Brahma.xlsRev. 4.012 December 22, 2004

Copyright 2003 by Robert F. Bruner and the Trustees of the University of Virginia Darden School Foundation.

ContentsExh. 5: Analysis of voting control by major investors, before and after the transaction.Exh. 6: Antarctica and Brahma: Comparative PerformanceExh. 8: Stock price information for Antarctica and Brahma.Exh. 9: Information on peer companies.Exh. 10: Information on comparable transactions.Exhs. 11 and 12: Financial forecast for Antarctica and forecast of free cash flows.Exhs. 13 and 13: Financial forecast for Brahma and forecast of free cash flows.

This model supports STUDENT preparation of the case study, "Brazilian Beer Merger Negotiations: Companhia Cervejaria Brahma S.A." (UVA-F-1418). This is a working model in which the student may insert alternative forecast assumptions in order to test the sensitivity of results. Note that the model contains an intentional circularity between the income statement and balance sheets for each firm--to resolve this circularity, please set the model to "iterate" 100 times or so, by clicking on tools/options/calculation and checking the iteration box.

Exhibit 5: Analysis of voting control by major investors, before and after the transaction.

Share Ownership in AntarcticaFAHZ 10,572,000 88.1%Anheuser-Busch 600,000 5.0%Other investors 828,000 6.9%Total Shares 12,000,000 100.0%

Share Ownership in BrahmaGarantia 3,522,876 51.0%Telles 462,809 6.7%Other investors 2,921,915 42.3%Total Shares 6,907,600 100.0%

Before Transaction

% of Total

Exhibit 6: Antarctica and Brahma: Comparative Performance

Antarctica Brahma1998, Financial Performance per HectolitreNet Sales R$ 33.95 R$ 46.98Cost of Goods Sold -22.85 -26.79Gross Profit 11.1 20.19Sales Expenses -4.59 -10.36General and Administrative Expenses -3.29 -4.85Pre-tax Income 3.22 4.98Taxes -0.40 -0.56Net Income R$ 2.82 R$ 4.42

Exhibit 8Recent Stock Price InformationAntarctica and Brahma

Antarctica Brahma(Reais per share)

May-97 120.0 781.0 0.1536

Jun-97 110.0 822.0 0.1338

Jul-97 100.0 820.0 0.1220

Aug-97 97.0 760.0 0.1276

Sep-97 96.0 805.0 0.1193

Oct-97 96.0 742.0 0.1294

Nov-97 93.0 690.0 0.1348

Dec-97 70.0 695.0 0.1007

Jan-98 70.0 740.0 0.0946

Feb-98 85.0 760.0 0.1118

Mar-98 80.0 800.0 0.1000

Apr-98 74.8 680.0 0.1100

May-98 70.0 670.0 0.1045

Jun-98 60.0 640.0 0.0938

Jul-98 61.5 670.0 0.0918

Aug-98 50.0 550.0 0.0909

Sep-98 38.3 460.0 0.0832

Oct-98 32.0 450.0 0.0711

Nov-98 28.0 520.0 0.0538

Dec-98 28.0 530.0 0.0528

Jan-99 25.5 604.0 0.0422

Feb-99 22.5 605.0 0.0372

Mar-99 28.0 630.0 0.0444

Apr-99 35.7 610.0 0.0585

May-99 39.6 637.5 0.0621

High 120.0 855.0 0.1536

Low 22.0 400.0 0.0372

Average 63.3 657.2 0.0954

Adjusted Beta 0.42 0.49

Volatility 84.6% 62.6%

Source of data: Datastream

Ratio of Antarctica to Brahma

Exhibit 9: Information on Peer Companies

Beverage (Alcoholic) IndustryAnheuser Busch $ 69.0 $ 32,839 $ 11,246 $ 1,233 2.53 2.85 3.10

