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

Yes ______ No ___X___

 

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CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP Rui de Britto Álvares Affonso Economic-Financial Officer and Investor Relations Officer Mario Azevedo de Arruda Sampaio Head of Capital Market and Investor Relations Phone: (5511) 3388-8664 / Fax: (5511) 3388-8669 e-mail: maasampaio@sabesp.com.br

 

SABESP announces its fourth quarter  and fiscal year 2005 results  São Paulo, March 24, 2006 - SABESP – Cia. de Saneamento Básico do Estado de São Paulo – (NYSE: SBS; Bovespa: SBSP3), the largest water and sewage utility company in the Americas and the third largest in the world, according to its number of customers, announces today its results for the fourth quarter 2005 (4Q05) and for the fiscal year of 2005. The Company’s operating and financial information, except when indicated otherwise, is shown in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the year 2004 and fourth quarter of 2004.  Highlights EBITDA margin recovery  Increase in net income Increase in billed water and sewage volume  Gross operating revenue growth		SBSP3: R$ 172.00/thousand shares
		SBS: US$ 19.90 (ADR=250 shares)
		Total shares: 28,480 million
		Market Values: R$ 4,898 million
		Closing Price:03/24//2006

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Fourth Quarter 2005 Results
March 24, 2006
Page 2 of 12

Main Financial Highlights

R$ million

1. EBITDA margin recovery

												(R$ million)
		4Q04		4Q05		Chg.		%		2004		2005		Chg.		%
(+) Gross Operating Revenue		1,276.7		1,451.1		174.4		13.7		4,642.5		5,356.4		713.9		15.4
(-) COFINS and PASEP		92.8		110.3		17.5		18.9		245.4		403.0		157.6		64.2
(+) Net Operating Revenue		1,183.9		1,340.8		156.9		13.3		4,397.1		4,953.4		556.3		12.7
(-) Costs and expenses		881.1		876.3		(4.8)		(0.5)		3,069.5		3,263.8		194.3		6.3
(=) Earnings before financial expenses (EBIT*)		302.8		464.5		161.7		53.4		1,327.6		1,689.6		362.0		27.3
(+) Depreciation and amortization		153.9		153.7		(0.2)		(0.1)		598.9		596.0		(2.9)		(0.5)
(=) EBITDA**		456.7		618.2		161.5		35.4		1,926.5		2,285.6		359.1		18.6
(%) EBITDA margin		38.6		46.1						43.8		46.1
Earnings per 1,000 shares (R$)		8.26		6.58						18.01		30.40
ROE (%)		3.0		2.2						6.5		10.2
ROA (%)		1.8		2.7						7.9		9.7

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

EBITDA in 2005 totaled R$ 2,285.6 million, R$ 359.1 million more than in 2004, thanks to expressive growth in revenues versus costs.

Despite the substantial increase (64.2%) in COFINS/PASEP expenses, due to changes in the duty’s rate and calculation basis as of September 2004, annual net income jumped by 68.7% from R$ 513.0 million, in 2004, to R$ 865.6 million. Part of this increase was due to the 11.8% appreciation of the Real in 2005, versus 8.1% the year before, but the hefty 66.2% rise in net income from operating results greatly contributed to this outcome.

ROE (return on equity) increased from 6.5% to 10.2%, while ROA (return on assets) climbed from 7.9% to 9.7% . 4Q05 EBITDA stood at R$ 618.2 million, 35.4% up year-on-year, while the corresponding EBITDA margin increased from 38.6% to 46.1% .

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Fourth Quarter 2005 Results
March 24, 2006
Page 3  of 12

2. Gross operating revenue growth

Gross operating revenue moved up R$ 713.9 million, or 15.4%, from R$ 4,642.5 million, in 2004, to R$ 5,356.4 million, as a result of the following factors:

In 4Q05 gross operating revenue totaled R$ 1,451.1 million, 13.7% up year-on-year.

