes as determined under Chilean GAAP (1)		65,016,882			38,213,657			1,288,064		21,480,003			33,103,382			321,727		159,423,715
	Deferred income taxes as determined under Chilean GAAP		(8,963,932	)		661,396			16,646,200		(23,941,812	)		(1,705,564	)				(17,303,712	)

	Total income tax provision under Chilean GAAP		56,052,950			38,875,053			17,934,264		(2,461,809	)		31,397,818			321,727		142,120,003

U.S. GAAP adjustments:
	Deferred tax effect of applying SFAS No 109		9,209,924			(5,563,761	)		10,295,909		54,698,116			877,519			—		69,517,707
	Deferred tax effect of adjustments to U.S. GAAP		(331,518	)		5,685,557			78,602		15,804,001			—			—		21,236,642

	Total U.S. GAAP adjustments		8,878,406			121,796			10,374,511		70,502,117			877,519			—		90,754,349

Total Income tax provision under U.S. GAAP			64,931,356			38,996,849			28,308,775		68,040,308			32,275,337			321,727		232,874,352


		2001

		Chile			Argentina		Perú			Brazil			Colombia		Other		Total

		ThCh$			ThCh$		ThCh$			ThCh$			ThCh$		ThCh$		ThCh$
Income tax provision under Chilean GAAP
	Current income taxes as determined under Chilean GAAP (1)		12,794,860			45,203,098		8,212,337			22,660,803			31,499,043		71,781		120,441,922
	Deferred income taxes as determined under Chilean GAAP		6,062,958			2,397,955		13,173,620			(13,678,191	)		172,468		—		8,128,810

	Total income tax provision under Chilean GAAP		18,857,818			47,601,053		21,385,957			8,982,612			31,671,511		71,781		128,570,732

U.S. GAAP adjustments:
	Deferred tax effect of applying SFAS No 109		994,832			23,387,331		690,007			3,382,515			164,149		—		28,618,834
	Deferred tax effect of adjustments to U.S. GAAP		(2,963,740	)		3,033,510		(776,899	)		(6,378,222	)		24,355,649		—		17,270,298
	Deferred tax effect of comulative effect of change in accounting principle		(1,841,380	)		41,529,856		214,348			(203,244	)		6,876,341		—		46,575,921

	Total U.S. GAAP adjustments:		(3,810,288	)		67,950,697		127,456			(3,198,951	)		31,396,139		—		92,465,053

Total Income tax provision under U.S. GAAP			15,047,530			115,551,750		21,513,413			5,783,661			63,067,650		71,781		221,035,785


		2002

		Chile			Argentina			Perú			Brazil			Colombia			Other		Total

		ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$		ThCh$
Income tax provision under Chilean GAAP
	Current income taxes as determined under Chilean GAAP		13,292,208			(62,123	)		12,661,339			2,602,883			45,248,145			—		73,742,452
	Deferred income taxes as determined under Chilean GAAP		3,214,739			(34,075,899	)		30,322,409			(5,879,658	)		(1,307,058	)		—		(7,725,467	)

	Total income tax provision under Chilean GAAP		16,506,947			(34,138,022	)		42,983,748			(3,276,775	)		43,941,087			—		66,016,985

U.S. GAAP adjustments:
	Deferred tax effect of applying SFAS No 109		2,298,780			(30,426,372	)		21,488,911			24,299,705			3,488,104			—		21,149,128
	Deferred tax effect of adjustments to U.S. GAAP		(13,217,783	)		13,786,982			(21,585,415	)		(20,363,366	)		(36,644,392	)		—		(78,023,974	)

	Total U.S. GAAP adjustments:		(10,919,003	)		(16,639,390	)		(96,504	)		3,936,339			(33,156,288	)		—		(56,874,846	)

Total Income tax provision under U.S. GAAP			5,587,944			(50,777,412	)		42,887,244			659,564			10,784,799			—		9,142,139

(1)

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

F-122

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	As of December 31, 2001									As of December 31, 2002

	SFAS No. 109									SFAS No. 109
	Applied to			SFAS No.			Total			Applied to			SFAS No.			Total
	Chilean			109 applied			Deferred			Chilean			109 applied			Deferred
	GAAP			to U.S. GAAP			Taxes under			GAAP			to U.S. GAAP			Taxes under
	Balances			Adjustments			SFAS No. 109			Balances			Adjustments			SFAS No. 109