Beringer Wine Estates Holdings 40.0 780 318 31 1.63 1.95 2.25

Brown-Forman Corp. 'B' 71.0 4,864 1,775 201 2.93 3.20 3.50

Canandaigua Brands 'A' 52.0 931 1,497 64 3.38 4.20 4.80

Coors (Adolph) Co. 'B' 53.0 1,958 1,900 79 2.12 2.35 2.60

Molson Cos. Ltd. 'A' 22.0 1,297 2,150 48 0.80 0.95 1.10

Mondavi (Robt.) Corp. 34.0 525 325 29 1.83 2.15 2.45

Seagram Co. 59.0 23,542 9,714 92 0.26 0.55 0.15

Average (excluding outlier, Seagram)

Beverage (Softdrink) IndustryCadbury Schweppes (ADR) 56.0 14,210 6,816 513 1.99 2.30 2.50

Coca-Cola Bottling Co. 54.0 452 929 15 1.78 2.00 2.40

Coca-Cola Co. 71.0 175,086 18,813 3,533 1.42 1.43 1.63

Coca-Cola Enterprises 35.0 14,051 13,414 113 0.28 0.30 0.35

Cott Corporation 4.1 264 959 10 0.16 0.05 0.10

Pepsi Bottling Group, Inc. 21.0 3,255 7,041 1 0.02 0.35 0.40

PepsiCo, Inc. 37.0 54,427 22,348 1,760 1.16 1.20 1.35

Tiarc Cos. 'A' 20.0 586 815 11 0.36 0.75 0.85

Whitman Corp. 16.0 1,616 1,635 63 0.61 0.70 0.80

Average (excluding two high outliers)

*No. of ADRS

Source: Value Line Investment Survey

Latin American BrewersModelo $2.69 $8,743 2,061.0 237 $0.07 $0.07 $0.08

Femsa 35.94 3,839 1,284.7 65 1.29 1.94 2.32

Brahma *** 9.38 3,224 2,720.0 288 0.84 0.26 0.42

Quinsa 11.00 1,173 855.0 95 0.89 0.75 0.89

Compania Cervecarias Unidad (CC 23.63 1,465 591.6 83 1.34 1.36 1.47

Average for Latin American Brewers

*Cash earnings = Net income plus Depreciation and Amortization

** Values in this table are denominated in US dollars.

*** Shares outstanding for Brahma refer to American Depositary Receipts, traded in New York.

Source: Morgan Stanley Dean Witter research report on Brahma, May 6, 1999.

Modelo is the largest producer of beer in Mexico. The most famous of its beer brands is Corona.

Price May 99

Mkt Cap (In $ MM)

1998 Rev (In $ MM)

1998 Prof (In $ MM)

1998 EPS

1999E EPS

2000E EPS

Price May 99

Mkt Cap (In $ MM)

1998 Rev (In $ MM)

1998 Prof (In $ MM)

1998 EPS

1999E EPS

2000E EPS

Femsa is the largest beverage company in Mexico. It produces several beer brands (including Dos Equis) and is also the bottler for Coca-Cola in Latin America. It also owns the largest chain of convenience stores in Latin America (OXXO).

Quinsa controls beverage and malting businesses in five Latin American countries - Argentina, Bolivia, Paraguay, Uruguay and Chile. The company also has bottling and franchise agreements with PepsiCo, and accounts for 100% of PepsiCo product sales in Uruguay and more than 80% of PepsiCo product sales in Argentina.

CCU is the leading brewer in Chile, and holds the third place in the Argentinian beer market. In the non-alcoholic beverages sector, CCU is Chile’s second-largest bottler of carbonated beverages and the leader in the mineral water market. It has winemaking operations in Argentina and in Chile.

Company descriptions taken from respective websites.