3. Billed volume

The following tables show billed water and sewage volume per customer category and region in 4Q04 and 4Q05, as well as in 2004 and 2005.

VOLUME OF WATER AND SEWAGE BILLED**PER CUSTOMER CATEGORY – million m3
QUARTER
		Water				%		Sewage				%		Water + Sewage				%
		4Q04		4Q05		Chg.		4Q04		4Q05		Chg.		4Q04		4Q05		Chg.
Residential		312.6		326.7		4.5		244.0		256.1		5.0		556.6		582.8		4.7
Commercial		36.1		36.9		2.2		32.6		33.6		3.1		68.7		70.5		2.6
Industrial		8.4		8.9		6.0		8.0		8.4		5.0		16.4		17.3		5.5
Public		11.3		11.5		1.8		8.8		9.2		4.5		20.1		20.7		3.0
Total Retail		368.4		384.0		4.2		293.4		307.3		4.7		661.8		691.3		4.5
Wholesale		63.5		65.6		3.3		-		-		-		63.5		65.6		3.3
Total		431.9		449.6		4.1		293.4		307.3		4.7		725.3		756.9		4.4
YEAR
		2004		2005		%Chg.		2004		2005		% Chg.		2004		2005		% Chg.
Residential		1,222.1		1,275.8		4.4		947.6		997.9		5.3		2,169.7		2,273.7		4.8
Commercial		142.4		145.3		2.0		127.4		131.9		3.5		269.8		277.2		2.7
Industrial		31.8		33.4		5.0		31.1		32.0		2.9		62.9		65.4		4.0
Public		44.7		45.7		2.2		35.3		36.4		3.1		80.0		82.1		2.6
Total Retail		1,441.0		1,500.2		4.1		1,141.4		1,198.2		5.0		2,582.4		2,698.4		4.5
Wholesale		251.4		258.7		2.9		-		-		-		251.4		258.7		2.9
Total		1,692.4		1,758.9		3.9		1,141.4		1,198.2		5.0		2,833.8		2,957.1		4.4

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Fourth Quarter 2005 Results
March 24, 2006
Page 4  of 12

VOLUME OF WATER AND SEWAGE BILLED**PER REGION – million m3
QUARTER
		Water						Sewage						Water + Sewage
		4Q04		4Q05		% Chg.		4Q04		4Q05		% Chg.		4Q04		4Q05		% Chg.
Metropolitan		244.6		257.1		5.1		198.6		209.0		5.2		443.2		466.1		5.2
Regional Systems*		123.8		126.9		2.5		94.8		98.3		3.7		218.6		225.2		3.0
Total Retail		368.4		384.0		4.2		293.4		307.3		4.7		661.8		691.3		4.5
Wholesale		63.5		65.6		3.3		-		-		-		63.5		65.6		3.3
Total		431.9		449.6		4.1		293.4		307.3		4.7		725.3		756.9		4.4
YEAR
		2004		2005		% Chg.		2004		2005		% Chg		2004		2005		% Chg.
Metropolitan		954.5		997.8		4.5		770.7		811.7		5.3		1,725.2		1,809.5		4.9
Regional Systems*		486.5		502.4		3.3		370.7		386.5		4.3		857.2		888.9		3.7
Total Retail		1,441.0		1,500.2		4.1		1,141.4		1,198.2		5.0		2,582.4		2,698.4		4.5
Wholesale		251.4		258.7		2.9		-		-		-		251.4		258.7		2.9
Total		1,692.4		1,758.9		3.9		1,141.4		1,198.2		5.0		2,833.8		2,957.1		4.4

*	Non-metropolitan and coastal regions.
**	Figures not reviewed by the independent auditors.

4. Costs and administrative and selling expenses

In 2005, product and service costs, plus administrative and selling expenses, increased by R$ 194.3 million or 6.3% over the year before. This increase is very close to the average annual variation of the country’s main inflation indicators.

The 4Q05 figure dipped 0.5% year-on-year, a reduction of R$ 4.8 million.