	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Deferred income tax assets
Property, plant and equipment		6,976,342			4,386,013			11,362,355			6,032,020			13,837,806			19,869,826
Regulated assets and related deferred cost (conpanies in Brazil)					14,247,101			14,247,101						33,016,167			33,016,167
Negative goodwill					8,406,250			8,406,250						22,148,453			22,148,453
Allowance for doubtful accounts		38,334,751						38,334,751			32,217,765						32,217,765
Actuarial deficit (companies in Brazil)		7,487,563						7,487,563			6,766,431						6,766,431
Deferred income		2,507,334			1,152,980			3,660,314			2,746,091			1,168,618			3,914,709
With-holdings		2,164,150						2,164,150			3,252,750						3,252,750
Provision real estate projects		—						—			2,656,047						2,656,047
Derivative contracts		1,003,760			7,555,125			8,558,885			584,992			8,998,383			9,583,375
Severance indemnities		4,166						4,166			5,248			415,266			420,514
Vacation accrual		1,395,215						1,395,215			1,211,297						1,211,297
Post retirement benefits		499,032			16,365,659			16,864,691			1,627,336			10,850,823			12,478,159
Tax loss carryforwards (1)		80,072,911						80,072,911			116,468,223						116,468,223
Contingencies		46,795,319						46,795,319			50,931,732						50,931,732
Finance costs		194,771						194,771			117,034						117,034
Salaries for construction-in progress		5,843,294						5,843,294			3,926,807			5,583,440			9,510,247
Exchange difference - -subsidiaries		—						—			5,155,480						5,155,480
Valuation allowance		(3,322,326	)					(3,322,326	)		(3,448,901	)					(3,448,901	)

Total deferred income tax assets		189,956,282			52,113,128			242,069,410			230,250,352			96,018,956			326,269,308

Deferred income tax liabilities
Negative goodwill					1,927,532			1,927,532									—
Property, plant and equipment		388,356,194			6,019,514			394,375,708			459,271,816			5,229,011			464,500,827
Severance indemnities		1,954,040						1,954,040			814,241						814,241
Intangibles		24,954						24,954			—						—
Regulated assets		—						—			3,828,000						3,828,000
Deferred charges		1,510,731						1,510,731			—						—
Actuarial deficit (companies in Brazil)		5,570,625						5,570,625			2,301,708						2,301,708
Finance costs		8,304,618						8,304,618			13,755,855						13,755,855
Derivative contracts		512,289			86,306,393			86,818,682			—			69,744,951			69,744,951
Bond discount		2,126,014						2,126,014			1,871,635						1,871,635
Cost of studies		4,675,640						4,675,640			7,972,554						7,972,554
Imputed interest on construction		4,830,117						4,830,117			4,863,433						4,863,433
With-holdings		5,659						5,659			198,638						198,638
Materials used		3,349,399						3,349,399			1,086,289						1,086,289
Hid. El Chocón investment		119,374						119,374			2,897,791						2,897,791
Capitalized expenses		5,059,362						5,059,362			3,883,070						3,883,070
Capitalized interest					26,738,515			26,738,515						20,896,091			20,896,091
Post retirement benefits		559			8,255			8,814			1,033			525,304			526,337
Contingencies		10,311,653						10,311,653			13,767,462						13,767,462
Others					229,961			229,961						2,339,411			2,339,411
Differences between the financial and tax value of Río Maipo S.A.		—						—			1,475,222						1,475,222

Total deferred income tax liabilities		436,711,228			121,230,170			557,941,398			517,988,747			98,734,768			616,723,515

Net deferred assets (liabilities)		(246,754,946	)		(69,117,042	)		(315,871,988	)		(287,738,395	)		(2,715,812	)		(290,454,207	)

(1)

F-123

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	2000

	Chile			Argentina			Perú		Brazil			Colombia			Other			Total

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

Tax expense at effective tax rate		64,931,356			38,996,847			28,308,776		68,040,308			32,275,338			321,726			232,874,351


	2001

	Chile			Argentina			Perú			Brazil			Colombia			Other			Total

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

Tax expense at effective tax rate		15,047,528			115,551,751			21,513,413			5,783,661			63,067,650			71,782			221,035,785


	2002

	Chile			Argentina			Perú			Brazil			Colombia			Other		Total

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

Tax (benefit) expense at effective tax rate		5,587,944			(50,777,412	)		42,887,244			659,564			10,784,799			—		9,142,139

F-124

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(d) Acquisitions

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

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

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

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

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

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

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

(e)

Segment disclosures

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

•

Generation

•

Distribution

•

Engineering Services and Real State

•

Corporate and other

F-125

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

•

Generation

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

•

Distribution — Operating Revenues

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

•

Distribution — Non Operating Revenues

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

•

Engineering Services and Real Estate

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

•

Corporate and Other

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

F-126

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


					Engineering
					services and		Corparate
2000	Generation		Distribution		real estate		and other			Eliminations			Consolidated

	ThCh$		ThCh$		ThCh$		ThCh$			ThCh$			ThCh$
Sales to unaffilated customers		700,831,148		1,972,978,680		47,820,038		35,417,231						2,757,047,097
Intersegment sales		236,819,167		29,428,862		32,294,269		25,803,150			(324,345,448	)

Total revenues		937,650,315		2,002,407,542		80,114,307		61,220,381			(324,345,448	)		2,757,047,097

Operating income		266,929,009		271,970,486		14,955,921		(8,807,981	)		7,702,184			552,749,619

Participation in net income of affialate companies						3,556		73,197						76,753

Depreciation and amortization		169,553,126		243,552,307		1,264,335		49,658,881			(266,434	)		463,762,215

Identifiable assets including investment in related companies		6,016,567,836		6,005,278,026		143,109,885		4,729,152,140			(5,138,754,125	)		11,755,353,762

Capital expenditures		89,662,770		250,520,763		1,028,999		1,796,973						343,009,505