1999E P/CF

27.3 24.2 22.3 4.55 15.2 475.9

24.5 20.5 17.8 2.60 15.4 19.5

24.2 22.2 20.3 3.95 18.0 68.5

15.4 12.4 10.8 7.85 6.6 17.9

25.0 22.6 20.4 5.70 9.3 36.9

27.5 23.2 20.0 2.80 7.9 58.9

18.6 15.8 13.9 3.20 10.6 15.4

226.9 107.3 393.3 1.05 56.2 399.0

23.2 20.1 17.9 4.4 11.8

28.1 24.3 22.4 3.45 16.2 253.75*

30.3 27.0 22.5 8.90 6.1 8.4

50.0 49.7 43.6 1.75 40.6 2,466.0

125.0 116.7 100.0 3.07 11.4 401.5

25.6 82.0 41.0 0.75 5.5 64.5

1,050.0 60.0 52.5 3.70 5.7 155.0

31.9 30.8 27.4 1.80 20.6 1,471.0

55.6 26.7 23.5 2.90 6.9 29.3

26.2 22.9 20.0 1.50 10.7 101.0

35.4 37.6 28.6 3.0 15.2

Shares Out.

36.9 36.5 31.9 0.13 21 3,250.2

27.8 18.5 15.5 3.82 9.4 106.8

11.2 36.1 22.3 1.20 7.8 343.7

12.4 14.7 12.4 1.43 7.7 106.6

17.6 17.4 16.1 NA NA 62.0

23.7 21.8 19.0 1.8 12.7

1998A P/E

1999E P/E

2000E P/E

1999 E CF/Shr

Shares Outsdg.

1998A P/E

1999E P/E

2000E P/E

1999 E CE/Shr*

1999E P/CE

Femsa is the largest beverage company in Mexico. It produces several beer brands (including Dos Equis) and is also the bottler for Coca-Cola in Latin America. It also owns the largest chain of convenience stores in

Quinsa controls beverage and malting businesses in five Latin American countries - Argentina, Bolivia, Paraguay, Uruguay and Chile. The company also has bottling and franchise agreements with PepsiCo, and accounts

CCU is the leading brewer in Chile, and holds the third place in the Argentinian beer market. In the non-alcoholic beverages sector, CCU is Chile’s second-largest bottler of carbonated beverages and the leader in the

Recent Beverage Company Deals(01/01/1998 to 03/31/1999)Exhibit 10: Information on Comparable Transactions

Target Name Acquiror Name03/03/98 FEMSA Valores Industriales SA 1,886.7 60.1

01/14/99 Sanyo Coca-Cola Bottling Co Kita Kyushu Coca-Cola Bottling 614.8 19.8

04/24/98 Lion Nathan Ltd Kirin Brewery Co Ltd 495.3 19.2

11/26/98 Marston Thompson & Evershed Wolverhampton & Dudley 465.2 12.5

11/03/98 Matthew Clark PLC Canandaigua Ltd 355.8 8.5

09/18/98 Coca-Cola Beverages PLC Coca-Cola Co 110.7 39.1

11/02/98 AquaPenn Spring Water Co Inc Danone Group 110.3 61.6

08/25/98 San Miguel Corp{SMC} Exchange Capital Corp 69.7 19.8

05/22/98 Pete's Brewing Co Gambrinus Co 69.4 nm

02/15/99 Australian Premium Wines Ltd Cranswick Estate Wines Ltd 21.5 15.3

03/31/98 Fresh Juice Co Inc Saratoga Beverage Group Inc 18.9 47.9

08/26/98 Lion Brewery Inc Malt Acquiring Inc 18.3 8.8

NA = Not available.

Source: SDC Platinum

Notes:

Marston Thompson & Evershed is a UK-based brewery.

San Miguel Corp. is a Philippine based producer of beer and spirits, and a bottler for Coca-Cola.

DateAnnounced

Value ofTransaction

($mil)

Offering Price

Earnings Ratio

Lion Nathan is an Australian based alcoholic beverages company with operations in Australia, New Zealand and China. It brews and distributes around 1 billion litres of beer annually.

Matthew Clark plc is a UK-based producer of many brands in the categories of light table wine, cider, fortified wines, wine-style drinks, flavoured alcoholic beverages (FABs) and bottled waters.