														(R$ million)
		QUARTER								YEAR
		4Q04		4Q05		Chg.		% Chg.		2005		2005		Chg.		% Chg.
Salaries and payroll		265.9		291.3		25.4		9.6		1,054.9		1,110.3		55.4		5.3
General supplies		30.5		33.8		3.3		10.8		94.0		115.9		21.9		23.3
Treatment supplies		21.8		20.3		(1.5)		(6.9)		91.5		98.8		7.3		8.0
Third-party services		131.9		143.5		11.6		8.8		422.2		474.0		51.8		12.3
Electric power		117.1		107.9		(9.2)		(7.9)		398.7		423.5		24.8		6.2
General expenses		63.4		34.3		(29.1)		(45.9)		142.0		160.7		18.7		13.2
Depreciation and amortization		153.9		153.7		(0.2)		(0.1)		598.9		596.0		(2.9)		(0.5)
Credit write-offs		89.0		84.5		(4.5)		(5.1)		241.6		255.3		13.7		5.7
Tax expenses		7.6		7.0		(0.6)		(7.9)		25.7		29.3		3.6		14.0
Costs plus administrative and
selling expenses		881.1		876.3		(4.8)		(0.5)		3,069.5		3,263.8		194.3		6.3

4.1. Salaries and payroll

The Company expanded its services throughout the year and annual productivity rose from 626 connections per employee, in 2004, to 651 in 2005.

Annual salary and payroll expenses moved up by R$ 55.4 million, or 5.3%, due to the following factors:

• A 7.9% wage increase (IPC-FIPE) as of May/05 and a 2% rise in the Performance Evaluation as of June/05;
• A 1.6% head count reduction from 17,735 to 17,448 employees.

The 4Q05 figure increased by R$ 25.4 million, or 9.6% year-on-year.

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Fourth Quarter 2005 Results
March 24, 2006
Page 5  of 12

4.2. General supplies

In 2005, the figure moved up 23.3% or R$ 21.9 million, primarily due to the following increases:

In 4Q05, the total increase was R$ 3.3 million, or 10.8% year-on-year, due to the same factors above.

4.3. Treatment supplies

In annual terms, the cost of these materials rose by 8%, or R$ 7.3 million, caused by the increase in the volume of water treated as consumption climbed back to normal levels following the conclusion of the bonus campaign to reduce water consumption in the São Paulo Metropolitan Region.

Considering the average price increase for treatment material of 11.6% in 2005, the 8% increase in costs was possible due to operating actions geared towards a more rational and efficient application of these materials, leading to overall lower costs.

In the 4Q05, costs dropped 6.9% year-on-year, or R$ 1.5 million, chiefly due to reduced consumption of activated carbon, in turn caused by a decline in taste- and odor-producing algae in the São Paulo Metropolitan Region’s water sources.

4.4. Third-party services

Annual service expenses climbed by 12.3%, from R$ 422.2 million, in 2004, to R$ 474.0 million. Most of the R$ 51.8 million difference can be put down to the following:

The 4Q05 figure climbed 8.8% year-on-year to R$ 11.6 million, mostly pushed by expenses from environmental preservation and network and residential connection maintenance.

4.5. Electric power

Power costs moved up R$ 24.8 million, or 6.2%, in 2005, from R$ 398.7 million to R$ 423.5 million, primarily due to the 2.1% increase in consumption, in turn caused by higher water production and an weighted average 14.1% increase in captive-market tariffs;

It is worth mentioning that the upturn would have been even bigger but for a series of cost-trimming measures, such as the migration of 43% of the Company’s consumption to the free market, generating savings of R$ 25.6 million; and the implementation of electrical efficiency programs and contractual improvements, generating savings of R$ 5.0 million; and a reduction in the ECE (Emergency Capacity Charge), saving a further R$ 7.2 million.

On a quarter to quarter basis this cost dropped from R$ 117.1 million in 4Q04 to R$ 107.9 million in 4Q05, a slide of R$ 9.2 million or 7.9%, despite the 14.1% period tariff hike authorized by ANEEL (Brazil’s Electricity Regulatory Agency).