							Engineering
							services and			Corparate
2001	Generation			Distribution			real estate			and other			Eliminations			Consolidated

	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Sales to unaffilated customers		836,144,871			2,126,128,164			35,046,655			62,061,071						3,059,380,761
Intersegment sales		209,134,449			43,705,715			28,336,648			30,562,731			(311,739,543	)

Total revenues		1,045,279,320			2,169,833,879			63,383,303			92,623,802			(311,739,543	)		3,059,380,761

Operating income		347,975,163			386,500,673			10,133,274			(4,545,293	)		14,479,950			754,543,767

Participation in net income of affialate companies		(10,355,056	)								(343,742	)					(10,698,798	)

Depreciation and amortization		150,091,696			260,276,949			1,241,298			56,491,985			(266,433	)		467,835,495

Identifiable assets including investment in related companies		6,361,571,367			6,310,062,578			135,386,583			4,945,729,831			(4,992,951,048	)		12,759,799,311

Capital expenditures		(52,972,422	)		(287,990,889	)		(415,494	)		(174,931	)					(341,553,736	)


					Engineering
					services and		Corparate
2002	Generation		Distribution		real estate		and other			Eliminations			Consolidated

	ThCh$		ThCh$		ThCh$		ThCh$			ThCh$			ThCh$
Sales to unaffiliated customers		724,708,753		1,712,052,829		34,157,580		14,954,058						2,485,873,220
Intersegment sales		213,390,398		50,057,741		71,166,328		42,859,584			(377,474,051	)

Total revenues		938,099,151		1,762,110,570		105,323,908		57,813,642			(377,474,051	)		2,485,873,220

Operating income		336,622,006		183,495,124		13,379,302		(111,044	)		(741,027	)		532,644,361

Participation in net income of affiliate companies		8,541,745						(277,962	)					8,263,783

Depreciation and amortization		221,359,385		512,547,464		1,411,217		110,822,164			12,816,588			858,956,818

Identifiable assets including investment in related companies		6,524,201,396		6,105,423,113		140,950,745		4,294,946,364			(4,444,356,942	)		12,621,164,676

Capital expenditures		134,858,115		181,859,234		755,092		443,002						317,915,443

F-127

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

A summary of activities by geographic area is as follows:


	Chile		Argentina		Perú		Brazil		Colombia		Total

	ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
2000
Total revenues		699,239,131		759,355,551		233,989,079		634,011,382		430,451,955		2,757,047,098

Long lived assets (net) (1)		2,803,069,054		1,440,626,633		1,064,776,614		1,254,692,103		2,381,648,403		8,944,812,807

2001
Total revenues		805,112,327		827,352,863		265,489,142		691,658,117		469,768,312		3,059,380,761

Long lived assets (net) (1)		2,365,838,917		1,562,886,168		1,173,962,317		1,944,053,053		2,578,309,204		9,625,049,659

2002
Total revenues		799,462,080		297,634,006		292,427,127		624,290,007		472,060,000		2,485,873,220

Long lived assets (net) (1)		2,374,734,591		1,551,821,292		1,235,792,237		2,039,631,354		2,677,478,709		9,879,458,183

(1)

Long-lived assets include property, plant and equipment.

(f)

Concentration of risk:

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

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

(g)

Schedule of debt maturity:

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


	ThCh$
2003		1,558,378,097
2004		2,355,368,823
2005		177,943,497
2006		611,688,751
2007		155,949,924
Thereafter		1,518,063,448

Total		6,377,392,540

F-128

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(h)

Disclosure regarding interest capitalization:


	Year ended December 31,

	2000		2001		2002

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

(i)

Cash flow information:

(i)

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


	Year ended December 31,

	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Cash provided by operating activities under Chilean GAAP		538,690,847			662,920,609			627,782,332
Development stage companies					1,303,896

Cash provided by (used in) operating activities under U.S. GAAP		538,690,847			664,224,505			627,782,332

Cash provided by (used in) financing activities under Chilean GAAP		(814,290,090	)		(61,414,127	)		(285,039,864	)
Development stage companies					(985,718	)
Repurchase of Yankee Bonds					(177,168,871	)

Cash provided by (used in) financing activities under U.S. GAAP		(814,290,090	)		(239,568,716	)		(285,039,864	)

Cash provided by (used in) investing activities under Chilean GAAP		176,616,070			(503,639,589	)		(336,878,757	)
Development stage companies					(310,893	)
Repurchase of Yankee Bonds					177,168,871
Time deposits (1)								(10,176,847	)

Cash provided by (used in) investing activities under U.S. GAAP		176,616,070			(326,781,611	)		(347,055,604	)

(1)

Time deposits with maturities longer than 90 days

(ii)

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


	Year ended December 31,

	2000		2001		2002

	ThCh$		ThCh$		ThCh$
Cash		28,073,249		37,648,796		48,184,878
Time deposits		79,697,694		178,113,234		135,450,047
Marketable securities				198,248		1,543,290
Other current assets		12,264,761		1,867,323		25,836,618

Total cash and cash equivalents		120,035,704		217,827,601		211,014,833

F-129

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(iii)

Additional disclosures required under U.S. GAAP are as follows:


	Year ended December 31,

	2000		2001		2002

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

(j)

Disclosures about fair value of financial instruments

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

•

Cash

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

•

Time deposits

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

•

Marketable securities

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

•

Long-term accounts receivable

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

•

Long-term debt

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

•

Derivative instruments

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

F-130

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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


	As of December 31,

	2001						2002

	Carrying			Fair			Carrying			Fair
	amount			Value			amount			Value

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

(k)

Derivative instruments

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

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

F-131

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


		As of January 1, 2001

		Distribution			Generation			Total

		ThCh$			ThCh$			ThCh$
Commodity derivatives			16,330,955			127,914,469			144,245,424
Embedded derivatives			25,266			(8,631,797	)		(8,606,531	)
Financial derivatives			(1,650,130	)		(3,776,374	)		(5,426,504	)

			14,706,091			115,506,298			130,212,389
Effects of minority interest			(7,947,755	)		(54,673,667	)		(62,621,422	)
Deferred tax effects			(5,185,287	)		(41,390,634	)		(46,575,921	)

	Cumulative change in accounting principle		1,573,049			19,441,997			21,015,046


	As of December 31, 2001

	Distribution			Generation			Total

	ThCh$			ThCh$			ThCh$
Commodity derivatives		80,927,204			135,782,017			216,709,221
Embedded derivatives		(23,089,669	)		(3,876,022	)		(26,965,691	)
Financial derivatives		352,726			(19,026,564	)		(18,673,838	)

		58,190,261			112,879,431			171,069,692
Investment in related companies					39,297,958			39,297,958

Derivative instruments U.S.GAAP Shareholders equity adjustment		58,190,261			152,177,389			210,367,650


	As of December 31, 2002

	Distribution			Generation			Total

	ThCh$			ThCh$			ThCh$
Commodity derivatives		(11,240,489	)		218,474,062			207,233,573
Embedded derivatives		262,190			(12,209,854	)		(11,947,664	)
Financial derivatives		(28,432,901	)		(16,952,690	)		(45,385,591	)

		(39,411,200	)		189,311,518			149,900,318
Investment in related companies					7,649,226			7,649,226

Derivative instruments U.S.GAAP Shareholders equity adjustment		(39,411,200	)		196,960,744			157,549,544

F-132

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

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

F-133

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

Embedded Derivative Contracts

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

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

Financia1 Derivatives

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

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

Net lnvestment Hedges

F-134

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

(l)

Reclassification to U.S. GAAP

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


	Year ended December 31, 2000

	Chilean GAAP						U.S. GAAP

	ThCh$			ThCh$			ThCh$
Operating income		552,749,621			258,352,632			811,102,252
Non-operating expense, net		(169,411,441	)		(219,985,929	)		(389,397,370	)
Income taxes		(146,323,505	)		4,203,502			(142,120,003	)
Minority interest		(184,000,228	)		—			(184,000,228	)
Equity participation in income of related companies, net		—			76,753			76,753
Amortization of negative goodwill		42,646,957			(42,646,957	)		—

Net income		95,661,405			—			95,661,405

F-135

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


	Year ended December 31, 2001

	Chilean GAAP						U.S. GAAP

	ThCh$			ThCh$			ThCh$
Operating income		754,543,767			(84,016,035	)		670,527,732
Non-operating expense, net		(498,001,278	)		109,936,884			(388,064,394	)
Income taxes		(136,687,539	)		8,116,807			(128,570,732	)
Minority interest		(125,152,619	)		—			(125,152,619	)
Equity participation in income of related companies, net		—			(10,698,797	)		(10,698,797	)
Amortization of negative goodwill		47,451,702			(47,451,702	)		0

Net income before extraordinary gain		42,154,033			(24,112,843	)		18,041,190
Extraordinary gain		—			24,112,843			24,112,843

Net income		42,154,033			—			42,154,033


	Year ended December 31, 2002

	Chilean GAAP						U.S. GAAP

	ThCh$			ThCh$			ThCh$
Operating income		532,644,361			(443,002,361	)		89,642,000
Non-operating expense, net		(796,530,156	)		540,598,729			(255,931,427	)
Income taxes		(66,016,985	)		(15,988,017	)		(82,005,002	)
Minority interest		16,282,559			—			16,282,559
Equity participation in income of related companies, net		—			8,263,783			8,263,783
Amortization of negative goodwill		112,247,774			(112,247,774	)		—

Net loss before extraordinary items		(201,372,447	)		(22,375,640	)		(223,748,087	)
Extraordinary items		(22,375,640	)		22,375,640			—

Net loss		(223,748,087	)		—			(223,748,087	)

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

F-136

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	Year ended December 31, 2001

	Chilean GAAP		Reclassification			U.S. GAAP

	ThCh$		ThCh$			ThCh$
Current assets		1,162,446,794		(211,305,194	)		951,141,600
Property, plant an equipment, net		9,625,049,659		27,262,972			9,652,312,631
Other assets		1,972,302,858		(52,706,143	)		1,919,596,715