109.5 47.6

42.9 100

9.5 30

63.7 100

40.1 100

17.7 3.4

100.0 100

27.0 NA

39.7 100

9.7 100

(2.5) 100

17.5 100

Premium 1 weekprior to

ann.

% ofShares

Acq.

Lion Nathan is an Australian based alcoholic beverages company with operations in Australia, New Zealand and China. It brews and

Matthew Clark plc is a UK-based producer of many brands in the categories of light table wine, cider, fortified wines, wine-style drinks,

04/22/202312:07:08Page 10

Exhibits 11 and 12: Antarctica's Financial Forecast and Forecast of Free Cash FlowsAssumptions Note: "#DIV/0!" likely indicates the needs to enter data somewhere in the model.

ProjectedOperating Assumptions 1997 1998 1999 2000 2001 2002 2003 2004Unit growth in sales of beer 4.0% 6.0% 6.0% 6.0% 6.0%Unit growth in sales of soft drinks 1.7% 3.0% 3.0% 3.0% 3.0%Forecasted inflation rate 5.5% 3.8% 3.8% 3.8% 3.8%% Weight of beer in revenue 73.0% 73.0% 73.0% 73.0% 73.0%% Weight of soft drinks in revenue 27.0% 27.0% 27.0% 27.0% 27.0%Nominal Revenue Growth (weighted average) 1.8% 9.1% 9.2% 9.2% 9.2% 9.2%COGS (Excl Depr) / Revenues 67.3% 61.7% 60.0% 59.0% 58.0% 58.0% 57.0%SG&A / Revenues 28.8% 35.7% 34.0% 34.0% 34.0% 33.0% 33.0%Licensing Exp (Income) / Revenues -9.4% -8.9% -8.9% -8.9% -8.9% -8.9% -8.9%Effective Tax Rate 12.1% -3.3% 14.0% 14.0% 14.0% 14.0% 14.0%

Wgtd Average Shares Outstanding (millions) 12 12 12 12 12 12 12 12Common Dividends payout % 0 0 0 45% 45% 45% 45% 45%Common Dividends per Share $0.00 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33

Minimum Cash Balance 0.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0Operating Cash Balance/Sales 9% 21% 15% 15% 15% 15% 15%Days in Receivables 85.9 89.9 89.9 89.9 89.9 89.9 89.9Days in Inventory 83.4 77.8 77.8 77.8 77.8 77.8 77.8Days in Payables 38.9 42.9 42.9 42.9 42.9 42.9 42.9Other Current Assets / Revenues 7.0% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%Other Current Liabilities / Revenues 18.7% 29.1% 29.1% 29.1% 29.1% 29.1% 29.1%Capital Expenditures (excl Acquisitions) 0.0 0.0 140.0 110.0 110.0 110.0 110.0 105.0

Depreciation, Amortization, & Other Years x Declining Financing Assumptions Coupon

Existing Intangible Book Amortization 40 yrs 1.0 x Straight Debt 15.0%Existing PPE Book Depreciation 20 yrs 1.0 xFuture CapEx Book Depreciation 20 yrs 1.0 x

Int. Rate on Excess Cash 4.0%Use of Excess Cash Flow 1(1=Build Cash; 2=Repay Debt)Interest Rate on Revolver 15.0%

04/22/202312:07:08Page 11

Exhibits 11 and 12: Antarctica's Financial Forecast and Forecast of Free Cash FlowsIncome Statement