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Fourth Quarter 2005 Results
March 24, 2006
Page 6 of 12

4.6. General expenses

In 2005, general expenses increased by R$ 18.7 million, or 13.2%, from R$ 142.0 million to R$ 160.7 million, chiefly due to provisions for legal contingencies from new lawsuits, which climbed from R$ 32.1 million, in 2004, to R$ 44.1 million, a difference of R$ 12.0 million. On the other hand, bank charges fell by 1.1%, thanks to agreements with the main collecting banks, which reduced these charges from R$ 56.1 million to R$ 55.5 million, equivalent to a real reduction of 5.7% (IPC-FIPE, the index used for contract updates until 2004). In 4Q05 dropped R$ 29.1 million, from R$ 63.4 million to R$ 34.3 million or 45.9% year-on-year, mainly due to a reduction in provisions for legal contingencies, losses and judicial labor deposits and the above mentioned drop in bank charges.

4.7. Credit write-offs

In 2005 credit write-offs increased by R$13.7 million, or 5.7%, from R$ 241.6 million to R$ 255.3 million. This variation consisted of a R$ 79.8 million increase in write-offs, offset by R$ 66.1 million with recovered credits.

In 4Q05, this line recorded a R$ 4.5 million or 5.1% decrease, from R$ 89.0 million to R$ 84.5 million in comparison to the same period of the previous year.

4.8. Tax expenses

Tax expenses moved up by 14.0% in 2005, from R$ 25.7 million to R$ 29.3 million, mainly due to CPMF (Provisional Financial Transaction Tax) charges with debt payments that occurred though out 2005 specially the Eurobonds settlement in the amount of US$ 275 million in July.

In the fourth quarter, there was a R$ 0.6 million or 7.9% drop year-on-year from R$ 7.6 million to R$ 7.0 million.

5. Financial expenses and passive monetary variations

5.1. Financial expenses

Annual financial expenses climbed R$ 67.8 million, or 9.4%, from R$ 724.0 million to R$ 791.8 million, thanks to:

• Interest on domestic loans and financing, which increased by R$ 77.6 million, mainly due to interest on the 6^th , 7^th and 8^th debenture issues, offset by interest on external loans and financing, which dropped R$ 77.1 thanks to the depreciation of the dollar and payment of US$ 275 million in Eurobonds in July/05 and US$10 million to Deutsche Bank Luxembourg in October/05;
• A R$ 33.2 million increase in the payment of withholding tax on foreign remittances in 2004, which did not occur in 2005;
• A R$ 38.0 million upturn in financial contingencies as of December/05, regarding interest on and updates of new and existing lawsuit estimates.

In 4Q05 financial expenses posted a variation of R$ 61.9 million, or 49.1%, moving up from R$ 126.0 million to R$ 187.9 million, due to the same factors mentioned above.

5.2. Passive monetary variation

In 2005, passive monetary variation amounted to a monetary gain of R$ 147.7 million, from R$ 82.4 million to R$ 230.1 million, due to the 8.1% appreciation of the Real against the US dollar in 2004, versus the 11.8% appreciation in 2005.

In 4Q05 due to the Real depreciation versus the US dollar, passive monetary variation represented a monetary loss of R$ 194.5 million, from a R$ 110.4 million revenue in 4Q04 to a R$ 84.1 million expense in 4Q05.

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Fourth Quarter 2005 Results
March 24, 2006
Page 7 of 12

6. Active monetary variations

In 2005, active monetary variations fell by R$ 26.3 million, or 43.6%, over 2004, from R$ 60.3 million to R$ 34.0 million. The decline was mainly due to: i) the adjustment, in 2004, of the methodology for calculating the updates of the special judicial orders from the Municipality of São Paulo, with the booking of R$12.2 million as the full amount due; ii) the reduction in the GESP agreement balance due to payments during 2005, which resulted in a R$ 3.4 million decrease in terms of monetary restatement; and iii) the reduction in the monetary restatement indexes used to update debts at R$ 7.8 million.