Total assets		12,759,799,311		(236,748,365	)		12,523,050,946

Current liabilities		1,639,303,381		(110,607,126	)		1,528,696,255
Long-term liabilities		5,832,362,823		(126,141,239	)		5,706,221,584
Minority interest		4,073,571,128		—			4,073,571,128
Shareholders’s equity		1,214,561,979		—			1,214,561,979

Total liabilities and shareholders’ equity		12,759,799,311		(236,748,365	)		12,523,050,946


	Year ended December 31, 2002

	Chilean GAAP		Reclassification			U.S. GAAP

	ThCh$		ThCh$			ThCh$
Current assets		1,223,963,114		(84,691,477	)		1,139,271,637
Property, plant an equipment, net		9,879,458,183		23,804,228			9,903,262,411
Other assets		1,517,743,379		(24,600,329	)		1,493,143,050

Total assets		12,621,164,676		(85,487,578	)		12,535,677,098

Current liabilities		2,151,373,249		(28,554,145	)		2,122,819,104
Long-term liabilities		5,413,608,412		(56,933,433	)		5,356,674,979
Minority interest		4,050,602,721					4,050,602,721
Shareholders’s equity		1,005,580,294					1,005,580,294

Total liabilities and shareholders’ equity		12,621,164,676		(85,487,578	)		12,535,677,098

(m) Employee Benefit Plans

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

Severance indemnities

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

F-137

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

Benefits for Retired Personnel

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

Electrical rate service

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

ii)

Medical benefits

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

iii)

Supplementary pension benefits

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

iv)

Worker’s compensation benefits

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

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

F-138

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


	Pension Benefits						Other Benefits

	2001			2002			2001			2002

	ThCh$			ThCh$			ThCh$			ThCh$
Changes in benefit (obligations)
Benefit (obligations) at January 1		(127,276,623	)		(158,318,450	)		(5,630,758	)		(18,790,555	)
Price-level restatement		3,826,939			4,141,331			136,056			468,722
Foreign exchange effect					(15,743,272	)		(2,514,206	)		—
Net periodic expense		(14,783,599	)		(13,649,465	)		(12,326,341	)		(18,982,900	)
Benefits paid		1,130,278			14,647,166			906,077			(170,245	)
Company contributions		8,250,286			32,554,873			—			4,029,429

Benefit (obligations) at December 31		(144,595,992	)		(123,138,751	)		(16,914,966	)		(33,445,549	)

Funded Status of the Plans
Proyected Benefit Obligation		(224,243,937	)		(208,863,000	)		(19,442,624	)		(33,293,198	)
Fair value of the plan’s assets		93,527,895			93,196,829

Funded Status		(130,716,041	)		(115,666,171	)		(19,442,624	)		(33,293,198	)
Unrecognized loss		(30,531,801	)		(17,138,790	)		—			(13,056,708	)
Unrecognized net transition obligation		16,651,850			9,666,203			2,527,658			12,904,357

Net liability recorded under U.S. GAAP		(144,595,992	)		(123,138,758	)		(16,914,966	)		(33,445,549	)

Adjustment required to reflect minimum liability:


Additional minimum liability	(291,282	)	(2,299,601	)
Intangible asset	291,282		2,299,601

Balance of additional liability	—		—


	Pension
	Benefits
Change in the plan assets	2002

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

Fair value of plans assets, December 31		93,196,829

F-139

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)


	Pension Benefits									Other Benefits

Assumptions as of December 31	2000			2001			2002			2000			2001			2002

	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Discount rate		15.0	%		12.2	%		12.97	%		9.5	%		11.8	%		11	%
Salary increase		9.6	%		7.0	%		6.86	%		—			—			—
Return on plan assets		10.4	%		10.4	%		10.96	%		—			—			—
Components of net periodic
Benefits expenses
Service cost		(748,873	)		(697,719	)		(905,752	)		1,272,083			(11,129,179	)		(4,407,258	)
Interest cost		(16,106,429	)		(23,595,153	)		(13,605,434	)		(716,812	)		(986,524	)		(2,586,994	)
Expected return on assets		1,026,865			15,826,320			6,541,907			—			—
Amortization gain (loss)		6,101,489			(3,838,806	)		(4,040,437	)		—			—			(10,120,907	)
Amortization of transition asset		(1,482,653	)		(2,478,241	)		(1,639,750	)		217,167			(210,638	)		(1,867,741	)

Net periodic expenses		(11,209,601	)		(14,783,599	)		(13,649,466	)		772,438			(12,326,341	)		(18,982,900	)

(n) Comprehensive income (loss)

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

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

2000

Effect of U.S. GAAP

Chilean GAAP

adjustments on

cumulative

Accumulated other

translation

comprehensive

adjustment

income (loss)

ThCh$

Beginning balance

8,454,732

4,135,642

12,590,374

Credit (charge) for the period

1,336,996

(4,410,079

)

(3,073,083

)

Ending balance

9,791,728

(274,437

)

9,517,291

2001

Effect of U.S. GAAP

Chilean GAAP

adjustments on

cumulative

Accumulated other

translation

comprehensive

adjustment

income (loss)

ThCh$

Beginning balance

9,791,728

(274,437

)

9,517,291

Credit (charge) for the period

19,459,327

(3,494,199

)