Projected1998 1999 2000 2001 2002 2003 2004

Revenues $1,381.9 $1,406.5 $1,534.0 $1,674.9 $1,828.8 $1,996.8 $2,180.3 COGS (excluding Depreciation) 929.5 868.4 920.4 988.2 1,060.7 1,158.2 1,242.8 Selling, General, & Administrative 397.6 502.0 521.6 569.5 621.8 659.0 719.5 EBITDA 54.8 36.1 92.0 117.2 146.3 179.7 218.0 Depreciation 67.0 80.0 93.8 100.8 107.8 114.8 121.8 Licensing Expense (Income) (130.0) (125.0) (136.3) (148.9) (162.5) (177.5) (193.8) EBIT 117.8 81.1 134.6 165.3 201.1 242.4 290.0 Interest (Income) (2.5) (8.3) (10.4) (9.6) (10.5) (11.5) (12.5)Interest Expense - Straight Debt 41.9 649.9 Err:522 Err:522 Err:522 Err:522 Err:522 Pre-Tax Income 78.4 (560.5) Err:522 Err:522 Err:522 Err:522 Err:522Income Taxes 9.5 18.3 Err:522 Err:522 Err:522 Err:522 Err:522 Net Income 68.9 (578.8) Err:522 Err:522 Err:522 Err:522 Err:522Common dividends 0.0 0.0 Err:522 Err:522 Err:522 Err:522 Err:522 Net Income to Retained Earnings 68.9 (578.8) Err:522 Err:522 Err:522 Err:522 Err:522

Earnings per Share (R$/share): $5.75 ($48.23) Err:522 Err:522 Err:522 Err:522 Err:522

04/22/202312:07:08Page 12

Exhibits 11 and 12: Antarctica's Financial Forecast and Forecast of Free Cash FlowsBalance Sheet

Projected1998 1999 2000 2001 2002 2003 2004

Cash and Equivalents 127.0 289.4 230.1 251.2 274.3 299.5 327.0 Accounts Receivable 325.2 346.6 378.0 412.7 450.7 492.1 537.3 Inventory 212.4 185.2 196.3 210.8 226.2 247.0 265.0 Other Current Assets 97.0 45.0 49.1 53.6 58.5 63.9 69.8 Total Current Assets 761.6 866.2 853.5 928.3 1,009.7 1,102.5 1,199.1 Property , Plant, & Equipment 2,811.9 2,922.9 3,032.9 3,142.9 3,252.9 3,362.9 3,467.9 Accumulated Depreciation 1,137.2 1,187.2 1,281.0 1,381.8 1,489.6 1,604.3 1,726.1 Net Property, Plant, & Equipment 1,674.7 1,735.7 1,751.9 1,761.1 1,763.3 1,758.6 1,741.8 Other Long-Term Assets 965.7 965.7 965.7 965.7 965.7 965.7 965.7 Total Assets 3,402.0 3,567.6 3,571.1 3,655.2 3,738.8 3,826.7 3,906.6 Accounts Payable 99.0 102.1 108.2 116.2 124.7 136.2 146.1 Other Current Liabilities (excl. S/T Debt) 257.8 409.7 446.8 487.9 532.7 581.7 635.1 Total Current Liabilities 356.8 511.8 555.1 604.1 657.4 717.8 781.2 Debt (plug) 1,038.5 1,424.7 Err:522 Err:522 Err:522 Err:522 Err:522Other Long-Term Liabilities 85.4 84.0 84.0 84.0 84.0 84.0 84.0 Total Liabilities 1,480.7 2,020.5 Err:522 Err:522 Err:522 Err:522 Err:522Common Stock (Par + APIC+ Other Equity) 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 Retained Earnings 815.0 236.2 Err:522 Err:522 Err:522 Err:522 Err:522 Total Liabilities & Stockholders' Equity 3,402.0 3,363.0 Err:522 Err:522 Err:522 Err:522 Err:522

Forecast of Free Cash Flows Projected1998 1999 2000 2001 2002 2003 2004

Net Operating Profit After Tax 103.5 83.7 115.7 142.2 172.9 208.5 249.4 Add: Depreciation 67.0 80.0 93.8 100.8 107.8 114.8 121.8 (Increase) / Decrease in NWC (95.0) 112.8 (3.3) (4.7) (5.0) (7.2) (5.7) Cash Flow from Operations 75.5 276.5 206.2 238.3 275.7 316.1 365.5 Less: Capital Expenditures 35.0 140.0 110.0 110.0 110.0 110.0 105.0 Free Cash Flow 40.5 136.5 96.2 128.3 165.7 206.1 260.5