In 4Q05 the active monetary variation dropped by R$ 9.5 million, or 44.6%, from R$ 21.3 million to R$ 11.8 million as a result of the updates of amounts related to the GESP agreement, whose baseline amount for updating purpose was reduced by payments occurred during 2005.

7. Operational indicators

The table below shows the continued improvement in the Company’s services.

Operational indicators		2004		2005		% Chg.
Water connections (1)		6,358		6,489		2.1
Sewage connections (1)		4,747		4,878		2.8
Population directly served - water (2)		22.3		22.6		1.3
Population directly served – sewage collection (2)		18.0		18.3		1.7
Number of employees		17,735		17,448		(1.6)
Operational productivity (3)		626		651		4.0

Notes:
(1) In 1,000 units at the end of the period
(2) Million inhabitants at the end of the period (does not include wholesale services). Due to new projections by Fundação SEADE, the population with direct sewage collection in 4Q04 was adjusted from 18.2 to 18.0 million.
(3) Number of water and sewage connections per employee

8. Loans and financing

Sabesp reduced its foreign-currency debt exposure from 38% at the end of 2004 to 24% at the close of 2005, chiefly due to July’s US$ 275 million Eurobond settlement, funded by the 8^th debenture issuance. Today 65% of Sabesp’s foreign-currency debt is held by international development banks, such as the IDB..

The net debt/EBITDA ratio recorded an improvement from 3.6 in 2004 to 2.8 in 2005.

R$ million

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Fourth Quarter 2005 Results
March 24, 2006
Page 8 of 12

(R$ million)
DEBT PROFILE
INSTITUTION		2006		2007		2008		2009		2010		2011		2012  and  onwards		TOTAL
DOMESTIC
Banco do Brasil		194		211		230		250		273		297		768		2,223
Caixa Econômica Federal		43		47		51		54		58		63		187		503
Debentures		249		381		-		746		287		346		-		2,009
BNDES		29		31		31		31		31		31		27		211
Others		3		5		5		5		5		4		-		27
Interest and charges		115		-		-		-		-		-		-		115
Domestic Total		633		675		317		1,086		654		741		982		5,088
INTERNATIONAL
World Bank		10		5		-		-		-		-		-		15
Société Génerale		3		-		-		-		-		-		-		3
IDB		101		101		70		71		71		71		534		1,019
Eurobonds		-		-		527		-		-		-		-		527
Interest and charges		12		-		-		-		-		-		-		12
International Total		126		106		597		71		71		71		534		1,576
Total		759		781		914		1,157		725		812		1,516		6,664

9. Subsequent Events

A Credit Rights Investment Fund – SABESP I was established with the objective of acquiring Sabesp’s credit rights.

Fund duration will be 60 months, starting from quota issuance date of March 23, 2006.

Proceeds obtained by Sabesp from the fund in the amount of R$ 250 million, will be used by the Company to settle debt maturing during 2006.

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Fourth Quarter 2005 Results
March 24, 2006
Page 9  of 12

10. Conference call and webcast details

English:		April 5, 2006
		11:00 a.m. – US EST
		Phone: (+1 973) 935-8599
		Conference code: 7161144 or SABESP
Portuguese:		April 5, 2006
		9:00 a.m. – US EST
		Phone: (5511) 2101-1490
		Conference code: SABESP

For additional information please contact the Investor Relations Department: Mario Sampaio ((5511) 3388-8664 / maasampaio@sabesp.com.br) or Angela Beatriz Airoldi ((5511) 3388-8793 / abairoldi@sabesp.com.br)

Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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Fourth Quarter 2005 Results
March 24, 2006
Page 10 of 12