15,965,128

Ending balance

29,251,055

(3,768,636

)

25,482,419

F-140

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

2002

Effect of U.S. GAAP

Chilean GAAP

adjustments on

cumulative

Accumulated other

translation

comprehensive

adjustment

income (loss)

ThCh$

Beginning balance

29,251,055

(3,768,636

)

25,482,419

Credit (charge) for the period

20,596,914

(12,536,493

)

8,060,421

Ending balance

49,847,969

(16,305,129

)

33,542,840

(o) Discontinued operations

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

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

F-141

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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


	As of December 31,

	2001		2002

	ThCh$		ThCh$
Assets:
Cash		543,989		190,065
Account receivable, net		7,276,944		14,769,412
Other current assets		2,556,811		35,355,119
Property, plant and equipment, net		177,536,030		168,496,330
Intangibles		21,445		34,420
Other assets		2,517,470		18,055,721

Total assets of discontinued operations		190,452,689		236,901,067

Liabilities:
Current liabilities		122,970,123		74,178,107
Long term liabilities		2,621,183		97,156,269
Income taxes payable (including deferred)		536,942		835,078
Minority interest		734,927		729,136

Total liabilities and minority interest of discontinued operations		126,863,175		172,898,590

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


	As of December 31,

	2000			2001			2002

	ThCh$			ThCh$			ThCh$
Sales		15,081,812			20,150,123			20,202,007
Costs of sales		(8,689,379	)		(10,457,778	)		(9,961,732	)

Gross profit		6,392,433			9,692,345			10,240,275
Administrative and selling expenses		(985,710	)		(1,291,432	)		(1,309,638	)

Operating income		5,406,723			8,400,913			8,930,637

Non operating (loss) income		(4,836,751	)		(7,003,803	)		(7,501,002	)

Income before taxes and minority interest		569,972			1,397,110			1,429,635

Income tax		155,745			(605,137	)		(972,455	)
Minority interest		(465,717	)		(507,563	)		(292,061	)

Net income for the year		260,000			284,410			165,119

F-142

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(p) Goodwill and intangible assets

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

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

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


	Goodwill

	January 1,				Translation					December 31,
	2002 (1)		Acquisitions		adjustment		Impairment			2002

	ThCh$		ThCh$		ThCh$		ThCh$			ThCh$
Chile		998,343,122		3,333,940		—		(1,713,130	)		999,963,932
Argentina		83,196,029		—		6,624,271		(89,820,300	)		—
Brazil		482,974,835		—		25,871,748		(508,846,583	)		—
Colombia		60,415,564		—		2,225,133		—			62,640,697
Peru		19,993,731		—		1,309,513		—			21,303,244

Total		1,644,923,281		3,333,940		36,030,665		(600,380,013	)		1,083,907,873

(1)

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

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

F-143

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(q) Recent accounting pronouncements

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

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

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

F-144

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

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

F-145

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

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

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

Subsequent events

(1)

During January 2003, the governor of the State of Paraná in Brazil suspended payment and announced its intention to cancel or renegotiate the long-term energy contracts between Copel and Endesa-Chile’s equity method investment, CIEN. The 20-year long-term contracts were negotiated during almost two years of negotiations and aim to relieve the energy-suppy shortages in Brazil, and were complied with through December 31, 2002. An investment of more than US$700 million was made to build the Interconnection-line between Brazil and Argentina. During 2002, approximately R$1.2 billion (or approximately US$340 million) of energy was sold by CIEN to Copel through the long-term energy contracts. CIEN has notified the Ministry of Mines and Energy and the Electric Energy Regulatory Agency (“ANEEL”) of Copel’s default. CIEN has 20-year long-term energy purchase commitments in Argentina to satisfy the supply contracts with Copel. Additionally, the estimated fair value of these long-

F-146

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

term energy contracts with Copel was US$350 million as of December 31, 2002, and any changes or cancellation of the contracts would likely have a material impact in the Company’s consolidated net income and shareholders’ equity.

(2)

On March 28, 2003, Enersis announced that the board of directors awarded the sale of its 98.7% equity stake in Río Maipo to CGE Distribución S.A. for US$203 million. Enersis’ shareholders approved the sale of Río Maipo at a March 31, 2003 Extraordinary Shareholders’ Meeting. Enersis estimates that the sale of Río Maipo will contribute US$126 million before taxes to its income statement for the year ended December 31, 2003, and expects to apply the proceeds of this sale to reduce its debt. On April 30, 2003, Río Maipo was sold for US$203 million, including US$33 million in debt.

(3)

On March 31, 2003, at an Extraordinary Shareholders’ Meeting, Enersis’ management approved a capital increase for the equivalent of up to US$2 billion. The capital increase, which commenced on May 31, 2003, already allowed for the capitalization of all of Endesa-Spain’s loan to Enersis (with a face value of approximately US$1.37 billion), and will allow the capitalization of Enersis’ local bonds (with a face value of approximately US$151 million), as well as the subscription of shares for cash. All existing shareholders, other than Endesa-Spain, will have two pre-emptive rights periods in which they are allowed to subscribe their pro rata equity shares, or sell their rights in the market. Endesa-Spain exercised its rights on June 2, 2003, and has voluntarily excluded itself from the second pre-emptive rights period. The new shares to be offered in the capital increase will not be registered with the Securities and Exchange Commission (the “SEC”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act of 1933, as amended. Enersis’ shareholders approved the removal of the 65% maximum limit that a single shareholder was permitted to own in Enersis.