Book Depreciation Schedule Projected2000 2001 2002 2003 2004

On Existing PP&E 86.8 86.8 86.8 86.8 86.8 Capital Expenditures (2000-2004): Amount2000 140.0 7.0 7.0 7.0 7.0 7.0 2001 140.0 7.0 7.0 7.0 7.0 2002 140.0 7.0 7.0 7.0 2003 140.0 7.0 7.0 2004 140.0 7.0 Total Book Depreciation 93.8 100.8 107.8 114.8 121.8

04/22/202312:07:08Page 13

Exhibits 11 and 12: Antarctica's Financial Forecast and Forecast of Free Cash Flows

Summary Ratios Projected1999 2000 2001 2002 2003 2004 2005

EBITDA / Revenues 4.0% 2.6% 6.0% 7.0% 8.0% 9.0% 10.0%EBIT / Revenues 8.5% 5.8% 8.8% 9.9% 11.0% 12.1% 13.3%Return on Revenues 5.0% -41.1% Err:522 Err:522 Err:522 Err:522 Err:522EBITDA / Interest Expense 1.31 x 0.06 x Err:522 Err:522 Err:522 Err:522 Err:522EBIT / Interest Expense 2.81 x 0.12 x Err:522 Err:522 Err:522 Err:522 Err:522Return on Average Equity 7.2% -35.5% Err:522 Err:522 Err:522 Err:522 Err:522Return on Average Assets 4.1% -16.6% Err:522 Err:522 Err:522 Err:522 Err:522Return on Average (Debt+Equity) Capital 4.7% -20.2% Err:522 Err:522 Err:522 Err:522 Err:522Total Debt / Book Capitalization 35.1% 51.5% Err:522 Err:522 Err:522 Err:522 Err:522Total Debt / Book Equity 54.1% 106.1% Err:522 Err:522 Err:522 Err:522 Err:522Total Debt / EBITDA 18.95 x 39.47 x Err:522 Err:522 Err:522 Err:522 Err:522 Book Value per Share $160.11 $111.88 Err:522 Err:522 Err:522 Err:522 Err:522

Exhibits 13 and 14: Brahma's financial forecast and forecast of free cash flowsAssumptions Note: "#DIV/0!" likely indicates the needs to enter data somewhere in the model.

Operating Assumptions 1997 1998 1999 2000 2001Unit growth in sales of beer 4.0% 6.0%Unit growth in sales of soft drinks 1.7% 3.0%Forecasted inflation rate 5.5% 3.8%% Weight of beer in revenue 78.5% 78.5%% Weight of soft drinks in revenue 21.5% 21.5%Revenue Growth 2.9% 9.2% 9.4%COGS (Excl Depr) / Revenues 47.4% 48.6% 48.6% 48.6%SG&A / Revenues 28.6% 30.4% 30.4% 30.4%Other Exp (Income) / Revenues -1.2% -2.3% -2.3% -2.3%Effective Tax Rate 11.3% 10.3% 14.0% 14.0%

Minority Interest / Pre-tax Income 3.6% 5.5% 5.5% 5.5%

Wgtd Average Shares Outstanding (millions) 6.878 6.908 6.908 6.908Common Dividends payout % 55% 55% 55% 55%Common Dividend per share R$ 20.50 R$ 14.45 Err:522 Err:522

Minimum Cash Balance R$ 1,000.0 R$ 1,873.0 R$ 1,200.0 R$ 1,200.0Operating Cash/Revenues 34% 58% 42% 42%Days in Receivables 35.3 27.5 27.5 27.5Days in Inventory 91.1 74.0 74.0 74.0Days in Payables 62.3 67.7 67.7 67.7Other Current Assets / Revenues 6.3% 0.9% 0.9% 0.9%Other Current Liabilities / Revenues 13.3% 12.0% 12.0% 12.0%Other Assets/Revenues 25.7% 31.5% 31.5% 31.5%Capital Expenditures (excl Acquisitions) 0.0 350.0 350.0 350.0