Income Statement

Brazilian Corporate Law										R$ thousand
		4Q04		4Q05		%		2004		2005		%
Sales/Services Gross Revenues		1,276,679		1,451,066		13.7		4,642,491		5,356,326		15.4
Water Supply - Retail		675,966		766,768		13.4		2,457,097		2,828,667		15.1
Water Supply - Wholesale		57,087		64,610		13.2		217,378		241,209		11.0
Sewage Collection and Treatment		543,626		619,688		14.0		1,968,016		2,286,450		16.2
Other Services		-		-		-		-		-		-
Gross Revenue Deductions (Cofins/Pasep)		(92,768)		(110,303)		18.9		(245,419)		(402,963)		64.2
Net Sales		1,183,911		1,340,763		13.2		4,397,072		4,953,363		12.7
Cost of Goods and/or Services Sold		(616,185)		(637,389)		3.4		(2,253,380)		(2,390,421)		6.1
Gross Profit		567,726		703,374		23.9		2,143,692		2,562,942		19.6
Selling Expenses		(159,973)		(156,417)		(2.2)		(502,520)		(537,864)		7.0
General & Administrative Expenses		(104,979)		(82,483)		(21.4)		(313,557)		(335,505)		7.0
Net Interest Income (Expense)		42,334		(227,533)		-		(503,706)		(447,004)		-
Operating Result		345,108		236,941		(31.3)		823,909		1,242,569		50.8
Non Operating Expenses (Income)		(22,955)		(15,586)		(32.1)		(33,922)		(25,421)		(25.1)
Income Before Taxes		322,153		221,355		(31.3)		789,987		1,217,148		54.1
Provivision for Income Tax/Social Contribution		(79,746)		(33,569)		(57.9)		(250,609)		(343,426)		37.0
Provivision for Deferred Income Tax/Social         Contribution		1,715		8,381		388.7		8,772		27,047		208.3
Extraordinary Item Net of IT and SC		(8,780)		(8,780)		-		(35,122)		(35,122)		-
Net Income		235,342		187,387		(20.4)		513,028		865,647		68.7
Shares Outstanding (1000 shares)		28,479,577		28,479,577		-		28,479,577		28,479,577		-
EPS (R$/1000 shares)		8.26		6.58		(20.4)		18.01		30.40		68.7
Depreciation and Amortization		(153,899)		(153,692)		(0.1)		(598,911)		(595,981)		(0.5)
EBITDA		456,673		618,166		35.4		1,926,526		2,285,554		18.6
% of net sales		38.6%		46.1%		-		43.8%		46.1%		-

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Fourth Quarter 2005 Results
March 24, 2006
Page 11 of 12

Balance Sheet

Brazilian Corporate Law				R$ thousand
ASSETS		12/31/2004		12/31/2005
Cash and Cash Equivalents		105,557		280,173
Accounts Receivable, net		949,792		1,195,249
Accounts Receivable from Shareholders		81,334		166,356
Inventory		29,604		36,070
Taxes and contributions		30,215		23,515
Other Receivables		33,288		24,023
Total Current Assets		1,229,790		1,725,386
Accounts Receivable, net		278,060		263,356
Accounts Receivable from Shareholders		740,609		800,594
Indemnities Receivable		148,794		148,794
Judicial Deposits		16,189		27,926
Taxes and contributions		257,271		298,820
Other Receivables		27,976		32,920
Total Long-Term Assets		1,468,899		1,572,410
Investments		5,100		740
Permanent Assets		14,040,922		14,116,099
Deferred Assets		39,097		20,531
Total Permanent Assets		14,085,119		14,137,370
Total Assets		16,783,808		17,435,166
LIABILITIES		12/31/2004		12/31/2005
Suppliers and Constructors		51,578		77,781
Loans and Financing		1,496,810		759,013
Salaries and Payroll Charges		107,228		117,289
Provivion for Judicial Pendencies		30,373		31,557
Interest on Own Capital Payable		144,078		409,725
Taxes and contributions payable		115,119		106,131
Taxes and contributions		71,902		70,893
Other Payables		83,801		119,577
Total Current Liabilities		2,100,889		1,691,966
Loans and Financing		5,553,843		5,905,208
Taxes and contributions payable		272,338		256,114
Taxes and Contributions		130,055		133,443
Provision for Contingencies		460,231		580,840
Pension Fund Obligations		222,176		276,558
Other Payables		92,688		108,489
Total Long-Term Liabilities		6,731,331		7,260,652
Capital Stock		3,403,688		3,403,688
Capital Reserves		65,291		78,820
Revaluation Reserves		2,619,220		2,529,771
Profit Reserves		1,863,389		2,470,269
Retained Earnings		-		-
Shareholder's Equity		7,951,588		8,482,548
Total Liabilities and Shareholder's Equity		16,783,808		17,435,166