(4)

In April 2003, CELG initiated legal proceedings against Cachoeira Dourada and ANEEL demanding the annulment of the energy sale contract signed with Cachoeira Dourada in 1998, alleging, among other things, that the contract is extremely onerous and damaging to the financial stability of CELG, causing it supposed damages of approximately US$250 million from 1997 to 2003.

CELG obtained a preliminary and provisional judgment that suspends the effects of the contract and authorizes CELG to stop payments, also provisionally, of the amounts contractually due to Cachoeira Dourada which correspond to the energy sale price.

Both Cachoeira Dourada and ANEEL presented their defenses and legal argument against the decision to suspend the contract. All parties are waiting for the judge to decide whether or not to confirm the preliminary decision of suspending the effects of the contract. Should the judge confirm the decision to suspend the effects of the contract, Cachoeira Dourada and ANEEL will have the opportunity to appeal to an appropriate authority.

Both Cachoeira Dourada and its lawyers believe that there is a high probability of obtaining a favorable final decision.

F-147

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

(5)

On April 8, 2003 Endesa Chile (Enersis Subsidiary) sold 285 kilometers of 220 kV transmission lines to Transelec for US$32 million (approximately ThCh$22,400,000). The carrying value of net assets under Chilean GAAP sold amounted to ThCh$21,562,962 as of December 31, 2002. Additionally, GasAtacama Generación Limitada, of which Endesa Chile has a 50% participation, sold 673 kilometers of 220 kV line transmission lines for approximately US$78 million (ThCh$54,600,000 approximately). The carrying value of net assets under Chilean GAAP sold amounted to ThCh$53,458,465 as of December 31, 2002. In both cases, the transaction included the transfer of the respective substations.

(6)

On April 25, 2003, Enersis, Endesa-Chile, Enersis Internacional, Chilectra Internacional, and Chilectra filed an action before the Centro Internacional de Arreglo de Diferencias relativas a Inversiones (“CIADI”) in Washington, D.C., requesting an arbitration for resolving a dispute with the Republic of Argentina. The grounds of this action are the damages suffered by the investments of Enersis and our subsidiaries in Argentina, as a consequence of the approval of Economic Emergency Law, Decree N°214/2002, Decree N°293/2002 and Resolution N°38/2002 of the Ministry of Economy. The outcome of these new rules has been a complete new legal framework for the Argentine investments of Enersis and its subsidiaries, which originally date back to September 1992. The original commitments assumed by the Republic of Argentina regarding these investments have not been met. The arbitration action argues that the Republic of Argentina’s failure to comply with its commitments in relation to our investments by the part of the Republic of Argentina is against the letter and the spirit of the Treaty.

(7)

On April 30, 2003 Endesa Chile (Enersis Subsidiary) sold Canutillar Plant to Cenelca S.A. for US$174 million (approximately ThCh$121,800,000). The carrying value of net assets sold under Chilean GAAP amounted to ThCh$125,925,381 as of December 31, 2002 and its installed capacity was 172 MW.

(8)

In May 2003 Chilectra increased its interest in Cerj in Brazil from 33.4% to 41.2% through a capital increase to which Enersis subscribed in January 2003, and later sold a share to Chilectra. Its interest in Coelce in Brazil was also indirectly increased, through Cerj, from 12.8% to 14.4%. Chilectra also owns a 9.9% interest in Codensa in Colombia and a 15.6% interest in Edelnor in Peru.

(9)

On May 15, 2003, Enersis and Endesa-Chile refinanced US$2.33 billion in syndicated loans and bilateral credit agreements structured as:

•

a US$200 million Senior Secured Syndicated Term Loan Facility for Enersis and a US$1,388 billion Senior Secured Syndication Term Loan Facility for Enersis, acting through its Cayman Islands Branch (the “Enersis Facility”) each for five years; and

•

a US$743 million Senior Guaranteed Syndicated Term Loan Facility for Endesa-Chile, acting through its Cayman Islands Branch (the “Endesa-Chile Facility”, and together with the Enersis Facility, the “Facilities”).

F-148

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

The refinancing of bank obligations with the Facilities has allowed Enersis and Endesa-Chile to: (a) make payments for the bond maturities and put option coming due in 2003 for a total of US$701 million, (b) lengthen the maturity profile of our debt, (c) allow a greater period of time before amortizing principal payments on our debt and (d) provide better conditions for the planned capital increase process.

The following table shows the effects that would have been recognized under Chilean GAAP from the refinancing of liabilities mentioned before.