Depreciation, Amortization, & Other Years x Declining Financing AssumptionsExisting Intangible Book Amortization 40 yrs 1.0 x Straight Debt 1Existing PPE Book Depreciation 20 yrs 1.0 xFuture CapEx Book Depreciation 20 yrs 1.0 x

Int. Rate on Excess CashUse of Excess Cash Flow (1=Build Cash; 2=Repay Debt)Interest Rate on Revolver

Income Statement1997 1998 1999 2000 2001

Revenues R$ 3,156.0 R$ 3,247.0 R$ 3,545.7 R$ 3,877.5 COGS (excluding Depreciation) 1,495.0 1,579.0 1,724.2 1,885.6 Selling, General, & Administrative 904.0 987.0 1,077.8 1,178.7 EBITDA 757.0 681.0 743.6 813.2 Depreciation 305.0 305.0 322.5 340.0 Other Expense (Income) (37.0) (75.0) (81.9) (89.6)

EBIT 489.0 451.0 503.0 562.8 Interest (Income) 0.0 0.0 (67.2) (62.4)Interest Expense - Straight Debt 188.0 198.3 Err:522 Err:522 Pre-Tax Income 301.0 252.7 Err:522 Err:522Income Taxes 34.0 26.0 Err:522 Err:522Minority Interest 10.7 14.0 Err:522 Err:522 Net Income 256.3 212.7 Err:522 Err:522Common Dividends 141.0 99.8 Err:522 Err:522 Net Income to Common 115.3 112.9 Err:522 Err:522

Earnings per Share (R$/share): R$ 37.26 R$ 30.79 Err:522 Err:522

Balance Sheet1997 1998 1999 2000 2001

Cash and Equivalents 1,081.0 1,873.0 1,489.2 1,628.5 Accounts Receivable 305.0 245.0 267.5 292.6 Inventory 373.0 320.0 349.4 382.1 Other Current Assets 200.0 29.0 31.7 34.6 Total Current Assets 1,959.0 2,467.0 2,137.8 2,337.9 Property , Plant, & Equipment 3,292.5 3,447.6 3,797.6 4,147.6 Accumulated Depreciation 1,396.6 1,705.0 2,027.5 2,367.5 Net Property, Plant, & Equipment 1,895.9 1,742.6 1,770.1 1,780.1 Other Long-Term Assets 812.2 1,024.2 1,118.4 1,223.1 Total Assets 4,667.1 5,233.8 5,026.3 5,341.1

Accounts Payable 255.0 293.0 320.0 349.9 Other Current Liabilities (excl. S/T Debt) 419.0 391.0 427.0 466.9 Total Current Liabilities 674.0 684.0 746.9 816.8 Total Debt (plug) 1,880.0 1,983.0 Err:522 Err:522Minority Interest 50.0 57.5 57.5 57.5 Other Long-Term Liabilities 637.0 903.0 986.1 1,078.3 Total Liabilities 3,241.0 3,627.5 Err:522 Err:522Common Stock (Par + APIC+ Other Equity) 975.0 990.3 990.3 990.3 Retained Earnings 451.1 616.0 Err:522 Err:522 Total Liabilities & Stockholders' Equity 4,667.1 5,233.8 Err:522 Err:522

Forecast of Free Cash Flows1998 1999 2000 2001

Net Operating Profit after Tax 433.8 404.6 432.6 484.0 Add: Depreciation 305.0 305.0 322.5 340.0 (Increase) / Decrease in NWC (125.0) (498.0) 392.1 (130.2) Cash Flow from Operations 613.8 211.6 1,147.2 693.8 Less: Capital Expenditures 325.0 350.0 350.0 350.0 Free Cash Flow 288.8 (138.4) 797.2 343.8