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Fourth Quarter 2005 Results
March 24, 2006
Page 12 of 12

Cash Flow

Brazilian Corporate Law				R$ thousand
Description		Jan-Dec/04		Jan-Dec/05
Cash flow from operating activities
Net income for the period		513,028		865,647
Adjustments for reconciliation of net income
Deferred income tax and social contribution		340		(32,470)
Impostos compensados		(43,096)		-
Provisions for contingencies		91,183		135,714
Liabilities related to pension plans		89,906		68,665
Loss in the wirte-off of property, plant and equipment		34,440		19,051
Write-off of deferred assets		-		6,700
Provision for investments		-		4,360
Depreciation and Amortization		598,911		595,981
Interest calculated on loans and financing payable		693,684		677,921
Foreign exchange loss on loans and financing		(103,640)		(230,797)
Monetary exchange loss on interest on own capital		9,794		715
Passive monetary exchange variation and interest		28,128		24,852
Active monetary exchange variation and interest		(36,000)		(21,343)
Provisions for bad debt		241,577		255,292
Adjusted net income		2,118,255		2,370,288
(Increase) decrease in assets
Accounts Receivable, net		(244,047)		(363,110)
Accounts receivable from shareholders		(166,627)		(27,991)
Inventories		(7,296)		(6,466)
Other accounts receivable		(20,273)		9,265
Accounts Receivable, net - long term		(169,839)		(122,935)
Accounts receivable from shareholders		(104,977)		(96,388)
Judicial deposits		1,387		(11,737)
Other long term receivables		(1,753)		(4,944)
		(713,425)		(624,306)
Increase (decrease) in liabilities
Accounts payable to suppliers and contractors		(356)		26,203
Salaries and payroll charges		(28,066)		10,061
Interest on own capital payable		(1,865)		(727)
Taxes and contributions		49,735		(50,064)
Other accounts payable		25,811		35,776
Pension plan		(13,270)		(14,283)
Provision for contingencies		(4,416)		(13,921)
Other accounts payable - long term		3,723		15,801
		31,296		8,846
Net cash from operating activities		1,436,126		1,754,828
Cash flow from investing activities
Acquisition of property, plant and equipment		(670,257)		(660,373)
Sale of property, plant and equipment		176		-
Increase in Deferred Assets		(444)		(106)
Net cash used in investing activities		(670,525)		(660,479)
Cash flow from financing activities
Loans and Financing -
Funding		130,000		-
Payments		(133,787)		-
Loans and Financing - long term
Funding		780,722		1,153,479
Payments		(1,585,496)		(1,991,370)
Interest on own capital payment		(132,496)		(81,842)
Net cash used in financing activities		(941,057)		(919,733)
Net increase (decrease) in cash equivalents		(175,456)		174,616
Cash and cash equivalents at the beginning of the period		281,013		105,557
Cash and cash equivalents at the end of the period		105,557		280,173
Change in Cash		(175,456)		174,616
Additional information on cash flow:
Interest and charges paid to loans and financing		701,261		701,641
Capitalization of interest and financial charges		4,907		4,335
Payable income tax and social contribution		129,973		359,826
Property, plant and equip. received as donations and/or paid in		14,552		13,529
COFINS and PASEP taxes payable		216,699		378,932
Balancing accounts		(126,814)		(715)

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

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