	As of December 31, 2002

	Before		After
	refinancing		refinancing

	ThCh$		ThCh$
CURRENT LIABILITIES:
Short-term debt due to banks and financial institutions		425,049,260		384,736,676
Current portion of long-term debt due to banks and financial institutions		605,261,953		226,914,211
Other current liabilities		1,121,062,036		1,121,062,036

Total current liabilities		2,151,373,249		1,732,712,923

LONG-TERM LIABILITIES:
Due to banks and financial institutions		1,691,338,670		2,109,998,996
Other long-term liabilities		3,722,269,742		3,722,269,742

Total long-term liabilities		5,413,608,412		5,832,268,738

(10)

On May 15, 2003 the Supreme Court of Chile made its final verdict as a consequence of an appeal against Resolution No. 667, ruling in favor of Enersis and confirming Resolution No. 667 from Comisión Resolutiva.

On May 28, 2003, a private complaint against Enersis was filed with the Comisión Resolutiva alleging that Enersis has failed to comply with Resolution No. 667 since Enersis, Endesa-Chile and Chilectra have supposedly shared finance, auditing and communication departments. The complaint alleges that by joining these departments, Enersis is frustrating the Comisión Resolutiva’s objective of preventing energy companies from sharing essential information and keeping the electricity business of generation and distribution independent. Enersis believes that the Comisión Resolutiva’s investigation will not lead to a prohibition of Enersis’s control over the energy distribution and generation markets, because we believe this matter was clearly resolved by Resolution No.667.

F-149

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Concluded)

(11)		The Sixth Civil Court of Santiago recently issued its ruling in relation to a lawsuit opposing the Ralco Project filed by a group of people belonging to the Pehuenche ethnic group. The lower court’s sentence concludes that the voluntary procedure undertaken by Endesa-Chile for the assessment of the environmental impact of the Ralco Project is null since, in the court’s opinion, CONAMA, the Environmental Government Agency, was not legally entitled to assess the environmental impact study presented by the Company to CONAMA. Both defendants, the Company and CONAMA, consider this questioning of the legitimacy of the process is unjustified. The resolution dictated by the Sixth Civil Court of Santiago does not imply the penalization of the project, which to date has achieved more than 80% completion.

		On May 30, 2003, the plaintiffs requested the suspension of the Ralco Project, which was rejected by the court. Instead, of suspending the entire project, the judge ruled that the flooding of the dam should not proceed. Endesa plans to appeal this ruling before the Appeals Court of Santiago.

F-150

ENERSIS S.A. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Concluded)

Schedule II — Valuation and Qualifying Accounts


			Additions
			charged to								Balance
	Balance at beginning		costs and								at end of
	of period		expenses		Deductions			Others			period

	ThCh$		ThCh$		ThCh$			ThCh$			ThCh$
December 31, 2000
Allowance for doubtful accounts receivable		78,303,154		64,414,380		(10,600,402	)		(10,783,848	)		121,333,284
December 31, 2001
Allowance for doubtful accounts receivable		121,333,284		42,858,379		(6,340,092	)		(11,474,437	)		146,377,134
December 31, 2002
Allowance for doubtful accounts receivable		146,377,134		18,798,815		(1,297,010	)		(48,529,408	)		115,349,531

F-151

Item 19. Exhibits


Exhibit		Description
1.1		By-laws (Estatutos) of ENERSIS S.A., as amended, (incorporated by reference to Exhibit 1.1 of our 2002 Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)

1.2		By-laws (Estatutos) of ENERSIS S.A., as amended (English translation) (incorporated by reference to Exhibit 1.2 of our 2002 Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)

4.1		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Interocean Development Inc. (Spanish version) (incorporated by reference to Exhibit 10.1 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.2		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Interocean Development Inc. (English version) (incorporated by reference to Exhibit 10.2 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.3		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Enersis Investment S.A. (Spanish version) (incorporated by reference to Exhibit 10.3 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.4		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Enersis Investment S.A. (English version) (incorporated by reference to Exhibit 10.4 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.5		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Empresa Eléctrica de Panamá S.A. (Spanish version) (incorporated by reference to Exhibit 10.5 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.6		Assignment of Rights Contract, dated June 25, 1999, between Endesa Internacional S.A. and Empresa Eléctrica de Panamá S.A. (English version) (incorporated by reference to Exhibit 10.6 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2000)

4.7		Credit Agreement among ENERSIS S.A, Banco Bilbao Vizcaya Argentaria, S.A., Citigroup Global Markets Inc., Dresdner Kleinwort Wasserstein Securities LLC, Santander Central Hispano Investment Securities Inc., various lenders and Citibank N.A., as administrative agent, dated May 12, 2003 (incorporated by reference to Exhibit 4.7 of our 2002 Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)

8.1		List of Subsidiaries (incorporated by reference to Exhibit 8.1 of our 2002 Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 30, 2003)

99.1		Section 302 Certification of Chief Executive Officer.

99.2		Section 302 Certification of Chief Financial Officer.

99.3		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer.

We will furnish to the Securities and Exchange Commission, upon request, copies of any unfiled instruments that define the rights of holders of long-term debt of ENERSIS S.A.

SIGNATURES

The registrant certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this amendment to the annual report on its behalf.


		ENERSIS S.A.

		By:		/s/ Mario Valcarce

				Name: Mario Valcarce
				Title: Chief Executive Officer

Date: February 19, 2004

Enel Americas (ENIA) 20-F/A2002 FY Annual report (foreign) (amended)