Depreciation Schedule 2000 2001Depreciation on Existing PP&E 305.0 305.0

Capital Expenditures (2000-2004): Amount2000 350.0 17.5 17.5 2001 350.0 17.5 2002 350.0 2003 350.0 2004 350.0 Total Book Depreciation 322.5 340.0

Summary Ratios1997 1998 1999 2000 2001

EBITDA / Revenues 24.0% 21.0% 21.0% 21.0%EBIT / Revenues 15.5% 13.9% 14.2% 14.5%Return on Revenues 8.1% 6.6% Err:522 Err:522EBITDA / Interest Expense 4.03 x 3.43 x Err:522 Err:522EBIT / Interest Expense 2.60 x 2.27 x Err:522 Err:522Return on Average Equity 16.2% 7.4% Err:522 Err:522Return on Average Assets 2.5% 2.3% Err:522 Err:522Return on Average (Debt+Equity) Capital 6.9% 3.2% Err:522 Err:522Total Debt / Book Capitalization 56.0% 54.4% Err:522 Err:522Total Debt / Book Equity 131.8% 123.5% Err:522 Err:522Total Debt / EBITDA 2.48 x 2.91 x Err:522 Err:522Book Value per Share R$ 207.35 R$ 232.54 Err:522 Err:522

Note: "#DIV/0!" likely indicates the needs to enter data somewhere in the model.Projected

2002 2003 20046.0% 6.0% 6.0%3.0% 3.0% 3.0%3.8% 3.8% 3.8%

78.5% 78.5% 78.5%21.5% 21.5% 21.5%

9.4% 9.4% 9.4%48.6% 48.6% 48.6%30.4% 30.4% 30.4%-2.3% -2.3% -2.3%14.0% 14.0% 14.0%

5.5% 5.5% 5.5%

6.908 6.908 6.90855% 55% 55%

Err:522 Err:522 Err:522

R$ 1,200.0 R$ 1,200.0 R$ 1,200.042% 42% 42%27.5 27.5 27.574.0 74.0 74.067.7 67.7 67.7

0.9% 0.9% 0.9%12.0% 12.0% 12.0%31.5% 31.5% 31.5%350.0 350.0 350.0

Coupon

15.0%

4.0%1

(1=Build Cash; 2=Repay Debt)15.0%

Projected2002 2003 2004

R$ 4,240.4 R$ 4,637.2 R$ 5,071.2 2,062.1 2,255.0 2,466.1 1,289.0 1,409.6 1,541.5

889.3 972.6 1,063.6 357.5 375.0 392.5 (97.9) (107.1) (117.1)

629.8 704.7 788.2 (68.2) (74.6) (81.6)

Err:522 Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522

Err:522 Err:522 Err:522

Projected2002 2003 2004

1,781.0 1,947.6 2,129.9 Err:522320.0 349.9 382.6 417.9 457.0 499.8 37.9 41.4 45.3

2,556.7 2,795.9 3,057.6 4,497.6 4,847.6 5,197.6 2,725.0 3,100.0 3,492.5 1,772.6 1,747.6 1,705.1 1,337.5 1,462.7 1,599.6 5,666.8 6,006.3 6,362.3

382.6 418.4 457.6 510.6 558.4 610.7 893.3 976.9 1,068.3

Err:522 Err:522 Err:522 Err:52257.5 57.5 57.5 57.5

1,179.3 1,289.6 1,410.3 Err:522 Err:522 Err:522990.3 990.3 990.3

Err:522 Err:522 Err:522 Err:522Err:522 Err:522 Err:522

Projected2002 2003 2004

541.6 606.0 677.9 357.5 375.0 392.5

(142.3) (155.7) (170.2)756.8 825.4 900.1 350.0 350.0 350.0 406.8 475.4 550.1

Projected2002 2003 2004

305.0 305.0 305.0

17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5

17.5 17.5 17.5

357.5 375.0 392.5

Projected2002 2003 2004

21.0% 21.0% 21.0%14.9% 15.2% 15.5%

Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522Err:522 Err:522 Err:522